diff --git "a/China/16.China Shenhua Energy_$103.81 B_Energy/2016/results.txt" "b/China/16.China Shenhua Energy_$103.81 B_Energy/2016/results.txt"
new file mode 100644--- /dev/null
+++ "b/China/16.China Shenhua Energy_$103.81 B_Energy/2016/results.txt"
@@ -0,0 +1,39007 @@
+Signing Page for Opinions
+47.8
+55,406
+81,883
+RMB million
+Net cash generated from operating activities
+Net cash generated from operating activities
+41.1
+0.887
+1.252
+RMB/share
+Basic earnings per share
+41.1
+17,649
+24,910
+RMB million
+holders of the Company
+Profit for the year attributable to equity
+28.1
+24,959
+31,970
+excluding the effect from Shenhua
+Finance Company
+RMB million
+RMB million
+46,341
+Total equity
+(2.1)
+195,870
+191,760
+RMB million
+3.0
+559,791
+576,729
+RMB million
+Total assets
+Total liabilities
+(%)
+Change
+2015
+As at
+31 December 31 December
+2016
+As at
+Unit
+99.7
+92,564
+RMB million
+Profit for the year
+177,069
+Deloitte Touche Tohmatsu Certified Public
+A Share/the PRC
+Signing Auditors
+Office Address
+Name
+Signing Auditors
+Address
+and Transfer
+Office
+Share Registrar Name
+Auditor engaged
+by the Company
+(Hong Kong)
+Office Address
+(the PRC)
+by the Company
+Name
+Auditor engaged
+601088
+01088
+Stock Code
+VI. OTHER RELEVANT INFORMATION
+China Shenhua
+Accountants LLP
+3.4
+8th Floor, Tower W2, The Towers, Oriental Plaza,
+Xu Bin, Yu Chunhui
+183,127
+RMB million
+Revenue
+Change
+(%)
+2015
+2016
+Unit
+VII. MAJOR ACCOUNTING DATA AND FINANCIAL INDICATORS
+Section II Company Profile and Major Financial Indicators (Continued)
+2016 Annual Report 9
+Hopewell Centre, 183 Queen's Road
+East, Wanchai, Hong Kong
+Rooms 1712-1716, 17th Floor,
+Computershare Hong Kong Investor
+Services Limited
+H Share/Hong Kong
+3rd Floor, China Insurance Building,
+166 Lujiazui East Road,
+Pudong New Area, Shanghai
+China Securities Depository and
+Clearing Corporation Limited
+Shanghai Branch
+Wong Tin Chak, Samuel
+35th Floor, One Pacific Place, 88 Queensway,
+Hong Kong
+Deloitte Touche Tohmatsu
+1 East Chang An Avenue, Beijing
+384,969
+363,921
+5.8
+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.
+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
+Section III
+Business Overview
+11
+Section IV
+Chairman's Statement
+13
+Section V
+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.
+Directors' Report
+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.
+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.
+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
+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.
+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.
+20
+Section VI
+Significant Events
+246
+Section XV
+6.3
+14.99
+15.94
+RMB/share
+share
+Equity attributable to equity holders per
+0.0
+19,890
+19,890
+RMB million
+Total share capital at the end of the period
+6.3
+298,068
+316,975
+RMB million
+Company
+Equity attributable to equity holders of the
+Documents Available for Inspection
+Section XIV
+154
+Independent Auditor's Report and Financial Statements
+81
+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
+China Shenhua
+136
+Supervisory Committee's Report
+147
+Section XI
+Investor Relations
+149
+Section XII
+Index to Information Disclosure
+150
+Section XIII
+Section X
+Shanghai Stock Exchange
+Hong Kong Stock Exchange
+247
+H Share
+Yuyao Power
+Mengjin Power
+Taicang Power
+Guohua Hulunbeier Power
+Dingzhou Power
+Jinjie Energy
+Hebei Guohua Cangdong Power Co., Ltd.
+Suizhong Power
+Cangdong Power
+Taishan Power
+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.
+Sanhe Power Co., Ltd.
+Tianjin Guohua Panshan Power Generation Co., Ltd.
+Shenmu Power
+Zheneng Power
+Suizhong Power Co., Ltd.
+Zhunge'er Power
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+Inner Mongolia Guohua Hulunbeier Power Generation Co., Ltd.
+Liuzhou Power
+Shouguang Power
+Section Definitions (Continued)
+6 China Shenhua Energy Company Limited
+Shenhua Guohua (Beijing) Gas-fired Power Co., Ltd.
+Guohua Xuzhou Power Generation Company Limited
+Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+Beijing Gas-fired Power
+Zhoushan Power
+Xuzhou Power
+Ningxia Guohua Ningdong Power Generation Co., Ltd.
+Ningdong Power
+Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+Guohua Huizhou Thermal Power Branch of the Company
+Huizhou Thermal
+Zhuhai Wind Energy
+Jiujiang Power
+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.
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+Guohua Ningdong
+Guohua Zhunge'er
+Section | Definitions (Continued)
+Baotou Energy Company
+Huanghua Harbour Administration
+Company
+Shenhua Trading Group
+Shuohuang Railway Company
+Zhunge'er Energy Company
+Shendong 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:
+Section | Definitions
+China Shenhua Energy Company Limited
+4
+249
+Summary of Major Financial Information for the Recent Five Years
+Section XVI
+Abbreviation
+Baotou Coal Chemical Company
+Sanhe Power
+Shenbao Energy Company
+Overseas Company
+2016 Annual Report 5
+PT.GH EMM INDONESIA
+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.
+Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+Shenhua Baorixile Energy Co., Ltd.
+Shenhua Baotou Coal Chemical Co., Ltd.
+Shenhua Baotou Energy Co., Ltd.
+Shenhua Huanghua Harbour Administration Co., Ltd.
+Shenhua Trading Group Limited
+Shuohuang Railway Development Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Shendong Power Co., Ltd.
+Shenhua Shendong Coal Group Co., Ltd.
+The Company and its controlling subsidiaries
+China Shenhua Energy Company Limited
+Shenhua Group Corporation Limited and its controlling subsidiaries
+Shenhua Group Corporation Limited
+EMM Indonesia
+Yu Shen Energy Company
+Xinjie Energy Company
+Shenwan Energy Company
+Fujian Energy Company
+Shenhua Finance Company
+Shenhua Zhuhai Coal Dock
+Shenhua Guangdong Power Sales
+Company
+Panshan Power
+JORC
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 3355
+Chen Guangshui
+Representative of Securities Affairs
+E-mail
+Company Website
+the Company
+Postal Code of Office Address of
+Office Address of the Company
+the Company
+Registered Address of the Company
+Postal Code of Registered Address of
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 1088/3399/3355
+(8610) 5813 1804/1814
+Department of the Company
+Board and Supervisory
+Committee Affairs and
+Investor Relations
+(8610) 5813 1804/1814
+1088@shenhua.cc
+(8610) 5813 3399
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+Ling Wen, Huang Qing
+Huang Qing
+Secretary to the Board
+Hong Kong Office of the Company
+PARTICULARS
+Room B, 60th Floor,
+(852) 2578 1635
+A Share
+Jawa Company
+Type
+Stock Exchange
+V. BASIC INFORMATION ON SHARES
+Section II Company Profile and Major Financial Indicators (Continued)
+China Shenhua Energy Company Limited
+8
+Shanghai Stock Exchange, Board and Supervisory
+Committee Affairs and Investor Relations Department of
+the Company and Hong Kong Office of the Company
+China Securities Journal, Shanghai Securities News,
+Securities Times and Securities Daily
+http://www.sse.com.cn and http://www.hkex.com.hk
+publishing annual report
+Annual report is available at
+Internet website designated by CSRC for
+Disclosure
+Designated Media for Information
+INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+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
+Bank of China Tower, 1 Garden Road,
+Central, Hong Kong
+IV.
+(8610) 5813 1804/1814
+ir@shenhua.cc
+Tel
+Fax
+Articles of Association of China Shenhua Energy Company Limited
+International Financial Reporting Standards issued by the International
+Accounting Standards Committee
+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
+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 Stock Exchange of Hong Kong Limited
+Shanghai Stock Exchange
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+RMB
+Shanghai-Hong Kong Stock Connect
+Profit for the year + net finance costs + income tax expenses +
+depreciation and amortisation - shares of results of associates
+Total debt to total debt and
+total equity ratio
+Articles of Association
+International Financial Reporting
+Standards
+Accounting Standards for Business
+Enterprises
+Hong Kong Listing Rules
+Shanghai Listing Rules
+Hong Kong Stock Exchange or
+Stock Exchange
+III.
+Shanghai Stock Exchange
+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.
+EBITDA
+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
+Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+Tel
+Fax
+E-mail
+Address
+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
+Name
+Address
+CONTACTS AND CONTACT DETAILS
+Zhang Yuzhuo
+CSEC/China Shenhua
+中國神華
+中國神華能源股份有限公司
+Legal Representative of the Company
+Authorised Representatives of the Company
+under the Hong Kong Listing Rules
+Abbreviation of English Name of
+the Company
+China Shenhua Energy Company Limited
+2016 Annual Report 7
+Abbreviation of Chinese Name of
+the Company
+Chinese Name of the Company
+INFORMATION OF THE COMPANY
+II.
+I.
+Section II Company Profile and Major Financial Indicators
+English Name of the Company
+Renminbi unless otherwise specified
+78,000
+15,937
+71,500
+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
+40
+104,000
+40
+3,742
+15,562
+520
+Section VI Significant Events (Continued)
+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
+4.
+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
+period
+RMB million
+58
+amount
+during the
+reporting
+8.8
+26,000
+138
+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.
+0.3
+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
+Transaction
+Caps for the non-exempt continuing connected transactions for 2017 to 2019
+4,420
+Counterparty
+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
+8,800
+8,800
+3
+Financial Services
+Shenhua Group
+(1) Total amount of providing financial services
+24 March 2016
+4,290
+4,550
+Agreement
+Corporation
+1,739
+annual general meeting
+Name of
+No. agreement
+13,500
+9,400
+Connected
+transaction item
+Date of
+agreement
+Transaction cap
+(RMB million)
+Approval
+procedure
+For the year
+For the year
+For the year
+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
+11,400
+0.5
+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;
+(2) Services
+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, 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.
+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.
+(3)
+(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)
+Section VI Significant Events (Continued)
+(2)
+2016 Annual Report 97
+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.
+Section VI Significant Events (Continued)
+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.
+of
+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
+(2)
+46
+(3)
+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
+Transportation and related services provided by the Taiyuan Railway Bureau
+Group to the Group: price prescribed by NDRC or other related government
+authorities.
+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
+f guarantee (including guarantee business
+Others
+enterprises, such as performance guarantee
+Whether
+guarantee
+guarantee
+Whether
+Whether
+is for the
+(execution Beginning
+Guarantor
+company
+Guaranteed
+Date of
+provision of
+Amount date of date of
+guaranteed agreement) 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
+No
+No
+Expiry date Type of
+of guarantee guarantee
+Relationship
+between the
+guarantor
+and the listed
+Unit: RMB million
+1. Guarantee provided by the Company to external parties (excluding guarantee granted to its subsidiaries)
+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
+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
+No
+N/A
+liability
+guarantee
+Total amount of guarantee provided during the reporting period (excluding guarantee
+provided to its subsidiaries)
+10,688.29
+0
+10,688.29
+See below
+See below
+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;
+2016 Annual Report 95
+104
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+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:
+(1)
+(2)
+(3)
+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.
+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 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%.
+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.
+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%.
+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.
+For details of the opinions of the independent Directors, please refer to relevant reports disclosed
+in conjunction with the report.
+0
+7,423 (2,599)
+2.
+Description of guarantee
+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)
+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)
+Description of the potential joint and several repayment liability for outstanding guarantee
+Notes: 1.
+700
+0
+700
+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
+Service Framework
+13,000
+Bureau
+13,000
+(5)
+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)
+granted to members of Shenhua Group
+Maximum daily balance of entrusted loans
+within the business scope of financial
+other related services provided by the Group to the
+Taiyuan Railway Bureau
+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
+700
+0
+700
+0
+0
+0
+parties
+Total
+Funds provided to
+related parties
+Agreement
+Unit: RMB million
+Section VI Significant Events (Continued)
+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
+China Shenhua Energy Company Limited
+(IV) Debts and liabilities between related parties
+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.
+2017
+3
+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.
+Pre-emptive rights
+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.
+Changes in total number of ordinary shares, shareholding structure and assets and
+liabilities structure of the Company
+(II)
+(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.
+ISSUANCE AND LISTING OF SECURITIES
+II.
+Not applicable
+Applicable
+Changes of shares with selling restrictions
+The Company has satisfied minimum public float requirement under Rule 8.08 of the Hong Kong
+Listing Rules.
+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.
+100.00
+17.09
+82.91
+100.00
+19,889,620,455
+16,491,037,955
+3,398,582,500
+19,889,620,455
+0.00
+As at 31 December 2016
+Number
+Percentage
+(%)
+114
+China Shenhua Energy Company Limited
+Section VII Changes in Share Capital and Shareholders (Continued)
+III.
+Shareholdings of the top ten shareholders
+Unit: share
+Shareholdings of top ten shareholders and top ten holders of marketable shares (or
+shareholders not subject to selling restrictions)
+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.
+2,321
+199,434
+201,755
+2,335
+206,573
+208,908
+Total number of shares
+Registered holders of H shares
+prior to the date of this annual report (accounts)
+Total number of ordinary shareholders at the end of last month
+Including: Holders of A shares (including Shenhua Group Corporation) Note
+(II)
+Registered holders of H shares
+at the end of the reporting period (accounts)
+Total number of shareholders of ordinary shares as
+Total number of shareholders
+(1)
+SHAREHOLDERS
+Including: Holders of A shares (including Shenhua Group Corporation)
+Increase/
+III.
+2.
+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.
+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.
+During the reporting period, the Group did not have any material environmental pollution
+accidents.
+(III) Environmental issues of listed companies and their subsidiaries in heavy polluting
+industries as stipulated by the competent environmental protection authorities of the
+PRC
+For details of the Group's CSR endeavors, please refer to the 2016 CSR Report which is disclosed
+in conjunction with this report.
+(II) Corporate social responsibilities
+Section VI Significant Events (Continued)
+2016 Annual Report 109
+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).
+1
+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.
+Subsequent targeted poverty alleviation plan
+Notes: It is mainly used to aid children with congenital heart disease and leukemia.
+The Shenhua Loving Care Activities
+was awarded the title of "State-owned
+Enterprise Voluntary Service Brand"
+by SASAC of the State Council
+Improvement of infrastructure in
+deprived villages
+1,161
+1,161
+928
+4.3. Description of other projects
+III. Awards
+In which: 4.1. Number of projects
+4.2. Contribution amount
+(RMB0'000)
+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.
+For the environmental protection work of the Group, please refer to the 2016 CSR Report which is
+disclosed in conjunction with this report.
+(IV) Donations
+During the reporting period, the Group made external donations of approximately RMB791 million.
+RMB ordinary shares
+1.
+Shares without selling restrictions
+II.
+Shares with selling restrictions
+I.
+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.
+(II)
+Change in the number of ordinary shares
+(1)
+Overseas listed foreign shares
+CHANGE IN ORDINARY SHARE CAPITAL
+Section VII Changes in Share Capital and Shareholders
+2016 Annual Report 113
+MATILDA
+Changes in Share Capital and Shareholders
+Section VII
+Applicable ✓ Not applicable
+XIV. CONVERTIBLE BONDS OF THE COMPANY
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+110
+I.
+Number of
+decrease
+shares held
+Index Securities Investment Fund
+Shanghai Index 50 Trading Open-end
+Industrial & Commercial Bank of China -
+State-owned
+N/A
+0 Nil
+0.09
+17,029,796
+17,029,796
+National Social Security Fund 108 Portfolio
+N/A Others
+0
+0.12
+22,952,488
+-2,206,906
+Initiated Securities Investment Fund
+Fengqing Flexible Configuration Hybrid
+Bank of China Limited - China Merchants
+N/A corporate
+☐ Nil
+15
+152,393
+14,648,826
+400
+0.07
+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.
+N/A Others
+0 Nil
+00
+0.06
+12,640,466
+12,640,466
+Investment Fund
+Reform Index Classification Securities
+Fullgoal CSI State-owned Enterprises
+0.15
+Agricultural Bank of China Limited -
+0 Nil
+0.07
+13,082,927
+-931,960
+Limited-China Southern Consumption
+Vitality Flexible Allocation Hybrid Initiated
+Securities Investment Fund
+Industrial & Commercial Bank of China
+NA
+Others
+N/A
+0 Nil
+N/A Others
+29,999,534
+22,698,660
+Overseas
+Nil
+0
+73.06
+14,530,574,452
+0
+Shenhua Group Corporation Limited
+(%)
+Nature of
+shareholders
+Number
+Status
+N/A State-owned
+restrictions
+pledge or lock-up
+with selling
+the reporting
+reporting
+period
+Full name of shareholders
+Shares subject to
+shares
+at the end of
+during the
+Number
+period Percentage
+4. Other Projects (RMB0'000)
+Overseas
+407,620
+Hong Kong Securities Clearing Company
+Limited
+State-owned
+N/A
+0 Nil
+0.55
+110,027,300
+0
+Central Huijin Asset Management Ltd.
+Others
+N/A
+HKSCC NOMINEES LIMITED
+Nil
+2.87
+569,895,835
+13,847,602
+Limited
+China Securities Finance Corporation
+N/A corporate
+Unknown
+0
+17.05
+3,390,466,096
+0
+western regions (RMB0'000)
+3.2 Targeted poverty alleviation
+(RMB0'000)
+Yes
+4.
+250 2016/12/13
+Not yet confirmed
+Principal and profit to be
+3.
+- No
+No
+Bank
+guaranteed with
+floating return
+paid on redemption
+date
+100 2016/12/14
+2017/12/14
+Principal and profit to be
+- 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
+5 Shenhua Finance Everbright Bank Non-principal-
+Shenhua Finance China Construction Non-principal-
+Company
+4
+expiry date
+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
+Principal and interests to
+- Yes
+2017/1/23
+- No
+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
+No
+Principal and profit to be
+Yes
+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
+Inner Mongolia Sanxin Railway Co.,
+Ltd. ("Sanxin Railway Company")
+Inner Mongolia Yili Chemical Industry
+37 1 year
+6% Working capital Nil
+Yes
+No
+No
+0
+627 10 years
+Co., Ltd.
+4.9% Replacement of Pledge
+bank loans
+No
+No
+No
+alleviation in eastern and
+entrusted
+Whether
+Balance
+Unit: RMB million
+- No
+No
+Company
+Bank
+7
+Shenhua Finance CITIC Trust
+Company
+paid one-off on expiry
+date
+50 2016/12/26
+Not yet confirmed
+I
+Principal and profit to be
+paid on redemption
+date
+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
+Not applicable
+Yes
+- No
+guaranteed with
+floating return
+Non-principal-
+guaranteed with
+floating return
+Principal and interests to
+be paid together on
+expiry date
+3.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+108
+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.
+2
+The donation from the Group accounts for 82% of the total donation received by Shenhua Foundation
+since its establishment.
+1
+In 2016, Shenhua Foundation invested RMB300 million into the "Central State-Owned-
+Enterprises Poverty Regional Industrial Investment Fund" (@Q£££*&AHD).
+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.
+Summary of the targeted poverty alleviation during the year
+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.
+2.
+1. Targeted poverty alleviation plan
+Poverty alleviation
+(1)
+XIII. PROACTIVE FULFILMENT OF SOCIAL RESPONSIBILITY
+Section VI Significant Events (Continued)
+2016 Annual Report 107
+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.
+No
+Statistical table of the targeted poverty alleviation work in 20161
+Number and Circumstances
+Index
+I. General
+In which: 3.1 Cooperation for poverty
+3,977
+Yes
+4,905
+3. Social Support (RMB0'000)
+4,740
+In which: Helping poor people with treatment
+for serious illness (RMB0'000)Notes
+4,740
+2. Health Support (RMB0'000)
+regions (RMB0'000)
+May 2017
+resources in deprived
+1.3 Improvement of educational
+students
+1,200
+1.2 Number of subsidized poor
+279
+In which: 1.1 Subsidy for poor students
+(RMB0'000)
+1,735
+1. Education Support (RMB0'000)
+12,541
+II. Contribution by Category
+1,456
+Thermal coal 460
+futures
+In which: 1. Capital (RMB0'000)
+Whether
+it is
+involved in
+litigations
+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
+compensation
+Whether
+redeemed
+provision connected involved in
+amount transaction litigations
+1
+China
+Shenhua
+Industrial and
+Commercial
+Bank of China
+Commodity Futures
+2017/3/27
+Principal-guaranteed
+with floating
+return
+10,000 2016/12/27
+gained taken
+Whether
+management
+of
+Whether
+Gain/loss from
+investment
+(RMB million)
+Investment
+type
+Not applicable
+Applicable
+Other investment and wealth management products and derivatives investment
+Expiry date
+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.
+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.
+2016 Annual Report 105
+Section VI Significant Events (Continued)
+1. Entrusted wealth management
+Applicable
+Not applicable
+Unit: RMB million
+Amount
+No. Trustor
+Trustee
+Type of
+entrusted wealth
+management
+products
+Investment
+share
+(lot)
+Amount of
+(III) Entrusted cash asset management
+Product
+type
+Vice President
+25 November 2015
+Male
+58
+Male
+1.2
+Wang Shumin
+Vice President
+54
+25 November 2015
+76.6
+Zhang Zifei
+27 September 2013
+92.7
+25 November 2015
+54
+Male
+Vice President
+Wang Yongcheng
+Yes
+57
+Male
+Senior Vice President
+9.6
+75.9
+Wang Jinli
+18.5
+1.2
+22 January 2007
+Vice President
+120
+91.6
+90.6
+838.8
+Total
+No
+21.0
+97.9
+53
+Female
+Chief Financial Officer
+No
+No
+No
+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
+Zhang Jiming
+22 August 2014
+45.0
+Male
+400
+18 June 2010
+67
+Male
+Independent Non-
+Guo Peizhang
+executive Director
+45.0
+5 June 2009
+70
+Male
+Independent Non-
+Gong Huazhang
+executive Director
+18 June 2010
+71
+Female
+President
+Independent Non-
+Fan Hsu Lai Tai
+24 May 2011
+Senior Vice
+Yes
+Yes
+17 June 2016
+56
+90
+China Shenhua Energy Company Limited
+45.0
+2 2 2
+No
+No
+Supervisor
+Shen Lin
+43.6
+17 June 2016
+51
+Male
+Supervisor
+Zhou Dayu
+Committee
+Supervisory
+No
+17.1
+93.0
+56
+22 August 2014
+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
+52
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+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.
+Notes: (1)
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2016 Annual Report 123
+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.
+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.
+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.
+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.
+HAN Jianguo
+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 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.
+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.
+LING Wen
+Biographical details
+Executive Director
+Executive Director
+and President
+Vice Chairman,
+Name
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+China Shenhua Energy Company Limited
+122
+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
+Biographical details
+Executive Director
+Name
+Chairman and
+Executive Director and
+Senior Vice President
+Non-executive
+Director
+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.
+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.
+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
+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.
+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.
+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
+Non-executive
+Director
+Independent
+Independent
+Non-executive
+Director
+Biographical details
+Name
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+China Shenhua Energy Company Limited
+124
+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.
+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.
+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.
+FAN Hsu Lai Tai
+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.
+Male
+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.
+LI Dong
+Biographical details
+Independent
+Name
+Biographical details of the directors, supervisors and senior management as at the end
+of the reporting period
+3.
+reporting period
+during the
+received for
+during the
+Date of
+resignation
+Date of
+appointment
+Gender Age
+Position before
+resignation
+Name
+the Company
+from
+shareholders of
+Including:
+performance
+remuneration
+the Company
+Whether
+received
+remuneration
+Total
+remuneration
+before tax
+received from
+Supervisor and senior management resigned during the reporting period
+The ages were calculated as at 31 December 2016.
+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 personnel mentioned above did not hold any shares in the Company during the reporting
+period.
+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 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 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.
+(6)
+(5)
+(4)
+(3)
+(2)
+previous years
+reporting period
+(RMB ten
+thousand)
+(RMB ten
+thousand)
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2016 Annual Report 121
+The ages were calculated as at 31 December 2016.
+(3)
+The personnel mentioned above did not hold any shares of the Company during the reporting
+period.
+The remuneration package of the senior management was approved by the Board.
+31.4
+50.9
+(2)
+Notes: (1)
+Total
+No
+00
+2.
+5.0
+17 June 2016
+18 June 2010
+61
+Male
+Shareholder
+representative
+supervisor
+No
+26.4
+45.9
+25 November 2015 23 March 2016
+50
+Male
+Vice President
+Wu Xiuzhang
+Tang Ning
+5.0
+Executive Director
+There was no change in the controlling shareholder of the Company during the reporting
+period.
+4 January 2017
+0.05
+1,567,500
+Short position
+1.16
+6.78
+230,288,205
+Long position
+H shares
+Interest of corporation
+controlled by the
+BlackRock, Inc.
+2
+73.06
+88.11
+14,530,574,452
+N/A
+A shares
+Beneficial owner
+Shenhua Group Corporation
+1
+Company
+respectively
+A shares held
+of the
+A shares
+share capital
+H shares/
+Number of
+Hshares/
+0.01
+Nature of
+interest
+substantial shareholders
+JPMorgan Chase & Co.
+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).
+Approved lending agent
+(2)
+Notes: (1)
+for lending
+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
+Beneficial owner; Investment
+3
+A shares
+Capacity
+No. Name of shareholders
+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
+110,027,300
+RMB ordinary shares
+110,027,300
+569,895,835
+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
+29,999,534
+22,952,488
+RMB ordinary shares
+22,952,488
+H shares/
+total issued
+Percentage of
+Percentage
+of H shares/
+A shares over
+total issued
+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):
+(III) Substantial shareholders' interests and short positions in the shares of the Company
+Section VII Changes in Share Capital and Shareholders (Continued)
+China Shenhua Energy Company Limited
+116
+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
+b.
+13,082,927
+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
+RMB ordinary shares
+Li Dong
+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;
+13,714,465 H shares in long position and 10,833,497 H shares in short position: unlisted
+derivatives physically settled;
+period previous years
+Age appointment date) term of office
+Gender
+reporting period
+Name
+reporting
+received for
+reporting
+expiration of
+(from the first
+during the
+remuneration
+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
+period
+Whether
+(RMB ten
+thousand)
+27 June 2014
+President (Resigned)
+24 May 2011
+58
+80
+Male
+Executive Director
+Han Jianguo
+4 January 2017
+President
+6 November 2004
+Executive Director
+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)
+(RMB ten
+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
+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
+Index and date of changes in controlling shareholders during the reporting period
+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.
+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.)
+23 October 1995
+Zhang Yuzhuo
+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.
+China Shenhua Energy Company Limited
+Section VII Changes in Share Capital and Shareholders (Continued)
+(II)
+De facto controller
+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
+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
+China Shenhua Energy Company Limited
+VI.
+V.
+C.
+73.06%
+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.
+Shenhua Group Corporation Limited
+12,640,466
+Zhang Jiming Vice President
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Chen Hongsheng
+SINOTRANS & CSC
+Independent non-executive
+director
+External director
+April 2011
+June 2014
+March 2016
+December 2011
+February 2016
+Holdings Co., Ltd.
+State Development &
+External director
+April 2012
+Investment Corp.
+Zhao Jibin
+China National Building
+External director
+December 2014
+Material Group Corporation
+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
+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.
+June 2016
+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.
+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
+REMUNERATION OF DIRECTORS, SUPERVISORS AND 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.
+CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+December 2007
+Nanyang Commercial Bank
+(China) Limited
+COFCO Corporation
+China Railway Group Limited
+Shenhua Wuhai Energy
+Company Limited
+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
+Guo Peizhang
+Gong Huazhang
+February 2016
+Independent non-executive
+director
+May 2011
+Independent non-executive
+director
+Independent non-executive
+director
+External director
+director
+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
+Fan Hsu Lai Tai
+February 2009
+(I) Changes during the reporting period
+V.
+VI.
+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.
+2016 Annual Report 125
+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
+Shareholder
+Zhou Dayu
+Passed the election at the annual general
+Elected
+Zhao Jibin
+Passed the election at the annual general
+meeting on 17 June 2016
+Elected
+Elected
+Li Dong
+Reason for the change
+Particular of
+movements
+Position
+Name
+(II)
+Executive Director
+July 2013
+representative
+Appointed
+supervisor
+representative
+Resigned on 17 June 2016 due to age
+Resigned
+Shareholder
+Tang Ning
+supervisor
+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
+Deputy general manager
+Non-executive Director
+Zhang Zifei
+Biographical details
+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
+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.
+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.
+Senior Vice President
+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.
+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
+Vice President
+ZHANG Zifei
+Vice President
+Supervisory
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Shenhua Group Corporation
+Shenhua Group Corporation
+Non-executive Director
+Non-executive Director
+Biographical details
+CHEN Hongsheng
+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.
+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.
+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. 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..
+ZHAO Jibin
+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.
+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.
+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.
+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.
+126
+China Shenhua Energy Company Limited
+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.
+Mr. Zhai served as a general manager of the financial department of
+Shenhua Group Corporation from November 2004 to June 2016.
+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.
+ZHAI Richeng
+Biographical details
+Supervisor
+Chairman of
+the Supervisory
+Committee
+Name
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Born in July 1964, Chinese, a senior accountant, Mr. Zhai received a
+master's degree from China University of Mining and Technology in
+2003.
+Vice President
+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.
+WANG Shumin
+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
+Zhao Jibin
+Zhai Richeng
+of term of office
+Chen Hongsheng
+Han Jianguo
+Shenhua Group Corporation
+Chairman
+Shenhua Group Corporation
+Zhang Yuzhuo
+Ling Wen
+Position
+Li Dong
+Name of shareholder
+May 2014
+May 2014
+Wang Jinli
+Party Building
+Biographical details
+Department of
+July 2010
+Operation Department
+General manager of
+April 2010
+March 2016
+Shenhua Group Corporation
+Shenhua Group Corporation
+Shen Lin
+Zhou Dayu
+February 2012
+April 2015
+June 2015
+August 2003
+July 2014
+Ownership Administration
+General manager of Capital
+Name
+Expiry of
+term of office
+POSITIONS OF EXISTING DIRECTORS, SUPERVISORS AND SENIOR
+MANAGEMENT DURING THE REPORTING PERIOD
+Chief Financial Officer
+Secretory to the Board
+Name
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+China Shenhua Energy Company Limited
+130
+Mr. Wang has been serving as a vice president of the Company since
+November 2015.
+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.
+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.
+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.
+ZHANG Jiming
+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.
+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.
+(1) Positions held in the shareholders of the Company
+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.
+HUANG Qing
+Biographical details
+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.
+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.
+II.
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+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.
+2016 Annual Report 131
+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.
+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.
+7
+7
+No
+7
+Han Jianguo
+6
+Ling Wen
+4
+7
+7
+Li Dong
+No
+No
+4
+Fan Hsu Lai Tai
+Yes
+No
+Zhang Yuzhuo
+Absent
+Absence
+Attendance at Board meetings
+(1) Attendance at Board meetings and general meetings
+7
+PERFORMANCE OF DUTIES OF THE BOARD
+Name of
+director
+Independent
+director
+Required
+attendance
+at Board
+Attendance
+in a row
+or not
+Attendance
+by written
+in Person
+resolution
+Attendance
+by proxy
+at two
+meetings
+Attendance
+at general
+meetings
+this year
+5
+China Shenhua Energy Company Limited
+2
+✓ Applicable
+VIII. INTERNAL CONTROL AND RISK 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.
+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
+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.
+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.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+144
+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.
+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.
+THE SUPERVISION OPINION OF THE SUPERVISORY COMMITTEE
+III.
+During the reporting period, the Committees under the Board did not express any dissenting views in
+performing their duties.
+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.
+Not applicable
+0
+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.
+No
+Gong Huazhang
+Yes
+7
+7
+2
+0
+Guo Peizhang
+Yes
+7
+7
+1
+Chen Hongsheng No
+7
+7
+0
+0
+Zhao Jibin
+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.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+University graduate
+138
+person
+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
+Number of
+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.
+Remuneration policy
+Graduate of technical school, high school and below
+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.
+(II)
+Function
+Function
+Operation and repair
+Management and administration
+Finance
+Research and development
+Technical support
+Sales and marketing
+Others
+Total
+Education Level
+Education Level
+Postgraduate and above
+College graduate
+Specialized secondary school graduate
+Total
+China Shenhua Energy Company Limited
+(III) Training program
+(IV) Outsourced Work
+2.
+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 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.
+GENERAL MEETINGS
+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.
+1.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+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)
+(II)
+Compliance with domestic regulatory requirements
+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
+II.
+Safety, Health and Environment Committee
+Number of meetings held by correspondence
+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.
+On-site
+28 October 2016
+The 19th meeting of the third session of
+the Board
+6
+00
+26 August 2016
+The 18th meeting of the third session of
+the Board
+5
+LO
+Correspondence
+1 July 2016
+The 17th meeting of the third session of
+the Board
+4
+On-site
+29 April 2016
+The 16th meeting of the third session of
+the Board
+3
+On-site
+24 March 2016
+7
+23 December 2016
+(III) Others
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+140
+✓ Not applicable
+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.
+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.
+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.
+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.
+Performance of duties of independent directors
+(II)
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2016 Annual Report 139
+correspondence
+On-site with
+The 20th meeting of the third session of
+the Board
+Implementation of resolutions passed at the general meetings by the Board in 2016:
+The 15th meeting of the third session of
+the Board
+On-site
+0
+No
+0
+No
+0
+No
+0
+1/1
+No
+0
+1/1
+No
+meetings
+011 ONO o O 0
+ooo O O O O O O
+4
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+No
+2
+0
+0
+29 January 2016
+The 14th meeting of the third session of
+the Board
+1
+Methods
+Date
+No. Name
+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:
+1511
+4
+7
+Number of meetings held on-site with correspondence
+Including: Number of meetings held on-site
+Number of Board meetings held during the year
+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.
+1/1
+No
+No
+No
+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.
+No. General Meeting
+2015 Annual General
+Meeting
+3.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+142
+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.
+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
+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.
+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.
+2.
+Strategy Committee
+1.
+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.
+Environment Committee
+Safety, Health and
+Guo Peizhang, Zhang Yuzhuo, Fan Hsu Lai Tai
+Guo Peizhang, Ling Wen, Han Jianguo, Li Dong
+Guo Peizhang
+The Audit Committee has performed required procedures for the preparation of the 2016 annual
+report and internal control report of the Company:
+Guo Peizhang
+(1)
+(3)
+Nomination Committee
+5.
+4.
+VI.
+V.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2016 Annual Report 143
+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 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 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 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 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.
+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.
+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.
+(4)
+(2)
+1
+Nomination Committee
+Fan Hsu Lai Tai
+discretion, relevant matters relating to the
+signing of such agreement.
+Committee to deal with, at its absolute
+Company, and chairman of the Audit
+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
+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 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 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.
+Subject Matter
+2015 Annual General
+Meeting
+2015 Annual General
+Meeting
+5
+LO
+4
+2015 Annual General
+Meeting
+3
+2015 Annual General
+Meeting
+2
+Status
+Fan Hsu Lai Tai, Gong Huazhang, Zhao Jibin
+Implementation of 2015
+profit distribution plan
+was completed in the
+third quarter of 2016.
+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.
+Remuneration Committee
+Gong Huazhang, Fan Hsu Lai Tai, Guo Peizhang,
+Chen Hongsheng
+Zhang Yuzhuo, Ling Wen, Han Jianguo
+Zhang Yuzhuo
+Gong Huazhang
+Chairman
+Audit Committee
+Strategy Committee
+Committee
+Members
+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
+IV.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2016 Annual Report 141
+For details of the
+Financial Services
+Agreement, please
+refer to the section
+headed "Significant
+Events" of this report.
+For details of the Mutual
+Supplies and Services
+Agreement, please
+refer to the section
+headed "Significant
+Events" of this report.
+For details of the
+2016 Annual Report 135
+On-site
+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.
+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
+28
+25/03/2016
+Highlights of the Annual Report of China Shenhua
+27
+25/03/2016
+Annual Report of China Shenhua
+26
+25/03/2016
+Audit Report of China Shenhua on Internal Control for the Year Ended 31 December 2015
+First Quarterly Report for the Year 2016 of China Shenhua
+25
+30/04/2016
+30/04/2016
+Information on the 2015 Annual General Meeting of China Shenhua
+37
+26/05/2016
+Announcement on the Major Operational Data of China Shenhua for April 2016
+36
+09/05/2016
+Clarification Announcement of China Shenhua
+35
+30/04/2016
+Notice of the 2015 Annual General Meeting of China Shenhua
+34
+30/04/2016
+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
+H Share Circular of China Shenhua
+25/03/2016
+Announcement of China Shenhua on the Resignation of Senior Management
+24
+25/03/2016
+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
+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
+Work Report of the Independent Directors of China Shenhua for the Year 2015
+3456781
+19
+25/03/2016
+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.
+12
+25/03/2016
+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
+11
+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
+222222332 333 334
+31
+25/03/2016
+Special Explanation and Independent Opinion on the Company's External Guarantee by Independent
+Non-executive Directors of China Shenhua
+23
+25/03/2016
+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
+28/05/2016
+22
+Report on the Performance of Duties by the Audit Committee of the Board of China Shenhua for
+2015
+24
+21
+25/03/2016
+Announcement on Resolutions of the 8th Meeting of the Third Session of the Supervisory Committee
+of China Shenhua
+20
+20
+25/03/2016
+17/03/2016
+38
+17/06/2016
+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
+27/08/2016
+16/08/2016
+Announcement on the Major Operational Data of China Shenhua for July 2016
+Half-yearly Report for the Year 2016 of China Shenhua
+51
+50
+gggg
+10/08/2016
+27/08/2016
+26/07/2016
+of Guarantee for Connected Transactions by Shenhua Group Corporation Limited issued by
+Independent Non-executive Directors of China Shenhua
+59
+29/10/2016
+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
+57
+13/09/2016
+Announcement on the Major Operational Data of China Shenhua for August 2016
+གླཀླགྷ
+56
+27/08/2016
+Announcement of China Shenhua on the Provision of Guarantee to the Wholly-owned Subsidiary by
+the Controlling Shareholders
+55
+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
+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)
+2016 Annual Report 151
+18/06/2016
+Announcement on Resolutions Passed at the 2015 Annual General Meeting of China Shenhua
+40
+18/06/2016
+Legal Opinion on 2015 Annual General Meeting of China Shenhua
+39
+18/06/2016
+25/06/2016
+43
+Announcement on Resolutions of the 17th Meeting of the Third Session of the Board of China
+Shenhua and Changes in Senior Management
+21/07/2016
+H Share Announcement of China Shenhua
+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
+Announcement on the Major Operational Data of China Shenhua for May 2016
+46
+Announcement on Implementation Results of the Plan on Increase in Shareholding by the Controlling
+Shareholder of China Shenhua
+45
+45
+12/07/2016
+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
+12/07/2016
+23/02/2016
+Announcement on the Major Operational Data of China Shenhua for January 2016
+Announcement on the Major Operational Data of China Shenhua for February 2016
+10
+Resolution on the Special Report
+distribution plan of the Company
+Passed unanimously
+Resolution on the 2015 profit
+of the Company
+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
+Passed unanimously
+24 March
+on Deposit and Actual Use of the
+Proceeds of the Company
+Passed unanimously
+All
+Beijing On-site
+29 April
+The 9th meeting of the third session
+2015
+candidates for supervisors to the
+Annual General Meeting for the year
+KEY AUDIT MATTERS
+Passed unanimously
+Resolution on the nomination of
+for the year 2015
+Committee's report of the Company
+Passed unanimously
+Resolution on the Supervisory
+Company
+Report on Internal Control of the
+Resolution on the 2015 Assessment
+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
+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.
+DESCRIPTION OF THE AUDIT REPORT ON INTERNAL CONTROL
+Applicable ✓ Not applicable
+Material defects in the internal control during the reporting period:
+IX.
+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)
+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.
+2016 Annual Report 147
+Section X 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".
+All
+In writing
+29 January Beijing
+The 7th meeting of the third session
+of the Supervisory Committee
+Poll results
+Subject matter
+Attendance of
+supervisors
+of the Supervisory Committee
+Meeting
+Date
+Meeting
+Method of
+In 2016, the Supervisory Committee held five 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
+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
+I.
+Venue
+Resolution on the 2016 first quarterly
+report of the Company
+Passed unanimously
+Resolution on the 2016 first quarterly
+Section XII Index to Information Disclosure
+150 China Shenhua Energy Company Limited
+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".
+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.
+PROACTIVELY RESPONDING HOT ISSUES CONCERNED IN THE MARKET
+AND GUIDING MARKETS TO MAKE JUDGEMENT THAT COMPLIES WITH THE
+FACTUALITY OF THE COMPANY
+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.
+HIGHLIGHTING BUSINESS EXPANSION CHARACTERISTICS AND ADEQUATELY
+EXPLORING COMPANY'S VALUE
+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.
+KEEPING ON MAINTAINING FREQUENT COMMUNICATION AND MAINTAINING
+AN EFFECTIVE COMMUNICATION CHANNEL
+III.
+II.
+I.
+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
+No. Disclosure document for A Shares (published on the website of Shanghai Stock Exchange)
+12
+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
+Date of
+publication
+03/02/2016
+30/01/2016
+Announcement on Provisions for Asset Impairment on China Shenhua
+Announcement of China Shenhua on Adjustments to Electricity Tariffs
+78 1
+9
+30/01/2016
+Announcement on Resolutions of the 7th Meeting of the Third Session of the Supervisory Committee
+of China Shenhua
+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.
+6
+Announcement on Resolutions of the 14th Meeting of the third Session of the Board of China
+Shenhua
+30/01/2016
+23/01/2016
+Announcement on the Major Operational Data of China Shenhua for December 2015
+Preliminary Financial Data of China Shenhua for 2015
+345
+19/01/2016
+09/01/2016
+30/01/2016
+686
+The insider management system of the Company 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.
+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
+All
+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
+Passed unanimously
+Passed unanimously
+148
+China Shenhua Energy Company Limited
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+SELF-ASSESSMENT REPORT ON INTERNAL CONTROL 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.
+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
+VII. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE MEASURES ON INSIDER
+MANAGEMENT
+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
+VI.
+V.
+IV.
+III.
+II.
+Section X Supervisory Committee's Report (Continued)
+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.
+60
+Announcement of China Shenhua Regarding Online Discussion Forum for Investors
+29/10/2016
+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 June 2016
+20/07/2016
+Establishment of Shenhua Guohua Ningdong Power Generation Co., Ltd.
+OG TONIN222222222268
+65
+61
+59
+58
+14/07/2016
+Overseas Regulatory Announcement
+57
+11/07/2016
+01/08/2016
+Overseas Regulatory Announcement
+Announcement on Preliminary Financial Data for the First Half of 2016
+Overseas Regulatory Announcement
+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
+12/08/2016
+Notice of Board Meeting
+63
+09/08/2016
+09/08/2016
+56
+in Shareholding by the Controlling Shareholder
+11/07/2016
+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
+17/06/2016
+Voting Results of 2015 Annual General Meeting
+17/06/2016
+Overseas Regulatory Announcement
+45
+17/06/2016
+49
+Overseas Regulatory Announcement
+24/06/2016
+Announcement on Implementation Result of the Plan On Increase
+55
+03/07/2016
+Overseas Regulatory Announcement
+54
+ED
+03/07/2016
+Announcement of Interim Results for the Six Months Ended 30 June 2016
+53 Changes in Senior Management
+Appointment of Board Committee Members
+52
+03/07/2016
+30/06/2016
+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
+51
+50
+03/07/2016
+26/08/2016
+69
+2016 Interim Report
+2017 Annual Business Plan for Financial Derivatives
+87
+16/12/2016
+Announcement on the Major Operational Data of November 2016
+86
+16/12/2016
+Overseas Regulatory Announcement
+85
+88 80 80 80 8
+02/12/2016
+Overseas Regulatory Announcement
+84
+the Month Ended 30 November 2016
+30/11/2016
+Monthly Return of Equity Issuer on Movements in Securities for
+16/12/2016
+88
+Overseas Regulatory Announcement
+23/12/2016
+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
+83
+Section XIII
+154
+30/12/2016
+Overseas Regulatory Announcement
+90
+23/12/2016
+Overseas Regulatory Announcement
+89
+China Shenhua Energy Company Limited
+16/06/2016
+22/11/2016
+82
+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
+72
+71
+70
+28/08/2016
+Notice of Board Meeting
+17/10/2016
+76
+77
+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
+Overseas Regulatory Announcement
+28/10/2016
+79
+28/10/2016
+Overseas Regulatory Announcement
+78
+28/10/2016
+19/10/2016
+Announcement on the Major Operational Data of September 2016
+Overseas Regulatory Announcement
+Third Quarterly Report for the Year 2016
+2016 Annual Report 145
+05/06/2016
+44
+29/01/2016
+29/01/2016
+29/01/2016
+22/01/2016
+18/01/2016
+08/01/2016
+publication
+Date of
+Overseas Regulatory Announcement
+Announcement on Preliminary Financial Data for the Year 2015
+Announcement on the Major Operational Data of December 2015
+Overseas Regulatory Announcement
+Overseas Regulatory Announcement
+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
+29/01/2016
+8
+01/02/2016
+9
+27
+26
+24
+23
+21
+18
+the Month Ended 29 February 2016
+29/02/2016
+Monthly Return of Equity Issuer on Movements in Securities for
+11
+22/02/2016
+Announcement on the Major Operational Data of January 2016
+10
+02/02/2016
+Overseas Regulatory Announcement
+the Month Ended 31 January 2016
+Inside Information Provision for Impairment of Assets
+Overseas Regulatory Announcement
+Section XII Index to Information Disclosure (Continued)
+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
+Announcement of China Shenhua on the Completion of 168-hour Trial Run of Generator No. 1 of
+Shenhua Guohua Liuzhou Power Plant
+63
+19/11/2016
+Announcement on the Major Operational Data for October 2016
+62
+83
+29/10/2016
+61 Announcement of China Shenhua on the Provision of Guarantee to Investees by the Wholly-owned
+Subsidiary
+Announcement of China Shenhua on the Approval Obtained for Sanhe Power Plant Phase III
+1x350MW Expansion Construction Project
+07/12/2016
+969
+66
+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
+29
+67
+Announcement on Resolutions of the 20th Meeting of the Third Session of the Board of China
+Shenhua
+68
+24/12/2016
+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
+24/12/2016
+30
+2345672222 22222222
+12
+ENERGIEF 14 G
+46
+41
+40
+37
+29/04/2016
+Reply Slip Annual General Meeting
+34
+29/04/2016
+Notice of Annual General Meeting
+33
+29/04/2016
+Notification Letter and Request Form to Non Registered Holder
+32
+29/04/2016
+35
+Form of Proxy for Annual General Meeting
+29/04/2016
+36
+43
+27/05/2016
+42 Overseas Regulatory Announcement
+25/05/2016
+Announcement on the Major Operational Data of April 2016
+09/05/2016
+03/05/2016
+Entering into Financial Services Agreement and Proposed Appointment of Director and Supervisor
+Notification Letter and Request Form to Registered Holder
+Monthly Return of Equity Issuer on Movements in Securities for the Month Ended 30 April 2016
+Overseas Regulatory Announcement
+29/04/2016
+First Quarterly Report for the Year 2016
+38
+29/04/2016
+Overseas Regulatory Announcement
+29/04/2016
+Overseas Regulatory Announcement
+39
+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
+31
+Entering into Mutual Coal Supply Agreement, Entering into Mutual Supplies and Services Agreement,
+19 Continuing Connected Transactions - Entering into Transportation Service Framework Agreement
+20 Continuing Connected Transactions - Entering into Mutual Coal Supply Agreement
+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
+16/03/2016
+Announcement on the Major Operational Data of February 2016
+14/03/2016
+17 Changes in Senior Mangement
+15 Overseas Regulatory Announcement
+16 Overseas Regulatory Announcement
+14 Overseas Regulatory Announcement
+Notice of Board Meeting
+13
+24/03/2016
+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
+25/04/2016
+Announcement on the Major Operational Data of March 2016
+15/04/2016
+31/03/2016
+Monthly Return of Equity Issuer on Movements in Securities for the Month Ended 31 March 2016
+Notice of Board Meeting
+28
+30/03/2016
+29/04/2016
+Clarification Announcement
+2015 CSR Report
+25
+28/03/2016
+2015 Annual Report
+24/03/2016
+Proposed Appointment of Director and Supervisor
+24/03/2016
+28/03/2016
+(889)
+(3,747)
+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).
+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.
+As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
+skepticism throughout the audit. We also:
+Identify and assess the risks
+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.
+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.
+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.
+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.
+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.
+The engagement partner on the audit resulting in the independent auditor's report is Wong Tin Chak, Samuel.
+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
+Year ended 31 December
+2016
+Notes
+RMB million
+2015
+RMB million
+Revenue
+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.
+Cost of sales
+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.
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+(6,060)
+shareholders
+1,111
+1,111
+34
+889
+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.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCEF FOR
+THE CONSOLIDATED FINANCIAL STATEMENTS
+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.
+• 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.
+OTHER INFORMATION
+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.
+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. 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.
+156
+China Shenhua Energy Company Limited
+Our procedures in relation to impairment
+assessment on coal mines related non-current
+assets included:
+57
+183,127
+(124,843)
+9
+(9,283)
+(9,561)
+10
+31,970
+24,959
+Other comprehensive income (expense) for the year
+Item that will not be reclassified
+to profit or loss, net of income tax:
+Remeasurement of defined benefit obligations
+21
+21
+(21)
+Items that may be reclassified subsequently
+34,520
+to profit or loss, net of income tax:
+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
+392
+32,362
+149
+25,108
+2016 Annual Report 159
+Exchange differences
+41,253
+Profit for the year
+Income tax expense
+177,069
+(123,341)
+Gross profit
+58,284
+53,728
+Selling expenses
+(610)
+(584)
+General and administrative expenses
+(8,423)
+(9,714)
+Other gains and losses
+10
+(3,078)
+(5,856)
+Other income
+1,379
+1,659
+Profit before income tax
+428
+237
+Share of results of associates
+608
+(5,123)
+(5,748)
+(6,060)
+8
+723
+8
+(626)
+(1,511)
+Interest income
+Other expenses
+Finance costs
+Consolidated Statement of Profit or Loss and Other Comprehensive Income (Continued)
+At 31 December 2016
+3,612
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve in 2016
+and 2015.
+(iv)
+Other reserves
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, and share of other
+comprehensive income (expense) of associates.
+(250)
+250
+3,699
+(3,699)
+(5,381)
+--- - 5,381
+(14,718)
+(14,718)
+(14,718)
+Distributions to non-controlling
+shareholders
+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.
+shareholders
+Shenhua Group
+Acquisition of subsidiaries from
+interest in a subsidiary
+Acquisition of additional
+production funds (note (i))
+Utilisation of maintenance and
+production funds (note (iii))
+Appropriation of general reserve
+(note (iii))
+Dividend declared (Note 13)
+Appropriation of maintenance and
+25,108
+7,325
+17,783
+17,649
+(43)
+--- 177
+Total comprehensive income (expense)
+for the year
+149
+Contributions from non-controlling
+15
+Discretionary surplus reserve
+General reserve
+(5,695)
+2,288
+2,288
+(8,628)
+(8,628)
+At 31 December 2015
+19,890 85,001
+3,612
+(176)
+18,003 (14,308) 186,046 298,068
+65,853
+363,921
+Notes:
+(i)
+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.
+(ii)
+-------- (4) (4)
+163
+164
+China Shenhua Energy Company Limited
+Consolidated Statement of Changes in Equity (Continued)
+For the year ended 31 December 2016
+(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.
+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.
+Specific reserve for production and maintenance funds
+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.
+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.
+134
+(43)
+--- 177
+RMB
+RMB
+RMB
+RMB
+RMB
+equity
+interests
+Total
+earnings
+reserves
+reserve reserves
+reserve
+capital premium
+Total
+RMB
+controlling
+Other
+Capital Exchange Statutory
+Share
+Share
+Non-
+Equity attributable to equity holders of the Company
+For the year ended 31 December 2016
+Consolidated Statement of Changes in Equity (Continued)
+2016 Annual Report
+67,994 384,969
+316,975
+(14,227) 201,767
+20,827
+105
+Retained
+RMB
+RMB
+RMB
+for the year
+Other comprehensive income (expense)
+7,310 24,959
+17,649
+17,649
+365,570
+64,872
+300,698
+185,047
+(8,570)
+16,071
+(353)
+3,612
+85,001
+19,890
+Profit for the year
+At 1 January 2015
+RMB
+million
+million
+million
+million
+million
+19,890 85,001
+million
+million
+million
+million
+(Note 35) (note (i))
+(note (ii))
+(note (iii)) (note (iv))
+million
+(5,695)
+For the year ended 31 December 2016
+Profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+384,969
+363,921
+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
+94,383
+67,994
+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
+For the year ended 31 December 2016
+Equity attributable to equity holders of the Company
+Non-
+Share
+Share
+65,853
+Capital Exchange Statutory
+79,575
+Total non-current liabilities
+458,304
+2016 Annual Report 161
+Consolidated Statement of Financial Position (Continued)
+At 31 December 2016
+Notes
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+Non-current liabilities
+Borrowings
+Medium-term notes
+Bonds
+Long-term liabilities
+Accrued reclamation obligations
+Net assets
+Deferred tax liabilities
+29
+58,462
+54,179
+4,985
+24,955
+10,331
+9,651
+2,451
+2,523
+34
+2,549
+2,197
+797
+878
+20338
+Other Retained
+controlling
+Total
+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
+Dividend declared (Note 13)
+Appropriation of maintenance and
+production funds (note (iii)
+Utilisation of maintenance and
+production funds (note (iii))
+65,853 363,921
+Utilisation of general
+Contributions from non-controlling
+shareholders
+Distributions to non-controlling
+----(34)
+- - 281
+81
+24,910
+25,272
+7,090
+32,362
+(6,365)
+(6,365)
+(6,365)
+3,747
+reserve (note (iii)
+298,068
+18,003 (14,308) 186,046
+(176)
+capital premium
+reserve
+reserve reserves
+reserves
+earnings
+Total
+interests
+equity
+RMB
+RMB
+RMB
+RMB RMB RMB
+RMB
+RMB
+RMB
+RMB
+million
+3,612
+85,001
+19,890
+At 1 January 2016
+million
+million
+464,544
+million
+million million
+(note (iii)) (note (iv))
+(note (ii))
+(Note 35) (note (i))
+million
+million
+million
+million
+Year ended 31 December
+19,549
+101,487
+Property, plant and equipment
+15
+Construction in progress
+16
+56
+337,785
+339,326
+35,220
+33,610
+Exploration and evaluation assets
+17
+2,344
+2,176
+Intangible assets
+Non-current assets
+18
+2,964
+Interest in associates
+19
+5,142
+5,113
+Available-for-sale investments
+20
+1,800
+1,795
+Other non-current assets
+21
+36,749
+34,562
+22
+3,018
+17,359
+RMB million
+31 December
+Total comprehensive income
+for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+2016
+Notes
+RMB million
+2015
+RMB million
+24,910
+17,649
+7,060
+7,310
+31,970
+24,959
+25,272
+17,783
+2015
+7,090
+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
+7,325
+16,535
+28
+3,849
+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
+12,812
+30
+4,998
+41,188
+35,156
+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
+33,990
+27
+27
+916
+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
+3,428
+4,611
+6,141
+26
+19,351
+48,792
+21,278
+25
+20,573
+24
+12,816
+13,341
+23
+2222
+41,019
+(5,695)
+1,660
+Contributions from non-controlling shareholders
+(5,730)
+28,037
+26,458
+(24,927)
+(22,756)
+14,985
+Net proceeds from bonds
+Repayments of short-term debentures and medium-term notes
+(5,000)
+(5,600)
+9,049
+(20,000)
+435
+1,111
+2,288
+Distributions to non-controlling shareholders
+(6,181)
+(7,343)
+Dividend paid to equity holders of the Company
+(6,365)
+(14,718)
+Proceeds from bills discounted
+Cash paid for acquisition of a subsidiary
+and medium-term notes
+Repayments of borrowings
+(Increase) decrease in restricted bank deposits
+(1,530)
+Increase in time deposits with original maturity over three months
+Maturity of time deposits with original maturity over three months
+(5,026)
+(1,265)
+2,514
+1,624
+NET CASH USED IN INVESTING ACTIVITIES
+(64,654)
+Net proceeds from short-term debentures
+(26,123)
+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
+FINANCING ACTIVITIES
+Interest paid
+Proceeds from borrowings
+166
+under common control
+Acquisition of non-controlling interests
+(5,386)
+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
+2.
