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+Shenhua Shendong Coal Group Co., Ltd.
+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
+(852) 2578 1635
+Bank of China Tower, 1 Garden Road,
+Central, Hong Kong
+Room B, 60th Floor,
+Hong Kong Office of the Company
+Stock Exchange
+(8610) 5813 1804/1814
+ir@shenhua.cc
+Type
+H Share
+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
+China Shenhua
+Shanghai Stock Exchange
+Hong Kong Stock Exchange
+Abbreviation
+A Share
+Signing Auditors
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 3355
+Representative of Securities Affairs
+CONTACTS AND CONTACT DETAILS
+Zhang Yuzhuo
+CSEC/China Shenhua
+China Shenhua Energy Company Limited
+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
+English Name of the Company
+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
+2016 Annual Report 7
+Renminbi unless otherwise specified
+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
+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
+Name
+Address
+Chen Guangshui
+Tel
+Fax
+E-mail
+Tel
+Fax
+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
+PARTICULARS
+IV.
+III.
+Address
+A Share/the PRC
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+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
+46,341
+92,564
+(2.1)
+RMB million
+Total equity
+384,969
+The Company and its controlling subsidiaries
+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
+Company
+Equity attributable to equity holders of the
+5.8
+363,921
+RMB million
+excluding the effect from Shenhua
+Finance Company
+47.8
+55,406
+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
+Xu Bin, Yu Chunhui
+1 East Chang An Avenue, Beijing
+8th Floor, Tower W2, The Towers, Oriental Plaza,
+Revenue
+RMB million
+183,127
+177,069
+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
+Profit for the year + net finance costs + income tax expenses +
+depreciation and amortisation - shares of results of associates
+17,649
+RMB million
+holders of the Company
+Profit for the year attributable to equity
+28.1
+24,959
+31,970
+RMB million
+Profit for the year
+3.4
+24,910
+Articles of Association of China Shenhua Energy Company Limited
+RMB million
+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
+Business Overview
+11
+Section IV
+Chairman's Statement
+13
+Section V
+Directors' Report
+20
+Section VI
+Significant Events
+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
+Section III
+136
+7
+Section II
+VI.
+VII.
+VIII.
+IX.
+Important Notice
+The Board, supervisory committee and directors, supervisors and senior management of the Company
+warrant that this report does not contain any misrepresentations, misleading statements or material
+omissions, and are jointly and severally liable for the authenticity, accuracy and completeness of the
+information contained in this report.
+This report was approved at the 24th meeting of the third session of the Board of the Company, all the
+directors of the Company were present at the meeting of the Board.
+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.
+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.
+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.
+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
+Company Profile and Major Financial Indicators
+V.
+Section X
+147
+Shenhua Group
+China Shenhua/the Company
+The Group
+Shendong Coal Group Corporation
+Shendong Power Company
+Zhunge'er Energy Company
+Shuohuang Railway Company
+Shenhua Trading Group
+Huanghua Harbour Administration
+Company
+Baotou Energy Company
+Baotou Coal Chemical Company
+Shenhua Zhuhai Coal Dock
+Overseas Company
+Yu Shen Energy Company
+Xinjie Energy Company
+Shenwan Energy Company
+Fujian Energy Company
+Shenhua Finance Company
+EMM Indonesia
+Shenhua Group Corporation Limited
+Shenhua Group Corporation Limited and its controlling subsidiaries
+International Financial Reporting Standards issued by the International
+Accounting Standards Committee
+China Shenhua Energy Company Limited
+Shenhua Group Corporation
+Supervisory Committee's Report
+Unless the context otherwise requires, the following terms used in this report have the following meanings:
+China Shenhua Energy Company Limited
+Section XI
+Investor Relations
+149
+Section XII
+Index to Information Disclosure
+150
+Section XIII
+Independent Auditor's Report and Financial Statements
+154
+Section XIV
+Documents Available for Inspection
+246
+Section XV
+Signing Page for Opinions
+247
+Section XVI
+Summary of Major Financial Information for the Recent Five Years
+249
+4
+Section | Definitions
+IV.
+Shenbao Energy Company
+II.
+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.
+Inner Mongolia Guohua Hulunbeier Power Generation Co., Ltd.
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+Shouguang Power
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+Liuzhou Power
+Shenhua Guangdong Power Sales
+Company
+The Stock Exchange of Hong Kong Limited
+III.
+Rules Governing the Listing of Stocks on Shanghai Stock Exchange
+Rules Governing the Listing of Securities on The Stock Exchange of
+Hong Kong Limited
+Shanghai Stock Exchange
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+Shanghai-Hong Kong Stock Connect
+Total debt to total debt and
+total equity ratio
+EBITDA
+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
+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.
+JORC
+Jawa Company
+Guohua Ningdong
+Suizhong Power Co., Ltd.
+RMB
+Mengjin Power
+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.
+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)
+I.
+2016 Annual Report
+Promote Eco-Friendly and
+Highly-Efficient Utilization of Coal
+Yuyao Power
+2016 Annual Report 5
+Section | Definitions (Continued)
+Stock Code: 01088
+Sanhe Power
+Taicang Power
+Guohua Hulunbeier Power
+Panshan Power
+Dingzhou Power
+Jinjie Energy
+Hebei Guohua Cangdong Power Co., Ltd.
+Suizhong Power
+Cangdong Power
+Taishan Power
+Guangdong Guohua Yudean Taishan Power Co., Ltd.
+2016 Annual Report 1
+Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+CLP Guohua Shenmu Power Co., Ltd.
+Zhunge'er Power
+Zheneng Power
+Shenmu Power
+Tianjin Guohua Panshan Power Generation Co., Ltd.
+Guohua Zhunge'er
+Sanhe Power Co., Ltd.
+Power-generating division controlled and operated by Zhunge'er Energy
+Company
+Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+Agreement
+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
+Supply of products and provision of services by the
+Shenhua Group to the Group
+16,000 Approved at the 2015
+9,400
+11,400
+13,500
+annual general meeting
+Shenhua Group
+Corporation
+Shenhua Group
+Corporation
+Supply of products and provision of services by the
+Group to the Shenhua Group
+24 March 2016
+11,800
+11,200
+11,900
+on 17 June 2016
+Mutual Coal Supply
+Agreement
+Mutual Supplies
+Caps for the non-exempt continuing connected transactions for 2017 to 2019
+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.
+8,800
+Name of
+No. agreement
+Counterparty
+Connected
+transaction item
+Date of
+agreement
+Transaction cap
+(RMB million)
+Approval
+procedure
+For the year
+For the year
+2017
+2018
+2019
+1
+2
+and Services
+For the year
+10,400
+8,800
+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
+(5)
+Maximum daily balance of entrusted loans
+4.
+13,000
+13,000
+Maximum daily balance (including interests
+(3)
+acceptance and discount services
+10,400
+3
+Financial Services
+Shenhua Group
+(1) Total amount of providing financial services
+24 March 2016
+4,290
+4,420
+4,550
+8,800
+Agreement
+of
+f guarantee (including guarantee business
+within the business scope of financial
+enterprises, such as performance guarantee
+and quotation sharing) to members of
+Shenhua Group
+(2) Annual total transaction amount of bill
+10,400
+Corporation
+Section VI Significant Events (Continued)
+1,739
+100
+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
+(2) Services
+4,724
+34,800
+Shenhua Group Corporation
+between the Company and
+Transaction
+amount during
+the reporting the same type of
+13,000
+Proportion in
+Prevailing
+RMB million
+period
+RMB million
+transactions
+transaction cap
+46
+period
+RMB million
+RMB million
+amount during
+Proportion in
+the reporting the same type of
+transactions
+A
+Mutual Coal Supply Agreement
+%
+China Shenhua Energy Company Limited
+0.5
+0.3
+period
+RMB million
+40
+40
+104,000
+15,562
+3. Maximum daily balance of loans, consumption
+credit, buyer's credit and financial leasing
+(including interests accrued thereon) granted
+to Shenhua Group and its associates
+4. Maximum daily balance (including interests
+accrued thereon) of entrusted loans granted
+by Shenhua Group to the Group through
+Shenhua Finance Company
+71,500
+15,937
+78,000
+3,742
+520
+58
+50
+5. Annual total fee charged for providing the
+Shenhua Group and its associates with
+consultancy, agency, settlement, transfer,
+investment, lease finance, letter of credit,
+online banking, entrusted loan and other
+financial services
+The above continuing connected transactions were settled in cash and carried out in
+the ordinary course of business of the Company, and were strictly in compliance with
+procedures of review and approval by independent directors and independent shareholders
+as well as disclosure requirements.
+The independent non-executive directors of the Company have confirmed to the Board
+of the Company that they have reviewed the transactions contemplated under the
+agreements A to D above and are of the view that (1) those transactions were entered
+into the ordinary course of business of the Group; (2) those transactions were on normal
+commercial terms or better terms; and (3) those transactions were conducted according to
+the agreements governing them on terms that are fair and reasonable and in the interest of
+the shareholders of the Company as a whole.
+Deloitte Touche Tohmatsu, the international auditors of the Company, have reviewed the
+transactions contemplated under the agreements A to D above and issued a letter to the
+Board, indicating that they were not aware of any matter for which they would consider
+that the continuing connected transactions above (1) had not been approved by the
+Company's Board of Directors; (2) were not, in all material aspects, in accordance with the
+pricing policy of the Group, (3) were not entered into, in all material aspects, in accordance
+with the relevant agreements governing such transactions; and (4) the aggregate amount
+of those transactions for the year ended 31 December 2016 had not exceeded the
+annual caps disclosed in the Company's announcements on the continuing connected
+transactions.
+amount
+during the
+reporting
+Transaction
+26,000
+RMB million
+8.8
+D Transportation Service Framework
+Agreement between the
+Company and Taiyuan Railway
+Bureau
+12,400
+3,970
+39.0
+138
+900
+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
+2016 Annual Report 99
+(including relevant accrued interests incurred)
+(1) Trust, contracting and leasing
+and its subsidiaries to the Company and/
+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
+No
+N/A
+liability
+guarantee
+Total amount of guarantee provided during the reporting period (excluding guarantee
+provided to its subsidiaries)
+Total balance of guarantee at the end of the reporting period (A) (excluding guarantee
+provided to its subsidiaries)
+2. Guarantee provided by the Company and its subsidiaries for the benefit of its subsidiaries
+(3.22)
+108.26
+Expiry date Type of
+of guarantee guarantee
+Total amount of guarantee provided for the benefit of subsidiaries during the reporting
+period
+Amount date of date of
+guaranteed agreement) guarantee
+company
+Section VI Significant Events (Continued)
+XII. MATERIAL CONTRACTS AND THEIR PERFORMANCE
+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
+1. Guarantee provided by the Company to external parties (excluding guarantee granted to its subsidiaries)
+Unit: RMB million
+Relationship
+between the
+guarantor
+and the listed
+Date of
+provision of
+Whether
+guarantee
+guarantee
+Whether
+Whether
+is for the
+(execution Beginning
+Guarantor
+Guaranteed
+Total balance of guarantee provided for the benefit of subsidiaries at the end of the
+reporting period (B)
+544.03
+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;
+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.
+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.
+Prevailing
+transaction cap
+See below
+See below
+10,688.29
+0
+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:
+2016 Annual Report 103
+Amount of guarantee provided for the benefit of shareholders, de facto controller and their
+related parties (C)
+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
+Notes: 1.
+2.
+0
+10,688.29
+Amount of guarantee directly or indirectly provided for the benefit of parties with a gearing
+ratio in excess of 70% (D)
+advanced by Shenhua Group Corporation
+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.
+Currently, the principal and interests of the above entrusted
+loans and borrowings are repaid in a normal manner in
+accordance with the repayment schedule.
+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.
+Acceptance of railway transportation services and
+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.
+Taiyuan Railway Bureau
+other related services provided by the Group to the
+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
+700
+Service Framework
+Bureau
+Agreement
+102
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+0
+parties
+Total
+700
+0
+700
+7,423 (2,599)
+4,824
+Amount of funds provided by the Group to the
+controlling shareholder and its subsidiaries
+during the reporting period
+Balance of funds provided by the Group to the
+controlling shareholder and its subsidiaries
+Reasons for debts and liabilities between
+related parties
+Repayment of debts and liabilities between
+related parties
+Undertakings related to debts and liabilities
+between related parties
+Impacts of debts and liabilities between related
+parties on the operating results
+and financial position of the Company
+0
+0
+The above related debts and liabilities incurred were mainly
+due to the fact that the Group provided entrusted loans to an
+associated company of a subsidiary of the Company through a
+bank, and the Group took long-term and short-term loans from
+Shenhua Group and performed internal decision procedures in
+accordance with relevant requirements.
+0
+0
+700
+0
+(IV) Debts and liabilities between related parties
+Unit: RMB million
+Funds provided to
+related parties
+Funds offered by related
+parties to the Group
+Related party
+Relationship
+Opening Amount Closing Opening Amount Closing
+balance incurred balance balance incurred balance
+Shenhua Group
+Not applicable
+Controlling shareholders and
+0
+0 7,423 (2,599) 4,824
+Corporation and
+its subsidiaries
+its subsidiaries
+Other related
+Others
+700
+0
+No. Name of agreement
+1,700
+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;
+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)
+(2)
+(3)
+Transportation and related services provided by the Taiyuan Railway Bureau
+Group to the Group: price prescribed by NDRC or other related government
+authorities.
+Rolling stock leasing and other related services provided by the Group to the
+Taiyuan Railway Bureau Group: price prescribed by NDRC or other related
+government authorities.
+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.
+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.
+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.
+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
+b.
+a.
+The pricing policy of the Financial Services Agreement is as follows:
+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.
+Financial Services Agreement
+C.
+Section VI Significant Events (Continued)
+2016 Annual Report 95
+Implementation of and review opinion on the non-exempt continuing connected
+transactions
+(4)
+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.
+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)
+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:
+(2)
+(3)
+(4)
+Subject to compliance with the terms and conditions of the Financial Services
+Agreement, Finance Company shall be appointed as one of the financial
+institutions to provide financial services to Members of Shenhua Group.
+Members of Shenhua Group may obtain financial services from other financial
+institutions in addition to or instead of Finance Company, as it thinks fit;
+the interest rates for deposits placed by Members of Shenhua Group with
+Finance Company under the Financial Service Agreement are negotiated
+on arm's length terms and with reference to the interest rate prescribed by
+the PBOC for the same type of deposit and interest rates charged by major
+commercial banks in the PRC for comparable deposits provided to Members
+of Shenhua Group;
+the interest rates for loans granted by Finance Company to Members of
+Shenhua Group under the Financial Service Agreement are negotiated on
+arm's length terms and with reference to the interest rate prescribed by
+the PBOC for the same type of loan and interest rates charged by major
+commercial banks in the PRC for comparable loans provided to Members of
+Shenhua Group; and
+the service fees charged by Finance Company for the provision of the financial
+services to Members of Shenhua Group are determined according to the
+fee rates fixed by the PBOC or the CBRC, and if such fixed fee rates are not
+available, the service fees are negotiated on arm's length taking into account
+the market conditions and with reference to the fee rates charged by major
+commercial banks for comparable services provided to Members of Shenhua
+Group.
+(1)
+2016 Annual Report 97
+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.
+(2)
+(2)
+(1)
+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.
+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.
+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:
+Taiyuan Railway Bureau is the parent company of Daqin Railway, which is a
+substantial shareholder of 10% shareholding or above of Shuohuang Railway, a
+significant subsidiary of the Company under the Hong Kong Listing Rules. Therefore,
+Taiyuan Railway Bureau is a connected person of the Company under the Hong
+Kong Listing Rules, and the Transportation Service Framework Agreement and the
+transactions contemplated thereunder constitute continuing connected transactions
+of the Company under the Hong Kong Listing Rules.
+Transportation Service Framework Agreement between the Company and Taiyuan
+Railway Bureau
+D.
+Non-exempt continuing connected transactions between the Group and other parties
+Section VI Significant Events (Continued)
+(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
+MATILDA
+CHANGE IN ORDINARY SHARE CAPITAL
+I.
+Section VII Changes in Share Capital and Shareholders
+2016 Annual Report 113
+Changes in Share Capital and Shareholders
+Shares without selling restrictions
+(1)
+1.
+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.
+2.
+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.
+Section VII
+100.00
+17.09
+RMB ordinary shares
+82.91
+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
+(%)
+Total number of shares
+III.
+Overseas listed foreign shares
+100.00
+Applicable ✓ Not applicable
+(II) Corporate social responsibilities
+Section VI Significant Events (Continued)
+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
+Notes: It is mainly used to aid children with congenital heart disease and leukemia.
+III. Awards
+4. Other Projects (RMB0'000)
+western regions (RMB0'000)
+3.2 Targeted poverty alleviation
+(RMB0'000)
+alleviation in eastern and
+1. Entrusted wealth management
+Applicable
+Not applicable
+In which: 4.1. Number of projects
+4.2. Contribution amount
+(RMB0'000)
+Subsequent targeted poverty alleviation plan
+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.
+1
+China Shenhua Energy Company Limited
+110
+During the reporting period, the Group made external donations of approximately RMB791 million.
+(IV) Donations
+For the environmental protection work of the Group, please refer to the 2016 CSR Report which is
+disclosed in conjunction with this report.
+The main pollutants discharged by wastewater discharging enterprises are chemical oxygen
+demand (COD) and ammonia nitrogen, which are discharged to the surface water through the
+sewage outfall of the enterprises. Wastewater enterprises are mainly distributed in coal mining
+and coal-to-chemical enterprises and wastewater treatment plants. The emission standard
+implemented was the Comprehensive Emission Standards for Sewage (GB8978-1996). During
+the reporting period, the enterprises under the Group are well equipped with wastewater pollution
+prevention and treatment facilities and in stable operation which fulfilled the discharge standard.
+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.
+Not applicable
+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).
+XIV. CONVERTIBLE BONDS 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.
+Nature of
+shareholders
+Number
+Status
+restrictions
+period Percentage
+pledge or lock-up
+(%)
+with selling
+reporting
+period
+Full name of shareholders
+Shares subject to
+shares
+at the end of
+during the
+the reporting
+Number
+Shenhua Group Corporation Limited
+14,530,574,452
+Limited
+China Securities Finance Corporation
+N/A corporate
+Unknown
+0
+17.05
+0
+3,390,466,096
+HKSCC NOMINEES LIMITED
+Overseas
+N/A State-owned
+Nil
+0
+73.06
+407,620
+ISSUANCE AND LISTING OF SECURITIES
+shares held
+Number of
+at the end of the reporting period (accounts)
+Total number of shareholders of ordinary shares as
+Total number of shareholders
+SHAREHOLDERS
+III.
+Section VII Changes in Share Capital and Shareholders (Continued)
+Registered holders of H shares
+China Shenhua Energy Company Limited
+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)
+114
+decrease
+(II)
+Total number of ordinary shareholders at the end of last month
+Increase/
+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
+Including: Holders of A shares (including Shenhua Group Corporation) Note
+Unit: RMB million
+2,335
+206,573
+208,908
+Registered holders of H shares
+Including: Holders of A shares (including Shenhua Group Corporation)
+prior to the date of this annual report (accounts)
+201,755
+199,434
+expiry date
+Trustee
+Note: The entrusted loans provided by the Company to Sanxin Railway Company was not repaid when it was
+due in February 2015, and both parties are under negotiation in respect of the subsequent relevant
+matters.
+3
+No
+No
+No
+4.9% Replacement of Pledge
+bank loans
+Co., Ltd.
+627 10 years
+0
+No
+No
+Yes
+6% Working capital Nil
+37 1 year
+Inner Mongolia Sanxin Railway Co.,
+Ltd. ("Sanxin Railway Company")
+Inner Mongolia Yili Chemical Industry
+Whether it is
+Whether
+Whether
+collaterals or
+Gain or
+guarantor is Whether it connected the term is involved in loss from
+provided is expired transaction extended litigations investment
+it is a
+Interest Use of
+rate proceeds
+loans Maturity
+3.
+Borrower
+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.
+Other investment and wealth management products and derivatives investment
+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
+May 2017
+Thermal coal 460
+futures
+Commodity Futures
+Whether
+it is
+involved in
+litigations
+Gain/loss from
+investment
+(RMB million)
+Expiry date
+Investment
+share
+(lot)
+Product
+type
+Investment
+type
+Not applicable
+Applicable
+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.
+Summary of the targeted poverty alleviation during the year
+entrusted
+Balance
+I
+Principal and profit to be
+2017/1/23
+2,000 2016/12/22
+6 Shenhua Finance China Construction Non-principal-
+date
+paid one-off on expiry
+guaranteed with
+floating return
+Company
+No
+- No
+- Yes
+Principal and profit to be
+2017/12/14
+100 2016/12/14
+paid on redemption
+date
+guaranteed with
+floating return
+Bank
+No
+- No
+(III) Entrusted cash asset management
+Yes
+Whether
+- No
+Company
+Unit: RMB million
+Not applicable
+✓ Applicable
+Entrusted loans
+2.
+Section VI Significant Events (Continued)
+106 China Shenhua Energy Company Limited
+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.
+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.
+No
+No
+Yes
+Principal and profit to be
+paid on redemption
+date
+Not yet confirmed
+50 2016/12/26
+paid one-off on expiry
+date
+guaranteed with
+floating return
+Non-principal-
+guaranteed with
+floating return
+Company
+Shenhua Finance CITIC Trust
+7
+Bank
+No
+No. Trustor
+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.
+1
+Bank of China
+Principal-guaranteed
+with floating
+return
+10,000 2016/12/27
+2017/3/27
+Principal and interests to
+be paid together on
+expiry date
+Yes
+- No
+No
+2 China
+Industrial and
+Shenhua
+3 China Shenhua
+Commercial
+Bank of China
+China Construction Principal-guaranteed
+Bank
+with floating
+return
+Principal-guaranteed
+with floating
+5,000 2016/12/29
+2017/3/29
+Principal and interests to
+- Yes
+- No
+No
+be paid together on
+Commercial
+return
+Industrial and
+1
+Type of
+entrusted wealth
+management
+products
+Amount of
+of
+Whether
+Whether
+Whether
+entrusted Initial date of
+wealth entrusted wealth
+management management
+Expiry date of
+principal
+Actual the legal
+Section VI Significant Events (Continued)
+Impairment it is a it is
+entrusted wealth
+Determination of
+actually
+profit process is
+management
+compensation
+redeemed
+gained taken
+provision connected involved in
+amount transaction litigations
+China
+Shenhua
+In 2016, Shenhua Foundation invested RMB300 million into the "Central State-Owned-
+Enterprises Poverty Regional Industrial Investment Fund" (@Q£££*&AHD).
+expiry date
+2017/3/23
+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
+In which: 1. Capital (RMB0'000)
+I. General
+Index
+Number and Circumstances
+Statistical table of the targeted poverty alleviation work in 20161
+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.
+1.3 Improvement of educational
+16,000 2016/12/23
+1,456
+regions (RMB0'000)
+Principal and interests to
+Yes
+- No
+No
+be paid together on
+4
+Shenhua Finance China Construction Non-principal-
+Company
+5 Shenhua Finance Everbright Bank Non-principal-
+250 2016/12/13
+Not yet confirmed
+Principal and profit to be
+Yes
+4.
+3,977
+In which: 3.1 Cooperation for poverty
+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)
+resources in deprived
+Amount
+2016 Annual Report 105
+N/A Others
+17,029,796
+National Social Security Fund 108 Portfolio
+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
+0.15
+17,029,796
+29,999,534
+Overseas
+State-owned
+N/A
+0 Nil
+0.55
+110,027,300
+0
+Central Huijin Asset Management Ltd.
+Others
+N/A
+Nil
+0
+2.87
+22,698,660
+0.09
+0 Nil
+N/A
+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
+Agricultural Bank of China Limited -
+N/A Others
+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
+0.07
+400
+14,648,826
+152,393
+Index Securities Investment Fund
+Shanghai Index 50 Trading Open-end
+Industrial & Commercial Bank of China -
+State-owned
+569,895,835
+13,847,602
+Hong Kong Securities Clearing Company
+Limited
+Type
+Male
+Male
+223
+25 May 2012
+Yes
+64
+17 June 2016
+Yes
+52
+22 August 2014
+93.0
+17.1
+No
+Supervisory
+Committee
+Zhou Dayu
+Supervisor
+Male
+51
+17 June 2016
+43.6
+Shen Lin
+Supervisor
+Male
+56
+22 August 2014
+91.6
+Male 66
+9.6
+executive Director
+Non-executive Director
+Non-executive Director
+Chairman of the
+Chen Hongsheng
+Zhao Jibin
+Senior Vice
+24 May 2011
+Fan Hsu Lai Tai
+President
+Independent Non-
+Female
+71
+18 June 2010
+45.0
+executive Director
+Gong Huazhang
+Independent Non-
+Male
+70
+5 June 2009
+45.0
+executive Director
+Guo Peizhang
+Independent Non-
+Male
+67
+18 June 2010
+400
+45.0
+2 2 2
+No
+No
+No
+Zhai Richeng
+Wang Jinli
+Senior Vice President
+Male
+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
+shares
+without selling
+restrictions
+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.
+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.
+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
+Gender Age
+Huang Qing
+Zhang Kehui
+31.4
+1 July 2016
+57
+27 September 2013
+Yes
+Wang Yongcheng
+Vice President
+Male
+54
+25 November 2015
+92.7
+18.5
+Zhang Zifei
+Vice President
+Male
+Yes
+58
+76.6
+1.2
+Wang Shumin
+Vice President
+Male
+54
+25 November 2015
+75.9
+1.2
+Zhang Jiming
+Vice President
+Male
+53
+25 November 2015
+Non-executive
+Director
+Yes
+56
+Index and date of changes in de facto controller during the reporting period
+3.