+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.
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS")
+Amendments to IAS 16 and IAS 38
+Amendments to IAS 16 and IAS 41
+Amendments to IFRS 10,
+IFRS 12 and IAS 28
+Amendments to IFRSS
+Accounting for Acquisitions of Interests in Joint Operations
+Disclosure Initiative
+Clarification of Acceptable Methods of Depreciation and
+Amortisation
+Agriculture: Bearer Plants
+Investment Entities: Applying the Consolidation Exception
+Annual Improvements to IFRSS 2012-2014 Cycle
+Amendments to IFRS 11
+Amendments to IAS 1
+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
+(4)
+NET CASH USED IN FINANCING ACTIVITIES
+(18,490)
+(23,157)
+Net (decrease) increase in cash and cash equivalents
+Cash and cash equivalents, at the beginning of the year
+Effect of foreign exchange rate changes
+(1,261)
+6,126
+42,323
+35,962
+126
+235
+Cash and cash equivalents, at the end of the year
+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.
+590
+710
+Interest received
+309
+5,062
+4,483
+Fair value changes on financial instruments (Note 8)
+Exchange loss, net
+(2)
+6
+688
+649
+Other income
+(56)
+Interest expenses
+Operating cash flows before movements in working capital
+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
+73,840
+(428)
+(237)
+Share of results of associates
+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
+Adjustments for:
+Depreciation and amortisation (Note 10)
+Other gains and losses (Note 10)
+41,253
+34,520
+24,721
+23,990
+3,078
+5,856
+Interest income
+(723)
+(608)
+5,116
+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.
+Increase (decrease) in accounts and bills payable
+(5,021)
+3
+Proceeds from disposal of debt securities
+400
+Proceeds from disposal of wealth management products
+160
+Proceeds from disposal of derivative financial instruments
+23
+Investments in wealth management products
+(33,350)
+35
+(160)
+(104)
+(48)
+Purchase of derivative financial instruments
+(2)
+|
+Purchase of tradable wealth management products
+(50)
+Dividend received from associates
+375
+Investments in associates
+640
+699
+Proceeds from disposal of associates
+(Decrease) increase in accrued expenses and other payables
+(6,267)
+5,754
+Cash generated from operations
+Income tax paid
+90,652
+66,166
+(8,769)
+(10,760)
+NET CASH GENERATED FROM OPERATING ACTIVITIES
+81,883
+55,406
+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
+(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
+2,925
+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.
+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.
+2016 Annual Report 169
+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)
+SIGNIFICANT ACCOUNTING POLICIES
+2.
+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
+.
+•
+Step 3: Determine the transaction price
+.
+Step 2: Identify the performance obligations in the contract
+•
+For the year ended 31 December 2016
+Basis of preparation
+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").
+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.
+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.
+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;
+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;
+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.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+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.
+Notes to the Consolidated Financial Statements (Continued)
+174 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;
+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:
+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.
+Historical cost is generally based on the fair value of the consideration given in exchange for goods and
+services.
+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:
+For the year ended 31 December 2016
+IFRS 15 Revenue from Contracts with Customers
+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
+Financial Instruments¹
+Amendments to IFRSS
+Amendments to IAS 40
+Amendments to IAS 12
+Amendments to IAS 7
+Amendments to IFRS 10 and IAS 28
+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
+Notes to the Consolidated Financial Statements (Continued)
+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.
+Effective for annual periods beginning on or after 1 January 2019
+3
+Amendments to IFRS 15
+4
+Other than above, the Directors do not expect IFRS 9 will have a material impact on the results and
+financial position of the Group.
+Effective for annual periods beginning on or after a date to be determined
+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)
+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.
+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)
+2016 Annual Report 171
+2.
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+5
+Effective for annual periods beginning on or after 1 January 2017 or 1 January 2018, as appropriate
+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.
+IFRS 9 Financial Instruments
+IFRS 9 introduces new requirements for the classification and measurement of financial assets, financial
+liabilities, general hedge accounting and impairment requirements for financial assets.
+Effective for annual periods beginning on or after 1 January 2017
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+170
+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.
+Notes to the Consolidated Financial Statements (Continued)
+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 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.
+180
+China Shenhua Energy Company Limited
+Railway and port
+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.
+3.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Property, plant and equipment
+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:
+Generators related machinery and equipment
+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.
+Buildings
+Mining related machinery and equipment
+For the year ended 31 December 2016
+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.
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+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
+Vessel
+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).
+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.
+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.
+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.
+Internally-generated intangible assets - research and development expenditure (Continued)
+Internally-generated intangible assets - research and development expenditure
+Intangible assets (Continued)
+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;
+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:
+For the year ended 31 December 2016
+Coal chemical related machinery and equipment
+surveying transportation and infrastructure requirements; and
+10-50 years
+gathering exploration data through topographical, geochemical and geophysical studies;
+exploratory drilling, trenching and sampling;
+determining and examining the volume and grade of the resource;
+•
+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.
+182
+China Shenhua Energy Company Limited
+researching and analysing historical exploration data;
+Notes to the Consolidated Financial Statements (Continued)
+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.
+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.
+Inventories
+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
+Intangible assets acquired separately
+For the year ended 31 December 2016
+Furniture, fixtures, motor vehicles and other equipment
+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:
+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.
+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.
+Exploration and evaluation assets
+Mining structures and mining rights
+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.
+2016 Annual Report
+181
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+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.
+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.
+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.
+3.
+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.
+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.
+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.
+2016 Annual Report 177
+Notes to the Consolidated Financial Statements (Continued)
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Investments in associates (Continued)
+For the year ended 31 December 2016
+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's consolidated financial statements only to the extent of
+interests in the associate that are not related to the Group.
+Revenue recognition
+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 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.
+Dividend income from unlisted investments is recognised when the shareholder's right to receive
+payment is established.
+Interest income is recognised as it accrues using the effective interest method.
+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.
+2016 Annual Report 175
+Notes to the Consolidated Financial Statements (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Business combinations
+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.
+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.
+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.
+Merger accounting for business combination involving entities under common control
+178
+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 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
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+3.
+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.
+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.
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+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.
+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
+Financial assets
+Financial assets and financial liabilities are recognised when a group entity becomes a party to the
+contractual provisions of the instruments.
+Financial instruments
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+184 China Shenhua Energy Company Limited
+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).
+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.
+Provisions
+it is a derivative that is not designated and effective as a hedging instrument.
+Taxation
+3.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+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.
+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
+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.
+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 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
+Notes to the Consolidated Financial Statements (Continued)
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Retirement benefit costs
+For the year ended 31 December 2016
+Government grants
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+6.4 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 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.
+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.
+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)
+(5)
+4.2 Key sources of estimation uncertainty (Continued)
+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.
+183,127
+-
+14,164
+162,905
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 185
+3.
+Coal revenue
+Power revenue
+Transportation revenue
+Coal chemical revenue
+Other 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
+175,964
+7,163
+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)
+RMB
+RMB
+RMB
+RMB RMB
+RMB RMB
+RMB
+RMB RMB
+million
+million
+million
+million
+million
+million
+million
+million
+million
+million million
+Revenue from external
+customers
+RMB
+RMB RMB RMB
+million million million
+2016 2015
+2016 2015
+SEGMENT AND OTHER INFORMATION (Continued)
+For the year ended 31 December 2016
+6.
+6.1
+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.
+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
+Financial instruments (Continued)
+Railway
+Shipping
+Coal chemical
+Segment total
+2016 2015 2016 2015
+2016 2015
+2016
+2015
+2016
+2015
+Port
+Financial assets (Continued)
+Loans and receivables
+For the year ended 31 December 2016
+4.2 Key sources of estimation uncertainty
+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.
+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.
+Control over Hebei Guohua Dingzhou Power Co., Ltd. ("Dingzhou Power")
+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.
+4.1 Critical judgements in applying accounting policies
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 189
+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.
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+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.
+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.
+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.
+Impairment of tangible and intangible assets other than goodwill
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+4.
+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.
+5.
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 191
+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.
+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. 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.
+Depreciation
+3.
+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.
+Impairment losses
+Key sources of estimation uncertainty (Continued)
+4.2
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+4.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+190 China Shenhua Energy Company Limited
+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.
+102,283 93,502 69,613 72,768
+For the year ended 31 December 2016
+China Shenhua Energy Company Limited
+•
+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:
+Impairment of financial assets
+Financial assets (Continued)
+Financial instruments (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+186
+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.
+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
+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".
+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.
+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 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.
+significant financial difficulty of the issuer or counterparty; or
+breach of contract, such as default or delinquency in interest and principal payments; or
+it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
+REVENUE
+188
+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.
+Derivative financial instruments
+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.
+Derecognition 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).
+Financial liabilities
+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.
+Notes to the Consolidated Financial Statements (Continued)
+Equity instruments
+Financial instruments (Continued)
+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.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 187
+3.
+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.
+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.
+Financial liabilities and equity instruments
+4,174
+(6)
+575
+246,720
+233,064
+2,237
+1,838
+(65,830)
+(57,833)
+183,127
+177,069
+Profit before income tax
+41,614
+34,631
+154
+(215)
+(515)
+104
+41,253
+34,520
+Interest expenses
+5,304
+4,856
+1,920
+Revenue
+2015
+Consolidated
+2016
+inter-segment amounts
+2016
+2015
+50
+24 153
+391
+8
+7
+-
+211 422
+Impairment loss
+823
+3,076 1,855 1,819
+2,483
+2 879
+60
+2,771 5,774
+6.2
+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:
+Reportable
+segment amounts
+2016
+2015
+RMB million RMB million
+Unallocated head office
+and corporate items
+Elimination of amounts
+2015
+2016
+RMB million RMB million RMB million RMB million RMB million RMB million
+31
+(2,162)
+(2,871)
+5,062
+SEGMENT AND OTHER INFORMATION (Continued)
+6.3 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.
+Revenue from external customers
+Year ended 31 December
+2016
+Specified non-current assets
+31 December
+2016
+RMB million
+31 December
+2015
+6.
+RMB million
+2015
+RMB million
+Domestic markets
+Overseas markets
+179,859
+3,268
+175,129
+1,940
+412,502
+9,113
+414,513
+5,173
+183,127
+177,069
+421,615
+419,686
+RMB million
+Share of results of associates
+For the year ended 31 December 2016
+194 China Shenhua Energy Company Limited
+4,468
+Depreciation and amortisation
+24,388
+23,754
+333
+236
+24,721
+23,990
+Share of results of associates
+211
+Notes to the Consolidated Financial Statements (Continued)
+422
+237
+428
+Impairment loss
+2,771
+5,774
+44
+(1)
+(8)
+2,807
+5,773
+26
+3,420
+Obligations for land reclamation
+Reportable segment profit
+1,732
+1,461
+3 64,864 56,969
+Reportable segment revenue
+131,357 121,458 69,850 73,053 33,530 27,232
+5,040
+3,769
+2,112
+2,002
+4,831
+5,550 246,720 233,064
+197
+16,084
+5,883 10,001 17,628 13,283
+9,862
+2,049
+868
+473
+433
+637
+1,189
+1,320 1,882 2,048
+1,517
+3,452
+Interest expenses
+342 41,614 34,631
+5
+48
+ထု
+192
+962
+Including:
+86
+4,465
+29,356
+903 24,388 23,754
+938
+285
+292
+922
+23,812
+3,887
+4,635
+8,477
+9,550
+1,037
+7,936
+29,074 27,956 237 285
+9,280
+Inter-segment revenue
+5,547 181,856 176,095
+4,831
+103
+380
+317
+275 5,304 4,856
+Depreciation and amortisation
+541
+2016: SEIZING MARKET OPPORTUNITIES, OPTIMISING OPERATION UNITS AND
+CREATING FAVORABLE OPERATING RESULTS
+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.
+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.
+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.
+Dear Shareholders,
+Section IV Chairman's Statement (Continued)
+China Shenhua Energy Company Limited
+Chairman
+Zhang Yuzhuo
+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.
+✓ Not applicable
+Promoting clean energy development strategy proactively and developing new characteristics of
+business structure
+Implementing refined management and achieving outstanding performance in cost control
+Section IV Chairman's Statement (Continued)
+2016 Annual Report 17
+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.
+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.
+Strengthening technological innovation and promoting clean development
+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%.
+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 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.
+Promoting "macroscopic logistics" and proactively achieving new profit growth areas
+Section IV Chairman's Statement (Continued)
+China Shenhua Energy Company Limited
+16
+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.
+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.
+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.
+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.
+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%.
+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%.
+Optimising the operation, exploring markets, and achieving integrated and efficient operation
+Section IV Chairman's Statement (Continued)
+2016 Annual Report 15
+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.
+Section IV Chairman's Statement
+2016 Annual Report 13
+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.
+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.
+quarter
+First quarter
+Third
+Second
+Unit: RMB million
+MAJOR FINANCIAL DATA OF EACH QUARTER OF 2016
+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.
+298,068
+316,975
+quarter
+17,649
+Standards
+Under International Financial Reporting
+5,278
+4,618
+1,505
+2,198
+production and other related
+expenditure
+maintenance, safety
+Section III Business Overview
+24,910
+Forth
+quarter
+(January-
+(April -
+Applicable
+Explanation on the differences between quarterly data and disclosed regular reporting data:
+19,709
+23,967
+22,982
+15,225
+Net cash generated from operating activities
+6,262
+7,821
+6,086
+4,741
+holders of the Company
+Profit for the period attributable to equity
+58,324
+46,080
+39,321
+39,402
+Revenue
+(October-
+December)
+(July-
+June) September)
+March)
+Standards:
+2016 Annual Report 11
+Adjusted items and amount in accordance
+with International Financial Reporting
+312,357
+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)
+III. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+The core competitiveness of the Group are mainly:
+During the reporting period, the Group made no significant change in the scope of its principal
+businesses.
+1.
+3.
+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.
+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.
+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.
+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.
+2.
+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 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".
+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.
+16,144
+22,712
+Under China Accounting Standards for
+Business Enterprises
+of 2015
+At the end
+of 2016
+2015
+At the end
+of the Company
+Net assets attributable to
+equity holders
+Unit: RMB million
+2016
+Net profit attributable to
+equity holders
+of the Company
+IX.
+VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+Section II Company Profile and Major Financial Indicators (Continued)
+China Shenhua Energy Company Limited
+10
+I.
+II.
+EXPLANATION ON PRINCIPAL BUSINESSES AND OPERATION MODEL OF THE
+COMPANY AND INDUSTRY CONDITIONS DURING THE REPORTING PERIOD
+292,790
+Adjustment: simple production
+14
+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.
+Chairman
+Zhang Yuzhuo
+3₤2-$
+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.
+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.
+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.
+17 March 2017
+Section IV Chairman's Statement (Continued)
+For more information about our social responsibility efforts, please refer to the "2016 Corporate Social
+Responsibility Report" of the Group.
+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.
+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:
+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.
+2017: OPTIMISING OPERATION AND ORGANISATION, IMPROVING QUALITY WHILE
+ENHANCING EFFICIENCY COMPREHENSIVELY AND ACCELERATING THE PROMOTION
+OF CLEAN AND EFFICIENT DEVELOPMENT
+Section IV Chairman's Statement (Continued)
+2016 Annual Report 19
+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.
+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.
+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.
+China Shenhua Energy Company Limited
+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.
+18
+Proactively fulfilling social responsibility and achieving safe and green development
+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".
+The emoluments of these directors were borne by Shenhua Group during the years ended 31 December 2016 and 2015.
+(ii)
+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.
+The emolument of Mr. Zhai Richeng was borne by Shenhua Group during the year ended 31 December 2015.
+Mr. Li Dong was appointed as executive director on 17 June 2016.
+(iv)
+Mr. Zhao Jibin was appointed as non-executive director on 17 June 2016.
+Mr. Zhou Dayu was appointed as supervisor on 17 June 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.
+(v)
+Mr. Wang Xiaolin resigned as executive director on 20 August 2015.
+(iii)
+0.45
+(i)
+0.03
+0.41
+0.41
+0.36
+0.08
+0.85
+0.59
+0.56
+0.11
+1.26
+3.88
+2016 Annual Report 201
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+11. 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:
+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.
+The independent non-executive directors' emoluments shown above were mainly for their services as
+directors of the Company.
+RMB million
+China Shenhua Energy Company Limited
+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
+202
+0.36
+1.38
+2.13
+1.75
+2.23
+0.20
+RMB million
+2015
+Year ended 31 December
+2016
+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, 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)
+0.40
+2015
+0.18
+0.45
+1.16
+0.98
+0.20
+2.34
+3.69
+200 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS (Continued)
+Year ended 31 December 2015
+Basic salaries,
+housing
+and other
+allowance
+and benefits
+Retirement
+Fees
+RMB million
+in kind
+RMB million
+Discretionary
+bonuses
+0.05
+scheme
+contributions
+0.05
+0.08
+0.45
+1.35
+| | | |
+Total
+RMB million
+0.45
+0.45
+0.45
+1.35
+0.45
+0.40
+0.08
+0.93
+0.25
+0.15
+0.04
+0.44
+0.46
+0.38
+0.92
+1.35
+Total
+RMB million
+Sub-total
+Independent non-executive
+directors
+Fan Hsulaitai
+Gong Huazhang
+Guo Peizhang
+Sub-total
+Supervisors
+Zhai Richeng (note (ii))
+Tang Ning
+Shen Lin
+Sub-total
+Total
+0.45
+0.45
+0.45
+1.35
+0.45
+0.45
+Chen Hongsheng (note (i))
+RMB million
+Non-executive directors
+0.16
+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
+Wang Xiaolin (note (v))
+0.13
+0.35
+0.06
+0.54
+Sub-total
+0.32
+0.79
+1.27
+RMB million
+Furniture,
+2015 final - RMB0.32 (2015: 2014 final of RMB0.74)
+per ordinary share
+(289)
+(283)
+(517)
+(281)
+(232)
+(174)
+Disposals or write-off
+(15)
+122
+18,348
+29,075
+970
+172
+20,720
+in progress
+Transferred from construction
+903
+2,231
+25
+70,515
+103
+8
+114
+Exchange adjustment
+500,618
+17,716
+13,120
+205
+6,853
+167,802
+66,040
+30,876
+76,977
+At 31 December 2015
+(1,830)
+(39)
+121,234
+Additions
+52
+6
+COST
+RMB million RMB million RMB million
+RMB million
+RMB million
+Total
+equipment
+Vessels equipment
+At 1 January 2015
+and port
+RMB million RMB million
+rights
+and other
+and
+Railway
+and
+and
+equipment equipment
+RMB million RMB million
+52
+56,248
+64,775
+699
+287
+576
+362
+249
+Additions
+57
+30,574
+123
+Exchange adjustment
+429,645
+17,498
+13,007
+6,239
+102,470
+138,834
+(66)
+28
+2,609
+689
+23
+23
+Exchange adjustment
+137,383
+9,042
+2,767
+26,099
+Charge for the year
+43,984
+8,763
+14,853
+At 1 January 2015
+IMPAIRMENT
+DEPRECIATION AND
+521,097
+17,765
+31,756
+13,218
+vehicles
+motor
+6,365
+14,718
+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.
+14. EARNINGS PER SHARE
+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).
+No diluted earnings per share is presented as there were no potential ordinary shares in existence during
+both years.
+2016 Annual Report 203
+machinery
+Notes to the Consolidated Financial Statements (Continued)
+15. PROPERTY, PLANT AND EQUIPMENT
+Land and and mining
+buildings
+Mining
+structures
+Mining Generators,
+related
+machinery machinery
+related
+Coal chemical
+related
+fixtures,
+For the year ended 31 December 2016
+6,880
+123,297
+177,186
+27
+2,476
+10,403
+1,045
+246
+5,232
+in progress
+134
+Transferred from construction
+16
+225
+1
+16
+8
+685
+153
+4,188
+67
+19,630
+Disposals or write-off
+67,018
+33,624
+82,109
+At 31 December 2016
+(152)
+(152)
+enhancement
+progress, for overall technical
+Transferred to construction in
+(3,412)
+(34)
+(44)
+(946)
+(1,275)
+(756)
+(115)
+(242)
+Dividend approved and paid during the year:
+0.45
+119
+Retirement
+scheme
+contributions
+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
+(401) (300)
+3,396 3,882
+Others
+4,313 11,643
+483
+823 2,642
+14,595
+107,493 53,939 49,788 17,350
+109,404
+Total cost of sales
+9,049 15,949
+196
+2,271
+67
+533
+584
+759
+140
+252
+2,025
+538
+12,570
+14,708
+42,221 38,488
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+2016 2015
+2015
+2016
+2015
+2016
+2015
+2016
+2016 2015
+2,523
+RMB
+RMB
+Cost of coal transportation
+36,584 40,098
+Cost of coal production
+26,286 17,264
+26,286 17,264
+Coal purchased
+RMB
+million
+million
+million million
+million
+million
+million million million
+RMB RMB
+million million million
+2015
+2,026
+760
+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)
+Non-current assets exclude financial instruments and deferred tax assets.
+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 operation is calculated as revenue minus cost of sales, selling expenses, general and administrative
+expenses and impairment loss.
+COST OF SALES
+Coal purchased
+Materials, fuel and power
+Personnel expenses
+Depreciation and amortisation
+Repairs and maintenance
+21,134
+21,744
+11,874
+12,661
+15,816
+16,405
+95
+17,264
+2015
+RMB million
+RMB million
+Year ended 31 December
+2016
+Other operating costs
+Taxes and surcharges
+Transportation charges
+26,286
+138
+8,038 8,189
+(2,363)
+(2,063)
+(10,950)
+2,302
+10,070
+15,000
+18,810
+11,689
+6,433
+1,350
+17,017
+(57,237) 124,843 123,341
+(64,477)
+196
+67
+4,720
+4,330
+Profit from operations
+(note (iii)
+Additions to non-current
+1,707 1,760
+266
+254
+22,303
+7
+1,387
+1,746
+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)
+Total liabilities (note (ii))
+133
+Total assets (note (i))
+46,444 37,657
+(1,345) (596)
+808
+RMB million
+649
+254
+assets (note (i))
+9,509
+2016
+Total
+At 31 December 2016
+CARRYING VALUES
+183,312
+10,979
+4,643
+455
+35,046
+61,977
+40,092
+10,870
+19,250
+At 31 December 2016
+RMB million RMB million RMB million
+Total
+equipment
+equipment
+Vessels
+RMB million
+Land and and mining
+buildings
+rights
+RMB million
+RMB million
+machinery
+and
+equipment equipment
+RMB million RMB million RMB million
+62,859
+machinery
+vehicles
+and
+Railway
+and
+and other
+and port
+machinery
+22,754
+26,926
+115,209
+33,019
+94,850
+76,371
+6,120
+10,240
+8,456 292,262
+21,811
+Notes:
+Impairment loss
+Impairment loss for cash-generating units
+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.
+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.
+(i)
+motor
+41,395
+339,326
+88,251
+6,425
+8,575
+6,786
+337,785
+At 31 December 2015
+At 1 January 2015
+59,826
+30,021
+114,706
+90,105
+6,696
+9,220
+7,782
+20,970
+2016 2015 2016 2015 2016 2015
+RMB RMB RMB RMB RMB RMB
+million
+million
+million million million million
+related
+related
+Impairment losses (note (i))
+22,813
+1,066
+732
+298
+4,679
+8,327
+4,700
+1,048
+1,963
+Charge for the year
+36
+25
+11
+Exchange adjustment
+161,292
+6.
+Eliminations
+Unallocated items
+Coal chemical
+Shipping
+Port
+Railway
+149
+Power
+Certain other information of the Group's segments for the years ended 31 December 2016 and
+2015 is set out below:
+For the year ended 31 December 2016
+6.5 Other information
+SEGMENT AND OTHER INFORMATION (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 195
+Coal
+10
+1,551
+13
+enhancement
+(122)
+(122)
+204
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+progress, for overall technical
+For the year ended 31 December 2016
+Coal
+Furniture,
+Mining Generators,
+chemical
+fixtures,
+Mining
+structures
+15. PROPERTY, PLANT AND EQUIPMENT (Continued)
+related
+Transferred to construction in
+(23)
+2
+1,725
+Transferred from construction
+in progress
+18
+Disposals or write-off
+(2,472)
+(43)
+F
+(655)
+(1,022)
+fgo
+(640)
+35
+(84)
+8,619
+1,261
+12,193
+Tax at PRC income tax rate of 25% (2015: 25%)
+Profit before income tax
+2015
+RMB million
+Year ended 31 December
+2016
+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:
+9,561
+(877)
+224
+10,214
+2015
+RMB million
+9,283
+(1,256)
+Tax effects of:
+10,378
+161
+2016
+Year ended 31 December
+Deferred tax
+Current tax, mainly PRC enterprise income tax ("EIT")
+Over provision in respect of prior years
+INCOME TAX EXPENSE
+9.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 197
+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.
+4,515
+5,025
+RMB million
+41,253
+34,520
+10,313
+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.
+9,561
+9,283
+Income tax expense
+(18)
+(8)
+224
+161
+1,798
+704
+- tax losses and deductible temporary difference not recognised
+- additional tax in respect of prior years
+- others
+(24)
+(190)
+- utilisation of tax losses and deductible temporary difference
+previously not recognised
+(107)
+(59)
+- share of results of associates
+(32)
+(65)
+- income not taxable
+325
+636
+- non-deductible expenses
+(1,235)
+(2,209)
+- different tax rates of branches and subsidiaries
+8,630
+1,930
+1,339
+4,234
+7,900
+3,900
+9,934
+5,123
+5,748
+6
+(2)
+649
+688
+144
+173
+Net finance costs
+Total finance costs
+Fair value changes on financial instruments
+Exchange loss, net
+Unwinding of discount
+4,324
+4,889
+1,518
+643
+Less: amount capitalised
+5,842
+5,532
+fair value through profit or loss
+Total finance costs on financial liabilities not at
+310
+329
+1,311
+157
+198 China Shenhua Energy Company Limited
+31,129
+36,019
+4,343
+290
+688
+915
+21,639
+Impairment losses (note (i))
+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
+53,096
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+9.
+Zhang Yuzhuo (note (i))
+Chief executive
+RMB million
+Fees
+Directors' and chief executives' remuneration for the year, disclosed pursuant to the applicable Listing
+Rules and CO, is as follows:
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+2016 Annual Report 199
+22
+32
+- audit service
+219
+301
+Operating lease in respect of properties and equipment
+Auditors' remuneration
+82,673
+86,149
+Carrying amount of inventories sold
+5,856
+3,078
+98
+- impairment in respect of goodwill
+36
+- impairment in respect of other non-current assets
+950
+551
+- write down of inventories
+300
+Sub-total
+388
+Executive directors
+Han Jianguo (note (ii))
+Discretionary
+bonuses
+RMB million
+RMB million
+in kind
+and benefits
+allowance
+and other
+housing
+Basic salaries,
+Year ended 31 December 2016
+Total
+Sub-total
+Tang Ning (note (iv))
+Zhou Dayu (note (iii))
+Shen Lin
+Zhai Richeng
+Supervisors
+Sub-total
+Guo Peizhang
+Gong Huazhang
+Fan Hsulaitai
+directors
+Independent non-executive
+Sub-total
+Zhao Jibin (note (ii) and note (iii))
+Chen Hongsheng (note (i))
+Non-executive directors
+Sub-total
+Li Dong (note (ii) and note (iii))
+Ling Wen (note (i))
+1,289
+- allowance for doubtful debts
+22
+20,067
+20,844
+Personnel expenses, including
+2015
+RMB million
+Year ended 31 December
+2016
+RMB million
+Profit for the year has been arrived at after charging (crediting):
+10. PROFIT FOR THE YEAR
+During the year ended 31 December 2016 and 2015, 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
+30.0
+%
+%
+2015
+2016
+Year ended 31 December
+Hong Kong
+Russia
+Indonesia
+Australia
+The applicable tax rates of the Group's overseas subsidiaries are as follows:
+INCOME TAX EXPENSE (Continued)
+- contributions to defined contribution plans of RMB2,728
+million (2015: RMB2,791 million)
+2
+10,172
+21,639
+651
+22
+3,834
+1,725
+1
+- impairment in respect of properties and equipment
+-impairment in respect of construction in progress
+- impairment of loans receivable
+- impairment of interest in associates
+(5)
+– gains on disposal of a subsidiary
+(11)
+- gains on disposal of derivative financial instruments
+(17)
+- gains on disposal of associates
+83
+304
+- losses on disposal of property, plant and equipment,
+intangible assets and non-current assets
+Other gains and losses, represent
+23,990
+24,721
+Depreciation and amortisation
+1,626
+1,065
+396
+429
+329
+414
+Amortisation of intangible assets, included in cost of sales
+Amortisation of lease prepayments, included in cost of sales
+Amortisation of other non-current assets
+22,813
+583
+Depreciation of property, plant and equipment
+4
+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
+2015
+RMB million
+RMB million
+691
+448
+32
+156
+723
+608
+Interest on:
+- borrowings
+- short-term debenture
+- medium-term notes
+- bonds
+3,896
+3,638
+18
+Notes to the Consolidated Financial Statements (Continued)
+196 China Shenhua Energy Company Limited
+Year ended 31 December
+2016
+124,843
+30,608
+21,144
+5,833
+6,922
+123,341
+Materials and supplies
+Others (note)
+31 December
+2016
+2,500
+8,000
+8,000
+RMB million
+RMB million
+9,165
+Coal
+RMB million
+31 December
+2015
+31 December
+2016
+(i)
+31 December
+2015
+RMB million
+5,563
+3,152
+8,493
+23. INVENTORIES
+2016 Annual Report 209
+Notes to the Consolidated Financial Statements (Continued)
+At 31 December 2016, the Group had prepayments to fellow subsidiaries amounting to RMB5 million (2015: RMB28
+million).
+34,562
+36,749
+2,482
+6,424
+2,693
+987
+889
+For the year ended 31 December 2016
+627
+13,502
+2,500
+(ii)
+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.
+(iii)
+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.
+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 RMB2,526 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.
+11,473
+7,982
+98
+1,682
+16,179
+23,370
+Bills receivable
+- Shenhua Group and fellow subsidiaries
+18
+41
+- Associates
+42
+(194)
+162
+4,334
+17,446
+4,394
+17,649
+20,573
+41,019
+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.
+210 China Shenhua Energy Company Limited
+- Third parties
+1,354
+(420)
+23,564
+13,341
+12,816
+Note: Others mainly represent properties held for sale and properties under development.
+24. ACCOUNTS AND BILLS RECEIVABLE
+Notes:
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+Less: allowance for doubtful debts
+Accounts receivable
+- Associates
+- Third parties
+3,177
+284
+3,049
+770
+13,138
+19,745
+16,599
+- Shenhua Group and fellow subsidiaries
+Others
+Prepayment for mining projects
+Long-term entrusted loans (note (iii))
+RMB million
+2015
+RMB million
+2,964
+1,540
+9
+5
+356
+255
+106
+1,493
+(414)
+2016
+(329)
+3,018
+2,964
+31 December
+2016
+31 December
+2015
+RMB million
+RMB million
+3,274
+3,184
+1,868
+1,929
+5,142
+(3)
+5,113
+Share of post-acquisition profits and other comprehensive
+income, net of dividend received
+19. INTEREST IN ASSOCIATES
+Additions
+At the end of the year
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+2,176
+2,212
+119
+49
+(119)
+83
+2,344
+Unlisted shares, at cost
+2,176
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+18. INTANGIBLE ASSETS
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+Year ended 31 December
+At the beginning of the year
+Exchange adjustment
+Additions
+Transferred from construction in progress
+Amortisation
+Disposal
+At the end of the year
+2016 Annual Report 207
+Goodwill
+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:
+Type of
+legal entity
+Limited company
+44
+44
+Provision of transportation
+service
+Inner Mongolia Yili Chemical Industry
+Co., Ltd.
+Limited company
+25
+25
+25
+Production and sale of chemicals
+Tianjin Yuanhua Shipping Co., Ltd.
+208
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+20. AVAILABLE-FOR-SALE INVESTMENTS
+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.
+21. OTHER NON-CURRENT ASSETS
+Prepayments in connection with construction work,
+equipment purchases and others (note (i))
+Notes to the Consolidated Financial Statements (Continued)
+Long-term receivable
+and fellow subsidiaries (note (ii))
+Loans to Shenhua Group
+China Shenhua Energy Company Limited
+Name of associate
+Generation and sale of electricity
+25
+Proportion of ownership
+interest and voting power
+held by the Group
+Principal activities
+31 December 31 December
+2016
+2015
+%
+%
+Shendong Tianlong Group Co., Ltd.
+Limited company
+Zhejiang Zheneng Jiahua Power Co., Ltd. Limited company
+Sichuan Guangan Power Co., Ltd.
+25
+Limited company
+Limited company
+2222
+20
+20
+Coal production and sale
+20
+20
+Generation and sale of electricity
+20
+20
+Generation and sale ofelectricity
+Guohua (Hebei) Renewables Co., Ltd.
+For the year ended 31 December 2016
+24. ACCOUNTS AND BILLS RECEIVABLE (Continued)
+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:
+Credited in
+profit or loss
+At 31
+December
+2016
+RMB million
+RMB million
+RMB million
+Allowances, primarily for receivables and inventories
+Property, plant and equipment
+417
+86
+503
+427
+342
+769
+Lease prepayments
+(171)
+2
+(169)
+Tax losses carried forward
+384
+77
+461
+Tax allowable expenses not yet incurred
+(62)
+63
+At 1 January
+2016
+1
+The following are the major deferred tax assets and liabilities recognised and movements thereon during
+the current and prior year:
+For the year ended 31 December 2016
+EUR
+Indonesian Rupiah
+28. DEFERRED TAXATION
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+111
+220
+2
+1
+3
+28
+27
+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
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+3,849
+(797)
+2,674
+(878)
+3,052
+1,796
+214
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+28. DEFERRED TAXATION (Continued)
+Unrealised profits from sales within the Group
+558
+629
+(175)
+4
+(171)
+Tax losses carried forward
+200
+184
+384
+Tax allowable expenses not yet incurred
+(329)
+267
+(62)
+Unrealised profits from sales within the Group
+730
+(172)
+558
+Accrued salaries and other expenses not yet paid
+Others
+140
+30
+170
+45
+28
+73
+Net deferred tax assets
+919
+877
+Lease prepayments
+427
+423
+4
+1,187
+Accrued salaries and other expenses not yet paid
+Others
+170
+18
+188
+73
+39
+112
+Net deferred tax assets
+1,796
+1,256
+3,052
+HKD
+At 1 January
+At 31
+December
+2015
+profit or loss
+2015
+RMB million
+RMB million
+RMB million
+Allowances, primarily for receivables and inventories
+304
+113
+417
+Property, plant and equipment
+(Charged)
+credited in
+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.
+(10)
+(9)
+420
+194
+The aging analysis of accounts receivable that are past due but not impaired are as follows:
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+Less than one year
+One to two years
+Two to three years
+More than three years
+2,115
+1,408
+5,942
+1,401
+178
+52
+162
+51
+3,753
+7,556
+Receivables that were not overdue or unimpaired relate to a wide range of customers for whom there
+was no recent history of default.
+2016 Annual Report 211
+Notes to the Consolidated Financial Statements (Continued)
+24. ACCOUNTS AND BILLS RECEIVABLE (Continued)
+140
+245
+54
+194
+Less than one year
+One to two years
+Two to three years
+More than three years
+The movement of allowance for doubtful debts was as follows:
+At the beginning of the year
+Impairment loss
+- recognised
+- amounts recovered
+Written off
+At the end of the year
+31 December
+2016
+RMB million
+For the year ended 31 December 2016
+31 December
+2015
+RMB million
+1,996
+21,756
+1,401
+1,010
+162
+138
+51
+16,179
+23,370
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+13,035
+At the beginning of the year
+Exchange adjustments
+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.
+United States Dollars ("USD")
+European Dollars ("EUR")
+7,889
+Loans and advances to Shenhua Group and fellow
+subsidiaries (note)
+2,209
+3,645
+Amounts due from associates
+973
+378
+Deductible VAT and other tax
+3,396
+4,483
+Other receivables
+1,781
+2,784
+48,792
+19,351
+Note:
+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.
+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.
+26. RESTRICTED BANK DEPOSITS
+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.
+2016 Annual Report 213
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+27. CASH AND CASH EQUIVALENTS
+7,029
+Prepaid expenses and deposits
+172
+33,404
+Transfers of financial assets
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+486
+140
+215
+119
+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.
+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.
+212 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+25. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+31 December
+Included in accounts receivable are the following amounts denominated in foreign currencies are set out
+below:
+2016
+31 December
+2015
+RMB million
+Financial assets at FVTPL
+- Derivative financial instruments
+- Tradable wealth management products
+- Wealth management products
+4
+12
+50
+33,350
+160
+RMB million
+The movement of the exploration and evaluation assets is as follows:
+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.
+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.
+Transferred to property, plant and equipment
+technical enhancement
+Transferred from property, plant and equipment for overall
+Additions
+At the beginning of the year
+16. CONSTRUCTION IN PROGRESS
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+206
+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).
+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.
+The Group's freehold land with a carrying amount of RMB1,141 million (2015: RMB1,047 million) are located in Australia.
+Transferred to intangible assets
+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 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).
+Impairment loss for individual assets (Continued)
+(iv)
+(iii)
+(ii)
+(i)
+Notes: (Continued)
+For the year ended 31 December 2016
+15. PROPERTY, PLANT AND EQUIPMENT (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 205
+1,796
+17. EXPLORATION AND EVALUATION ASSETS
+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.
+Transferred to lease prepayments
+Impairment loss (Continued)
+Disposal
+33,610
+Net income from mine trial run
+35,220
+40
+(22)
+(228)
+(47)
+(319)
+(2,263)
+(459)
+(1,493)
+(106)
+(70,515)
+(651)
+30
+(19,630)
+Impairment transferred to property, plant and equipment
+At the end of the year
+Note:
+Year ended 31 December
+2016
+2015
+Impairment losses
+RMB million
+RMB million
+33,610
+22,123
+78,988
+29,674
+Impairment write-off
+The Group's long-term borrowings comprise:
+65,889
+29. BORROWINGS (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+216
+60,556
+31 December
+2016
+RMB million
+More than two years, but not exceeding five years
+39,765
+More than five years
+15,599
+13,040
+6,472
+5,657
+More than one year, but not exceeding two years
+6,377
+31 December
+7,427
+32,108
+2015
+2,448
+Loans from banks and other institutions
+Within one year
+6,377
+7,427
+60,556
+65,889
+Less: current portion of long-term borrowings
+69
+45
+Interest rate at 2.85% per annum with
+maturities through 22 June 2017
+EUR denominated
+2,445
+Interest rates ranging from 1.80% to 2.60%
+per annum with maturities through
+20 March 2031
+Japanese Yen ("JPY")
+denominated
+484
+1,722
+Interest rates ranging from Libor+0.7% to
+Libor+2.85% per annum with maturities
+through 26 December 2034
+USD denominated
+57,555
+61,677
+Interest rates ranging from 1.08% to 6.55%
+per annum with maturities through
+22 January 2036
+Renminbi denominated
+RMB million
+(Restated)
+contractual maturity dates:
+RMB million
+The exposure of the long-term borrowings and the
+Current portion of long-term borrowings
+Short-term bank and other borrowings
+58,462
+31 December
+2015
+31 December
+2016
+RMB million
+Current borrowings:
+An analysis of the Group's borrowings is as follows:
+29. BORROWINGS
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 215
+705
+784
+Taxes payable other than income tax
+6,911
+3,571
+Dividends payable
+2,665
+2,786
+Receipts in advances
+4,196
+4,384
+RMB million
+6,435
+6,377
+2015
+RMB million
+2016
+31 December
+31 December
+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).
+66,991
+70,273
+55,397
+61,159
+11,594
+9,114
+Unsecured
+Secured
+66,991
+70,273
+54,179
+58,462
+Long-term borrowings, less current portion
+Non-current borrowings:
+12,812
+11,811
+7,427
+54,179
+For the year ended 31 December 2016
+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.
+35,156
+1,178
+2,356
+More than three years
+3,305
+2,320
+3,922
+4,184
+25,585
+26,296
+Two to three years
+One to two years
+Less than one year
+2015
+RMB million
+RMB million
+2016
+31 December
+31 December
+The following is an aging analysis of accounts payable, presented based on invoice date:
+As at 31 December 2016, certain bills payable were secured by bills receivable held by the Group (see
+Note 24).
+33,990
+33,990
+35,156
+Included in accounts and bills payable are the following amounts denominated in foreign currencies are
+set out below:
+EUR
+Accrued interest payable
+Accrued staff wages and welfare benefits
+31 December
+2015
+RMB million
+RMB million
+2016
+31 December
+32. ACCRUED EXPENSES AND OTHER PAYABLES
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 219
+18
+19
+1
+413
+179
+154
+486
+31 December
+2015
+RMB million
+RMB million
+31 December
+2016
+Great British Pounds
+HKD
+USD
+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).
+2,473
+31,517
+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 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 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.
+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.
+30. DEBENTURES, MEDIUM-TERM NOTES AND BONDS
+69
+45
+2,448
+2,445
+484
+1,722
+31 December
+2015
+RMB million
+2016
+RMB million
+31 December
+USD
+JPY
+EUR
+Included in borrowings are the following amounts denominated foreign currencies are set out below:
+29. BORROWINGS (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 217
+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.
+3,174
+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.
+218
+31,982
+29,272
+29,624
+398
+1,847
+2,140
+218
+RMB million
+2015
+31 December
+RMB million
+31 December
+2016
+Bills payable
+- Third parties
+- Associates
+fellow subsidiaries
+- Shenhua Group, an associate of Shenhua Group and
+Accounts payable
+31. ACCOUNTS AND BILLS PAYABLE
+3,624
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+The net proceeds of the Dollar bonds issued is mainly used for the repayment of loans of subsidiaries.
+Deposits from Shenhua Group and fellow subsidiaries (note (i))
+Other accrued expenses and payables (note (ii))
+Current liabilities
+24,500
+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
+Assets
+31 December
+2016
+2015
+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.
+RMB million RMB million RMB million RMB million
+897
+2,448
+597
+435
+267
+170
+150
+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
+2,208
+2,445
+218
+Currency risk
+(i)
+Market risk
+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
+37. FINANCIAL INSTRUMENTS (Continued)
+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 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.
+JPY
+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
+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.
+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.
+3,397
+The Group's exposures to interest rates on financial liabilities are detailed in the liquidity risk
+management section of this note.
+Available-for-sale investments
+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.
+Interest rate risk
+2016
+2015
+RMB million RMB million
+(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)
+Market risk (Continued)
+(ii)
+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).
+Financial assets:
+31 December
+2015
+RMB million
+RMB million
+Others
+Analysed for reporting purpose as:
+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
+2,451
+203
+2,523
+Defined benefit plans
+2,854
+Payables for acquisition of mining rights (note (i))
+Deferred income (note (ii))
+For the year ended 31 December 2016
+9,665
+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
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+33. LONG-TERM LIABILITIES
+13,492
+2,726
+(i)
+2016
+31 December
+2015
+RMB million
+RMB million
+Registered, issued and fully paid:
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,398,582,500 H shares of RMB1.00 each
+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.
+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
+37.1 Categories of financial instruments
+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:
+31 December
+2016
+31 December
+Note:
+35. SHARE CAPITAL
+Notes to the Consolidated Financial Statements (Continued)
+(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.
+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
+Accretion expense
+Utilisation for the year
+At the end of the year
+Year ended 31 December
+2016
+RMB million
+2015
+RMB million
+2,197
+2,102
+220
+132
+137
+(42)
+2,549
+2,197
+2016 Annual Report 221
+For the year ended 31 December 2016
+3,727
+75,934
+39. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+51.00% equity interest in Zhoushan Power Plant.
+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.
+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
+100.00% equity interest in Xuzhou Power Plant; and
+31 December
+2016
+31 December
+2015
+RMB million
+23,604
+26,623
+17,200
+21,170
+40,804
+47,793
+39.2 Operating lease commitments
+RMB million
+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:
+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:
+Fixed rate bank borrowings
+8,507
+Fixed rate medium-term notes
+24,974
+8,567
+25,282
+Fixed rate bonds
+10,331
+10,436
+-
+4,020
+24,955
+9,651
+9,660
+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.
+2016 Annual Report 227
+Notes to the Consolidated Financial Statements (Continued)
+38. ACQUISITION OF SUBSIDIARIES IN PRIOR
+Acquisitions from Shenhua Group
+For the year ended 31 December 2016
+4,387
+26,008
+Within one year
+After one year but within five years
+After five years
+31 December
+2016
+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
+RMB million
+2016 Annual Report 229
+2015
+RMB million
+634
+819
+Income from entrusted loans
+33
+39
+Interest expense
+242
+290
+Interest income
+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).
+40. 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.
+RMB million
+31 December
+2015
+RMB million
+45
+23
+46
+17
+3
+68
+66
+228
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+Accrued expenses and other payables
+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
+Financial liabilities:
+Purchases of ancillary materials and spare parts
+Fair value
+RMB million
+At 31 December 2015
+Carrying amount
+21,107
+39,946
+84,188
+61,311
+Borrowings fixed interest rate
+3.66
+2,239
+594
+9,199
+1,321
+6,594
+5,680
+Debentures, medium-term notes and bonds
+4.45
+6,614
+21,266
+12,320
+3,757
+2,440
+43,957
+13,936
+Borrowings variable interest rate
+interest rate
+%
+1 year
+RMB million
+1-2 years
+RMB million
+2-5 years
+RMB million
+5 years
+cash flows
+amount
+4.98
+RMB million
+RMB million
+other payables and long-term liabilities
+74,602
+265
+532
+535
+32
+75,577
+RMB million
+39,604
+97,391
+31,324
+Level 1
+Quoted price in an active market.
+Tradable wealth management
+50
+0
+Level 2
+Discounted cash flow. Future cash flows are
+products
+12
+Wealth management products
+160
+Level 2
+estimated based on expected rate of return.
+Discounted cash flow. Future cash flows are
+estimated based on expected rate of return.
+There were no transfer between Level 1 and Level 2 during the year ended 31 December 2016
+and 2015.
+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 2016
+Carrying amount
+RMB million
+Fair value
+RMB million
+33,350
+4
+Derivative financial instruments
+Valuation technique(s)
+and key input(s)
+35,280
+46,678
+210,673 182,172
+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.
+226
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+37. FINANCIAL INSTRUMENTS (Continued)
+37.3 Fair value measurements
+Fair value of the Group's financial assets that are measured at fair value on a recurring basis
+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.
+Financial asset:
+At 31
+December
+2016
+At 31
+December
+2015
+Fair value
+hierarchy
+RMB million
+RMB million
+RMB million
+carrying
+(iv)
+1,385
+(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)
+(xix) Granting of entrusted loan represents an entrusted loan granted to an associate of the
+Group.
+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.
+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)
+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:
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+41. RELATED PARTY TRANSACTIONS (Continued)
+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.
+For the year ended 31 December 2016
+Property leasing represents rental paid or payable in respect of properties leased from
+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.
+Sale of coal chemical product represents income from sale of coal chemical product to
+fellow subsidiaries.
+(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.
+(xvii) Granting of loans from Shenhua Finance represents loans granted by Shenhua Finance to
+fellow subsidiaries.
+(xviii) Repayment of loans from Shenhua Finance represents loans repaid by fellow subsidiaries
+to Shenhua Finance.
+2016 Annual Report 231
+Notes to the Consolidated Financial Statements (Continued)
+Repairs and maintenance services expense represents expense related to machinery
+repairs and maintenance services provided by fellow subsidiaries and an associate of the
+Group.
+(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.
+(iii)
+(iv)
+22
+24
+3,458
+3,959
+25
+3,182
+4,023
+21
+RMB million
+13,507
+20,147
+20,110
+Borrowings
+29
+4,824
+7,424
+Accounts payable
+31
+12,128
+31 December
+2015
+31 December
+2016
+RMB million
+Note
+(v)
+(vi)
+(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
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+Amounts due from/to Shenhua Group, an associate of Shenhua Group, fellow subsidiaries, and
+associates of the Group:
+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
+(xv)
+1,347
+(xiv)
+(xii)
+(xi)
+48
+48
+Repairs and maintenance services expense
+(xii)
+44
+7
+Coal export agency expense
+Property leasing
+(xiii)
+4
+Purchase of equipment and construction work
+(xiv)
+1,021
+1,753
+Sale of coal chemical product
+(xv)
+3,804
+9
+3,104
+3,697
+(x)
+Mining service income
+(v)
+812
+Ancillary and social services
+(vi)
+688
+585
+Transportation service income
+6,227
+(vii)
+189
+Transportation service expense
+(viii)
+Sale of coal
+(ix)
+4,724
+4,188
+Purchase of coal
+195
+Other income
+(xvi)
+2,123
+(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
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+3,324
+41. RELATED PARTY TRANSACTIONS (Continued)
+(iv)
+(v)
+(vi)
+(vii)
+(viii)
+(ix)
+(x)
+(xi)
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+2,600
+(xxiii)
+Repayment of loans from Shenhua Group
+2,365
+Granting of loans from Shenhua Finance
+(xvii)
+4,768
+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
+(xiii)
+undiscounted
+More than
+or less than
+8
+2015
+RMB million
+RMB million
+2016
+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
+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
+22,673
+Total amounts due to Shenhua Group, an
+associate of Shenhua Group and fellow
+subsidiaries, and associates of the Group
+26,406
+15,491
+2016 Annual Report 225
+Notes to the Consolidated Financial Statements (Continued)
+37. FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2016
+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:
+1
+8
+1
+9
+2,358
+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.
+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;
+-
+Financial liabilities:
+-
+The Company is ultimately controlled by the PRC government and the Group operates in an
+economic environment currently predominated by 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 2016
+Notes to the Consolidated Financial Statements (Continued)
+234 China Shenhua Energy Company Limited
+Total remuneration is included in "personnel expenses" as disclosed in Note 10.
+9
+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:
+31 December 2016
+2,245
+2-5 years
+9,287
+4.58
+21,287
+8,952
+3,986
+3,879
+38,104
+35,305
+102,589
+17,428
+10,710
+25,069
+172,081
+Financial liabilities:
+Accounts and bills payable, accrued expenses,
+31 December 2015
+Weighted
+On demand
+Total
+Total
+average
+Weighted On demand
+average
+or less than
+interest rate
+1 year
+1-2 years
+% RMB million RMB million RMB million RMB million
+53,796
+2,653
+198,882
+543
+Total
+More than undiscounted
+5 years
+cash flows amount
+RMB million RMB million
+2,583
+Accounts and bills payable, accrued expenses,
+other payables and long-term liabilities
+65,695
+Total
+carrying
+436
+425
+66,762
+66,503
+Borrowings variable interest rate
+206
+Medium-term notes and bonds
+3.94
+4.60
+Borrowings fixed interest rate
+60,986
+4,931
+46,839
+18,064
+7,727
+10,676
+83,306
+Details of the Company's Material Subsidiaries
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+43. SUBSIDIARIES
+and voting rights held by
+Name of the subsidiary
+Place of
+incorporation
+Proportion of ownership interest
+and operation Type of legal entity
+Particulars of
+registered capital
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the end of
+the reporting period are set out below:
+236
+1,396
+2,725
+3,669
+59,567
+64,578
+4,611
+6,141
+43,233
+44,602
+1,289
+16,606
+12,354
+31 December
+2015
+RMB million
+the Group
+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.
+Principal activities
+Limited company
+31 December
+Limited company
+PRC
+Shenhua Baorixile Energy
+Co., Ltd.
+58
+50
+RMB7,102 million
+RMB million
+PRC
+Shenhua Zhunge'er Energy
+100 Trading of coal; provision of
+integrated services
+100
+RMB4,989 million
+31 December
+Limited company
+51 Trading of coal
+51
+RMB4,696 million
+Limited company
+Shenwan Energy Co., Ltd. PRC
+100 Trading of coal
+10
+100
+RMB1,888 million
+Limited company
+Shenhua Sales Group Co., Ltd. PRC
+2015
+2016
+Shenhua Shendong Coal Group PRC
+Co., Ltd.
+2016
+Transportation costs
+42. EVENTS AFTER THE REPORTING PERIOD
+283,646
+213,124
+19,890
+19,890
+263,756
+35
+35
+233,014
+283,646
+31,098
+10,541
+1,156
+1,224
+1,115
+233,014
+872
+4,985
+3,872
+3,460
+Total equity
+Share capital
+Reserves
+Equity
+Net assets
+Total non-current liabilities
+Accrued reclamation obligations
+Long-term liabilities
+Medium-term notes
+Borrowings
+Non-current liabilities
+24,955
+2016 Annual Report 235
+Notes to the Consolidated Financial Statements (Continued)
+41. RELATED PARTY TRANSACTIONS (Continued)
+Accrued expenses and other payables
+Borrowings
+Restricted bank deposits
+Cash and time deposits at banks
+Prepaid expenses and other current assets
+Accounts and bills receivable
+Balances with other government-related entities, including state-controlled banks in the PRC
+5,696
+448
+691
+5,463
+10,427
+7,618
+69,389
+67,472
+63,347
+69,822
+RMB million
+RMB million
+2016
+Interest expenses (including amount capitalised)
+Interest income
+RMB1,169 million
+Power revenue
+Coal revenue
+2015
+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:
+41.4 Transactions with other government-related entities in the PRC (Continued)
+For the year ended 31 December 2016
+31 December
+Industrial Co., Ltd.
+100
+PRC
+100
+RMB2,098 million
+Limited company
+PRC
+Shenhua Fujian Energy
+51 Generation and sale of
+electricity; trading of coal
+Co., Ltd.
+51
+RMB2,152 million
+Limited company
+PRC
+Shenhua Sichuan Energy
+Co., Ltd. (note (iii)))
+Co., Ltd.
+RMB2,000 million
+PRC
+Guohua Taicang Power
+50 Generation and sale of
+electricity
+50
+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
+Limited company
+RMB1,834 million
+100 Generation and sale of
+electricity
+PRC
+Shenhua Baotou Coal
+51 Provision of Transportation
+services
+Co., Ltd.
+51
+RMB5,180 million
+Limited company
+PRC
+Shenhua Zhonghai Shipping
+70 Provision of harbour and port
+services
+Administration Co., Ltd.
+70
+RMB6,790 million
+Limited company
+Shuohuang Railway
+Shenhua Huanghua Harbour PRC
+Ltd.
+85 Provision of transportation
+53 Provision of transportation
+services
+85
+85
+RMB4,710 million
+Limited company
+Shenhua Zhunchi Railway Co., PRC
+Development Co., Ltd.
+53
+53
+RMB5,880 million
+Limited company
+services
+Limited company
+PRC
+Hebei Guohua Cangdong
+Power Co., Ltd.
+80
+RMB4,670 million
+Limited company
+Guangdong Guohua Yuedian PRC
+100 Generation and sale of
+electricity
+10
+RMB3,024 million
+Limited company
+PRC
+Shenhua Shendong Power
+Co., Ltd.
+70 Generation and sale of
+electricity
+70
+RMB4,010 million
+Taishan Power Co., Ltd.
+Limited company
+70 Generation and sale of
+electricity; coal mining and
+development
+63 Coal mining; provision of
+loading and transportation
+services
+57 Coal mining; provision of
+loading and transportation
+services
+58 Coal mining and development;
+generation and sale of
+electricity
+44
+57
+70
+RMB2,278 million
+Limited company
+Shaanxi Guohua Jinjie Energy PRC
+Co., Ltd.
+Energy Co., Ltd.
+RMB2,674 million
+Limited company
+Shenhua Guohua International PRC
+Power Co., Ltd.
+80 Generation and sale of
+electricity
+Zhejiang Guohua Zheneng
+PRC
+%
+2015
+Principal activities
+2016
+31 December
+the Group
+Particulars of
+registered capital
+31 December
+Proportion of ownership interest
+and voting rights held by
+Details of the Company's Material Subsidiaries (Continued)
+43. SUBSIDIARIES (Continued)
+and operation Type of legal entity
+Name of the subsidiary
+Place of
+incorporation
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 237
+electricity
+65 Generation and sale of
+60 Generation and sale of
+electricity
+ទ
+RMB4,029 million
+Limited company
+PRC
+Suizhong Power Co., Ltd.
+(note (i))
+Power Generation Co., Ltd.
+60
+60
+RMB3,255 million
+Limited company
+Shenhua Beidian Shengli
+For the year ended 31 December 2016
+RMB million
+PRC
+49
+Shenhua Zhonghai Shipping Co., Ltd. PRC
+12,343
+14,112
+2,388
+3,062
+49
+47
+PRC
+Shuohuang Railway Development
+Co., Ltd.
+1,588
+1,550
+72
+(36)
+47
+70
+18
+2,940
+PRC
+Administration Co., Ltd.
+Shenhua Huanghua Harbour
+1,625
+1,525
+335
+206
+20
+20
+20
+220
+PRC
+Power Co., Ltd.
+Guangdong Guohua Yuedian Taishan
+2,870
+49
+30
+49
+Shenhua Sichuan Energy Co., Ltd.
+275
+25
+90
+206
+43
+43
+1,885
+PC
+Co., Ltd.
+Shenhua Baorixile Energy Industrial
+10,027
+10,636
+505
+576
+PRC
+1,860
+Hebei Guohua Cangdong Power
+Co., Ltd.
+1,955
+1,928
+575
+503
+50
+59
+PRC
+Dingzhou Power
+1,485
+1,449
+405
+329
+49
+49
+PRC
+PRC
+30
+48
+367
+RMB million
+RMB million
+RMB million
+2015
+2016
+2015
+Current assets
+31 December 31 December 31 December
+RMB million
+31 December 31 December
+2016
+RMB million
+RMB million
+RMB million
+2015
+2016
+31 December 31 December
+2015
+2016
+RMB million
+1,145
+1,062
+13,580
+Current liabilities
+6,183
+5,965
+4,885
+5,218
+18,181
+18,506
+12,437
+12,292
+Non-current assets
+1,047
+1,233
+1,976
+1,967
+11,680
+Hebei Guohua Cangdong
+Power Co., Ltd.
+Shenhua Baorixile Energy
+Industrial Co., Ltd.
+Shenhua Zhunge'er Energy
+Co., Ltd.
+Shenwan Energy Co., Ltd.
+31 December
+PRC
+Zhejiang Guohua Zheneng Power
+Generation Co., Ltd.
+3,168
+3,010
+183
+302
+30
+30
+PRC
+Power Co., Ltd.
+Shenhua Guohua International
+2,610
+2,866
+50
+156
+40
+42
+40
+414
+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)
+China Shenhua Energy Company Limited
+240
+65,853
+67,994
+45,699
+48,089
+with non-controlling interests
+Individually immaterial subsidiaries
+2,381
+2,212
+647
+4114
+31 December
+2015
+RMB million
+42
+3,787
+100
+AUD400 million
+Limited company
+Australia
+Shenhua Australia Holding
+Pty Ltd.
+%
+Shenhua Watermark Coal
+Pty Ltd.
+2015
+31 December
+31 December
+Principal activities
+Proportion of ownership interest
+and voting rights held by
+the Group
+Particulars of
+registered capital
+and operation Type of legal entity
+2016
+Australia
+Limited company
+AUD350 million
+Limited company
+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;
+generation and sale of
+electricity
+100 Coal mining and development;
+10
+100
+Name of the subsidiary
+RMB10,000 million
+Place of
+incorporation
+43. SUBSIDIARIES (Continued)
+Transportation Co., Ltd.
+100 Provision of transportation
+10
+100
+RMB4,701 million
+Limited company
+Shenhua Finance
+PRC
+Chemical Co., Ltd.
+100 Coal chemical
+10
+100
+RMB5,132 million
+Limited company
+Shenhua Railway
+PRC
+Limited company
+RMB5,000 million
+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
+100
+Details of the Company's Material Subsidiaries (Continued)
+100
+100 Provision of transportation
+services
+(Tianjin) Finance Lease Co., Ltd. PRC
+31 December
+31 December
+Year ended 31 December
+31 December
+31 December
+Accumulated
+non-controlling interests
+2016
+Profit allocated to
+non-controlling interests
+voting rights held by
+interest and
+Proportion of ownership
+Place of
+incorporation
+and operation
+Name of the subsidiary
+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:
+non-controlling interests
+2015
+2016
+2015
+3,976
+594
+434
+49
+49
+PRC
+Shenwan Energy Co., Ltd.
+RMB million
+RMB million
+RMB million
+RMB million
+%
+%
+2015
+2016
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+43. SUBSIDIARIES (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+PRC
+Xuzhou Power
+Co., Ltd.
+100 Comprehensive utilisation of
+inferior coal resources
+Development & Utilisation
+10
+100
+RMB1,200 million
+Limited company
+Shenhua Zhunneng Resources PRC
+services
+51 Provision of financial lease
+51
+RMB1,000 million
+Limited company
+Limited company
+Shenhua Zhunge'er Energy Co., Ltd. PRC
+RMB1,790 million
+100 Generation and sale of
+electricity
+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)
+(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.
+51 Generation and sale of
+electricity
+51
+RMB755 million
+Limited company
+PRC
+Zhoushan Power
+100
+31 December
+2016
+RMB million
+14,538
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY (Continued)
+Non-current liabilities
+973
+1,139
+2,087
+1,961
+2,242
+2,117
+718
+1,999
+Total equity
+3,240
+3,286
+3,163
+3,241
+383
+29,848
+6,000
+5,857
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2016
+2015
+2016
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+26,107
+1,376
+8,571
+5,507
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+1,060
+929
+1,031
+1,343
+8,210
+7,475
+969
+1,436
+598
+1,130
+2,072
+2,276
+Current liabilities
+6,803
+2016
+RMB million
+7,125
+29,387
+4,457
+5,349
+5,568
+5,429
+Non-current assets
+29,320
+2015
+2015
+RMB million
+2015
+540
+40
+2
+2
+1,435
+3,457
+529
+Net cash inflow from operating
+activities
+1,438
+1,197
+127
+463
+8,419
+4,484
+20
+372
+Net cash outflow from investing
+activities
+(610)
+(212)
+(656)
+(766)
+(1,935)
+(2,010)
+(85)
+(393)
+Net cash (outflow) inflow from
+financing activities
+(828)
+(985)
+472
+529
+Dividend paid to non-controlling
+interests
+36
+RMB million
+RMB million
+Revenue
+3,873
+4,099
+1,106
+1,594
+17,250
+13,386
+2,112
+2,002
+Expenses
+2,741
+2,780
+1,162
+1,449
+8,737
+143
+13
+5,051
+6,477
+17
+147
+2016
+(74)
+845
+income for the year
+Profit (loss) and total comprehensive
+1,971
+1,928
+7,234
+967
+2016
+2015
+2016
+6,458
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Revenue
+6,324
+5,859
+9,677
+9,234
+2,697
+2,972
+5,695
+4,019
+Expenses
+5,249
+4,174
+8,114
+7,948
+2,146
+2,082
+3,120
+2,998
+Profit and total comprehensive
+income for the year
+886
+1,212
+1,364
+4,092
+2,680
+2,557
+3,210
+2015
+2016
+2015
+2016
+2015
+2016
+2015
+2016
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+3,030
+2,958
+4,286
+4,345
+23,739
+3,266
+Non-current liabilities
+2,345
+2,769
+448
+427
+1,196
+160
+1,030
+934
+Total equity
+8,114
+7,729
+25,180
+18
+75
+475
+30
+1,063
+(295)
+(348)
+171
+(54)
+(610)
+(1,234)
+Net cash inflow (outflow)
+2,798
+112
+112
+(9)
+13
+103
+41
+2016 Annual Report 241
+Notes to the Consolidated Financial Statements (Continued)
+2015
+2016
+2015
+2016
+31 December 31 December 31 December
+31 December
+958
+31 December 31 December 31 December 31 December
+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)
+43. SUBSIDIARIES (Continued)
+For the year ended 31 December 2016
+Shenhua Zhonghai
+Shipping Co., Ltd.
+531
+390
+(363)
+634
+672
+826
+Dividend paid to non-controlling
+interests
+245
+193
+344
+254
+365
+471
+Net cash inflow from operating
+activities
+1,444
+2,394
+4,199
+956
+(3)
+(42)
+(942)
+(47)
+activities
+Net cash outflow from financing
+25
+(184)
+(4,045)
+(1,457)
+1,401
+investing activities
+Net cash inflow (outflow) from
+650
+(962)
+NOTES
+(394)
+(2,653)
+3
+2
+22
+122
+(27)
+344
+46
+(1,530)
+2016 Annual Report 243
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY
+NOTES
+31 December
+2016
+RMB million
+Net cash inflow (outflow)
+Non-current assets
+Investments in subsidiaries
+Investments in associates
+Available-for-sale investments
+Other non-current assets
+Lease prepayments
+Deferred tax assets
+Total non-current assets
+Current assets
+31 December
+2015
+RMB million
+52,469
+55,404
+3,446
+3,469
+Property, plant and equipment
+Construction in progress
+Intangible assets
+(2,712)
+(2,712)
+(1,344)
+115
+583
+676
+Net cash inflow from operating
+activities
+1,646
+2,832
+1,962
+719
+19
+2,546
+1,860
+1,312
+2,687
+Net cash (outflow) inflow from
+investing activities
+(155)
+(1,890)
+(2,180)
+(1,416)
+(2,600)
+(1,488)
+activities
+1,712
+Net cash outflow from financing
+(130)
+(470)
+(312)
+1,434
+(424)
+(230)
+25
+10
+1,780
+127,264
+Borrowings
+5,263
+9,038
+Short-term debenture
+4,998
+Accounts and bills payable
+6,251
+8,693
+Accrued expenses and other payables
+63,875
+57,364
+Current portion of long-term liabilities
+20,227
+200
+Current liabilities
+Income tax payable
+630
+Total current liabilities
+97,186
+80,923
+Net current assets
+61,107
+38,384
+Total assets less current liabilities
+294,187
+264,112
+244
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+1,570
+119,307
+158,293
+Total current assets
+1,065
+1,065
+1,647
+1,647
+36,853
+31,796
+3,167
+3,245
+152
+58
+233,080
+225,728
+Inventories
+3,591
+4,436
+Accounts and bills receivable
+22,559
+20,414
+19,276
+Cash and cash equivalents
+9,500
+27,750
+months
+132,569
+Time deposits with original maturity over three
+335
+Restricted bank deposits
+64,923
+84,782
+Prepaid expenses and other current assets
+19,385
+649
+460
+55
+455
+1,439
+1,310
+1,419
+1,661
+3,260
+3,677
+1,340
+1,251
+Non-current assets
+11,332
+12,004
+RMB million
+14,366
+16,974
+Current assets
+18,340
+10,527
+Current liabilities
+5,147
+4,913
+1,304
+1,698
+7,932
+9,291
+3,585
+3,230
+Non-current liabilities
+278
+5,099
+5,630
+10,276
+RMB million
+RMB million
+RMB million
+(273)
+Net cash inflow (outflow)
+2
+(697)
+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)
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+Shenhua Huanghua Harbour
+Administration Co., Ltd.
+RMB million
+Guangdong Guohua Yuedian
+Taishan Power Co., Ltd.
+31 December 31 December
+2016
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+2015
+2016
+31 December 31 December
+1,841
+31 December
+2015
+2015
+31 December
+31 December 31 December
+2016
+Zhejiang Guohua Zheneng
+Power Generation Co., Ltd.
+Shenhua Guohua
+International Power Co., Ltd.
+2,978
+2016
+2,167
+2,501
+2,595
+6,476
+7,275
+Expenses
+4,963
+5,300
+2,015
+2,022
+9,045
+10,728
+5,135
+5,111
+Profit and total comprehensive
+income for the year
+1,031
+1,677
+1,223
+520
+189
+118
+10
+410
+306
+interests
+10,758
+Dividend paid to non-controlling
+1,034
+609
+69
+490
+460
+20
+1,618
+(6,460)
+9,794
+3,964
+Total equity
+7,624
+8,123
+9,554
+8,699
+10,461
+10,559
+5,530
+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
+7,607
+6,310
+Revenue
+RMB million
+RMB million
+RMB million
+2,780
+RMB million
+RMB million
+2015
+2016
+2015
+2016
+2015
+RMB million
+3,001
+17,395
+Notes to the Consolidated Financial Statements (Continued)
+Profit for the year
+(9,283)
+(9,561)
+(12,784)
+(13,912)
+(11,116)
+41,253
+58,482
+34,520
+69,844
+69,598
+Profit before income tax
+Income tax
+237
+428
+410
+588
+61,847
+477
+55,932
+24,959
+Earnings per share (RMB)
+7,060
+7,310
+9,762
+10,226
+8,218
+Non-controlling interests
+49,063
+24,910
+39,301
+45,706
+50,264
+Company
+Equity holders of the
+Profit for the year attributable to:
+31,970
+17,649
+- Basic
+Share of results of associates
+(5,123)
+1,242
+Other income
+(3,078)
+(5,856)
+(770)
+(888)
+(474)
+534
+Other gains and losses
+(9,714)
+(8,835)
+(9,285)
+(8,458)
+expenses
+General and administrative
+(610)
+(8,423)
+(5,748)
+939
+1,379
+(4,459)
+(3,321)
+(3,568)
+Finance costs
+723
+608
+803
+1,659
+758
+Interest income
+(1,511)
+(626)
+(419)
+(382)
+(494)
+Other expenses
+776
+2.527
+2.298
+1.976
+holders of the Company
+Equity attributable to equity
+384,969
+363,921
+365,570
+338,210
+316,270
+266,013
+Net assets
+195,870
+185,302
+187,116
+168,056
+Total liabilities
+79,575
+94,383
+191,760
+74,524
+280,113
+298,068
+2016 Annual Report 245
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+384,969
+363,921
+365,570
+338,210
+300,698
+316,270
+67,994
+65,853
+64,872
+58,097
+50,257
+Non-controlling interests
+316,975
+Total equity
+53,115
+58,679
+Total non-current liabilities
+369,573
+Total non-current assets
+RMB Million RMB Million
+2016
+2015
+2014
+RMB Million
+RMB Million RMB Million
+402,759
+2013
+As at 31 December
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+Section XVI Summary of Major Financial Information for the Recent Five Years (Continued)
+China Shenhua Energy Company Limited
+250
+1.252
+0.887
+2012
+431,226
+438,755
+443,266
+112,185
+101,487
+110,778
+134,001
+109,377
+Total current liabilities
+576,729
+559,791
+550,872
+525,326
+484,326
+Total assets
+121,036
+119,646
+122,567
+114,753
+Total current assets
+(584)
+(794)
+133,463
+(881)
+50
+30
+----
+213,124
+110,455
+1,681
+15,987
+56,967
+85,001
+(2,840)
+(4,281)
+4,281
+(14,718)
+--- (14,718)
+17,395
+17,395
+2,840
+At 31 December 2016
+56,967
+- 30
+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
+(2,699)
+263,756
+158,756
+1,681
+30
+30
+85,001
+(398)
+2,699
+(6,365)
+(6,365)
+56,997
+56,967
+18,288
+246
+production funds
+production funds
+85,001
+At 1 January 2015
+RMB million RMB million
+RMB million
+Total
+Retained
+earnings
+Capital and
+other reserves
+14,546
+income
+RMB million RMB million
+reserves
+Statutory comprehensive
+Share
+premium
+Other
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY (Continued)
+(1,031)
+For the year ended 31 December 2016
+RMB million
+Utilisation of maintenance and
+1,681
+210,447
+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
+109,219
+production funds
+production funds
+Dividend declared (Note 13)
+year
+Total comprehensive income for the
+Other comprehensive income
+Profit for the year
+17,395
+Utilisation of maintenance and
+China Shenhua Energy Company Limited
+Appropriation of maintenance and
+Documents Available
+for Inspection
+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.
+2016
+Section XVI Summary of Major Financial Information for the Recent Five Years
+China Shenhua Energy Company Limited
+17 March 2017
+(Zhang Kehui)
+(Huang Qing)
+(Zhang Jiming)
+明
+(Zhang Zifei)
+(Wang Yongcheng)
+2016 Annual Report 249
+(Wang Shumin)
+RMB Million RMB Million
+Cost of sales
+Selling expenses
+58,284
+Section XIV Documents Available for Inspection
+53,728
+74,972
+82,871
+80,978
+Revenue
+183,127
+(124,843)
+(178,109)
+(206,359)
+(178,407)
+177,069
+253,081
+289,230
+259,385
+(123,341)
+IMHE
+Gross profit
+(Wang Jinli)
+(Gong Huazhang)
+The annual report for the year 2016 signed by the chairman
+觉徐丽泰
+(Han Jianguo)
+(Ling Wen)
+韩建国
+(Zhang Yuzhuo)
+Directors
+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.
+Section XV Signing Page for Opinions
+2016 Annual Report 247
+Approved by the Board for submission on: 17 March 2017
+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
+张飞
+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
+(Li Dong)
+(Fan Hsu Lai Tai)
+張玉年
+(Guo Peizhang)
+Senior Management
+(Ling Wen)
+部の
+Section XV Signing Page for Opinions (Continued)
+China Shenhua Energy Company Limited
+248
+申林
+(Zhou Dayu)
+周大亨
+(Shen Lin)
+(Zhai Richeng)
+(Li Dong)
+翟
+Supervisors
+(Zhao Jibin)
+(Chen Hongsheng)
+神東站
+Shenchi South
+Shenchi
+神池
+B6
+Shendong
+神木北站
+Shuozhou West
+神池南
+A7
+Zhunge'er
+朔州西
+河北省
+Batuta
+巴圖塔
+天津市
+TIANJIN
+SB
+Dongsheng
+Shenmu North C
+韓家村
+Hanjiacun
+東馬
+HEBEI
+陝西省
+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.
+山西省
+Shengli Energy Branch
+Major
+Branches
+Guohua Huizhou Thermal Power Branch
+Diandaigou
+51.00%- Shenhua Funeng Power Generation Co., Ltd.
+30
+China Shenhua Energy Company Limited
+Section V Directors' Report
+I.
+BUSINESS REVIEW
+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%.
+SHAANXI
+19.3
+Proportion of
+2016
+(after
+adjustments)
+completion
+Actual
+amount for
+2015
+Year-on-year
+change
+(%)
+(%)
+Commercial coal production 100 million tonnes
+Coal sales
+2.898
+2.8
+SHANXI
+Actual
+amount for Target for
+2016
+地點位满
+D1.黃驊港
+Datong East
+Luoyuan Wan Project (under preparation)
+D4.羅源灣項目(籌備中)
+Zhuhai Coal Dock
+D3. 珠海煤碼頭
+Coal Dock
+Huanghua Port
+D2.天津煤碼頭
+Tianjin
+港口 PORT
+C6.巴准鐵路
+Baoshen Railway
+C5. 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
+B15. 台山電力
+Shouguang Power
+B29.柳州電力
+Liuzhou Power
+B28. 壽光電力
+Guohua Power Branch
+Yuyao Power
+、煤化工 COAL CHEMICAL
+F1. 包頭煤化工
+Baotou Coal Chemical
+.航運 SHIPPING
+Dagin Railway
+大秦鐵路
+BEIJING
+北京
+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
+INNER MONGOLIA AUTONOMOUS REGION
+包頭
+Baotou
+內蒙古自治區
+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)
+Zhunchi Railway
+CB.准池鐵路
+Ganquan Railway
+Bazhun Railway
+C7.甘泉鐵路
+Shenhua Zhonghai Shipping Company
+E1. 神華中海航運
+Amo Railway (construction suspended)
+65.00%- Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+9.85%
+55.00% Sanhe Power Co., Ltd.
+73.06%
+Coal Sales
+Other A Share
+Shareholders
+Power Generation
+China Shenhua
+Energy Company Limited
+Major Branches
+Major Controlling Companies
+Railway
+Port
+Shipping
+Major Branches
+Shenhua Baotou Coal
+Coal Chemical
+100.00%
+Chemical Co., Ltd.
+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.
+60.00% Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+73.33%- Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+Limited
+80.00% Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+Shenhua Group
+Corporation
+17.09%
+B27. 余姚電力
+220.57
+Total power output dispatch Billion kWh
+3.705
+111.2
+3.55
+3.949
+100 million tonnes
+2.809
+103.5
+Huanghua
+Dingzhou West
+肅寧北
+Suning North
+秦皇島港
+Qinhuangdao Port
+「曹妃甸港
+Caofeidian Port
+Dajiawa
+Equity structure diagram
+H Share
+Coal Production
+Major Controlling Companies
+Shareholders
+51.00%-
+Hebei Guohua Cangdong Power Co., Ltd.
+40.50%-
+-100.00% China Shenhua Overseas Development and Investment Co., Ltd. 100.00%
+100.00% Shenhua Hong Kong Limited
+-100.00% Shenhua Zhunneng Group Co., Ltd.
+51.00% Shenhua (Tianjin) Financial Leasing Co., Ltd.
+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 Fujian Energy Co., Ltd.
+51.00% Shenwan Energy Co., Ltd.
+-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.
+51.00% Shenhua Sichuan Energy 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.
+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
+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.
+65.00%- Tianjin Guohua Panshan Power Generation Co., Ltd.
+-100.00% Shenhua Geological Exploration Co., Ltd.
+-100.00% Shenhua Information Technology Co., Ltd.
+100.00% Shenhua Logistics Group Corporation Limited
+indirectly controlled)
+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%-
+Tianjin Guohua Jinneng Power Co., Ltd.
+55.00%-Jiangsu Guohua Chenjiagang Power Co., Ltd.
+Major
+Controlling
+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%
+50.00%-Suizhong Power Co., Ltd.
+Shenhua Baoshen Railway Group Co., Ltd.
+88.16%
+Shenhua Baoshen Railway Co., Ltd.
+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 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.
+100.00% Shenhua Finance Co., Ltd.
+(Directly and
+88.46%
+Zhuhai Wind
+88.5
+Ningdong Power
+Tibet
+西藏
+中國 CHINA
+97km 15.52 million tonnes
+Amo Railway (construction suspended]
+(0.8)
+79.8
+79.2
+2018
+2015
+40 million tonnes
+210.2km
+Huangda Railway (under construction)
+(32.7)
+27.5
+18.5
+Total of shipping volume
+External customers
+8.7
+81.4
+(2.0)
+157.4
+154.3
+新疆
+(1.2)
+Xinjiang
+Qinghai
+黑龍江
+Amoqi
+阿莫旗•
+Hulunbeier Molidawaqi
+莫力達瓦旗
+呼倫貝爾
+Ningxia
+Sichuan
+四川
+(22
+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)
+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
+青海
+243.1
+240.1
+Total of China Shenhua
+294
+76.0
+281.6
+321
+77.4
+305.5
+Including: Sales to external customers
+year
+capacity
+Length
+construction
+16.1
+523
+60.7
+The Group's internal customers
+(1.6)
+12.8
+12.6
+(1.6)
+124
+12.2
+(1.4)
+211.40
+8.5
+9.2
+completion year
+Baotou Mines
+0.4
+(7.0)
+236
+1.2
+4.3
+237
+1.0
+4.0
+Sales to internal coal chemical segment
+5.5
+0.9
+● 齊齊哈商
+292
+84.6
+308
+21.6
+85.4
+Sales to internal power segment
+0.1
+0.1
+0.4
+0.4
+0.5
+0.5
+22.8
+EMM Nansu
+B26、珠海風能
+Heilongjiang
+塔本陶勒盖
+Sanhe Power
+B9. 北京燃氣
+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���工作階段)
+Watermark Coal Project in Australia (plans under review)
+A6.澳大利亞沃特馬克煤礦項目(規劃審查中)
+A5. 包頭確區
+Baotou Mines
+Baorixile Mines
+A4.寶日希勒礦區
+Shengli Mines
+A3. 勝利礦區
+Zhunge'er Mines
+A2. 准格爾礦區
+Shendong Mines
+A1. 神東礦區
+B8、國華呼電
+B1. 滄束電力
+【電廠 POWER
+1 煤礦 COAL MINE
+2017
+Beijing Gas Power
+主要資產分佈圖 Assets Distribution Map
+B3. 定洲電力
+Dingzhou Power
+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
+Shenwan Energy
+B21. 神皖能源
+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
+B14.神木電力
+Jinjie Energy
+B13. 錦界能源
+Zheneng Power
+Shendong Power
+Zhunge'er Power
+Guohua Zhunge'er
+B7. 國華准格爾
+B6.神來電力
+B12. 舟山電力
+Zhoushan Power
+Panshan Power
+B5. 准能電力
+B11. 浙能電力
+B4.盤山電力
+Suzhong Power
+B10. 綏中電力
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+Taiwan
+廣西
+廣東
+Hunan
+Jiangxi
+湖南
+江西
+Hebei
+河北
+Hubei
+湖北
+Guizhou
+貴州
+Henan
+Shaanxi
+河南
+陝西
+Gansu
+甘肅
+Shanxi
+山西
+Inner Mongolia Autonomous Region
+內蒙古自治區
+Tavan Tolgoi
+Guangdong
+Guangxi
+海南
+Hainan
+台灣:
+Fujian
+福建
+Tarangaole
+塔然高勒
+Diaoyu Islands.
+釣魚島
+Ganqimaodu
+甘其毛都
+Jilin
+吉林
+Qiqihar
+Liaoning
+Zhejiang
+浙江
+Jiangsu
+江蘇
+Anhui
+安徽
+Shandong
+山東
+Hongkong
+香港
+澳門
+遼寧
+104.3
+1.810
+Revenue
+1,732
+1,461
+33.530
+27,232
+5.040
+3,769
+2,112
+2,002
+4.831
+5,550
+(17,350)
+(14,595)
+(2,523)
+(2,026)
+(1,707)
+(1,760)
+(4,330)
+3,452
+(4,720)
+4.465
+29.356
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+4.174
+3,420
+575
+317
+380
+541
+4.831
+5.547
+23,812
+15.000
+10,070
+2.302
+(61,284)
+(10,135)
+(10,950)
+རམྦྷམྦྷཝཝཱ
+As at
+As at
+As at
+31 December 2015
+31 December 2016
+RMB million
+RMB milion
+RMB million
+RMB million
+RMB million
+ནྡྲ རྐནྡྷམྦྷ
+2016
+2015
+22,303
+22,489
+124,661
+125,152
+(65,396)
+1,350
+266
+133
+254
+649
+As at
+As at
+As at
+2015
+As at
+31 December 2015
+31 December 2016
+31 December 2015
+31 December 2016
+RMB million
+RMB million
+RMB million
+RMB milion
+31 December 2016
+2016
+2015
+2016
+6.433
+11.689
+Selling, general and administrative
+RMB100 million
+147
+140.58
+46
+operating activities
+expenses and net finance costs
+Net cash generated from
+RMB million
+92,564
+46,341
+99.7
+As at
+As at
+As at
+17.017
+operations
+47.8
+55,406
+RMB100 million
+2.036
+1,831.27
+112
+Basic eamings per share
+RMB/share
+1.252
+0.887
+Change in unit production costs of
+411
+Cost of sales
+RMB100 million
+1428
+1,248.43
+144
+Net cash generated from
+RMB million
+81,883
+Segment profit loss) from
+RMB million
+1
+year-on-year
+(134,519)
+(131,373)
+པཉྩ ནཱམབྷཎྜ དྷརམྦྷམྦྷདྷབྷ
+31 December 2015
+RMB million
+Table 4 Operation Data
+Table 5 Commercial Coal Production Volume
+Table 6 Power Business
+Railway
+Port
+Shipping
+Coal chemical
+Unallocated items
+2016
+2015
+2016
+2015
+207,879
+RMB million
+(115,814)
+(116,711)
+1
+operating activities
+31 December 2016
+31 December 2015
+31 December 2016
+self-produced coal
+decrease of
+decrease of
+year-on-year
+excluding Shenhua
+RMB million
+1% to 2%
+11.0%
+Finance Company
+Segment total assets
+198,140
+246,972
+Segment total liabilities
+RMB million
+Revenue
+RMB million
+966
+34
+Power plants
+Regional grid
+Location
+generation
+dispatch
+Gross power generation
+billion kWh
+236.04
+225.79
+45
+Zhunge'er Mines
+62.9
+63.6
+(1.1)
+100 million kWh 100 million kWh
+hours
+177.0
+Total power output dispatch
+183.0
+34.7
+289.8
+280.9
+32
+Total power
+Including: Self-produced coal
+million tonnes
+285.5
+289.3
+(1.3)
+By mines
+Gross power
+output
+utilisation
+Purchased coal
+million tonnes
+109.4
+81.2
+Shendong Mines
+billion kWh
+220.57
+210.45
+282.1
+312.9
+(9.8)
+Others
+18
+19
+(5.3)
+Guohua Hulunbeer Power
+North China Power Grid
+North China Power Grid
+Northeast Power Grid
+Inner Mongolia
+Inner Mongolia
+Inner Mongolia
+36.3
+48.4
+46.4
+Transportation turnover of
+billion tonne km
+244.6
+200.1
+thousand tonnes
+Polypropylene sales
+Guchua Zhungeler
+(83)
+4.8
+Shengli Mines
+16.0
+12.1
+322
+Baorixile Mines
+25.0
+25.1
+%
+(0.4)
+Polyethylene sales
+thousand tonnes
+292.6
+3192
+(8.3)
+Baotou Mines
+1.1
+1.2
+Zhunge'er Power
+million tonnes
+million tonnes
+Change
+(57,833)
+(65.830)
+(57,833)
+183,127
+177,069
+64.477
+57,237
+(124,843)
+(123,341)
+(1,345)
+596
+46,444
+37,657
+As at
+As at
+As at
+31 December 2016
+(65,830)
+177,069
+183,127
+RMB million
+974
+864
+2.237
+1,838
+(67)
+(196)
+1,261
+808
+As at
+31 December 2015
+As at
+��ཽཎྞཱ･ཎྜཎྜ༔ ར
+Eliminations
+Total
+2015
+210.45
+2015
+RMB million
+RMB million
+31 December 2015 31 December 2016 31 December 2015 31 December 2016 31 December 2015
+1,271
+RMB million
+RMB million
+Table 7 Cost of Sales of Coal Segment
+Table 8 Cost of Sales of Power Segment
+2016
+2015
+Change %
+Commercial coal production
+Coal sales
+million tonnes
+289.8
+280.9
+32
+million tonnes
+394.9
+370.5
+66
+Total production
+2016
+2015
+(195,870
+(191,760)
+316,985
+278,929
+RMB million
+RMB million
+8,038
+8,189
+11,621
+12,564
+377,853
+348,720
+RMB million
+(374,443)
+576,729
+559,791
+(2,063)
+(2,363)
+(4,686)
+(5.593)
+(137,179)
+(185,478)
+(433,391)
+(53,939)
+(107.493)
+(109,404)
+40.9
+151.5
+229
+38.3
+151.3
+1. Direct arrival
+Shenhua Zhuhai Coal Dock
+8.2
+5.7
+292
+95.6
+354.1
+316
+94.8
+374.4
+Self-produced coal and purchased coal
+(1)
+221
+Shenhua Tianjin Coal Dock
+(0.1)
+Table 13 Coal Resources Reserve
+3.6
+318
+3.0
+11.2
+339
+(II) Sales of domestic trading coal
+9.0
+10.1
+345
+54.7
+202.6
+376
+56.5
+223.1
+2. Seaborne
+བྷིཝོཔྤཡོ པི
+Third-party ports
+3.6
+624
+780
+Huanghua Port
+Yuyao Power
+8.2
+5.7
+293
+98.7
+365.5
+317
+97.8
+386.2
+I. Domestic sales
+211
+4,218
+39.1
+40.1
+North China Power Grid Beijing
+Beijing Gas-fired Power
+%
+East China Power Grid Zhejiang
+16.0
+15.6
+2,055
+950
+950
+Self-owned ports
+48
+125
+125
+12
+16
+6.6
+ཁྐྲཎྜ
+950
+༄བ་ བྷཊྛ
+608
+509
+223
+596
+བྷྱཿཀྑུ ཨྰཿཀྑུ
+231
+780
+Coal resources (under PRC standard)
+Recoverable reserve (under PRC standard)
+Marketable reserve (under JORC standard)
+24.2
+30.0
+118.7
+154.3
+79
+45.6
+49.2
+222
+200.1
+244.6
+%
+billion tonnes km
+billion tonnes km
+Change
+2015
+2016
+Zhunchi Railway
+25.7
+(5.8)
+73
+78
+443
+0.3
+1.2
+0.8
+3.3
+III. Overseas coal sales
+II. Export sales
+0.5
+Bazhun Railway
+4357
+75
+200.0
+0.4
+12
+80.0
+05
+0.9
+(6.4)
+14
+%
+11.1
+226.4
+Change
+2015
+2016
+As at
+As at
+As at
+As at
+As at
+As at
+413
+0.1
+0.2
+415
+0.1
+0.2
+(II) Sales of imported coal
+Total seaborne coal
+million tonnes
+million tonnes
+%
+201.3
+Ganquan Railway
+Baoshen Railway
+(44.6)
+45.3
+Dazhun Railway
+(51.5)
+6.6
+Shuchuang-Huangwan Railway
+203.8
+(2.0)
+39.5
+Shenshuo Railway
+42.1
+111.6
+158.6
+Self-owned railways
+27.0
+158.5
+40.3
+tonne
+%
+tonnes
+2016
+Change %
+2016
+2015
+2016
+Power
+Revenue
+RMB million
+183,127
+177,069
+3.4
+Commercial coal production
+100 million
+2.98
+2.898
+28
+RMB million
+2017
+Unit
+Item
+Change %
+22.9
+258
+20.2
+2034
+1147
+Section V Directors' Report
+☐
+h
+RMB million
+Overview of China Shenhua's Operating Results for the year of 2016
+Business targets for 2017
+Table 2 Financial Indicators
+Table 3 Results of Each Segment
+Target for
+Actual amount for
+Coal
+2016
+2015
+Table 1
+308
+RMB million
+RMB million
+Profit for the year attributable to
+RMB milion
+24,910
+17,649
+41.1
+tornes
+Sub-total of segment revenue
+131,357
+121,458
+69,850
+equity holders of the Company
+Power output dispatch
+billion kWh
+214.7
+220.57
+(2.7)
+Segment cost of sales
+RMB million
+237
+69,613
+27,956
+31,970
+24,959
+28.1
+Revenue from external customers
+102,283
+93,502
+EBITDA
+RMB milion
+Profit for the year
+70,762
+13.0
+Coal sales volume
+100 million
+4.07
+3.949
+3.1
+Inter-segment revenue
+29,074
+62.597
+222
+20.8
+(29.9)
+1,968
+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
+4.330
+(37.5)
+264
+165
+Zhuhai Wind Energy
+South China Power Grid Guangdong
+0.3
+03
+tonne
+%
+tonnes
+Power Grid
+(hydropower)
+Price
+volume
+Price RMB/
+200.0
+(3.0
+-
+65
+6.7
+Sichuan
+Sichuan Provincial Local
+Shenhua Sichuan Energy
+Sales
+-
+1,952
+5.331
+1
+1,760
+(0.9)
+23.7
+1.950
+80.0
+18.6
+Shipping
+14.2
+44.2
+73.1
+21.0
+2,804
+22
+270
+9.8
+17.4
+2.433
+(13.3)
+2,269
+60
+20.0
+16
+143.8
+538
+533
+(73)
+3.918
+3.632
+(3.1
+1.759
+(48.0
+1
+612
+260
+21
+233
+424
+168
+ཀཽ ཀྐོཎྞ – ཨ ཀྑཛིརྦཎྷནྟ་ ཀ ཏི
+24.5
+2,026
+(54.2
+175.0
+By regions
+Northwest/North China/ Inner Mongolia
+tonne
+%
+2016
+MW
+MW
+960
+2016
+2016
+Cost of coal purchased
+26,286 109.4 240.3 17,264
+81.2 2126
+13.0
+MW
+MW
+Production cost of self-produced
+31,297 285.5 109.6 35,654 289.3 1232
+(11.0)
+tonnes
+coal
+million tonnes tonne milion
+31 December
+301
+སྒྱུ རྒྱུ 』མོཟེ ཨཨྰཿཨྰཿཔུཀྐི སི ཧྲི࿄ཝཿཕྱམཝཿནཱཀྐམུནཱནཱསུབཨཽ་བོ་བྷཝ་ཟབྷི
+(decrease)
+Total installed Equity installed
+Cost
+Volume Unit cost Cost
+Volume Unit cost Change in
+in installed
+capacity as at
+capacity as at
+RMB
+million RMB/ RMB
+million
+RMBA unit cost
+2016
+Power
+output
+31 December
+960
+554
+Cost of power output
+dispatch
+12.313 285.5
+****
+Materials, fuel and power 34,438
+2,205.7
+17.6 5,122 289.3 17.7
+8.7 2.674 289.3
+9.2
+(0.6)
+(5.4)
+Personnel expenses
+3.720 2.205.7
+Repairs and maintenance
+2.732 2.205.7
+21.9 7.282 289.3 25.2 (13.1)
+Depreciation and
+9.095 2,205.7
+Cost dispatch Unit cost Cost dispatch
+RMB 100 million
+Others
+6.260 285.5
+Depreciation and amortization
+7.534
+52,472 2,205.7
+Materials, fuel and power
+5.220
+285.5
+18.3 5.949 289.3 20.6
+(11.2)
+1,320
+1,320
+315
+639
+5.030 285.5
+1,200
+1,200
+960
+Repairs and maintenance
+2.474 285.5
+8,187
+8,187
+Personnel expenses
+4,428
+2,144.2
+2,297.3
+308
+307
+Chemical (including
+32.3
+84
+31.2
+3.5
+Others
+-
+05
+Shouguang Power
+North China Power Grid Shandong
+25.6
+24.1
+5,034
+290
+294
+3,701
+41.8
+44.4
+Central China Power Grid Henan
+Thermal coal
+289.2
+749
+2442
+18.4
+Shipping
+0.4
+0.1
+coal slurry)
+(mal-fired power)
+6.7
+1.7
+60
+11.7
+Coal chemical business
+0.8
+1.0
+Mengin Power
+Metallurgy
+million
+Panshan Power
+52.9
+Guangxi Power Grid
+Guangxi
+2.1
+19
+3,095
+320
+328
+EMM Indonesia
+PLN
+Indonesia
+16.4
+143
+5,470
+369
+476
+Table 12 Coal Sales Price
+Total for coal-fired power plants/weighted average
+Liuzhou Power
+205
+359
+5,184
+49.6
+4.994
+314
+331
+Others
+58.0
+15.0
+84.1
+North China Power Grid Tianjin
+(310)
+350
+169.5
+293.8
+Ningdong Power
+Northwest Power Grid
+Ningxia
+34.2
+30.6
+Total
+By usage
+kWh RMB/mWh RMB million
+31,676 2,104.5
+Personnel expenses
+Repairs and maintenance
+Depreciation and amortization
+Depreda
+External transportation charges
+Others
+Cost of external transportation business
+1,060
+482
+Sub-total cost of prime business
+660
+660
+700
+700
+364
+300
+210
+1,200
+52,257
+2,000
+1,200
+3,760
+1,880
+Materials, fuel and power
+2,700
+1,324
+2,400
+1,680
+220
+112
+1,260
+604
+1,200
+2,000
+1,060
+660
+300
+,ཊྛོ,,Ë,
+612
+54,417
+35,089
+Other operating costs
+2015
+Change
+2015 Change
+2015 Change
+2016
+2015 Change
+RMB million RMB milion
+% RMB million RMB milion
+% RMB million
+RMB million
+%
+RMB million
+RMB million
+%
+14,331
+12352
+16.0
+2016
+Chemical
+Port
+Railway
+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
+דוית
+(1.6)
+1.867
+14.9
+Cost of internal transportation business
+14.219
+158
+214.6
+218
+72.9
+14,595
+18.9
+ༀ རྒྱུུ ཀྲི ཇི ཀཽ བོ ü 3 ཊཿ ཕྲུ་ ཋ བྷ
+Coal
+15.9
+2,000
+2,000
+726
+38.488
+2,520
+2,520
+Others
+2.487
+2.205.7
+11.3 1,941
+2.104.5
+ཟླ་ ཨོ་ཨཽ་ཕི་ཡ
+228
+1,285
+Other operating costs
+4.313
+1,300
+1,300
+501
+Tax and surcharges
+42.221
+Cost of coal transportation
+amortization
+(14.7)
+16.9 3,526 2.104.5
+124 2.609 2,104.5
+41.2 8.517 2,104.5
+156.1
+2015
+Power
+output
+Unit cost Change in
+100 million
+unit cost
+5.287
+kWh
+%
+3.7
+3.7
+0.6
+-
+1.7
+43.1 14,627 289.3
+505
+RMB/mWh
+237.9 48.269 2,104.5
+2,520
+1,021
+4,600
+2,346
+Coal Chemical Segments
+1,260
+1.260
+630
+1.320
+2,000
+3,760
+3,240
+(540)
+2,400
+220
+1,260
+.......
+осо
+1320
+4.600
+464
+910
+Table 11 Cost of Sales of Transportation and
+Total cost of sales
+109,404
+11,645
+4.442
+107,493
+Other operating costs
+Tax and surcharges
+483
+984
+Total cost of sales
+53,939
+2,520
+823
+696
+49,788
+5.000
+4,000
+660
+660
+660
+4.400
+4,400
+2,640
+5.000
+375
+332
+1,901
+33.7
+24.5
+Increased by 3.7
+percentage points
+Shipping
+2,112
+1,707
+19.2
+5.5
+Coal
+4,831
+4,330
+10.4
+(13.0)
+chemical
+(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:
+49.9
+(3)
+2,523
+Port
+percentage points
+Power
+69,850
+53,939
+22.8
+(4.4)
+8.3
+Decreased by 9.0
+percentage points
+Railway
+33,530
+17,350
+48.3
+23.1
+18.9
+Increased by 1.9
+percentage points
+5,040
+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.
+billion tonnenm
+63.0
+64.1
+(1.7)
+Overseas
+1.8
+1.9
+(5.3)
+Sanhe Power
+North China Power Grid Hebei
+63.3
+58.9
+4,870
+296
+304
+Dingzhou Power
+North China Power Grid Hebei
+Shipment turnover
+297
+304
+5,515
+Shaanxi
+92.7
+92.1
+0.7
+Power Grid
+Shipping volume
+million tonnes
+79.2
+Increased by 5.2
+79.8
+Shanxi
+42
+3.7
+13.5
+Cangdong Power
+North China Power Grid Hebei
+139.0
+132.4
+(0.8)
+1.8
+8.2
+16.7
+2016
+2015
+self-owned railway
+Inner Mongolia
+191.1
+183.2
+43
+Shaanxi Provincial Local
+Seabome coal
+million tonnes
+226.4
+203.8
+11.1
+24.9
+(30.9)
+Total cost of sales
+124,843
+Increase/
+2015
+31 December capacity for
+capacity as at
+297.1
+ཡསཔཐཱ
+32.1
+3,784
+3.669
+41.5
+3,864
+273.8
+100.0
+3.629
+ཙྪི』,Rཋ
+Standard coal
+consumption
+Average rate for power
+output
+hours dispatch Power tariff
+RMB/mWh
+Total installed
+******!!!
+137.5
+123,341
+1.2
+Business
+Gross profit
+with last
+with last
+margin as compared
+segment
+Revenue Cost of sales
+margin
+year
+year
+with last year
+(%)
+(%)
+(%)
+Coal
+131,357
+109,404
+Increase/decrease
+in gross profit
+compared as compared
+revenue as cost of sales
+Increase/
+decrease in
+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;
+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;
+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;
+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.
+100.0
+34
+Section V Directors' Report (Continued)
+(3) 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) 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.
+Unit: RMB million
+Major business segments in 2016 (before eliminations)
+Increase/
+decrease in
+China Shenhua Energy Company Limited
+127.2
+5,457
+317
+Liaoning
+164.1
+153.7
+4,365
+311
+300
+Central China and
+46.6
+120
+38.9
+19.8
+Transportation segment
+41.6
+55.7
+Southern China
+Northeast China
+Including: Railway
+Northeast Power Grid
+Suizhang Power
+178.3
+109.5
+185.6
+48.1
+210.8
+(12.0)
+Xuzhou Power
+East China Power Grid
+Jiangsu
+103.9
+38.2
+98.6
+289
+313
+Eastern China
+126.2
+327
+95.8
+31.7
+Power segment
+5,193
+Northern China
+38.2
+64
+147.5
+135.3
+6,144
+325
+244
+Northwest Power Grid
+Shaanxi
+9.0
+79
+4,094
+382
+296
+Shenhua Sichuan Energy
+Sichuan Power Grid
+Sichuan
+24.0
+21.6
+Shaanxi
+North China Power Grid
+304
+308
+19.1
+30.4
+Others
+2.9
+0.8
+09
+222.2
+Port
+24.9
+3.0
+Fujian Energy
+Jinje Energy
+Shenmu Power
+East China Power Grid
+Fujian
+105.1
+99.8
+4,589
+174
+Shendong Power
+By region
+288
+2016
+Proportion of
+domestic sales
+2015
+Change
+Plan for 2017
+Completion in 2016
+Zheneng Power
+East China Power Grid Zhejiang
+198.8
+187.8
+4518
+303
+342
+Total amount
+Including: First batch
+Zhoushan Power
+East China Power Grid
+340
+21-3
+380
+328
+301
+Table 9
+Domestic Coal Sales Volume
+Table 10
+Capital Expenditure Plan for 2017
+Taishan Power
+South China Power Grid Guangdong
+177.5
+Zhejiang
+165.9
+313
+375
+Huizhou Thermal
+South China Power Grid Guangdong
+30.6
+30.0
+27.7
+4.642
+3,550
+310
+43.6
+4.792
+East China Power Grid
+Jiangsu
+66.0
+63.2
+5,241
+298
+315
+5.7
+Coal segment
+17.6
+58.3
+Chenjiagang Power
+East China Power Grid
+Jiangsu
+68.8
+65.6
+5,212
+Taicang Power
+365.5
+100.0
+386.2
+342
+347
+million tonnes
+%
+million tonnes
+%
+Shenwan Energy
+East China Power Grid
+40.8
+Anhui
+204.5
+4.669
+301
+301
+100 million
+100 million
+100 million
+Domestic sales
+214.8
+(8.1)
+2016
+31 December 2016
+(217.8)
+Net cash generated from operating activities
+excluding the effect of Shenhua Finance
+Company
+92,564
+46,341
+99.7
+Net cash used in investing activities
+(64,654)
+(26,123)
+147.5
+Net cash used in financing activities
+(18,490)
+(23,157)
+(20.2)
+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.
+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%;
+32
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+9,065
+(3
+(10,681)
+55,406
+(16.9)
+Other expenses
+Interest income
+(1,511)
+(626)
+141.4
+723
+608
+18.9
+Finance costs
+(5,748)
+(5,123)
+12.2
+Income tax expense
+Share of results of associates
+Net cash generated from operating activities
+Of which: Net cash (used in)/generated from
+operating activities of Shenhua
+Finance Company Note
+237
+428
+(44.6)
+(9,283)
+(9,561)
+(2.9)
+81,883
+47.8
+1,659
+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%;
+Changes
+for 2016
+compared
+Million tonnes
+109.4
+81.2
+34.7
+152.4
+(II) Power generation
+1. Gross power generation
+Billion kWh
+236.04
+225.79
+4.5
+234.38
+2. Total power output dispatch
+Billion kWh
+220.57
+210.45
+4.8
+218.42
+(III) Coal chemical
+1. Sales of polyethylene
+Thousand
+292.6
+319.2
+(8.3)
+265.5
+Purchased coal
+A decrease in the materials trading business volume.
+298.7
+289.3
+with that
+Major operating indicators
+Unit
+2016
+2015
+for 2015
+2014
+(%)
+(I) Coal
+1. Commercial coal production
+Million tonnes
+289.8
+280.9
+3.2
+306.6
+2. Coal sales
+Million tonnes
+394.9
+370.5
+6.6
+451.1
+Of which:
+Self-produced coal
+Million tonnes
+285.5
+(1.3)
+tonnes
+1,379
+(47.4)
+costs of self-produced
+coal
+Year-on-year
+decrease of
+11.0%
+Year-on-year
+decrease of
+5%
+/ Year-on-year
+decrease of
+6.7%
+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 %
+end of the period
+Return on net assets as at the
+%
+end of the period
+EBITDA
+RMB million
+5.5
+4.5
+Increased by 1.0
+percentage point
+7.9
+5.9
+Increased by 2.0
+Changes in unit production /
+percentage points
+and net finance costs
+(5.1)
+RMB100 million
+1,831.27
+1,560
+117.4
+1,770.69
+Cost of sales
+RMB100 million
+1,248.43
+1,104
+Mines
+113.1
+1,233.41
+Selling, general and
+RMB100 million
+140.58
+150
+93.7
+148.13
+26842-
+364315
+3.2
+6.6
+4.8
+3.4
+1.2
+administrative expenses
+Other income
+70,762
+13.0
+DISCUSSION AND ANALYSIS ON MAJOR OPERATION DATA DURING THE
+REPORTING PERIOD
+(I)
+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
+Change
+(%)
+Revenue
+Cost of sales
+183,127
+177,069
+3.4
+(124,843)
+(123,341)
+1.2
+General and administrative expenses
+(8,423)
+(9,714)
+(13.3)
+Other gains and losses
+(3,078)
+(5,856)
+Section V Directors' Report (Continued)
+62,597
+2016 Annual Report 31
+Note: Please refer to the section headed "Definitions" of this report for the calculations of the above indicators.
+As at
+As at
+31 December
+2016
+31 December
+2015
+Change
+(%)
+Equity attributable to equity
+RMB/share
+15.94
+14.99
+6.3
+holders per share
+Gearing ratio
+%
+33.2
+35.0
+Decreased by 1.8
+percentage points
+Total debt to total debt and total %
+22.0
+23.1
+Decreased by 1.1
+equity ratio
+percentage points
+II.
+2. Sales of polypropylene
+黃驊
+282.1
+12.4
+19.3
+21.7
+(1.8)
+32.8
+32.2
+(1.5)
+40.7
+40.1
+Zhunge'er Mines
+2.5
+89.5
+358
+05
+19
+367
+0.9
+3.6
+Total sales volume/average price
+Re-export trade
+123
+241.4
+271.2
+Total railway tumover
+%
+Planned annual
+million tonnes
+394.9
+370.5
+18.7
+Others
+21,144
+16.9
+30,608
+14.6
+14.4
+Baorixile Mines
+Estimated
+transportation Commencement
+Self-owned railways under
+Shenhua Zhonghai Shipping Company
+(65.8)
+7.3
+2.5
+(0.7)
+14.2
+14.1
+20.7
+20.6
+Shengli Mines
+8.2
+6.6
+293
+100.0
+100.0
+4.7
+23.2
+51.6
+35.6)
+41.3
+26.6
+State-owned railways
+%
+100 million tonnes
+100 million tonnes
+%
+100 million tonnes
+100 million tonnes
+%
+100 million tonnes
+100 million tonnes
+-
+31 December 2015
+Change
+31 December 2016
+31 December 2015
+Change
+31 December 2016
+31 December 2015
+Change
+Table 16 Shipping Volume
+Tahan Railway
+Thousand
+5.4
+41.9
+1.4
+3.8
+(2.3)
+97.6
+95.4
+(1.3)
+166.6
+164.5
+Shendong Mines
+15.5
+(5.3)
+84
+0.5
+1.9
+97
+0.5
+1.8
+(II)
+EMM Indonesia
+(1)
+Change
+2015
+2016
+26.6
+42.1
+218
+1.0
+276
+5,833
+million tonnes
+6,922
+36.6
+Via Shenhua Zhuhai
+Coal Dock
+Million tonnes
+3.2
+6.6
+(51.5)
+5.8
+3. Shipping volume
+Million tonnes
+79.2
+79.8
+(0.8)
+87.7
+4. Shipment turnover
+Billion tonne
+63.0
+64.1
+(1.7)
+72.2
+nautical miles
+(2)
+Changes in costs
+2016 Annual Report 33
+Section V Directors' Report (Continued)
+Percentage
+(2.0)
+Unit: RMB million
+40.3
+Million tonnes
+(9.8)
+312.9
+5.6
+268.1
+tonnes
+(IV) Transportation
+1. Turnover of self-owned railway Billion tonne km
+244.6
+200.1
+22.2
+223.8
+2. Seaborne coal
+Million tonnes
+226.4
+203.8
+11.1
+235.8
+Of which:
+Via Huanghua Port
+Million tonnes
+158.6
+111.6
+42.1
+131.6
+Via Shenhua Tianjin
+39.5
+Percentage
+Coal Dock
+17.4
+3.7
+Personnel expenses
+10.1
+11,874
+9.6
+6.6
+Depreciation and amortization
+21,744
+21,134
+17.1
+2.9
+Repairs and maintenance
+9,509
+7.6
+8,619
+7.0
+10.3
+Transportation charges
+10,172
+8.2
+12,193
+Change in
+amount for
+9.9
+(16.6)
+Taxes and surcharges
+12.8
+15,816
+12,661
+16,405
+the year
+over that of
+to cost of
+Breakdown of cost items
+Amount for
+the year
+sales for
+Amount for
+the previous
+to cost of
+定州西
+sales for the
+13.1
+the year
+year
+previous year
+the previous
+(%)
+(%)
+(%)
+Cost of coal purchased
+26,286
+21.1
+17,264
+14.0
+year
+52.3
+Materials, fuel and power
+394.9
+Total
+Thermal coal
+Coking coal
+25,526
+0
+125,330
+125,189
+141
+0.2
+394.7
+289.8
+99,663
+141
+99,804
+Increase in balance of long-term
+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.