+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
+State-owned Assets Supervision and
+Administration Commission of
+the State Council
+100.00%
+Shenhua Group Corporation Limited
+73.06%
+V.
+VI.
+China Shenhua Energy Company Limited
+OTHER CORPORATE SHAREHOLDERS WITH MORE THAN 10% SHAREHOLDING IN
+THE COMPANY
+As at the end of the reporting period, there was no other corporate shareholder with more than 10%
+shareholding in the Company.
+RESTRICTIONS ON THE REDUCTION IN THE SHAREHOLDING
+✓ Applicable
+Not applicable
+On 8 July 2015, Shenhua Group Corporation increased its shareholding of 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.
+During the reporting period, Shenhua Group Corporation did not dispose of any share it held in the
+Company.
+I.
+2016 Annual Report 119
+Section VIII Directors, Supervisors, Senior Management and Employees
+CHANGES IN SHAREHOLDING AND REMUNERATION
+(I) Changes in shareholding and remuneration
+1. Directors, supervisors and senior management as at the end of the reporting period
+Whether
+2.
+received
+remuneration
+State-owned Assets Supervision and Administration Commission of the State Council
+Legal person
+Controlling shareholder
+(1)
+1.
+Legal person
+2.
+3.
+Name
+Legal representative
+Date of incorporation
+Principal business
+Shareholdings in other domestic and
+overseas listed subsidiaries and
+associates during the reporting
+period
+Shenhua Group Corporation Limited
+Zhang Yuzhuo
+23 October 1995
+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.)
+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.
+Index and date of changes in controlling shareholders during the reporting period
+There was no change in the controlling shareholder of the Company during the reporting
+period.
+Diagram of the equity and controlling relationship between the Company and the
+controlling shareholder
+Shenhua Group Corporation Limited
+73.06%
+China Shenhua Energy Company Limited
+118
+China Shenhua Energy Company Limited
+Section VII Changes in Share Capital and Shareholders (Continued)
+(II)
+De facto controller
+1.
+Name
+Total
+remuneration
+before tax
+from
+shareholders
+27 June 2014
+Executive Director
+18 June 2010
+Ling Wen
+Vice Chairman
+Male
+53
+27 June 2014
+Yes
+Yes
+Executive Director
+6 November 2004
+President
+4 January 2017
+Han Jianguo
+Executive Director
+Male
+80
+58
+24 May 2011
+President (Resigned)
+27 June 2014
+4 January 2017
+Li Dong
+Executive Director
+Male
+90
+54
+Male
+Chairman
+Zhang Yuzhuo
+of the
+received from
+Including
+Company or
+Position as at
+the end of the
+Date of
+appointment
+the Company
+performance
+associates
+Scheduled
+during the
+remuneration
+during the
+17 June 2016
+(from the first
+reporting
+received for
+reporting
+Name
+reporting period
+Gender
+Age appointment date) term of office
+period previous years
+period
+(RMB ten
+(RMB ten
+thousand)
+thousand)
+expiration of
+Independent
+124
+Name
+5.33
+181,187,131
+Long position
+H shares
+Beneficial owner; Investment
+JPMorgan Chase & Co.
+3
+substantial shareholders
+0.01
+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
+0.91
+1
+manager; Trustee (other
+17,734,195
+Section VII Changes in Share Capital and Shareholders (Continued)
+2016 Annual Report 117
+Save as disclosed above, as at 31 December 2016, no other person held any interest and/or short
+position in the shares or underlying shares of the Company which is required to be recorded in
+the register to be kept thereunder, or was a substantial shareholder of the Company pursuant to
+section 336 of Part XV of the SFO.
+431,977 H shares in long position and 2,161,198 H shares in short position: unlisted derivatives -
+cash settled.
+d.
+13,714,465 H shares in long position and 10,833,497 H shares in short position: unlisted
+derivatives physically settled;
+C.
+1,241,000 H shares in short position: derivatives listed on or traded on the Hong Kong Stock
+Exchange or traded on the future exchange - cash settled;
+b.
+4,806,832 H shares in long position and 2,998,500 H shares in short position: derivatives listed on
+or traded on the Hong Kong Stock Exchange or traded on the future exchange - physically settled;
+Executive Director and
+Senior Vice President
+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
+Short position
+Company
+respectively
+A shares held
+RMB ordinary shares
+14,648,826
+17,029,796
+RMB ordinary shares
+17,029,796
+National Social Security Fund 108 Portfolio
+Industrial & Commercial Bank of China - Shanghai
+Index 50 Trading Open-end Index Securities
+Investment Fund
+22,952,488
+RMB ordinary shares
+22,952,488
+29,999,534
+RMB ordinary shares
+29,999,534
+Hong Kong Securities Clearing Company Limited
+Bank of China Limited - China Merchants Fengqing
+Flexible Configuration Hybrid Initiated Securities
+Investment Fund
+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
+14,648,826
+Industrial & Commercial Bank of China Limited -
+China Southern Consumption Vitality Flexible
+Allocation Hybrid Initiated Securities Investment
+Fund
+Agricultural Bank of China Limited - Fullgoal
+CSI State-owned Enterprises Reform Index
+Classification Securities Investment Fund
+of the
+A shares
+share capital
+H shares/
+Number of
+Hshares/
+Nature of
+interest
+A shares
+Capacity
+No. Name of shareholders
+H shares/
+total issued
+Percentage of
+Percentage
+of H shares/
+A shares over
+total issued
+IV. CHANGES IN CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+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):
+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
+12,640,466
+13,082,927
+RMB ordinary shares
+13,082,927
+Statement on holders of preference shares
+with voting rights restored and number of
+shares held
+Statement on the connected relationships
+among the above shareholders or whether
+they are parties acting in concert
+(III) Substantial shareholders' interests and short positions in the shares of the Company
+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.
+a.
+Biographical details
+Secretary to the Board
+Male
+51
+6 November 2004
+101.1
+22.0
+2 2 2 2 2 2 2
+No
+No
+No
+No
+Chief Financial Officer
+Female
+53
+22 January 2007
+ZHANG Yuzhuo
+21.0
+No
+Total
+838.8
+90.6
+120
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2.
+Notes: (1)
+(2)
+HKSCC NOMINEES LIMITED
+(3)
+Shenhua Group Corporation Limited
+Type and number of shares
+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.
+2016 Annual Report 115
+Section VII Changes in Share Capital and Shareholders (Continued)
+Shareholdings of top ten shareholders without selling restrictions
+Number of
+Name of shareholders
+(4)
+97.9
+(6)
+26.4
+No
+Shareholder
+representative
+supervisor
+Male
+61
+18 June 2010
+17 June 2016
+5.0
+5.0
+00
+(5)
+Total
+Notes: (1)
+(2)
+50.9
+31.4
+The remuneration package of the senior management was approved by the Board.
+The personnel mentioned above did not hold any shares of the Company during the reporting
+period.
+(3)
+The ages were calculated as at 31 December 2016.
+2016 Annual Report 121
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+3.
+Biographical details of the directors, supervisors and senior management as at the end
+of the reporting period
+Name
+Chairman and
+Executive Director
+45.9
+25 November 2015 23 March 2016
+No
+Male
+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.
+50
+The remuneration received by Zhou Dayu from the Company covers the period from July to
+December 2016; the remuneration received by Zhang Jiming from the Company covers the
+period from August to December 2016; and the remuneration of others received from the
+Company covers the entire year.
+The personnel mentioned above did not hold any shares in the Company during the reporting
+period.
+The 2014 first extraordinary general meeting of the Company approved that term of service of the
+third session of the Board and the supervisory committee is three years (22 August 2014 to 21
+August 2017).
+The ages were calculated as at 31 December 2016.
+Supervisor and senior management resigned during the reporting period
+Total
+remuneration
+before tax
+received from
+Whether
+received
+remuneration
+the Company
+Including:
+performance
+remuneration
+from
+shareholders of
+the Company
+Name
+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.
+Date of
+appointment
+Position before
+resignation
+Vice President
+(RMB ten
+thousand)
+(RMB ten
+thousand)
+reporting period
+previous years
+Wu Xiuzhang
+Tang Ning
+during the
+received for
+during the
+Date of
+resignation
+reporting period
+Born in May 1960, Chinese, a senior economist, Mr. Shen graduated
+from Harbin Institute of Technology in 2005 with a master's degree.
+SHEN Lin
+Biographical details
+Senior Vice President
+Supervisory
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+2016 Annual Report 127
+Mr. Zhou had been the general manager of the Business
+Administration Department of the Company from November
+2009 to March 2016, and the general manager of the Business
+Administration Department of Shenhua Group Corporation Limited
+from November 2009 to March 2016. Prior to the foregoing, Mr. Zhou
+had successively held the post of the general manager of the Planning
+Department and a deputy director of the Policy and Law Research
+Office of Shenhua Group Corporation.
+Born in 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.
+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. 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.
+Name
+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, 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.
+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.
+128
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Biographical details
+Vice President
+Vice President
+ZHOU Dayu
+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.
+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.
+HUANG Qing
+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.
+WANG Yongcheng
+2016 Annual Report 125
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+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..
+Mr. Zhai served as a general manager of the financial department of
+Shenhua Group Corporation from November 2004 to June 2016.
+ZHAO Jibin
+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
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Chairman of
+the Supervisory
+Committee
+Supervisor
+Biographical details
+ZHAI Richeng
+Born in July 1964, Chinese, a senior accountant, Mr. Zhai received a
+master's degree from China University of Mining and Technology in
+2003.
+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.
+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.
+Basis for determining the remuneration
+of directors, supervisors and senior
+management
+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.
+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.
+The remuneration package of relevant directors and
+supervisors was proposed by the Company in accordance
+with international and domestic practices and with
+reference to the remuneration of directors and supervisors
+of large-scale listed companies in China.
+The remuneration package of 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.
+Please refer to "Changes in shareholding and
+remuneration" in this section
+Please refer to "Changes in shareholding and
+remuneration" in this section
+2016 Annual Report 133
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+IV.
+CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+(I) Changes during the reporting period
+V.
+by all directors, supervisors and
+senior management at the end of the
+reporting period
+VI.
+Name
+Position
+Particular of
+movements
+Reason for the change
+Li Dong
+Executive Director
+Elected
+Passed the election at the annual general
+meeting on 17 June 2016
+Zhao Jibin
+Non-executive Director
+Elected
+(II)
+Passed the election at the annual general
+Total remuneration actually obtained
+Decision-making procedures for the
+remuneration of directors, supervisors
+and senior management
+Gong Huazhang
+Guo Peizhang
+Nanyang Commercial Bank
+(China) Limited
+COFCO Corporation
+China Railway Group Limited
+Independent non-executive
+director
+External director
+December 2007
+June 2016
+Chen Hongsheng
+SINOTRANS & CSC
+Independent non-executive
+director
+External director
+April 2011
+June 2014
+March 2016
+Remuneration payable for remuneration
+of directors, supervisors and senior
+management
+December 2011
+Holdings Co., Ltd.
+State Development &
+External director
+April 2012
+Investment Corp.
+Zhao Jibin
+China National Building
+External director
+December 2014
+Material Group Corporation
+REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+February 2016
+February 2016
+Mr. Wang has been serving as a vice president of the Company since
+November 2015.
+Elected
+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.
+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
+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.
+(1)
+Employees
+Number of current employees of the headquarter of the Company
+(Number of person)
+674
+Number of current employees of the branches/subsidiaries of
+the Company (Number of person)
+90,208
+Total number of current employees of the Group (Number of person)
+Number of retired employees in respect of which the Company
+90,882
+and subsidiaries bore cost (Number of person)
+12,722
+VII. EMPLOYEES OF THE GROUP
+Shareholder
+Appointed
+Resigned
+President
+representative
+supervisor
+Zhang Jiming Vice President
+Appointed
+meeting on 17 June 2016
+meeting on 17 June 2016
+Approved at the 17th meeting of the
+third session of the Board on 1 July
+2016
+Passed the election at the annual general
+Wu Xiuzhang
+Vice President
+Resigned
+Han Jianguo President
+Resigned on 23 March 2016 due to work
+change
+Shareholder
+Resigned
+Resigned on 17 June 2016 due to age
+representative
+supervisor
+Changes after the reporting period
+Name
+Position
+Particular of
+movements
+Reason for the change
+Ling Wen
+Tang Ning
+Independent non-executive
+director
+Zhou Dayu
+Independent non-executive
+director
+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.
+Mr. Huang has served as secretary to the Board of the Company and
+company secretary of the Company since November 2004.
+Prior to the foregoing, Mr. 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.
+ZHANG Kehui
+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.
+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.
+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.
+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.
+2016 Annual Report 131
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Secretory to the Board
+II.
+(II) Share incentive plan awarded to directors, supervisors and senior management
+during the reporting period
+Applicable ✓ Not applicable
+POSITIONS OF EXISTING DIRECTORS, SUPERVISORS AND SENIOR
+MANAGEMENT DURING THE REPORTING PERIOD
+(1) Positions held in the shareholders of the Company
+Name
+Name of shareholder
+Position
+Zhang Yuzhuo
+Ling Wen
+Shenhua Group Corporation
+Chairman
+Shenhua Group Corporation
+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.
+Han Jianguo
+Name
+China Shenhua Energy Company Limited
+May 2011
+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.
+ZHANG Zifei
+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.
+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.
+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.
+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.
+2016 Annual Report 129
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Name
+Vice President
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+Vice President
+WANG Shumin
+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.
+Mr. Wang has been serving as a vice president of the Company since
+November 2015.
+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.
+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.
+ZHANG Jiming
+Born in November 1963, Chinese, a senior engineer. Mr. Zhang has
+extensive experience in chemical business administration. In 1985, he
+graduated from Liaoning Petrochemical School.
+Mr. Zhang has served as the vice president of the Company since
+July 2016, and served as the chairman and the general manager of
+China Shenhua Coal to Liquid and Chemical Co., Ltd. from November
+2015 to July 2016.
+Mr. Zhang served as the president of China Shenhua Coal to Liquid
+and Chemical Co., Ltd. from August 2012 to November 2015, as a
+director and a vice president (subsidiary chief level) of China Shenhua
+Coal to Liquid Co., Ltd. from January 2011 to August 2012.
+Prior to the foregoing, Mr. Zhang had successively held the post
+of the chief economist and the deputy general manager of China
+Shenhua Coal to Liquid Co., Ltd., the vice director and the director of
+Liaoyang Petrochemical Branch Company Refinery Plant.
+130
+Biographical details
+Li Dong
+Chief Financial Officer
+Zhao Jibin
+Zhai Richeng
+Shenhua Wuhai Energy
+Company Limited
+Employee representative
+director
+Chairman (legal
+representative)
+July 2014
+April 2016
+November 2016
+132
+China Shenhua Energy Company Limited
+III.
+(II) Positions held in other entities
+Name
+Name of shareholder
+Position
+Commencement
+of term of office
+Expiry of
+term of office
+Fan Hsu Lai Tai
+COSCO Pacific Limited
+Independent non-executive
+director
+January 2009
+China Overseas Land &
+Investment Limited
+China COSCO Holdings
+Company Limited
+Bank of East Asia Limited
+Independent non-executive
+February 2009
+Chen Hongsheng
+director
+July 2013
+Deputy general manager
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+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
+March 2009
+August 2006
+Commencement
+of term of office
+Expiry of
+term of office
+May 2014
+April 2010
+July 2014
+August 2003
+February 2012
+April 2015
+June 2015
+Zhou Dayu
+May 2014
+Shenhua Group Corporation
+Shenhua Group Corporation
+Ownership Administration
+General manager of Capital
+March 2016
+Operation Department
+General manager of
+July 2010
+Department of
+Party Building
+Wang Jinli
+Zhang Zifei
+Shen Lin
+Shenhua Group Corporation
+Shenhua Group Corporation
+7
+Number of meetings held on-site with correspondence
+Number of meetings held by correspondence
+Including: Number of meetings held on-site
+Number of Board meetings held during the year
+No
+1/1
+0
+1511
+No
+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.
+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:
+On-site
+Date
+Methods
+1
+The 14th meeting of the third session of
+the Board
+29 January 2016
+On-site
+2
+The 15th meeting of the third session of
+the Board
+24 March 2016
+3
+No
+The 16th meeting of the third session of
+the Board
+No. Name
+0
+Strategy Committee
+0
+Audit Committee
+29 April 2016
+Chairman
+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.
+No
+For details of the Mutual
+Supplies and Services
+Agreement, please
+refer to the section
+headed "Significant
+Events" of this report.
+For details of the
+No
+1/1
+0
+No
+1/1
+0
+No
+0
+No
+0
+No
+appointment and
+remuneration of
+auditors for the year
+2016, please refer to
+the section headed
+"Significant Events"
+of this report.
+For details of the
+Mutual Coal Supply
+Agreement, please
+refer to the section
+headed "Significant
+Events" of this report.
+On-site
+discretion, relevant matters relating to the
+signing of such agreement.
+The 17th meeting of the third session of
+the Board
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+(III) Others
+Implementation of resolutions passed at the general meetings by the Board in 2016:
+No. General Meeting
+1
+2015 Annual General
+Meeting
+2
+2015 Annual General
+Meeting
+3
+2015 Annual General
+Meeting
+4
+LO
+5
+2015 Annual General
+Meeting
+2015 Annual General
+Meeting
+Subject Matter
+To approve the profit distribution plan of the
+Company for the year 2015 and authorize
+a committee comprising of chairman, vice
+chairman and president, all being directors
+of the Company, to implement the profit
+distribution plan.
+To approve the appointment of auditors for
+the year 2016 and authorize a committee
+comprising of chairman, vice chairman,
+president, all being directors of the
+Company, and chairman of the Audit
+Committee to determine the remuneration
+of the auditors.
+To approve the Mutual Coal Supply
+Agreement entered into between the
+Company and Shenhua Group and the
+caps of the transactions for 2017-2019
+agreed thereunder and authorize a
+committee comprising of chairman, vice
+chairman, president, all being directors of
+the Company, and chairman of the Audit
+Committee to deal with, at its absolute
+discretion, relevant matters relating to the
+signing of such agreement.
+To approve the Mutual Supplies and Services
+Agreement entered into between the
+Company and Shenhua Group and the
+caps of the transactions for 2017-2019
+agreed thereunder and authorize a
+committee comprising of chairman, vice
+chairman, president, all being directors of
+the Company, and chairman of the Audit
+Committee to deal with, at its absolute
+discretion, relevant matters relating to the
+signing of such agreement.
+To approve the Financial Services Agreement
+entered into between the Company
+and Shenhua Group and the caps of
+the transactions for 2017-2019 agreed
+thereunder and authorize a committee
+comprising of chairman, vice chairman,
+president, all being directors of the
+Company, and chairman of the Audit
+Committee to deal with, at its absolute
+Status
+Implementation of 2015
+profit distribution plan
+was completed in the
+third quarter of 2016.
+Zhang Yuzhuo
+Gong Huazhang
+China Shenhua Energy Company Limited
+140
+✓ Not applicable
+Applicable
+1 July 2016
+Correspondence
+LO
+5
+The 18th meeting of the third session of
+the Board
+26 August 2016
+00
+6
+The 19th meeting of the third session of
+the Board
+28 October 2016
+On-site
+On-site
+4
+7
+23 December 2016
+On-site with
+correspondence
+2016 Annual Report 139
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+(II)
+Performance of duties of independent directors
+During the reporting period, the Company had three independent non-executive directors,
+among whom Mr. Gong Huazhang is an accounting professional. The Company has received
+written confirmation from each of the independent non-executive directors confirming their
+independence. The Company is of the view that all of the independent non-executive directors
+are independent. The number and background of the independent directors are in compliance
+with the requirements of the listing rules of the places of listing.
+During the reporting period, the independent directors of the Company strictly complied with
+the requirements of relevant laws and regulations, the Articles of Association of China Shenhua,
+relevant rules of procedure of meetings and the independent directors system of China Shenhua.
+They maintained their independence of being independent directors, performed their functions
+of supervision, participated in the formation of various important decisions of the Company
+and reviewed regular reports and financial reports of the Company. Therefore the independent
+directors of the Company played an important role in the regulated operation of the Company and
+protected the legitimate interests of minority shareholders.
+The Company ensured that proper conditions are in place for independent directors to perform
+their duties and proactively adopted opinions and suggestions from independent directors.
+The Company formulated the independent directors system to provide, in a systematic way,
+guarantee for the independent directors to perform their duties, and designated departments
+to undertake work related to independent directors' affairs and independent board committee,
+assisting the independent directors in conducting research and investigation, convening meetings
+and expressing independent opinions.
+For the attendance of independent directors at Board meetings and general meetings, please
+refer to the sections on the attendance at Board meetings and general meetings of the Company.
+Dissenting views of independent directors on matters of the Company:
+The 20th meeting of the third session of
+the Board
+Zhang Yuzhuo, Ling Wen, Han Jianguo
+I.
+Remuneration Committee
+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.
+18 June 2016
+The website of the Shanghai
+Stock Exchange
+17 June 2016
+2015 Annual General
+Meeting
+Date of disclosure of
+the publication of the
+voting results
+Meetings
+Inquiry index for the
+designated website for
+publishing the voting results
+Date
+Convening of General Meetings during the Reporting Period
+The Company discloses information in strict compliance with the listing rules of its places of
+listing. The Company makes its investor relations hotline, fax and email available. The Company
+has established an effective communication channel with shareholders through an information
+disclosure system and an investor reception system.
+Pursuant to Articles 68 and 74 of the Articles of Association of China Shenhua, shareholders
+may submit written request to the Board for the convening of extraordinary general meetings or
+class meetings and submit proposals to the Company at general meetings. Upon providing the
+Company with written evidence of the class and number of shares of the Company held, and
+following verification of the shareholders' identity by the Company, shareholders are entitled
+to inspect the relevant information of the Company or obtain the Articles of Association, the
+register of members, minutes of general meetings, resolutions of meetings of the Board and the
+supervisory committee, regular reports and financial and accounting reports, etc.
+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.
+Shareholders' rights
+2.
+GENERAL MEETINGS
+1.
+II.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2016 Annual Report 137
+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.
+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.
+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 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.
+2016 Annual Report 135
+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.
+China Shenhua Energy Company Limited
+Zhang Yuzhuo
+in a row
+Absence
+at general
+Attendance
+at two
+meetings
+Attendance
+by proxy
+resolution
+in Person
+by written
+Attendance
+meetings
+this year
+or not
+Attendance
+Absent
+Required
+attendance
+at Board
+Independent
+director
+Name of
+director
+Attendance at Board meetings
+(1) Attendance at Board meetings and general meetings
+PERFORMANCE OF DUTIES OF THE BOARD
+III.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+138
+Section VIII Directors, Supervisors, Senior Management and Employees (Continued)
+(II)
+Function
+Number of
+person
+2,941
+28,873
+24,553
+13,470
+21,045
+90,882
+The Company has formulated a remuneration policy comprising basic salary and performance
+assessment. The remuneration policy is competitive within the industry and is favoring the front-
+line employees.
+(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 2016, the accrued capital used for training was approximately RMB0.139 billion.
+The number of attendances in training was approximately 0.9457 million with training hours of
+approximately 3.93 million hours in aggregate. For details, please refer to the 2016 CSR Report of
+the Group.
+(IV) Outsourced Work
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+Approximately 50.845 million hours
+RMB2 billion
+136
+China Shenhua Energy Company Limited
+Compliance with the Corporate Governance Code
+During the reporting period, there was no material difference between the corporate governance
+of the Company and the relevant rules and requirements of the CSRC.
+Compliance with domestic regulatory requirements
+(II)
+(1)
+CORPORATE GOVERNANCE
+90,882
+3,512
+1,062
+10,518
+Function
+Operation and repair
+Management and administration
+Finance
+Research and development
+Technical support
+Sales and marketing
+Others
+Total
+Education Level
+Education Level
+No
+Postgraduate and above
+College graduate
+Specialized secondary school graduate
+Graduate of technical school, high school and below
+Total
+Remuneration policy
+Number of
+person
+56,155
+15,317
+1,850
+2,468
+University graduate
+7
+7
+Ling Wen
+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.
+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.
+The Audit Committee received briefings by the management to understand the overall
+operation of the Company during the reporting period. On 13 March 2017, the Audit
+Committee received a briefing given by Dr. Zhang Kehui, the Chief Financial Officer of the
+Company, on the accounting policies and the preparation of the financial statements.
+Deloitte completed all audit procedures within the agreed time and intended to issue a
+standard unqualified audit report for 2016 to the Audit Committee. On 13 March 2017, the
+Audit Committee voted on the audited annual financial statements, the assessment report
+on internal control and the corporate social responsibility report for the year 2016 and
+agreed to submit such reports to the Board for consideration.
+The Audit Committee discussed separately with the external auditors and no inconsistency was
+found in the briefings by the management.
+Remuneration Committee
+The main duties of the Remuneration Committee are to make recommendations to the Board
+on formulation of the remuneration plan or proposal for directors, supervisors, the president and
+other senior management, including but not limited to the criteria, procedures and the major
+systems of performance assessment, key incentive and punishment plans and systems; to
+examine how directors, supervisors, the president and other senior management of the Company
+perform their duties and carry out annual performance assessment on them; and to supervise the
+implementation of the remuneration system of the Company. The Remuneration Committee is
+delegated by the Board to determine the specific remuneration package, including non-monetary
+benefits, pension and compensation (including compensation for loss or termination of office or
+appointment) for all executive directors, supervisors, the president and other senior management,
+to ensure that none of the directors or any of their associates can determine their own
+remuneration; and to carry out other matters as authorised by the Board.