+tonnes RMB million RMB million RMB million
+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%.
+25,526
+Million
+(80.0) Medium-term notes to be due
+within one year were reclassified
+to non-current liabilities due
+sales Gross profit
+By sales regions
+borrowings from power segment
+within one year
+2016 Annual Report 39
+Section V Directors' Report (Continued)
+2.
+Restriction on the major assets
+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.
+(IV) Operation results by business segment
+1.
+Coal segment
+(1)
+Million
+tonnes
+Production, operation and construction
+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.
+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)
+(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
+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.
+2016
+Proportion
+54.7
+Change
+8.2
+(I) Self-produced coal
+and purchased
+coal
+374.4
+94.8
+316
+354.1
+95.6
+292
+5.7
+1. Direct arrival
+5.7
+151.3
+229
+151.5
+40.9
+221
+2. Seaborne
+223.1
+56.5
+376
+202.6
+345
+10.1
+/ Increase of medium-term notes
+due within one year
+38.3
+2015
+Proportion
+23
+98.7
+Sales
+of total
+Sales
+of total
+Sales
+volume
+sales
+Price
+volume
+sales
+Price
+volume
+293
+Price
+Million
+tonnes
+% RMB/tonne
+tonnes
+% RMB/tonne
+%
+1. Domestic sales
+386.2
+97.8
+78
+317
+365.5
+Million
+(13.0) Decrease in balance of deposits
+placed with Shenhua Finance
+Company
+Unit: RMB million
+45
+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
+33,610
+20,573
+41,019
+7.3
+receivable
+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
+3.6
+of bank acceptance bills; and
+decrease in receivables from coal
+sales of coal segment
+Increase in purchase of wealth
+6.1
+Construction in progress
+Section V Directors' Report (Continued)
+(III) Analysis on Assets and Liabilities
+1.
+Assets and Liabilities
+དྨེདྨེ
+Percentage of
+Percentage of
+Amount at
+total assets at
+Amount at the
+total assets at
+the end of
+35,220
+the end of
+the end of the
+Items
+the year
+the year
+previous year
+previous year
+the amount
+Change of
+Main reasons for changes
+(%)
+(%)
+(%)
+end of the
+acceptance bills from power
+segment
+management products by the
+Restricted bank deposits
+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
+19,989
+3.5
+0
+(100.0)
+3.4
+0.0
+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
+medium-term notes
+Company and Shenhua Finance
+Company
+6.1
+6.1
+6,141
+1.1
+4,611
+0.8
+33.2
+Increase in statutory deposit
+Time deposits with
+3,428
+90
+0.6
+90
+916
+33,990
+0.2
+Finance Company placed at the
+central bank
+274.2 Maturity of time deposits
+original maturity over
+three months
+Short-term debentures
+0
+Accounts and bills payable
+35,156
+20
+0.0
+4,998
+0.9
+reserves balance of Shenhua
+(0.1)
+4.0
+18800
+Recoverable
+Coal resources
+coal reserve
+(under the PRC (under the PRC
+Standard)
+Unit: '00 million tonnes
+Marketable
+coal reserve
+(under
+the JORC
+Standard)
+164.5
+95.4
+51.6
+40.1
+32.2
+21.7
+20.6
+14.1
+2.5
+14.4
+12.2
+12.6
+0.5
+0.4
+0.1
+240.1
+154.3
+88.5
+Total
+Baotou Mines
+Baorixile Mines
+Shengli Mines
+price
+394.9
+100.0
+317
+370.5
+100.0
+293
+93
+8.2
+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.
+Production safety
+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.
+44
+Efforts in ensuring safe coal production are detailed in the 2016 CSR Report of the
+Group.
+Section V Directors' Report (Continued)
+(4)
+(5)
+Environmental protection
+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.
+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.
+Measures which are taken by the Company for environmental protection are detailed
+in the "2016 Corporate Social Responsibility" Report of the Group.
+Coal resources
+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.
+Mines
+Shendong Mines
+Zhunge'er Mines
+2016 Annual Report 43
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(6)
+Lignite
+Approximately
+≤0.22 Approximately
+3,650
+14.5
+5
+Baotou Mines
+Non-caking coal
+Approximately
+4,410
+≤0.72 Approximately
+16.2
+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.
+Baorixile Mines
+Operating results
+2016
+2015
+Change Main reasons for changes
+(%)
+Revenue
+RMB
+million
+131,357 121,458
+Cost of sales RMB
+million
+109,404 107,493
+1.8
+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
+procurement of purchased
+coal for meeting market
+demand led to a significant
+increase in the cost of
+purchased coal; and the
+related transportation cost
+increased in line with the
+increase in sales volume of
+coal
+The operating results of the coal segment of the Group before elimination on
+consolidation
+Total sales volume/average
+4
+3,095
+Characteristics of the commercial coal produced in the Company's major mines are as
+follows:
+No. Mines
+Major types of coal
+Calorific value
+of major
+commercial
+coal products
+(kcal/kg)
+Sulphur
+content
+Ash content
+(%) (average, %)
+1
+Shendong Mines
+Long flame coal/
+Approximately
+<0.49 Approximately
+20.2
+non-caking coal
+11.8
+2
+Zhunge'er Mines
+Long flame coal
+Approximately
+4,680
+≤0.48 Approximately
+26.3
+3
+Shengli Mines
+Lignite
+Approximately
+≤0.81 Approximately
+5,500
+3.6
+0.4
+1.2
+175.0
+(8.1)
+III. Overseas coal sales
+5.4
+1.4
+276
+3.8
+1.0
+218
+26.6
+(I) EMM Indonesia
+1.8
+0.5
+97
+1.9
+0.5
+84
+(5.3)
+15.5
+(II) Re-export trade
+3.6
+0.9
+367
+1.9
+0.5
+443
+0.3
+1.2
+407
+8.2
+9.0
+(II) Sales of domestic
+trading coal
+11.6
+2.9
+339
+11.2
+3.0
+318
+3.6
+90
+358
+6.6
+coal
+0.2
+0.1
+415
+0.2
+0.1
+413
+0.0
+0.5
+II. Export Sales
+3.3
+0.8
+(II) Sales of imported
+89.5
+2.5
+Total sales volume/average
+price
+% RMB/tonne
+%
+Sales to external customers
+305.5
+77.4
+321
+281.6
+76.0
+294
+9%
+9.2
+Sales to internal power
+tonnes
+segment
+21.6
+308
+84.6
+22.8
+292
+5.5
+Sales to internal coal chemical
+segment
+China Shenhua Energy Company Limited
+1.0
+237
+4.3
+85.4
+236
+RMB/tonne
+Million
+394.9
+100.0
+317
+370.5
+100.0
+293
+6.6
+8.2
+Note: Sales prices of coal in this report are all exclusive of tax.
+42
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+tonnes
+(3)
+By internal and external customers
+2016
+2015
+Sales
+Sales
+volume
+Percentage Price
+volume
+Percentage
+Price
+Change in
+price
+Million
+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.
+38
+Standard)
+Not applicable
+29.4 million
+3.2
+6.6
+30.1
+tonnes
+4.5
+4.8
+kWh
+(5)
+Major customers
+(6)
+2016
+Percentage to
+Revenue
+revenue
+No.
+Top five customers
+RMB million
+%
+12345
+First
+11,481
+6.3
+Second
+Third
+8,771
+4.7
+289.8 million 394.9 million
+tonnes
+tonnes
+236.04 billion 220.57 billion
+kWh
+7,656
+Power
+(%)
+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.
+(4)
+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
+production
+decrease in
+beginning of
+volume
+volume
+Inventory
+volume sales volume
+the year
+(%)
+(%)
+Coal
+4.2
+42.1
+Total
+2016 Annual Report 37
+Section V Directors' Report (Continued)
+3.
+Investment in research and development
+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)
+The ratio of research and development personnel to the total number of
+persons in the Company (%)
+175
+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.
+Cash flow
+(1)
+(2)
+(3)
+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.
+Explanation on the material changes in profit incurred from non-principal business
+Fourth
+Fifth
+✓ Applicable
+(II)
+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.
+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.
+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.
+4.0
+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.
+7,286
+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)
+2.
+6,943
+(1)
+Interest income: representing a year-on-year increase of 18.9% in 2016, which was
+mainly attributable to the increase of time deposits.
+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.
+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 items of income statement
+(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.
+(6)
+(5)
+(4)
+(3)
+(2)
+(7)
+China Shenhua Energy Company Limited
+50
+(8.1)
+220.57
+307
+4.8
+210.45
+4.5
+334
+Section V Directors' Report (Continued)
+Unit: MW
+Installed capacity
+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
+increased/
+Gross
+Gross installed
+capacity as at
+31 December
+(decreased)
+installed
+during the capacity as at
+236.04 225.79
+reporting 31 December
+(3)
+Total/weighted
+average
+1.98 (17.2)
+431
+Power type
+294
+Overseas in total/
+weighted average
+1.64
+1.98 (17.2) 1.43
+1.76
+(18.8) 476
+431
+10.4
+Indonesia
+1.64
+coal-fired power
+1.64
+តុតុ
+1.43
+1.76
+(18.8)
+476
+431
+10.4
+1.98 (17.2) 1.43
+1.76
+(18.8)
+476
+10.4
+Coal-fired power
+2x1,000
+period
+Liuzhou City, Guangxi Zhuang
+Autonomous Region
+2x350
+Total
+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.
+1
+Data source: China Electricity Council
+2016 Annual Report 51
+Section V Directors' Report (Continued)
+(4) Utilisation Rate of power generation equipment
+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.
+Average utilisation hours
+(Hour)
+Liuzhou Power
+Power consumption
+ratio of power plant
+(%)
+2016
+2015 Change
+2016
+2015 Change
+(%)
+Coal-fired
+4,428
+4,631
+(4.4)
+5.95
+6.14
+Power type
+2015
+294
+Shouguang Power
+2016
+2,160
+54,417
+Wind power
+16
+16
+Hydro power
+125
+125
+Gas-fired power
+1,730
+Shouguang City, Shandong
+Province
+1,730
+54,128
+2,160
+56,288
+Newly
+Projects put into
+operation during
+the reporting period
+Location
+added
+installed
+capacity
+(MW)
+Total
+(18.2)
+205
+292 (18.2)
+5.71
+3.35
+70.4
+5.45
+3.20
+70.3
+coal-fired power
+5.71
+3.35
+70.4
+5.45
+Chongqing
+3.20
+Beijing
+4.01
+2.11
+90.0
+3.91
+1.99
+96.5
+coal-fired power
+0.56
+(100.0)
+0.48 (100.0)
+70.3
+(2.5)
+3.14
+3.06
+(18.0)
+340
+coal-fired power
+2.39
+3.08
+(22.4)
+2.17
+2.79
+(22.2)
+375
+hydropower
+0.67
+0.67
+0.65 0.65
+Ningxia
+3.42
+3.48
+(1.7)
+3.06
+3.14
+(2.5)
+coal-fired power
+3.42
+3.48
+(1.7)
+gas-fired power
+292
+4.01
+158.7
+222222IIIEL23312
+(14.9)
+(14.9)
+208
+(5.3)
+(5.3)
+350 (5.4)
+350
+(5.4)
+347 (11.5)
+347 (11.5)
+509
+364
+395 (5.1)
+(3.9)
+(9.3)
+(9.3)
+3.0
+3.0
+404
+26.0
+(100.0)
+509
+401 26.9
+(6.6)
+343
+Decreased by 0.19
+205
+3.91
+1.51 158.9
+Shanxi
+3.39
+0.95
+256.8
+3.16 0.86 267.4
+coal-fired power
+3.39
+0.95
+256.8
+3.16 0.86 267.4
+Shandong
+2.56
+2.41
+coal-fired power
+2.56
+2.41
+Guangxi
+0.21
+0.19
+coal-fired power
+0.21
+0.19
+3222222222'22222
+1.55
+power
+6.09
+Wind power
+100.0
+8.7
+3.
+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.
+Analysis on cost of sale of power of coal-fired power plant of the Group before
+elimination on consolidation
+2016
+2015
+Change
+Costs Percentage
+Costs Percentage
+in costs
+48,269
+RMB million
+%
+%
+Raw material, fuel and
+power
+31,996
+64.7
+29,958
+Personnel expenses
+3,667
+7.4
+3,477
+% RMB million
+100.0
+(1.7) 52,472
+70,345
+9
+0.0
+10
+0.0
+(10.0)
+Hydro power
+145
+152
+(4.6)
+66
+0.1
+74
+0.2
+(10.8)
+Gas-fired power
+2,936
+1,830
+60.4
+2,890
+5.5
+2,062
+4.3
+40.2
+Total
+69,146
+58
+28.6
+65.0
+15
+49,507
+100.0
+46,123
+100.0
+7.3
+54
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+3.
+Railway segment
+(1) Overview of production and operations
+plant
+(2)
+Progress of projects
+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.
+11.5
+16.7
+%
+Gross profit
+margin
+Change Main reasons for changes
+(%)
+2015
+2016
+Section V Directors' Report (Continued)
+2016 Annual Report 45
+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%.
+coal-fired power
+output dispatch of
+Total cost of power
+6.8
+5.5
+59
+Repairs and
+maintenance
+2,645
+5.3
+2,503
+5.4
+57
+5.7
+Depreciation and
+amortization
+8,959
+18.1
+8,329
+18.1
+7.6
+Others
+2,240
+4.5
+1,856
+4.0
+20.7
+19
+7.5
+percentage point
+14
+Wind power
+(5)
+Environmental protection
+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.
+1
+Data source: China Electricity Council
+52
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(6)
+Capitalized Expenses
+(7)
+Decreased by 0.25
+percentage point
+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.
+The operation results of the power segment of the Group before elimination
+on consolidation:
+2016
+2015
+Change Main reasons for changes
+(%)
+Revenue
+RMB
+million
+69,850
+73,053
+Cost of sales
+RMB
+53,939
+Analysis of operation results
+average
+3.44
+(4.4) 5.84
+1,952
+1,478
+32.1
+0.90
+1.08
+Decreased by 0.18
+percentage point
+Hydropower
+5,331
+5,364
+(0.6)
+0.23
+0.25
+Decreased by 0.02
+percentage point
+Gas-fired
+3,243 2,889
+12.3
+2.03
+2.15
+Decreased by 0.12
+power
+percentage point
+Weighted
+4,391 4,591
+49,788
+18
+million
+sales prices due to the
+reduction in on-grid power
+tariff of coal-fired power
+generation
+costs of
+costs of 2016 over
+Power type
+2016
+2015
+Change
+2016
+2016
+2015
+2015
+2015
+to total Change in
+(%)
+(%)
+(%)
+Coal-fired power
+66,047
+68,349
+(3.4)
+49,507
+94.4
+46,123
+95.5
+7.3
+(%)
+to total
+Percentage
+Percentage
+8.3 Increase in purchase costs
+of coal of power plants
+resulting from the growth
+in coal price; Power
+output dispatch increased
+year-on-year
+Gross profit %
+margin
+22.8
+31.8 Decreased
+by 9.0
+percentage
+points
+Profit from RMB
+operations
+11,689
+18,810
+(37.9)
+million
+Profit margin %
+16.7
+25.7
+Decreased
+from operations
+by 9.0
+percentage
+points
+2016 Annual Report 53
+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
+(4.4) Decrease in power output
+2.82
+2,700
+3.75
+33.99
+Hebei
+(8.1)
+333
+306
+5.0
+219.14 208.69
+4.7
+223.81
+234.40
+weighted average
+32.30
+Domestic in total/
+(%)
+(%)
+2015 year
+2016
+2015 year
+2016
+2015 year
+2016
+Type of power
+Year-on-
+Year-on-
+(%)
+5.2 31.84
+30.12
+5.7
+23.87
+coal-fired power
+(4.9)
+329
+313
+(8.8)
+24.94
+22.74
+(9.0)
+26.23
+23.87
+Jiangsu
+(10.4)
+335
+300
+5.7
+30.12
+31.84
+5.2
+32.30
+33.99
+coal-fired power
+(10.4)
+335
+300
+Year-on-
+(18.4)
+Location/
+(billion kWh)
+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
+5.47
+0.02
+50.0
+0.03 0.02
+Wind power
+3.8
+206.51
+214.42
+3.6
+221.75
+229.73
+Coal-fired power
+(%)
+0.03
+3.27
+67.3
+គ៖នទ
+(billion kWh)
+Power output dispatch
+Power generation
+Classified by location
+(8.1)
+344
+334
+307
+4.8
+210.45
+220.57
+4.5
+225.79
+236.04
+Total
+(4.1)
+560
+537
+(3.9)
+232
+(0.3)
+598
+(9.1)
+331
+301
+Power tariff
+(RMB/mWh)
+(%)
+26.23
+24.94
+9.6
+22.11 20.17
+9.8
+24.25 22.08
+coal-fired power
+(13.7)
+292
+252
+9.6
+20.17
+22.11
+252
+9.8
+24.25
+Shaanxi
+(0.3)
+598
+596
+(8.3)
+409
+375
+(8.5)
+(8.1)
+409
+22.08
+292
+(13.7)
+Anhui
+coal-fired power
+321 (6.5)
+300
+10.1
+13.96
+15.37
+10.1
+14.90
+16.41
+Liaoning
+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
+20.45 16.59
+22.8
+17.49
+21.48
+376
+(9.0) 22.74
+21.17 (8.4)
+239
+(11.4)
+387
+343
+2.5
+22.31
+22.86
+2.6
+23.63
+24.24
+coal-fired power
+(12.0)
+gas-fired power
+409
+1.5
+24.07
+24.42
+1.6
+25.43
+25.84
+Zhejiang
+(4.9)
+329
+313
+(8.8)
+360
+1.60
+1.80
+(11.1) 1.56
+(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
+20.95 23.51
+22.74
+20.85
+Guangdong
+coal-fired power
+(12.6)
+239
+209
+(10.5)
+21.09
+18.88
+(10.9)
+23.51
+20.95
+Inner Mongolia
+(12.9)
+698
+(11.4) 608
+1.76
+(12.6)
+(%)
+52,257
+2016
+208
+197
+(28.1)
+5.31
+3.82
+(27.3)
+5.72
+4.16
+coal-fired power
+197
+(28.1)
+Tianjin
+5.31
+(27.3)
+5.72
+4.16
+Xinjiang
+280
+11.0
+8.99
+9.98
+10.7
+9.49
+10.51
+3.82
+5.29
+5.41
+(2.2)
+4.59
+4.18
+(8.8)
+4.87
+4.44
+coal-fired power
+307
+4.59 (8.9)
+4.18
+(8.8)
+4.87
+4.44
+Henan
+331
+(2.0)
+5.06
+4.96
+(2.2)
+5.41
+5.29
+coal-fired power
+331
+(2.0)
+5.06
+4.96
+coal-fired power
+(8.9)
+11.0 280
+9.98
+300
+10.1
+15.37 13.96
+10.1
+14.90
+16.41
+Increased
+by 5.2
+percentage
+points
+Profit from
+321
+RMB
+6,433
+164.5
+Other than the above factors,
+operations million
+the volume of material
+Profit margin
+from
+%
+Increased
+5.3
+13.0
+2015 Change
+17,017
+(6.5)
+гл
+2016 Annual Report 49
+10.7
+9.49
+10.51
+Fujian
+(%)
+(%)
+(%)
+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)
+8.99
+307
+LOLO
+3.06
+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
+Unit production cost
+of self-produced
+coal
+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
+(11.2) Decrease in tunneling footage
+for underground mines
+year-on-year through
+optimizing the production
+units; Decrease in fuel price
+50.5
+Section V Directors' Report (Continued)
+43.1
+25.2
+21.9
+Depreciation and
+amortization
+maintenance
+(5.4)
+9.2
+8.7
+Repairs and
+(0.6)
+17.7
+17.6
+Other costs
+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.
+Power segment
+2.
+2016
+2015 Change
+2015 Change
+Sichuan
+2016
+Power type
+(RMB/mWh)
+(billion kWh)
+(billion kWh)
+Power tariff
+Total power output dispatch
+Gross power generation
+Classified by power type
+Power consumption and power tariffs
+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.
+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.
+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.
+Production and operations
+(1)
+Personnel expenses
+power
+(2)
+18.3
+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
+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
+by 7.7
+20.6
+operations
+points
+percentage
+122,486 97,487
+24,999
+Gross
+(4)
+2015
+Change Main reasons for changes
+(%)
+Unit: RMB/tonne
+Materials, fuel and
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+2016
+46
+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).
+Unit production cost of self-produced coal
+91,408 17,005
+20.4 108,413
+15.7
+125,330 99,804 25,526
+90,179
+16,862
+15.8
+Export and
+overseas
+2,844 2,317
+20.4 107,041
+18.5 1,372
+1,229
+143
+10.4
+Total
+527
+(2.1)
+Company
+1,278
+24,678
+7,102 31,584
+1,305
+tariff
+to agency model
+from the buyout model
+(487.6) Sales model was changed
+(378)
+1,465
+5,888
+6
+24,844
+1,889
+5 Zhunge'er Energy
+Huanghua Harbour
+7,320
+9,385
+(36.1) Decrease in the power
+Shenhua Trading Group
+1,034 1,618
+5,529
+3,255 11,616
+8 Zheneng Power
+output dispatch and
+power tariff
+(37.7) Decrease in the power
+139.7 Increase in the loading
+volume of vessels at
+the port
+1,701
+1,059
+12,467
+4,670
+Taishan Power
+7
+Company
+Administration
+506
+1,213
+6,790 15,787
+4
+7,433
+dispatch and power
+4,989
+Shendong Coal Group
+Co., Ltd.
+1
+Main reasons for changes
+Change
+(%)
+2015
+the equity holders of the parent company
+2016
+35,627 14,565
+assets assets
+As at 31 December 2016
+Net
+Total
+Registered
+capital
+Net profit attributable to
+Unit: RMB million
+Major subsidiaries
+9
+1.
+No. Company
+3,601
+106.4
+Increase in coal prices
+in the power output
+(38.1) Impact of the decrease
+2,374
+1,469
+5,564
+9,193
+2,278
+Jinjie Energy
+3
+Ltd.
+Development Co.,
+28.2
+5,059
+6,487
+29,308
+37,057
+5,880
+2 Shuohuang Railway
+and sales volume
+tariff
+Shenwan Energy
+Company
+Zhang Donghui
+13,437
+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.
+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.
+Section V Directors' Report (Continued)
+2016 Annual Report 63
+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.
+Non-executive director
+Independent director
+Employee director
+general manager
+Executive director, deputy
+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.
+Executive director
+Executive director, general
+Chairman
+7
+Du Shengli
+6
+Feng Ning
+5
+Zhang Ying
+manager
+Mei Xueyan
+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.
+In 2016, the board of Shenhua Finance Company held three meetings.
+(VIII) Analysis on major holding and associated companies
+In 2016, the Audit Committee did not hold any meeting.
+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.
+Audit Committee
+In 2016, the Risk Management Committee held one meeting.
+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.
+Risk Management Committee
+In 2016, the Related Party Control Transaction Committee held one
+meeting.
+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.
+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.
+(B)
+(A) Related Party Transaction Control Committee
+The board of Shenhua Finance Company currently has three board
+committees, namely the Related Party Transaction Control Committee, Risk
+Management Committee and Audit Committee.
+Board Committees
+B.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+64
+(C)
+34
+Han Weiping
+2
+As of the end of the reporting period, the Company directly and indirectly held 100% equity
+interest in Shenhua Finance Company.
+Shenhua Finance Company
+2.
+Section V Directors' Report (Continued)
+62
+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.
+3. Shuohuang Railway Company recorded a revenue of RMB17,250 million and a profit from operations
+of RMB8,557 million in 2016.
+2. Shendong Coal Group Corporation recorded a revenue of RMB39,256 million and a profit from
+operations of RMB9,004 million in 2016.
+No.
+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.
+(12.3)
+991
+869
+1,561 6,237 2,987
+10 Dingzhou Power
+(26.9)
+886 1,212
+8,115
+Note:
+Name of Shareholder
+1234
+Total
+Zhang Kehui
+1
+Position
+Members of the board at the end
+of the reporting period
+No.
+Board of directors
+A.
+Governance of Shenhua Finance Company is as follows:
+(1)
+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.
+100.00
+4.29
+7.14
+7.14
+81.43
+(%)
+interest held
+Percentage
+of equity
+China Shenhua Energy Company Limited
+Shuohuang Railway Development Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Baoshen Railway Co., Ltd.
+4,696
+Not applicable
+production
+cost
+(VII) Disposal of material assets and equity interest
+Shipping Segment
+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)
+5.
+Operating results
+2016
+2015
+Change Main reasons for changes
+(%)
+Revenue
+RMB
+The operating results of the shipping segment of the Group before eliminations on
+consolidation are as follows:
+2,112
+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.
+Increase in relevant transportation
+costs as a result of the increase in
+seaborne coal sales
+points
+Profit from
+RMB
+2,302
+1,350
+70.5
+by 9.9
+percentage
+points
+operations
+million
+%
+45.7
+35.8
+Increased
+from
+operations
+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
+Profit margin
+percentage
+2,002
+million
+266
+133
+100.0
+operations
+million
+Profit margin
+RMB
+%
+6.6
+Increased
+from
+by 6.0
+operations
+percentage
+points
+12.6
+5.5
+Profit from
+percentage
+Increase in shipping price in coastal
+markets affected by factors
+including the tight supply of coal
+in coastal areas and the weather;
+Increase in coal transportation
+volume over internal power plants
+(3.0) Decrease in fuel price, and improved
+control on costs
+Cost of sales
+RMB
+1,707
+points
+1,760
+Gross profit
+%
+12.1
+Increased
+margin
+by 7.1
+million
+Increased
+by 3.7
+46.2
+49.9
+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
+18.9 Increase in depreciation and
+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
+Gross profit
+margin
+%
+48.3
+With the recovery of coal market,
+46.4
+Profit from
+RMB
+15,000
+10,070
+points
+49.0
+operations
+Increased
+by 1.9
+percentage
+Profit margin
+million
+17,350
+(3)
+Operating results
+2016 Annual Report 55
+Section V Directors' Report (Continued)
+The operation results of the railway segment of the Group before elimination on
+consolidation are as follows:
+2016
+14,595
+2015
+(%)
+Revenue
+RMB
+million
+33,530 27,232
+23.1
+Cost of sales RMB
+Change Main reasons for changes
+million
+%
+44.7
+from
+RMB
+5,040
+3,769
+33.7
+Increase in sales of seaborne coal
+million
+Revenue
+Cost of sales
+2,523
+2,026
+24.5
+million
+Gross profit
+margin
+%
+RMB
+Change Main reasons for changes
+(%)
+2015
+2016
+operations
+37.0 Increased
+by 7.7
+percentage
+points
+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%).
+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.
+56
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+4.
+Port Segment
+(1)
+Overview of production and operations
+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.
+(2)
+Analysis of operating results
+The operating results of the port segment of the Group before eliminations on
+consolidation are as follows:
+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.
+Applicable
+58
+Section V Directors' Report (Continued)
+%
+Polyethylene
+Polypropylene
+294.6
+5,839
+314.7
+5,348
+tonnes RMB/tonne
+(6.4)
+5,373
+308.7
+5,074
+(8.0)
+95
+9.2
+5.9
+284.0
+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.
+tonnes RMB/tonne
+production
+Section V Directors' Report (Continued)
+(3)
+Unit production cost of main products
+2016
+2015
+Change
+cost
+Unit
+Unit
+Production production
+volume
+Thousand
+cost
+Production
+volume
+Thousand
+Production
+volume
+Unit
+2016 Annual Report 59
+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.
+Unit: RMB million
+(1)
+Material investment in equity interest
+(2)
+Applicable
+Not applicable
+Material investment in non-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.
+Applicable
+(3)
+Financial assets at fair value
+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.
+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.
+2016 Annual Report 61
+Section V Directors' Report (Continued)
+Not applicable
+(V) Regional operation analysis
+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.
+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.
+2016
+2015
+Revenue from external transactions in domestic markets
+Revenue from external transactions in overseas markets
+179,859
+3,268
+175,129
+1,940
+Total
+(VI) Analysis on Investments
+183,127
+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 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
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+177,069
+points
+by 6.4
+percentage
+operations
+%
+%
+Polyethylene
+Polypropylene
+292.6
+7,222
+319.2
+tonnes RMB/tonne
+7,432
+(2.8)
+282.1
+5,958
+312.9
+6,508
+(9.8)
+(8.3)
+(8.5)
+tonnes RMB/tonne
+Thousand
+6.
+Coal Chemical Segment
+(1)
+Overview of production and operations
+(2)
+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.
+Thousand
+The sales of polyethylene and polypropylene products of the Group in 2016 is as follows:
+Price
+2015
+Sales
+volume
+Change
+Price
+Sales
+volume
+Price
+2016
+Sales
+volume
+Analysis of operating results
+The operating results of the coal chemical segment of the Group before eliminations
+on consolidation are as follows:
+2016
+margin
+by 4.6
+percentage
+Profit from
+RMB
+254
+649
+15.0 Decreased
+points
+(60.9)
+million
+Profit margin
+%
+5.3
+11.7 Decreased
+from
+operations
+10.4
+%
+Gross profit
+2015 Change Main reasons for changes
+(%)
+Revenue
+RMB
+4,831
+5,550
+(13.0)
+million
+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
+(8.3) Decrease in production and sales
+volume in olefins products
+Cost of sales
+RMB
+4,330
+4,720
+million
+China Shenhua Energy Company Limited
+19.2
+China Shenhua Energy Company Limited
+Prospects for 2017
+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
+(million tonnes)
+Coal import
+(million tonnes)
+Coal transportation by
+2016
+Year-on-year
+2015
+change
+(%)
+3,410
+3,747
+(9.0)
+255.6
+204.1
+25.2
+1,900
+1,994
+(4.7)
+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.
+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
+1.
+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.
+(IX) Structured Vehicle Controlled by the Company
+(X)
+Applicable ✓ Not applicable
+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.
+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%.
+Please refer to the Social Responsibility Report of the Group for information in respect of
+environmental protection of the Company.
+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.
+(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
+Section V Directors' Report (Continued)
+III.
+(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
+(I)
+Competition and Development Trend in the Industry
+(XI) Compliance with Relevant Laws and Regulations
+Amount of contracted loans
+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%.
+China Shenhua Energy Company Limited
+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.
+Development Strategy of the Company
+1.
+China Shenhua's opportunities for future development
+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 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.
+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.
+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.
+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.
+4.
+Section V Directors' Report (Continued)
+(2)
+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.
+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.
+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.
+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
+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.
+3.
+70
+2016 Annual Report 71
+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.
+Market environment of the power industry
+Review for 2016
+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.
+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.
+72
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+Section V Directors' Report (Continued)
+2016
+railway (million tonnes)
+Unit: RMB million
+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
+31 December
+2016
+No.
+Name of customer
+123
+China Shenhua Energy Company Limited
+33,111
+2
+Shenhua Guoneng Group Company Limited
+3,777
+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
+China Shenhua Energy Company Limited
+66
+0
+0
+(2)
+(3)
+2016 Annual Report 65
+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
+Company Limited
+As at
+31 December
+2015
+Change
+(%)
+Balance of deposits
+46,603
+51,282
+(9.1)
+Balance of loans
+30,672
+29,380
+4.4
+Of which: balance of
+guaranteed loans
+Item
+6
+31 December
+2016
+1,017
+3,000
+Shenhua Yili Energy Co., Ltd.
+2,198
+Shenhua Bayannur Energy Co., Ltd.
+2,129
+7
+Shenhua Ganquan Railway Co., Ltd.
+1,857
+8
+Shenhua Guoneng Jiaozuo Power Plant
+1,500
+Company Limited
+9
+Shenhua Group Corporation Limited
+1,000
+10
+China Shenhua Coal Liquefaction and Chemical
+1,000
+Company Limited
+Inner Mongolia Dayan Mining Industry Group
+1,000
+Co., Ltd.
+2016 Annual Report 67
+Section V Directors' Report (Continued)
+C.
+Approval of loans during the reporting period
+China Energy Conservation and Environmental
+Shenhua Zhunchi Railway Company Limited
+456900
+11
+3,000
+Protection Group
+Co., Ltd.
+7
+Guohua Energy Investment Co., Ltd.
+798
+8
+703
+9
+Shenhua Ningxia Coal Industry Group Co., Ltd.
+684
+10
+Shenhua Group Corporation Limited
+620
+Note: Data of all companies were consolidated except those of Shenhua Group
+Corporation, which were based on the headquarters of the company.
+Shenhua Wuhai Energy Co., Ltd.
+4,500
+Balance of loans of the top ten customers
+Unit: RMB million
+As at
+31 December
+2016
+No. Name of customer
+123
+State Grid Energy Hami Coal and Electricity
+Shenhua Ningxia Coal Industry Group Co., Ltd.
+Shenhua Xinzhun Railway Co., Ltd.
+3,500
+(b)
+PROFIT DISTRIBUTION PLAN
+Applicable ✓ Not applicable
+REASONS AND CAUSES OF FAILURE TO DISCLOSE PURSUANT TO GUIDELINES
+BY THE COMPANY DUE TO NON-APPLICATION OF GUIDELINES OR SPECIAL
+REASONS
+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.
+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 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.
+V.
+Risk of natural disasters
+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.
+Please refer to "Significant Events" to this report.
+Significant Events
+(II)
+Section VI Significant Events
+2016 Annual Report 83
+Section VI
+I. PROFIT DISTRIBUTION PLAN
+(1)
+Formulation, implementation or adjustment of cash dividend policy
+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.
+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.
+S
+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.
+Risks of production safety for coal mines
+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.
+2016 Annual Report 79
+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.
+Profit distribution scheme/plan
+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.
+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
+China Shenhua Energy Company Limited
+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.
+Risk of international operations
+1. Final dividend scheme/plan for the year
+40.3
+the year
+attributable
+9,149
+22,712
+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.
+Special Dividend Plan
+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.
+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.
+4.6
+Profit for
+(Proposed)
+%
+to equity
+holders of the
+Company in the
+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
+Risk of rising costs
+2.98
+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.
+140.58
+4.6
+expenses and net finance costs
+Percentage change of unit production
+cost of the self-produced coal
+1
+Year-on-year
+decrease
+ranging 1% to
+2%
+Year-on-year
+1
+147
+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
+3. Transportation segments
+Of which: Railway
+Port
+Shipping
+4. Coal chemical segment
+5. Others
+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%.
+RMB100 million
+Selling, general and administrative
+14.4
+100 million tonnes
+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.
+2.898
+2.8
+100 million tonnes
+4.07
+3.949
+3.1
+Power output dispatch
+billion kWh
+214.7
+220.57
+(2.7)
+Revenue
+RMB100 million
+2,036
+11.2
+Cost of sales
+RMB100 million
+1,428
+1,248.43
+Total
+Unit: RMB100 million
+Accomplishment
+in 2016
+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.
+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.
+2016 Annual Report 77
+Section V Directors' Report (Continued)
+(V) Major risks faced
+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
+4.
+Section V Directors' Report (Continued)
+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.
+China Shenhua Energy Company Limited
+293.8
+Plans for 2017
+Total amount
+Of which:
+first batch
+17.6
+58.3
+109.5
+178.3
+41.6
+55.7
+38.2
+38.2
+3.0
+17.4
+0.4
+0.1
+0.8
+1.0
+0.0
+0.5
+350
+169.5
+76
+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.
+1,831.27
+Accomplishment
+2016 Annual Report 75
+Section V Directors' Report (Continued)
+Increase/
+Unit
+Target of 2017
+Item
+in 2016
+(%)
+Commercial coal production
+Coal sales
+(decrease)
+(III) Business Targets for 2017
+Applicable ✓ Not applicable
+VII. MATERIAL LITIGATION AND ARBITRATION
+Applicable
+INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+Not applicable
+7 July 2016
+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.
+VI.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+90
+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.
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY,
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDERS, DE FACTO CONTROLLER AND OFFEROR
+X. THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY AND
+THEIR IMPACTS
+IX. EXPLANATION FOR CREDIT OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDERS AND DE FACTO CONTROLLER
+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.
+2016 Annual Report 91
+Section VI Significant Events (Continued)
+RMB1.59 million
+Applicable ✓ Not applicable
+XI. MATERIAL CONNECTED TRANSACTIONS
+(1)
+Applicable
+Not applicable
+Connected transactions during the daily operation
+Applicable ✓ Not applicable
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+Internal Control Auditors
+Remuneration
+(II)
+Not applicable
+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
+The Board's analysis and explanation about the reasons for and impact of changes in
+accounting policies, accounting estimates or accounting method
+Applicable
+Section VI Significant Events (Continued)
+2016 Annual Report 89
+IV.
+III.
+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.
+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.
+NA
+APPROPRIATION OF FUNDS AND PROGRESS OF THE COLLECTION DURING THE
+REPORTING PERIOD
+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.
+Applicable ✓ Not applicable
+Applicable
+Name
+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.
+1.50
+Deloitte Touche Tohmatsu
+4
+Deloitte Touche Tohmatsu Certified
+Public Accountants LLP
+9.20
+the Company (year)
+(III) The Board's analysis and explanation about the reasons for and impact of correction
+to material previous errors
+Term of Auditing of International Auditors of
+Remuneration of International Auditors of the Company
+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
+V. APPOINTMENT AND REMOVAL OF AUDITORS
+Not applicable
+(RMB million)
+(1)
+92
+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:
+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.
+94
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+In addition to the above, for certain types of product or service, specific pricing policy
+adopted as follows:
+(a)
+(b)
+(c)
+(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;
+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;
+Alternative power generation: price prescribed by NDRC or other related
+government competent authorities;
+(f)
+Chemical products: market price;
+(g) Production equipment and spare parts, office products: market price;
+(h)
+Tendering services: price prescribed by NDRC;
+(i)
+(j)
+(k)
+(1)
+(m)
+Technical consulting services: agreed price with a profit margin of
+approximately 10%;
+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;
+Logistics and support services and training 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
+Hardware and software equipment and related services: market price (including
+tender and bidding price);
+Non-exempt continuing connected transactions between the Group and Shenhua
+Group
+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;
+(c)
+A.
+Mutual Coal Supply Agreement
+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.
+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%).
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+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.
+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:
+(1)
+(2)
+(3)
+(4)
+The national industrial policy as well as industry and market conditions in the
+PRC;
+The specified guidelines issued by NDRC setting out the coal purchase prices (if
+any);
+(d)
+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;
+(5)
+The quantity of coal; and
+(6)
+The transportation fees.
+2016 Annual Report 93
+Section VI Significant Events (Continued)
+B.
+Mutual Supplies and Services Agreement
+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:
+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.
+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.
+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)
+The quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+N/A
+2015 to
+2016 Annual Report 85
+23 May 2017,
+general meeting
+Tuesday 4:30 p.m.
+Computershare
+Hong Kong
+Investor
+2
+Entitled to the final
+dividend for year
+3 July 2017,
+Monday
+7 July 2017,
+Friday
+30 June 2017,
+Friday 4:30 p.m.
+2016 and the
+special dividend
+Services
+Limited
+Computershare
+Hong Kong
+Investor
+Services
+Limited
+7.
+8.
+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.
+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).
+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%.
+23 June 2017,
+Friday
+2016 Annual Report 87
+24 May 2017,
+Wednesday
+Attending and voting
+5.
+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.
+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.
+Pursuant to the Articles of Association:
+(1)
+(2)
+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;
+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.
+86
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+6.
+The arrangement of temporary closure of the register of members of H shares of the
+Company:
+Temporary closure of the register of members
+The
+No.
+Corresponding
+Rights
+First Day
+(inclusive)
+Last Day
+(inclusive)
+The last day for
+registering members
+Company's
+share
+registrar for
+H shares
+1
+at the 2016 annual
+4.
+Section VI Significant Events (Continued)
+10.
+Shenhua Group The Company and Shenhua Group
+24 May 2005, Yes
+Yes, in process N/A
+N/A
+in relation to
+competition
+Corporation
+Corporation entered into a
+long-term
+initial public
+offering
+undertaking
+"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
+competition.
+Other
+commitment
+Commitment Shenhua Group
+Shenhua Group Corporation
+in relation to
+increase in
+shares
+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.
+From 8 July
+Yes
+Yes, completed N/A
+Non-
+9.
+Commitment
+Commitment in time
+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.
+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.
+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.
+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.
+88
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+II. PERFORMANCE OF COMMITMENTS
+Detailed
+Further steps
+Timely
+reasons shall
+shall be
+Background of Type of
+Commitment Commitment Covenantor Commitment
+Date and
+Duration of
+Commitment
+and Strict
+Performance
+be specified if
+specified if
+commitment commitment
+Any Time Limit
+for Commitment
+is not fulfilled
+is not fulfilled
+in time
+Section VI Significant Events (Continued)
+Company Profile and Major Financial Indicators
+中国神华能源股份有限公司
+308
+Section XII
+Summary of Major Financial Information for the Recent Five Years
+309
+Section | Definitions.
+I
+Section I
+China Shenhua/the Company
+The Group
+China Energy
+China Energy Group
+China Guodian
+Guodian Group
+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
+Documents Available for Inspection
+Shipping Corporation
+Section XI
+Independent Auditors' Report and Financial Statements
+Section III
+Chairman's Statement
+12
+Section IV
+Directors' Report
+Section V
+Corporate Governance and Corporate Governance Report
+80
+3728
+14
+Section VI
+Environmental and Social Responsibility
+133
+Definitions
+Significant Events
+146
+Section VIII
+Changes in Share Capital and Shareholders
+171
+Section IX
+Investor Relations
+179
+Section X
+183
+Baoshen Railway
+Baotou Energy
+Yulin Energy
+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.
+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.
+VII.
+VI.
+V.
+IV.
+III.
+II.
+I.
+Important Notice
+首列重载移动闭塞列车
+国能朔黄铁路
+HX 17140A
+120km h
+CHN ENERGY
+、国家能源集团
+国共产党成立100周年
+PIONEER OF ENERGY REVOLUTION
+STABILIZER OF ENERGY SUPPLY
+Annual Report
+2021
+(a joint stock limited company incorporated in the People's Republic of China with limited liability)
+Stock Code: 01088
+CHINA SHENHUA ENERGY COMPANY LIMITED
+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.
+Baotou Coal Chemical
+Sichuan Energy
+Fujian Energy
+China Shenhua Energy Company Limited
+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.
+Section II
+Shenhua Shendong Power Co., Ltd.
+China Energy Baorixile Energy Co., Ltd.
+Shenhua Beidian Shengli Energy Co., Ltd.
+China Energy Shuohuang Railway Development Co., Ltd.
+Contents
+2021 Annual Report 1
+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".
+Whether more than half of the Directors cannot guarantee the authenticity, accuracy and
+completeness of the annual report disclosed by the Company?: No
+X.
+IX.
+VIII. 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
+Shenhua Zhunge'er Energy Co., Ltd.
+Unless the context otherwise requires, the following terms used in this report have the following
+meanings:
+Section VII
+RMB million
+335,216
+233,263
+43.7
+Profit for the year
+RMB million
+61,009
+Authorised Representatives of the Company under
+the Hong Kong Listing Rules
+43,984
+Profit for the year attributable to equity
+holders of the Company
+RMB million
+51,607
+35,849
+44.0
+38.7
+Basic earnings per share
+Revenue
+Change
+8th, Tower E2, Oriental Plaza, 1 East Chang
+An Avenue, Beijing
+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
+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
+2021
+2020
+188 Yanggao South Road, Pudong New Area,
+Shanghai
+KPMG Huazhen LLP
+RMB/share
+1.803
+7.8 percentage points
+Return on net assets as at the end
+of the period
+%
+EBITDA
+RMB million
+10.0
+13.6
+101,680
+Increased by 3.8
+percentage points
+28.7
+At the end of 2021 At the end of 2020
+Change
+%
+Total assets
+9.8
+79,018
+2.597
+%
+Increased by 2.2
+44.0
+Net cash generated from operating
+activities
+RMB million
+94,575
+81,289
+16.3
+the period
+Net cash generated from operating
+Finance Company
+RMB million
+94,575
+62,690
+50.9
+Return on total assets as at the end of
+activities excluding the effect from
+Office Address
+Name
+8 China Shenhua Energy Company Limited
+中國神華
+China Shenhua Energy Company Limited
+CSEC/China Shenhua
+Wang Xiangxi
+Wang Xiangxi, Huang Qing
+Representative of Securities Affairs
+中國神華能源股份有限公司
+Sun Xiaoling
+(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
+22 Andingmen Xibinhe Road, Dongcheng
+District, Beijing (Postal Code: 100011)
+N/A
+Office Address of the Company
+Postal Code of Office Address of
+the Company
+Company Website
+E-mail
+Registered Address of the Company
+Postal Code of Registered Address of
+the Company
+Tel
+Fax
+E-mail
+Address
+Tel
+Fax
+Secretary to the Board
+Change of Registered Address of the
+Company
+Huang Qing
+(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
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing (Postal
+Code: 100011)
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+www.csec.com or www.shenhuachina.com
+ir@csec.com
+2021 Annual Report 7
+VI. OTHER RELEVANT INFORMATION
+Auditor engaged by the
+Company (China's mainland)
+Name
+Office Address
+Signing Auditors
+601088
+01088
+Auditor engaged by the
+Company (Hong Kong)
+Office Address
+Signing Auditors
+Share Registrar and Transfer
+Office of the Company (A
+Share)
+Name
+Office Address
+Share Registrar and Transfer
+Office of the Company (H
+Share)
+Name
+China Shenhua
+China Shenhua
+SSE
+HKEX
+H Share
+Section II Company Profile and
+Major Financial Indicators (Continued)
+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
+RMB million
+Name
+Address
+610,597
+8.5
+Shenhua Lease Company
+Shandong Power Sales Company
+Jiangsu Power Sales Company
+Section | Definitions (Continued)
+4 China Shenhua Energy Company Limited
+Guangdong Power Sales Company China Energy (Guangdong) Power Sales Co., Ltd.
+Beijing GD Power
+Shengli Energy Branch of the Company
+PT. Shenhua Guohua Pembangkitan Jawa Bali
+Shenhua Guohua Shouguang Power Generation Company Limited
+China Energy Guangtou (Liuzhou) Power Generation Co., Ltd.
+China Energy Guohua (Beijing) Gas-fired Power Co., Ltd.
+China Energy (Huizhou) Thermal Power Co., Ltd.
+China Energy Shenhua Jiujiang Power Co., Ltd.
+China Energy Mengjin Thermal Power Co., Ltd.
+China Energy Group Yongzhou Power Co., Ltd.
+Shengli Energy
+Finance Company
+Equity Transfer of Fuping Thermal
+Power
+2021 Annual Report 5
+The Stock Exchange of Hong Kong Limited
+Shanghai Stock Exchange
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+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
+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
+The deconsolidation of Finance
+Company's financial statements
+China Energy Finance Co., Ltd.
+Shenhua (Tianjin) Finance Lease Co., Ltd.
+Shenhua Shandong Power Sales Co., Ltd.
+China Energy Jiangsu New Energy Technology Development Co.,
+Ltd. (formly Shenhua Guohua Jiangsu Power Sales Co., Ltd.)
+HKEx
+SSE
+JORC
+Beijing GD Power Co., Ltd
+Section Definitions (Continued)
+Yongzhou Power
+Liuzhou Power
+Zhunge'er Power
+EMM Indonesia
+Section Definitions (Continued)
+2021 Annual Report 3
+Shenhua (Fujian) Energy Co., Ltd.
+China Energy Sichuan Energy Co., Ltd.
+Shenmu Power
+China Energy Baotou Coal Chemical Co., Ltd.
+China Energy Baotou Energy Co., Ltd.
+China Energy Baoshen Railway Group Co., Ltd.
+Guoneng Yuanhai Shipping Co., Ltd.
+China Energy Huanghua Harbour Administration Co., Ltd.
+China Energy (Tianjin) Harbour Administration Co., Ltd.
+China Energy Zhuhai Harbour Administration Co., Ltd.
+China Energy Trading Group Limited
+China Energy Railway Equipment Co., Ltd.
+China Energy Yunlin Energy Co., Ltd.
+Pembangkitan Jawa
+Taishan Power
+Power-generating division controlled and operated by Zhunge'er
+Shouguang Power
+Beijing Gas-fired Power
+Huizhou Thermal
+Jiujiang Power
+Mengjin Power
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+PT.GH EMM INDONESIA
+China Energy Jinjie Energy Co., Ltd.
+Jinjie Energy
+China Energy Hebei Cangdong Power Co., Ltd.
+Cangdong Power
+China Energy Yudean Taishan Power Co., Ltd.
+China Energy Shaanxi Shenmu Power Co., Ltd.
+Energy
+Dingzhou Power
+Shanghai Listing Rules
+Hong Kong Listing Rules
+China Accounting Standards for
+Business Enterprises
+RMB million
+19,869
+19,890
+(0.1)
+Equity attributable to equity holders per
+share
+period
+RMB/share
+18.33
+4.4
+Gearing ratio
+Increased by 2.7
+%
+26.4
+19.13
+23.7 percentage points
+Total share capital at the end of the
+364,203
+Total liabilities
+RMB million
+161,376
+133,317
+21.0
+Total equity
+4.3
+RMB million
+429,587
+4.6
+Equity attributable to equity holders of
+the Company
+RMB million
+380,038
+449,221
+Total debt to total equity ratio
+Decreased by 1.0
+12.4
+Shenzhen-Hong Kong
+Shanghai-Hong Kong Stock Connect 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]
+Total liabilities/total assets
+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
+International Financial Reporting Standards issued by the
+International Accounting Standards Board
+Stock Connect
+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
+Rules Governing the Listing of Stocks on SSE
+Total debt to total equity ratio
+Gearing ratio
+EBITDA
+Articles of Association
+International Financial Reporting
+Standards
+Rules Governing the Listing of Securities on the HKEX
+RMB
+A mutual access and connect mechanism for transactions in stock
+markets between Shenzhen Stock Exchange and HKEX
+Renminbi unless otherwise specified
+13.4
+percentage point
+2021 Annual Report 9
+Legal Representative of the Company
+Abbreviation/Short Name of English Name of the
+Company
+English Name of the Company
+Short Name of Chinese Name of the Company
+Chinese Name of the Company
+INFORMATION OF THE COMPANY
+III.
+II.
+I.
+Major Financial Indicators
+Section II Company Profile and
+6 China Shenhua Energy Company Limited
+562,904
+CONTACTS AND CONTACT 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.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Biographical details
+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.
+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.
+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.
+2021 Annual Report 103
+104
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Cui Weishan
+Member of the
+Party Committee
+and Secretary of
+the Disciplinary
+Committee
+Deputy Secretary
+of the Party
+Committee
+Biographical details
+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.
+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.
+China Shenhua Energy Company Limited
+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.
+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.
+Biographical details
+Board, Member
+of the Party
+Secretary of the
+Huang Qing
+Name
+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.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Yang Xiangbin
+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.
+100
+China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Li Zhiming
+Executive Vice
+President and
+Member
+of the Party
+Committee
+Biographical details
+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.
+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.
+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.
+Name
+2021 Annual Report 101
+Name
+Prior to the foregoing, Mr. Huang had served in various
+Committee and the capacities, including Secretary to the Chairman of former
+Chief Financial
+Officer and Member
+of the Party
+Committee
+Biographical details
+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.
+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.
+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.
+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..
+102 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 99
+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.
+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
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+96 China Shenhua Energy Company 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.
+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.
+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..
+Born in May 1964, male, Chinese, a member of the
+Communist Party, and Ph. D in Management, senior
+economist.
+Biographical details
+Chairman of
+Supervisory
+Committee
+Luo Meijian
+Zhou Dayu
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 95
+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..
+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.
+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.
+Biographical details
+Employee Director,
+Executive Vice
+President and
+Member of the
+Party Committee
+Wang Xingzhong
+Name
+(2) Existing supervisors as at the end of the reporting period
+Supervisor
+Biographical details
+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.
+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.
+Biographical details
+Chief Executive
+Officer, Deputy
+Secretary
+of the Party
+Committee
+Lv Zhiren
+Name
+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:
+Senior management in office as at the end of the reporting period
+(3)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+98 China Shenhua Energy Company Limited
+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..
+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.
+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.
+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.
+Biographical details
+Employee's
+Supervisor
+Zhang Changyan
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 97
+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.
+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.
+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.
+General Counsel
+Xu Shancheng
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2
+Jia Jinzhong
+No
+Xu Mingjun
+5
+No
+Wang Xiangxi
+attendance
+Attendance
+Absence person or not
+in Person correspondence proxy
+year
+not
+Director
+required
+meetings in
+by Attendance by
+Attendance
+Director or meetings this
+Name of
+meetings/
+consecutive
+Attendance
+Board
+Yang Rongming
+Independent
+No
+5
+O O O O O O
+0
+1
+0
+5
+0
+0
+1
+1
+0
+LOLOLO 3 LO LOLOLO
+54535555
+No
+Wang Xingzhong
+5
+Yes
+Chen Hanwen
+5
+Yes
+Bai Chong-En
+Yes
+Yuen Kwok Keung
+3
+5
+0
+at general
+Attendance
+23 April 2021
+The 7th meeting of the
+fifth session of the
+Board
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2.
+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
+Chairman and Secretary
+to the Leading Party
+2019-03
+Members' Group
+Yang Jiping
+China Energy
+Director of Operating
+2019-08
+2020-03
+Management Centre of
+Coal Industry
+3
+Absent at two
+The 8th meeting of the
+fifth session of the
+Board
+Methods
+Required
+attendance at
+Attendance at Board meetings
+1. Directors in office as at the end of the period
+PERFORMANCE OF DUTIES OF THE DIRECTORS
+(II)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 109
+Board
+The 10th meeting of the 29 December 2021 On-site with
+fifth session of the
+5
+22 October 2021 On-site with
+correspondence
+The 9th meeting of the
+fifth session of the
+Board
+4
+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
+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
+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
+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
+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
+correspondence
+On-site with
+correspondence
+On-site with
+correspondence
+On-site with
+correspondence
+Meeting Resolutions
+27 August 2021
+5/5
+4/4
+0
+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)
+2021 Annual Report 111
+For details, please see the section
+headed "Significant Events" of
+this report
+For details of remuneration,
+please see the section headed
+"Significant Events" of this
+report
+Completed
+To approve the Company to enter into the Financial
+Services Agreement with China Energy Finance Co.,
+Ltd. for 2021 to 2023
+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 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:
+Executed
+For the attendance of independent Directors at Board meetings and general meetings,
+please refer to the section of "Performance of duties of the Directors".
+of the Company
+Executed
+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)
+VI. THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD
+DURING THE REPORTING PERIOD
+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
+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
+Executed
+To approve the general mandate of the Board to
+repurchase H Shares
+of the Company to RMB19,868,519,955 and the
+amendments to the Articles of Association of the
+Company
+To approve the reduction of the registered capital
+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.
+Directors resigned during the reporting period
+2.
+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.
+1/1
+4/4
+4/4
+ཟུཟུ€=རྫུ]ཝཐ
+5/5
+5/5
+5/5
+5/5
+LOLOLOLO
+0
+0
+0
+0
+0
+3/3
+5/5
+No
+0
+4/5
+No
+Attendance at Board meetings
+Required
+attendance at
+Absent at two
+consecutive
+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
+No
+0
+0
+China Energy
+4
+No
+Yang Jiping
+meetings
+person or not Attendance
+by proxy Absence
+at general
+meetings in
+Attendance in Attendance by Attendance
+Person correspondence
+Independent Board meetings
+Director or not
+this year
+Name of D
+irector
+Attendance
+4
+Audit Committee
+Director of Operating
+2020-03
+2015-06
+2021-07
+of University of International
+Business and Economics
+University of International
+Business and Economics
+International Business School
+the Accounting Department
+Distinguished Professor of
+2017-05
+2021-07
+Huiyuan
+First-level Professor
+2018-01
+2021-07
+of University of International
+Business and Economics
+Xiamen Bank Co., Ltd.
+Independent Director
+2018-01
+2021-01
+106 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(III) REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Decision-making procedures
+Basis for determination
+Actual payment of
+remuneration
+Total remuneration actually
+obtained as at the end of the
+reporting period
+Professor and Doctoral Tutor of
+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.
+International Business School
+Executive Director
+Member of the Executive
+2014-06
+2021-06
+Association
+Committee
+Chen Hanwen
+Nanjing Audit University
+Professor and Doctoral Supervisor 2021-07
+Shenwan Hongyuan Securities
+Independent Director
+2021-05
+Co., Ltd.
+Bank of Communications Co.,
+Ltd.
+External Supervisor
+2019-06
+Beijing Tri-Prime Gene
+Pharmaceutical Co., Ltd.
+China Business Executives
+Academy, Dalian
+Independent Director
+2018-11
+Chair Professor
+2013-01
+China Auditing Society
+2005-07
+International Economic
+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.
+Please refer to "Changes in shareholding and remuneration
+of Directors, Supervisors and senior management" in this
+section
+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.
+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.
+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 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.
+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.
+V. BOARD OF DIRECTORS
+(I)
+Board Meetings
+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
+5005
+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:
+No.
+Name
+Date
+1
+The 6th meeting of the
+fifth session of the
+Board
+26 March 2021
+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.
+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.
+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.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Please refer to "Changes in shareholding and remuneration
+of Directors, Supervisors and senior management" in this
+section
+(IV) CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE
+COMPANY
+Name
+Position
+Particulars
+of changes
+Reason for the change
+Li Zhiming
+Executive Vice President Appointed
+Yang Rongming
+Non-Executive Director
+Elected
+Appointed by the sixth meeting of the
+fifth session of the Board
+Elected by the 2020 Annual General
+Meeting
+Yang Jiping
+Lv Zhiren
+Executive Director and
+Chief Executive Officer
+Chief Executive Officer
+Resigned
+Job change
+Appointed
+Appointed by the tenth meeting of the
+fifth session of the Board
+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.
+(V) SANCTION FROM SECURITIES REGULATORY AUTHORITIES IN THE LAST THREE
+YEARS
+Applicable ✓ Not applicable
+2021 Annual Report 107
+(VI) OTHERS
+Economics
+2016-11
+Vice President
+China Energy
+and Procurement
+Supervision
+Department
+Director of the Industrial 2018-05
+2020-03
+Coordination
+Department
+Zhang
+Changyan
+National Energy Group
+Chairman (legal
+2022-02
+Media Center Co., Ltd.
+representative) and
+Secretary to the Party
+Committee
+China Energy Fujian
+Energy Co., Ltd.
+Chairman (legal
+2020-12
+2020-02
+representative) and
+Secretary to the Party
+Committee
+Zhou Dayu
+Senior Management Huang Qing
+Director of the Materials 2020-03
+Department (Human
+Management Centre of
+Transportation Industry
+Jia Jinzhong
+China Energy
+Senior Business Officer
+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
+Executive vice president
+2021-12
+Director
+2021-12
+China Energy
+Director of Organization
+2018-06
+2021-11
+and Personnel
+Resources Department)
+Beijing GD Power
+Vice Chairman
+2019-03
+Council Member
+2018-10
+Bai Chong-En
+School of Economics and
+Dean
+2018-08
+Management of Tsinghua
+University
+School of Economics and
+Professor
+2004-07
+Management of Tsinghua
+University
+National Center of Fiscal and Tax Director
+Policy Research at Tsinghua
+University
+2008-08
+Society of Public Finance of China Vice President of the Tenth
+2019-10
+Session and a Member of the
+Academic Committee of the
+Council
+China Association of Labour
+2018-09
+Member
+Commercial Expert Committee
+2018-08
+of China Shenhua
+Xu Shancheng Beijing GD Power
+Chairman of the
+supervisory committee
+2019-03
+China Energy Finance Co., Non-Executive Director
+Ltd.
+2016-08
+2021 Annual Report
+Remuneration Committee
+Nomination Committee
+Safety, Health and
+105
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+3. Positions held in other entities
+2019-12
+Commencement
+Name
+Name of other entities
+Positions
+of term of office
+office
+Yuen Kwok Keung
+Temple Chambers
+International Commercial Court of
+the Supreme People's Court of
+the People's Republic of China
+Hong Kong Exchange Fund
+Advisory Committee
+Hong Kong International
+Arbitration Centre
+Senior Counsel
+Member of the International
+2018-05
+Expiry of term of
+The fifth session of the Board committees
+Environment Committee
+27 December 2021
+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.
+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.
+2021 Annual Report 113
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+In 2021, the Audit Committee convened 6 meetings. All proposals at the meetings
+were approved and all members attended all meetings in person.
+Convening date
+Meeting content
+To consider the proposal on the adjustment Agreed
+to the Company's investment plan for the
+year 2021
+16 March 2021
+(1)
+Important opinions and
+suggestions
+To consider the proposals on the Company's 2020 Agreed
+financial report (draft), 2020 internal control
+evaluation report (draft), etc.
+(2)
+(3)
+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.;
+To review the internal audit report of the
+Company for 2020;
+23 March 2021
+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;
+Energy Company Limited (Trial)
+Important opinions
+and suggestions
+Wang Xiangxi (Chairman), Jia Jinzhong
+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
+112 China Shenhua Energy Company Limited
+(II)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+The duties and performance of duties of the committees
+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:
+To consider the proposal on the formulation Agreed
+of Measures for the Administration of
+Strategic Planning of China Shenhua
+1.
+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.
+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.
+Date
+20 August 2021
+2.
+Audit Committee
+Meeting content
+Strategy Committee
+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.
+(2)
+the renewal of the external auditor for 2021,
+the changes in accounting policies, the
+external donation budget for 2021, etc.;
+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
+21 April 2021
+(1)
+114 China Shenhua Energy Company Limited
+To consider the proposals on the Company's Agreed
+financial report for the first quarter of 2021,
+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
+unanimously
+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.
+PERFORMANCE OF DUTIES OF THE SUPERVISORY COMMITTEE
+(1)
+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.
+VII. SUPERVISORY COMMITTEE'S REPORT
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 119
+Passed
+Passed
+unanimously
+Report of China Shenhua
+Proposal of the 2020
+the year 2021
+Meeting
+Date
+Venue
+Method of
+meeting
+Attendance of
+Supervisors Subject matter
+The fourth
+26 March Beijing
+On-site
+All
+meeting
+of the fifth
+session
+of the
+Supervisory
+Committee
+120
+China Shenhua Energy Company Limited
+Poll results
+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
+In 2021, the Supervisory Committee of the Company held four meetings in total.
+To consider the proposals on ESG work of Agreed
+the Company and key points of work for
+meeting
+Important opinions
+and suggestions
+23 March 2021
+Date
+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.
+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.
+Nomination Committee
+4.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 117
+23 August 2021
+of the Remuneration Committee of the
+Board for the year 2020
+management of the Company for the
+To consider proposals on the remuneration Agreed
+of Directors, Supervisors and senior
+Important opinions
+and suggestions
+Meeting content
+15 March 2021
+Date
+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.
+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.
+year 2020 and the performance of duties
+27 December 2021
+118 China Shenhua Energy Company Limited
+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
+Meeting content
+24 May 2021
+23 March 2021
+Date
+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.
+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.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Safety, Health and Environment Committee
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+5.
+Agreed
+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
+To consider the proposals on the
+of members of the Safety, Health and
+Environment Committee of the fifth
+session of the Board
+To consider the proposal on the nomination Agreed
+Agreed
+Important opinions
+and suggestions
+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
+Agreed
+Method of
+Attendance of
+Meeting
+Total
+Graduate of technical school, high school and below
+Specialized secondary school graduate
+College graduate
+University graduate
+Postgraduate and above
+Category of Education Level
+Education Level
+Total
+Others
+Sales and marketing
+Technical support
+Research and development
+Finance
+Number
+Management and administration
+Category of Function
+12,640
+77,872
+Function
+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)
+77,649
+Number of current employees of the branches/subsidiaries of the Company
+(number of person)
+223
+Number of current employees of the headquarter of the Company (number
+of person)
+Employees as at the end of 2021
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(1)
+VIII. EMPLOYEES
+122 China Shenhua Energy Company Limited
+Operation and repair
+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.
+of person
+12,811
+(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.
+46,754
+124 China Shenhua Energy Company Limited
+2021 Annual Report 123
+77,872
+12,949
+8,707
+20,354
+32,366
+3,496
+Number
+of person
+77,872
+4,758
+584
+8,809
+2,619
+1,537
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Remuneration Committee
+The insider management system of the Company 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.
+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
+session
+of the fifth
+All
+On-site
+Beijing
+27 August
+The sixth
+meeting
+Passed
+unanimously
+Passed
+unanimously
+Proposal of the 2021 First
+policy of the Company
+Proposal of change of accouting
+Supervisory
+Committee
+of the
+Passed
+unanimously
+of China Shenhua Energy
+Company Limited
+of the fifth
+unanimously
+Passed
+Proposal of the 2021 First
+Quarterly Financial Report
+All
+On-site
+Beijing
+23 April
+The fifth
+Poll results
+Supervisors Subject matter
+meeting
+Venue
+Date
+session
+(VII) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE MEASURES ON INSIDER
+MANAGEMENT
+of the
+Report of China Shenhua
+(VI) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE SELF-
+ASSESSMENT REPORT ON INTERNAL CONTROL OF THE COMPANY
+There were no major acquisition and disposal of assets of the Company.
+(V) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE MAJOR
+ACQUISITION AND DISPOSAL OF ASSETS OF THE COMPANY
+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.
+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.
+After careful review of the connected transactions of the Company in 2021, the Supervisory
+Committee is of the opinion that all:
+(IV) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON CONNECTED
+TRANSACTIONS OF THE COMPANY
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 121
+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.
+(III) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+FINANCIAL POSITION 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 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
+Passed
+unanimously
+Supervisory
+Quarterly Report of China
+Shenhua Energy Company
+Limited
+Passed
+unanimously
+Proposal of the 2021 Third
+Quarterly Financial Report
+of China Shenhua Energy
+Company Limited
+Proposal of the 2021 Third
+Supervisory
+Committee
+of the
+session
+of the fifth
+meeting
+All
+On-site
+22 October Beijing
+The seventh
+Committee
+Energy Company Limited
+Passed
+unanimously
+(II)
+3.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+116 China Shenhua Energy Company Limited
+(3)
+To review the internal audit report of the
+Company for the first half of 2021;
+(2)
+Agreed. It is recommended
+that China Shenhua
+establish a management
+system related to
+fund investments to
+effectively prevent risks
+in fund operations.
+Agreed
+Important opinions and
+suggestions
+18 October 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;
+(1)
+24 August 2021
+18 June 2021
+Convening date
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+To review the Company's interim review work plan
+for the year 2021
+(1)
+Meeting content
+To listen to KPMG's report on the interim
+review
+The Audit Committee discussed separately with the external auditors and no
+inconsistency was found in the briefings by the management.
+(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.
+(4)
+(3)
+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.
+(1)
+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.;
+The Audit Committee has performed required procedures for the preparation of the
+2021 annual report and internal control report of the Company:
+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.
+(2)
+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
+99.88
+11
+discharge
+0
+Organised continuous
+1,320
+Soot
+1 The units share one
+discharge port.
+100
+44
+Soot
+383
+0
+100
+SO,
+NOX
+1,428
+ផទី៩
+716
+20.36
+81.91
+1,000
+9.74
+381
+23.04
+31.86
+99.92
+0
+100
+483
+10.6
+1,814.31
+NOX
+957
+41.23
+2,591.87
+2,427
+4 Each unit has one
+discharge port.
+0
+100
+discharge
+100
+Soot
+1.76
+521.86
+0
+100
+149
+Organised continuous
+1,500
+ន8
+Organised continuous
+0
+100
+22
+1.3
+71.65
+0
+888
+100
+100
+134
+2021 Annual Report 133
+discharge port.
+100
+100
+흐흐흐
+Organised continuous
+discharge
+one discharge port;
+Units 3-7 share one
+1,620
+1.42
+133
+Soot
+9,560
+30.45
+discharge
+2 Each unit has one
+discharge port.
+0
+1 The units share one
+discharge port.
+0
+97.91
+discharge
+72.6
+2.37
+200
+0
+100
+SO,
+454
+26.9
+501.52
+NOX
+Soot
+0
+660
+192.50
+888
+100
+100
+China Shenhua Energy Company Limited
+38.91
+716.46
+Organised continuous
+100
+Mengjin Power
+O O O
+(%)
+Guoneng Shenfu (Shishi) SO,
+Power Generation Co., NOX
+Ltd.
+Baotou Coal Chemical
+8¾× 838
+950
+22.32
+3,675
+1,944
+hours
+45.76
+2 Each unit has one
+discharge port.
+Organised continuous
+0
+100
+discharge
+0
+99.91
+Soot
+186
+4.41
+3,675
+(tonne/year)
+(tonnes)
+facilities
+2,840
+Soot
+0
+discharge
+0
+Organised continuous
+2 Each unit has one
+discharge port.
+1,925
+31.2
+Section VI Environmental and Social Responsibility (Continued)
+Company
+Major
+pollutant
+Total
+Average
+emission Total approved
+Emissions
+concentration
+Emissions
+Number of
+discharge Distribution of
+ports discharge ports
+Operation rate
+of pollution
+Excessive
+prevention
+Discharge method
+emissions
+309
+0
+3
+239
+Dingzhou Power
+SO,
+Sichuan Energy Jiangyou SO,
+Power Plant
+NO
+Guoneng Chongqing
+Wanzhou Electric
+Power Co., Ltd.
+Huizhou Thermal
+Dianta Power Plant of
+Shendong Power
+NO
+×3× 838 833 832 233 234 235
+10.74
+1,842.65
+1,024
+22.3
+2,632.36
+4 Each unit has one
+discharge port.
+Organised continuous
+discharge
+Soot
+1.68
+292.06
+495
+Cangdong Power
+off gas of the sulfur
+recovery facilities.
+port is set for the
+16.54
+2,810.22
+2 The flue gas of the
+Organised continuous or
+0
+NOX
+505
+45.43
+1,451.39
+Soot
+5.92
+428.75
+thermoelectric boiler
+system shares one
+intermittent discharge
+1.25
+0
+0
+888
+100
+100
+100
+discharge port, and
+a separate discharge
+100
+NOX
+(mg/Nm3)
+4,780
+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).
+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%.
+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.
+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.
+128 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+9.
+10.
+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.
+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.
+8.
+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.
+Applicable ✓ Not applicable
+XI. Appraisal Mechanism for Senior Management, and the Establishment and
+Implementation of the Incentive Mechanism during the Reporting Period
+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.
+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 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.
+2021 Annual Report 129
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+XII. ESTABLISHMENT AND IMPLEMENTATION OF INTERNAL CONTROL SYSTEM
+DURING THE REPORTING PERIOD
+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.
+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.
+X. THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY
+AND THEIR IMPACTS
+7.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+127
+First Day
+(inclusive)
+Last Day
+(inclusive)
+The last day
+for registering
+members
+The Company's
+share registrar
+for H shares
+1
+Attending and voting at
+the 2021 annual general
+meeting
+Tuesday, 21 June Friday, 24 June
+2022
+2022
+4:30 p.m. on
+Monday, 20 June
+Computershare
+Hong Kong
+2022
+Investor Services
+Limited
+2
+Entitled to the final dividend
+for the year 2021
+Friday, 1 July
+2022
+Friday, 8 July
+2022
+4:30 p.m. on
+Computershare
+Monday, 30 June
+2022
+Hong Kong
+Investor Services
+Limited
+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.
+2021 Annual Report
+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.
+Corresponding Rights
+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.
+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 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:
+Company
+Major
+pollutant
+Total
+Emissions
+Average
+emission Total approved
+concentration Emissions
+Number of
+discharge Distribution of
+ports discharge ports
+Operation rate
+of pollution
+Excessive
+prevention
+Discharge method
+emissions
+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).
+facilities
+(mg/Nm3)
+(tonne/year)
+hours
+(%)
+Power Plant of Guoneng SO₂
+Yili Energy Co., Ltd.
+NO
+Jinjie Energy (Power Plant) SO,
+Taishan Power
+SO,
+838 38 838
+583
+(tonnes)
+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).
+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.
+Information on pollutant discharge
+130 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+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.
+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.
+Material defects in the internal control during the reporting period:
+Applicable
+Not applicable
+XIII. MANAGEMENT CONTROL OVER SUBSIDIARIES
+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.
+2021 Annual Report 131
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+XIV. DESCRIPTION OF SELF-ASSESSMENT REPORT ON INTERNAL CONTROL 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
+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.
+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.
+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
+ENVIRONMENTAL INFORMATION
+(1)
+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
+1.
+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.
+6 Units 1 and 2 share
+No.
+The arrangement of temporary closure of the register of members of H shares of
+the Company:
+100
+Organised continuous
+discharge
+4 Each unit has one
+discharge port.
+3,200
+97.07
+1,626
+SO,
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(II) Special description for cash dividend policy
+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 unambiguous
+0
+Yes
+Whether the relevant decision procedures and
+Yes
+mechanism are complete
+Whether Independent Directors have performed their
+duties and responsibilities and played their full role
+Whether small and medium shareholders have
+Yes
+adequate opportunities to express the opinions and
+concerns, and whether their legitimate rights are
+fully protected
+(III) Cash dividend scheme/plan
+1.
+Cash dividend scheme for 2021
+Yes
+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
+100
+Soot
+3.74
+17.12
+1,596
+100
+100
+100
+888
+0
+884.45
+2.99
+264
+Soot
+0
+discharge
+0
+Organised continuous
+3 Two units share one
+discharge port.
+4,422.18
+29.14
+2,467
+2,458
+15.69
+1,375
+100
+1
+480
+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.
+Temporary closure of the register of members
+2021 Annual Report 125
+Profit distribution scheme/plan for the recent three years
+18.1
+35,962
+39,170
+91.8
+Final dividend for the year 2019
+12.6
+25,061
+43,250
+57.9
+2.
+3.
+Final dividend for the year 2020
+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.
+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.
+126 China Shenhua Energy Company Limited
+4.
+5.
+6.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Pursuant to the Articles of Association:
+(1)
+(2)
+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;
+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.
+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.
+100.4
+50,269
+50,466
+(including the reporting period)
+Amount of
+Net profit
+attributable
+to equity holders
+of the Company in
+the consolidated
+financial statements
+of the respective
+dividend year
+in accordance
+with China
+Accounting
+Standards for
+Dividend
+per 10 share
+cash dividend
+s (inclusive of tax)
+(inclusive of tax)
+Business Enterprises
+RMB
+RMB million
+RMB million
+Percentage to
+the net profit
+attributable
+to equity holders
+of the Company in
+the consolidate
+d financial
+statements
+%
+Final dividend for the year 2021
+(Proposed)
+25.4
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+437
+3,200
+1,079
+Organised continuous
+1 The units share one
+discharge port.
+1,474.02
+30.57
+319
+NOX
+0
+1,031.81
+156
+SO,
+100
+100
+100
+888
+15.22
+100
+discharge
+3
+34.79
+966
+NOX
+1,347.50
+13.4
+418
+38
+SO,
+Shouguang Power
+100
+294.80
+2.77
+23
+Soot
+99.86
+308
+0
+22.18
+40.07
+Soot
+2.65
+៩៖
+2 Each unit has one
+discharge port.
+Organised continuous
+0
+discharge
+810
+1,542
+NOX
+42.92
+839
+1 The units share one
+discharge port.
+Organised continuous
+2
+100
+discharge
+529
+SO,
+358
+Organised continuous
+0
+discharge
+0
+Soot
+30
+2.89
+559
+0
+888
+100
+100
+100
+252
+20.41
+99.45
+Soot
+Soot
+3.11
+421
+2.88
+42
+SO,
+100
+ㅎㅎㅎ
+100
+0
+13.52
+2
+0.2
+20
+30
+discharge
+Organised continuous
+1 The units share one
+discharge port.
+67.6
+22.67
+27
+47.32
+10.15
+122
+1 The units share one
+discharge port.
+100
+1
+360
+100
+28.59
+1,863.60
+390
+2,400
+110.4
+122
+100
+0
+1.75
+6
+Soot
+99.95
+0
+discharge
+100
+0
+Organised continuous
+352
+1 The units share one
+discharge port.
+43.21
+172
+182
+16.6
+100
+100
+100
+ㅎㅎㅎ
+0
+576
+3.06
+43
+Soot
+0
+260
+32.41
+1,200
+2 Each unit has one
+discharge port.
+3,727.20
+14.26
+154
+×3× × 38 233 832 233 234 235 835
+Yongzhou Power
+Shengli Energy
+NO
+Bayan Nur Energy
+SO,
+Shenmu Power
+Guojiawan Power Plant NO
+Shendong Power
+Thermal Power Plant NO
+Shendong Power Daliuta SO,
+Ltd.
+Power Generation Co., NO
+Guoneng Shenfu (Longyan) SO,
+Organised continuous
+0
+100
+discharge
+19
+99.86
+37.63
+Soot
+348
+0
+100
+Liuzhou Power
+SO,
+NO
+5.45
+Soot
+1 The units share one
+discharge port.
+0.55
+91431100064229496R001R
+91610821770043971N014V
+91610821770043971N013V
+Daliuta Coal Mine of
+Shendong Coal
+Yongzhou Power
+91152500664096746A
+Shengli Energy
+Bayan Nur Energy
+91150824566931138J001P
+Shenmu Power
+Power Generation Co.,
+Guoneng Shenfu (Longyan) 91350800665064105M001P
+91610806758848611Y001P
+Power Plant
+Shendong Power Guojiawan 916108226879560162001P
+91610000710924961H001P
+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
+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
+26 May 2020
+26 May 2025
+Renewal
+4.
+Environmental and Social Responsibility (Continued)
+Section VI
+138 China Shenhua Energy Company Limited
+Renewal
+18 June 2025
+15 June 2020
+name
+Company
+Environment Bureau
+Change of
+30 June 2025
+29 June 2020
+Change of
+Change
+Change
+20 July 2023
+21 July 2020
+23 July 2020
+Newly acquired
+27 October 2026
+28 October 2021
+Newly acquired
+1 July 2026
+2 July 2021
+21 December 2020 21 December 2025 Change
+Renewal
+18 June 2025
+30 June 2020
+12 July 2023
+4 December 2020 5 years
+Change
+22 June 2025
+name
+Change of
+3
+discharge
+2
+Organised continuous
+1 The units share one
+discharge port.
+270
+27.43
+77
+189
+9.06
+274
+Soot
+Company
+NOX
+100
+888
+0
+120
+3
+discharge
+100
+0
+Organised continuous
+discharge
+600
+420
+2220
+100
+8
+name
+91410000674137417P001P
+24 June 2020
+Renewal
+12 June 2025
+13 June 2020
+Renewal
+24 October 2025
+8 July 2020
+Renewal
+7 September 2021 6 September 2026
+Renewal
+26 May 2025
+Change
+16 January 2027
+Mengjin Power
+17 January 2022
+26 May 2020
+Power Co., Ltd.
+Guoneng Jiangyou Thermal 91510781749716818XL001P
+Power Co., Ltd.
+91350582766182784B001P
+Fujian Jinjiang Thermal
+9115000070125242XH001P
+Zhunge'er Power
+91360429573617139E001P
+916108069239349286001P
+91370783695434656X001P
+Jiujiang Power
+Shouguang Power
+Shendong Power
+Dianta Power Plant of
+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
+for Phase I and Phase
+2 One discharge port each
+38.9
+8
+Soot
+750
+2.7
+290.4
+흐흐흐
+100
+100
+Section VI Environmental and Social Responsibility (Continued)
+136 China Shenhua Energy Company Limited
+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.
+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.
+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.
+6.66
+discharge
+Continuous or
+intermittent
+treatment plant for the
+main shaft
+Outlet of well water
+1
+54.45
+forced outlet
+337
+4.31
+27.26
+COD
+Daliuta Coal Mine of
+Shendong Coal
+discharge
+main shaft; Zaoshaogou
+forced outlet; Hezegou
+0100
+intermittent
+1 There is one discharge
+port at the coke oven
+chimney.
+17
+91350581052340074H001P
+91440781727840297A
+91610806755247976C001P
+Cangdong Power
+Guoneng Shenfu (Shishi)
+Power Generation Co.,
+Ltd.
+Baotou Coal Chemical
+Taishan Power
+Jinjie Power
+Energy Co., Ltd.
+Power Plant of Guoneng Yili 91150621797172626N001P
+Company Name
+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:
+Environmental effect appraisal of construction project and other administrative
+approvals on environmental protection
+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.
+Organised continuous
+discharge
+Construction and operation of pollution prevention and control facilities
+2.
+Organised continuous
+discharge
+2 Each unit has one
+discharge port.
+1,271
+217
+NOX
+1,016.4
+17.5
+SO,
+99.65
+99.65
+99.65
+730
+3.
+911502000783949434001P
+treatment plant for the
+100
+concentration
+Major pollutant Emissions
+Company
+Operation rate
+of pollution
+Total
+approved
+emission
+Total
+Average
+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:
+Section VI Environmental and Social Responsibility (Continued)
+2021 Annual Report 135
+100
+110
+Number of
+Emissions discharge ports
+1.2
+Soot
+100
+0
+100
+0
+Organised continuous
+discharge
+2 Each unit has one
+discharge port.
+1080
+35.5
+107
+NOX
+895
+18.53
+4
+80
+Distribution of
+discharge ports
+prevention
+0
+Continuous or
+Outlet of well water
+3
+54
+6.54
+141.41
+00
+COD
+Jinjie Energy (coal mine)
+10
+100
+0
+Excessive
+One external sewage outlet Continuous discharge
+150
+32.7
+107.36
+COD
+Baotou Coal Chemical
+%
+hours.
+tonne/year
+mg/Nm³
+tonnes
+facilities
+emissions
+Discharge method
+1
+3,840
+911309117356054492001P
+Drainage Permit Number
+Guoneng Jiangyou
+NO
+Power Co., Ltd.
+Fujian Jinjiang Thermal SO,
+SO,
+Zhunge'er Power
+SO,
+Jiujiang Power
+(%)
+hours
+(tonne/year)
+(mg/Nm3)
+(tonnes)
+SO,
+facilities
+Discharge method
+ports discharge ports
+Emissions
+concentration
+Emissions
+pollutant
+Company
+prevention
+Excessive
+of pollution
+Number of
+discharge Distribution of
+emission Total approved
+Total
+emissions
+Major
+Thermal Power NO
+×3× ×35 833 833
+544
+0
+Organised continuous
+100
+3,840
+21.38
+317
+100
+100
+100
+៩៩៩
+0
+1,065
+Co., Ltd.
+0.79
+Soot
+0
+discharge
+0
+Organised continuous
+2 Each unit has one
+discharge port.
+Emergency plan for unexpected environmental incidents
+29.97
+1,049
+NOX
+2,805
+12.8
+477
+28
+Baotou Ecological
+Environment Bureau
+Cangzhou Ecological
+Environment Bureau
+Average
+Environmental and Social Responsibility (Continued)
+Drainage Permit Number
+Company Name
+Section VI Environmental and Social Responsibility (Continued)
+2021 Annual Report 137
+17 September 2026 Reapply
+18 September
+2021
+Change
+30 June 2025
+27 June 2020
+name
+Company
+Change of
+22 June 2025
+Issuing Authority
+23 June 2020
+31 May 2025
+20 April 2020
+Change
+26 May 2025
+27 May 2020
+Renewal
+12 June 2025
+12 June 2020
+Erdos Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Jiangmen Ecological
+Environment Bureau
+Quanzhou Ecological
+Environment Bureau
+Description
+of License
+Changes in
+2021
+Expiry Date
+Date of
+Acquisition
+Issuing Authority
+Change
+Operation rate
+Date of
+Acquisition
+Description
+of License
+Section VI
+Change of
+Company
+name
+Change of
+Company
+name
+Change of
+Company
+31 May 2025
+6 August 2020
+23 July 2023
+24 July 2020
+22 March 2025
+10 March 2020
+Chongqing Wanzhou
+District Ecological
+Environment Bureau
+Chongqing Wanzhou
+Ecological
+Environment Bureau
+Huizhou Ecological
+Environment Bureau
+Expiry Date
+91441300669838702N001P
+91500101050356427B002Q
+Wanzhou Electric Power
+Co., Ltd.
+91500101050356427B001P
+Guoneng Chongqing
+4 December 2020 5 years
+Renewal
+20 June 2025
+Department of Ecology 21 June 2020
+and Environment of
+Hebei Province
+Mianyang Ecological
+Environment Bureau
+915107817729546807001P
+Sichuan Energy Jiangyou
+Power Plant
+911130000601110408T001P
+Dingzhou Power
+Changes in
+2021
+Huizhou Thermal
+3,014
+Soot
+610822-2018-053-M
+Shenmu Branch of Yulin Ecological
+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
+Bayan Nur Energy
+Shenmu Power
+Shendong Power Guojiawan Power
+Plant
+Shendong Power Daliuta Thermal
+Power Plant
+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
+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
+610821-2021-066L
+Environment Bureau
+Shouguang Branch of Weifang
+370783-2019-224M
+Section VI Environmental and Social Responsibility (Continued)
+139
+2021 Annual Report
+610821-2019-012-L
+Bureau
+Shenmu Environmental Protection
+Bureau
+Urad Zhongqi Environmental Protection 150824-2020-07-M
+610821-2021-050L
+China Shenhua Energy Company Limited
+610821-2021-136-M
+Environment Bureau
+Shenmu Branch of Yulin Ecological
+Environment Bureau
+Dingzhou Power
+Fugu Branch of Yulin Ecological
+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
+450223-2020-012-M
+510781-2021-15-M
+350582-2019-059-M
+150622-2021-195-L
+Zhunge'er Banner Branch of Erdos
+Bureau
+360429-2019-012-M
+Jiujiang Hukou Ecological Environment
+Ecological Environment Bureau
+Environment Bureau
+Cangdong Power
+Ecological Environment Bureau
+Ecological Environment Bureau
+144
+2021 Annual Report 143
+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.
+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
+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.
+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
+41
+0
+sources were under key
+supervision and control of China
+Shenhua
+Section VI Environmental and Social Responsibility (Continued)
+Other enterprises
+1.35
+0.03
+147
+4,455
+Total
+1.18
+3.42
+0.19
+464
+6,203
+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.
+China Shenhua Energy Company Limited
+Section VI Environmental and Social Responsibility (Continued)
+(III) Actions taken by the Company to protect ecology, prevent pollution and fulfill
+environmental responsibilities
+0.17
+5.
+(IV)
+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.
+150207-2020-027-H
+Jiuyuan District Branch of Baotou
+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
+Dalate Banner Branch of Erdos
+Record Number
+Filing Authority
+Generation Co., Ltd.
+Baotou Coal Chemical
+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.
+Guoneng Shenfu (Shishi) 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:
+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.
+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".
+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.
+3.
+2.
+7
+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
+Taishan Power
+6.
+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) (EUKSTIÀÌ
+Paint buckets were stored in the
+temporary storage of hazardous
+wastes, which were not
+reported.
+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.
+Shendong Coal Mine
+Comprehensive Branch
+24 June 2021
+Shaan K Huan Fa [2021] No.
+119
+20
+Shendong Coal Halagou
+Mine
+1 July 2021
+Shaan K Shen Mu Huan Fa
+[2021] No. 118
+Equipment Maintenance
+Center of Shendong Coal
+9 August
+2021
+Shaan K Shen Mu Huan Fa
+[2021] No. 119
+20
+9 March 2021 Shaan K Huan Fa [2021] No. 23
+The construction project was
+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
+Shipping Company
+Baotou Energy Shuiquan
+open pit mine
+9 August
+2021
+24 August
+2021
+Hai Shi Fa Zi [2021]
+0.2
+160800005411
+Bao Huan Fa 150221 [2021]
+No. 14
+4
+Baotou Energy Shenshan
+open pit mine
+31 August
+2021
+E Huan Zhun Fa [2021] No. 80
+10
+E Huan Zhun Fa [2021] No. 181
+Shendong Coal Shigetai
+Mine
+Baotou Energy Shenshan
+open pit mine
+put into operation before
+acceptance.
+7 September
+2021
+Shenshuo Railway Branch
+Dong Huan Ze Gai Zi [2021]
+No. 2
+waste dump was not
+covered.
+Environmental protection tax payment and environmental pollution liability
+insurance
+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.
+Total actual payment of
+environmental protection
+Amount of environmental protection tax paid by tax item (RMB0,000)
+tax (RMB0,000)
+5,958.59
+Air pollutant Water pollutant
+Solid waste
+Noise
+5,860.64
+97.95
+0
+0
+10
+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.
+Section VI Environmental and Social Responsibility (Continued)
+(II)
+Environmental issues of companies other than those classified as the key
+pollutant discharging units
+1.
+Administrative penalties for environmental problems
+Unit Name
+Date
+Penalty No.
+Fine Amount Reason for Penalty
+RMB0,000
+10 The industrial slag account was
+not established, which was not
+reported.
+Baotou Energy Lijiahao
+mine
+11 January
+2021
+Dong Huan Ze Gai Zi [2021]
+No. 1
+11 January
+2021
+140 China Shenhua Energy Company Limited
+1.
+Shaan K Shen Mu Huan Fa
+[2021] No. 152
+Shendong Coal Halagou
+Mine
+sources were under key
+supervision and control of the
+state
+Enterprises whose pollution
+0.05
+90
+0.06
+0.02
+Part of the gangue in the
+1
+Shan K Shen Mu Huan Fa
+[2021] 139
+27 August
+2021
+99.5
+6.66
+1,748
+0
+SO,
+21
+18.93
+75
+303
+266.68
+Jinjie Power
+7.
+Fine
+Amount Reason for penalty
+RMB0,000
+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.
+100
+5 December
+2021
+276
+2.01
+28 December
+2021
+Shaan K Shen Mu Huan Fa
+[2021] No. 196
+ship was not recorded truthfully
+700 tonnes of raw coal was
+piled up in the open air, and
+no effective dust prevention
+measures such as closed
+enclosures or coverings were
+taken.
+The waste oil drums in the
+temporary storage of hazardous
+waste were not provided with
+hazardous waste identification
+marks as required.
+10 Dumped gangue.
+30 The ammonia nitrogen and
+phosphate of domestic sewage
+exceeded the standard.
+20 Hazardous wastes were not
+stored, utilized and disposed
+of in accordance with national
+environmental protection
+standards.
+2021 Annual Report 141
+142
+Section VI Environmental and Social Responsibility (Continued)
+2.
+Other environmental information
+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.
+0.14
+During the reporting period, total emission of major pollutants of the Group are as
+follows:
+oxygen
+Sulfur
+dioxide
+Nitrogen
+oxide
+demand
+Soot
+(COD)
+Hazardous
+solid waste
+0,000 tonnes
+0,000 tonnes
+0,000 tonnes
+tonnes
+tonnes
+Enterprises whose pollution
+0.96
+Chemical
+2.
+Name of Domestic Auditors of the Company
+Party
+Making the
+Commitment
+Section VI Environmental and Social Responsibility (Continued)
+5.
+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.
+II. DETAILS OF THE COMPANY'S ACTIVE FULFILLMENT OF SOCIAL
+RESPONSIBILITIES
+III.
+Please refer to the 2021 Report on Environment, Social Responsibility and Corporate Governance
+of the Company, which was disclosed simultaneously with this Report.
+DETAILS OF THE COMPANY'S EFFORTS TO CONSOLIDATE AND EXPAND THE
+ACHIEVEMENTS OF POVERTY ALLEVIATION AND RURAL REVITALIZATION
+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.
+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.
+Commitment
+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.
+Section VII Significant Events
+100101
+国家能源集团 准能黑岱沟露天煤矿
+CHN ENERGY
+4750
+Section VII Significant Events (Continued)
+I. PERFORMANCE OF COMMITMENT
+Background of
+Commitment
+Type of
+Commitment
+2021 Annual Report 145
+APPOINTMENT AND REMOVAL OF AUDITORS
+Chemical products: market price;
+Applicable ✓ Not applicable
+m.
+Production equipment and spare parts, office products: market
+price;
+Tendering services: price prescribed by National Development and
+Reform Commission of the People's Republic of China;
+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%);
+k.
+Social security and pension management services and staff data
+recording services: agreed price (cost plus a profit margin of
+approximately 5%);
+154
+China Shenhua Energy Company Limited
+(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.
+The Company's analysis and explanation about the reasons for and impact of
+changes in accounting policies, accounting estimates or accounting method
+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%).
+j.
+i.
+h.
+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:
+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;
+b.
+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;
+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;
+Hardware and software equipment and related technology services:
+market price (including tender and bidding price);
+f.
+Applicable ✓ Not applicable
+Explanation from the Board and the Supervisory Committee for the "non-standard
+audit report" issued by the auditors
+(II)
+(1)
+V.
+is not fulfilled in
+time
+Commitment
+Performance of
+Limit for
+Commitment
+Duration of
+Commitment
+if commitment
+and Strict
+Any Time
+Date and
+Detailed reasons
+shall be specified
+Timely
+time
+not fulfilled in
+specified if
+commitment is
+Further steps
+shall be
+24 May 2005, Yes
+long-term
+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.
+Yes, in progress N/A
+VA
+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
+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.
+offering
+to initial public
+II.
+Commitment in relation Non-competition China Energy
+N/A
+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.
+g.
+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;
+Applicable ✓ Not applicable
+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;
+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 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.
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY AND
+ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDER, DE FACTO CONTROLLER AND OFFEROR
+Applicable ✓ Not applicable
+China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+IX. EXPLANATION FOR CREDIT OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDER AND DE FACTO CONTROLLER
+X.
+Applicable ✓ Not applicable
+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.
+MATERIAL RELATED PARTY/CONNECTED TRANSACTIONS
+(1)
+INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+Related party/Connected transactions during the daily operation
+In 2021, the above two auditors did not serve as the external auditors of subsidiaries of the
+Company.
+Remuneration
+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
+Remuneration of International Auditors of the Company (RMB
+million)
+Term of Auditing of International Auditors of the Company (year)
+KPMG Huazhen LLP
+7.15
+3
+KPMG
+1.4
+3
+2021 Annual Report 149
+150
+Section VII Significant Events (Continued)
+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.
+VI.
+Internal Control Auditor
+Name
+KPMG Huazhen LLP
+RMB0.95 million
+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.
+VII. MATERIAL LITIGATION AND ARBITRATION
+1.
+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.
+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 New Mutual Supplies and Services Agreement entered into by the
+Company and China Energy
+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.
+The pricing principles for the products and services provided under the New
+Mutual Supplies and Services Agreement set out below:
+(1) General pricing principles
+a.
+b.
+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:
+d.
+Section VII Significant Events (Continued)
+(4)
+C.
+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);
+152 China Shenhua Energy Company Limited
+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
+2021 Annual Report 151
+Section VII Significant Events (Continued)
+announcement dated 23 March 2019, and the 2020 annual report of the Company)
+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)
+A.
+Non-exempt continuing related party/connected transactions between the Group
+and China Energy Group
+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 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:
+(1) The national industrial policy as well as industry and market conditions in
+the PRC;
+(2)
+(3)
+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);
+The New Mutual Coal Supply Agreement entered into by the Company and
+China Energy
+2021
+2020
+Change
+%
+Owner's equity
+Total assets
+Total liabilities
+RMB million
+36.1
+105,607
+RMB million
+120,427
+83,136
+44.9
+Unit
+143,734
+31 December
+1,318
+107.2
+RMB million
+Change
+%
+Revenue
+Total profit
+RMB million
+2,998
+2,196
+36.5
+RMB million
+2,770
+110.2
+Net profit
+RMB million
+2,113
+1,020
+31 December
+23,307
+Index
+3.7
+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;
+b.
+a.
+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.
+Section VII Significant Events (Continued)
+2020
+2.
+22,471
+(2)
+a.
+Note: The above financial dates were prepared in accordance with the China Accounting Standards for
+Business Enterprises and have been audited.
+164
+China Shenhua Energy Company Limited
+(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.
+b.
+In terms of paid services provided by Finance Company to Members of
+the Group:
+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)
+2021
+1. Main financial indicators of the Finance Company
+type of
+RMB million
+% RMB million
+period transactions
+cap
+reporting
+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)
+during the in the same
+Proportion
+amount
+Purchase of products and services from
+related/connected persons by the Group and
+other outflows
+Transaction
+%
+reporting
+type of
+period transactions
+RMB million
+cap
+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.
+RMB million
+Implementation of and review opinions on the non-exempt continuing related
+party/connected transactions
+A B
+86,000
+7,300
+Continuing Connected Transactions
+D
+15.2
+4,489
+13.4
+3,188
+(2) Services
+2.1
+2,106
+11.8
+New Mutual Coal Supply Agreement
+7,314
+Agreement
+6,595
+13,000
+10,502
+13,000
+New Mutual Supplies and Services
+13.6
+14,019
+20,000
+38.8
+96,776
+including: (1) Products
+1,052
+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.
+Equipment supply: tender and bidding price.
+Section VII Significant Events (Continued)
+2021 Annual Report 157
+the specified guidelines issued by NDRC setting out the coal
+purchase prices (if any);
+(ii)
+the national industrial policy as well as industry and market
+conditions in the PRC;
+(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;
+(iii)
+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;
+(v)
+(iv)
+(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:
+Matters that have been disclosed on interim announcements and where there is
+no any further progress and change upon subsequent implementation
+Overview of Event
+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.
+Guoneng Fund completed the industrial and
+commercial registration procedures and
+obtained a business licence.
+Guoneng Fund completed the filing
+procedures with the Asset Management
+Association of China.
+(vi)
+Business consulting and technical 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 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);
+the quality of the coal;
+Overhaul services and railway track maintenance services: price
+prescribed by NDRC or other related government competent
+authorities.
+(iv)
+(iii)
+(ii)
+Rolling stock usage: market price.
+(i)
+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.
+(iv)
+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
+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.
+(vi)
+the quantity of coal; and
+(v)
+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;
+Unit
+0.4
+19,800
+Power Generation
+(55)
+55
+Controlled subsidiary of
+Anhui Anqing Wanjiang
+21,397
+(2,679)
+the parent company
+27,126 24,076
+7,376
+19,750
+Controlled subsidiary of
+Finance Company
+874
+874
+Controlling shareholder
+China Energy
+balance
+incurred
+Closing
+Opening Amount
+balance
+parties to the Group
+Funds provided to related parties
+Opening Amount Closing
+balance incurred balance
+the parent company
+Co., Ltd.
+Other related parties
+Others
+(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..
+Relationship
+(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.
+(1) Long and short-term borrowings were provided by China
+Energy to the Group.
+Reasons for debts and liabilities between related parties
+22,472
+7,260 27,526 24,950 (2,478)
+20,266
+201
+201
+400
+(61)
+461
+Total
+(2) The Group's deposits and loans with Finance Company.
+Related parties
+Funds offered by related
+32
+(3)
+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
+(1)
+New Financial
+Services
+C
+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
+RMB million
+agreement
+RMB million
+Transaction
+amount during
+the Reporting
+Transaction
+cap during the
+valid period of
+Transaction item
+Name of
+agreement
+No.
+Section VII Significant Events (Continued)
+2021 Annual Report 159
+Framework Agreement
+3.8
+8,743
+period
+200
+Prevailing
+transaction
+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.
+(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)
+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)
+Announcement by the Company on participation
+in the establishment of Guoneng Low-carbon
+Fund and Connected Transaction (www.sse.com.
+cn, 28 August 2021)
+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.
+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)
+1.
+(III) Material related party transactions regarding joint external investments
+Applicable ✓ Not applicable
+Related party transactions regarding the acquisition and disposal of assets or
+equity
+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.
+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.
+(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.
+Unit: RMB million
+noted sub-prime
+suspicious loss
+suspicious loss
+100.00
+1.
+RMB ordinary
+shares
+16,491,037,955
+82.91
+0 16,491,037,955
+83.00
+-21,100,500 19,868,519,955
+2.
+foreign shares
+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
+Overseas listed
+17.00
+-21,100,500
+19,889,620,455
+As at 31 December 2021
+Number Percentage
+Repurchase and
+cancellation
+Subtotal
+Number
+Percentage
+I.
+Shares with selling
+100.00
+restrictions
+0.00
+0
+0
+0
+0.00
+II.
+Shares without selling
+restrictions
+0
+Change
+100.00
+Explanation on changes in shares
+reporting period (accounts)
+161,039
+Including: Holders of A shares (including China Energy)
+159,087
+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
+Total number of shareholders of ordinary shares as at the end of the
+Including: Holders of A shares (including China Energy)
+Registered holders of H shares
+1,936
+172 China Shenhua Energy Company Limited
+Section VIII Changes in Share Capital and Shareholders (Continued)
+(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
+Unit: share
+Shareholdings of top ten shareholders
+Increase Number of shares
+148,787
+2.
+Total number of shareholders
+III.
+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.
+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.
+(II) Changes of shares with selling restrictions
+Applicable
+✓ Not applicable
+2021 Annual Report 171
+Section VIII Changes in Share Capital and Shareholders (Continued)
+(1)
+II.
+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.
+SHAREHOLDERS
+ISSUANCE AND LISTING OF SECURITIES
+As at 31 December 2020
+Unit: shares
+Change in number of shares
+Unit: RMB million
+Type of products
+Source of
+funding
+Maximum
+Balance Note
+Outstanding
+ending balance
+Overdue
+Uncollectible
+amount
+Entrusted loans
+Own fund
+General status of entrusted loans
+437.4
+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
+400.0
+has been
+1.
+For the details of the opinions of the Independent Directors, please refer to the
+relevant reports simultaneously disclosed with this Report.
+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)
+Description of the potential joint and several repayment liability for outstanding guarantee
+Description of guarantee
+0
+3,260.29
+(III) Entrusted cash asset management
+0
+3,260.29
+Please refer to below
+Please refer to below
+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.
+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.
+between the
+Name of
+borrower
+Yili Chemical associate of a Bank of China 400.0
+2020/12/24 2023/12/24
+3 years
+subsidiary
+Own fund Replacement of Interest to be paid
+loans
+quarterly
+4.75%
+19.1
+0
+procedures
+Yes
+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.
+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.
+for 2021
+2021
+rate
+borrower and
+the Group
+Trustee
+Amount of
+entrusted
+loans
+Actual
+Principal
+through
+Initial date Expiry date
+Duration
+Source
+Investment
+of loans of loans
+of loans
+of fund
+of fund
+Determination of
+compensation
+Interest
+return for
+recovered
+legal
+Number
+Decrease held at the end
+of shares
+Shares subject to pledge, tag
+or lock-up
++21,768,317
+21,768,317
+0.11%
+0
+N/A Others
+- Social Security Fund 1104
+Portfolio
+China Merchants Bank Ltd. - SSE
+E Fund Management Co., Ltd.
++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
+21,505,083
+Number of shares
+without selling
+restrictions
+Offered Fund
+Management Co., Ltd. -
+of China-hanghai Index
+50 Trading Open-end Index
+Securities Investment Fund
+China Life Insurance Company
++27,703,519
+27,703,519
+0.14%
+0
+Nil
+Ruifeng Huibang No.3 Privately
+N/A Others
+Guoshou Ruian
+Zhuhai Ruifeng Huibang Asset
+0
+22,233,848
+0.11%
+0
+Nil
+N/A Others
+Limited Life Insurance -
+Unit: share
+Name of shareholders
+Type and number of shares
+Ltd. Ruifeng Huibang No.3 Privately Offered
+Fund
+22,233,848
+22,233,848 RMB ordinary shares
+Zhuhai Ruifeng Huibang Asset Management Co.,
+27,703,519
+27,703,519 RMB ordinary shares
+China Life Insurance Company Limited - Life
+Insurance Guoshou Ruian
+27,825,922
+E Fund Management Co., Ltd. - Social Security
+Fund 1104 Portfolio
+RMB ordinary shares
+106,077,400
+106,077,400 RMB ordinary shares
+Central Huijin Asset Management Ltd.
+Industrial and Commercial Bank of China -
+Shanghai Index 50 Trading Open-end Index
+Securities Investment Fund
+218,669,817
+218,669,817 RMB ordinary shares
+Hong Kong Securities Clearing Company Limited
+594,718,004
+594,718,004 RMB ordinary shares
+27,825,922
+21,768,317 RMB ordinary shares
+21,768,317
+China Merchants Bank Ltd. - SSE
+Type
+Number
+China Energy Investment Corporation Limited
+HKSCC NOMINEES LIMITED
+13,812,709,196 RMB ordinary shares
+13,812,709,196
+3,369,478,486
+Overseas-listed foreign
+shares
+China Shenhua Energy Company Limited
+174
+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.
+with voting rights restored and the number of
+shares held
+Details regarding the holders of preference shares N/A
+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.
+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
+Description of the abovementioned shareholders' N/A
+entrusting of voting rights, entrusted voting
+rights, and waiver of voting rights
+Description of the special account for repurchase N/A
+of the top ten shareholders
+Dividend ETF
+N/A Others
+0.9
+Nil
+0.14%
+0
+Unknown
+N/A Overseas corporation
+China Securities Finance
+-45
+594,718,004
+2.99%
+0
+16.96%
+Nil
+Corporation Limited
+Hong Kong Securities Clearing
++118,584,244
+218,669,817
+1.10%
+0
+Nil
+N/A Overseas corporation
+N/A Others
+Company Limited
+3,369,478,486
+HKSCC NOMINEES LIMITED
+Name of shareholders
+reporting period
+during the of the reporting
+period
+with selling
+Percentage
+restrictions
+Status
+Number
+-20,842,236
+Nature of
+shareholders
+China Energy Investment
+0 13,812,709,196
+69.52%
+0
+Nil
+N/A State-owned
+Corporation Limited
+corporation
+%
+Central Huijin Asset Management
+-3,949,900
+106,077,400
+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
+4%
+Control indicators
+As at 31
+Main risk indicators of the Finance Company
+2.
+Section VII Significant Events (Continued)
+corporation
+Industrial and Commercial Bank
++3,278,174
+27,825,922
+No.
+Non-performing loan rate not higher than
+5%
+15.65%
+0.53%
+Nil
+N/A State-owned
+Ltd.
+Yes
+assets)
++∞ (none
+Loan loss coverage ratio not lower than
+100%
+5
+LO
+China Securities Finance Corporation Limited
+noted sub-prime
+Yes
++∞ (none
+Capital loss coverage ratio not lower than
+100%
+Yes
+0%
+Yes
+0%
+Yes
+0
+3,260.29
+3,369,478,486
+(74.60)
+Opening
+Loan interest
+Related
+Total amount Total amount
+Amount for the period
+Unit: RMB million
+Loan business
+of loan for of repayment
+4.
+2021 Annual Report 165
+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.
+27,126
+138,644
+146,020
+19,750
+Total
+Section VII Significant Events (Continued)
+27,126
+Closing
+Loan limit rate range
+Note:
+21,397
+12,191
+9,512
+24,076
+Total
+21,397
+parties Relationship
+12,191
+24,076
+100,000 3.15%-4.90%
+Subsidiary of controlling
+shareholder
+Finance
+Company
+balance
+the period for the period
+balance
+9,512
+"Loan limit" refers to the maximum daily balance (including accrued interest incurred) of loans
+provided by Finance Company to the Group.
+138,644
+19,750
+0%
+Yes
+50.01%
+3,187.85
+Inter-bank borrowing ratio not higher than
+100%
+Ratio of investment (against total capital)
+not higher than 70%
+9
+Yes
+8
+0.07%
+Ratio of self-owned fixed assets not higher
+than 20%
+Yes
+37.36%
+Liquidity ratio not lower than 25%
+19
+assets)
+Yes
+146,020
+10
+28.54%
+27,900 0.455%-3.3%
+shareholder
+Finance Subsidiary of controlling
+balance
+Closing
+Opening deposited withdrawn
+balance for the period for the period
+Total amount Total amount
+Guarantee ratio not higher than 100%
+Deposit
+interest
+rate range
+Relationship
+Related
+parties
+Amount for the period
+Unit: RMB million
+Deposit business
+3.
+Yes
+Maximum
+daily deposit
+limit
+5.
+Company
+Unit: RMB million
+0 No
+No
+Baorixile Energy
+Relationship
+overdue provided parties
+completed overdue
+guarantee guarantee
+No
+guarantee guarantee is of related
+Expiry date of Type of
+Amount of counter for the benefit
+Whether
+guarantee is
+Whether
+Whether
+performance Whether
+Date of
+1. Guarantee provided by the Company to external parties
+(excluding guarantee granted to its subsidiaries)
+has been guarantee is
+Relationship
+between the
+guarantor
+and the listed
+several
+liability
+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)
+Credit facilities or other financial business
+(8.86)
+72.44
+2021 Annual Report 167
+Section VII Significant Events (Continued)
+Railway
+2. Guarantee provided by the Company and its subsidiaries for the benefit of its subsidiaries
+Total balance of guarantee provided for the benefit of subsidiaries at the end of the
+reporting period (B)
+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 (%)
+guarantee
+Company
+Limited
+Total amount of guarantee provided for the benefit of subsidiaries during the reporting
+period
+Amount date of date of
+company Guaranteed guaranteed agreement guarantee
+Controlled Hulunbeer 72.44 2008.08.30 2008.08.30 2029.08.29 Joint and
+subsidiary Liangyi
+(execution Beginning
+Finance Company Subsidiary of controlling
+shareholder
+1,061
+100,000
+Issue of acceptance bill
+Finance Company Subsidiary of controlling
+shareholder
+Guarantor
+100,000
+Bill discount
+Finance Company Subsidiary of controlling
+the period
+Quota
+Business Type
+Relationship
+Related parties
+Amount for
+Intermediary business
+200
+3,913
+shareholder
+32
+provision of
+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.
+✓ Not applicable
+Applicable
+(1)
+MATERIAL CONTRACTS AND THEIR PERFORMANCE
+Section VII Significant Events (Continued)
+XI.
+Trust, contracting and leasing
+(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.
+guarantee
+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.
+(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.
+166 China Shenhua Energy Company Limited
+of total issued
+share capital of
+the Company
+%
+%
+1
+China Energy
+Beneficial owner
+N/A
+A shares
+V.