+In 2016, the Remuneration Committee held two meetings to consider resolutions including the
+remuneration packages of directors, supervisors and senior management for the year 2015, all of
+which were approved at the meeting. All members of the Committee attended all the meetings
+in person. During the reporting period, the Remuneration Committee reviewed the remuneration
+management system of the Company and the remuneration level for directors, supervisors, the
+president and other senior management for the relevant period.
+The Remuneration Committee is of the view that the Company has a well-established
+remuneration management system which reflects the economic benefit-oriented philosophy of a
+listed company and political, social and economic responsibility of a state-owned enterprise. The
+Remuneration Committee agrees to the remuneration management systems of the Company.
+2016 Annual Report 143
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+V.
+VI.
+4.
+5.
+Nomination Committee
+The main duties of the Nomination Committee are to formulate the board diversity policy,
+regularly review the structure, size and diversity of the Board, and to make recommendations
+to the Board with regard to any proposed changes; assess and verify the independence of
+independent non-executive directors; draft procedures and criteria for election and appointment of
+directors, the president and other senior management and make recommendations to the Board;
+extensively seek for qualified candidates of directors, the president and other senior management;
+examine the aforementioned candidates and make recommendations; nominate candidates for
+members of the Board Committees (other than members of the Nomination Committee and
+the chairman of any Board Committee); draft development plans for the president, other senior
+management and key reserve talents; review the board diversity policy where appropriate, and
+review the quantitative objectives set up by the Board to implement the board diversity policy
+and their progress of achievement, as well as disclose the results of review in the Corporate
+Governance Report annually; and carry out any other matters as authorised by the Board.
+In 2016, the Nomination Committee held three meetings to consider resolutions including the
+nomination of director candidates and substitute members of relevant special committees under
+the Board, all of which were approved at the meetings. All members of the Committee attended
+all meetings in person.
+Safety, Health and Environment Committee
+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.
+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.
+During the reporting period, the Committees under the Board did not express any dissenting views in
+performing their duties.
+THE SUPERVISION OPINION OF THE SUPERVISORY COMMITTEE
+(4)
+(3)
+(2)
+011 ONO o O 0
+Fan Hsu Lai Tai
+Fan Hsu Lai Tai, Gong Huazhang, Zhao Jibin
+Nomination Committee
+Guo Peizhang
+Guo Peizhang
+Guo Peizhang, Zhang Yuzhuo, Fan Hsu Lai Tai
+Guo Peizhang, Ling Wen, Han Jianguo, Li Dong
+Safety, Health and
+Environment Committee
+Note: Upon the consideration and approval at the 17th meeting of the third session of the Board of the Company held on 1 July
+2016, Li Dong was appointed as a member of the Safety, Health and Environment Committee under the Board and Zhao
+Jibin was appointed as a member of the Remuneration Committee under the Board.
+1.
+Strategy Committee
+During the reporting period, the Supervisory Committee did not have any dissenting view over the
+matters supervised by the Supervisory Committee.
+2.
+In 2016, the Strategy Committee of the Board held three meetings to consider resolutions such
+as the amendment to administrative measures on investment of the Company, the 2017 annual
+production plan of China Shenhua, and 2017 annual size of investment of China Shenhua, all of
+which were approved at the meetings. All members of the Committee attended all meetings in
+person.
+Audit Committee
+The principal duties of the Audit Committee were: to supervise and assess the work of the
+external audit institutions; to guide the internal audit work; to review and provide opinions on the
+financial reports of the Company; to evaluate the effectiveness of risk management and internal
+control; to coordinate communications between the management, internal audit department and
+relevant departments, and the external audit institutions; other duties authorized by the Board and
+other issues related to the relevant laws and regulations. During the reporting period, the Audit
+Committee carried out its duties strictly in accordance with the Rules of Procedure of Meetings of
+the Audit Committee of the Board, Rules on Work of the Audit Committee of the Board and Rules
+on Work of Annual Reports of the Audit Committee of the Board of China Shenhua.
+Section IX Corporate Governance and Corporate Governance Report
+In 2016, the Audit Committee held eight meetings to consider resolutions such as the financial
+reports and internal control reports of the Company. Suggestions were made on improving the
+management of accounts receivable and maintaining reasonable size of monetary capital. All
+resolutions were approved at the meetings and all members of the Committee attended all
+meetings in person.
+142
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+3.
+The Audit Committee has performed required procedures for the preparation of the 2016 annual
+report and internal control report of the Company:
+(1)
+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.
+Gong Huazhang, Fan Hsu Lai Tai, Guo Peizhang,
+Chen Hongsheng
+EXPLANATION OF INDEPENDENCE AND COMPETITION
+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.
+0
+2
+7
+7
+Yes
+Gong Huazhang
+2
+0
+5
+7
+Yes
+Fan Hsu Lai Tai
+4
+4
+No
+Li Dong
+7
+7
+No
+Han Jianguo
+6
+7
+No
+Guo Peizhang
+Yes
+7
+7
+144
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+The Company is principally engaged in the production and sale of coal and power, as well as railway,
+port, shipping transportation and coal-to-olefins. Currently, the major coal, power and olefins products
+produced by enterprises such as Shenhua Ningxia Coal Co., Ltd. and Shenhua Guoneng Group Company
+Limited which are the existing and continuing assets of Shenhua Group Corporation, the controlling
+shareholder of the Company, are similar to those produced by the Company in terms of type and quality,
+but each company also has its relatively independent regional markets.
+The Company and Shenhua Group Corporation entered into a Non-competition Agreement in 2005.
+Pursuant to the agreement, Shenhua Group has committed not to compete with the Company in
+respect of the Company's principal businesses whether in or outside of the PRC, and granted the
+Company an option and pre-emptive right to acquire from Shenhua Group any potential competing
+business. In 2016, Shenhua Group Corporation strictly abided by its undertakings, and there was no
+violation of such undertakings.
+VII. THE EXAMINATION AND EVALUATION AND THE INCENTIVE MECHANISM FOR
+THE SENIOR MANAGEMENT
+The Company established the remuneration package of the senior management in accordance with the
+Provisional Measures for the Administration of the Annual Remuneration of the Senior Management of
+China Shenhua Energy Company Limited. The Company has adopted a performance appraisal system
+for senior management which combines annual appraisal of operational performance and appraisal of
+operational performance over the terms of office. Such annual appraisal and appraisal over the terms
+of office are conducted based on the letter of responsibility of operational performance signed by the
+Board and the management.
+The remuneration of the management is determined in accordance with the Provisional Measures for
+the Administration of the Annual Remuneration of the Senior Management. In addition to the basic
+salary, the Board of the Company conducts appraisal based on the performance of the management,
+and a performance bonus is determined based on the results of such appraisal.
+VIII. INTERNAL CONTROL AND RISK MANAGEMENT
+✓ Applicable
+Not applicable
+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.
+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.
+ooo O O O O O O
+4
+4
+No
+Zhao Jibin
+0
+0
+7
+7
+Chen Hongsheng No
+1
+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.
+meetings
+Announcement on the Major Operational Data of September 2016
+Overseas Regulatory Announcement
+KEY AUDIT 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
+686
+23/02/2016
+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
+of the Supervisory Committee
+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
+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
+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)
+2016 Annual Report 145
+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.
+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.
+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
+Resolution on the 2016 first quarterly
+report of the Company
+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
+Announcement on the Major Operational Data of China Shenhua for January 2016
+Announcement on the Major Operational Data of China Shenhua for February 2016
+Passed unanimously
+Passed unanimously
+No. Disclosure document for A Shares (published on the website of Shanghai Stock Exchange)
+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
+12
+2016 Annual Report 149
+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
+09/01/2016
+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
+6
+30/01/2016
+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
+Date of
+publication
+The Supervisory Committee will continue to perform its duties with due care to facilitate the
+standardized operation of the Company and to safeguard the lawful interests of the Company and its
+shareholders in strict compliance with the Company Law and the Articles of Association.
+The insider management system of the Company is sound and comprehensive, effective in its
+implementation and able to keep all insider information confidential.
+VII. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE MEASURES ON INSIDER
+MANAGEMENT
+Passed unanimously
+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
+148
+China Shenhua Energy Company Limited
+Section X Supervisory Committee's Report (Continued)
+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.
+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.
+Resolution on the 2016 first quarterly
+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 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.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE LAWFUL
+OPERATION OF THE COMPANY
+VI.
+V.
+IV.
+III.
+II.
+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.
+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.
+60
+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
+16/06/2016
+26/08/2016
+2016 Interim Report
+16/12/2016
+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
+88
+Monthly Return of Equity Issuer on Movements in Securities for
+Overseas Regulatory Announcement
+89
+We conducted our audit in accordance with International Standards on Auditing ("ISAS"). Our responsibilities
+under those standards are further described in the Auditor's Responsibilities for the Audit of the Consolidated
+Financial Statements section of our report. We are independent of the Group in accordance with the
+International Ethics Standards Board for Accountants' Code of Ethics for Professional Accountants ("the
+Code"), and we have fulfilled our other ethical responsibilities in accordance with the Code. We believe that
+the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated financial
+position of the Group as at 31 December 2016, and of its consolidated financial performance and its
+consolidated cash flows for the year then ended in accordance with International Financial Reporting Standards
+("IFRSS") and have been properly prepared in compliance with the disclosure requirements of the Hong Kong
+Companies Ordinance.
+We have audited the consolidated financial statements of China Shenhua Energy Company Limited (the
+"Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 158 to 245, which
+comprise the consolidated statement of financial position as at 31 December 2016, and the consolidated
+statement of profit or loss and other comprehensive income, consolidated statement of changes in equity
+and consolidated statement of cash flows for the year then ended, and notes to the consolidated financial
+statements, including a summary of significant accounting policies.
+OPINION
+TO THE SHAREHOLDERS OF CHINA SHENHUA ENERGY COMPANY LIMITED
+(Incorporated in The People's Republic of China with limited liability)
+Independent Auditor's Report and Financial Statements
+Section XIII
+China Shenhua Energy Company Limited
+154
+30/12/2016
+Overseas Regulatory Announcement
+90
+23/12/2016
+Overseas Regulatory Announcement
+23/12/2016
+83
+22/11/2016
+Overseas Regulatory Announcement
+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
+82
+18/11/2016
+Announcement on the Major Operational Data of October 2016
+81
+the Month Ended 31 October 2016
+01/11/2016
+Monthly Return of Equity Issuer on Movements in Securities for
+69
+80
+Third Quarterly Report for the Year 2016
+79
+28/10/2016
+Overseas Regulatory Announcement
+78
+28/10/2016
+19/10/2016
+28/10/2016
+Announcement of China Shenhua Regarding Online Discussion Forum for Investors
+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
+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
+30
+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
+2345672222 22222222
+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
+29/04/2016
+24/03/2016
+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
+Continuing Connected Transactions - Entering into Mutual Supplies and Services Agreement
+Discloseable Transaction Continuing Connected Transactions Entering Into Financial Services
+Agreement
+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
+2016 Annual Report 147
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+2016 Annual Report 155
+(8,628)
+30
+362
+81
+281
+24,910 24,910 7,060 31,970
+65,853 363,921
+298,068
+18,003 (14,308) 186,046
+(176)
+3,612
+85,001
+19,890
+At 1 January 2016
+million
+392
+million
+million
+million million
+(note (iii)) (note (iv))
+(note (ii))
+(Note 35) (note (i))
+million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB
+RMB RMB RMB
+RMB
+million
+RMB
+Profit for the year
+income for the year
+(6,060)
+(6,060)
+shareholders
+1,111
+1,111
+34
+889
+(889)
+(3,747)
+3,747
+(6,365)
+(6,365)
+(6,365)
+32,362
+Other comprehensive
+7,090
+24,910
+81
+- - 281
+----(34)
+Distributions to non-controlling
+shareholders
+Contributions from non-controlling
+reserve (note (iii)
+Utilisation of general
+production funds (note (iii)
+Utilisation of maintenance and
+production funds (note (iii))
+Appropriation of maintenance and
+Dividend declared (Note 13)
+income for the year
+Total comprehensive
+25,272
+RMB
+equity
+interests
+Reserves
+Share capital
+Equity
+363,921
+384,969
+94,383
+79,575
+Net assets
+Total non-current liabilities
+878
+797
+2,197
+2,549
+34
+Equity attributable to equity holders of the Company
+Non-controlling interests
+2,523
+9,651
+10,331
+24,955
+4,985
+54,179
+58,462
+29
+20338
+Deferred tax liabilities
+Accrued reclamation obligations
+Long-term liabilities
+Bonds
+Medium-term notes
+Borrowings
+2,451
+Total equity
+35
+19,890
+Total
+earnings
+reserves
+reserve reserves
+reserve
+capital premium
+Total
+controlling
+Other Retained
+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
+China Shenhua Energy Company Limited
+19,890
+297,085
+278,178
+316,975
+298,068
+67,994
+At 31 December 2016
+65,853
+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
+384,969
+Non-current liabilities
+19,890 85,001
+105
+2,288
+2,288
+(5,695)
+(5,695)
+(5,695)
+-------- (4) (4)
+(250)
+250
+3,699
+(3,699)
+(5,381)
+--- - 5,381
+(14,718)
+(14,718)
+(8,628)
+(14,718)
+shareholders
+Contributions from non-controlling
+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
+Distributions to non-controlling
+shareholders
+Total comprehensive income (expense)
+for the year
+At 31 December 2015
+3,612
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, and share of other
+comprehensive income (expense) of associates.
+Other reserves
+(iv)
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve in 2016
+and 2015.
+The appropriation to the discretionary surplus reserve is subject to the shareholders' approval. The utilisation of the reserve is
+similar to that of the statutory surplus reserve.
+Discretionary surplus reserve
+Pursuant to relevant regulations issued by the Ministry of Finance, the Company's subsidiary, Shenhua Finance Co., Ltd. ("Shenhua
+Finance"), is required to set aside a general reserve by the end of the financial year through appropriations of profit after tax as
+determined in accordance with China Accounting Standards at a certain ratio of the ending balance of gross risk-bearing assets to
+cover potential losses against such assets.
+General reserve
+Pursuant to the relevant PRC regulations, the Group is required to transfer production and maintenance funds at fixed rates based
+on relevant bases to a specific reserve accounts. The production and maintenance funds could be utilised when expenses or
+capital expenditures on production maintenance and safety measures are incurred. The amount of production and maintenance
+funds utilised would be transferred from the specific reserve account to retained earnings.
+Specific reserve for production and maintenance funds
+Statutory surplus reserve can be used to make up losses, if any, or to expand the Company's business, and may be converted into
+share capital by the issue of new shares to shareholders in proportion to their existing shareholdings or by increasing the par value
+of the shares currently held by them, provided that the balance after such issue is not less than 25% of the registered capital of
+the Company. The statutory surplus reserve is not distributable.
+The statutory surplus reserve has reached 50% of the registered capital in 2009. Accordingly, no appropriation of net profit to the
+statutory surplus reserve has been proposed since 1 January 2010.
+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
+19,890 85,001
+Statutory reserves
+For the year ended 31 December 2016
+Consolidated Statement of Changes in Equity (Continued)
+China Shenhua Energy Company Limited
+164
+163
+The capital reserve represents the difference between the total amount of the par value of shares issued and the amount of the
+net assets, net of other reserves, transferred from Shenhua Group Corporation Limited ("Shenhua Group") in connection with the
+Restructuring (as defined in Note 1).
+Share premium represents the difference between the total amount of the par value of shares issued and the amount of the net
+proceeds received upon the global initial public offering of H shares in 2005 and the issue of A shares in 2007.
+(ii)
+(i)
+Notes:
+363,921
+65,853
+18,003 (14,308) 186,046 298,068
+(176)
+(iii)
+149
+15
+134
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+equity
+interests
+earnings
+reserves
+reserve reserves
+reserve
+capital premium
+RMB
+Total
+Retained
+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
+controlling
+RMB
+RMB
+million
+(43)
+--- 177
+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
+million
+million
+million
+million
+million
+million
+3,612
+million
+million
+(Note 35) (note (i))
+(note (ii))
+(note (iii)) (note (iv))
+At 1 January 2015
+Profit for the year
+million
+RMB million
+Total
+31 December
+2016
+RMB million
+10
+(9,561)
+(9,283)
+9
+34,520
+41,253
+Profit for the year
+Income tax expense
+Profit before income tax
+428
+237
+Share of results of associates
+608
+(5,123)
+(5,748)
+31,970
+8
+723
+8
+(626)
+(1,511)
+Interest income
+Other expenses
+1,659
+1,379
+Other income
+(5,856)
+(3,078)
+10
+Other gains and losses
+(9,714)
+Finance costs
+(8,423)
+24,959
+Item that will not be reclassified
+RMB million
+Notes
+2016
+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 2016
+Consolidated Statement of Profit or Loss and Other Comprehensive Income (Continued)
+2016 Annual Report 159
+25,108
+149
+392
+32,362
+Total comprehensive income for the year
+net of income tax
+Other comprehensive income (expense) for the year
+Other comprehensive income for the year,
+371
+(22)
+60
+Share of other comprehensive income (expense) of associates
+192
+311
+Exchange differences
+to profit or loss, net of income tax:
+Items that may be reclassified subsequently
+(21)
+21
+21
+Remeasurement of defined benefit obligations
+to profit or loss, net of income tax:
+170
+General and administrative expenses
+(584)
+(610)
+As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
+skepticism throughout the audit. We also:
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a
+whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's report that
+includes our opinion solely to you, as a body, in accordance with our agreed terms of engagement, and for no
+other purpose. We do not assume responsibility towards or accept liability to any other person for the contents
+of this report. Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
+in accordance with 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.
+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
+In preparing the consolidated financial statements, the directors are responsible for assessing the Group's
+ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using
+the going concern basis of accounting unless the directors either intend to liquidate the Group or to cease
+operations, or have no realistic alternative but to do so.
+The directors 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.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCEF FOR
+THE CONSOLIDATED FINANCIAL STATEMENTS
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+China Shenhua Energy Company Limited
+156
+In connection with our audit of the consolidated financial statements, our responsibility is to read the other
+information and, in doing so, consider whether the other information is materially inconsistent with the
+consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be materially
+misstated. If, based on the work we have performed, we conclude that there is a material misstatement of this
+other information, we are required to report that fact. We have nothing to report in this regard.
+Our opinion on the consolidated financial statements does not cover the other information and we do not
+express any form of assurance conclusion thereon.
+The directors of the Company are responsible for the other information. The other information comprises the
+information included in the annual report, but does not include the consolidated financial statements and our
+auditor's report thereon.
+OTHER INFORMATION
+• reconciling input data to supporting evidence,
+such as approved budgets and considering the
+reasonableness of these budgets.
+Identify and assess the risks
+comparing the current year actual results with
+the 2016 figures included in the prior years
+forecast; and
+analysing and reviewing the specific discount
+rates used by management in impairment
+tests;
+•
+• 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;
+• assessing the valuation methodology;
+• testing the key controls related to the
+assessment on the carrying value of its non-
+current assets;
+Our procedures in relation to impairment
+assessment on coal mines related non-current
+assets included:
+As set out in Note 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.
+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.
+We identified non-current assets impairment assessment
+on coal mines related non-current assets as a key
+audit matter due to significant judgment made by
+management in determining the recoverable amounts of
+the corresponding cash-generating units.
+Impairment assessment on coal mines related non-current assets
+How our audit addressed the key audit matter
+Key audit matter
+KEY AUDIT MATTERS (Continued)
+31 December
+2015
+evaluating the sensitivity analysis performed
+by management;
+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.
+Selling expenses
+53,728
+58,284
+Gross profit
+177,069
+(123,341)
+(124,843)
+183,127
+57
+Revenue
+2015
+RMB million
+RMB million
+Notes
+Year ended 31 December
+2016
+For the year ended 31 December 2016
+Consolidated Statement of Profit or Loss and Other Comprehensive Income
+China Shenhua Energy Company Limited
+158
+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.
+2015
+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.
+From the matters communicated with those charged with governance, we determine those matters that
+were of most significance in the audit of the consolidated financial statements of the current period and are
+therefore the key audit matters. We describe these matters in our auditor's report unless law or regulation
+precludes public disclosure about the matter or when, in extremely rare circumstances, we determine that
+a matter should not be communicated in our report because the adverse consequences of doing so would
+reasonably be expected to outweigh the public interest benefits of such communication.
+The engagement partner on the audit resulting in the independent auditor's report is Wong Tin Chak, Samuel.
+Deloitte Touche Tohmatsu
+Certified Public Accountants
+Hong Kong
+17 March 2017
+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.
+RMB million
+Cost of sales
+17,649
+29
+121,036
+133,463
+42,323
+41,188
+27
+27
+916
+3,428
+4,611
+6,141
+26
+19,351
+48,792
+Accounts and bills payable
+25
+20,573
+24
+12,816
+13,341
+23
+2222
+Short-term debenture
+Borrowings
+Current liabilities
+Total current assets
+Cash and cash equivalents
+over three months
+Time deposits with original maturity
+Prepaid expenses and other current assets
+Restricted bank deposits
+41,019
+31
+Accrued expenses and other payables
+Current portion of medium-term notes
+Notes
+24,910
+At 31 December 2016
+Consolidated Statement of Financial Position (Continued)
+2016 Annual Report 161
+458,304
+464,544
+19,549
+21,278
+101,487
+112,185
+Total assets less current liabilities
+Net current assets
+Total current liabilities
+1,965
+203
+403
+3,465
+23
+11,811
+12,812
+30
+4,998
+35,156
+Accounts and bills receivable
+33,990
+41,361
+47,519
+30
+19,989
+33
+Income tax payable
+32
+Inventories
+Current portion of long-term liabilities
+Total non-current assets
+56
+16
+Construction in progress
+15
+Property, plant and equipment
+Non-current assets
+RMB million
+2015
+31 December
+RMB million
+Notes
+31 December
+2016
+At 31 December 2016
+China Shenhua Energy Company Limited
+160
+0.887
+1.252
+7,060
+7,310
+Current assets
+31,970
+24,959
+25,272
+337,785
+17,783
+7,325
+32,362
+25,108
+Earnings per share (RMB)
+- Basic
+14
+7,090
+339,326
+Consolidated Statement of Financial Position
+34,562
+1,795
+Other non-current assets
+21
+36,749
+22
+Lease prepayments
+438,755
+17,359
+28
+3,849
+2,674
+443,266
+Deferred tax assets
+35,220
+16,535
+20
+1,800
+Available-for-sale investments
+33,610
+Exploration and evaluation assets
+17
+2,344
+2,176
+18
+3,018
+Intangible assets
+Interest in associates
+19
+5,142
+5,113
+2,964
+Financial Instruments¹
+Revenue from Contracts with Customers¹
+Leases²
+Foreign Currency Transactions and Advance Consideration¹
+Classification and Measurement of Share-based Payment
+Transactions¹
+Applying IFRS 9 Financial Instruments with IFRS 4 Insurance
+Contracts¹
+Amendments to IFRSS
+Amendments to IAS 40
+Amendments to IAS 12
+170
+Amendments to IFRS 10 and IAS 28
+Amendments to IFRS 15
+Amendments to IFRS 4
+Amendments to IFRS 2
+Clarifications to IFRS 15 Revenue from Contracts with
+IFRIC 22
+IFRS 16
+IFRS 15
+Amendments to IAS 7
+Customers¹
+Effective for annual periods beginning on or after 1 January 2017 or 1 January 2018, as appropriate
+Disclosure Initiative4
+IFRS 9 introduces new requirements for the classification and measurement of financial assets, financial
+liabilities, general hedge accounting and impairment requirements for financial assets.
+IFRS 9 Financial Instruments
+IFRS 9
+China Shenhua Energy Company Limited
+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.
+5
+Effective for annual periods beginning on or after 1 January 2017
+Sale or Contribution of Assets between an Investor and its
+Associate or Joint Venture³
+4
+3
+Effective for annual periods beginning on or after 1 January 2019
+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
+Effective for annual periods beginning on or after a date to be determined
+New and revised IFRSS not yet effective and not early adopted
+Organisation
+For the year ended 31 December 2016
+168
+At 31 December 2016, the Directors consider the immediate parent and ultimate holding company of
+the Group to be Shenhua Group.
+Immediate parent and ultimate controlling party
+In 2007, the Company issued 1,800,000,000 A shares with a par value of RMB1.00 each, at a price of
+RMB36.99 per A share in the PRC. The A shares were listed on the Shanghai Stock Exchange.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a price
+of Hong Kong Dollars ("HKD") 7.50 per H share by way of a global initial public offering. In addition,
+308,962,045 domestic state-owned ordinary shares of RMB1.00 each owned by Shenhua Group were
+converted into H shares. A total of 3,398,582,500 H shares were listed on The Stock Exchange of Hong
+Kong Limited.
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares issued to
+Shenhua Group represented the entire registered and paid-up share capital of the Company at that date.
+Effective on 31 December 2003, the coal production and power generation operations previously
+operated by various entities wholly-owned or controlled by Shenhua Group were restructured and
+managed separately (the "Restructuring"), and those assets and liabilities related to the operations and
+businesses that were transferred to the Company were revalued by China Enterprise Appraisal Co., Ltd.,
+an independent valuer registered in the PRC, as at 31 December 2003 as required by the PRC rules and
+regulations.
+China Shenhua Energy Company Limited
+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.
+Principal activities
+PRINCIPAL ACTIVITIES AND ORGANISATION
+1.
+2016 Annual Report 167
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements.
+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.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+2.
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 169
+The Group has applied these amendments retrospectively. The Segment and Other Information has
+been reordered to Note 6 to give prominence to areas of the Group's activities that management
+considers to be most relevant to an understanding of the Group's consolidated financial performance
+and financial position. The application of the amendments to IAS 1 has not resulted in any impact on the
+financial performance or financial position of the Group.
+The Group has applied the amendments to IAS 1 Disclosure Initiative for the first time in the current
+year. The amendments to IAS 1 clarify that an entity need not provide a specific disclosure required by
+an IFRS if the information resulting from that disclosure is not material, and give guidance on the bases
+of aggregating and disaggregating information. However, the amendments reiterate that an entity should
+consider providing additional disclosures when compliance with the specific requirements in IFRS is
+insufficient to enable users of financial statements to understand the impact of particular transactions,
+events and conditions on the entity's financial position and financial performance.
+The application of the amendments to IFRSS in the current year has had no material impact on the
+Group's financial performance and positions for the current and prior years and/or on the disclosures set
+out in these consolidated financial statements, except for the application of Amendment to IAS 1.
+Annual Improvements to IFRSS 2012-2014 Cycle
+Investment Entities: Applying the Consolidation Exception
+Agriculture: Bearer Plants
+Clarification of Acceptable Methods of Depreciation and
+Amortisation
+Accounting for Acquisitions of Interests in Joint Operations
+Disclosure Initiative
+Amendments to IFRSS
+IFRS 12 and IAS 28
+Amendments to IAS 16 and IAS 41
+Amendments to IFRS 10,
+Amendments to IAS 16 and IAS 38
+Amendments to IFRS 11
+Amendments to IAS 1
+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.
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS")
+2. APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+For the year ended 31 December 2016
+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:
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+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.
+174 China Shenhua Energy Company Limited
+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.
+Basis of preparation
+SIGNIFICANT ACCOUNTING POLICIES
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 173
+3.
+The application of the amendments will result in additional disclosures on the Group's financing activities,
+specifically reconciliation between the opening and closing balances in the consolidated statement of
+financial position for liabilities arising from financing activities will be provided on application.
+The 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 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.
+Notes to the Consolidated Financial Statements (Continued)
+3.
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
+accounting policies into line with the Group's accounting policies.
+42,323
+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;
+For the year ended 31 December 2016
+the size of the Group's holding of voting rights relative to the size and dispersion of holdings of
+the other vote holders;
+The Group reassesses whether or not it controls an investee if facts and circumstances indicate that
+there are changes to one or more of the three elements of control listed above.
+has the ability to use its power to affect its returns.
+is exposed, or has rights, to variable returns from its involvement with the investee; and
+has power over the investee;
+Basis of consolidation
+The principal accounting policies are set out below.
+SIGNIFICANT ACCOUNTING POLICIES (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:
+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 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.
+IFRS 15 Revenue from Contracts with Customers
+Other than above, the Directors do not expect IFRS 9 will have a material impact on the results and
+financial position of the Group.
+IFRS 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
+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:
+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
+Step 1: Identify the contract(s) with a customer
+•
+Step 2: Identify the performance obligations in the contract
+IFRS 16, which upon the effective date will supersede IAS 17 Leases, introduces a single lessee
+accounting model and requires a lessee to recognise assets and liabilities for all leases with a term of
+more than 12 months, unless the underlying asset is of low value. Specifically, under IFRS 16, a lessee
+is required to recognise a right-of-use asset representing its right to use the underlying leased asset
+and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should
+recognise depreciation of the right-of-use asset and interest on the lease liability, and also classifies
+cash repayments of the lease liability into a principal portion and an interest portion and presents them
+as financing in the statement of cash flows. Also, the right-of-use asset is initially measured at cost
+and subsequently measured at cost (subject to certain exceptions) less accumulated depreciation and
+impairment losses, adjusted for any remeasurement of the lease liability. The lease liability is initially
+measured at the present value of the lease payments that are not paid at that date. The measurement
+includes non-cancellable lease payments and also includes payments to be made in optional periods if
+the lessee is reasonably certain to exercise an option to extend the lease, or not to exercise an option to
+terminate the lease. This accounting treatment is significantly different from the lessee accounting for
+leases that are classified as operating leases under the predecessor standard, IAS 17.
+IFRS 16 Leases
+New and revised IFRSS not yet effective and not early adopted (Continued)
+APPLICATION OF NEW AND REVISED INTERNATIONAL FINANCIAL REPORTING
+STANDARDS ("IFRSS") (Continued)
+2.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+172
+The Directors anticipate that the application of IFRS 15 in the future may result in more disclosures,
+however, the Directors do not anticipate that the application of IFRS 15 will have a material impact on
+the timing and amounts of revenue recognised in the respective reporting periods.
+Under IFRS 15, an entity recognises revenue when (or as) a performance obligation is satisfied, i.e.
+when "control" of the goods or services underlying the particular performance obligation is transferred
+to the customer. Far more prescriptive guidance has been added in IFRS 15 to deal with specific
+scenarios. Furthermore, extensive disclosures are required by IFRS 15.
+Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation
+Step 4: Allocate the transaction price to the performance obligations in the contract
+.
+•
+Step 3: Determine the transaction price
+.
+2.
+41,188
+(428)
+235
+(10,760)
+(8,769)
+66,166
+90,652
+Cash generated from operations
+Income tax paid
+5,754
+(6,267)
+NET CASH GENERATED FROM OPERATING ACTIVITIES
+(Decrease) increase in accrued expenses and other payables
+2,925
+Increase (decrease) in accounts and bills payable
+5,116
+1,146
+Decrease in prepaid expenses and other receivables
+(10,309)
+20,084
+(5,021)
+Decrease (increase) in accounts and bills receivable
+81,883
+INVESTING ACTIVITIES
+400
+Proceeds from disposal of debt securities
+3
+35
+640
+699
+Proceeds from disposal of associates
+55,406
+649
+Proceeds from disposal of property, plant and equipment,
+(29,685)
+(191)
+(794)
+Increase in lease prepayments
+(28,264)
+construction in progress and other non-current assets
+Acquisition of property, plant and equipment, intangible assets,
+exploration and evaluation assets, additions to the
+intangible assets and other non-current assets
+2,214
+(1,076)
+(Increase) decrease in inventories
+24,721
+34,520
+41,253
+Other gains and losses (Note 10)
+Depreciation and amortisation (Note 10)
+Adjustments for:
+OPERATING ACTIVITIES
+Profit before income tax
+23,990
+RMB million
+RMB million
+2016
+Year ended 31 December
+For the year ended 31 December 2016
+Consolidated Statement of Cash Flows
+2016 Annual Report 165
+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.
+2015
+3,078
+5,856
+Interest income
+68,412
+73,840
+Operating cash flows before movements in working capital
+(56)
+Other income
+649
+688
+6
+(2)
+Fair value changes on financial instruments (Note 8)
+Exchange loss, net
+4,483
+5,062
+Interest expenses
+(237)
+Share of results of associates
+(608)
+(723)
+Proceeds from disposal of wealth management products
+Cash and cash equivalents, at the end of the year
+160
+23
+2,288
+1,111
+Contributions from non-controlling shareholders
+435
+Proceeds from bills discounted
+9,049
+(20,000)
+(5,000)
+Distributions to non-controlling shareholders
+Repayments of short-term debentures and medium-term notes
+14,985
+(22,756)
+(24,927)
+26,458
+28,037
+(5,730)
+(5,600)
+Net proceeds from bonds
+and medium-term notes
+(6,181)
+Dividend paid to equity holders of the Company
+126
+35,962
+42,323
+6,126
+(1,261)
+Net (decrease) increase in cash and cash equivalents
+Cash and cash equivalents, at the beginning of the year
+Effect of foreign exchange rate changes
+(23,157)
+(7,343)
+(18,490)
+(4)
+(5,386)
+Acquisition of non-controlling interests
+under common control
+Cash paid for acquisition of a subsidiary
+(14,718)
+(6,365)
+NET CASH USED IN FINANCING ACTIVITIES
+Proceeds from disposal of derivative financial instruments
+Net proceeds from short-term debentures
+Proceeds from borrowings
+710
+Interest received
+309
+375
+Dividend received from associates
+(50)
+Purchase of tradable wealth management products
+590
+|
+Purchase of derivative financial instruments
+(48)
+(104)
+Investments in associates
+(160)
+(33,350)
+Investments in wealth management products
+(2)
+Repayments of borrowings
+(Increase) decrease in restricted bank deposits
+1,660
+Interest paid
+FINANCING ACTIVITIES
+RMB million
+2015
+Year ended 31 December
+2016
+RMB million
+For the year ended 31 December 2016
+Consolidated Statement of Cash Flows (Continued)
+(1,530)
+China Shenhua Energy Company Limited
+(26,123)
+(64,654)
+NET CASH USED IN INVESTING ACTIVITIES
+1,624
+2,514
+(1,265)
+(5,026)
+Increase in time deposits with original maturity over three months
+Maturity of time deposits with original maturity over three months
+166
+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.
+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.
+For the year ended 31 December 2016
+For the year ended 31 December 2016
+Retirement benefit costs
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 179
+Government grants that are receivable as compensation for expenses or losses already incurred or
+for the purpose of giving immediate financial support to the Group with no future related costs are
+recognised in profit or loss in the period in which they become receivable.
+Government grants are recognised in profit or loss on a systematic basis over the periods in which the
+Group recognises as expenses the related costs for which the grants are intended to compensate.
+Specifically, government grants whose primary condition is that the Group should purchase, construct or
+otherwise acquire non-current assets are recognised as deferred income in the consolidated statement
+of financial position and transferred to profit or loss on a systematic and rational basis over the useful
+lives of the related assets.
+Government grants are not recognised until there is reasonable assurance that the Group will comply
+with the conditions attaching to them and that the grants will be received.
+Government grants
+Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets,
+which are assets that necessarily take a substantial period of time to get ready for their intended use
+or sale, are added to as part of the cost of those assets, until such time as the assets are substantially
+ready for their intended use or sale. All other borrowing costs are expensed in the period in which they
+are incurred.
+Borrowing costs
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of the
+Group's foreign operations are translated into the presentation currency of the Group (i.e. RMB) using
+exchange rates prevailing at the end of each reporting period. Income and expenses items are translated
+at the average exchange rates for the period. Exchange differences arising, if any, are recognised
+in other comprehensive income and accumulated in equity under the heading of exchange reserve,
+attributed to non-controlling interests as appropriate.
+In preparing the financial statements of each individual group entity, transactions in currencies other than
+entity's functional currencies (foreign currencies) are recognised at the rates of exchange prevailing on
+the dates of the transactions. At the end of the reporting period, monetary items denominated in foreign
+currencies are retranslated at the rates prevailing at that date. Non-monetary items that are measured
+in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary
+items are recognised in profit or loss in the period in which they arise.
+Foreign currencies
+Land using rights under operating leases are presented as lease prepayments in the consolidated
+statement of financial position and are initially stated at cost and subsequently charged to the profit or
+loss on the straight-line basis over the lease terms.
+Leases where substantially all the rewards and risks of ownership of assets remain with the lessor are
+accounted for as operating leases. Where the Group is the lessor, assets leased by the Group under
+operating leases are included in non-current assets, and rentals receivable under the operating leases
+are credited to profit or loss on the straight-line basis over the lease terms. Where the Group is the
+lessee, rentals payable under operating leases are charged to the profit or loss on the straight-line basis
+over the lease terms.
+Leasing
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+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.
+Notes to the Consolidated Financial Statements (Continued)
+Taxation
+The tax currently payable is based on taxable profit for the year. Taxable profit differs from "profit before
+income tax" as reported in the consolidated statement of profit or loss and other comprehensive income
+because of income or expense that are taxable or deductible in other years and items that are never
+taxable or deductible. The Group's current tax is calculated using tax rates that have been enacted or
+substantively enacted by the end of the reporting period.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+3.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Financial instruments
+Financial assets and financial liabilities are recognised when a group entity becomes a party to the
+contractual provisions of the instruments.
+Financial assets and financial liabilities are initially measured at fair value. Transaction costs that are
+directly attributable to the acquisition or issue of financial assets and financial liabilities (other than
+financial assets and financial liabilities at fair value through profit or loss) are added to or deducted
+from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition.
+Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair
+value through profit or loss are recognised immediately in profit or loss.
+Financial assets
+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.
+Effective interest method
+The effective interest method is a method of calculating the amortised cost of a financial instrument and
+of allocating interest income or expense over the relevant period. The effective interest rate is the rate
+that exactly discounts estimated future cash receipts or payments (including all fees and points paid or
+received that form an integral part of the effective interest rate, transaction costs and other premiums or
+discounts) through the expected life of the financial instrument, or, where appropriate, a shorter period,
+to the net carrying amount on initial recognition.
+Interest income is recognised on an effective interest basis for debt instruments.
+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:
+Financial assets at FVTPL
+Financial assets are classified as at FVTPL when the financial asset is either held for trading or it is
+designated as at FVTPL. The Group's debt securities are classified as held for trading as it has been
+acquired for the purpose of selling in the near term. They are stated at fair values, with any gains or
+losses arising on remeasurement, net of interest earned, recognised in profit or loss and are included in
+other gains and losses line item.
+A financial asset is classified as held for trading if:
+it has been acquired principally for the purpose of selling it in the near term; or
+on initial recognition it is part of a portfolio of identified financial instruments that the Group
+manages together and has a recent actual pattern of short-term profit-taking; or
+it is a derivative that is not designated and effective as a hedging instrument.
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+China Shenhua Energy Company Limited
+178
+Interest income is recognised as it accrues using the effective interest method.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+176 China Shenhua Energy Company Limited
+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.
+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 net assets of the combining businesses are consolidated using the existing book values from the
+controlling party's perspective. No amount is recognised in respect of goodwill or bargain purchase gain
+at the time of common control combination.
+The consolidated 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.
+Merger accounting for business combination involving entities under common control
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount of any non-
+controlling interests in the acquiree, and the fair value of the acquirer's previously held equity interest in
+the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and
+the liabilities assumed. If, after re-assessment, the net of the acquisition-date amounts of the identifiable
+assets acquired and liabilities assumed exceeds the sum of the consideration transferred, the amount of
+any non-controlling interests in the acquiree and the fair value of the acquirer's previously held interest in
+the acquiree (if any), the excess is recognised immediately in profit or loss as a bargain purchase gain.
+Non-controlling interests that are present ownership interests and entitle their holders to a proportionate
+share of the entity's net assets in the event of liquidation is initially measured at the non-controlling
+interests' proportionate share of the recognised amounts of the acquiree's identifiable net assets. The
+choice of measurement basis is made on a transaction-by-transaction basis.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised at
+their fair values, except that deferred tax assets or liabilities, and assets or liabilities related to employee
+benefit arrangements are recognised and measured in accordance with IAS 12 Income Taxes and IAS
+19 Employee Benefits respectively.
+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.
+For the year ended 31 December 2016
+Business combinations
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 175
+3.
+Goodwill
+Goodwill arising on an acquisition of a business is carried at cost as established at the date of acquisition
+of the business less accumulated impairment losses, if any.
+For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-generating units
+(or groups of cash-generating units) that is expected to benefit from the synergies of the combination.
+A cash-generating unit to which goodwill has been allocated is tested for impairment annually or more
+frequently when there is indication that the unit may be impaired. For goodwill arising on an acquisition
+in a reporting period, the cash-generating unit to which goodwill has been allocated is tested for
+impairment before the end of that reporting period. If the recoverable amount of the cash-generating
+unit is less than its carrying amount, the impairment loss is allocated first to reduce the carrying amount
+of any goodwill allocated to the unit and then to the other assets of the unit on a pro-rata basis based on
+the carrying amount of each asset in the unit. Any impairment loss for goodwill is recognised directly in
+profit or loss. An impairment loss recognised for goodwill is not reversed in subsequent periods.
+Dividend income from unlisted investments is recognised when the shareholder's right to receive
+payment is established.
+Revenue from the rendering of railway, port, shipping and other services is recognised upon the
+delivery or performance of the services.
+Revenue from sale of power is recognised upon the transmission of electric power to the power
+grid companies, as determined based on the volume of electric power transmitted and the
+applicable fixed tariff rates agreed with the respective electric power grid companies annually.
+Revenue associated with the sale of coal is recognised when the risks and rewards to the
+ownership of the goods have been passed to the customer.
+•
+Revenue is measured at the fair value of the consideration received or receivable. Provided it is probable
+that the economic benefits will flow to the Group and the revenue and costs can be measured reliably,
+revenue is recognised in profit or loss as follows:
+Revenue recognition
+When a group entity transacts with an associate, profits and losses resulting from the transactions with
+the associate are recognised in the Group's consolidated financial statements only to the extent of
+interests in the associate that are not related to the Group.
+When the Group reduces its ownership interest in an associate but the Group continues to use the
+equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that had
+previously been recognised in other comprehensive income relating to that reduction in ownership
+interest if that gain or loss would be reclassified to profit or loss on the disposal of the related assets or
+liabilities.
+184 China Shenhua Energy Company Limited
+For the year ended 31 December 2016
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 177
+The requirements of IAS 39 are applied to determine whether there are any indicators that the Group's
+investment in an associate may be impaired. When necessary, the entire carrying amount of the
+investment (including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by
+comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its
+carrying amount. Any impairment loss is recognised when the recoverable amount is less the current
+value of the investment in associates. Any reversal of that impairment loss is recognised in accordance
+with IAS 36 to the extent that the recoverable amount of the investment subsequently increases.
+On acquisition of the investment in an associate, any excess of the cost of acquisition over the Group's
+share of the net fair value of the identifiable assets, liabilities of the investee is recognised as goodwill,
+which is included within the carrying amount of the investment. Any excess of the Group's share of the
+net fair value of the identifiable assets and liabilities over the cost of investment, after reassessment, is
+recognised immediately in profit or loss in the period in which the investment is acquired.
+The results and assets and liabilities of associates are incorporated in these consolidated financial
+statements using the equity method of accounting. The financial statements of associates used for
+equity accounting purposes are prepared using uniform accounting policies as those of the Group for
+like transactions and events in similar circumstances. Under the equity method, an investment in an
+associate is initially recognised in the consolidated statement of financial position at cost and adjusted
+thereafter to recognise the Group's share of the profit or loss and other comprehensive income of
+the associate. When the Group's share of losses of an associate exceeds the Group's interest in that
+associate (which includes any long-term interests that, in substance, form part of the Group's net
+investment in the associate), the Group discontinues recognising its share of further losses. Additional
+losses are recognised only to the extent that the Group has incurred legal or constructive obligations or
+made payments on behalf of that associate.
+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, the attributable amount of goodwill is included in the
+determination of the amount of profit or loss on disposal.
+Investments in associates (Continued)
+When some or all of the economic benefits required to settle a provision are expected to be recovered
+from a third party, a receivable is recognised as an asset if it is virtually certain that reimbursement will
+be received and the amount of the receivable can be measured reliably.
+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.
+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).
+10-20 years
+5-20 years
+The Directors reviewed the estimated useful lives of the assets annually based on the Group's historical
+experience with similar assets and taking into account anticipated technological changes.
+Construction in progress intended to be used for production, supply or administrative purposes are
+carried at cost, less any recognised impairment loss. Costs include professional fees and, for qualifying
+assets, borrowing costs capitalised in accordance with the Group's accounting policy. Such properties
+are classified to the appropriate categories of property, plant and equipment when completed and
+ready for intended use. Depreciation of these assets, on the same basis as other property, plant and
+equipment, commences when the assets are ready for their intended use.
+An item of property, plant and equipment is derecognised upon disposal or when no future economic
+benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the
+disposal or retirement of an item of property, plant and equipment is determined as the difference
+between the sales proceeds and the carrying amount of the asset and is recognised in profit or loss.
+Mining structures and mining rights
+The costs of mining structures and mining rights, which include the costs of acquiring and developing
+mining structures and mining rights, are firstly capitalised as "construction in progress" in the year in
+which they are incurred and then reclassified to "Mining structures and mining rights" under property,
+plant and equipment when they are ready for commercial production.
+Mining structures and mining rights are depreciated on a units-of-production basis utilising only proved
+and probable coal reserves in the depletion base.
+30-45 years
+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.
+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.
+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:
+2016 Annual Report
+researching and analysing historical exploration data;
+20 years
+10-50 years
+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.
+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
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+3.
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+5-20 years
+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:
+Buildings
+Mining related machinery and equipment
+Generators related machinery and equipment
+Railway and port
+Vessel
+Coal chemical related machinery and equipment
+Furniture, fixtures, motor vehicles and other equipment
+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.
+gathering exploration data through topographical, geochemical and geophysical studies;
+10-25 years
+Provisions
+the ability to use or sell the intangible asset;
+how the intangible asset will generate probable future economic benefits;
+the availability of adequate technical, financial and other resources to complete the development
+and to use or sell the intangible asset; and
+the ability to measure reliably the expenditure attributable to the intangible asset during its
+development.
+2016 Annual Report 183
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+Intangible assets (Continued)
+Internally-generated intangible assets - research and development expenditure (Continued)
+The amount initially recognised for internally-generated intangible asset is the sum of the expenditure
+incurred from the date when the intangible asset first meets the recognition criteria listed above. Where
+no internally-generated intangible asset can be recognised, development expenditure is recognised in
+profit or loss in the period in which it is incurred.
+Subsequent to initial recognition, internally-generated intangible asset is measured at cost less
+accumulated amortisation and accumulated impairment losses (if any), on the same basis as intangible
+assets acquired separately.
+Intangible assets acquired in a business combination not under common control
+Intangible assets acquired in a business combination are recognised separately from goodwill and are
+initially recognised at their fair values at the acquisition date (which is regarded as their cost).
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite useful
+lives are reported at cost less accumulated amortisation and any accumulated impairment losses, on the
+same basis as intangible assets that are acquired separately.
+Derecognition of intangible assets
+An intangible asset is derecognised on disposal, or when no future economic benefits are expected from
+use or disposal. Gains and losses arising from derecognition of an intangible asset are measured as the
+difference between the net disposal proceeds and the carrying amount of the asset and are recognised
+in profit or loss in the period when the asset is derecognised.
+Inventories
+Inventories are stated at the lower of cost and net realisable value. Costs of inventories are calculated
+using the weighted average method. Net realisable value represents the estimated selling price for
+inventories less all estimated costs of completion and costs necessary to make the sale.
+exploratory drilling, trenching and sampling;
+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;
+3. SIGNIFICANT ACCOUNTING POLICIES (Continued)
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+determining and examining the volume and grade of the resource;
+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:
+surveying transportation and infrastructure requirements; and
+conducting market and finance studies.
+Expenditure during the initial exploration preparation stage of a project is charged to profit or loss as
+incurred. Exploration and evaluation costs, including the costs of acquiring licenses, are capitalised as
+exploration and evaluation assets on a project-by-project basis pending determination of the technical
+feasibility and commercial viability of the project.
+Once the final feasibility study has been completed and a development decision has been taken,
+accumulated capitalised exploration and evaluation expenditures in respect of an area of interest are
+transferred to property, plant and equipment. In circumstances when an area of interest is abandoned
+or management decides it is not commercially viable, any accumulated costs in respect of that area are
+written off in the period the decision is made.
+182
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+•
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3.
+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
+Internally-generated intangible assets - research and development expenditure
+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.
+Obligations for land reclamation
+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.
+(2,162)
+34,520
+Interest expenses
+5,304
+4,856
+1,920
+41,253
+2,483
+(2,871)
+23,754
+4,468
+Depreciation and amortisation
+24,388
+333
+236
+24,721
+23,990
+Share of results of associates
+104
+5,062
+(515)
+segment amounts
+2016
+2015
+RMB million RMB million
+154
+211
+Unallocated head office
+and corporate items
+Elimination of amounts
+2015
+2016
+RMB million RMB million RMB million RMB million RMB million RMB million
+inter-segment amounts
+2016
+2015
+Consolidated
+2016
+2015
+Revenue
+(215)
+246,720
+2,237
+1,838
+(65,830)
+(57,833)
+183,127
+177,069
+Profit before income tax
+41,614
+34,631
+233,064
+422
+6.
+237
+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
+RMB million
+421,615
+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.
+RMB
+RMB
+RMB
+RMB
+RMB RMB RMB
+million million million
+2016 2015
+Reportable
+419,686
+26
+2015
+RMB million
+428
+Impairment loss
+2,771
+5,774
+44
+(1)
+(8)
+2,807
+5,773
+31 December
+194 China Shenhua Energy Company Limited
+For the year ended 31 December 2016
+6.