+VI.
+OTHER CORPORATE SHAREHOLDERS WITH MORE THAN 10% SHAREHOLDING
+IN THE COMPANY
+H shares/A shares
+over total issued
+H shares/A shares
+respectively
+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
+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
+Percentage 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):
+Nature of
+interest
+Description of changes in control of the Company during the reporting period
+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
+H shares/
+A shares held
+Applicable ✓ Not applicable
+Section VIII Changes in Share Capital and Shareholders (Continued)
+(III) Substantial shareholders' interests and short positions in the shares of the
+Company
+Number of
+No.
+Name of
+shareholders
+Capacity
+H shares/
+A shares
+PERSISTING IN SUSTAINABLE DEVELOPMENT AND PROTECTING THE
+RIGHTS AND INTERESTS OF INVESTORS
+3.
+Controlling shareholder as at the end of the reporting period
+State-owned Assets Supervision and Administration Commission of the
+State Council
+Legal representative
+Name
+1. Legal person
+(1)
+IV. CHANGES IN CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+Section VIII Changes in Share Capital and Shareholders (Continued)
+2021 Annual Report 175
+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.
+the substantial
+shareholder
+corporation
+controlled by
+Date of incorporation
+Principal business
+0.88
+175,044,309
+Long position
+H shares
+Interest of
+BlackRock, Inc.
+2
+69.52
+83.76
+13,812,709,196
+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.
+5.18
+Shareholdings in other
+domestic and overseas
+listed subsidiaries and
+associates during the
+reporting period
+China Energy Investment Corporation Limited
+Wang Xiangxi
+23 October 1995
+Name
+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.
+Holding 67.50% shares of Guodian Changyuan Electric
+Co., Ltd.;
+Effectively controlling 41.24% shares of Yantai
+Longyuan Power Technology Co., Ltd.
+Effectively controlling 51.25% shares of Ningxia
+Yinglite Chemicals Co., Ltd.;
+Effectively controlling 78.40% shares of Guodian
+Technology & Environment Group Corporation Limited;
+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.)
+2.
+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.
+Percentage
+2021 Annual Report 179
+2021 Evergreen Award -
+Sustainable Development
+Efficiency Award
+182 China Shenhua Energy Company Limited
+14 December 2021
+China Business's Top 100
+Forum
+China Association for Public
+Companies
+China Securities Journal
+Hosted by Hong Kong Ta Kung
+Wen Wei Media Group
+China Fund Jihuibao
+Award Institution
+Contribution Enterprises
+Award, China Top 100
+Enterprises Award, China
+Ethical Enterprises Award
+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
+The 11th China Securities Golden
+Bauhinia Award and Best Hong
+Kong Stock Connect Listed
+Company Award
+Most Valuable Company in
+Investor Relations of the
+Year of the First China Listed
+Company Classic Award
+13 December 2021
+December 2021
+12
+11 December 2021
+10 December 2021
+November 2021
+9
+Award Title
+No. Date of Award
+Section IX Investor Relations (Continued)
+2021 Annual Report 181
+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
+Caijing Magazine
+Sina Finance
+Section X
+and Financial Statements
+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.
+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.
+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.
+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.
+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
+Independent Auditor's Report
+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.
+SSE
+Securities Times
+January 2021
+2
+May 2021
+3
+June 2021
+4
+5
+August 2021
+6
+August 2021
+7
+August 2021
+00
+8
+September 2021
+Award Title
+2020 Evergreen Award
+-Sustainable Development
+Inclusive Award
+Best Investor Relations Award of
+Tianma Award
+2020 Outstanding Performance
+Award for Enterprise Water
+Safety
+Practice Case of 2020 Annual
+Performance Presentation of
+Beijing Listed Companies
+ESG Excellent Practice Cases of
+Beijing Listed Companies
+2020-2021 Information
+Disclosure Work Appraisal
+Grade A
+Industry Pioneer Title of Chine
+Carbon Company awarded
+by the First Session of China
+Carbon Company
+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
+CDP (Carbon Disclosure
+Project)
+The Listed Companies
+Association of Beijing
+The Listed Companies
+Association of Beijing
+1
+Date of Award
+July 2021
+III. CHINA SHENHUA MAJOR AWARD LIST IN 2021
+Section IX Investor Relations (Continued)
+180 China Shenhua Energy Company Limited
+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
+Section IX Investor Relations (Continued)
+No.
+1,427
+689
+Income tax payable
+Long-term liabilities
+Accrued reclamation obligations
+36
+Deferred tax liabilities
+Current portion of long-term liabilities
+Current portion of lease liabilities
+187
+33
+9,028
+18,949
+29,109
+35
+Accrued expenses and other payables
+28,980
+35,216
+242
+Bonds
+192
+Non-current liabilities
+34
+Contract liabilities
+6,864
+5,256
+Liabilities associated with assets classified
+as held for sale
+217
+Total current liabilities
+Borrowings
+91,748
+Net current assets
+116,562
+102,736
+Total assets less current liabilities
+518,849
+493,411
+6,313
+China Shenhua Energy Company Limited
+69,493
+Accounts and bills payables
+Others
+137
+208,310
+Total current assets
+2,783
+294
+11
+Assets classified as held for sale
+112,880
+156,706
+172,229
+29
+1,701
+3,391
+4,479
+28
+17,480
+18,514
+27
+376
+11,186
+8,847
+Current liabilities
+31
+(170)
+(33)
+(246)
+(279)
+At 31 December 2021
+19,869
+84,766
+3,657
+Borrowings
+(334)
+263,971
+380,038
+69,183
+449,221
+194 China Shenhua Energy Company Limited
+Lease liabilities
+11,759
+9,917
+22,425 (14,316)
+(227)
+Total non-current liabilities
+Equity
+for the year
+Other comprehensive income
+186
+(37)
+223
+356
+(133)
+61,009
+9,402
+51,607
+51,607
+Profit for the year
+65,384 429,587
+Total comprehensive income
+364,203
+(14,809)
+20,236
+(201)
+3,657
+85,001
+(256)
+19,890
+At 1 January 2021
+(Note (v))
+(Note (iv))
+(Note (iii))
+capital shares
+RMB million RMB million
+(Note 38) (Note 38)
+Share Treasury
+250,685
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+(Note (i)) (Note (ii))
+for the year
+and production funds
+(Note (iii)))
+Disposal of subsidiaries
+(6,739)
+(6,739)
+1,646
+1,646
+(235)
+56
+256
+(21)
+¨¨¨¨- (3,392) - 3,392 ---
+controlling shareholders
+Distributions to non-
+controlling shareholders
+Dividend declared (Note 15)
+Appropriation of maintenance
+Contributions from non-
+(5,581)
+5,581
+(35,962)
+(35,962)
+(35,962)
+61,195
+9,365
+51,830
+51,607
+356
+(133)
+production funds (Note (iii)
+Utilisation of maintenance and
+own shares
+Total interests equity
+Total
+controlling
+606
+1,510
+896
+974
+30
+6,169
+6,754
+37
+2,661
+8,025
+36
+3,241
+3,172
+(227)
+32
+50,251
+49,193
+RMB million
+2020
+31 December
+31 December
+2021
+RMB million
+Notes
+Total equity
+Equity attributable to equity holders of the Company
+Non-controlling interests
+At 31 December 2021
+Consolidated statement of Profit or Loss and
+Other Comprehensive Income (Continued)
+Reserves
+Share capital
+33333
+69,628
+63,824
+449,221
+Non-
+Share
+premium reserve
+reserves earnings
+reserves
+reserve
+Other Retained
+Capital Exchange Statutory
+Equity attributable to equity holders of the Company
+For the year ended 31 December 2021
+Consolidated Statement of Changes in Equity.
+2021 Annual Report 193
+The notes on pages 201 to 307 form part of these financial statements.
+Executive Director
+Xu Mingjun
+Chairman and Executive Director
+Wang Xiangxi
+Approved and authorised for issue by the board of directors on 25 March 2022.
+429,587
+449,221
+65,384
+69,183
+364,203
+380,038
+344,313
+360,169
+19,890
+19,869
+38
+429,587
+Net assets
+13,607
+Fair value changes on investments in debt
+12,750
+(555)
+(581)
+70,889
+96,060
+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
+General and administrative expenses
+The engagement partner on the audit resulting in the independent auditor's report is Guen Kin Shing.
+Research and development costs
+Other income
+947
+(874)
+Share of results of associates
+(2,263)
+(2,583)
+1,684
+2,492
+66
+Finance costs
+(1,090)
+(1,103)
+(524)
+(2,561)
+12
+778
+893
+(194)
+(955)
+12
+282
+(1,362)
+(2,499)
+(8,948)
+(9,119)
+Interest income
+Other expenses
+Loss allowances, net of reversal
+Other gains and losses
+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 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.
+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.
+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
+KEY AUDIT MATTERS (CONTINUED)
+Section X Independent Auditor's Report
+and Financial Statements (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.
+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.
+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)
+KEY AUDIT MATTERS (CONTINUED)
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+Timing of revenue recognition from sale of coal (continued)
+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.
+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.
+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
+Profit before income tax
+The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the
+Group's financial reporting process.
+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.
+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
+How our audit addressed the key audit matter
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+Key audit matter
+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.
+79,170
+59,362
+Income tax expense
+22,240
+24
+3,888
+4,651
+4,000
+39,845
+26,201
+238,198
+263,656
+781222
+Interests in associates
+Right-of-use assets
+20
+Intangible assets
+19
+Exploration and evaluation assets
+Construction in progress
+Property, plant and equipment
+RMB million
+2020
+31 December
+31 December
+2021
+RMB million
+Notes
+Non-current assets
+At 31 December 2021
+Consolidated Statement of Financial Position
+2021 Annual Report 191
+18,597
+47,708
+49,556
+Financial assets at fair value through
+12,633
+25
+12 220 2
+Cash and cash equivalents
+Time deposits with original maturity over three months
+Restricted bank deposits
+Prepaid expenses and other current assets
+comprehensive income
+Financial assets at fair value through other
+Accounts and bills receivables
+Inventories
+Current assets
+390,675
+The notes on pages 201 to 307 form part of these financial statements.
+402,287
+2,856
+3,568
+30
+35,890
+28,089
+23
+1,845
+2,174
+22
+223
+Deferred tax assets
+Other non-current assets
+other comprehensive income
+Total non-current assets
+26
+1.803
+16
+Other comprehensive income for the year,
+(4)
+instruments at fair value through other
+comprehensive income
+(41)
+66
+(344)
+(172)
+Share of other comprehensive income of associates
+Items that may be reclassified subsequently to profit or
+loss, net of income tax:
+Exchange differences
+56
+99
+292
+Fair value changes on investments in equity
+instruments at fair value through other
+comprehensive income
+net of income tax:
+Items that will not be reclassified to profit or loss,
+Other comprehensive income for the year
+43,984
+61,009
+Profit for the year
+43,984
+61,009
+12
+Profit for the year
+(15,378)
+(18,161)
+10
+net of income tax
+186
+(333)
+Total comprehensive income for the year
+-Basic/ diluted (RMB)
+Earnings per share
+43,651
+61,195
+8,044
+9,365
+35,607
+51,830
+43,984
+61,009
+8,135
+9,402
+35,849
+2.597
+51,607
+2020
+RMB million
+Notes
+2021
+Total comprehensive income
+for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+Profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+Year ended 31 December
+For the year ended 31 December 2021
+Consolidated statement of Profit or Loss and
+Other Comprehensive Income (Continued)
+China Shenhua Energy Company Limited
+190
+43,651
+61,195
+RMB million
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND
+AUDITOR'S REPORT THEREON
+Cancellation of repurchased
+660
+Port
+16.0
+35.6
+8.7
+4,068
+45.6
+488
+Henan
+Central China Power Grid
+Mengin Power
+39.79
+64.87
+15.38
+Including: Railway
+50.36
+80.69
+%
+% RMB million RMB million
+% RMB million RMB million
+% RMB million RMB million
+RMB million RMB million
+2,102
+3,260
+2000
+1260
+424
+power
+325
+10.02
+Guangxi Power Grid
+Indonesia
+PLN
+EMM Indonesia
+4. Coal chemical segment
+(203)
+23.2
+3.9
+8.8
+356.3
+81.4
+664
+102
+Liuzhou Power
+10.6
+Hunan Power Grid
+Yongzhou Power
+0.55
+0.44
+Shipping
+117.9
+14.0
+6.4
+5.826
+38.7
+408
+Guangxi
+Hunan
+17.6
+3,468
+61.0
+Jiujiang Power
+Including: new energy business
+10.8)
+180.4
+37.6
+5.7
+137.7
+30.5
+Coal Chemical
+Shipping
+Port
+Railway
+Central China Power Grid Jiangxi
+Table 11 Cost of Sales of Transportation and Coal
+Chemical Segments
+2,020
+2,020
+357
+275
+5,434
+104.7
+109.8
+North China Power Grid Shandong
+Shuguang Power
+168.76
+171.86
+2. Power segment
+1,212
+56.1
+1205
+6,023
+Sichuan
+Sichuan Power Grid
+Change
+2020
+2021
+Change
+2020
+2021
+Change
+2020
+2021
+Change
+115.0
+2020
+Sichuan Energy Icoal-fired
+3. Transportation segments
+44
+76.6
+16.8
+0.33
+50.22
+2,000
+2,000
+2,000
+364
+276
+2021
+15.5
+5,858
+4.83
+182
+(1.1)
+736
+728
+14
+3,917
+3,972
+Depreciation and amortization
+210
+300
+-
+300
+113
+465
+62.8
+298
+485
+637.5
+8
+59
+15.2
+316
+364
+30.5
+3.231
+4,217
+365
+Recair and maintenance
+61.1
+811 (14.9
+88.5
+130
+245
+17
+702
+714
+(74.4
+1,501
+385
+Others
+0.39
+7.16
+690
+5. Others
+671
+2.996
+(7.5
+665
+615
+External transportation charges
+26,499
+36,824
+5.620
+31,204
+343
+305
+346.5
+16.1
+311
+361
+700
+366
+314
+239.3
+1,156
+3,922
+5.8
+2,463
+2.606
+6.8
+16,953 15,871
+Cost of internal transportation business
+-
+612
+1,200
+295
+303
+*888
+4.764
+1.516.4
+1.618.6
+Total of coal-fired power plants/weighted average
+4.7
+60.2
+13.2
+8.51
+1.200
+700
+490
+Raw materials, fuel and power
+466.7
+3
+17
+22.7
+344
+422
+21.3
+4,185
+5,078
+Personnel expenses
+1.600
+2.000
+2.000
+467
+280
+2.1
+2,475
+2.423
+83.1
+231
+423
+3.6
+365
+378
+132
+2372
+2.686
+72
+444.3
+100.0
+2,604
+1,276.5
+4911
+32.7
+5,105 1.5613
+Depreciation and
+(28.8)
+16.3
+2,086 1,276.5
+11.6
+1.561.3
+1.808
+Repair and maintenance
+38.5
+12.5
+58,027
+Transportation charges
+Power Grid
+(4.7)
+331.2
+315.6
+thousand tonnes
+Polypropylene sales
+2.5
+93.2
+95.5
+16.0
+51,557
+18.1
+(15.1)
+4.5
+108.8
+1176
+Hebei
+North China Power Grid
+Dingzhou Power
+Table 10 Capital Expenditure
+Table 9 Domestic Coal Sales Volume
+2,520
+323
+297
+4,539
+108.8
+Shanxi Province
+1144
+278
+352
+712
+8.4
+9.4
+Inner Mongolia
+Hebei
+North China Power Grid
+Cangdong Power
+North China Power Grid
+Shengli Energy
+50.0
+3.0
+1,320
+1.276.5
+2307
+21.0
+省界線
+Provincial Boundary
+「國有或地方鐵路線
+State-owned or Local Railway
+- 自有運營鐵路
+Self-owned Railway (in operation)
+自有礦區
+Self-owned mines
+← 准班輪航線
+Quasi-liner Shipping Route
+青海:
+Qinghai
+圖例 Legend
+寧夏
+2J810
+Sichuan
+長江
+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
+2021
+呼倫貝爾
+Hulunbeier
+吉林
+內蒙古自治區
+Jilin
+塔本陶勒盖
+Ningxia C
+Tibet
+西藏
+Dajiawa
+1.561.3
+3,277
+Personnel expenses
+5,318 24.6
+6,624
+Depreciation and amortization
+4.528
+5.014
+(700)
+Zhunchi Railway
+C10. 塔韓鐵路
+包神鐵路
+Tahan Railway
+註
+① 於2021年12月31日之分佈圖,僅做示意
+② 以審圖號GS(2016)1600號地圖為基礎編制
+Note: ① This map as at 31 December 2021 is for illustrative purpose only.
+② Prepared on the basis of the map with the approval number of GS(2016)1600.
+航運 SHIPPING
+E1. 航運公司
+Shipping Company
+煤化工 COAL CHEMICAL
+F1.
+包頭煤化工
+Baotou Coal Chemical
+中國 CHINA
+大家洼
+4.666
+106
+301
+324
+1,021
+2520
+2,852
+4.833
+Other operating costs
+81.6
+8.7
+1,276.5
+1,115
+15.8
+1,561.3
+9,531 55.8
+5,120
+14,850
+1,285
+2,520
+2.464
+Others
+amortization
+1.4
+19,453
+19,724
+Others
+1,320
+1,320
+ཐྰ་་་ 'B
+Tax and surcharge
+2,810
+4,096
+225,126
+3,720
+3,720
+267
+312
+5,765
+1983
+214.5
+Shaanxi
+North China Power Grid
+Jinje Energy
+205.75
+61.57
+Total cost of sales
+1. Coal segment
+Million tonnes
+%
+2,378
+3,810
+660
+38,729
+60.019
+Total cost of sales
+631
+846
+Tax and surcharge
+153,373 46.8
+%
+357
+294
+6,014
+307
+5,760
+34.3
+312
+380
+38.0
+Guangdong
+South China Power Grid
+Huizhou Thermal
+Completion in 2021
+Plan for 2022
+of domestic
+221
+5,120
+201
+307
+307
+5,218
+2521
+252.4
+267.1
+Guangdong
+South China Power Grid
+Taishan Power
+Proportion
+2520
+394
+307
+371
+C&.准池鐵路
+164.6
+171.9
+Fujian
+st China Power Grid
+East C
+Fujian Energy
+RMB100 million
+RMB100 million
+Change
+2020
+sales
+2021
+སོ ཟ ཟཋ ཙ བྷཟཆ་ཤ
+Others
+slurry
+Chemical including coal
+Metallurgy
+Thermal coal
+By usage
+Northeast China
+Others
+Southern China
+Central China and
+Eastern China
+Northern China
+By regions
+Domestic sales
+Million tonnes
+304
+51
+107.8
+1.5
+330.6
+10.9
+44.9
+5.5
+183.4
+23.2
+9.9
+64.7
+1.7
+10.8
+26.9
+-
+6.8
+45.5
+(0.7)
+54.1
+23
+8.6
+62
+285.7
+%
+billion tonne km billion tonne km
+Change
+2020
+ཝརྞྞབྷཟaག་ཟཁ་རྫོདཿབྷལྷ
+Total railway turnover
+1.1
+7.3
+甘其毛都
+煤礦 COAL MINE
+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
+Ganqimaodu
+● 靖邊
+浩勒報吉
+Batuta
+C 巴圖塔 Dongsheng
+東勝
+Hanjiacun
+韓家村
+Tarangaole
+塔然高勒
+Baotou
+包頭
+Shendong Mines
+A1. 神束礦區
+Haoleɓaoji
+113.0
+121.2
+Total of shipping volume
+1
+67.6
+Xinje Mines
+49.4
+44.8
+176
+3.7
+64.2
+107.6
+Bazhun Railway
+Table 16 Shipping Volume
+Baotou Mines
+2021
+-
+0.3
+0.3
+05
+0.5
+Dazhun Railway
+Baorixile Mines
+12.6
+11.6
+11.3
+(1.8
+11.3
+11.1
+.
+2020
+Change
+Zhunchi Railway
+State-owned railways
+(53.7)
+70.0
+32.4
+External customers
+Huangda Railway
+106.5
+43.0
+88.8
+The Group's internal customers
+(3.9
+77.3
+74.3
+(1.9
+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
+Diandaigou
+(1.5)
+大秦鐵路
+Daqin Railway
+B12. 南蘇FMM
+B17.永州電力
+B15. 九江電力
+Jiujiang Power
+Fujian Energy
+B11.福建能源
+Liuzhou Power
+Shouguang Power
+B14.柳州電力
+B13.壽光電力
+Sichuan Energy
+Mengjin Power
+B10.四川能源
+EMM Indonesia
+孟津電力
+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
+B9.
+Cangdong Power
+B16. 印尼爪哇
+B18.
+55.
+C2. 朔黃鐵路
+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
+Zhuhai Coal Dock
+Indonesia Java
+D3.珠海煤碼頭
+D2. 天津煤碼頭
+Huanghua Port
+D1. 黃驊港
+港口 PORT
+Bazhun Railway
+C6. 巴准鐵路
+Huangwan Railway
+C3.黃萬鐵路
+Shuohuang Railway
+Shengli Energy
+Yongzhou Power
+勝利能源
+Tianjin Coal Dock
+神東電力
+B4.
+准能電力
+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
+Suning North
+天津市
+TIANJIN
+Qinhuangdao Port
+秦皇島港
+BEIJING
+HEBEI
+河北省
+Shuozhou West
+朔州西
+Zhunge'er
+准格爾
+Datong East
+大同東
+Waixigou
+唐山
+Tangshan
+Dongying
+神木北站
+Shenmu North
+B3.
+B2. 定州電力
+B5. 北京燃氣
+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
+A4.寶日希勒礦區
+Shengli Mines
+Mines
+Zhunge'er
+A3.勝利礦區
+A2.准格爾礦區
+YELLOW RIVER
+黃河
+SHAANXI
+陝西省
+SHANXI
+山西省
+Watang
+瓦塘
+外西溝
+Inner Mongolia Autonomous Region
+13.5
+Tahan Railway
+Percentage to
+2021
+Change
+2020
+Total sales volume/average price (excluding tax)
+17
+4.675
+4.754
+82.1
+2.755
+5.018
+0.8
+Percentage to
+3,314
+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
+3.342
+20.7
+total sales
+Sales
+410
+100.0
+446.4
+588
+100.0
+482 3
+Mines
+%
+%
+RMB/tonne
+%
+Million tonnes
+Price (excluding
+RMB/tonne
+Million tonnes
+tax)
+Sales volume
+tax)
+volume
+volume
+tax
+volume
+Sales volume
+Price (excluding
+Price (excluding
+total sales
+%
+421
+508
+Tax and surcharge
+3.539
+Cost of extemal transportation business
+Power Grid
+125
+224
+5,921
+72
+7.4
+Sichuan
+Sichuan Provincial Local
+Sichuan Energy hydropower)
+950
+2.976
+565
+4,067
+37.7
+38.5
+Beijing
+North China Power Grid
+Beijing Gas Power
+Other power plants
+433.77
+326.11
+Total
+50.0
+4.6
+193
+18.9
+396
+55.9
+6.7
+609
+568
+46.8
+218
+(1.5
+1,036
+1,020
+Other operating costs
+62
+125
+3.0
+3.946
+4.065
+82.2
+5.006 2,747
+10.5
+2717
+3,002
+8.7
+20,492 18,847
+Prime business cost
+960
+950
+(31.9
+1,591
+1,084
+8.0
+13.3
+43.4
+Coal resources (under PRC standard)
+1
+Classify by internal and external customers
+16.3
+263
+(19.0)
+29.0
+23.5
+Third-party ports
+Shenshuo Railway
+13.6
+19.5
+18.8
+Sales to external customers
+(201
+29.6
+(1.8
+37.9
+Zhunge'er Mines
+37.2
+444
+66
+419
+96.3
+4301
+605
+ཙྪཱ་ྒུབྷཡཱགྷ
+30.2
+22
+2
+3
+(1.7)
+268.1
+263.6
+Total seaborne coal sales
+Ganquan Railway
+(16.7)
+1.8
+1.5
+(1.5
+13.5
+13.3
+(1.5
+Sales to internal power segment
+19.9
+Shengli Mines
+⠀⠀⠀⠀⠀⠀⠀
+::::::
+13.7
+8.5
+322
+11
+47
+366
+0.9
+4.3
+Sales to internal coal chemical segment
+19.6
+4.9
+23.6
+Direct sales through coal mine pit
+Huanghua Port
+%
+% 100 million tonnes 100 million tonnes
+100 million tonnes 100 million tonnes
+%
+100 million tonnes 100 million tonnes
+0.4
+239.1
+Change
+2020
+Milion tonnes
+Million tonnes
+240.1
+Self-owned ports
+194.9
+Change
+Change 31 December 2021 31 December 2020
+31 December 2021 31 December 2020
+As at
+2021
+Table 15 Railway Cargo Transportation Turnover
+Table 14 Seaborne Coal at Ports
+Marketable reserve (under JORC standard)
+As at
+As at
+As at
+As at
+As at
+Recoverable reserve (under PRC standard)
+Change 31 December 2021 31 December 2020
+193.9
+0.5
+Self-owned railways
+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
+87.2
+(1.3
+156.0
+153.9
+Shendong Mines
+(I) Classify by contract pricing mechanism
+Table 13 Coal Resources Reserve
+Tavan Tolgoi
+Baoshen Railway
+Shanxi
+(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
+As at
+As at
+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
+RMB million
+8,864
+(2,425)
+RMB million
+446,069
+(176,717)
+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
+山西
+(28
+1,047
+%
+2021
+Change
+Table 5 Commercial coal production Volume
+Table 4 Operation Data
+As at
+As at
+As at
+As at
+562,904
+(133,317)
+(161,376)
+610,597
+RMB million
+RMB million
+424,257
+(154,901)
+2020
+(2,951)
+259
+722
+(38,729)
+(60,019)
+(153,373)
+(225,126)
+Segment cost of sales
+holders of the Company
+and R&D expenses and net finance
+(61,464)
+(81,075)
+1,853
+321
+5,165
+5,851
+3.112
+(22,020)
+6,195
+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
+6,359
+2020 Change
+(20,304)
+(3.314)
+209
+980
+2,678
+2,720
+16,636
+16,310
+7,976
+3,010
+29,832
+59,125
+Segment profit/(loss) from
+operations
+16.3
+81 289
+94,575
+(3,342)
+RMB million
+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)
+Net cash generated from operating activities
+Million tonnes
+Million tonnes
+307.0
+24.6
+Baorixile Mines
+Dock
+100 million
+100 million
+48,742 111.0
+102,865
+unit cost
+dispatch Unit cost
+Cost
+dispatch Unit cost
+Cost
+Cost of coal purchased
+capacity as at 31
+21.5
+capacity as at 31
+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
+in installed capacity
+Total installed
+14.4
+Power grid
+1.8
+1.2
+Baotou Mines
+20.5
+93.0
+112.1
+billion tonnenm
+Shipment turnover
+7.3
+113.0
+121.2
+million tonnes
+Shipping volume
+KWh RVB/MWh
+Power plants
+KWh RMB/MWh 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
+RMB million
+122.90
+Increase/decrease]
+for power
+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
+(2,950
+8,938
+(50,470)
+(56,285)
+RMB million
+21,619
+(6,629)
+billion tonne km
+RMB million
+RMB million
+124,113
+RMB million
+139,551
+RMB million
+RMB million
+150,299
+(110,040)
+RMB million
+166,654
+(134,566)
+(106,897)
+RMB million
+222,984
+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
+(120,171)
+268,067
+5.3
+291.6
+19,821
+(6,519)
+Total installed
+303.4
+6.2
+Average
+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
+285.7
+%
+2020
+Power
+Power
+2021
+2020 Change
+2021
+consumption
+Standard coal
+2.3
+185.0
+189.2
+Shendong Mines
+Loading volume at Huanghua Port
+railway
+By mines
+RMB million RMB million
+132
+RMB100 million
+Selling, general and administrative
+19,614
+Net cash generated from operating activities
+10,330
+14,777
+14,636
+11,864
+holders of the Company
+Profit for the period attributable to equity
+102,267
+88,970
+76,371
+67,608
+Revenue
+December)
+20,605
+September)
+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:
+June)
+364,203
+27,287
+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.
+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
+国家能源集团
+庆祝中
+重载技术新突破
+Section IV Directors' Report
+2021 Annual Report 13
+Chairman
+27,069
+Wang Xiangxi
+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
+£ if
+HXD17140A
+380,038
+51,607
+3,352.16
+2,426
+138.2
+2,332.63
+43.7
+Costs
+RMB100 million
+2,391.56
+1,704
+140.3
+1,623.74
+47.3
+Sales, general and administration,
+RMB100 million
+RMB100 million
+122.90
+98.3
+114.44
+7.4
+and R&D expenses
+and net finance costs
+Changes in unit production costs
+of self-produced coal
+Year-on-year
+increase of
+Year-on-year
+increase of
+Year-on-year
+increase of 3.6%
+24 China Shenhua Energy Company Limited
+approximately 7.4% approximately 5%
+125
+35,849
+Revenue
+1,363.3
+Standards
+Under International Financial Reporting
+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
+22.1
+Under China Accounting Standards for
+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
+1,664.5
+1,350
+123.3
+of 2020
+(33.3)
+N
+首列重载移动闭塞列车
+RMB million
+RMB million
+2020
+2021
+2020
+Total
+-
+1,028
+24
+5,165
+5,851
+1,747
+1,321
+974
+RMB million
+982
+6,838
+49,348
+63,959
+169.197
+256,241
+Revenue from external
+38.7
+43.984
+61,009
+RMB million
+Profit for the year
+8.4
+1,664.5
+1,805
+5,804
+100 million kWh
+335,216
+customers
+14.4)
+(61,464)
+(81,075)
+825
+297
+1,365
+4,874
+5,385
+5,458
+32,919
+33,861
+138
+165
+20,832
+233,263
+36.420
+2.391.56
+2,048
+RMB100 million
+Cost of sales
+28.7
+79,018
+101,680
+RMB million
+EBITDA
+(11.5)
+3.352.16
+2.966
+RMB100 million
+Revenue
+Inter-segment revenue
+国能朔黄铁路
+Power generation
+233 263
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+Eliminations
+Unallocated items
+Coal chemical
+2020
+Shipping
+Railway
+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
+Port
+43.7
+2021
+2021
+335,216
+RMB million
+Revenue
+16.5)
+4.823
+4.029
+100 million tonnes
+Coal sales
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+(3.0
+3.070
+2.978
+100 million tonnes
+Commercial coal production
+2021
+2020
+RMB million
+100 million kWh 100 million kWh
+Commercial coal production
+Gross power generation
+Power Generation
+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%-
+-69.52%
+Limited
+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.
+-100.00%-
+Shenhua Guohua Shouguang Power Generation Company Limited
+60.00%-
+Major
+Controlling
+Companies
+China Energy Guohua Beijing Power Research Institute Co., Ltd.
+92.00%-
+PT GH EMM Indonesia
+70.00%-
+台灣
+Tianjin Guohua Jinneng Power Co., Ltd.
+-13.48%
+-100.00%-
+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.
+12.5% - Haoji Railway Co., Ltd.
+Track Mechanical Maintenance Branch
+Shenshuo Railway Branch
+85.00% Shenhua Zhunchi Railway Company Limited
+-100.00% China Energy Railway Equipment Co., Ltd.
+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.
+70.00%-
+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 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% China Energy Baoshen Railway Group Co., Ltd.
+88.16%
+88.46 %
+65.00%-
+China Energy Jinjie Energy Co., Ltd.
+70.00%-
+Macau
+澳門
+Guangdong
+廣東
+Jiangxi
+Hunan
+湖南
+江西
+河北
+(69)
+Hubei
+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
+----------
+Taiwan
+香港
+Hongkong
+山東
+Shandong
+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%-
+PT. Shenhua Guohua Pembangkitan Jawa Bali
+hours
+福建
+Diaoyu Islands *
+釣魚島
+3110
+Heilongjiang
+黑龍江
+Zhejiang
+浙江
+Liaoning
+遼寧
+Jiangsu
+江蘇
+Anhui
+安徽
+Fujian
+-100.00%-
+Other A Share
+Shareholders
+-100.00%- China Energy Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+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
+35,246
+China Energy (Guangdong) Electricity Sales Co., Ltd.
+166.45
+billion kWh
+1,276.5 276.1
+26.1
+127.65
+41.686
+1,561.3
+267.0
+24,827
+1.276.5
+1945
+37.3
+347
+299
+660
+660
+348.1
+381
+1561.3
+Cost of power output dispatch
+223
+Inner Mongolia
+Shendong Power
+Northwest North China
+Inner Mongolia
+240.3
+222.1
+4,792
+207.0
+195.4
+5.9
+Polyethylene sales
+thousand tonnes
+332.8
+356.9
+(6.8
+Shaanxi Province
+Shaanxi Provincial Local
+**
+g/kWh
+RMB/MW
+MW
+MW
+MW
+MW
+Personnel expenses
+11,355
+8,119
+39.9
+54,340
+-
+Raw materials, fuel and
+3,114
+Associated
+Companies
+42.53% Beijing GD Power Co., Ltd.
+China Energy Shenfu (Shishi) Power Generation Co., Ltd.
+-51.00% Shenhua (Tianjin) Financial Leasing Co., Ltd.
+100.00%-China Energy Economy and Technology Institute Co., Ltd.
+Section IV Directors' Report (Continued)
+I.
+DISCUSSION AND ANALYSIS ON OPERATION RESULTS
+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.
+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%.
+Actual amount
+for 2021
+Target for
+2021
+Proportion
+of Completion
+Actual amount
+for 2020
+Year-on-year
+change
+%
+%
+51.00%-
+Commercial coal production
+Coal sales
+-100.00% China Energy Zhunneng Group Co., Ltd.
+The equity structure diagram of China Shenhua (including major branches/subsidiaries)
+-90.00%-
+Shenhua Shandong Power Sales Co., Ltd.
+Coal Chemical
+100.00%
+China Energy Baotou Coal
+Chemical Co., Ltd.
+80.00%-
+-100.00% China Energy Supply Chain Management Group Co., Ltd.
+-100.00%-China Energy Information Technology Co., Ltd.
+China Energy Group Yueyang Power Generation Co., Ltd.
+Guangdong Branch
+Shandong Branch
+Major Controlling Companies
+Major
+Branches
+Others
+-100.00% Shenhua Geological Exploration Co., Ltd.
+Shengli Energy Branch
+Major associated companies
+-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.
+-100.00% Shenhua International (Hong Kong) Limited
+as at 31 December 2021 is for illustrative purpose only.
+100 million tonnes
+156.13
+2.84
+5.3
+100 million tonnes
+4.823
+4.76
+101.3
+Repair and maintenance
+4.464
+2.916
+8.0
+100 million kWh
+5,714
+323
+320
+3.070
+power
+2,756 13.0
+Power generation
+108.1
+expenses and other current assets
+2,566
+141
+O Collection of other current assets
+Disposal of interbank certificate of deposits included in prepaid
+other non-current assets
+Investments in long-term loans included in
+Net cash received from acquisition of subsidiaries
+614
+Dividend received from associates
+1,613
+937
+Interest received
+2,135
+1,427
+(1,191)
+Increase in restricted bank deposits
+(3,023)
+Placing of time deposits with original maturity over three months
+(1,046)
+(11,212)
+Maturity of time deposits with original maturity
+over three months
+10,531
+2,016
+(1,088)
+classified as held for sale
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve
+in 2021 and 2020.
+17,954
+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
+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
+(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)
+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.
+725
+(iv)
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, and share of
+other reserves of associates.
+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
+79,170
+Adjustments for:
+Profit before income tax
+2020
+RMB million
+RMB million
+Year ended 31 December
+2021
+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
+28,621
+480
+Level 3 inputs are unobservable inputs for the asset or liability.
+(6,844)
+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.
+Immediate parent and ultimate controlling party
+2.
+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.
+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.
+For the year ended 31 December 2021
+Principal activities
+1. PRINCIPAL ACTIVITIES AND ORGANISATION
+China Shenhua Energy Company Limited
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES
+China Shenhua Energy Company Limited
+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.
+(i)
+Notes to the consolidated financial statements
+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
+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.
+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").
+Basis of preparation
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
+liabilities that the entity can access at the measurement date;
+Net cash (used in)/ generated from investing activities
+China Shenhua Energy Company Limited
+112,880
+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)
+(197)
+Capital element of lease rentals paid (Note 29(b))
+Interest element of lease rentals paid (Note 29(b))
+Financing activities
+2020
+RMB million
+Year ended 31 December
+2021
+RMB million
+For the year ended 31 December 2021
+Consolidated Statement of Cash Flows (Continued)
+200
+2021 Annual Report 199
+32,048
+995
+996
+Purchase of own shares
+(256)
+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
+The notes on pages 201 to 307 form part of these financial statements.
+44,000
+(42,079)
+(43,731)
+Net cash used in financing activities
+(25,061)
+(35,962)
+Dividend paid to equity holders of the Company (Note 15)
+(8,159)
+(6,826)
+Distributions to non-controlling shareholders
+606
+1,129
+Contributions from non-controlling shareholders
+Net increase in cash and cash equivalents
+Notes:
+606
+Consolidated Statement of Changes in Equity (Continued)
+Impairment losses on construction in progress (Note 12)
+605
+535
+Impairment losses on property, plant and equipment (Note 12)
+134
+financial instruments (Note 12)
+376
+Losses on changes in fair value of derivative
+FVTPL (Note 12)
+Gains on disposal of financial assets at
+(1,181)
+7
+9
+160
+(449)
+(346)
+268
+505
+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)
+Impairment losses on exploration and evaluation assets (Note 12)
+18
+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)
+36
+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)
+942
+1,162
+premium
+reserve
+reserve
+reserves
+reserves
+earnings
+shares
+Total
+equity
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+interests
+capital
+Total
+controlling
+Amortisation of long-term deferred expenses (Note 12)
+(Gains)/ losses on disposal of property,
+400
+413
+689
+Consolidated Statement of Changes in Equity (Continued)
+Equity attributable to equity holders of the Company
+Non-
+Share
+Treasury
+Share
+Capital
+Exchange
+Statutory
+Other
+Retained
+Interest income (Note 9)
+Share of results of associates
+(2,492)
+(1,684)
+Investing activities
+RMB million
+2020
+2021
+RMB million
+Year ended 31 December
+For the year ended 31 December 2021
+Additions of property, plant and equipment, intangible assets,
+Consolidated Statement of Cash Flows (Continued)
+198
+81,289
+94,575
+Net cash generated from operating activities
+(11,804)
+(16,080)
+China Shenhua Energy Company Limited
+exploration and evaluation assets, construction in progress
+and other non-current assets
+Increase in right-of-use assets
+(23,236)
+(627)
+1,350
+1,389
+(786)
+(123)
+(736)
+Net cash received from disposed of assets
+Net cash received from disposal of subsidiaries
+Purchase of non-controlling interests
+Investments in associates
+33,736
+490
+900
+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
+(644)
+(20,030)
+Income tax paid
+RMB million
+93,093
+Cash generated from operations
+79,697
+105,196
+Operating cash flows before movements in working capital
+(71)
+(115)
+Exchange gain, net (Note 9)
+Changes in working capital:
+2,334
+Interest expenses
+524
+2,561
+Loss allowances, net of reversal (Note 12)
+(947)
+874
+2,698
+Increase in inventories
+(157)
+(909)
+472
+1,608
+Increase in contract liabilities
+15,438
+9,488
+Increase in accrued expenses and other liabilities
+3,693
+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
+110,655
+For the year ended 31 December 2021
+For the year ended 31 December 2021
+Total comprehensive income for the year
+43,984
+(242)
+(91)
+(333)
+At 1 January 2020
+19,890
+Profit for the year
+Other comprehensive income
+for the year
+8,135
+Dividend declared (Note 15)
+production funds (Note (ii)
+Utilisation of maintenance and
+(257)
+15
+(257)
+15
+35,849
+8,044
+43,651
+Appropriation of maintenance and
+(25,061)
+35,849
+420,218
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+(Note 38)
+(Note 38)
+(Note (i))
+(Note (i))
+(Note (i)
+35,849
+(Note (iv))
+85,001
+3,618
+90
+56
+25,118
+(14,824)
+237,218
+356,077
+64,141
+(Note (v))
+(25,061)
+35,607
+2,995
+627
+627
+(84)
+(25,061)
+(2,248)
+At 31 December 2020
+19,890
+(256)
+(7,950)
+85,001
+6677
+(201)
+20,236
+(14,809) 250,685
+364,203
+65,384
+429,587
+2021 Annual Report 195
+3,657
+' ' ठ
+(7,950)
+(507)
+(2,995)
+production funds (Note (iii))
+(6,181)
+6,181
+Purchase of own shares
+(256)
+(2,164)
+(256)
+Contributions from non-controlling
+(256)
+606
+Distributions to non-controlling
+shareholders
+Disposal of subsidiaries
+Others
+(1,696)
+shareholders
+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.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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
+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.
+3.
+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
+SIGNIFICANT ACCOUNTING POLICIES (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.
+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.
+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.
+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.
+rights arising from other contractual arrangements; and
+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 acquired separately
+Intangible assets
+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.
+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.
+Obligations for land reclamation
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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;
+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.
+Non-current assets held for sale (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.
+3.
+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 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.
+2021 Annual Report 211
+212
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+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
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+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
+Term for deprecation (year)
+Buildings
+Mining related machinery and equipment
+Generators related machinery and equipment
+Railway and port
+Vessels
+Coal chemical related machinery and equipment
+Taxation
+Furniture, fixtures, motor vehicles and other equipment
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+Revenue from contracts with customers
+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.
+2021 Annual Report 209
+210
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+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
+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.
+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.
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+10 - 55 years
+5- 35 years
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+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.
+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.
+Non-current assets held for sale
+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.
+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.
+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.
+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.
+Investments in associates (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+208
+2021 Annual Report 207
+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.
+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.
+Investments in associates
+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.
+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 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.
+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)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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.
+5 - 40 years
+8-35 years
+6 - 45 years
+25 years
+8-20 years
+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.
+Property, plant and equipment (Continued)
+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.
+China Shenhua Energy Company Limited
+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.
+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 and does not providing any improved access to 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;
+surveying transportation and infrastructure requirements; and
+conducting market and finance studies.
+2021 Annual Report 213
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Exploration and evaluation assets (Continued)
+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.
+China Shenhua Energy Company Limited
+214
+China Shenhua Energy Company Limited
+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.
+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.
+As a lessor
+(ii)
+Leased assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+218
+217
+2021 Annual Report
+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.
+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.
+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 fair value
+through other comprehensive income (the "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
+Financial assets that meet the following conditions are subsequently measured at amortised cost:
+Classification and subsequent measurement of financial assets
+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 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.
+Financial instruments (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
+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 instruments
+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.
+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 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.
+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.
+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
+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).
+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.
+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.
+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.
+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. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+216
+the contractual terms give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+Notes to the consolidated financial statements (Continued)
+3.
+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 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.
+As a lessee
+(i)
+Leased 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
+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.
+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.
+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)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+For the year ended 31 December 2021
+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.
+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.
+220
+2021 Annual Report
+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.
+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.
+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.
+Significant increase in credit risk (Continued)
+(ii)
+(i)
+Impairment of financial assets (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
+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.
+223
+an actual or expected significant deterioration in the operating results of the debtor;
+224
+For the year ended 31 December 2021
+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.
+2021 Annual Report 219
+(iv) Write-off policy
+the disappearance of an active market for that financial asset because of financial
+difficulties.
+it is becoming probable that the borrower will enter bankruptcy or other financial re-
+organisation; or
+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;
+(e)
+(d)
+(c)
+(b)
+(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
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+Notes to the consolidated financial statements (Continued)
+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 breach of contract, such as a default or past due event;
+an actual or expected significant deterioration in the financial instrument's external
+credit rating (if available);
+China Shenhua Energy Company Limited
+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.
+Financial assets that do not meet the criteria for being measured at amortised cost or
+FVTOCI or designated as FVTOCI are measured at FVTPL.
+(iii) Financial assets at FVTPL
+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.
+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.
+Equity instruments designated as at FVTOCI
+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.
+(ii)
+(i) Amortised cost and interest income (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.
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+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;
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Classification and subsequent measurement of financial assets (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+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.
+(i)
+Impairment of financial assets (Continued)
+In particular, the following information is taken into account when assessing whether credit
+risk has increased significantly:
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Financial assets (Continued)
+Significant increase in credit risk
+222
+2021 Annual Report 221
+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.
+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.
+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.
+Notes to the consolidated financial statements (Continued)
+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.
+Impairment of financial assets
+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.
+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
+3.
+the amount of the loss allowance determined in accordance with IFRS 9 /IAS 37 Provisions,
+Contingent Liabilities and Contingent Assets; and
+Financial guarantee contracts
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+For the year ended 31 December 2021
+3.
+the amount initially recognised less, where appropriate, cumulative amortisation recognised
+over the guarantee period.
+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:
+(ii)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(ii)
+The entity and the Group are members of the same group.
+Notes to the consolidated financial statements (Continued)
+(i)
+An entity is related to the Group if any of the following conditions applies:
+(b)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+is a member of the key management personnel of the Group or the Group's parent.
+has significant influence over the Group; or
+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
+(iii)
+228
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+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.
+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.
+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).
+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.
+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.
+226
+China Shenhua Energy Company Limited
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Financial assets (Continued)
+Financial liabilities and equity (Continued)
+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
+such designation eliminates or significantly reduces a measurement or recognition
+inconsistency that would otherwise arise; or
+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.
+2021 Annual Report 227
+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
+-
+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
+it has been acquired principally for the purpose of repurchasing it in the near term; or
+(iii)
+2021 Annual Report 231
+(iv)
+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.
+232
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty (Continued)
+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 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.
+Fair value measurement of financial instruments
+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.
+China Shenhua Energy Company Limited
+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.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+4.2 Key sources of estimation uncertainty (Continued)
+Provision of ECL for accounts receivables
+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.
+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.
+Obligations for land reclamation
+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.
+2021 Annual Report 233
+234
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+5. REVENUE FROM GOODS AND SERVICES
+Disaggregation of revenue of business lines and geographical location of customers is as follows:
+Segments
+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.
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+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.
+(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.
+(vi)
+The entity is controlled or jointly controlled by a person identified in (a).
+(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).
+(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.
+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.
+Segment reporting
+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.
+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.
+2021 Annual Report 229
+230
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+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
+Both entities are joint ventures of the same third party.
+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.
+Control over Guoneng Hebei Dingzhou Power Co., Ltd. ("Dingzhou Power")
+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.
+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.
+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.
+449
+(v)
+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
+771
+1,321 1,747
+982
+5,730 4,743
+5,165
+5,851
+Power
+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
+Shipping
+Others
+Port
+326,051 223,710
+974 1,321 1,747
+5,851
+5,165
+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
+Total
+1,028 324,488 227,539
+10,728 5,724
+24
+24
+1,028 335,216 233,263
+Geographical markets
+Domestic markets
+Overseas markets
+252,481
+3,760
+Railway
+168,198 56,991 44,623 6,838
+999 6,968 4,725
+982
+974
+1,321
+1,747
+5,851
+5,165
+5,804
+Measurement and recognition of ECL (Continued)
+Transportation and other services
+616
+RMB
+Total
+Other
+Coal chemical
+Shipping
+Port
+Railway
+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 (Continued)
+(v)
+Measurement and recognition of ECL
+million
+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.
+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.
+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.
+2021 Annual Report 225
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Impairment of financial assets (Continued)
+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.
+2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB
+RMB
+million million million million
+RMB
+RMB
+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
+Power
+163,751
+249,569
+Coal
+Sales of goods
+RMB
+million
+million
+million
+million
+RMB
+million
+14,606 11,089
+2021 2020 2021 2020
+RMB RMB RMB RMB
+million million million million
+2020
+RMB
+RMB
+million
+million
+Types of goods or service
+2021
+Coal
+Notes to the consolidated financial statements (Continued)
+7
+345
+154
+(3) 168
+(4)
+6
+4
+344
+Share of results of associates
+326
+1,140
+1,297
+69
+538
+(3)
+3
+61
+Loss allowances and impairment of assets
+(2) 1,270
+21,421 19,803
+726
+136
+270
+2
+50
+90
+3,656 3,333
+Depreciation and amortisation
+844
+8,769
+5,495
+5,265 5,094
+4,987
+1,024
+997
+313
+297
+7,413
+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
+3,927
+955
+853
+79,170
+59,362
+Interest expenses
+27,229
+(2,814)
+10,926
+15,076
+18,764
+9,124
+10,722
+16,647
+18,093
+16,066
+16,502
+54,582
+81,029
+Profit/(loss) before income tax
+Unallocated head office
+and corporate items
+Elimination of
+inter-segment amounts
+2021
+RMB million RMB million
+2020
+2021
+2020
+RMB million RMB million
+Consolidated
+2021
+2020
+2021
+2020
+RMB million RMB million RMB million RMB million
+Revenue
+415,970
+292,874
+321
+1,853
+(81,075)
+(61,464)
+335,216
+233,263
+869
+21,285
+1,107
+1,514
+2020 2021 2020 2021 2020
+RMB
+RMB
+million
+million
+million
+million
+million
+RMB RMB
+RMB
+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
+2021 2020 2021 2020
+RMB RMB RMB RMB
+million million million million
+1,747
+RMB
+2021
+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:
+RMB
+million
+(b)
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Total
+2021 2020 2021 2020
+RMB RMB RMB
+million million million
+Coal
+5,851
+5,165 335,192 232,235
+33,861
+2,025
+6,907
+15,723
+15,790
+2,623
+2,487
+1,003
+28,992
+226
+180
+80
+81,029
+54,582
+Interest expenses
+849
+761
+706
+58,949
+Reportable segment profit
+Including:
+292,874
+32,919
+5,458
+5,385 4,874
+1,365
+80,778 60,639
+Reportable segment revenue
+292,661 190,029 64,124
+49,486
+40,699
+38,723
+6,440
+6,359
+6,195
+3,112
+5,851
+5.
+415,970
+1,341
+Segment results
+19,501
+48,742
+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
+16,291
+254
+1,517
+517
+Total cost of sales
+225,126 153,373 60,019 38,729 22,020 20,304 3,342 3,314
+34
+5,018
+2,755
+3,673
+785
+17,460
+transportation
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Unallocated items Eliminations
+Total
+58,027 51,557
+RMB RMB RMB RMB
+million million million million
+RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million
+2021 2020 2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million
+Coal purchased
+102,865 48,742
+Cost of coal
+production
+Cost of coal
+60,899 50,032
+2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
+102,865 48,742
+(4,904) (3,019) 55,995 47,013
+(44,193) (39,669) 35,586 32,477
+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
+(Note (ii))
+8,065
+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:
+6,410
+Capital expenditures
+(660) 80,008 57,977
+92
+(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
+209
+722
+259 (2,951) 1,047 92
+Coal
+23,696
+Certain other information of the Group's segments for the years ended 31 December 2021
+and 2020 is set out below:
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+861
+(1,963)
+(1,933)
+2,593
+2,261
+Depreciation and amortisation
+21,421
+900
+19,803
+182
+21,545
+19,985
+Share of results of associates
+344
+326
+(1,133)
+124
+621
+3,333
+(i)
+102,865
+2020
+RMB million
+RMB million
+Year ended 31 December
+2021
+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
+3,656
+7.
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 239
+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.
+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.
+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)
+For the year ended 31 December 2021
+(85)
+Loss allowances and impairment of assets
+1,270
+RMB million
+31 December
+2021
+RMB million
+2020
+RMB million
+324,488
+10,728
+227,539
+5,724
+377,145
+6,147
+378,504
+7,070
+2020
+335,216
+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
+233,263
+current assets
+Specified non-
+Year ended 31 December
+2021
+RMB million
+1,840
+2,583
+207
+(874)
+3,853
+947
+2,047
+2021 Annual Report 237
+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
+(e) Other information
+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.
+5,165
+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.
+- Contributions to defined contribution plans
+3,662
+2,504
+Depreciation of property, plant and equipment (Note 17)
+19,264
+17,965
+29,405
+Depreciation of right-of-use assets
+713
+Amortisation of intangible assets
+413
+400
+Amortisation of long-term deferred expenses
+1,162
+946
+807
+Depreciation and amortisation charged for the year
+35,499
+RMB million
+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.
+Personnel expenses, including
+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.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+12. PROFIT FOR THE YEAR
+Profit for the year has been arrived at after charging/(crediting)
+Year ended 31 December
+2021
+2020
+RMB million
+2021 Annual Report 243
+21,646
+20,024
+Less: amount capitalised
+Unwinding of discount
+Others
+1,950
+2,205
+(602)
+(850)
+Less: amount capitalised
+Exchange gain, net
+2,552
+Total finance costs on financial liabilities not at FVTPL
+146
+130
+37
+29
+2,369
+2,896
+3,055
+105
+73
+524
+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
+21.0
+- bonds
+25.0
+30.0
+(71)
+(115)
+311
+388
+202
+18,161
+15,378
+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:
+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
+Year ended 31 December
+2021
+RMB million
+- different tax rates of branches and subsidiaries
+Net finance costs
+2,263
+(1,465)
+15,966
+20,260
+RMB million
+2020
+Current tax, mainly PRC enterprise income tax
+Over provision in respect of prior years
+Deferred tax
+RMB million
+2,583
+Year ended 31 December
+2021
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 241
+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.
+Note:
+579
+91
+10. INCOME TAX EXPENSE
+(2,066)
+(607)
+- non-deductible expenses
+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:
+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.
+Australia
+Indonesia
+Hong Kong, China
+Year ended 31 December
+2021
+2020
+%
+%
+30.0
+United States
+15,378
+18,161
+Income tax expense
+– non-taxable income
+890
+231
+(296)
+- share of results of associates
+194
+(240)
+- utilisation of tax losses and deductible temporary
+difference previously not recognised
+(483)
+(224)
+- tax losses and deductible temporary difference not
+recognised
+1,298
+2,463
+- over provision
+(1,465)
+(790)
+22.0
+(790)
+- lease liabilities
+1,684
+2020
+million
+million million
+million
+million million
+million
+information
+2020 2021 2020 2021
+RMB RMB RMB RMB RMB RMB RMB
+External customers
+256,241 169,197 63,959 49,348
+36,420 20,832 165 138
+6,838
+33,861
+5,804
+32,919
+982
+974
+5,458 5,385
+1,321 1,747
+4,874 1,365
+Inter-segment
+5,851
+Total
+Coal chemical
+2021
+5,804
+982
+974
+1,321
+1,747 5,851 5,165
+24 1,028 335,216 233,263
+The Group's revenue from contracts with customers is RMB335,106 million for the year ended 31
+December 2021 (2020: RMB232,155 million).
+Other
+Set out below is the reconciliation of the revenue with the amounts disclosed in the segment
+information.
+Revenue disclosed in segment
+Coal
+2021 2020 2021 2020
+RMB
+RMB
+RMB RMB
+million million million million
+Power
+Railway
+Port
+Shipping
+2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB
+RMB
+million million million million million
+Segments
+5,165
+223
+24
+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.
+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.
+(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.
+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)
+(2)
+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.
+24 1,028 335,216 233,263
+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
+256,241 169,197 63,959 49,348 6,838 5,804
+982
+974 1,321 1,747 5,851 5,165
+256,241 169,197 63,959 49,348 6,838
+- borrowings
+Total
+24
+333
+389
+21
+39
+424
+465
+China Shenhua Energy Company Limited
+893
+240
+Government grants
+2020
+RMB million
+RMB million
+Year ended 31 December
+2021
+8. OTHER INCOME
+162,374
+239,156
+Claim income
+Others
+26,292
+778
+For the year ended 31 December 2021
+2,492
+609
+18
+1,075
+2,474
+RMB million
+2020
+Notes to the consolidated financial statements (Continued)
+RMB million
+Year ended 31 December
+Interest on:
+Total interest income
+- other loans and receivables
+- bank deposits
+Interest income from:
+9. INTEREST INCOME/FINANCE COSTS
+2021
+For the year ended 31 December 2021
+REVENUE FROM GOODS AND SERVICES (CONTINUED)
+Segments
+RMB
+RMB RMB
+million
+million
+million
+million million million million million million
+Timing of revenue recognition
+RMB RMB RMB
+A point in time
+Over time
+5,851 5,165
+326,051 223,710
+6,838
+5,804
+982
+974
+1,321 1,747
+256,241 169,197 63,959 49,348
+RMB
+RMB
+RMB
+Coal
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Other
+1,028 9,165 9,553
+Total
+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
+(634)
+(56)
+14
+Exchange adjustment
+107
+12,905
+Transferred from construction in
+progress (Note 18)
+2,855
+(1)
+2,939
+17,929
+8,151
+160
+1,177
+33,224
+Reclassification and other
+additions
+(973)
+(215)
+260
+928
+Disposals or write-off
+(219)
+(104)
+(1,558)
+(1,374)
+(389)
+(30)
+44
+(705)
+8
+163
+(92)
+(1,698)
+Exchange adjustment
+(25)
+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
+18,180
+436,240
+Additions
+166
+8,757
+2,091
+1,569
+(4,379)
+Exchange adjustment
+(179)
+1,108
+4,152
+4,167
+5,184
+331
+721
+575
+17,965
+Reclassification
+383
+63
+(48)
+(292)
+Impairment losses (Note (i))
+455
+23
+126
+Disposals or write-off
+(112)
+(157)
+(590)
+(45)
+(316)
+(49)
+(85)
+1,727
+Charge for the year
+180,912
+12,786
+(40)
+(12)
+(231)
+Classified as assets held for sale
+(1,310)
+I
+(1,310)
+At 31 December 2021
+59,577
+48,755
+73,075
+112,979
+(15)
+142,747
+12,987
+18,747
+476,449
+Depreciation and impairment
+At 1 January 2020
+13,037
+14,371
+47,355
+36,188
+48,719
+1,536
+6,920
+7,582
+(38)
+(57)
+(23)
+238,198
+4,844
+5,513
+5,693
+78,831
+56,197
+18,340
+24,995
+43,785
+At 31 December 2020
+263,656
+5,225
+2021 Annual Report 253
+4,906
+84,094
+69,828
+19,503
+31,198
+43,521
+At 31 December 2021
+Carrrying values
+212,793
+13,522
+8,081
+2,201
+58,653
+5,381
+43,151
+254
+For the year ended 31 December 2021
+274
+(367)
+China Shenhua Energy Company Limited
+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.
+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.
+(iii)
+(ii)
+measurement.
+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
+50
+57
+28
+Notes to the consolidated financial statements (Continued)
+140
+Shenhua Baotou Coal Chemical Co., Ltd.("Baotou Coal Chemical")
+Shendong Coal Group Equipment Management Center
+Guoneng Zhuanlongwan Company
+Shenhua Shendong Coal Group Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd. ("Zhunge'er Energy")
+RMB million
+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:
+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)
+Notes:
+PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+17.
+175
+53,572
+17,557
+16,056
+22
+41
+(93)
+30
+Reclassification
+5,296
+4,436
+3,883
+2,364
+1,705
+Charge for the year
+1,867
+Impairment losses (Note (i))
+53,657
+51,003
+15,323
+15,452
+At 31 December 2020
+(274)
+(61)
+(1,354)
+605
+249
+72
+21515
+(246)
+40,104
+226
+153
+11
+At 31 December 2021
+(1,016)
+(124)
+'
+(3,908)
+(396)
+(25)
+535
+14
+131
+19,264
+571
+675
+198,042
+13,336
+7,300
+8d ! ,,,,
+(1,016)
+Classified as assets held for sale
+(1)
+(103)
+Exchange adjustment
+(322)
+(1,383)
+(1,507)
+(238)
+Disposals or write-off
+Classified as assets held for sale
+(99)
+2.55
+(169)
+0.83
+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
+2021 Annual Report 247
+248
+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
+Chairman
+Wang Xiangxi (Note (i))
+Sub-total
+Executive directors
+0.33
+(Note (i) and Note (iii))
+0.90
+0.30
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Independent non-executive
+directors
+Chen Hanwen
+Bai Chongen
+Yuan Guoqiang
+0.30
+0.30
+0.30
+Sub-total
+0.90
+Employee director
+Wang Xingzhong
+Sub-total
+Supervisors
+Zhou Dayu (Note (iv))
+Luo Meijian (Note (iv))
+Zhang Changyan
+Sub-total
+Total
+0.30
+(696)
+Basic salaries,
+Housing and
+other allowance
+0.48
+0.07
+1.01
+Non-executive directors
+Zhao Jibin
+(Note (i) and Note (iii))
+Jia Jinzhong
+(Note (i) and (Note(ii))
+Zhao Yongfeng (Note (iii))
+0.08
+0.20
+0.02
+0.30
+Sub-total
+0.08
+0.20
+0.02
+0.30
+China Shenhua Energy Company Limited
+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,
+0.46
+Sub-total
+0.50
+0.03
+Retirement
+and benefits
+Discretionary
+scheme
+Fee
+RMB million
+in kind
+RMB million
+bonuses
+contributions
+RMB million
+RMB million
+Total
+Total
+RMB million
+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
+0.24
+Li Dong
+contributions
+in kind
+Fee
+-(gains)/ losses on disposal of property, plant and
+equipment, exploration and evaluation assets,
+intangible assets and non-current assets
+Other gains and losses, represent
+RMB million
+2020
+RMB million
+2021
+Year ended 31 December
+12. PROFIT FOR THE YEAR (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+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
+Note:
+- 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
+18
+36
+87
+3
+60
+11
+- write down of inventories
+- reversal of allowance for prepaid expenses
+- impairment losses on goodwill
+- impairment losses on assets held for sale
+- impairment losses on right-of-use assets
+- impairment losses on Interests in associates
+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).
+- impairment losses on Intangible assets (Note 20)
+268
+376
+- impairment losses on construction in progress (Note 18)
+- impairment losses on exploration and evaluation assets
+(Note 19)
+605
+535
+- impairment losses on property, plant and equipment
+(Note 17)
+134
+(1,181)
+(449)
+- losses on changes in fair value of derivative financial
+instruments
+- gains on disposal of financial assets at FVTPL
+PL =
+7
+505
+Housing and
+2021 Annual Report 245
+Notes to the consolidated financial statements (Continued)
+0.39
+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
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Year ended 31 December 2021
+Basic salaries,
+Housing and
+other allowance
+and benefits
+Discretionary
+bonuses
+Retirement
+scheme
+Xu Mingjun
+1.13
+0.09
+0.78
+For the year ended 31 December 2021
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+Directors' and supervisors' remuneration for the year, disclosed pursuant to the applicable
+Listing Rules and CO, is as follows:
+Chairman
+Wang Xiangxi (Note (i))
+Sub-total
+Executive directors
+and benefits
+Fee
+in kind
+Year ended 31 December 2021
+Basic salaries,
+246
+Housing and
+Discretionary
+bonuses
+Retirement
+scheme
+contributions
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Yang Jiping (Note (ii) and
+Note (iii))
+0.26
+other allowance
+other allowance
+0.30
+Fee
+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,
+Land and
+buildings rights
+Mining
+structures
+and mining
+Mining Generators
+related
+Coal
+fixtures,
+related
+chemical
+motor
+machinery
+machinery
+related
+vehicles
+and
+2020
+2021
+million
+Year ended 31 December
+Weighted average number of shares in issue
+Year ended 31 December
+HKD1,000,001 to HKD1,500,000
+HKD1,500,001 to HKD2,000,000
+2021
+1
+1
+2
+2020
+2021 Annual Report 251
+252
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+15. DIVIDENDS
+and
+Year ended 31 December
+2021
+RMB million
+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:
+Weighted average number of ordinary shares
+Number of shares in issue at 1 January
+Effect of shares repurchased
+2020
+Their emoluments are within the following band:
+Railway
+and other
+3,493
+Transferred from construction
+in progress
+3,050
+16
+496
+2,894
+955
+90
+38
+32
+150
+7,631
+Reclassification and other
+additions
+(995)
+2,929
+1,381
+(295)
+340
+(548)
+(14)
+2,798
+Disposals or write-off
+(219)
+27
+and benefits
+881
+250
+equipment
+equipment
+and port
+Vessels and equipment
+equipment
+Total
+RMB million RMB million
+RMB million RMB million
+RMB million
+RMB million
+RMB million RMB million RMB million
+Cost
+machinery
+At 1 January 2020
+37,399
+66,293
+96,057
+130,679
+7,518
+13,358
+17,998
+426,905
+Additions
+161
+143
+1,868
+57,603
+5.84
+4
+0.33
+Total
+1.37
+Retirement
+Discretionary
+bonuses
+RMB million
+scheme
+contributions
+RMB million
+| | | |
+| | | |
+||||
+|
+Total
+RMB million
+0.23
+0.23
+0.23
+0.23
+0.15
+0.15
+0.15
+1.37
+0.19
+0.20
+0.04
+0.43
+0.19
+0.20
+Sub-total
+0.04
+Zhang Changyan
+Zhou Dayu (Note (iv))
+in kind
+RMB million
+RMB million
+Tam Wai Chu, Maria
+(Note (iii))
+0.23
+Jiang Bo (Note (iii)
+0.23
+Zhong Yingjie, Christina
+(Note (iii))
+0.23
+Peng Suping (Note (iii))
+0.23
+0.15
+Bai Chongen (Note (ii))
+0.15
+Yuan Guoqiang (Note (ii))
+0.15
+Sub-total
+1.37
+Employee director
+Wang Xingzhong (Note (ii))
+Sub-total
+Supervisors
+Zhai Richeng (Note (iv))
+Luo Meijian (Note (iv))
+0.43
+Chen Hanwen (Note (ii))
+0.46
+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:
+Basic salaries, housing and other allowances
+and benefits in kind
+Discretionary bonuses
+Retirement scheme contributions
+1.73
+2020
+RMB million
+0.32
+0.27
+3.78
+0.72
+Mr. Zhao Jibin resigned as executive director on 29 May 2020.
+Mr. Gao Song and Mr. Mi Shuhua resigned as executive directors on 29 May 2020.
+Year ended 31 December
+2021
+RMB million
+Dr. Li Dong resigned as executive director on 29 March 2020.
+0.06
+0.84
+0.32
+0.46
+(iv)
+0.06
+0.84
+1.05
+1.34
+0.19
+3.95
+Discretionary bonuses were determined by the remuneration committee in accordance with the
+relevant human resources policies.
+2021 Annual Report 249
+1.56
+Notes to the consolidated financial statements (Continued)
+Dr. Chen Hanwen, Dr. Bai Chongen and Dr. Yuan Guoqiang were elected and appointed as independent non-
+executive directors on 29 May 2020.
+Mr. Jia Jinzhong was elected and appointed as non-executive director on 29 May 2020.
+Mr. Yang Rongming was elected and appointed as non-executive director on 25 June 2021.
+(iii)
+Mr. Yang Jiping and Mr. Xu Mingjun were elected and appointed as executive directors on 29 May 2020.
+Mr. Wang Xingzhong was elected and appointed as employee director on 29 May 2020.
+The emoluments of these directors were borne by China Energy Group during the years ended 31 December 2021
+and 2020.
+For the year ended 31 December 2021
+(ii)
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+(i)
+Notes:
+At 31 December 2020 and 2021
+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
+22,240
+20,530
+1,478
+232
+25. INVENTORIES
+Net book value
+(64)
+(64)
+(3)
+At 31 December 2021
+Others (Note)
+Materials and supplies
+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
+5,236
+6,373
+RMB million
+RMB million
+31 December
+2020
+31 December
+2021
+Less: write-down of inventories
+At the beginning of the year
+Write down of inventories
+Write off of inventories
+Coal
+7,384
+6
+Additions
+Disposals
+(713)
+(469)
+(137)
+(107)
+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)
+At the end of the year
+Classified as assets held for sale
+(3)
+6
+(158)
+(61)
+(61)
+At 1 January 2020
+Impairment losses
+(5,921)
+(5,405)
+(239)
+(277)
+At 31 December 2021
+(807)
+229
+(599)
+85
+144
+Disposals
+(89)
+(119)
+Depreciation
+(5,343)
+(4,891)
+(294)
+At 31 December 2020
+262
+31 December
+2021
+Year ended 31 December
+2021
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 263
+7,798
+10,258
+617
+84
+80
+508
+125
+143
+6,972
+9,527
+31 December
+2020
+RMB million
+RMB million
+(143)
+More than three years
+Two to three years
+Less than one year
+One to two years
+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:
+26. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+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.
+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.
+Included in accounts receivable, the following amounts are denominated in foreign currencies:
+264 China Shenhua Energy Company Limited
+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.
+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.
+Transfers of financial assets
+579
+1,744
+303
+470
+23
+534
+276
+717
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+Indonesian Rupiah ("IDR")
+Great Britain Pound ("GBP")
+Euro ("EUR")
+United States Dollars ("USD")
+Details of credit risks of accounts and bills receivables for the year ended 31 December 2021 are
+set out in Note 40.2.
+China Shenhua Energy Company Limited
+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.
+13,607
+- China Energy Group and fellow subsidiaries
+Accounts receivable
+RMB million
+RMB million
+31 December
+2020
+2021
+31 December
+For the year ended 31 December 2021
+26. ACCOUNTS AND BILLS RECEIVABLES
+Notes to the consolidated financial statements (Continued)
+2,142
+2,251
+(539)
+(165)
+2,587
+94
+274
+2,142
+2020
+RMB million
+RMB million
+- Associates
+11,759
+3,391
+256
+3,961
+3,349
+3,896
+2,782
+65
+567
+– China Energy Group and fellow subsidiaries
+- Third parties
+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
+2,574
+(350)
+260
+2,807
+47,708
+2,176
+(15)
+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
+625
+821
+563
+49,556
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+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
+Generation and sale of
+electricity
+12.50
+3,648
+12.50
+Haoji Railway Co., Ltd.
+42.53
+42.53
+Beijing GD Power Co., Ltd.
+("Beijing GD")
+2020
+%
+Principal activities
+31 December 31 December
+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:
+("Haoji Railway")
+3,888
+2020
+RMB million
+RMB million
+Impairment losses (Note 12)
+Exchange adjustments
+Additions
+At the beginning of the year
+The movements of the exploration and evaluation assets are as follows:
+19. EXPLORATION AND EVALUATION ASSETS
+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.
+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.
+(ii)
+(i)
+At the end of the year
+39,845
+(13)
+(268)
+(376)
+(14)
+(1,021)
+(60)
+(2,807)
+(136)
+(625)
+(7,631)
+26,201
+Generation and sale of
+electricity
+Year ended 31 December
+2020
+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
+Unlisted shares, at cost
+21. INTERESTS IN ASSOCIATES
+At the end of the year
+Impairment losses (Note 12)
+Classified as assets held for sale
+Disposal
+Amortisation
+2021
+RMB million
+Transferred from construction in progress
+At the beginning of the year
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+20. INTANGIBLE ASSETS
+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
+Additions
+Guohua (Hebei) Renewables
+Co., Ltd.
+25.00
+91
+23,247
+Non-current liabilities
+3,865
+11,305
+47,423
+2,671
+120,417
+47,922
+Current liabilities
+102,945
+157,013
+175,869
+157,105
+145,003
+155,879
+Total assets
+148,568
+21,248
+149,135
+147,381
+59,552
+33,543
+126,331
+34,535
+Total liabilities
+9,242
+Disposals
+4,034
+101,461
+Revenue
+53,406
+22,238
+65,775
+51,489
+24,495
+99,742
+59,029
+Equity attributable to equity holders of
+28,136
+25,681
+Non-controlling interests
+103,607
+11,305
+81,958
+105,616
+120,508
+71,169
+the company
+(33,224)
+8,445
+26,734
+258
+2021 Annual Report 257
+Provision of comprehensive
+financial service
+40.00
+40.00
+("Finance Company")
+China Energy Finance Co., Ltd.
+Generation and sale of
+electricity
+20.00
+20.00
+Notes to the consolidated financial statements (Continued)
+Power Generation Co., Ltd.
+Generation and sale of
+electricity
+15.00
+15.00
+Suizhong Power Generation Co., Ltd.
+Production and sale of
+chemicals
+25.00
+25.00
+Inner Mongolia Yili Chemical Industry
+Co., Ltd.
+Generation and sale of
+electricity
+25.00
+Inner Mongolia Guohua Hulunbeier
+12,295
+For the year ended 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:
+9,724
+85,451
+29,548
+Current assets
+Non-current assets
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+Railway
+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/
+Haoji
+14,493
+2021
+%
+34,495
+At 31 December 2021, the Group had prepayments to China Energy Group and fellow subsidiaries amounting to
+RMB377 million (2020: RMB156 million).
+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").
+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.
+The movement of long-term deferred expenses during the year is as follows:
+At the beginning of the year
+Additions
+Amortisation
+Disposal
+Classified as assets held for sale
+At the end of the year
+(iv)
+China Shenhua Energy Company Limited
+2020
+RMB million
+RMB million
+3,602
+3,667
+1,692
+884
+(1,162)
+(946)
+(28)
+Year ended 31 December
+2021
+(1)
+(iii)
+(i)
+Goodwill
+Long-term deferred expenses (Note (iv))
+Notes:
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+4,868
+9,807
+5,273
+10,171
+(ii)
+392
+400
+400
+12,853
+11,044
+199
+235
+4,104
+3,602
+28,089
+35,890
+631
+Service concession receivables (Note (iii))
+(2)
+3,602
+| | | |
+60
+60
+23,388
+(2)
+(78)
+(78)
+(224)
+(224)
+At 31 December 2020
+Classified as assets held for sale
+Others
+389
+22,708
+24,004
+Additions
+120
+1,160
+627
+1,907
+Transferred from construction
+in progress
+2,807
+907
+4,104
+Transferred from construction
+in progress
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+24. RIGHT-OF-USE ASSETS
+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.
+As at 31 December 2021, the Group has no bank loans secured by the Group's right-of-use assets
+(2020: RMB810 million).
+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.
+Machinery,
+equipment
+and other
+Buildings
+RMB million
+properties
+RMB million
+Disposals
+Land use
+rights
+Total
+RMB million
+Cost
+At 1 January 2020
+Additions
+141
+248
+880
+27
+22,367
+585
+23,388
+860
+RMB million
+Long-term entrusted loans (Note (ii))
+(2)
+equipment purchases and others (Note (i))
+Prepayments for mining projects
+(1,944)
+2,794
+118
+(4,967)
+Total comprehensive (loss)/income for the year
+(4,018)
+2,117
+(1,944)
+2,795
+113
+2,117
+(4,967)
+company
+59,029
+24,495
+51,489
+65,775
+22,238
+53,406
+Group's proportion of ownership interest
+42.53%
+40.00%
+Equity attributable to equity holders of the
+12.50%
+(4,009)
+5,238
+39,845
+RMB million
+Deductible VAT and other tax
+2020
+RMB million
+2021
+Year ended 31 December
+For the year ended 31 December 2021
+Notes:
+At the end of the year
+(Loss)/profit for the year
+Impairment losses (Note (ii))
+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
+At the beginning of the year
+18. CONSTRUCTION IN PROGRESS
+Notes to the consolidated financial statements (Continued)
+89,379
+1,050
+Exchange adjustment
+42.53%
+Classified as assets held for sale
+12.50%
+Unlisted equity securities (Note (i))
+Current asset
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+2,174
+Accounts and bills receivables (Note (ii))
+376
+Note:
+1,845
+2,550
+1,845
+(i)
+(ii)
+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
+Notes to the consolidated financial statements (Continued)
+Prepayments in connection with construction work,
+40.00%
+23. OTHER NON-CURRENT ASSETS
+For the year ended 31 December 2021
+Non-current asset
+22. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+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.
+332
+333
+294
+associated company
+Carrying amount of equity investment in
+6,436
+9,798
+8,895
+6,675
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+27,974
+31 December
+2021
+RMB million
+227
+Aggregate information of associates that are not individually material:
+6,012
+6,369
+- Total comprehensive income for the year
+25,105
+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
+- Profit for the year
+476
+931
+848
+2,126
+1,697
+656
+606
+1,910
+1,510
+61
+59
+1,015
+After 5 years
+366
+341
+628
+809
+Notes to the consolidated financial statements (Continued)
+Present value of lease liabilities
+31 December
+2020
+RMB million
+RMB million
+After 2 years but within 5 years
+2021
+31 December
+Bills payable
+- Third parties
+- Associates
+Less: total future interest expenses
+- China Energy Group, an associate of China Energy Group
+and fellow subsidiaries
+For the year ended 31 December 2021
+34. ACCOUNTS AND BILLS PAYABLES
+848
+(83)
+1,697
+(429)
+China Shenhua Energy Company Limited
+272
+Accounts payable
+229
+Total
+267
+value of the
+Present
+31 December 2020
+Present
+31 December 2021
+3,241
+RMB million
+31 December
+2020
+Total
+The lease liabilities were repayable as follow:
+-
+10 year corporate bond
+3,172
+19/01/2025
+4.10%
+RMB million
+2,064
+31 December
+2021
+33. LEASE LIABILITIES
+206
+value of the
+minimum
+225
+After 1 year but within 2 years
+275
+242
+Within 1 year
+216
+187
+RMB million
+minimum
+RMB million
+payments
+lease
+lease
+payments
+lease
+payments
+payments
+lease
+minimum
+minimum
+RMB million RMB million
+1,435
+35. ACCRUED EXPENSES AND OTHER PAYABLES
+1,075
+1,422
+1,194
+Dividends payable
+4,154
+10,610
+Taxes payable other than income tax
+263
+209
+Accrued interest payable
+4,359
+5,941
+Accrued staff wages and welfare benefits
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+Other accrued expenses and payables (Note)
+274
+11,155
+29,109
+Due date
+578
+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
+8,751
+273
+2021 Annual Report
+747
+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
+31,468
+24,621
+888
+671
+1,760
+214
+521
+12
+84
+474
+1,202
+RMB million
+31 December
+2020
+31 December
+2021
+626
+Others
+USD
+Included in accounts and bills payables, the following amounts are denominated in foreign
+currencies:
+28,980
+35,216
+3,229
+2,460
+459
+400
+Euro
+Effective
+interest rate
+%
+RMB million
+32. BONDS
+6,948
+821
+47
+471
+49,355
+Capital element of lease rentals paid
+(250)
+(250)
+Interest element of lease rentals paid
+(37)
+(37)
+Interest paid
+(2,530)
+(2,530)
+Proceeds from borrowings
+9,940
+9,940
+Repayments of borrowings
+(13,840)
+(13,840)
+Repayments of bonds
+41,115
+At 1 January 2020
+64,188
+209
+Foreign exchange
+(361)
+Amortisation of discount on bonds
+༥ཚེ
+(76)
+(437)
+7
+Interest expenses
+29
+3,160
+(3,488)
+3,189
+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
+1,697
+Increase in lease liabilities from entering into
+(21,741)
+(3,488)
+(453)
+29. CASH AND CASH EQUIVALENTS (CONTINUED)
+(c) Total cash outflow for leases
+Amounts included in the consolidated cash flow statement for leases comprise the
+following:
+Within operating cash flows
+Within financing cash flows
+Year ended 31 December
+2021
+2020
+RMB million
+RMB million
+185
+226
+218
+287
+411
+505
+These amounts relate to the following:
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+Lease rental paid
+411
+505
+30. DEFERRED TAXATION
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+267
+2021 Annual Report
+(223)
+(676)
+Deconsolidation of Finance Company's financial
+statements
+22,336
+(217)
+22,119
+Amortisation of discount on bonds
+Interest expenses
+37
+Foreign exchange
+2,539
+Increase in lease liabilities from entering into new
+leases during the year
+At 31 December 2020
+277
+277
+59,098
+3,241
+848
+263
+63,450
+2,576
+(21,741)
+Repayments of borrowings
+22,114
+3,207
+706
+6,468
+9,464
+8,361
+4,999
+3,685
+3,017
+18,514
+17,480
+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.
+28. RESTRICTED BANK DEPOSITS
+Restricted bank deposits represent collaterals for bills payable and collaterals related to the
+operating of mines and ports.
+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.
+Details of impairment assessment of restricted bank deposits are set out in Note 40.2.
+2021 Annual Report 265
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+29. CASH AND CASH EQUIVALENTS
+(a)
+Cash and cash equivalents
+10,170
+9,675
+4,500
+4,500
+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:
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+27. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Financial assets measured at amortised cost
+- Service concession receivables (Note 23(iii))
+- Current portion of entrusted loans
+- Other receivables due from associates
+- Amount due from China Energy Group
+- Other receivables
+- Other loans
+Less: impairment losses (Note)
+Prepaid expenses and deposits
+Deductible VAT and other taxes
+Note:
+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.
+31 December
+RMB million
+31 December
+2020
+RMB million
+1,964
+1,512
+37
+502
+470
+1,417
+2,709
+2,234
+2021
+31 December
+2021
+31 December
+2020
+RMB million
+Deposits with banks and other financial institutions
+Less: Restricted bank deposits
+Total
+RMB million
+(Note 31)
+(Note 32)
+(Note 33)
+(Note 35)
+At 1 January 2021
+59,098
+3,241
+848
+263
+RMB million
+63,450
+(197)
+(197)
+Interest element of lease rentals paid
+(29)
+(29)
+Interest paid
+(3,214)
+(3,214)
+Proceeds from borrowings
+22,114
+Capital element of lease rentals paid
+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.
+payable
+Lease
+liabilities
+RMB million
+RMB million
+162,886
+4,479
+127,457
+3,391
+Less: Time deposits with original maturity over
+three months
+1,701
+11,186
+Cash and cash equivalents in the consolidated
+cash flow statement
+156,706
+112,880
+interest
+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.
+266 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+29. CASH AND CASH EQUIVALENTS (CONTINUED)
+(b)
+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.
+Accrued
+Borrowings
+RMB million
+Bonds
+RMB million
+Details of impairment assessment of bank deposits are set out in Note 40.2.
+Deferred tax assets
+1,196
+268
+Long-term borrowings, less current portion
+49,193
+50,251
+59,110
+59,098
+Secured
+Unsecured
+10,070
+10,920
+49,040
+48,178
+59,110
+59,098
+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).
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+31. BORROWINGS (CONTINUED)
+The exposure of the long-term borrowings and the
+contractual maturity dates:
+Within one year
+31 December
+2021
+RMB million
+Non-current borrowings:
+8,847
+9,917
+3,804
+Net deferred tax assets
+2,162
+(202)
+1,960
+2021 Annual Report 269
+270
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+30. DEFERRED TAXATION (CONTINUED)
+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.
+31 December
+2020
+31. BORROWINGS
+Current borrowings:
+Short-term bank and other borrowings
+Current portion of long-term borrowings
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+4,248
+5,043
+5,669
+An analysis of the Group's borrowings is as follows:
+58
+(193)
+RMB million
+3,804
+8,846
+1,057
+1,478
+Euro denominated
+Interest rate at 2.85% per
+annum with maturities
+through 22 June 2022
+2
+Less: current portion of long-term borrowings
+3
+54,862
+(5,669)
+54,055
+(3,804)
+49,193
+50,251
+2021 Annual Report 271
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+31. BORROWINGS (CONTINUED)
+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).
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount
+of RMB815 million (2020: RMB893 million) (see Note 17(iii)).
+Deferred tax liabilities
+8,220
+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
+More than one year, but not exceeding two years
+More than two years, but not exceeding five years
+More than five years
+5,337
+4,815
+3,854
+10,280
+40,002
+35,156
+54,862
+54,055
+The Group's long-term borrowings comprise:
+5,669
+Loans from banks and other institutions
+Interest rates ranging from
+4.28% to 5.39% per annum
+with maturities through 22
+January 2036
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+42,388
+41,061
+RMB denominated
+Interest rates ranging from
+LPR-2.60% to LPR+0.05%
+per annum with maturities
+through 8 October 2041
+3,195
+2,667
+RMB denominated
+(266)
+For the year ended 31 December 2021
+Others
+At 1 January comprehensive 31 December
+2021
+income
+2021
+RMB million
+RMB million
+RMB million
+609
+(53)
+556
+in profit or
+loss/other
+193
+288
+96
+(8)
+88
+1
+1
+1,196
+179
+1,375
+58
+95
+(24)
+(charged)
+Allowances, primarily for receivables and
+China Shenhua Energy Company Limited
+31 December
+2021
+31 December
+2020
+RMB million
+73
+3,568
+2,856
+(974)
+(896)
+2,594
+Credited/
+1,960
+30. DEFERRED TAXATION (CONTINUED)
+The following are the major deferred tax assets and liabilities recognised and movements thereon
+during the current and prior year:
+Allowances, primarily for receivables and
+inventories
+Property, plant and equipment
+Right-of-use assets
+Tax losses utilised
+Tax allowable expenses not yet incurred
+Unrealised profits from sales within the Group
+Accrued salaries and other expenses not yet
+paid
+Others
+Net deferred tax assets
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+34
+RMB million
+445
+inventories
+540
+69
+609
+Property, plant and equipment
+112
+81
+193
+Right-of-use assets
+Tax losses utilised
+116
+(20)
+96
+Tax allowable expenses not yet incurred
+1
+Unrealised profits from sales within
+1,255
+(59)
+Accrued salaries and other expenses not
+yet paid
+65
+(193)
+RMB million
+RMB million
+the Group
+31 December
+2020
+RMB million
+1,960
+252
+634
+2,594
+(charged)
+Credited/
+At 1 January
+2020
+income
+(7)
+comprehensive
+in profit or
+loss/other
+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
+2,146
+278
+RMB million RMB million
+2,773
+2021
+834
+2021
+RMB million
+1,127
+-
+1,479
+1,057
+431
+445
+1,202
+2020
+RMB million
+2020
+RMB million
+- if RMB weakens against foreign
+currencies
+2020
+RMB million
+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)
+31 December
+(ii) Interest rate risk
+57
+-if RMB strengthens against
+foreign currencies
+9
+122
+(112)
+(78)
+(13)
+(57)
+RMB million RMB million
+Year ended 31 December
+2020
+2021
+2021
+RMB million
+Assets
+(i)
+RMB million
+31 December
+2020
+RMB million
+RMB million
+2021
+31 December
+Financial liabilities
+Amortised cost
+Accounts and bills receivable at FVTOCI (Note 22)
+Equity instruments at FVTOCI (Note 22)
+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:
+40.1 Categories of financial instruments
+40. FINANCIAL INSTRUMENTS
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+276 China Shenhua Energy Company Limited
+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 2021 was 26% (2020: 24%).
+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.
+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.
+39. CAPITAL RISK MANAGEMENT
+All A shares and H shares rank pari passu in all material aspects.
+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.
+19,890
+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).
+196,114
+2020
+2,174
+376
+2021
+31 December
+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)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 277
+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.
+Currency risk
+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.
+40.2 Financial risk management objectives and policies
+105,763
+117,341
+157,469
+198,664
+155,624
+1,845
+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.
+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.
+Sensitivity analysis
+2,101
+1,459
+Credit-impaired
+(Note (i))
+6,996
+10,076
+Provision matrix
+N/A
+26
+4,500
+Other items
+4,500
+N/A
+27
+224
+Accounts receivable
+Other loans
+receivables
+12,556
+14,817
+12-month ECL
+23, 27 N/A
+Credit-impaired
+Financial guarantee
+contracts (Note (ii))
+N/A
+Notes:
+RMB million
+RMB million
+2020
+2020
+2021
+2021
+Accounts
+receivable
+Average
+loss rate
+Accounts
+receivable
+Average
+loss rate
+Gross carrying amount
+3,399
+Provision matrix - debtors' ageing
+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 2021
+2021 Annual Report 281
+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.
+144
+128
+(ii)
+(i)
+Service concession
+1,324
+949
+Credit-impaired
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+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
+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
+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
+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.
+Credit risk and impairment assessment
+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 2021
+280
+2021 Annual Report 279
+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).
+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.
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+The Group's exposures to interest rates on financial liabilities are detailed in the
+liquidity risk management section of this note.
+40.2 Financial risk management objectives and policies (Continued)
+External
+Notes credit rating
+2,797
+2,262
+12-month ECL
+27 N/A
+Other receivables
+437
+3,391
+124,066
+158,407
+12-month ECL
+29 N/A
+Cash
+400
+4,479
+12-month ECL
+28 N/A
+Restricted bank deposits
+12-month ECL
+23, 27 N/A
+Loans receivables
+amortised costs
+Financial assets at
+2020
+RMB million
+RMB million
+31 December
+2021
+12-month or
+lifetime ECL
+The tables below detail the credit risk exposures of the Group's financial assets and
+financial guarantee contracts, which are subject to ECL assessment:
+16,491
+The following table shows the movement in lifetime ECL that has been recognised for
+accounts receivable under the simplified approach.
+2020
+As at 1 January
+- Impairment losses reversed
+New financial assets originated or purchased
+Effect of disposals of subsidiaries
+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
+The following tables show reconciliation of loss allowances that has been recognised for
+loan receivables and interbank certificate of deposits.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+1,277
+1,156
+121
+312
+(26)
+(11)
+(37)
+Write-offs
+(49)
+(49)
+As at 1 January 2021
+136
+1,163
+1,299
+Impairment losses recognised
+8
+58
+66
+Impairment losses reversed
+(23)
+(22)
+(45)
+Write-offs
+(43)
+(43)
+As at 31 December 2021
+RMB million
+Total
+RMB million
+As at 1 January 2020
+162
+- Other (Note)
+23
+23
+As at 31 December 2021
+238
+2,969
+3,207
+Note:
+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.
+284 China Shenhua Energy Company Limited
+RMB million
+31 December
+2020
+2021
+31 December
+Others
+Defined benefit plans
+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)
+(62)
+294
+(62)
+(71)
+298
+460
+- Impairment losses recognised
+50
+208
+258
+- Impairment losses reversed
+- Write-offs
+(1)
+(6)
+(7)
+(5)
+(5)
+As at 1 January 2021
+211
+495
+706
+- Impairment losses recognised
+28
+2,583
+2,611
+- Impairment losses reversed
+(1)
+(70)
+- Write-offs
+RMB million
+18
+929
+6,169
+Accretion expense
+Addition for the year
+At the beginning of the year
+RMB million
+2020
+Year ended 31 December
+2021
+RMB million
+37. ACCRUED RECLAMATION OBLIGATIONS
+Deferred income mainly represents grants provided by several local governments in the PRC to encourage the
+construction of non-current assets.
+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.
+3,372
+(ii)
+Notes:
+3,350
+9,452
+2,661
+8,025
+Non-current liabilities
+689
+1,427
+Current liabilities
+Analysed for reporting purpose as:
+(i)
+565
+2,654
+350
+31 December
+19,869
+3,378
+16,491
+RMB million
+2021
+31 December
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,398,582,500 H shares of RMB1.00 each
+Registered, issued and fully paid:
+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:
+38. SHARE CAPITAL
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 275
+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.
+6,169
+6,754
+At the end of the year
+(145)
+(330)
+Accrued reclamation obligations utilised
+288
+3,350
+9,452
+1,171
+1,587
+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)
+Lifetime ECL
+(not credit
+impaired)
+-
+Lifetime ECL
+(credit -
+impaired)
+RMB million
+RMB million
+Total
+RMB million
+As at 1 January 2020
+Impairment losses recognised
+Impairment losses reversed
+144
+90
+1,073
+10%
+10%
+6
+4
+1,431
+1,408
+742
+6,453
+RMB million
+Current (not past due)
+0.4%
+5,609
+0.4%
+4,347
+Less than one year past due
+1%
+4,025
+1%
+2,035
+One to two years past due
+6%
+205
+6%
+105
+Two to three years past due
+More than three years past due
+65
+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.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Purchases of ancillary materials and spare
+4,395
+1,748
+(xvi)
+Other income
+3,945
+6,941
+(xv)
+Sale of coal chemical product
+494
+1,101
+Purchase of equipment and construction work (xiv)
+4
+4
+(xiii)
+Coal export agency expense
+17
+70
+(xii)
+Repairs and maintenance services expense
+125
+100
+Granting of loans from Finance Company
+Bills receivables discounted from Finance
+(xi)
+(xvii)
+Company
+(ii)
+(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.
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+2021 Annual Report 289
+1,596
+12,491
+(xxii)
+3,067
+10,012
+(xxi)
+19,726
+27,126
+(xx)
+19,492
+(xix)
+13,062
+(xviii)
+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
+3,913
+15,205
+(iv)
+Property leasing
+16,696
+19
+615
+183
+Ancillary and social services
+Interest expense
+Income from entrusted loans
+Interest income
+Mining service income
+parts
+RMB million
+RMB million
+2020
+Year ended 31 December
+2021
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+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.
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group
+43. RELATED PARTY TRANSACTIONS
+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).
+19
+10,073
+810
+(iv)
+(x)
+Purchase of coal
+54,906
+96,776
+(ix)
+Sale of coal
+201
+2,357
+(viii)
+Transportation service expense
+1,339
+1,813
+(vii)
+Transportation service income
+1,329
+1,294
+57
+3
+(v)
+1,229
+1,773
+286
+42. EMPLOYEE BENEFITS PLAN
+(v)
+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.
+19,726
+2,735
+3,892
+27,126
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+Prepaid expenses and other current assets
+Other non-current assets
+Accounts and bills receivables
+Cash and time deposits at bank
+(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:
+(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.
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+2021 Annual Report 293
+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.
+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 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 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.
+(vi)
+(v)
+1,755
+(iv)
+920
+704
+China Shenhua Energy Company Limited
+294
+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.
+24,343
+27,600
+Total amounts due to China Energy Group, an associate
+of China Energy Group and fellow subsidiaries, and
+associates of the Group
+896
+1,781
+Contract liabilities
+578
+657
+Accrued expenses and other payables
+2,510
+2,690
+Accounts payable
+20,359
+22,472
+Borrowings
+24,085
+33,199
+Total amounts due from China Energy Group, an
+associate of China Energy Group, fellow subsidiaries
+and associates of the Group
+426
+(vi)
+(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.
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+(xv) Sale of coal chemical product represents income from sale of coal chemical product
+to a fellow subsidiary.
+(xiv) Purchase of equipment and construction work represents expenditure related to
+equipment and construction service provided by fellow subsidiaries.
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+290
+(xiii) Coal export agency expense represents expense related to coal export agency
+services provided by a fellow subsidiary.
+(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.
+Property leasing represents rental paid or payable in respect of properties leased from
+China Energy Group and fellow subsidiaries.
+(xi)
+$1
+(x) Purchase of coal represents coal purchased from an associate of the Group, an
+associate of China Energy Group and fellow subsidiaries.
+Sale of coal represents income from sale of coal to fellow subsidiaries.
+(ix)
+(viii) Transportation service expense represents expense related to coal transportation
+service to fellow subsidiaries.
+(vii) Transportation service income represents income earned from fellow subsidiaries in
+respect of coal transportation services.
+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.
+Mining service income represents income earned from coal mining services to a
+fellow subsidiary.
+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.
+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.
+(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.
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(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.
+(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.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+292
+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 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.
+where there is neither a state-prescribed price nor a state-guidance price, the
+market price; or
+where there is no state-prescribed price but where there is a state-guidance
+price, then the state-guidance price;
+price prescribed by the state (including any price prescribed by any relevant
+local government), if applicable;
+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:
+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.
+(ii)
+(i)
+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:
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+2021 Annual Report 291
+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.
+(xxii) Repayment of loans to China Energy Group and fellow subsidiaries.
+(xxi) Granting of loans from China Energy Group and fellow subsidiaries.
+(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.
+(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.
+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.
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+41. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
+Total
+Total
+undiscounted
+cash flows
+RMB million
+5 years
+RMB million
+2-5 years
+RMB million
+1-2 years
+RMB million
+% RMB million
+1 year
+rate
+More than
+or less than
+On demand
+average
+interest
+Weighted
+31 December 2020
+117,341
+126,019
+44,614
+16,527
+11,141
+53,737
+3,172
+carrying
+3,566
+amount
+Financial liabilities:
+Accounts and bills payables,
+4,235
+2.65
+Borrowings fixed interest rate
+53,707
+64,950
+36,407
+41.4 Environmental contingencies
+6,736
+7,098
+4.47
+rate
+Borrowings variable interest
+43,424
+44,372
+1,085
+3,732
+2,088
+37,467
+liabilities
+liabilities and long-term
+other payables, lease
+RMB million
+3,318
+124
+124
+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
+other payables, lease
+Financial liabilities:
+Accounts and bills payables,
+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)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+liabilities
+42,317
+4,587
+6,323
+4.10
+Bonds
+6,348
+6,645
+192
+1,453
+1,445
+3,555
+2.97
+Borrowings fixed interest rate
+268
+52,762
+40,870
+5,433
+4,985
+7,741
+4.34
+interest rate
+Borrowings variable
+55,059
+56,779
+3,552
+59,029
+811
+14,709
+5,669
+– Land, buildings, mining rights and exploration and
+Contracted for but not provided
+As at 31 December, the Group had capital commitments for land, buildings and mining
+rights, equipment and other as follows:
+41.1 Capital commitments
+41. COMMITMENTS AND CONTINGENT LIABILITIES
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+286 China Shenhua Energy Company Limited
+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.
+evaluation assets
+3,426
+5,391
+3,241
+355
+6,348
+3,172
+Fixed rate bonds
+Fixed rate bank borrowings
+Financial liabilities:
+amount
+Fair value
+RMB million
+RMB million
+5,669
+- Equipment
+- Other (Note)
+Note:
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+288
+2021 Annual Report 287
+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.
+41.3 Legal contingencies
+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).
+41.2 Financial guarantees issued
+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.
+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.
+56,655
+69,489
+4,000
+5,481
+21,918
+30,737
+41,369
+22,639
+31 December
+2020
+RMB million
+RMB million
+2021
+31 December
+RMB million RMB million
+31 December 2020
+Carrying
+amount
+6,645
+3,261
+31 December 2021
+Carrying
+40.3 Fair value measurements
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 285
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 41.2.
+Fair value
+105,763
+118,765
+37,847
+22,774
+9,218
+48,926
+3,241
+3,774
+3,522
+126
+126
+4.10
+Bonds
+5,391
+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
+Saved as discussed above, the Group also makes use of banks and financial institutions
+facilities as one of the effective sources of liquidity.
+2020
+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
+RMB million
+the expected rates of
+return.
+for the valuation are
+Discounted cash flow
+method. The significant
+unobservable inputs
+used by the Group
+companies, multiples
+and discount for lack of
+liquidity.
+comparable listed
+based on value of
+Fair value is estimated
+approach.
+There were no transfer between Level 1, Level 2 and Level 3 during the year ended 31
+December 2021 and 2020.
+Level 3
+Market comparison
+Fair value
+hierarchy
+Financial assets:
+Equity instruments
+Valuation technique(s)
+and key input(s)
+1,845 Level 3
+Accounts and bills
+receivables
+376
+2,174
+National coal transportation
+6.6
+2021 Annual Report 25
+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.
+Section IV Directors' Report (Continued)
+Section IV Directors' Report (Continued)
+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.
+26 China Shenhua Energy Company Limited
+3.
+(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
+3.2
+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%
+Coal import (100 million tonnes)
+22.3
+40.7
+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.
+34 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+II.
+INDUSTRY IN WHICH THE COMPANY OPERATED DURING THE REPORTING
+PERIOD¹
+1.
+Macroeconomic environment
+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.
+4.7
+Coal market environment
+(1)
+China's thermal coal market
+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%.
+2021
+Year-on-
+year change
+%
+Sizable industrial raw coal production volume
+(100 million tonnes)
+2.
+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.
+Analysis on revenue and costs
+International Energy Agency (IEA), "Coal 2021" Annual Report.
+Billion kWh
+166.45
+136.33
+22.1
+153.55
+2. Total power output
+Billion kWh
+156.13
+127.65
+22.3
+144.04
+dispatch
+(IV) Coal chemical
+1. Sales of polyethylene
+Thousand tonnes
+332.8
+356.9
+2. Sales of polypropylene
+Thousand tonnes
+315.6
+331.2
+64
+(6.8)
+1. Gross power generation
+(III) Power generation
+nautical miles
+89.6
+Million tonnes
+215.0
+203.8
+5.5
+199.7
+Huanghua Port
+3. Loading volume at
+Million tonnes
+46.4
+45.4
+2.2
+319.0
+44.7
+4. Shipping volume
+Million tonnes
+121.2
+113.0
+7.3
+109.8
+5. Shipment turnover
+Billion tonne
+112.1
+93.0
+20.5
+Shenhua Tianjin Coal Port
+2. Loading volume at
+(4.7)
+2021 Annual Report 31
+12.0
+21.5
+Personnel expenses
+21,285
+8.9
+16,066
+9.9
+32.5
+Repair and maintenance
+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
+19,501
+9.9
+23,696
+Raw materials, fuel and power
+Section IV Directors' Report (Continued)
+(2) Analysis of costs
+Unit: RMB million
+Percentage
+to operating
+Percentage
+to operating
+Year-on-
+Amount
+costs for
+Amount
+costs for
+302.3
+year change
+for 2021
+2021
+for 2020
+2020
+in amount
+Cost of purchased coal
+102,865
+43.0
+48,742
+30.0
+111.0
+Breakdown of cost items
+self-owned railway
+285.5
+6.2
+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
+50.9
+activities excluding the effect of
+Finance Company
+Net cash (outflows)/inflows in
+(6,844)
+32,048
+(121.4)
+investing activities
+Net cash outflows in financing
+(43,731)
+(15,378)
+(192.3)
+947
+(874)
+(18,161)
+(1,362)
+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%.
+83.5
+Other gains and losses
+(955)
+(194)
+392.3
+Credit impairment loss
+(2,561)
+(524)
+Other income
+(42,079)
+893
+14.8
+Interest income
+Finance costs
+2,492
+1,684
+48.0
+(2,583)
+(2,263)
+14.1
+Share of results of associates
+Income tax expense
+778
+3.9
+activities
+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.
+2. Coal sales
+Million tonnes
+482.3
+446.4
+Of which: Self-produced
+Million tonnes
+312.7
+296.0
+G∞
+8.0
+5.6
+282.7
+06
+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
+447.1
+15,076
+5.3
+307.0
+30 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+2.
+(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)
+(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;
+291.6
+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.
+with that
+Major operating indicators
+Unit
+2021
+2020
+for 2020
+2019
+%
+(I) Coal
+1. Commercial coal
+production
+Million tonnes
+Change
+for 2021
+compared
+9.3
+388.7
+Tax and surcharge
+18.7
+13.3
+1.7
+Increased by 9.2
+percentage points
+(4) Analysis of the production and sales volume of major products
+Inventory
+Year-on-
+year
+increase/
+decrease in
+Year-on-
+Increase/
+decrease as
+year
+compared
+increase/
+decrease in
+with the
+beginning
+Major
+products Unit
+Production
+Sales at the end
+volume of the period
+production
+sales
+of the year
+volume
+volume in inventory
+%
+(4,754)
+5,851
+Coal chemical
+percentage points
+29.6
+Railway
+40,699
+(22,020)
+45.9
+5.1
+55.0 Decreased by 15.3
+8.5 Decreased by 1.7
+percentage points
+percentage points
+Port
+%
+6,440
+48.1
+1.3
+0.8 Increased by 0.2
+percentage points
+Shipping
+6,195
+(5,018)
+19.0
+99.1
+82.1
+Increased by 7.5
+(3,342)
+6.4
+%
+million
+Changes in the major items in the consolidated statement of profit or loss and
+consolidated statement of cash flows
+1.
+V. MAJOR OPERATION RESULTS DURING THE REPORTING PERIOD
+(1) Analysis on Principal Businesses
+Section IV Directors' Report (Continued)
+2021 Annual Report 29
+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.
+(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.
+(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.
+(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.
+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.
+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.
+(I)
+The core competitiveness of the Group is mainly:
+IV. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+Section IV Directors' Report (Continued)
+28 China Shenhua Energy Company Limited
+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.
+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.
+BUSINESSES ENGAGED IN BY THE COMPANY DURING THE REPORTING
+PERIOD
+III.
+Section IV Directors' Report (Continued)
+24.5
+2021 Annual Report 27
+Items
+Unit: RMB million
+2021
+2020
+307.0
+482.3
+24.3
+5.3
+8.0
+23.4
+tonnes
+Power
+billion kWh
+166.45
+156.13
+Coal
+22.1
+Research and development costs
+47.3
+(162,374)
+(239,156)
+Operating costs
+43.7
+233,263
+335,216
+Revenue
+%
+Change
+(2,499)
+(60,019)
+-
+Power generation
+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
+60,019
+38,729
+55.0
+22,020
+20,304
+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 labor costs: the
+increase in the number of production personnel and the increase in salary
+and social security contributions;
+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 the cost of purchased
+coal: the year-on-year increase in the sales volume of purchased coal and
+the unit purchase cost;
+64,124
+16,502
+10,926
+6.7
+6.9
+Others
+27,229
+11.4
+26,292
+16.2
+3.6
+8.5
+Total operating sales
+100.0
+162,374
+100.0
+47.3
+The operating costs of the Group in 2021:
+1
+(2)
+(3)
+(4)
+(5)
+(6)
+239,156
+Port
+51.0
+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
+with
+margin as
+Business
+segment
+Operating Gross profit
+previous
+previous
+compared with
+Revenue
+costs
+margin
+year
+year
+previous year
+RMB million RMB million
+%
+%
+Coal
+292,661
+(225,126)
+23.1
+46.8
+Shipping
+Increased by 3.8
+with
+in gross profit
+54.0
+Increase/decrease
+3,342
+3,314
+0.8
+compared as compared
+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
+percentage points
+repairs and maintenance, depreciation and amortisation,
+other costs, other operating costs, and taxes and
+surcharges
+operating
+costs
+revenue as
+1.7
+Increase/
+decrease in
+Increase/
+decrease in
+Major business by industry segments in 2021 (before eliminations on consolidation)
+operating
+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%).
+Section IV Directors' Report (Continued)
+(3) Principal businesses by industry segment
+2021 Annual Report 33
+-
+854
+8,118
+Non-current assets
+3,994
+4,158
+8,594
+8,739
+34,631
+34,437
+4,447
+Current liabilities
+2,129
+9,328
+2,196
+915
+3,955
+3,628
+Non-current liabilities
+100
+251
+788
+4,674
+2,041
+2,036
+45. SUBSIDIARIES (CONTINUED)
+Total equity
+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
+31 December
+2021
+31 December
+2020
+31 December
+Guoneng Shuohuang Railway
+Development Co., Ltd.
+31 December
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+796
+934
+4,693
+For the year ended 31 December 2021
+2021
+3,919
+2,800
+10,326
+Profit and total comprehensive
+income for the year
+(238)
+414
+414
+3,945
+3,080
+7,760
+7,670
+11,686
+Dividend paid to non-controlling
+655
+655
+924
+982
+3,266
+3,247
+Net cash inflow from operating
+activities
+352
+473
+6,052
+interests
+2,561
+3,738
+3,004
+10,303
+9,006
+35,330
+34,480
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+5,081
+2021
+RMB million
+2021
+RMB million
+2020
+RMB million
+Revenue
+3,686
+3,564
+9,758
+7,369
+22,008
+20,585
+Expenses
+2020
+RMB million
+Notes to the consolidated financial statements (Continued)
+2,960
+(47)
+37,469
+34,851
+6,480
+4,992
+4,965
+4,135
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+Total equity
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+Revenue
+14,892
+11,756
+5,440
+4,050
+4,126
+2,666
+Year ended 31 December
+181
+436
+505
+2,757
+3,638
+1,363
+1,506
+733
+Non-current assets
+16,172
+16,278
+9,566
+5,134
+5,112
+5,035
+Current liabilities
+9,241
+6,751
+1,827
+1,000
+1,217
+1,452
+Non-current liabilities
+560
+533
+4,016
+Expenses
+2021 Annual Report 301
+11,465
+2,702
+Net cash outflow from investing
+activities
+(452)
+(252)
+(969)
+(59)
+(373)
+(89)
+Net cash outflow from financing
+activities
+841
+(46)
+(331)
+(2,127)
+(1,136)
+(799)
+Net cash inflow/(outflow)
+222
+(799)
+313
+(1,947)
+(155)
+(46)
+1,354
+239
+1,613
+2,365
+1,888
+Profit and total comprehensive
+income for the year
+2,655
+1,240
+1,815
+825
+1,516
+571
+Dividend paid to non-controlling
+interests
+21
+21
+143
+943
+484
+40
+401
+Net cash inflow/(outflow) from
+operating activities
+720
+(501)
+9,764
+8,127
+69
+Net cash outflow from investing
+activities
+222
+(22)
+(112)
+(152)
+(641)
+(255)
+(517)
+(1,045)
+Net cash inflow
+239
+(252)
+249
+6
+1,742
+2,075
+2021 Annual Report 303
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+46. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY
+31 December
+2021
+31 December
+2020
+RMB million
+RMB million
+3
+(55)
+activities
+Net cash outflow from financing
+118
+544
+1,623
+1,556
+Dividend paid to non-controlling
+interests
+13
+73
+73
+101
+100
+276
+437
+345
+Net cash (outflow)/inflow from
+operating activities
+(124)
+523
+632
+1,203
+2,383
+2,330
+Net cash inflow/(outflow) from
+investing activities
+418
+Non-current assets
+169
+Property, plant and equipment
+Intangible assets
+Current assets
+Inventories
+3,372
+3,890
+Accounts and bills receivables
+9,220
+7,613
+Prepaid expenses and other current assets
+39,416
+47,244
+248,061
+Restricted bank deposits
+2,146
+Time deposits with original maturity over
+three months
+10,200
+Cash and cash equivalents
+142,410
+105,609
+Total current assets
+197,799
+25,857
+3,381
+258,390
+Total non-current assets
+275
+Right-of-use assets
+44,737
+44,035
+3,624
+4,702
+1,071
+1,008
+5,518
+3,678
+Investments in subsidiaries
+133,953
+123,676
+Investments in associates
+42,300
+44,741
+Equity investments at FVTOCI
+1,989
+1,655
+Other non-current assets
+24,332
+24,291
+Deferred tax assets
+866
+Construction in progress
+7,906
+753
+Profit and total comprehensive
+Administration Co., Ltd.
+31 December
+31 December
+2021
+2020
+31 December
+2021
+31 December
+31 December
+31 December
+2020
+Guoneng Huanghua Harbour
+2021
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+2,994
+812
+2,950
+2020
+Taishan Power
+Guoneng Yuanhai
+Shipping Co., Ltd.