+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
+Notes to the Consolidated Financial Statements (Continued)
+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:
+RMB RMB
+2,771 5,774
+29,356
+23,812
+4,465
+3,452
+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
+Reportable segment profit
+16,084
+5,883 10,001 17,628 13,283
+9,862
+29,074 27,956 237 285
+Inter-segment revenue
+5,547 181,856 176,095
+4,831
+2016 2015
+million
+million
+million
+million
+million
+million
+million
+million
+2,049
+million
+Revenue from external
+customers
+102,283 93,502 69,613 72,768
+4,174
+3,420
+575
+317
+380
+541
+million million
+868
+962
+192
+1,037
+922
+292
+285
+938
+903 24,388 23,754
+Share of results of associates
+50
+24 153
+3,887
+391
+7
+-
+211 422
+Impairment loss
+823
+3,076 1,855 1,819
+2 879
+31
+60
+8
+6.2
+4,635
+9,550
+ထု
+48
+5
+342 41,614 34,631
+Including:
+Interest expenses
+1,517
+1,320 1,882 2,048
+1,189
+8,477
+RMB RMB
+433
+473
+86
+103
+197
+275 5,304 4,856
+Depreciation and amortisation
+7,936
+9,280
+637
+2015
+2016 Annual Report 191
+2015
+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.
+Equity instruments
+Financial liabilities and equity instruments
+Financial instruments (Continued)
+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.
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+3.
+4.2 Key sources of estimation uncertainty (Continued)
+Obligations for land reclamation
+The estimation of the liabilities for final reclamation and mine closure involves the estimates of the
+amount and timing for the future cash spending as well as the discount rate used for reflecting
+current market assessments of the time value of money and the risks specific to the liability. The
+Group considers the factors including development plan of the mines, the geological structure of
+the mining regions and reserve volume to determine the scope, amount and timing of reclamation
+and mine closure works to be performed. Determination of the effect of these factors involves
+judgements from the Group and the estimated liabilities may turn out to be different from the
+actual expenditure to be incurred. The discount rate used by the Group may also be altered to
+reflect the changes in the market assessments of the time value of money and the risks specific
+to the liability, such as change of the borrowing rate and inflation rate in the market. As changes
+in estimates occur (such as mine plan revisions, changes in estimated costs, or changes in timing
+of the performance of reclamation activities), the revisions to the obligation will be recognised at
+the appropriate discount rate. The carrying amounts of the obligations are disclosed in Note 34.
+REVENUE
+Coal revenue
+Power revenue
+Transportation revenue
+Coal chemical revenue
+Other revenue
+Year ended 31 December
+2016
+RMB million
+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.
+Notes to the Consolidated Financial Statements (Continued)
+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.
+2016 Annual Report 189
+it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
+breach of contract, such as default or delinquency in interest and principal payments; or
+significant financial difficulty of the issuer or counterparty; or
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 185
+3.
+2015
+RMB million
+98,126
+82,726
+68,935
+71,347
+4,610
+SIGNIFICANT ACCOUNTING POLICIES (Continued)
+3,827
+5,005
+175,964
+162,905
+7,163
+14,164
+183,127
+177,069
+192 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+4,293
+5.
+Financial instruments (Continued)
+Loans and receivables
+•
+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)
+Financial assets (Continued)
+China Shenhua Energy Company Limited
+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.
+For the year ended 31 December 2016
+186
+2016
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+-
+Shipping operations - which provide shipment transportation services to the power operations
+segment, the coal operations segment and external customers. The rates of freight charges
+billed to the power operations segment, the coal operations segment and external customers are
+consistent.
+Port operations - which provide loading, transportation and storage services to the coal operations
+segment and external customers. The Group charges service fees and other expenses, which are
+reviewed and approved by the relevant government authorities.
+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.
+For the year ended 31 December 2016
+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.
+Power operations
+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.
+(6)
+(5)
+(4)
+(3)
+(2)
+(1)
+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.
+Coal chemical operations which use coal from the coal operations segment to first produce
+methanol and further process into polyethylene and polypropylene, together with other
+by-products, for sale to external customers. The Group sells its polyethylene at spot market.
+2016 Annual Report 193
+Notes to the Consolidated Financial Statements (Continued)
+SEGMENT AND OTHER INFORMATION (Continued)
+2016
+2016 2015
+2016 2015 2016 2015
+Segment total
+Coal chemical
+Shipping
+Port
+SEGMENT AND OTHER INFORMATION
+Railway
+Coal
+Information regarding the Group's reportable segments as provided to the Group's CODM for the
+purposes of resource allocation and assessment of segment performance for the years ended 31
+December 2016 and 2015 is set out below:
+For the purposes of assessing segment performance and allocating resources between
+segments, the Group's CODM monitors the results attributable to each reportable segment
+based on profit before income tax ("reportable segment profit"). Segment profit represents
+the profit earned by each segment without allocation of head office and corporate items. Inter-
+segment sales are primarily charged at prevailing market rate which are the same as those
+charged to external customers. The accounting policies of the operating segments are the same as
+the Group's accounting policies described in Note 3.
+Segment results
+6.1
+6.
+For the year ended 31 December 2016
+Power
+For the year ended 31 December 2016
+RMB RMB
+4.1 Critical judgements in applying accounting policies
+For the year ended 31 December 2016
+Control over Hebei Guohua Dingzhou Power Co., Ltd. ("Dingzhou Power")
+Note 43 describes that Dingzhou Power is a subsidiary of the Company although the Company
+has only 41% ownership interest and voting rights in Dingzhou Power. The remaining 59% of
+ownership interest and voting rights are owned by two shareholders that are unrelated to the
+Group as to 19% and 40%, respectively. Details of Dingzhou Power are set out in Note 43.
+In making their judgement, the Directors considered that the other shareholders of Dingzhou
+Power offered the Company, for the right on appointment of the majority members of the board
+of directors which is the governing body of most of the relevant activities of Dingzhou Power
+whilst some relevant activities require shareholders' approval. The Company considers it has the
+practical ability to direct the relevant activities that most significantly affect Dingzhou Power's
+returns unilaterally. After assessment, the Directors concluded that the Company has sufficiently
+dominant power over the board of directors of Dingzhou Power and therefore the Company has
+control over Dingzhou Power.
+4.2 Key sources of estimation uncertainty
+The following are the key assumptions concerning the future, and other key sources of estimation
+uncertainty at the end of the reporting period that have a significant risk of causing a material
+adjustment to the carrying amounts of assets and liabilities within the next financial year.
+Coal reserves
+Engineering estimates of the Group's coal reserves are inherently imprecise and represent
+only approximate amounts because of the subjective judgements involved in developing such
+information. There are authoritative guidelines regarding the engineering criteria that have to be
+met before estimated coal reserves can be designated as "proved" and "probable". Proved and
+probable coal reserve estimates are updated at regular basis and have taken into account recent
+production and technical information of each mine. In addition, as prices and cost levels change
+from year to year, the estimate of proved and probable coal reserves also changes. This change
+is considered as a change in estimate for accounting purposes and is reflected on a prospective
+basis in related depreciation rates.
+Despite the inherent imprecision in these engineering estimates, these estimates are used in
+determining depreciation expenses and impairment loss. Depreciation rates are determined based
+on estimated proved and probable coal reserve quantity (the denominator) and capitalised costs of
+mining structures and mining rights (the numerator). The capitalised cost of mining structures and
+mining rights are amortised based on the units of coal produced.
+190 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+4.
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+4.2
+Key sources of estimation uncertainty (Continued)
+Impairment losses
+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.
+In considering the impairment losses that may be required for current receivables and other
+financial assets, future cash flows need to be determined. One of the key assumptions that has
+to be applied is about the ability of the debtors to settle the receivables.
+Notwithstanding that the Group has used all available information to make this estimation,
+inherent uncertainty exists and actual write-offs may be higher or lower than the amount estimated.
+The carrying amounts of the property, plant and equipment, construction in progress and interest
+in associates are disclosed in Note15, 16 and 19, respectively.
+Depreciation
+Other than the freehold land and mining structures and mining rights, property, plant and
+equipment are depreciated on a straight-line basis over the estimated useful lives of the assets,
+after taking into account the estimated residual value. The Group reviews the estimated useful
+lives and residual value of the assets regularly based on the Group's historical experience with
+similar assets and taking into account anticipated technological changes. The depreciation
+expense for future periods is adjusted if there are significant changes from previous estimates.
+The carrying amounts of the property, plant and equipment is disclosed in Note 15.
+Deferred tax assets
+As at 31 December 2016, deferred tax assets of RMB3,849 million (2015: RMB2,674 million)
+have been recognised in the Group's consolidated statement of financial position. No deferred
+tax asset has been recognised on the tax losses of RMB6,869 million (2015: RMB5,604 million)
+and deductible temporary differences of RMB5,804 million (2015: RMB5,128 million) due to the
+unpredictability of future profit streams. The realisation of the deferred tax assets mainly depends
+on whether sufficient future profits or taxable temporary differences will be available in the future.
+In cases where the actual future profits generated are less or more than expected, a material
+reversal or further provision of deferred tax assets may arise, which will be recognised in profit or
+loss in the period in which such a reversal or further provision takes place.
+RMB
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (Continued)
+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.
+18
+2016 Annual Report 17
+China Shenhua Energy Company Limited
+Section IV Chairman's Statement (Continued)
+2017: OPTIMISING OPERATION AND ORGANISATION, IMPROVING QUALITY WHILE
+ENHANCING EFFICIENCY COMPREHENSIVELY AND ACCELERATING THE PROMOTION
+OF CLEAN AND EFFICIENT DEVELOPMENT
+In 2017, it is expected that the global economy will be unstable with increasing uncertainties and slow
+recovery. The organic growth of the domestic economy will still require reinforcement. The PRC government
+will adhere to the general principle of making progress while ensuring stability. With the key target of
+promoting the supply-side reform, it will properly expand the overall demand to facilitate stable and healthy
+development of the economy. The government will endeavour to resolve excess production capacities of
+coal and safeguard the dynamic balance between demand and supply of coal by eliminating the outdated
+production capacities, adjusting the production volume and taking other measures in response to changes in
+market demand. The coal price for the year will be subject to volatility based on the contract coal price. The
+trend of relatively excess supply of thermal power will continue and power generation costs will rise, the
+competition among power generation enterprises will increase.
+China Shenhua will firmly adopt the clean energy development strategy as the leading strategy to further
+leverage core competitiveness of the integrated operation, enhance the coordination and organisation of coal
+production, transportation and marketing, strictly control the increase in costs and endeavour to achieve the
+operating targets. Key emphasis will be placed on the following aspects:
+Coordinating the production, transportation and marketing to further improving the operational
+efficiency. Firstly, the Company will proactively implement the policy of excess capacity elimination, optimise
+the production units and raise the production volume of the type of coal with good quality and high economic
+efficiency based on the relationship between supply and demand. It will strive to secure the fulfilment of
+contract coal based on the market environment, support the relative stability of coal price, endeavour to
+raise the sales volume of seaborne coal with the greatest cost-efficiency and increase its efforts to promote
+e-commerce sale, in a bid to increase the market share and ensure the sales revenue. Secondly, on the basis
+of strengthening the refined management of power plants, the Company will actively promote the business of
+direct power purchase by large internal and external power users and keep promoting the establishment of a
+marketing system which is in line with the market practice, which strive to raise power output dispatch volume
+and the higher average level of utilisation hours of generators than those of the same type of generators
+in the same regions. Thirdly, on the basis of maintaining the cooperation with the existing key customers
+in macroscopic logistics business. The Company will seek potential quality customers featured by reverse
+transportation, bulk cargoes, long distance and mass transportation volume to further improve its economic
+benefits.
+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.
+2016 Annual Report 19
+Section IV Chairman's Statement (Continued)
+Optimising the asset structure and enhancing efficiency while increasing quality on an on-going basis.
+Firstly, the Company makes full use of existing resources to improve its profitability. It will continue to devote
+its efforts to controlling costs and strive to achieve a continuous year-on-year decrease in the unit production
+cost of self-produced coal and the controllable costs of other business segments remain constant as compared
+to last year. The Company will further vitalise its assets to improve asset operational efficiency. Secondly, it
+will strengthen the planning and management of capital expenditure and strictly control project investment for
+sustainable development. The Company will optimise the risk assessment for project commencement and
+the tracking and evaluation mechanism for economic benefits of key projects to further the risk control and
+management level of investment projects. According to the investment return analysis on the total life cycle of
+projects, it will properly arrange the construction schedule of projects to ensure the construction progress of
+quality projects. The Company will proactively promote the project construction including the renovation of the
+300 million tonne expansion capacity project of Shenshuo Railway and the construction of Huangda Railway.
+The coal-fired power projects of Sumsel-1 Coal Power (2×300MW) and Jawa-7 Coal Power (2×1,000 MW) in
+Indonesia will proceed in an orderly manner.
+Focusing on safety and environmental protection and technological innovation to strengthen the
+ability of sustainable development. The Company strengthen the accountability for safety production with
+a focus on implementing the safety overhaul and devoting more efforts to checks and rectification of hidden
+safety hazards, striving to remain "zero fatality" in its safety production. It will continuously optimise assessment
+and accountability mechanisms and on-line monitoring platform of environmental safety, improve the work in
+energy conservation and environmental protection in the whole industrial chain to prevent incidents relating to
+environmental protection from happening. The Company will increase its investments in scientific research and
+leverage the technological innovation to grasp the core technologies with their own intellectual property rights,
+in order to accelerate the industrialization of the technology innovation outcome.
+In 2017, China Shenhua will work pragmatically with steady confidence. It will facilitate the in integration of
+various businesses and realise a healthy and sustainable development in order to create greater value for
+investors.
+3₤2-$
+Zhang Yuzhuo
+Chairman
+17 March 2017
+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.
+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 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.
+Implementing refined management and achieving outstanding performance in cost control
+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.
+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.
+Section III Business Overview (Continued)
+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.
+22,712
+16,144
+312,357
+292,790
+Adjusted items and amount in accordance
+with International Financial Reporting
+Standards:
+Adjustment: simple production
+maintenance, safety
+production and other related
+expenditure
+2,198
+1,505
+4,618
+5,278
+Under International Financial Reporting
+Standards
+24,910
+17,649
+316,975
+298,068
+Explanation on differences in domestic and overseas accounting standards: Pursuant to the relevant
+regulations of the related government authorities in the PRC, the Group accrued provisions for simple
+production maintenance, safety production and other related expenditures, recognised as expenses in
+profit or loss and separately recorded as a specific reserve in shareholders' equity. On utilisation of the
+specific reserve as fixed assets within the stipulated scope, the full amount of accumulated depreciation
+is recognised at the same time when the cost of the relevant assets is recorded. Under International
+Financial Reporting Standards, these expenses are recognised in profit or loss as and when incurred.
+Relevant capital expenditure is recognised as property, plant and equipment and depreciated according
+to the relevant depreciation method. The effect on deferred tax arising from such difference is also
+reflected.
+MAJOR FINANCIAL DATA OF EACH QUARTER OF 2016
+Unit: RMB million
+Second
+Third
+First quarter
+quarter
+quarter
+Forth
+quarter
+(January-
+Under China Accounting Standards for
+Business Enterprises
+(April -
+of 2015
+of 2016
+12
+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.
+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.
+EXPLANATION ON MATERIAL CHANGES IN MAJOR ASSETS OF THE COMPANY
+DURING THE REPORTING PERIOD
+For industry conditions in which the Company operates, please refer to the section "Directors' Report"
+in the report.
+During the reporting period, the Group made no significant change in the scope of its principal
+businesses.
+In terms of sales, the Group is the largest listed coal company in China and globally with the sales
+volume of coal reaching 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.
+EXPLANATION ON PRINCIPAL BUSINESSES AND OPERATION MODEL OF THE
+COMPANY AND INDUSTRY CONDITIONS DURING THE REPORTING PERIOD
+II.
+I.
+Section III Business Overview
+2016 Annual Report 11
+✓ Not applicable
+Applicable
+Explanation on the differences between quarterly data and disclosed regular reporting data:
+10
+China Shenhua Energy Company Limited
+Section II Company Profile and Major Financial Indicators (Continued)
+VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+IX.
+Net profit attributable to
+equity holders
+of the Company
+2016
+Unit: RMB million
+Net assets attributable to
+equity holders
+of the Company
+At the end
+2015
+At the end
+19,709
+23,967
+22,982
+14
+China Shenhua Energy Company Limited
+Section IV Chairman's Statement (Continued)
+Dear Shareholders,
+On behalf of the Board, I am delighted to present the 2016 annual report of China Shenhua and to report to all
+shareholders on the Company's performance for the period.
+In 2016, the national economy has been steady amidst slowdown trend and improved smoothly. The supply-
+side reform of the coal industry was proactively promoted and preliminary outcome was seen in the progress
+of resolving excess production capacities. Affected by dual influence of market and policy on adjusting
+production volume, there was improvement in the severe imbalance between the demand for and supply
+of coal while the market price has considerably rebounded, resulting in a better operating situation of coal
+enterprises. The power consumption of the whole society grew at a faster pace as compared with the
+previous year, however, thermal power enterprises were under increasing pressure in their operations due to
+the relative overcapacity of thermal power supply and rising cost of power generation.
+Facing fluctuating market trend, based on the clean energy development strategy, the staff at all levels of
+China Shenhua have worked together to spare no efforts in structural optimisation, market expansion and
+cost control, thereby achieving good operating results. In 2016, the Company recorded operating revenue of
+RMB183,127 million, profit for the year of RMB31,970 million, profit for the year attributable to equity holders
+of the Company of RMB24,910 million and basic earnings per share of RMB1.252, representing a year-on-year
+increase of 3.4%, 28.1%, 41.1% and 41.1%, respectively.
+As at 31 December 2016, the total market capitalisation of China Shenhua reached US$44.9 billion, ranking the
+first among all listed coal companies worldwide and the fourth among all listed integrated mining companies
+globally. It was also awarded the CCTV Top 10 Listed Companies in China for 2016 (2016 CCTV++
+A). International credit rating agencies, including Moody's and Fitch, maintained the sovereign rating of the
+international credit rating of China Shenhua.
+2016: SEIZING MARKET OPPORTUNITIES, OPTIMISING OPERATION UNITS AND
+CREATING FAVORABLE OPERATING RESULTS
+Promoting clean energy development strategy proactively and developing new characteristics of
+business structure
+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.
+2016 Annual Report 15
+Section IV Chairman's Statement (Continued)
+Optimising the operation, exploring markets, and achieving integrated and efficient operation
+Coal segment: The Company arranged production in a reasonable manner in accordance with the industry
+policy and the changes in relationship between supply and demand in the markets. It organized its production
+orderly in compliance with laws and regulations in response to the changes in policies on production capacities.
+The production volume of commercial coal reached 289.8 million tonnes for the year, representing a year-on-
+year increase of 3.2%.
+The Company seized the opportunities brought by changes in coal market, timely adjusted the price and
+strategy of coal sale and strengthened the expansion of new markets including "the movement towards the
+shipping route from the northern sea to the Yangtze River" and transit bases, in order to elevate the market
+shares. It focused on raising the sales volume of the seaborne coal with the highest unit gross profit margin
+and enhanced the organisation of coal procured externally, in turn maximising the sales efficiency. The sales
+volume of coal reached 394.9 million for the year, representing a year-on-year increase of 6.6%, of which
+seaborne coal reached 226.4 million tonnes, representing a year-on-year increase of 11.1%.
+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.
+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.
+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.
+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.
+16
+China Shenhua Energy Company Limited
+Section IV Chairman's Statement (Continued)
+Promoting "macroscopic logistics" and proactively achieving new profit growth areas
+The Company proactively developed transportation resources. On the basis of delivering a sound performance
+in the transportation of its own coal, it progressively opened transportation capacity to the public by utilising
+the transportation network comprising Bazhun Railway and Zhunchi Railway, thereby opening up a new phase
+of the transition of its transportation system from railways designated for coal transportation towards the
+"macroscopic logistics" permeating Shenhua.
+The Company increased the number of trains with the capacity of 10,000 tonnes, effectively increased turnover
+of trains and enhanced the coal transportation efficiency, which significantly increased the transportation
+capacity of railways and the volume of seaborne coal at its own ports. It established long-term strategic
+partnership with major customers through efficient and convenient transportation services, thus excess
+transportation capacities were fully utilised. The Company's own railways had a freight turnover of 244.6
+billion tonne km, whilst the seaborne coal volume at the Company's own ports reached 201.3 million tonnes,
+representing a year-on-year increase of 22.2% and 27.0%, respectively. The coal shipping volume at Huanghua
+Port increased significantly, being the largest port for seaborne coal volume domestically for the first time.
+The Company positively carried out "macroscopic logistics" transportation business in a long-distance and
+pendulum manner and took the initiative to expand the scale of transportation of non-coal materials and reverse
+transportation in order to improve the profitability of the transportation segment. The transportation services of
+the railway segment provided to third parties generated revenue of 4,174 million, representing a year-on-year
+increase of 22.0%.
+Strengthening technological innovation and promoting clean development
+The Company continued to promote the "ultra-low emission" renovation of coal-fired generating units and was
+the first among power companies to complete the "ultra-low emission" renovation for all coal-fired generating
+units in Beijing, Tianjin, Hebei and Anhui areas, leading the clean coal power generation development in China.
+The "ultra-low emission" renovation of 16,460MW coal-fired generating units was completed, and the total
+installed capacity of coal-fired generating units with "ultra-low emission" technology reached 36,770MW,
+accounting for 67.6% of the total installed capacity of all coal-fired power generating units of the Company.
+The emission performance for soot, sulphur dioxide and nitrogen oxides of thermal power generators for the
+year were 0.021g/kWh, 0.096g/kWh and 0.16g/kWh respectively, which signified the encouraging result of the
+prevention and control on air pollution. As of the end of the year, 48 "ultra-low emission" coal-fired generating
+units were supported by policies including tariff subsidies, which facilitated profit realisation of the power
+business of the Company under the market slowdown.
+Chairman
+Zhang Yuzhuo
+Section IV Chairman's Statement
+2016 Annual Report 13
+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)
+China Shenhua Energy Company Limited
+(July-
+June) September)
+III. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+The core competitiveness of the Group are mainly:
+1.
+2.
+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.
+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.
+March)
+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.
+fair value through profit or loss
+For the year ended 31 December 2016
+18
+in progress
+Transferred from construction
+1,725
+2
+13
+1,551
+10
+149
+Impairment losses (note (i))
+22,813
+1,066
+732
+298
+4,679
+Disposals or write-off
+(43)
+(84)
+F
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+204
+(122)
+(122)
+enhancement
+8,327
+progress, for overall technical
+(2,472)
+(23)
+35
+(640)
+fgo
+(1,022)
+(655)
+Transferred to construction in
+15. PROPERTY, PLANT AND EQUIPMENT (Continued)
+4,700
+1,963
+(508)
+(244)
+(205)
+(94)
+Disposals or write-off
+3,834
+6
+458
+929
+1,697
+273
+9
+462
+Impairment losses (note (i))
+21,639
+(242)
+(252)
+(13)
+(29)
+Charge for the year
+36
+25
+11
+Exchange adjustment
+161,292
+9,934
+1,048
+3,900
+31,129
+53,096
+36,019
+9,906
+17,151
+At 31 December 2015
+(1,587)
+157
+915
+Coal
+Mining Generators,
+6,696
+90,105
+114,706
+30,021
+20,970
+59,826
+At 31 December 2015
+337,785
+6,786
+8,575
+6,425
+88,251
+115,209
+26,926
+22,754
+9,220
+7,782
+339,326
+At 1 January 2015
+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.
+Impairment loss for individual assets
+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.
+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.
+Impairment loss for cash-generating units
+5,532
+(i)
+62,859
+Notes:
+10,240
+6,120
+76,371
+94,850
+33,019
+21,811
+41,395
+8,456 292,262
+Furniture,
+At 31 December 2016
+183,312
+machinery
+machinery
+machinery
+and
+equipment equipment
+RMB million RMB million RMB million
+RMB million
+RMB million
+rights
+buildings
+Land and and mining
+motor
+related
+related
+related
+Mining
+structures
+fixtures,
+chemical
+vehicles
+and
+Railway
+and
+10,979
+4,643
+455
+35,046
+61,977
+40,092
+10,870
+CARRYING VALUES
+19,250
+RMB million RMB million RMB million
+Total
+equipment
+equipment
+Vessels
+RMB million
+and port
+and other
+At 31 December 2016
+688
+290
+4,343
+20,720
+in progress
+Transferred from construction
+2,231
+52
+52
+6
+699
+287
+576
+362
+249
+Additions
+57
+123
+172
+970
+29,075
+18,348
+At 31 December 2015
+(1,830)
+(39)
+70,515
+205
+25
+(15)
+(66)
+(289)
+(517)
+(281)
+(232)
+(174)
+Disposals or write-off
+122
+903
+(283)
+76,977
+Exchange adjustment
+17,498
+and
+Railway
+and
+and
+Land and and mining
+buildings
+vehicles
+machinery
+motor
+fixtures,
+Coal chemical
+related
+related
+Mining Generators,
+related
+machinery machinery
+Mining
+structures
+Furniture,
+15. PROPERTY, PLANT AND EQUIPMENT
+and other
+rights
+RMB million RMB million
+equipment equipment
+RMB million RMB million
+13,007
+6,239
+102,470
+138,834
+64,775
+30,574
+56,248
+429,645
+At 1 January 2015
+RMB million RMB million RMB million
+RMB million
+RMB million
+Total
+equipment
+Vessels equipment
+and port
+COST
+30,876
+66,040
+167,802
+521,097
+17,765
+13,218
+6,880
+123,297
+177,186
+67,018
+33,624
+82,109
+At 31 December 2016
+(152)
+(152)
+enhancement
+progress, for overall technical
+Transferred to construction in
+DEPRECIATION AND
+IMPAIRMENT
+At 1 January 2015
+14,853
+7,900
+4,234
+1,339
+1,930
+Charge for the year
+23
+23
+(3,412)
+Exchange adjustment
+9,042
+2,767
+119
+26,099
+43,984
+31,756
+8,763
+137,383
+(34)
+(44)
+(946)
+8
+685
+153
+689
+2,609
+28
+Additions
+16
+103
+114
+Exchange adjustment
+500,618
+17,716
+13,120
+6,853
+121,234
+8
+Notes to the Consolidated Financial Statements (Continued)
+1
+16
+(1,275)
+(756)
+(115)
+(242)
+Disposals or write-off
+19,630
+67
+225
+134
+2,476
+10,403
+1,045
+5,232
+in progress
+Transferred from construction
+4,188
+27
+246
+Impairment loss
+No diluted earnings per share is presented as there were no potential ordinary shares in existence during
+both years.