+Details of the Company's material subsidiaries (Continued)
+(168)
+(129)
+(240)
+(811)
+(1,290)
+(2,398)
+Net cash outflow from financing
+activities
+(180)
+(344)
+(2,832)
+(2,701)
+(6,748)
+(6,155)
+Net cash inflow/(outflow)
+4
+2,980
+126
+89
+(647)
+302 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+45. SUBSIDIARIES (CONTINUED)
+1,394
+income for the year
+2,238
+Non-current assets
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+Revenue
+6,195
+Year ended 31 December
+3,112
+6,349
+4,993
+4,923
+Expenses
+5,203
+2,903
+10,211
+5,462
+2,806
+2,889
+10,393
+Year ended 31 December
+11,092
+11,300
+5,129
+5,653
+7,844
+8,458
+11,579
+11,788
+Current liabilities
+530
+247
+3,430
+2,100
+1,313
+1,117
+Non-current liabilities
+46
+43
+1,204
+1,580
+Total equity
+7,547
+6,175
+7,364
+7,752
+2,001
+31,098
+51 Provision of transportation
+services
+RMB million
+100
+100
+Guoneng Yuedian Taishan Power Co., PRC
+Ltd. (formerly known as "Guangdong
+Guohua Yuedian Taishan Power Co.,
+Ltd.", "Taishan Power")
+Limited company RMB4,670 million
+60
+80
+2021 Annual Report 297
+298
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Limited company RMB3,024 million
+45. SUBSIDIARIES (CONTINUED)
+Name of the subsidiary
+Place of
+incorporation
+and operation
+Proportion of ownership
+Type of
+legal entity
+Particulars of
+registered capital
+interest and voting rights
+held by the Group
+31 December 31 December
+Principal activities
+2021
+2020
+Details of the Company's material subsidiaries (Continued)
+%
+PRC
+70
+550
+100 Trading of coal; provision of
+integrated services
+58
+Guoneng Baorixile Energy Industrial Co., PRC
+Limited company RMB1,169 million
+557
+Ltd. (formerly known as "Shenhua
+Baorixile Energy Industrial Co., Ltd.")
+Coal mining and
+development; generation
+and sale of electricity
+57 Coal mining; provision of
+loading and transportation
+services
+Shenhua Shendong Power Co., Ltd.
+Beidian Shengli Company
+Limited company RMB2,925 million
+63
+Coal mining; provision of
+loading and transportation
+services
+70 Generation and sale
+electricity; coal mining
+development
+Generation and sale of
+electricity
+80 Generation and sale of
+electricity
+Guoneng Jinjie Energy Co., Ltd. (formerly PRC
+known as "Shaanxi Guohua Jinjie
+Energy Co., Ltd.")
+Limited company RMB2,278 million
+70
+PRC
+%
+Hebei Guohua Cangdong Power Co., Ltd. PRC
+Limited company RMB1,834 million
+PRC
+Limited company RMB15,231 million
+53
+53
+Provision of transportation
+services
+Guoneng Huanghua Harbour
+PC
+PRC
+Limited company RMB6,790 million
+70
+Guoneng Shuohuang Railway
+Development Co., Ltd.
+Administration Co., Ltd. (formerly
+known as "Shenhua Huanghua
+Harbour Administration Co., Ltd.")
+Guoneng Yuanhai Shipping Co., Ltd.
+(formerly known as "Shenhua
+Zhonghai Shipping Co., Ltd.") (Note)
+Guoneng Baotou Coal Chemical Co., Ltd. PRC
+PRC
+Limited company RMB5,948 million
+51
+176,702
+Limited company RMB5,132 million
+100
+100
+Coal chemical
+70 Provision of harbour and
+port services
+100 Generation and sale of
+electricity
+00
+100
+51
+51
+Generation and sale of
+electricity
+Dingzhou Power
+PRC
+Limited company RMB1,561 million
+41
+41
+Generation and sale of
+electricity
+Guoneng Sichuan Energy Co., Ltd.
+PRC
+Limited company RMB3,101 million
+66
+51
+Generation and sale of
+(formerly known as "Shenhua
+electricity; trading of coal
+Sichuan Energy Co., Ltd.")
+Shenhua Fujian Energy Co., Ltd.
+PRC
+Limited company RMB3,280 million
+10
+Limited company RMB7,102 million
+PRC
+Zhunge'er Energy
+2021 Annual Report 295
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.4 Transactions with other government-related entities in the PRC (Continued)
+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:
+Transactions with other government-related entities, including state-controlled banks in the
+PRC
+Coal revenue
+Power revenue
+Transportation costs
+Financial services arrangements.
+Interest income
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+68,999
+74,053
+57,437
+40,808
+9,408
+8,961
+2,272
+2,406
+Interest expenses (including amount capitalised)
+Ancillary and social services; and
+Purchases of ancillary materials and spare parts;
+Construction work;
+Notes to the consolidated financial statements (Continued)
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.2 Key management personnel emoluments
+For the year ended 31 December 2021
+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
+2021
+RMB million
+2020
+RMB million
+9
+1
+10
+1
+10
+Total remuneration is included in "personnel expenses" as disclosed in Note 12.
+43.3 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 42.
+43.4 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.
+Power sales;
+Sales and purchases of coal;
+Transportation services;
+2,104
+Guoneng Railway Transportation Co.,
+Ltd.
+3,354
+Accounts and bills receivables
+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:
+Name of the subsidiary
+Place of
+incorporation
+and operation
+Type of
+legal entity
+Particulars of
+registered capital
+Proportion of ownership
+interest and voting rights
+held by the Group
+31 December 31 December
+2021
+Principal activities
+2020
+45. SUBSIDIARIES
+%
+PRC
+Limited company RMB1,889 million
+100
+100 Trading of coal
+Guoneng Shendong Coal Group Co.,
+PRC
+Limited company RMB4,989 million
+100
+Ltd. (formerly known as "Shenhua
+Shendong Coal Group Co., Ltd.")
+Guoneng Sales Group Co., Ltd.
+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
+Prepaid expenses and other current assets
+Cash and time deposits at banks
+Restricted bank deposits
+Borrowings
+Accrued expenses and other payables
+Contract liabilities
+296 China Shenhua Energy Company Limited
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+4,644
+4,268
+3,134
+7,468
+131,263
+103,590
+4,479
+3,391
+36,279
+39,067
+1,999
+1,528
+3,747
+1,278
+Notes to the consolidated financial statements (Continued)
+Balances with other government-related entities, including state-controlled banks in the PRC
+PRC
+Limited company RMB5,003 million
+100
+2,064
+Dingzhou Power
+PRC
+59.50
+59.50
+(142)
+246
+1,524
+1,666
+Guoneng Jinjie Energy Co., Ltd
+2,478
+PRC
+30.00
+1,196
+939
+3,172
+2,781
+Guoneng Shuohuang Railway Development Co., Ltd.
+PRC
+47.28
+47.28
+3,671
+30.00
+298
+783
+49.90
+2020
+RMB million
+31 December 31 December
+2021
+RMB million
+2020
+RMB million
+Zhunge'er Energy
+PRC
+42.24
+42.24
+1,166
+519
+15,951
+14,853
+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
+3,627
+RMB million
+17,462
+Guoneng Yuanhai Shipping Co., Ltd.
+300
+China Shenhua Energy Company Limited
+69,074
+65,384
+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)
+Zhunge'er Energy
+31 December
+2021
+31 December 31 December
+2020
+2021
+16,532
+Guoneng Baorixile Energy
+Industrial Co., Ltd.
+31 December
+31 December
+31 December
+2020
+2021
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Yulin Shenhua Energy Co., Ltd.
+16,773
+interests
+Individually immaterial subsidiaries with non-controlling
+PRC
+49.00
+49.00
+369
+83
+3,698
+3,026
+Taishan Power
+PRC
+20.00
+20.00
+23
+109
+1,474
+1,551
+Guoneng Huanghua Harbour Administration Co., Ltd.
+PRC
+30.00
+30.00
+502
+475
+3,624
+3,563
+17,057
+Current assets
+Accumulated
+non-controlling interests
+2020
+AUD400 million
+00
+100
+Watermark Company
+Australia
+Limited company
+AUD350 million
+100
+100
+PT GH EMM Indonesia
+Limited company
+Indonesia
+USD63 million
+70
+20
+Guoneng Baoshen Railway Group Co., PRC
+Ltd. (formerly known as "Shenhua
+Baoshen Railway Group Co., Ltd.")
+Limited company RMB11,700 million
+100
+100
+(Tianjin) Finance Lease Co., Ltd.
+PRC
+Limited company RMB2,500 million
+Limited company
+Australia
+Shenhua Australia Holding Pty Ltd.
+Oversea Capital")
+00
+100 Provision of transportation
+China Shenhua Energy Company Limited
+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)
+Name of the subsidiary
+Place of
+incorporation
+and operation
+Type of
+legal entity
+Particulars of
+registered capital
+Proportion of ownership
+interest and voting rights
+held by the Group
+31 December 31 December
+Principal activities
+2021
+2020
+%
+%
+China Shenhua Overseas Development Hong Kong, China Limited company
+HKD5,252 million
+100
+100
+Investment holding
+& Investment Co., Ltd. ("Shenhua
+100
+Profit allocated to
+non-controlling interests
+Year ended 31 December
+2021
+10
+PRC
+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)
+and sale of electricity
+For the year ended 31 December 2021
+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
+Proportion of ownership
+interest and voting rights held
+by non-controlling interest
+31 December 31 December
+2021
+45. SUBSIDIARIES (CONTINUED)
+development; generation
+100
+70 Coal mining and
+Limited company RMB7,450 million
+100
+00
+(formerly known as "Shenhua
+Xinshuo Railway Co., Ltd.")
+Guoneng Zhunneng Group Co., Ltd.
+PRC
+Limited company
+RMB834 million
+100
+10
+China Energy Bayannaoer Coal Chemical PRC
+Co., Ltd.
+Limited company
+RMB450 million
+100
+10
+Note:
+Coal mining and
+development; generation
+and sale of electricity
+Coal mining and
+development; generation
+and sale of electricity
+Guoneng Xinshuo Railway Co., Ltd.
+304 China Shenhua Energy Company Limited
+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:
+100
+2,492
+1,684
+1,170
+1,479
+1,205
+Interest income
+(1,103)
+(1,090)
+(278)
+(3,504)
+(1,262)
+Other expenses
+(2,561)
+(524)
+(139)
+(152)
+Credit impairment losses
+893
+778
+708
+744
+Finance costs
+(4,416)
+(5,421)
+(3,294)
+57,138
+Profit for the year
+(18,161)
+(15,378)
+(15,145)
+(15,977)
+(16,155)
+Income tax expense
+79,170
+59,362
+894
+64,922
+73,293
+Profit before income tax
+(874)
+947
+433
+448
+534
+Share of results of associates
+(2,583)
+(2,263)
+70,141
+54,164
+Other income
+(194)
+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
+Operating cost
+Revenue
+2021
+RMB million
+2020
+RMB million
+RMB million
+2019
+For the year ended 31 December
+2018
+RMB million
+RMB million
+2017
+76,892
+70,889
+96,060
+Selling expenses
+(2)
+(2,844)
+(1,880)
+Other gains and losses
+(2,499)
+(1,362)
+(940)
+(454)
+(341)
+Research and development costs
+(955)
+(9,119)
+(8,988)
+(9,854)
+(9,115)
+expenses
+General and administrative
+(581)
+(555)
+(640)
+(725)
+(612)
+(8,948)
+49,777
+43,984
+61,009
+379,105
+Net assets
+161,376
+133,317
+142,865
+182,789
+192,497
+Total liabilities
+69,628
+63,824
+47,382
+59,408
+76,592
+Total non-current liabilities
+91,748
+69,493
+95,483
+123,381
+115,905
+Total current liabilities
+610,597
+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
+449,221
+429,587
+420,218
+408,837
+379,105
+Total equity
+69,183
+562,904
+65,384
+77,144
+73,564
+Non-controlling interests
+380,038
+364,203
+356,077
+331,693
+305,541
+holders of the Company
+Total equity attributable to equity
+64,141
+563,083
+591,626
+571,602
+310
+2021 Annual Report 309
+2.597
+1.803
+2.097
+2.219
+2.403
+-Basic/diluted
+Earnings per share (RMB)
+9,402
+Section XII Summary of Major Financial Information
+8,135
+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:
+8,070
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+for the Recent Five Years (Continued)
+As at 31 December
+Total assets
+208,310
+172,229
+160,494
+233,296
+132,644
+Total current assets
+402,287
+390,675
+402,589
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+358,330
+Total non-current assets
+2021
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2020
+2019
+2018
+2017
+438,958
+The finance information below is extracted from the financial statement prepared by the Group in
+accordance with International Financial Reporting Standards:
+Summary of Major Financial Information.
+for the Recent Five Years
+Section XII
+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
+2021 Annual Report 305
+309,138
+306,775
+289,248
+19,890
+19,869
+286,906
+38
+309,138
+306,775
+7,458
+8,684
+Total equity
+Reserves
+Share capital
+Equity
+RMB million RMB million
+reserves
+RMB million
+income
+RMB million
+Purchase of own shares
+for the year
+Total comprehensive income
+Other comprehensive income
+Profit for the year
+51
+- 51 -
+35,283
+35,283
+277,718
+Net assets
+170,748
+96
+95
+20,748
+85,001
+At 1 January 2020
+RMB million RMB million
+Total
+earnings
+Retained
+Capital
+and other
+reserves
+RMB million
+1,126
+67
+4,120
+729
+588
+133
+344
+8,611
+96,021
+127,896
+8,961
+273
+311
+Contract liabilities
+Current portion of long-term liabilities
+Income tax payable
+409
+Current portion of lease liabilities
+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)
+Accrued expenses and other payables
+(Note 38)
+2,540
+90
+462
+2,054
+2,080
+1,619
+802
+4,156
+53
+Total non-current liabilities
+Deferred tax liabilities
+Accrued reclamation obligations
+Long-term liabilities
+Lease liabilities
+2,636
+Borrowings
+316,596
+315,459
+Total assets less current liabilities
+68,535
+57,069
+108,167
+140,730
+Net current assets
+Total current liabilities
+84
+Non-current liabilities
+Hang Seng Corporate
+Sustainability Index
+Series Member 2021-2022
+Dividend declared (Note 15)
+Appropriation of maintenance
+and production funds
+Utilisation of maintenance
+(256)
+Annual Improvements to IFRSS 2018-2020 Cycle
+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.
+INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED
+31 DECEMBER 2021
+47. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND
+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
+2,165
+(2,165)
+(3,839)
+3,839
+Amendments to IFRS 3, Reference to the Conceptual Framework
+Amendments to IAS 16, Property, Plant and Equipment: Proceeds before
+Intended Use
+Amendments to IAS 37, Onerous Contracts - Cost of Fulfilling a Contract
+Amendments to IAS 1, Classification of Liabilities as Current or Non-current
+Effective for
+accounting
+periods
+beginning
+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
+(35,962)
+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 12, Deferred tax related to assets and liabilities arising
+from a single transaction
+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
+1 January 2023
+(35,962)
+21
+26
+1,134
+146
+17,463
+(256)
+85,001
+At 31 December 2020
+1,513
+1,505
+8
+earning
+185,760
+Company's retained
+4,880
+(1,595)
+(25,061)
+(256)
+(4,880)
+1,595
+... - (25,061)
+35,334
+35,283
+51
+Attributable share of Finance
+and production funds
+289,248
+85,001
+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
+Cancellation of repurchased
+for the year
+Total comprehensive income
+At 1 January 2021
+336
+Other comprehensive income
+33,263
+33,263
+Profit for the year
+289,248
+185,760
+1,134
+146
+17,463
+(256)
+336
+Section IV Directors' Report (Continued)
+38 China Shenhua Energy Company Limited
+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.
+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
+Cash and cash equivalents
+0.7
+156,706
+112,880
+4.8
+29,109
+Accrued expenses and other
+payable
+5.1
+28,980
+35,216
+Accounts and bills payables
+0.5
+2,783
+0.0
+294
+Assets classified as held for
+sale
+Increase in net cash inflow
+38.8
+20.1
+25.7
+18,949
+4,479
+sales receivables
+%
+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
+Percentage of
+total assets
+at the end of
+%
+Restricted bank deposits
+year
+%
+Deferred tax assets
+receivable
+Increase in coal and electricity
+15.7
+2.1
+11,759
+2.2
+13,607
+Accounts and bills
+loss for relevant assets
+loss and asset impairment
+24.9 Provision for credit impairment
+0.5
+2,856
+0.6
+3,568
+Main reasons for changes
+Amount at
+the end of the
+3.4
+activities; maturity of certain
+time deposits
+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
+As of 31 December 2021, the distributable reserves of the Company to shareholders
+were RMB179,811 million.
+1,510
+42 China Shenhua Energy Company Limited
+(IV) Operation Results by Business Segment
+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.
+Production, operation and construction
+(1)
+Coal segment
+1.
+Section IV Directors' Report (Continued)
+generated from operating
+Lease liabilities
+0.5
+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
+under construction
+payable of power plants
+equipment and materials
+21.5 Increase in project funds,
+project during the reporting
+period
+related to the Watermark
+classified as held for sale
+Power; mainly are assets
+delivery of Fuping Thermal
+(89.4) The completion of equity
+enterprise income tax
+201.6
+30.6 Increase in provision in advance
+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
+2,661
+1.3
+8,025
+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
+coal payments due to the
+Section IV Directors' Report (Continued)
+5.8
+19.6 The increase of land use right
+assets related to Huangda
+Railway
+(6)
+(7)
+(8)
+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.
+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.
+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 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 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.
+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.
+The main reason for the year-on-year increase in income tax: the increase of
+pre-tax profit of the Group this year.
+36 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+4.
+Research and development expenditure
+(1) Research and development expenditure
+(5)
+Unit: RMB million
+(4)
+(2)
+5.
+(II)
+Section IV Directors' Report (Continued)
+(5)
+(6)
+Major customers
+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.
+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.
+Major suppliers
+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.
+2021 Annual Report 35
+Section IV Directors' Report (Continued)
+3.
+Expenses and other items of income statement
+(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.
+(3)
+Cash flow
+Expensed research and development expenditure in the period
+Capitalised research and development expenditure in the period
+Total research and development expenditure
+Ratio of capitalised research and development expenditure (%)
+34
+286
+1,819
+404
+High School and below
+76
+Age structure of research and development personnel
+Category of age structure
+Number
+(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
+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
+394
+1,110
+567
+548
+0
+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.
+Junior college
+Percentage of total research and development expenditure to
+revenue (%)
+Undergraduate
+Doctoral candidate
+2,499
+848
+3,347
+1.0
+25.3
+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.
+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..
+2021 Annual Report 37
+Section IV Directors' Report (Continued)
+(2) Research and development personnel
+Number of research and development personnel in the Group
+Ratio of research and development personnel to the total number
+of persons (%)
+2,619
+3.4
+Educational structure of research and development personnel
+Category of educational structure
+Number
+Master degree candidate
+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.
+Under 30 years old (excluding 30 years old)
+(2)
+22,240
+Right-of-use assets
+0.7
+3,888
+0.8
+4,651
+Intangible assets
+00
+0.0
+0.7 0.0
+4,000
+Exploration and evaluation
+assets
+6.1
+39,845
+4.3
+3.6
+26,201
+18,597
+Other non-current assets
+(1)
+made by the Group, and the
+increase in intangible assets
+made by the Group
+replacement indicators
+19.6 The purchase of coal capacity
+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
+3.3
+Construction in progress
+permit by Taigemiao South
+Area of Xinjie Mining Area
+238,198
+Percentage of
+Unit: RMB million
+to the end of
+Change of the
+amount at the
+end of the
+year compared
+Percentage of
+1. Assets and liabilities
+Amount at
+(III) Analysis on Assets and Liabilities
+2021 Annual Report 39
+Not applicable
+Explanation on Significant Change of Profit Caused by Non-principal Business
+Applicable
+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.
+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.
+43.7
+Section IV Directors' Report (Continued)
+total assets
+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.
+total assets at
+43.2
+Amount at
+263,656
+Property, plant and
+equipment
+Main reasons for changes
+year
+%
+%
+previous year
+(3)
+the year
+previous year
+year
+Items
+the previous
+the end of the
+the end of the
+the end of the at the end of
+0.2-0.6
+5-48
+2345
+Zhunge'er Mines
+Long flame coal
+17-33
+0.4-0.5
+Shengli Mines
+Baorixile Mines
+Lignite
+2,500-3,100
+0.7-1.5
+17-38
+Lignite
+4,000-5,300
+5,000-5,800
+1 Shendong Mines
+Long flame coal/
+Section IV Directors' Report (Continued)
+(5)
+Characteristics of the commercial coal produced in the Group's major mines are
+as follows:
+3,300-3,500
+No. Mines
+Calorific
+value of major
+commercial
+non-caking coal
+Sulphur
+Major types of coal
+coal products
+content
+kcal/kg
+%
+average,%
+Ash
+Content
+292,661
+13-17
+(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
+RMB million
+purchase cost of
+Gross profit
+margin
+23.1
+19.3 Increased
+2021 Annual Report 47
+point
+by 3.8
+percentage
+purchased coal
+0.1-0.3
+Operating costs
+190,029
+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.
+54.0 Increase in coal sales
+volume and average
+sales price
+Operating results
+2021
+2020
+Change
+%
+Main reasons for
+changes
+Revenue
+RMB million
+The operating results of the coal segment of the Group before elimination
+on consolidation
+74.3
+PRC Standard) PRC Standard)
+141.5
+Shendong Mines
+Mines
+Unit: 100 million tonnes
+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.
+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.
+Coal resources
+Efforts in ensuring production safety of coal mine are detailed in the 2021 ESG
+Report of the Company.
+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.
+(4)
+(3)
+Section IV Directors' Report (Continued)
+46 China Shenhua Energy Company Limited
+43.4
+8.0
+80
+10
+410
+Profit from
+0.3
+435
+285.7
+35.4
+Total sales volume/average price
+Coal
+reserve
+(exclusive of tax)
+100.0
+580
+588
+446.4
+00
+100.0
+482.3
+coal reserve reserve (under
+(under the
+Recoverable
+Proved
+Baorixile Mines
+13.3
+11.1
+2.3
+11.3
+Baotou Mines
+1.5
+0.5
+0.1
+0.0
+Xinjie Mines
+107.6
+Total
+332.1
+0.3
+33.1
+0.2
+19.6
+Marketable
+coal reserve
+(under the
+the PRC
+Standard)
+(under
+the JORC
+Standard)
+153.9
+87.2
+13.3
+17.8
+Zhunge'er Mines
+37.2
+29.6
+12.7
+18.8
+Shengli Mines
+42.7
+RMB million
+Total sales volume/average
+29,832
+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
+mine production equipment
+Increase in purchase of coal
+18.1
+18.8
+22.2
+Repairs and
+maintenance
+10.1
+101
+lead to the rise of electricity
+charge
+31.7 Increase in the number of
+employees; increase in
+Power segment
+salary and social security
+contributions
+maintenance costs and
+9.4
+7.4
+overhaul of some equipment of
+open-cut mines
+Depreciation and
+amortisation
+Increase in daily repair and
+(1)
+Production and operations
+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.
+Change
+%
+%
+%
+(1) coal-fired power
+161.86
+2020
+131.85
+151.64
+123.27
+23.0
+343
+327
+1.4
+22.8
+27.8
+2021
+2020
+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.
+Source: China Electricity Council
+50 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(2) Power consumption and power tariffs
+Power generation (billion KWh)
+Change
+Power output dispatch (billion kWh)
+Power type/operation
+location
+2021
+2020
+Change
+2021
+Power tariff (RMB/MWh)
+59,125
+36.6
+West Inner Mongolia Region
+182,082
+27.3
+76,413
+279,974 (203,561)
+Domestic
+%
+% RMB million RMB million RMB million
+RMB million RMB million RMB million
+margin
+profit
+Costs
+Gross profit
+Gross
+2020
+Revenue
+Gross Gross profit
+profit margin
+Costs
+98.2
+operations
+Profit margin from
+%
+20.2
+15.7 Increased
+(139,976)
+operations
+48 China Shenhua Energy Company Limited
+(3)
+Section IV Directors' Report (Continued)
+The sales gross profit of the coal products of the Group before elimination
+on consolidation
+Revenue
+2021
+by 4.5
+percentage
+points
+42,106
+23.1
+Export and
+2021
+2020
+Change Main reasons for changes
+%
+Unit production cost of
+149.9
+139.6
+Unit: RMB/tonne
+7.4
+Raw materials fuel
+28.2
+27.1
+4.1
+Rising electricity prices in
+and power
+self-produced coal
+Personnel expenses
+Unit production cost of self-produced coal
+42,277
+overseas
+3,760 (3,380)
+380
+10.1
+999
+(828)
+23.1
+171
+Total
+283,734 (206,941)
+76,793
+27.1
+183,081
+(140,804)
+17.1
+589
+sales tax)
+5.4
+482.3
+price(exclusive of tax)
+44.8 49.4
+176
+3.7
+43.3
+(28.7)
+418
+17.2
+669
+263 16.3
+4.9
+23.6
+II. Direct sales from pit head
+599 76.6
+11.3
+54.6
+44.4
+190.0
+42.5
+380
+9.4
+20.0
+100.0
+2. Monthly long-term contracts
+40.7
+765 163.5 36.6
+465
+20.0
+64.5
+3. Spot commodity
+196.2
+6.6
+588
+100.0 410
+RMB/
+Million
+RMB/
+Million
+of tax)
+volume
+4.9
+volume
+of tax)
+sales
+volume
+(exclusive
+Sales
+of total (exclusive of
+Sales
+of total (exclusive
+Sales
+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)
+446.4
+By internal and external customers
+2020
+Changes
+Price
+Proportion
+Price
+Price
+2021
+Proportion
+419
+96.3
+430.1
+2020
+2021
+Proportion Price
+By contract pricing mechanisms
+(1)
+The coal sales of the Group in 2021 is set out below:
+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).
+Note: The Group sold 9,300 tonnes of coking coal in 2021.
+76,793
+206,941
+283,734
+482.3
+307.0
+76,793
+0
+206,929
+12
+283,722
+12
+0.0
+482.3
+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
+Proportion
+Sales volume
+Million tonnes
+RMB million
+Sales cost
+RMB million
+Gross profit
+RMB million
+307.0
+Sales income
+Price
+Changes
+Price
+Sales
+tonne
+tonnes
+%
+tonne
+%
+1. Sales through Trading Group
+%
+458.7
+605
+1. Annual long-term contracts
+207.9
+43.1
+456
+1081
+95.1
+tonnes
+tonnes
+Million
+of total (exclusive
+Sales
+of total
+(exclusive
+Sales (exclusive
+volume
+RMB/
+sales of tax)
+sales
+of tax)
+volume
+of tax)
+Million
+RMB/
+volume
+%
+tonne
+tonnes
+262.9
+2. Seaborne
+39.4
+15.9
+317
+36.3
+162.1
+442
+39.0
+187.9
+1. Direct arrival
+42.3
+5.0
+411
+96.2
+429.5
+585
+I. Domestic sales
+476.2
+98.8
+588
+444.3
+99.5
+54.5
+10
+7.2
+43.4
+(I) Self-produced coal and
+purchased coal
+450.8
+93.5
+410
+687
+267.4
+59.9
+II. Export sales
+0.7
+0.1
+850
+0.7
+0.2
+418
+556
+26.8
+125.2
+156.9
+21.8
+0.0 52.9
+III. Overseas sales
+ខ៩៩
+tonne
+353
+1.1
+(1.7)
+46.8
+(II) Sales of domestic trading
+coal
+12.3
+2.6
+ឆឌ
+795
+2.2
+(III) Sales of imported coal
+13.1
+2.7
+509
+5.1
+9.7
+1.1
+tonnes
+tonnes
+100.0
+482.3
+price(exclusive of tax)
+Total sales volume/average
+42.2
+ថ្មី២
+(8.5) 13.7
+322
+1.1
+4.7
+366
+0.9
+4.3
+Sales to internal coal chemical segment
+374 28.3
+10.7
+47.7
+tonne
+Sales to external customers
+416.8
+86.4
+599
+394.0
+588
+88.2
+5.8
+44.0
+Sales to internal power segment
+61.2
+12.7
+532
+416
+446.4
+100.0
+40
+(exclusive
+Sales
+(exclusive
+volume
+sales of tax)
+volume
+of total
+sales
+volume
+of tax)
+Million
+RMB/
+Million
+RMB/
+of tax)
+tonne
+Sales
+Sales
+410
+80
+8.0
+43.4
+(3)
+By sales regions
+of total (exclusive
+2021
+Changes
+Proportion
+Price
+Proportion
+Price
+Price
+2020
+Hebei
+Production safety
+22.84
+Phase I
+Guangdong Qingyuan Power Plant
+2 × 1,000MW
+Guangxi
+Project
+Guangxi Beihai Thermal Power Plant
+2× 1,000MW
+Fujian
+Guangdong
+Generation & Storage Project
+Planned installed
+capacity
+Location
+Project
+As of the end of 2021, the generating units under construction and approved
+but not yet constructed by the Group are as follows:
+Section IV Directors' Report (Continued)
+5,620
+52 China Shenhua Energy Company Limited
+1 Source: China Electricity Council
+Fujian Luoyuanwan Port Power
+2× 1,000MW
+Huizhou Phase II Gas-fired
+Cogeneration Unit Project
+8.0
+4,412
+4,764
+Coal-fired power (includes
+%
+Change
+2020
+2021
+2020 Change
+2021
+Power type
+Power consumption rate of power plant (%)
+Average utilisation hours (Hour)
+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.
+Utilisation rate of power generation equipment
+(4)
+2 × 400MW
+2× 1,000MW
+Guangdong
+Hunan
+Hunan Yueyang Power Plant Project
+Total
+Shendong Power
+(700) Equity transfer
+Shaanxi
+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
+5,620
+125
+0
+950
+36,824
+5,620
+32,279
+125
+950
+31,204
+(decreased) during capacity as at 31
+the reporting period December 2021
+December 2020
+capacity as at 31
+Total installed
+Installed capacity
+increased/
+Unit
+5.48
+Location
+Description
+Fuping Thermal Power of
+storage Project
+Iwan Port Power Generation &
+The operation of new units
+1,000
+Fujian
+Unit 1 of Fujian Energy Luoyuan
+Energy Phase I project
+The operation of new units
+1,320
+Inner
+Mongolia
+Unit 1 and Unit 2 of Inner Mongolia
+Shengli Power Plant of Shengli
+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
+capacity
+MW
+Total installed
+5.73 Decreased by 0.25
+percentage points
+0.69
+4.58
+Shandong
+1
+2020
+2021
+2020
+2021
+346
+2020
+RMB/MWh
+RMB/MWh
+Billion kWh
+Power output dispatch
+power
+Province of the
+sales companies
+No.
+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.
+2021
+339
+339
+339
+23.20
+54 China Shenhua Energy Company Limited
+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.
+342
+346
+367
+339
+4.76
+12.11
+Jiangsu
+3
+379
+404
+371
+363
+1.06
+4.28
+Guangdong
+2
+(6) Operation results of the power sales business
+by 9.9
+percentage
+points
+Increased
+22.3
+4,403
+4,749
+Weighted average
+percentage points
+Decreased by 0.02
+0.30
+0.28
+15.6
+5,124
+5,921
+Hydro power
+percentage points
+Decreased by 0.17
+1.67
+1.50
+0.3
+4,045
+4,057
+Gas-fired power
+7.9
+gangue-fired power plants)
+5.37
+percentage points
+127.65
+52.9
+156.13
+62.8
+market-based transactions (%)
+Percentage of the power in
+(billion kWh)
+45.2
+67.54
+98.06
+based transactions (billion kWh)
+Total volume of on-grid power
+Total volume of power in market-
+%
+Change
+2020
+2021
+(5) Market transaction of power
+Section IV Directors' Report (Continued)
+2021 Annual Report 53
+Source: China Electricity Council
+1
+5.59 Decreased by 0.22
+Unit: MW
+Average selling price of power Unit electricity purchase cost
+(exclusive of tax)
+(exclusive of tax)
+Hydro power
+55.8
+3.60
+5.61
+54.0
+3.96
+6.10
+Sichuan
+(2.0)
+424
+301
+10.7
+4.12
+4.56
+10.7
+4.41
+4.88
+Henan
+34.4
+295
+382
+11.0
+Chongqing
+4.1
+343
+357
+7.7
+9.72
+10.47
+7.5
+10.21
+10.98
+Shandong
+3.3
+360
+372
+57.4
+5.40
+8.50
+57.6
+5.64
+8.89
+224
+301
+16.1
+6.90
+Guangdong
+(1.1)
+277
+274
+24.2
+23.88
+29.66
+23.9
+26.07
+32.29
+Shaanxi
+0.9
+320
+323
+1.5
+21.43
+21.76
+1.6
+Total
+30.52
+Guangxi
+21.68
+20.21
+8.01
+16.7
+7.59
+8.86
+Inner Mongolia
+2.9
+347
+357
+19.8
+13.74
+16.46
+19.9
+14.34
+17.19
+Fujian
+7.1
+365
+391
+41.9
+40.8
+4.08
+28.67
+27.5
+15.6
+0.64
+0.74
+Sichuan
+(3.4)
+232
+224
+14.3
+0.63
+0.72
+15.6
+0.64
+0.74
+(III) Hydropower
+0.4
+563
+565
+0.5
+3.75
+0.72
+3.77
+0.63
+224
+Coal-fired power
+Gas-fired power
+Power type
+3.20
+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).
+(3) Installed capacity
+Section IV Directors' Report (Continued)
+2021 Annual Report 51
+4.2
+334
+384
+348
+22.3
+127.65
+22.1
+136.33
+166.45
+Total
+(3.4)
+232
+14.3
+0.3
+156.13
+3.85
+1.02
+1.06
+Hunan
+0.3
+363
+364
+16.6
+9.86
+11.50
+16.7
+12.05
+Jiangxi
+18.4
+309
+366
+3.87
+3.84
+3.04
+27.3
+467
+Indonesia (overseas)
+10.33
+1.76
+563
+0.4
+Beijing
+565
+0.5
+3.75
+0.3
+3.84
+3.85
+(II) Gas-fired power
+3.77
+11.4
+(11.1)
+1.58
+523
+465
+13.1
+1.37
+1.55
+RMB million
+Revenue
+%
+Change Main reasons for changes
+2020
+13.9
+(3)
+The operation results of the coal chemical segment of the Group before
+eliminations on consolidation are as follows:
+62 China Shenhua Energy Company Limited
+(2) Operation results
+5,851
+Section IV Directors' Report (Continued)
+2021
+5,165
+(4,675)
+Profit from operations
+percentage
+by 9.2
+(4.7)
+Increased
+9.5
+18.7
+13.3
+Gross profit margin
+points
+(4,754)
+RMB million
+Operating costs
+polyolefin products
+Increase in the price of
+1.7
+21.7
+41.1
+Section IV Directors' Report (Continued)
+6.0
+1,989
+3.2
+1,688
+Repairs and maintenance
+6.8
+066
+2,265
+3,195
+Personnel expenses
+76.7
+RMB million
+69.9
+23,103
+6.1
+72.9
+(15.1)
+Depreciation and amortisation
+(7) Capital Expenditure
+In 2021, the total capital expenditure of the power segment was RMB16,876
+million, mainly for the following items:
+The
+No.
+Name of Project
+investing amount
+for the
+reporting period
+Unit: RMB Million
+Percentage of
+accumulative
+amount in project
+to the
+total budget
+4.0
+14.3
+4,742
+9.5
+4,932
+(6.8)
+722
+5,320
+178.8
+(7.9)
+7.2
+312.5
+340.1
+4,970
+(8.1)
+7.0
+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.
+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).
+2021 Annual Report 63
+Section IV Directors' Report (Continued)
+(V) Operations by Region
+2021
+2020
+Unit: RMB million
+Change %
+Foreign transaction revenue from domestic
+market
+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.
+39,944
+43.7
+233,263
+335,216
+5,079
+Total
+5,724
+10,728
+Foreign transaction revenue from overseas
+market
+42.6
+227,539
+324,488
+87.4
+360.4
+5,447
+332.0
+Unit
+Unit
+Change
+2020
+2021
+points
+Unit
+percentage
+Unit production cost of major products
+by 7.3
+Increased
+5.0
+12.3
+Profit margin from operations %
+Polyethylene
+Polypropylene
+259
+Production production
+Thousand
+%
+%
+tonne
+tonnes
+tonne
+tonnes
+volume
+RMB/
+volume
+cost
+Production production
+production
+Production
+volume
+Thousand
+cost
+RMB/
+cost
+Raw materials, fuel and power
+increase in output
+Percentage Change in cost
+%
+(60,019)
+RMB million
+Operating costs
+output dispatch
+29.6 Increase in power
+49,486
+(38,729)
+64,124
+Revenue
+%
+Main reasons for
+changes
+Change
+2020
+2021
+RMB million
+1 The operation results of the power segment of the Group before
+elimination on consolidation
+55.0 increase in coal
+dispatch
+16.1
+4.7
+Profit margin from
+(62.3)
+7,976
+3,010
+purchase price;
+Profit from operations RMB million
+15.3 percentage
+Decreased by
+21.7
+6.4
+%
+Gross profit margin
+points
+Decreased by
+Operation results
+Section IV Directors' Report (Continued)
+3
+Phase (2x660MW)
+Shengli Power Plant
+86
+3,077
+Construction of Inner Mongolia
+Fujian Luoyuanwan Port Power
+2
+93
+4,298
+Hunan Yongzhou Project
+1
+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.
+%
+Phase (2×1,000 MW)
+(8)
+2,727
+Generation & Storage Project
+2021 Annual Report 55
+(2x1,000MW)
+Generation Project
+Reserves & Power
+92
+1,637
+71
+Sichuan Jiangyou Coal
+Project (2x1,000MW)
+48
+2,520
+Guangxi Beihai Power Plant
+4
+Construction (2 × 1,000MW)
+5
+%
+operations
+points
+56,752
+Total
+23.9
+0.2
+0.2
+109
+44,445
+11.0
+162
+Hydro power
+4.4
+5.9
+2,074
+4.0
+146
+2,165
+27.7
+100.0
+% RMB million
+RMB million
+2020
+Costs
+Costs Percentage
+2021
+Costs of power output dispatch of coal-fired power plants of the Group
+before elimination on consolidation
+54,340
+(3)
+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
+Section IV Directors' Report (Continued)
+11.4 percentage
+1.0
+2,132
+Power type
+2021 over
+dispatch
+dispatch
+Change in
+power output
+2021
+power output
+total costs of
+Percentage to
+Cost of power output dispatch
+Revenue from power output dispatch
+Unit: RMB million
+Revenue and costs from the power output dispatch of the Group before
+elimination on consolidation
+Percentage to
+total costs of
+2,111
+2020
+2021
+Gas-fired power
+57.4
+93.9
+33,084
+95.8
+52,066
+Change
+29.1
+54,458
+Coal-fired power
+2020
+in 2020
+2020
+in 2021
+42,188
+64 China Shenhua Energy Company Limited
+as of the end of
+the reporting
+(1) Production and operations
+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
+(2.0)
+16,636
+16,310
+RMB
+Profit from operations
+points
+percentage
+by 1.7
+47.6 Decreased
+45.9
+20
+Port segment
+(1)
+Production and operations
+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.
+Gross profit margin
+million
+0.8
+(3,314)
+(3,342)
+RMB
+Operating costs
+port operation
+million
+Increase in volume of
+Gross profit margin
+1.3
+6,440
+RMB
+Revenue
+%
+Main reasons for
+changes
+Change
+2021
+The operation results of the port segment of the Group before eliminations on
+consolidation are as follows:
+Operation results
+(2)
+6,359
+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
+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.
+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
+(2)
+100.0
+power plant
+dispatch of coal-fired
+Total cost of power output
+134.2
+3.0
+985
+4.5
+2,307
+Others
+period
+52,066
+%
+Section IV Directors' Report (Continued)
+The operation results of the railway segment of the Group before elimination on
+consolidation are as follows:
+maintenance
+in repair and
+turnover; increase
+transportation
+Increase in railway
+turnover
+transportation
+million
+8.5
+(22,020) (20,304)
+Operation results
+RMB
+Increase in railway
+5.1
+40,699 38,723
+RMB
+million
+Revenue
+%
+Main reasons for
+changes
+Change
+2020
+2021
+Operating costs
+48.1
+2020
+by 0.2
+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
+47.9 Increased
+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
+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.
+6.7 Increased
+%
+Profit margin from
+operations
+million
+368.9
+209
+980
+RMB
+Profit from operations
+points
+percentage
+15.8
+volume; increase in
+vessel rental charges
+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 sales of polyethylene and polypropylene products of the Group in 2021 are
+as follows:
+164
+6,015
+331.2
+6,853
+315.6
+5,459
+356.9
+6,641
+332.8
+Polyethylene
+Polypropylene
+manner.
+tonne
+tonne
+tonnes
+RMB/
+Price
+volume
+Price
+Change
+Sales
+Sales
+Price volume
+RMB/ Thousand
+2020
+2021
+Sales
+volume
+Thousand
+tonnes
+by 7.5
+(1)
+19.0
+(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
+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
+11.5 Increased
+RMB
+Profit from operations
+percentage
+Operation results
+The operation results of the shipping segment of the Group before eliminations
+on consolidation are as follows:
+2,720
+2021
+Main reasons
+%
+Gross profit margin
+Increase in shipping
+82.1
+(2,755)
+(5,018)
+RMB
+Operating costs
+freight rates
+volume and average
+million
+Increase in shipping
+million
+Change
+%
+2020
+Revenue
+for changes
+6,195
+3,112
+99.1
+RMB
+5. Others
+8.51
+4.83
+4. Coal chemical segment
+0.55
+0.44
+Shipping
+10.02
+15.38
+Of which: Railway
+39.79
+64.87
+50.36
+80.69
+3. Transportation segments
+0.33
+7.16
+Of which: new energy business
+50.22
+Port
+0.39
+(2)
+74 China Shenhua Energy Company Limited
+168.76
+1,664.5
+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)
+(4)
+(3)
+Section IV Directors' Report (Continued)
+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
+171.86
+1,805
+205.75
+Baorixile Energy
+6
+Increase in sales volume of coal
+23.9
+1,835
+2,273
+10,128
+32,570
+1,169
+1,889
+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
+Trading Group
+11,934
+6,091
+1,655
+743
+1,415
+6,194
+10,006
+2,925
+Beidian Shengli
+8
+Administration
+2.9
+1,542
+1,586
+11,300
+13,817
+6,790
+Huanghua Harbour
+7
+price of coal
+109.5 Increase in sales volume and average
+790
+2,959
+23
+3,827
+13,116
+assets
+Net
+Total
+assets
+capital
+Registered
+Unit: RMB million
+2.
+Major subsidiaries
+No.
+1.
+✓ Not applicable
+Applicable
+(VII) Disposal of Material Assets and Equity Interest
+Section IV Directors' Report (Continued)
+2021 Annual Report 65
+0
+705
+2,550
+(VIII) Analysis on Major Holding and Associated Companies
+Company
+As at 31 December 2021
+2021
+2,278
+Jinjie Energy
+3
+1.1
+7,668
+7,755
+15,231 43,959 35,330
+Shuohuang Railway
+2
+Increase in sales volume and average
+price of coal
+89.7
+10,528
+19,967
+32,468
+4,989 46,235
+Shendong Coal
+Change Main reasons for changes
+Net profit attributable to the equity
+holders of the parent company
+2020
+10,132
+90.4
+Increase in sales volume and average
+price of coal
+9
+(III) Business Plan for 2022
+Section IV Directors' Report (Continued)
+2021 Annual Report 71
+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.
+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.
+Development Strategy of the Company
+(II)
+Section IV Directors' Report (Continued)
+1.
+70 China Shenhua Energy Company Limited
+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 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)
+VI. THE COMPANY'S OUTLOOK FOR FUTURE DEVELOPMENT
+During the reporting period, the Group made external donations of approximately RMB389
+million.
+(XIII) Donations
+Section IV Directors' Report (Continued)
+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.
+Business targets for 2022
+Actual amount
+Item
+100 million
+Gross power generation
+tonnes
+(16.5)
+4.823
+4.029
+100 million
+Coal sales
+tonnes
+(3.0)
+3.070
+2.978
+100 million
+Commercial coal production
+%
+Increase/
+(decrease)
+in 2021
+Target of 2022
+Unit
+2021 Annual Report 69
+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. .
+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.
+Section IV Directors' Report (Continued)
+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.
+(3)
+(2)
+(1)
+Notes:
+Increase in average price of coal
+139.8
+515
+1,235
+2,633 8,765 7,046
+Baotou Energy
+10
+Increase in sales volume and average
+price of coal
+170.1
+522
+4,965 1,410
+6,618
+2,420
+Yulin Energy
+Shendong Coal recorded a revenue of RMB84,288 million and a profit from operations of
+RMB26,673 million in 2021.
+1,845
+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.
+68 China Shenhua Energy Company Limited
+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.
+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.
+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.
+Section IV Directors' Report (Continued)
+2021 Annual Report 67
+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.
+(XII) Scientific and Technological Innovation
+In 2021, 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.
+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.
+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, 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
+Not applicable
+Applicable
+(IX) Structured Vehicle Controlled by the Company
+Section IV Directors' Report (Continued)
+66 China Shenhua Energy Company Limited
+Major companies in which the Company has invested
+2. Power segment
+Selling, general and administrative
+Applicable ✓ Not applicable
+Revenue
+kWh
+8.4
+(VI) Analysis on Investments
+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.
+1.
+2.
+Material investment in equity interest
+Applicable ✓ Not applicable
+Material investment in non-equity interest
+3.
+Financial assets at fair value
+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.
+Name of items
+RMB100
+Other investments in equity instruments
+financing receivables
+Unit: RMB million
+Opening balance
+at the beginning
+of the period
+Closing balance
+at the end
+of the period
+Change for the
+current period
+Change of profit
+for the current
+period
+1,845
+2,174
+329
+0
+376
+376
+0
+Total
+2,966
+Section IV Directors' Report (Continued)
+(11.5)
+produced coal
+Year-on-year
+increase of
+approximately 10%
+3,352.16
+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
+production cost of the self-
+Section IV Directors' Report (Continued)
+Capital expenditure plan for 2022
+Unit: RMB100 million
+Target of
+2022
+Actual amount
+in 2021
+1. Coal segment
+61.57
+2.
+Percentage change of unit
+Year-on-year
+million
+million
+Operating costs
+finance costs
+2,048
+2,391.56
+(14.4)
+RMB100
+RMB100
+132
+122.90
+7.4
+and R&D expenses and net
+million
+Basic
+healthcare,
+unemployment,
+work-related
+Including:
+injury,
+Retirement
+plan:
+Whether to
+receive
+maternity basic pension
+remuneration
+insurance
+Performance remuneration
+(including emoluments)
+performance
+Date of
+Appointment
+53
+Social insurance, housing funds and
+corporate annuities paid by the Company
+Remuneration paid (before tax)
+Unit: RMB ten thousand
+Directors, Supervisors and senior management as at the end of the reporting
+period
+1.
+(I) Changes in shareholding and remuneration of Directors, Supervisors and senior
+management
+IV. DIRECTORS, SUPERVISORS AND SENIOR 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.
+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.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 83
+insurance
+Employees'
+compensation
+Name
+Positions
+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
+Committee and
+the Party
+29 November 2018 -
+57
+29 May 2020
+28 May 2023
+30.00
+29 May 2020
+28 May 2023
+Director
+Independent
+Non-Executive
+Director
+000
+30.00
+30.00 No
+84 China Shenhua Energy Company Limited
+Chen Hanwen
+Non-Executive
+Secretary of
+30.00 No
+30.00
+28 May 2023
+29 May 2020
+58
+Independent Male
+Bai Chong-En
+Non-Executive
+Director
+30.00 No
+30.00
+30.00
+No
+144.81
+21.61
+parties of the
+monetary remuneration
+corporate
+annuities
+provident
+funds
+Subtotal 1
+year
+tion
+previous
+remunera-
+Subtotal 2
+expiration of
+term of office
+Total
+Other
+and
+and housing
+for the
+Basic
+Scheduled
+(from the first
+Appoint-ment
+date]
+Gender Age
+from related
+Male
+income
+Wang Xiangxi
+380
+13.90
+7.71
+123.20
+51.20
+91.90
+31.30
+28 May 2023
+29 May 2020
+before tax Company
+58
+Xu Mingjun
+Director
+Executive
+Yes
+28 May 2023
+21 June 2019
+59
+Male
+Chairman and
+Executive Director Male
+30.00
+considered and
+approved at the EGM
+by a combination of
+on-site voting by poll
+and internet voting.
+(IV) Major Risks and Countermeasures
+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.
+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
+1.
+GENERAL MEETINGS
+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.
+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.
+III.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 81
+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.
+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.
+There are potential peer competitions between the coal business and other business of
+China Energy Group and the main business of the Company.
+Avoidance of Competition
+(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.
+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.
+Measures of Ensurance of Independence of Listed Company by Controlling
+Shareholders
+(1)
+II. ENSURANCE OF INDEPENDENCE OF LISTED COMPANY BY CONTROLLING
+SHAREHOLDERS
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+80 China Shenhua Energy Company Limited
+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.
+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)
+Section IV Directors' Report (Continued)
+All the resolutions tabled at the general meeting above were passed.
+22 October 2021 The website
+of the SSE
+The website
+of the HKEX
+2021 First Extraordinary
+General Meeting
+23 October 2021 All 2 resolutions were
+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.
+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
+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
+Resoulutions
+25 June 2021
+The website
+of the HKEX
+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.
+2021 First H Shareholders
+Class Meeting
+The website
+of the SSE
+25 June 2021
+2021 First A Shareholders
+Class Meeting
+disclosure of the
+voting results
+publishing the
+voting results
+Date
+Date of
+2020 Annual General Meeting
+Meetings
+The designated
+website for
+Convening of general meetings during the reporting period
+26 June 2021
+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.
+22 October 2021
+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.
+Risk of international operations
+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.
+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.
+Risk of project management
+5.
+4.
+Section IV Directors' Report (Continued)
+76 China Shenhua Energy Company Limited
+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.
+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
+Investment risk
+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.
+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.
+3.
+Risk of market competition
+2.
+Section IV Directors' Report (Continued)
+2021 Annual Report 75
+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.
+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.
+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.
+Risk of safety production and environmental protection
+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 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 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.
+1.
+Section IV Directors' Report (Continued)
+CORPORATE GOVERNANCE
+2021 Annual Report 77
+I.
+Section V Corporate Governance and
+Corporate Governance Report
+2021 Annual Report 79
+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.
+Please refer to the section headed "Corporate Governance and Corporate Governance Report".
+IX. OTHERS
+VIII. PERFORMANCE OF THE BOARD AND ITS SPECIAL COMMITTEES
+Applicable ✓ Not applicable
+VII. REASONS AND CASES OF FAILURE OF DISCLOSURE IN ACCORDANCE WITH
+GUIDELINES BY THE COMPANY DUE TO NON-APPLICABLE GUIDELINES OR
+SPECIAL REASONS
+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.
+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.
+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.
+8.
+Policy risk
+7.
+Risk of macroeconomic fluctuations
+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.
+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.
+6.
+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.
+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.
+Section IV Directors' Report (Continued)
+78 China Shenhua Energy Company Limited
+Risk of integrated operations
+-tion
+term of office
+-ment date)
+Age
+Gender
+Positions
+Name
+Total
+Other
+monetary remuneration
+provident
+for the
+remunera
+previous year
+first appoint
+and
+housing
+remuneration
+Basic
+Scheduled
+(from the
+insurance
+corporate
+expiration of
+before tax Remark
+funds
+Secretary of the
+insurance and
+Deputy
+Total
+Yang Suping
+Officer and
+23 August 2019
+Chief Executive
+2021
+14.36
+9.20
+5.16
+99.20
+51.20
+20.87
+16 November
+29 May 2020
+51
+Executive Director Male
+Yang Jiping
+income
+Subtotal 2
+annuities
+Subtotal 1
+78.33
+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.
+pension
+(3)
+(2)
+(1)
+Notes:
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+85
+2021 Annual Report
+797.61
+119.34
+6.72 No
+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.
+12
+505
+75.05
+44.29
+678.27
+224.27
+521.24
+157.03
+88
+1.08
+Party Committee
+Member of the
+1.72
+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.
+(4)
+plan: basic
+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)
+performance
+Female
+Biographical details
+and Secretary of
+the Disciplinary
+2021 Annual Report 91
+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
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+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.
+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.
+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. 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.
+Name
+Yuen Kwok Keung
+Independent
+Non-executive
+Director
+94 China Shenhua Energy Company Limited
+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.
+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
+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.
+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.
+0.64
+Executive Director,
+Secretary of the
+Party Committee
+and Executive Vice
+President
+99.04
+149.48
+37.56
+No
+101.35
+113.56 No
+35T1
+13.51
+(2)
+(1)
+Notes:
+36
+8.35
+5.16
+87.84
+47.84
+71.15
+16.69
+23 August 2021
+21 June 2018
+56
+90
+Committee
+187.04
+Party Committee
+10.32
+27.87
+Xu Mingjun
+Name
+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
+17.55
+00
+Xu Shancheng
+0.00
+57
+Male
+Chairman of the
+Luo Meijian
+Committee
+of the Party
+and Member
+President
+30 December 2019-
+Executive Vice
+10
+Director
+No
+127.83
+19.99
+12.28
+7.71
+107.84
+47.84
+82.80
+25.04
+28 May 2023
+Representative
+29 May 2020
+28 May 2023
+Supervisory
+3.39
+2.61
+29 December 2021 -
+57
+Male
+Chief Executive
+Lv Zhiren
+Supervisor
+Representative
+38.66
+38.66
+38.66
+28 May 2023
+51
+Employees' Male
+Zhang Changyan
+28 May 2023
+17 June 2016
+56
+Male
+Supervisor
+Zhou Dayu
+Committee
+29 May 2020
+53
+Male
+Wang Xingzhong Employee'
+Appoint-ment
+compensation
+insurance
+insurance
+remuneration
+receive
+basic pension
+maternity
+performance
+Date of
+Appointment
+(from the first
+Whether to
+plan:
+injury,
+Including:
+Retirement
+work-related
+(including emoluments)
+Employees'
+Basic
+healthcare,
+unemployment,
+Performance remuneration
+Social insurance, housing funds and
+corporate annuities paid by the Company
+Remuneration paid (before tax)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+30
+Positions
+Age
+Company
+before tax
+income
+Subtotal 2
+parties of the
+monetary remuneration
+corporate
+annuities
+funds
+Subtotal 1
+year
+tion
+provident
+previous
+remunera-
+from related
+Total
+Other
+and
+and housing
+for the
+Basic
+Scheduled
+expiration of
+term of office
+date]
+Gender
+5.00
+0.00
+00
+90
+7.90
+No
+NNO
+Yes
+38.66
+Yes
+68
+Yes
+1.90
+21.50
+90
+Member of the
+Party Committee
+and Secretary of
+the Disciplinary
+Committee
+Committee
+the Party
+Member of
+Officer and
+Male
+Chief Financial
+of the Party
+Committee
+and Member
+Total
+Male
+135.41 No
+529
+15.29
+587
+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
+Cui Weishan
+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
+6.00
+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
+2 December 2019