+2015
+2016
+2015
+2016
+2016 2015 2016 2015 2016 2015
+RMB RMB RMB RMB RMB RMB
+million
+million
+million million million million
+Total
+Eliminations
+Unallocated items
+Coal chemical
+Shipping
+Port
+Railway
+Power
+Coal
+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
+Total finance costs
+Fair value changes on financial instruments
+Exchange loss, net
+Unwinding of discount
+4,324
+4,889
+2016
+1,518
+Less: amount capitalised
+5,842
+6.
+2016 Annual Report 195
+Notes to the Consolidated Financial Statements (Continued)
+SEGMENT AND OTHER INFORMATION (Continued)
+643
+2015
+2016
+2015
+million
+Coal purchased
+26,286 17,264
+26,286 17,264
+Cost of coal production
+36,584 40,098
+million million million
+Cost of coal transportation
+14,708
+12,570
+2,271
+1,886
+948
+1,176
+42,221 38,488
+Net finance costs
+million
+million
+2016 2015
+2016 2015
+RMB
+RMB
+RMB
+RMB
+million million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB RMB
+million
+RMB
+173
+144
+688
+(190)
+- utilisation of tax losses and deductible temporary difference
+previously not recognised
+(107)
+(59)
+- share of results of associates
+(32)
+(24)
+(65)
+325
+636
+- non-deductible expenses
+(1,235)
+(2,209)
+- different tax rates of branches and subsidiaries
+- income not taxable
+8,630
+- tax losses and deductible temporary difference not recognised
+- additional tax in respect of prior years
+- others
+1,798
+The applicable tax rates of the Group's overseas subsidiaries are as follows:
+INCOME TAX EXPENSE (Continued)
+9.
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+198 China Shenhua Energy Company Limited
+704
+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.
+9,283
+Income tax expense
+(18)
+(8)
+224
+161
+9,561
+Power cost
+10,313
+41,253
+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
+Deferred tax
+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.
+5,025
+5,123
+5,748
+6
+(2)
+649
+4,515
+34,520
+Year ended 31 December
+RMB million
+Tax effects of:
+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:
+2016
+9,561
+224
+10,214
+2015
+RMB million
+9,283
+(1,256)
+10,378
+161
+(877)
+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
+15,816
+12,661
+11,874
+21,744
+21,134
+9,509
+16,405
+8,619
+12,193
+6,922
+5,833
+21,144
+30,608
+124,843
+10,172
+123,341
+17,264
+2015
+RMB million
+(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
+26,286
+Materials, fuel and power
+Personnel expenses
+Repairs and maintenance
+Transportation charges
+Taxes and surcharges
+Other operating costs
+Year ended 31 December
+2016
+RMB million
+Depreciation and amortisation
+(ii)
+196 China Shenhua Energy Company Limited
+For the year ended 31 December 2016
+Interest on:
+- borrowings
+- short-term debenture
+- medium-term notes
+- bonds
+3,896
+608
+3,638
+583
+1,289
+1,311
+329
+310
+2016 Annual Report 203
+18
+Notes to the Consolidated Financial Statements (Continued)
+723
+156
+8.
+INTEREST INCOME/FINANCE COSTS
+Interest income from:
+- bank deposits
+- other loans and receivables
+- debt securities
+4
+Total interest income
+2015
+RMB million
+RMB million
+691
+448
+32
+Year ended 31 December
+2016
+Australia
+(i)
+7.
+196
+9,049 15,949
+Total cost of sales
+109,404
+107,493 53,939 49,788 17,350
+14,595
+67
+2,523
+1,707 1,760
+760
+4,330
+4,720
+67
+196
+2,026
+(64,477)
+538
+584
+Cost of coal chemical
+production
+3,797
+4,182
+(401) (300)
+3,396 3,882
+533
+Others
+483
+823 2,642
+2,025
+252
+140
+759
+4,313 11,643
+Notes:
+(57,237) 124,843 123,341
+17,017
+Total liabilities (note (ii))
+5,835 7,001 17,829 19,805 3,819 6,529
+198,140 246,972 207,879 229,773 125,152 124,661 22,489
+(116,711) (115,814) (134,519) (131,373) (65,396) (61,284) (10,135)
+1,746
+1,387
+7
+22,303
+Total assets (note (i))
+(10,950)
+138
+8,038 8,189
+(2,363)
+95
+531
+47
+35
+29,378 35,426
+11,621 12,564 377,853 348,720 (374,443) (433,391) 576,729 559,791
+(4,686) (5,593) (137,179) (185,478) 278,929 316,985 (191,760) (195,870)
+(2,063)
+Profit from operations
+(note (iii)
+Additions to non-current
+assets (note (i))
+(1,345) (596)
+6,433
+11,689
+18,810
+15,000
+10,070
+2,302
+46,444 37,657
+1,350
+133
+254
+254
+649
+1,261
+808
+266
+Indonesia
+million million million
+Hong Kong
+Guo Peizhang
+Gong Huazhang
+Fan Hsulaitai
+directors
+Independent non-executive
+Sub-total
+Sub-total
+Chen Hongsheng (note (i))
+1.27
+0.16
+0.79
+0.32
+Sub-total
+0.54
+Non-executive directors
+0.06
+Supervisors
+Tang Ning
+0.03
+0.20
+0.18
+1.35
+0.45
+0.45
+Zhai Richeng (note (ii))
+0.45
+0.45
+0.45
+0.45
+Total
+Sub-total
+Shen Lin
+1.35
+0.41
+0.35
+Wang Xiaolin (note (v))
+Fees
+Retirement
+and benefits
+and other
+allowance
+housing
+Basic salaries,
+RMB million
+Year ended 31 December 2015
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+200 China Shenhua Energy Company Limited
+3.69
+2.34
+0.20
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS (Continued)
+0.13
+in kind
+RMB million
+scheme
+contributions
+0.73
+0.10
+0.44
+0.19
+Han Jianguo
+Ling Wen (note (i))
+Discretionary
+bonuses
+Executive directors
+Zhang Yuzhuo (note (i))
+Chief executive
+RMB million
+RMB million
+RMB million
+Total
+Sub-total
+0.98
+0.41
+0.08
+2015
+Year ended 31 December
+2016
+Russia
+3.49
+4.76
+0.36
+HKD500,001 to HKD1,000,000
+0.40
+2.13
+1.75
+2.23
+RMB million
+RMB million
+2015
+1.38
+Year ended 31 December
+2016
+HKD1,000,001 to HKD1,500,000
+15
+The calculation of basic earnings per share is based on the profit attributable to ordinary equity holders
+of the Company of RMB24,910 million (2015: RMB17,649 million) and the number of shares in issue
+during the year of 19,890 million shares (2015: 19,890 million shares).
+14. EARNINGS PER SHARE
+Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31
+December 2016 of RMB0.46 (final dividend in respect of the year ended 31 December 2015: RMB0.32)
+per ordinary share and a special dividend of RMB2.51 per ordinary share has been proposed by the
+Directors and is subject to approval by the shareholders in the following general meeting.
+14,718
+6,365
+2015 final - RMB0.32 (2015: 2014 final of RMB0.74)
+per ordinary share
+13. DIVIDENDS
+Dividend approved and paid during the year:
+2015
+3
+1
+RMB million
+2016
+Year ended 31 December
+RMB million
+0.36
+Retirement scheme contributions
+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:
+The emoluments of these directors were borne by Shenhua Group during the years ended 31 December 2016 and 2015.
+(i)
+Notes:
+Discretionary bonuses were determined by the remuneration committee in accordance with the relevant
+human resources policies.
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS (Continued)
+For the year ended 31 December 2016
+(ii)
+Notes to the Consolidated Financial Statements (Continued)
+3.88
+1.26
+0.11
+0.56
+0.59
+0.85
+2016 Annual Report 201
+Basic salaries, housing and other allowances and benefits in kind
+Discretionary bonuses
+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.
+(iii)
+12. EMPLOYEES' EMOLUMENTS
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+202
+The independent non-executive directors' emoluments shown above were mainly for their services as
+directors of the Company.
+The emolument of Mr. Zhai Richeng was borne by Shenhua Group during the year ended 31 December 2015.
+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.
+(v)
+Mr. Tang Ning resigned as supervisor on 17 June 2016. He retired in the year ended 31 December 2015 and no more
+emolument achieved after his retirement. The discretionary bonuses he got during the year ended 31 December 2016 is
+for his prior years' performance.
+Mr. Zhou Dayu was appointed as supervisor on 17 June 2016.
+Mr. Zhao Jibin was appointed as non-executive director on 17 June 2016.
+(iv)
+Mr. Li Dong was appointed as executive director on 17 June 2016.
+Mr. Wang Xiaolin resigned as executive director on 20 August 2015.
+1.16
+Their emoluments were within the following band:
+0.05
+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)
+22
+– gains on disposal of a subsidiary
+- 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
+(11)
+Other gains and losses, represent
+651
+2
+86,149
+Carrying amount of inventories sold
+5,856
+3,078
+98
+- impairment in respect of goodwill
+22
+36
+950
+551
+- write down of inventories
+300
+388
+- allowance for doubtful debts
+- impairment in respect of other non-current assets
+82,673
+23,990
+Depreciation and amortisation
+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
+25.0
+25.0
+10. PROFIT FOR THE YEAR
+30.0
+%
+%
+2015
+2016
+0.05
+Year ended 31 December
+30.0
+24,721
+Profit for the year has been arrived at after charging (crediting):
+2015
+RMB million
+1,626
+1,065
+396
+429
+329
+414
+Year ended 31 December
+2016
+RMB million
+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
+Depreciation of property, plant and equipment
+- contributions to defined contribution plans of RMB2,728
+million (2015: RMB2,791 million)
+20,067
+20,844
+Personnel expenses, including
+21,639
+Operating lease in respect of properties and equipment
+Auditors' remuneration
+20.0
+219
+| | | |
+1.35
+0.45
+0.45
+0.45
+RMB million
+Total
+Retirement
+scheme
+contributions
+RMB million
+in kind
+and benefits
+allowance
+and other
+housing
+Discretionary
+bonuses
+RMB million
+Basic salaries,
+RMB million
+0.45
+0.92
+0.08
+301
+0.38
+0.46
+0.44
+0.45
+0.04
+0.93
+0.08
+0.40
+0.45
+1.35
+0.45
+0.25
+Year ended 31 December 2016
+0.15
+Sub-total
+Ling Wen (note (i))
+Executive directors
+Sub-total
+Zhang Yuzhuo (note (i))
+Chief executive
+RMB million
+Total finance costs on financial liabilities not at
+Fees
+22
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+2016 Annual Report 199
+- audit service
+32
+Total
+Directors' and chief executives' remuneration for the year, disclosed pursuant to the applicable Listing
+Rules and CO, is as follows:
+Han Jianguo (note (ii))
+11. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+Sub-total
+Li Dong (note (ii) and note (iii))
+Zhou Dayu (note (iii))
+Shen Lin
+Zhai Richeng
+Supervisors
+Guo Peizhang
+Gong Huazhang
+Fan Hsulaitai
+Sub-total
+Independent non-executive
+Non-executive directors
+directors
+Chen Hongsheng (note (i))
+Zhao Jibin (note (ii) and note (iii))
+Tang Ning (note (iv))
+Sub-total
+RMB million
+31 December
+Financial assets at FVTPL
+2016
+31 December
+2015
+25. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+212 China Shenhua Energy Company Limited
+The maximum exposure to loss from the Group's continuing involvement, if any, in the endorsed and
+discounted bills receivable equals to their carrying amounts. In the opinion of the Directors, the fair
+values of the Group's continuing involvement in the derecognised bills receivable are not significant.
+RMB million
+United States Dollars ("USD")
+European Dollars ("EUR")
+215
+119
+486
+140
+31 December
+2015
+RMB million
+31 December
+2016
+RMB million
+Transfers of financial assets
+Included in accounts receivable are the following amounts denominated in foreign currencies are set out
+below:
+Receivables that were past due but not impaired relate to a number of independent customers that have
+a good track record with the Group, which the Group does not hold any collateral over these balances.
+Based on past experience, the management believes that no impairment is necessary in respect of
+these balances as there has not been a significant change in credit quality and the balances are still
+considered fully recoverable.
+For the year ended 31 December 2016
+24. ACCOUNTS AND BILLS RECEIVABLE (Continued)
+2016 Annual Report 211
+Receivables that were not overdue or unimpaired relate to a wide range of customers for whom there
+was no recent history of default.
+7,556
+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.
+- Derivative financial instruments
+2,209
+- Wealth management products
+As at 31 December 2016, the Group invested in principal-guaranteed floating income wealth management products amounting
+to RMB31,000 million with term of 90 days and expected annual rates of return ranging from 3.20% to 3.35%, and non-principal-
+guaranteed floating income wealth management products amounting to RMB2,350 million with term ranging from 32 days to 365
+days and expected annual rates of return ranging from 4.10% to 4.55%. The wealth management products held by the Group are
+valued by discounting cash flow method, the detailed fair value measurements are disclosed in Note 37.3.
+As at 31 December 2016, the Group had loans to Shenhua Group and fellow subsidiaries amounting to RMB2,087 million (2015:
+RMB3,217 million), which bear interest at rates ranging from 3.92% to 5.04% per annum (2015: 4.14% to 5.04% per annum). The
+remaining balances are unsecured, interest-free and have no fixed terms of repayment.
+3,753
+Note:
+19,351
+48,792
+2,784
+1,781
+Other receivables
+4,483
+3,396
+Deductible VAT and other tax
+378
+- Tradable wealth management products
+973
+3,645
+subsidiaries (note)
+Loans and advances to Shenhua Group and fellow
+7,889
+7,029
+Prepaid expenses and deposits
+172
+33,404
+160
+33,350
+50
+12
+4
+Amounts due from associates
+51
+21,756
+1,401
+178
+52
+13,035
+31 December
+2015
+RMB million
+RMB million
+31 December
+2016
+At the end of the year
+Written off
+- amounts recovered
+- recognised
+Impairment loss
+At the beginning of the year
+The movement of allowance for doubtful debts was as follows:
+More than three years
+One to two years
+Two to three years
+Less than one year
+The following is an analysis of accounts receivable by age, net of allowance for doubtful debts,
+presented based on the date of delivery of goods or services which approximated the revenue
+recognition date:
+24. ACCOUNTS AND BILLS RECEIVABLE (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+210 China Shenhua Energy Company Limited
+Bills receivable were mainly issued by PRC banks and are expiring within one year. As at 31 December
+2016, the bills receivable with the carrying amounts of RMB85 million (2015: RMB36 million) were
+pledged to secure bills payable.
+41,019
+20,573
+17,649
+4,394
+17,446
+26. RESTRICTED BANK DEPOSITS
+4,334
+1,996
+162
+1,010
+138
+5,942
+1,401
+1,408
+2,115
+More than three years
+Two to three years
+One to two years
+Less than one year
+2015
+RMB million
+31 December
+RMB million
+31 December
+2016
+The aging analysis of accounts receivable that are past due but not impaired are as follows:
+194
+420
+(9)
+(10)
+140
+245
+54
+194
+2015
+RMB million
+RMB million
+2016
+Year ended 31 December
+23,370
+16,179
+51
+162
+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.
+188
+Notes to the Consolidated Financial Statements (Continued)
+4
+Property, plant and equipment
+417
+113
+304
+Allowances, primarily for receivables and inventories
+RMB million
+RMB million
+RMB million
+2015
+profit or loss
+2015
+At 31
+December
+(Charged)
+credited in
+At 1 January
+3,052
+1,256
+1,796
+Net deferred tax assets
+112
+39
+73
+18
+170
+Accrued salaries and other expenses not yet paid
+Others
+1,187
+629
+423
+558
+427
+(175)
+- Third parties
+At the end of the reporting period, the Group have unused tax losses of RMB8,714 million (31 December
+2015: RMB7,141 million) and unrecognised deductible temporary differences of RMB5,804 million (2015:
+RMB5,128 million) available for offset against future profits. A deferred tax assets has been recognised
+in respect of RMB1,845 million (31 December 2015: RMB1,537 million) of such losses. No deferred
+tax assets has been recognised in respect of the remaining RMB6,869 million (31 December 2015:
+RMB5,604 million) due to the unpredictability of future profit streams. Included in unrecognised tax
+losses are losses of RMB398 million (31 December 2015: RMB356 million) that will expire in 2017.
+1,796
+877
+919
+Net deferred tax assets
+73
+28
+45
+170
+30
+140
+Accrued salaries and other expenses not yet paid
+Others
+558
+(172)
+730
+Unrealised profits from sales within the Group
+(62)
+267
+(329)
+Tax allowable expenses not yet incurred
+384
+184
+200
+Tax losses carried forward
+(171)
+4
+Lease prepayments
+Unrealised profits from sales within the Group
+1
+63
+3,052
+(878)
+2,674
+3,849
+(797)
+31 December
+2015
+RMB million
+RMB million
+31 December
+2016
+Deferred tax assets
+Deferred tax liabilities
+For the purpose of the presentation in the consolidated statement of financial position, certain deferred
+tax assets and liabilities have been offset. The following is the analysis of the deferred tax balances for
+financial reporting purpose.
+27
+28
+3
+1
+2
+220
+111
+31 December
+2015
+RMB million
+31 December
+2016
+RMB million
+28. DEFERRED TAXATION
+Indonesian Rupiah
+EUR
+HKD
+USD
+Included in cash and cash equivalents are the following amounts denominated in foreign currencies are
+set out below:
+Cash and cash equivalents in the consolidated statement of financial position and the consolidated
+statement of cash flows comprise cash at bank and in hand, and time deposits with original maturity
+within three months.
+27. CASH AND CASH EQUIVALENTS
+For the year ended 31 December 2016
+1,796
+214
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+(62)
+Tax allowable expenses not yet incurred
+461
+77
+384
+Tax losses carried forward
+(169)
+2
+(171)
+Lease prepayments
+769
+342
+427
+2016 Annual Report 213
+503
+417
+Property, plant and equipment
+Allowances, primarily for receivables and inventories
+RMB million
+RMB million
+RMB million
+2016
+At 31
+December
+Credited in
+profit or loss
+At 1 January
+2016
+The following are the major deferred tax assets and liabilities recognised and movements thereon during
+the current and prior year:
+28. DEFERRED TAXATION (Continued)
+For the year ended 31 December 2016
+86
+162
+Notes to the Consolidated Financial Statements (Continued)
+- Associates
+Share of post-acquisition profits and other comprehensive
+income, net of dividend received
+Unlisted shares, at cost
+19. INTEREST IN ASSOCIATES
+At the end of the year
+Disposal
+Amortisation
+Transferred from construction in progress
+Additions
+Exchange adjustment
+At the beginning of the year
+Year ended 31 December
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+18. INTANGIBLE ASSETS
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+2016 Annual Report 207
+2,176
+2,344
+83
+(119)
+119
+49
+2,212
+2,176
+2015
+RMB million
+2016
+RMB million
+Year ended 31 December
+At the end of the year
+Additions
+2016
+At the beginning of the year
+Exchange adjustments
+RMB million
+2,964
+Principal activities
+Proportion of ownership
+interest and voting power
+held by the Group
+Type of
+legal entity
+Name of associate
+The Group's interests in associates are individually and in aggregate not material to the Group's financial
+position or results of operations for both years. The Group's associates are unlisted and established in
+the PRC. The following list contains only the particulars of associates, which principally affect the results
+or assets of the Group:
+5,113
+5,142
+1,929
+1,868
+3,184
+3,274
+RMB million
+RMB million
+31 December
+2015
+31 December
+2016
+2,964
+3,018
+(3)
+(329)
+(414)
+1,493
+106
+255
+356
+5
+9
+1,540
+2015
+RMB million
+The movement of the exploration and evaluation assets is as follows:
+17. EXPLORATION AND EVALUATION ASSETS
+As at 31 December 2016, the Group is in the process of obtaining requisite permits of certain of its construction in progress from
+the relevant government authorities. The Directors are of the opinion that the Group will be able to obtain the requisite permits in
+due course.
+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.
+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.
+Pursuant to the Notice to Close Coal-fired Generators at Guohua Beijing Thermal Power Plant (Jing Fa Gai [2015] No. 510)
+issued by Beijing Municipal Commission of Development and Reform, the coal-fired generators at Guohua Beijing Thermal
+Power Plant was discontinued from power generation in March 2015, the Group assessed the recoverable amounts of
+those non-current assets and generators which belong to power segment and as a result the carrying amount of the
+machineries and the generators was written down by RMB595 million to their recoverable amount as at 31 December
+2015, and an additional RMB173 million impairment loss was recognised in 2016.
+The 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)
+Impairment loss (Continued)
+(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
+42
+Transferred to property, plant and equipment
+Transferred to intangible assets
+Transferred to lease prepayments
+Net income from mine trial run
+33,610
+35,220
+40
+98
+(22)
+(228)
+(47)
+(319)
+(2,263)
+(459)
+(1,493)
+(106)
+(70,515)
+31 December 31 December
+(19,630)
+78,988
+29,674
+22,123
+33,610
+RMB million
+RMB million
+2015
+Year ended 31 December
+2016
+Note:
+At the end of the year
+Impairment transferred to property, plant and equipment
+Impairment write-off
+Impairment losses
+Disposal
+30
+2016
+(651)
+%
+3,152
+5,563
+31 December
+2015
+RMB million
+RMB million
+2016
+31 December
+Others (note)
+Materials and supplies
+Coal
+23. INVENTORIES
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 209
+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.
+22. LEASE PREPAYMENTS
+The Group has long-term entrusted loan of RMB627 million to an associate through a PRC state-owned bank, bearing
+interest at rates 4.90% per annum (2015: 6.15% per annum), which is receivable within one year and reclassified to other
+current assets.
+(iii)
+The loans to Shenhua Group and fellow subsidiaries bear interest at rates ranging from 4.28% to 4.41% per annum (2015:
+4.28% to 4.41% per annum) and are receivable within two to ten years.
+(ii)
+At 31 December 2016, the Group had prepayments to fellow subsidiaries amounting to RMB5 million (2015: RMB28
+million).
+34,562
+36,749
+2,482
+2,693
+987
+889
+627
+6,424
+11,473
+7,982
+13,341
+41
+2015
+18
+- Shenhua Group and fellow subsidiaries
+Bills receivable
+23,370
+16,179
+(194)
+(420)
+Less: allowance for doubtful debts
+23,564
+16,599
+19,745
+13,138
+770
+3,049
+3,177
+284
+- Third parties
+- Associates
+- Shenhua Group and fellow subsidiaries
+Accounts receivable
+RMB million
+31 December
+2015
+31 December
+2016
+RMB million
+24. ACCOUNTS AND BILLS RECEIVABLE
+Note: Others mainly represent properties held for sale and properties under development.
+12,816
+1,354
+13,502
+1,682
+2,500
+Inner Mongolia Yili Chemical Industry
+Co., Ltd.
+service
+Provision of transportation
+44
+44
+Limited company
+Tianjin Yuanhua Shipping Co., Ltd.
+Generation and sale of electricity
+25
+25
+Generation and sale ofelectricity
+20
+Generation and sale of electricity
+Limited company
+20
+Coal production and sale
+20
+20
+2222
+Limited company
+Guohua (Hebei) Renewables Co., Ltd.
+Limited company
+Sichuan Guangan Power Co., Ltd.
+Zhejiang Zheneng Jiahua Power Co., Ltd. Limited company
+Limited company
+2,500
+Shendong Tianlong Group Co., Ltd.
+%
+20
+25
+20
+25
+8,000
+8,000
+8,493
+25
+9,165
+RMB million
+RMB million
+31 December
+2015
+31 December
+2016
+Notes:
+Others
+Goodwill
+Long-term entrusted loans (note (iii))
+Loans to Shenhua Group
+(i)
+For the year ended 31 December 2016
+Long-term receivable
+Prepayment for mining projects
+equipment purchases and others (note (i))
+Prepayments in connection with construction work,
+208
+21. OTHER NON-CURRENT ASSETS
+Available-for-sale investments represent investment in unlisted equity securities issued by private
+entities incorporated in the PRC. They are measured at cost less impairment at end of the reporting
+period because the range of reasonable fair value measurement is significant and the probabilities of the
+various estimates cannot be reasonably assessed. The Directors are of the opinion that their fair values
+cannot be measured reliably.
+20. AVAILABLE-FOR-SALE INVESTMENTS
+Production and sale of chemicals
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+and fellow subsidiaries (note (ii))
+705
+31 December
+Taxes payable other than income tax
+32. ACCRUED EXPENSES AND OTHER PAYABLES
+784
+3,397
+31 December
+2015
+RMB million
+Accrued interest payable
+Accrued staff wages and welfare benefits
+RMB million
+2016
+6,911
+3,727
+3,571
+41,361
+2,665
+(i)
+For the year ended 31 December 2016
+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).
+Notes:
+47,519
+8,857
+Dividends payable
+9,665
+13,492
+Deposits from Shenhua Group and fellow subsidiaries (note (i))
+Other accrued expenses and payables (note (ii))
+3,624
+4,196
+Receipts in advances
+2,786
+24,500
+Notes to the Consolidated Financial Statements (Continued)
+Less than one year
+18
+3,305
+2,320
+3,922
+4,184
+25,585
+26,296
+More than three years
+Two to three years
+2015
+RMB million
+RMB million
+2016
+31 December
+(ii)
+31 December
+One to two years
+2016 Annual Report 219
+2,356
+35,156
+19
+1
+413
+179
+154
+486
+31 December
+2015
+RMB million
+1,178
+RMB million
+Great British Pounds
+HKD
+EUR
+USD
+Included in accounts and bills payable are the following amounts denominated in foreign currencies are
+set out below:
+33,990
+31 December
+2016
+Other accrued expenses and payables of the Group include:
+(42)
+31 December 2015
+203
+2,523
+2,854
+2,726
+Note:
+(i)
+(ii)
+The balances mainly represent payables for acquisition of mining rights which are to be settled over the period of
+production set out in the contracts on an annual basis. The annual payment is determined by fixed rates on a per tonne
+basis with reference to the annual production volume of the acquired mines in the acquisition agreements.
+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
+The following is an aging analysis of accounts payable, presented based on invoice date:
+2016
+31 December
+35. SHARE CAPITAL
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2,451
+2016 Annual Report 221
+2,549
+137
+132
+220
+2,102
+2,197
+2,197
+31 December 2016
+RMB million
+403
+2,854
+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)
+For the year ended 31 December 2016
+33. LONG-TERM LIABILITIES
+Payables for acquisition of mining rights (note (i))
+Deferred income (note (ii))
+Defined benefit plans
+Others
+Analysed for reporting purpose as:
+Current liabilities
+79
+286
+171
+147
+1,213
+1,328
+2,726
+1,263
+RMB million
+RMB million
+2015
+31 December
+31 December
+2016
+Non-current liabilities
+1,093
+As at 31 December 2016, certain bills payable were secured by bills receivable held by the Group (see
+Note 24).
+12,812
+35,156
+The exposure of the long-term borrowings and the
+RMB million
+contractual maturity dates:
+Within one year
+7,427
+6,377
+More than one year, but not exceeding two years
+5,657
+6,472
+More than two years, but not exceeding five years
+13,040
+15,599
+More than five years
+39,765
+32,108
+65,889
+60,556
+61,677
+Interest rates ranging from 1.08% to 6.55%
+per annum with maturities through
+22 January 2036
+Renminbi denominated
+Loans from banks and other institutions
+RMB million
+(Restated)
+2015
+2015
+RMB million
+31 December
+The Group's long-term borrowings comprise:
+29. BORROWINGS (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+216
+31 December
+2016
+RMB million
+2016
+31 December
+31 December
+7,427
+6,435
+4,384
+Current portion of long-term borrowings
+Short-term bank and other borrowings
+RMB million
+6,377
+31 December
+2015
+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
+31 December
+2016
+RMB million
+57,555
+11,811
+Non-current borrowings:
+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
+31 December
+2015
+9,114
+Secured
+66,991
+70,273
+54,179
+58,462
+Long-term borrowings, less current portion
+Unsecured
+33,990
+USD denominated
+1,722
+On 19 August 2014, the Company issued medium-term notes with proceeds of approximately
+RMB10,000 million and are payable on 21 August 2017. The notes bear interest rate of 5.10% per
+annum, repayable annually. The effective interest rate is 5.17% per annum.
+On 16 September 2014, the Company issued medium-term notes with proceeds of approximately
+RMB10,000 million and are payable on 18 September 2017. The notes bear interest rate of 5.04% per
+annum, repayable annually. Its effective interest rate is 5.11% per annum.
+On 20 January 2015, China Shenhua Overseas Capital Company Limited ("Shenhua Overseas Capital")
+issued Dollar bonds with proceeds of approximately RMB3,061 million and are payable on 19 January
+2018. The bonds bear interest rate of 2.50% per annum, repayable semi-annually. Its effective interest
+rate is 2.84% per annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of approximately
+RMB3,061 million and are payable on 19 January 2020. The bonds bear interest rate of 3.13% per
+annum, repayable semi-annually. Its effective interest rate is 3.35% per annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of approximately
+RMB3,061 million and are payable on 19 January 2025. The bonds bear interest rate of 3.88% per
+annum, repayable semi-annually. Its effective interest rate is 4.10% per annum.
+The net proceeds of the Dollar bonds issued is mainly used for the repayment of loans of subsidiaries.
+218
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+31. ACCOUNTS AND BILLS PAYABLE
+Accounts payable
+- Shenhua Group, an associate of Shenhua Group and
+fellow subsidiaries
+- Associates
+- Third parties
+Bills payable
+2,473
+3,174
+31,517
+31,982
+29,272
+29,624
+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.
+398
+2,140
+218
+RMB million
+2015
+31 December
+RMB million
+31 December
+2016
+1,847
+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
+6,377
+7,427
+60,556
+65,889
+Less: current portion of long-term borrowings
+69
+58,462
+45
+EUR denominated
+2,448
+2,445
+Interest rates ranging from 1.80% to 2.60%
+per annum with maturities through
+20 March 2031
+Japanese Yen ("JPY")
+denominated
+484
+Interest rate at 2.85% per annum with
+maturities through 22 June 2017
+Interest rates ranging from Libor+0.7% to
+Libor+2.85% per annum with maturities
+through 26 December 2034
+54,179
+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.
+45
+2,448
+2,445
+484
+1,722
+31 December
+2015
+RMB million
+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).
+2016
+RMB million
+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
+31 December
+RMB million
+31 December
+2016
+Registered, issued and fully paid:
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 223
+66
+(9)
+4
+184
+(184)
+(183)
+183
+121
+- if RMB strengthens against foreign currencies
+(35)
+(121)
+- if RMB weakens against foreign currencies
+(Decrease) increase in profit after tax for the year:
+2016
+2015
+RMB million RMB million
+Other currencies
+Year ended 31 December
+Year ended 31 December
+2016
+2015
+RMB million RMB million
+Year ended 31 December
+2016
+2015
+RMB million RMB million
+JPY
+USD
+The following table details the Group's sensitivity to a 10% increase or decrease in
+exchange rate of each foreign currency against RMB, while all other variables are held
+constant. The sensitivity analysis includes only outstanding foreign currency denominated
+monetary items at the end of the reporting period.
+Sensitivity analysis
+150
+170
+For the year ended 31 December 2016
+267
+37. FINANCIAL INSTRUMENTS (Continued)
+Market risk (Continued)
+RMB million
+The Group closely monitors cash flow requirements and optimising its cash return. The Group
+prepares cash flow forecasts and ensures it has sufficient cash for the servicing of operation,
+financial, and capital obligations; this excludes the potential impact of extreme circumstances that
+cannot reasonably be predicted, such as natural disasters.
+Liquidity risk is the risk that the Group will not be able to meet its financial obligation as they fall
+due. The approach to managing liquidity is to ensure, as far as possible, that it will always have
+sufficient liquidity to meet its liabilities when due, under both normal and stressed conditions,
+without incurring unacceptable losses or risk damage to the Group's reputation.
+Liquidity risk
+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.
+The credit risk on liquid funds is limited because the counterparties are banks with good
+reputation.
+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 amount of contingent liability in relation to the financial guarantees provided by the
+Group is as disclosed in Note 39.3.
+the Group's continuing involvement in the derecognised bills receivables equal to their
+carrying amounts as disclosed in Note 24; and
+the carrying amount of the respective recognised financial assets as stated in the
+consolidated statement of financial position;
+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:
+Credit risk
+37.2 Financial risk management objectives and policies (Continued)
+37. FINANCIAL INSTRUMENTS (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+224 China Shenhua Energy Company Limited
+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).
+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.
+The Group's exposures to interest rates on financial liabilities are detailed in the liquidity risk
+management section of this note.
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate
+borrowings and variable-rate loans and receivables (see Notes 29 and 21). Other than
+the concentration of interest rate risk related to the movements in London Interbank
+Offered Rate and the loan interest published by the PBOC, the Group has no significant
+concentration of interest rate risk.
+The Group 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).
+Interest rate risk
+(ii)
+37.2 Financial risk management objectives and policies (Continued)
+435
+Sensitivity analysis
+897
+2,448
+112,701
+95,651
+Loans and receivables (including cash and
+cash equivalents)
+1,795
+1,800
+Available-for-sale investments
+Financial assets:
+31 December
+2015
+RMB million
+RMB million
+31 December
+2016
+The carrying amounts of each of the following categories of financial assets and financial liabilities
+at the end of the reporting period are set out as follows:
+37.1 Categories of financial instruments
+There were no changes in the Group's approach to capital management compared with previous years.
+37. FINANCIAL INSTRUMENTS
+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%).
+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.
+36. CAPITAL RISK MANAGEMENT
+All A shares and H shares rank pari passu in all material aspects.
+19,890
+19,890
+3,399
+3,399
+16,491
+16,491
+597
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,398,582,500 H shares of RMB1.00 each
+Derivative financial instruments
+54
+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.
+33,350
+RMB million RMB million RMB million RMB million
+Investments in wealth management products
+2015
+31 December
+2016
+Assets
+2015
+Liabilities
+2,208
+2,445
+218
+USD
+JPY
+The carrying amounts of the Group's foreign currency denominated monetary assets and
+monetary liabilities at the end of the reporting period are as follows:
+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.
+Currency risk
+(i)
+Other currencies
+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.
+Financial liabilities:
+Market risk
+Amortised cost
+172,081
+12
+160
+222
+182,172
+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
+39. COMMITMENTS AND CONTINGENT LIABILITIES (Continued)
+For the year ended 31 December 2016
+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).
+Notes to the Consolidated Financial Statements (Continued)
+39.3 Financial guarantees issued
+China Shenhua Energy Company Limited
+17
+66
+68
+3
+46
+23
+31 December
+2015
+RMB million
+45
+228
+39.4 Legal contingencies
+2016
+39.5 Environmental contingencies
+819
+RMB million
+634
+Interest income
+2015
+RMB million
+RMB million
+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:
+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.
+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.
+41. RELATED PARTY TRANSACTIONS
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 229
+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.
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group
+31 December
+2016
+38. ACQUISITION OF SUBSIDIARIES IN PRIOR
+Within one year
+100.00% equity interest Ningdong Power Plant;
+-
+Pursuant to a resolution passed at the directors' meeting on 31 October 2015, the Company acquired
+the equity interests of certain entities held directly or indirectly by Shenhua Group, including:
+For the year ended 31 December 2016
+Acquisitions from Shenhua Group
+Notes to the Consolidated Financial Statements (Continued)
+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:
+Financial liabilities:
+Income from entrusted loans
+100.00% equity interest in Xuzhou Power Plant; and
+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
+Operating lease commitments mainly represent business premises leased through
+non-cancellable operating leases. These operating leases do not contain provisions for contingent
+lease rentals. As at 31 December, future minimum lease payments under non-cancellable
+operating leases on business premises having initial or remaining lease terms of more than one
+year are payable as follows:
+39.2 Operating lease commitments
+47,793
+40,804
+21,170
+17,200
+26,623
+After one year but within five years
+After five years
+23,604
+RMB million
+31 December
+2016
+- Equipment
+- Land and buildings
+Contracted for but not provided
+As at 31 December, the Group had capital commitments for land and buildings and equipment as
+follows:
+39.1 Capital commitments
+31 December
+2015
+RMB million
+33
+9,082
+Interest expense
+31 December 2016
+4,768
+(xvii)
+Granting of loans from Shenhua Finance
+2,365
+2,123
+(xvi)
+Other income
+3,104
+3,804
+(xv)
+Sale of coal chemical product
+1,753
+1,021
+(xiv)
+Repayment of loans from Shenhua Finance
+(xviii)
+3,900
+11,159
+(ii)
+(i)
+3,324
+2,600
+(xxiii)
+Repayment of loans from Shenhua Group
+2,235
+Purchase of equipment and construction work
+(xxii)
+(11,008)
+(xxi)
+Net deposits received by Shenhua Finance
+Loans from Shenhua Group
+(xx)
+Repayment of entrusted loan
+(xix)
+Granting of entrusted loan
+5,748
+4
+9
+(xiii)
+195
+(vii)
+Transportation service income
+585
+688
+(vi)
+Ancillary and social services
+189
+812
+Mining service income
+1,385
+1,347
+(iv)
+Purchases of ancillary materials and spare parts
+290
+242
+(v)
+39
+Transportation service expense
+Sale of coal
+Coal export agency expense
+7
+44
+(xii)
+Repairs and maintenance services expense
+48
+48
+(viii)
+(xi)
+3,697
+6,227
+(x)
+Purchase of coal
+4,188
+4,724
+(ix)
+Property leasing
+Weighted On demand
+average
+or less than
+interest rate
+1 year
+1-2 years
+% RMB million RMB million RMB million RMB million
+2-5 years
+RMB million
+Total
+More than undiscounted
+5 years
+cash flows amount
+RMB million RMB million
+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
+Valuation technique(s)
+and key input(s)
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 39.3.
+Saved as discussed above, the Group also makes use of banks and financial institutions facilities as
+one of the effective sources of liquidity.
+210,673 182,172
+46,678
+594
+1,321
+2,440
+6,594
+5,680
+Debentures, medium-term notes and bonds
+4.45
+Derivative financial instruments
+6,614
+12,320
+3,757
+43,957
+39,604
+97,391
+31,324
+35,280
+21,266
+2,239
+4
+Level 1
+Financial liabilities:
+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
+4,387
+26,008
+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
+Fair value
+RMB million
+RMB million
+At 31 December 2015
+Carrying amount
+Fair value
+RMB million
+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
+33,350
+3.66
+Borrowings fixed interest rate
+61,311
+4,931
+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.
+2,583
+2,653
+10,710
+9,287
+4.58
+21,287
+8,952
+3,986
+3,879
+38,104
+35,305
+102,589
+17,428
+3.94
+Medium-term notes and bonds
+Borrowings fixed interest rate
+60,986
+Total
+carrying
+Accounts and bills payable, accrued expenses,
+other payables and long-term liabilities
+65,695
+206
+436
+425
+25,069
+66,762
+Borrowings variable interest rate
+4.60
+10,676
+7,727
+18,064
+46,839
+83,306
+66,503
+53,796
+198,882
+172,081
+RMB million
+RMB million
+other payables and long-term liabilities
+74,602
+265
+532
+535
+RMB million
+75,934
+Borrowings variable interest rate
+4.98
+13,936
+9,199
+21,107
+39,946
+84,188
+75,577
+2-5 years
+amount
+5 years
+Financial liabilities:
+Accounts and bills payable, accrued expenses,
+31 December 2015
+Weighted
+On demand
+Total
+Total
+cash flows
+average
+More than
+undiscounted
+carrying
+interest rate
+%
+1 year
+RMB million
+1-2 years
+RMB million
+or less than
+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.
+543
+China Shenhua Energy Company Limited
+20,147
+20,110
+Borrowings
+29
+4,824
+7,424
+12,128
+Accounts payable
+2,358
+2,245
+Accrued expenses and other payables
+32
+15,491
+26,406
+31
+13,507
+21
+4,023
+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
+Note
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+22
+24
+3,458
+3,959
+25
+3,182
+Total amounts due to Shenhua Group, an
+associate of Shenhua Group and fellow
+subsidiaries, and associates of the Group
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+22,673
+Other than those disclosed in Notes 21, 25, 29 and 32, amounts due from/to Shenhua Group, an
+associate of Shenhua Group, fellow subsidiaries, and associates of the Group bear no interest, are
+unsecured and are repayable in accordance with normal commercial terms.
+41.4 Transactions with other government-related entities in the PRC
+The Company is ultimately controlled by the PRC government and the Group operates in an
+economic environment currently predominated by government-related entities.
+Other than those transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries and associate of the Group as disclosed above, the Group conducts business with
+other government-related entities which include but are not limited to the following:
+-
+-
+Power sales;
+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.
+Sales and purchases of coal;
+Construction work;
+Purchases of ancillary materials and spare parts;
+Ancillary and social services; and
+Financial services arrangements.
+These transactions are conducted in the ordinary course of the Group's business on terms
+comparable to those with other entities that are not government-related. The Group has
+established its pricing policies in respect of sale of goods and provision of services, and approval
+process for purchases of products and services. Such policies and approval process apply to all
+counterporties regardless of whether the counterparty is government-related or not.
+230
+Transportation services;
+41.3 Contributions to post-employment benefit plans
+41. RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2016
+41.2 Key management personnel emoluments
+Key management personnel receive compensation in the form of fees, basic salaries, housing and
+other allowances, benefits in kind, discretionary bonuses and retirement scheme contributions.
+Key management personnel compensation of the Group is summarised as follows:
+Short-term employee benefits
+Post-employment benefits
+2016
+RMB million
+2015
+RMB million
+8
+1
+1
+9
+9
+Total remuneration is included in "personnel expenses" as disclosed in Note 10.
+234 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+36,075
+For the year ended 31 December 2016
+8
+Notes to the Consolidated Financial Statements (Continued)
+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.
+Notes to the Consolidated Financial Statements (Continued)
+Property leasing represents rental paid or payable in respect of properties leased from
+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.
+Repairs and maintenance services expense represents expense related to machinery
+repairs and maintenance services provided by fellow subsidiaries and an associate of the
+Group.
+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
+Coal export agency expense represents expense related to coal export agency services
+provided by a fellow subsidiary.
+Mining service income represents income earned from coal mining services to fellow
+subsidiaries.
+Purchases of ancillary materials and spare parts represent purchase of materials and utility
+supplies related to the Group's operations from fellow subsidiaries.
+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.
+41. RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2016
+41. RELATED PARTY TRANSACTIONS (Continued)
+41.1 Transactions with Shenhua Group, an associate of Shenhua Group, fellow
+subsidiaries, and associates of the Group (Continued)
+(iv)
+(v)
+(vi)
+(vii)
+(viii)
+(ix)
+(x)
+(xi)
+(xiii)
+(xiv)
+(xv)
+Notes to the Consolidated Financial Statements (Continued)
+41. RELATED PARTY TRANSACTIONS (Continued)
+(xii)
+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)
+(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)
+(v)
+(vi)
+41. RELATED PARTY TRANSACTIONS (Continued)
+(vii)
+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.
+For the year ended 31 December 2016
+2016 Annual Report 233
+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.
+For the year ended 31 December 2016
+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.
+232 China Shenhua Energy Company Limited
+(xix) Granting of entrusted loan represents an entrusted loan granted to an associate of the
+Group.
+(xx)
+Notes to the Consolidated Financial Statements (Continued)
+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.
+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:
+(xxiii) Repayment of loans from Shenhua Group and fellow subsidiaries by 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.
+The products and services provided under the agreement, other than the sharing of use of
+the information network system which is free of charge, are provided in accordance with
+the following pricing policy:
+price prescribed by the state (including any price prescribed by any relevant local
+government), if applicable;
+where there is no state-prescribed price but where there is a state-guidance price,
+then the state-guidance price;
+where there is neither a state-prescribed price nor a state-guidance price, the market
+price; or
+where none of the above is applicable or where it is not practical to apply the above
+pricing policies in reality, the price to be agreed between the relevant parties shall be
+based on reasonable costs incurred in providing the goods or services plus a profit
+margin of 5% of such costs.
+(i)
+1,030
+23,739
+18
+934
+Total equity
+8,114
+7,729
+25,180
+4,345
+Year ended 31 December
+2,958
+3,030
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2016
+2015
+2016
+160
+2015
+4,286
+427
+5,218
+2,769
+2016
+1,047
+Non-current assets
+12,292
+12,437
+18,506
+18,181
+4,885
+5,965
+6,183
+Current liabilities
+2,978
+3,001
+6,458
+5,695
+2,680
+2,557
+3,210
+3,266
+Non-current liabilities
+2,345
+448
+2015
+475
+2015
+Profit and total comprehensive
+income for the year
+886
+1,212
+1,364
+1,196
+75
+30
+634
+672
+826
+Dividend paid to non-controlling
+interests
+245
+193
+344
+254
+365
+471
+Net cash inflow from operating
+1,233
+2,998
+3,120
+2,082
+2,146
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Revenue
+6,324
+2016
+5,859
+9,234
+2,697
+2,972
+4,019
+4,092
+Expenses
+5,249
+4,174
+8,114
+7,948
+9,677
+1,976
+220
+11,680
+PRC
+activities
+20
+20
+20
+206
+335
+1,525
+1,625
+Shenhua Huanghua Harbour
+Administration Co., Ltd.
+PRC
+30
+30
+48
+367
+156
+50
+2,866
+2,610
+Shenhua Guohua International
+Power Co., Ltd.
+Guangdong Guohua Yuedian Taishan
+2,870
+2,940
+1,955
+Shenhua Sichuan Energy Co., Ltd.
+PRC
+49
+49
+(36)
+72
+1,550
+1,588
+Shuohuang Railway Development
+Co., Ltd.
+Power Co., Ltd.
+PRC
+47
+3,062
+2,388
+14,112
+12,343
+Shenhua Zhonghai Shipping Co., Ltd. PRC
+49
+49
+70
+18
+47
+1,967
+PRC
+30
+Shenhua Zhunge'er Energy
+Co., Ltd.
+Shenhua Baorixile Energy
+Industrial Co., Ltd.
+Hebei Guohua Cangdong
+Power Co., Ltd.
+2016
+2015
+RMB million
+RMB million
+31 December 31 December
+2016
+RMB million
+RMB million
+31 December 31 December
+2015
+2016
+RMB million
+31 December 31 December 31 December
+2015
+2016
+2015
+RMB million
+RMB million
+RMB million
+Current assets
+1,145
+1,062
+13,580
+Shenwan Energy Co., Ltd.
+31 December
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+43. SUBSIDIARIES (Continued)
+For the year ended 31 December 2016
+302
+183
+3,010
+3,168
+Zhejiang Guohua Zheneng Power
+Generation Co., Ltd.
+PRC
+40
+40
+4114
+414
+30
+647
+2,381
+Individually immaterial subsidiaries
+with non-controlling interests
+48,089
+45,699
+67,994
+65,853
+240
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+2,212
+1,444
+1,436
+4,199
+1,106
+1,594
+17,250
+13,386
+2,112
+2,002
+Expenses
+2,741
+2,780
+1,162
+1,449
+8,737
+7,234
+1,928
+1,971
+Profit (loss) and total comprehensive
+income for the year
+845
+967
+(74)
+147
+4,099
+3,873
+Revenue
+RMB million
+3,241
+29,848
+26,107
+6,000
+5,857
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2016
+17
+2015
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+2016
+RMB million
+2015
+RMB million
+2016
+2015
+RMB million
+2016
+3,163
+6,477
+13
+(766)
+(1,935)
+(2,010)
+(85)
+(393)
+Net cash (outflow) inflow from
+financing activities
+(828)
+(985)
+531
+(394)
+(6,460)
+(2,653)
+(273)
+Net cash inflow (outflow)
+2
+(697)
+24
+(179)
+14
+(9)
+(656)
+(212)
+(610)
+activities
+143
+36
+Dividend paid to non-controlling
+interests
+529
+20
+540
+40
+2
+2
+1,435
+5,051
+3,457
+Net cash inflow from operating
+activities
+1,438
+1,197
+127
+463
+8,419
+4,484
+372
+472
+Net cash outflow from investing
+529
+2,394
+3,286
+Total equity
+Net cash inflow (outflow)
+2,798
+112
+112
+(9)
+13
+103
+41
+2016 Annual Report 241
+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)
+Dingzhou Power
+Shenhua Sichuan
+Energy Co., Ltd.
+Shuohuang Railway
+Development Co., Ltd.
+Shenhua Zhonghai
+Shipping Co., Ltd.
+31 December 31 December 31 December 31 December
+31 December
+31 December 31 December 31 December
+2016
+(1,234)
+(610)
+(54)
+171
+956
+650
+Net cash inflow (outflow) from
+investing activities
+1,401
+(1,457)
+(4,045)
+(962)
+(184)
+Net cash outflow from financing
+2015
+activities
+(942)
+(42)
+(3)
+(363)
+25
+390
+958
+1,063
+(295)
+(348)
+(47)
+3,240
+2016
+2016
+29,320
+7,125
+6,803
+Current liabilities
+2,276
+2,072
+1,130
+598
+5,507
+8,571
+1,376
+383
+Non-current liabilities
+973
+1,139
+2,087
+1,961
+2,242
+2,117
+718
+1,999
+29,387
+4,457
+5,349
+5,568
+2015
+2016
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2015
+RMB million
+1,060
+929
+1,031
+1,343
+8,210
+7,475
+969
+1,928
+Non-current assets
+5,429
+Current assets
+575
+The Company has the control over Guohua Taicang Power Co. through its voting rights over 50%.
+50
+Taishan Power Co., Ltd.
+80 Generation and sale of
+electricity
+Zhejiang Guohua Zheneng
+PRC
+Limited company
+RMB3,255 million
+60
+60
+Power Generation Co., Ltd.
+Suizhong Power Co., Ltd.
+(note (i))
+PRC
+Limited company
+RMB4,029 million
+ទ
+60 Generation and sale of
+electricity
+65 Generation and sale of
+electricity
+2016 Annual Report 237
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+Place of
+incorporation
+80
+RMB4,670 million
+Limited company
+Guangdong Guohua Yuedian PRC
+Shaanxi Guohua Jinjie Energy PRC
+Co., Ltd.
+Limited company
+RMB2,278 million
+70
+57
+44
+58 Coal mining and development;
+generation and sale of
+electricity
+57 Coal mining; provision of
+loading and transportation
+services
+63 Coal mining; provision of
+loading and transportation
+services
+70 Generation and sale of
+electricity; coal mining and
+development
+Name of the subsidiary
+Shenhua Guohua International PRC
+Power Co., Ltd.
+RMB4,010 million
+70
+70 Generation and sale of
+electricity
+Shenhua Shendong Power
+Co., Ltd.
+PRC
+Limited company
+RMB3,024 million
+100
+10
+100 Generation and sale of
+electricity
+Limited company
+Energy Co., Ltd.
+and operation Type of legal entity
+Details of the Company's Material Subsidiaries (Continued)
+Limited company
+RMB2,000 million
+Co., Ltd. (note (iii)))
+Shenhua Sichuan Energy
+PRC
+Limited company
+RMB2,152 million
+51
+Co., Ltd.
+51 Generation and sale of
+electricity; trading of coal
+Shenhua Fujian Energy
+PRC
+Limited company
+RMB2,098 million
+100
+Co., Ltd.
+100 Generation and sale of
+electricity
+Shuohuang Railway
+PRC
+Limited company
+RMB5,880 million
+PRC
+Guohua Taicang Power
+50 Generation and sale of
+electricity
+50
+Proportion of ownership interest
+and voting rights held by
+31 December
+Particulars of
+registered capital
+the Group
+31 December
+2016
+Principal activities
+2015
+%
+Hebei Guohua Cangdong
+Power Co., Ltd.
+43. SUBSIDIARIES (Continued)
+PRC
+RMB1,834 million
+51
+51 Generation and sale of
+electricity
+Dingzhou Power (note (ii))
+PRC
+Limited company
+RMB1,561 million
+41
+41 Generation and sale of
+electricity
+50
+Limited company
+53
+RMB2,674 million
+PRC
+Accounts and bills receivable
+Prepaid expenses and other current assets
+Cash and time deposits at banks
+Restricted bank deposits
+Borrowings
+Accrued expenses and other payables
+42. EVENTS AFTER THE REPORTING PERIOD
+31 December
+2016
+RMB million
+31 December
+2015
+RMB million
+12,354
+16,606
+1,289
+1,396
+44,602
+43,233
+6,141
+4,611
+64,578
+59,567
+Balances with other government-related entities, including state-controlled banks in the PRC
+5,696
+448
+691
+5,463
+2016 Annual Report 235
+Notes to the Consolidated Financial Statements (Continued)
+41. RELATED PARTY TRANSACTIONS (Continued)
+For the year ended 31 December 2016
+41.4 Transactions with other government-related entities in the PRC (Continued)
+Having considered the potential for transactions to be impacted by related party relationships,
+the Group's buying, pricing strategy and approval processes, and what information would
+be necessary for an understanding of the potential effect of the relationship on the financial
+statements, the Directors are of the opinion that the following transactions with other
+government-related entities require disclosure:
+Transactions with other government-related entities, including state-controlled banks in the PRC
+2015
+Coal revenue
+Power revenue
+3,669
+Transportation costs
+Interest expenses (including amount capitalised)
+2016
+RMB million
+RMB million
+69,822
+63,347
+67,472
+69,389
+7,618
+10,427
+Interest income
+Limited company
+2,725
+236
+RMB4,696 million
+51
+51 Trading of coal
+Shenhua Shendong Coal Group PRC
+Co., Ltd.
+Limited company
+RMB4,989 million
+100
+100 Trading of coal; provision of
+integrated services
+Shenhua Zhunge'er Energy
+PRC
+Limited company
+RMB7,102 million
+50
+58
+Co., Ltd.
+Shenhua Baorixile Energy
+PRC
+Limited company
+RMB1,169 million
+Industrial Co., Ltd.
+Shenhua Beidian Shengli
+Limited company
+Shenwan Energy Co., Ltd. PRC
+100 Trading of coal
+10
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+43. SUBSIDIARIES
+Details of the Company's Material Subsidiaries
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the end of
+the reporting period are set out below:
+Place of
+incorporation
+Proportion of ownership interest
+Name of the subsidiary
+and operation Type of legal entity
+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.
+Particulars of
+registered capital
+the Group
+Principal activities
+31 December
+31 December
+2016
+2015
+Shenhua Sales Group Co., Ltd. PRC
+Limited company
+RMB1,888 million
+100
+and voting rights held by
+503
+53
+Shenhua Zhunchi Railway Co., PRC
+(iii)
+242
+2016 Annual Report 239
+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
+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:
+Name of the subsidiary
+Place of
+incorporation
+and operation
+Proportion of ownership
+interest and
+voting rights held by
+non-controlling interests
+Profit allocated to
+non-controlling interests
+Accumulated
+non-controlling interests
+31 December
+31 December
+Year ended 31 December
+31 December
+31 December
+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)
+Shenhua Zhunneng Resources PRC
+Limited company
+RMB1,200 million
+100
+10
+Development & Utilisation
+100 Comprehensive utilisation of
+inferior coal resources
+Co., Ltd.
+Xuzhou Power
+PRC
+2016
+Limited company
+100
+100 Generation and sale of
+electricity
+Zhoushan Power
+PRC
+Limited company
+RMB755 million
+51
+51 Generation and sale of
+electricity
+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.
+Notes:
+RMB1,790 million
+services
+2015
+2015
+PC
+43
+43
+206
+90
+25
+275
+1,885
+1,860
+Hebei Guohua Cangdong Power
+Co., Ltd.
+PRC
+49
+49
+329
+405
+1,449
+1,485
+Dingzhou Power
+PRC
+59
+PRC
+Co., Ltd.
+Shenhua Baorixile Energy Industrial
+10,027
+2016
+2015
+%
+%
+RMB million
+RMB million
+RMB million
+RMB million
+Shenwan Energy Co., Ltd.
+PRC
+2016
+49
+434
+594
+3,976
+3,787
+Shenhua Zhunge'er Energy Co., Ltd. PRC
+42
+42
+576
+505
+10,636
+49
+Development Co., Ltd.
+51 Provision of financial lease
+RMB1,000 million
+10
+100 Coal chemical
+Chemical Co., Ltd.
+Shenhua Railway
+PRC
+Limited company
+RMB4,701 million
+100
+10
+100 Provision of transportation
+Transportation Co., Ltd.
+Shenhua Finance
+PRC
+Limited company
+RMB5,000 million
+100
+100
+100 Provision of financial services
+China Shenhua Overseas
+Hong Kong
+Limited company
+100
+RMB5,132 million
+Limited company
+PRC
+Limited company
+RMB4,710 million
+85
+85
+53 Provision of transportation
+services
+85 Provision of transportation
+Ltd.
+services
+Shenhua Huanghua Harbour PRC
+Limited company
+HKD5,252 million
+RMB6,790 million
+Administration Co., Ltd.
+70 Provision of harbour and port
+services
+Shenhua Zhonghai Shipping
+PRC
+Limited company
+RMB5,180 million
+51
+Co., Ltd.
+51 Provision of Transportation
+services
+Shenhua Baotou Coal
+70
+51
+100
+Development & Investment
+AUD350 million
+100
+10
+100 Coal mining and development;
+generation and sale of
+electricity
+100 Coal mining and development;
+generation and sale of
+electricity
+PT GH EMM Indonesia
+Indonesia
+Limited company
+USD63 million
+70
+70 Coal mining and development;
+generation and sale of
+electricity
+Shenhua Baoshen Railway
+Group Co., Ltd.
+PRC
+Limited company
+RMB10,000 million
+100
+100 Provision of transportation
+services
+(Tianjin) Finance Lease Co., Ltd. PRC
+Limited company
+Limited company
+Australia
+Shenhua Watermark Coal
+Pty Ltd.
+100
+Co., Ltd.
+238
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2016
+43. SUBSIDIARIES (Continued)
+Details of the Company's Material Subsidiaries (Continued)
+Place of
+incorporation
+Name of the subsidiary
+and operation Type of legal entity
+100 Investment holding
+Particulars of
+registered capital
+Principal activities
+31 December
+31 December
+2016
+2015
+%
+Shenhua Australia Holding
+Pty Ltd.
+Australia
+Limited company
+AUD400 million
+Proportion of ownership interest
+and voting rights held by
+the Group
+China Shenhua Energy Company Limited
+For the year ended 31 December 2016
+Short-term debenture
+36,853
+1,647
+1,647
+1,065
+1,065
+127,264
+31,796
+132,569
+1,712
+3,469
+3,446
+52,469
+RMB million
+31 December
+2015
+1,780
+3,167
+3,245
+152
+649
+335
+Restricted bank deposits
+64,923
+84,782
+Prepaid expenses and other current assets
+19,385
+22,559
+Accounts and bills receivable
+4,436
+3,591
+Inventories
+225,728
+233,080
+58
+Current assets
+Time deposits with original maturity over three
+Total non-current assets
+Lease prepayments
+3
+Net cash inflow (outflow)
+(2,712)
+(2,712)
+(1,344)
+(1,890)
+2
+(2,180)
+(2,600)
+(1,488)
+activities
+Net cash outflow from financing
+25
+(130)
+(1,416)
+22
+122
+(27)
+Other non-current assets
+Available-for-sale investments
+Investments in associates
+Investments in subsidiaries
+Property, plant and equipment
+Construction in progress
+Intangible assets
+Non-current assets
+31 December
+2016
+RMB million
+NOTES
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 243
+(1,530)
+46
+344
+Deferred tax assets
+(470)
+months
+9,500
+3,460
+Total equity
+Share capital
+Reserves
+Equity
+Net assets
+Total non-current liabilities
+3,872
+Accrued reclamation obligations
+Medium-term notes
+Borrowings
+Non-current liabilities
+31 December
+2015
+RMB million
+31 December
+2016
+RMB million
+NOTES
+Long-term liabilities
+4,985
+24,955
+872
+Notes to the Consolidated Financial Statements (Continued)
+233,014
+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
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY (Continued)
+27,750
+For the year ended 31 December 2016
+China Shenhua Energy Company Limited
+8,693
+6,251
+Accounts and bills payable
+4,998
+9,038
+5,263
+Accrued expenses and other payables
+Borrowings
+119,307
+158,293
+Total current assets
+20,414
+19,276
+Cash and cash equivalents
+Current liabilities
+63,875
+57,364
+Current portion of long-term liabilities
+244
+264,112
+294,187
+Total assets less current liabilities
+38,384
+61,107
+Net current assets
+80,923
+97,186
+Total current liabilities
+630
+1,570
+Income tax payable
+200
+20,227
+Notes to the Consolidated Financial Statements (Continued)
+(312)
+55,404
+(424)
+5,099
+278
+Non-current liabilities
+3,230
+3,585
+9,291
+5,630
+7,932
+1,304
+4,913
+5,147
+Current liabilities
+10,527
+10,276
+1,698
+1,841
+2,167
+2,501
+2016
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+5,953
+5,530
+10,559
+10,461
+8,699
+9,554
+8,123
+7,624
+Total equity
+2,595
+18,340
+RMB million
+16,974
+14,538
+2016
+31 December 31 December
+31 December
+2015
+2016
+2015
+31 December
+2015
+31 December 31 December
+2016
+Shenhua Guohua
+International Power Co., Ltd.
+Guangdong Guohua Yuedian
+Taishan Power Co., Ltd.
+31 December 31 December
+2016
+2015
+RMB million
+RMB million
+Shenhua Huanghua Harbour
+Administration Co., Ltd.
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+43. SUBSIDIARIES (Continued)
+Zhejiang Guohua Zheneng
+Power Generation Co., Ltd.
+RMB million
+RMB million
+RMB million
+12,004
+1,434
+Non-current assets
+1,251
+1,340
+3,677
+3,260
+1,661
+1,419
+1,310
+1,439
+Current assets
+RMB million
+RMB million
+RMB million
+14,366
+2015
+RMB million
+11,332
+2015
+460
+55
+455
+189
+118
+10
+410
+306
+interests
+Dividend paid to non-controlling
+1,618
+1,034
+609
+69
+490
+10
+460
+115
+Net cash inflow from operating
+2016
+(230)
+(155)
+investing activities
+Net cash (outflow) inflow from
+2,687
+1,312
+1,860
+2,546
+19
+719
+1,962
+2,832
+1,646
+activities
+676
+20
+583
+1,223
+3,964
+7,607
+6,310
+Revenue
+RMB million
+RMB million
+2,780
+RMB million
+RMB million
+2015
+2016
+520
+2015
+2016
+RMB million
+9,794
+RMB million
+5,135
+income for the year
+Profit and total comprehensive
+5,111
+1,031
+10,728
+9,045
+2,022
+10,758
+2,015
+1,677
+5,300
+4,963
+Expenses
+7,275
+6,476
+428
+410
+608
+Profit before income tax
+Income tax
+588
+69,598
+69,844
+237
+477
+(3,568)
+(5,748)
+(5,123)
+(4,459)
+803
+(3,321)
+Finance costs
+61,847
+723
+Share of results of associates
+34,520
+Company
+(11,116)
+17,649
+758
+24,910
+39,301
+45,706
+50,264
+Equity holders of the
+Profit for the year attributable to:
+41,253
+31,970
+49,063
+55,932
+58,482
+Profit for the year
+(9,283)
+(9,561)
+(12,784)
+(13,912)
+24,959
+776
+82,871
+(1,511)
+expenses
+General and administrative
+(610)
+(584)
+(794)
+(1,031)
+(881)
+Selling expenses
+(8,458)
+58,284
+74,972
+80,978
+(123,341)
+(178,109)
+(206,359)
+(178,407)
+Non-controlling interests
+177,069
+53,728
+Interest income
+(9,285)
+(9,714)
+(626)
+(419)
+(382)
+(494)
+Other expenses
+1,379
+1,659
+939
+(8,835)
+534
+Other income
+(3,078)
+(5,856)
+(770)
+(888)
+(474)
+Other gains and losses
+(8,423)
+1,242
+8,218
+183,127
+(124,843)
+9,762
+384,969
+363,921
+365,570
+338,210
+316,270
+Net assets
+191,760
+195,870
+Equity attributable to equity
+185,302
+168,056
+Total liabilities
+79,575
+94,383
+74,524
+53,115
+58,679
+Total non-current liabilities
+187,116
+112,185
+holders of the Company
+280,113
+253,081
+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
+316,270
+266,013
+Total equity
+65,853
+64,872
+58,097
+50,257
+Non-controlling interests
+316,975
+298,068
+300,698
+67,994
+101,487
+110,778
+134,001
+2014
+RMB Million
+RMB Million RMB Million
+2013
+2012
+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
+2015
+250
+0.887
+1.976
+2.298
+2.527
+- Basic
+Earnings per share (RMB)
+7,060
+7,310
+1.252
+2016
+RMB Million RMB Million
+Total non-current assets
+109,377
+Total current liabilities
+576,729
+559,791
+550,872
+525,326
+484,326
+Total assets
+133,463
+121,036
+119,646
+122,567
+114,753
+Total current assets
+443,266
+438,755
+431,226
+402,759
+369,573
+10,226
+289,230
+(6,365)
+Gross profit
+2,840
+(2,840)
+(4,281)
+4,281
+(14,718)
+--- (14,718)
+85,001
+17,395
+At 31 December 2016
+production funds
+Utilisation of maintenance and
+production funds
+Appropriation of maintenance and
+Dividend declared (Note 13)
+17,395
+for the year
+15,987
+110,455
+85,001
+(398)
+2,699
+(6,365)
+56,997
+56,967
+1,681
+- 30
+56,967
+56,967
+50
+30
+----
+213,124
+30
+Total comprehensive income
+Other comprehensive income
+Profit for the year
+Total
+Retained
+earnings
+Capital and
+other reserves
+income
+RMB million RMB million
+RMB million
+reserves
+RMB million
+Statutory comprehensive
+Other
+44. INFORMATION ABOUT THE FINANCIAL POSITION OF THE COMPANY (Continued)
+For the year ended 31 December 2016
+Notes to the Consolidated Financial Statements (Continued)
+2016 Annual Report 245
+259,385
+Share
+premium
+RMB million RMB million
+At 1 January 2015
+85,001
+At 31 December 2015
+production funds
+production funds
+Appropriation of maintenance and
+Dividend declared (Note 13)
+year
+Total comprehensive income for the
+Other comprehensive income
+Profit for the year
+17,395
+17,395
+210,447
+109,219
+1,681
+14,546
+18,288
+30
+Utilisation of maintenance and
+158,756
+(Wang Yongcheng)
+(Wang Shumin)
+IMHE
+张飞
+(Wang Jinli)
+(Li Dong)
+(Zhang Zifei)
+(Ling Wen)
+Section XV Signing Page for Opinions (Continued)
+China Shenhua Energy Company Limited
+248
+(Shen Lin)
+申林
+(Zhou Dayu)
+Senior Management
+明
+(Huang Qing)
+(Zhang Kehui)
+Cost of sales
+1,681
+Revenue
+RMB Million RMB Million
+2016
+2015
+2014
+RMB Million
+For the year ended 31 December
+2013
+RMB Million
+RMB Million
+2012
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+The finance information below is from the financial statement prepared by the Group in accordance with
+International Financial Reporting Standards.
+Section XVI Summary of Major Financial Information for the Recent Five Years
+2016 Annual Report 249
+China Shenhua Energy Company Limited
+17 March 2017
+周大亨
+(Zhai Richeng)
+(Zhang Jiming)
+Supervisors
+Zhang Yuzhuo, Chairman
+The original copies of all documents and announcements of the Company publicly
+disclosed in the newspapers designated by the CSRC during the reporting period
+The annual report for the year 2016 published on the Shanghai Stock Exchange and
+the Hong Kong Stock Exchange
+The original copies of all documents sealed by the accounting firm and signed and
+sealed by the certified public accountant
+The financial statements signed and sealed by the chairman, the Chief Financial
+Officer and the General Manager of the Financial Department
+The annual report for the year 2016 signed by the chairman
+Section XIV Documents Available for Inspection
+Approved by the Board for submission on: 17 March 2017
+China Shenhua Energy Company Limited
+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
+翟
+(2,699)
+263,756
+246
+2016 Annual Report 247
+Documents Available
+for Inspection
+(Li Dong)
+(Guo Peizhang)
+(Zhao Jibin)
+部の
+(Fan Hsu Lai Tai)
+(Gong Huazhang)
+觉徐丽泰
+(Chen Hongsheng)
+(Ling Wen)
+韩建国
+(Zhang Yuzhuo)
+張玉年
+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.
+(Han Jianguo)
+Section XV Signing Page for Opinions
+05
+-
+44.4
+North China Power Grid Shandong
+Others
+25.6
+Shouguang Power
+3.5
+308
+84
+32.3
+Chemical (including
+307
+Central China Power Grid Henan
+3,701
+41.8
+24.1
+31.2
+5,034
+(310)
+294
+169.5
+Mengin Power
+293.8
+350
+Total
+84.1
+15.0
+58.0
+Others
+331
+314
+4.994
+49.6
+52.9
+North China Power Grid Tianjin
+Panshan Power
+coal slurry)
+290
+1.0
+296
+Coal chemical business
+(1.7)
+Overseas
+1.8
+1.9
+(5.3)
+Sanhe Power
+North China Power Grid Hebei
+63.3
+58.9
+4,870
+304
+Dingzhou Power
+North China Power Grid Hebei
+137.5
+127.2
+Ningdong Power
+5,457
+64.1
+63.0
+billion tonnenm
+Shipment turnover
+11.7
+60
+1.7
+6.7
+Metallurgy
+(mal-fired power)
+0.1
+0.4
+0.8
+Shipping
+2442
+749
+289.2
+Thermal coal
+132.4
+5,515
+304
+297
+18.4
+Northwest Power Grid
+(11.0)
+34.2
+(11.2)
+1,320
+1,320
+639
+Personnel expenses
+5.030 285.5
+1,200
+1,200
+960
+MW
+2016
+%
+tonne
+tonnes
+million tonnes tonne milion
+31 December
+31 December
+18.3 5.949 289.3 20.6
+285.5
+5.220
+Materials, fuel and power
+317
+MW
+960
+2016
+2016
+Cost of coal purchased
+26,286 109.4 240.3 17,264
+81.2 2126
+output
+13.0
+MW
+Production cost of self-produced
+31,297 285.5 109.6 35,654 289.3 1232
+coal
+960
+554
+Cost of power output
+dispatch
+52,472 2,205.7
+MW
+Ningxia
+Power
+RMBA unit cost
+143
+16.4
+Indonesia
+PLN
+EMM Indonesia
+328
+320
+3,095
+19
+2.1
+Guangxi
+Guangxi Power Grid
+Liuzhou Power
+205
+359
+5,184
+30.6
+5,470
+369
+476
+Table 12 Coal Sales Price
+million
+million RMB/ RMB
+RMB
+capacity as at
+capacity as at
+in installed
+Volume Unit cost Change in
+Volume Unit cost Cost
+2016
+Cost
+(decrease)
+སྒྱུ རྒྱུ 』མོཟེ ཨཨྰཿཨྰཿཔུཀྐི སི ཧྲི࿄ཝཿཕྱམཝཿནཱཀྐམུནཱནཱསུབཨཽ་བོ་བྷཝ་ཟབྷི
+301
+315
+4,428
+2,144.2
+2,297.3
+Total for coal-fired power plants/weighted average
+Total installed Equity installed
+301
+Repairs and maintenance
+Domestic Coal Sales Volume
+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
+38.2
+38.2
+24.9
+153.7
+164.1
+Liaoning
+Northeast Power Grid
+(12.0)
+Xuzhou Power
+East China Power Grid
+Jiangsu
+103.9
+98.6
+5,193
+289
+64
+313
+126.2
+327
+95.8
+31.7
+Power segment
+109.5
+178.3
+Suizhang Power
+Eastern China
+210.8
+19.1
+Others
+325
+244
+Northwest Power Grid
+Shaanxi
+9.0
+79
+4,094
+382
+296
+Shenhua Sichuan Energy
+Sichuan
+24.0
+21.6
+1,901
+332
+375
+By usage
+6,144
+135.3
+147.5
+Shaanxi
+2.9
+0.8
+09
+222.2
+Port
+3.0
+174
+Fujian Energy
+30.4
+Jinje Energy
+East China Power Grid
+Fujian
+105.1
+99.8
+4,589
+308
+304
+North China Power Grid
+Shenmu Power
+Table 9
+48.1
+Northern China
+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
+Zhejiang
+43.6
+40.8
+2015
+Proportion of
+domestic sales
+2016
+340
+Table 10
+Capital Expenditure Plan for 2017
+Taishan Power
+South China Power Grid Guangdong
+177.5
+165.9
+3,550
+313
+4.792
+375
+South China Power Grid Guangdong
+30.6
+30.0
+27.7
+4.642
+328
+380
+21-3
+Huizhou Thermal
+185.6
+342
+million tonnes
+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
+288
+310
+By region
+66.0
+Jiangsu
+East China Power Grid
+Taicang Power
+%
+million tonnes
+%
+Shenwan Energy
+East China Power Grid
+Anhui
+214.8
+204.5
+347
+4.669
+301
+100 million
+100 million
+100 million
+Domestic sales
+386.2
+100.0
+365.5
+301
+2.474 285.5
+21
+8,187
+Shengli Energy Branch
+Major
+Branches
+Guohua Power Branch
+65.00%- Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+50.00%-Suizhong Power Co., Ltd.
+55.00% Sanhe Power Co., Ltd.
+65.00%- Tianjin Guohua Panshan Power Generation Co., Ltd.
+70.00% Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+-100.00% Shenhua Guohua Guangdong Electricity Sales Co., Ltd.
+-100.00% Shenhua Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+56.77% Shenhua Guohua Ningdong Power Generation Co., Ltd.
+Guohua Huizhou Thermal Power Branch
+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
+52.20% Shenhua Guohua Guangtou (Liuzhou) Power Generation Co., Ltd.
+-100.00% Guohua Xuzhou Power Generation Co., Ltd.
+-100.00%-
+-100.00% Shenhua Guohua Jiujiang Power Co., Ltd.
+Shenhua Guohua Yongzhou Power Co., Ltd.
+50.00%- Guohua Taicang Power Co., Ltd.
+52.00% Shenhua Guohua Guangtou (Beihai) Power Generation Co., Ltd.
+-100.00% Shenhua Guohua (Beijing) Gas Thermal Power Co., Ltd.
+Inner Mongolia Guohua Hulunbeier Power Generation Co., Ltd.
+51.00% Shenhua Sichuan Energy Co., Ltd.
+Shenhua Guohua Zhangzhou Power Co., Ltd.
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+-100.00% Ningxia Guohua Ningdong Power Generation Co., Ltd.
+51.00%- Shenhua Funeng Power Generation Co., Ltd.
+30
+China Shenhua Energy Company Limited
+100 million tonnes
+2.809
+103.5
+2.8
+2.898
+Commercial coal production 100 million tonnes
+Coal sales
+(%)
+(%)
+Year-on-year
+change
+Actual
+amount for
+2015
+completion
+2016
+(after
+adjustments)
+Proportion of
+Actual
+amount for Target for
+2016
+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%.
+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.
+BUSINESS REVIEW
+I.
+Section V Directors' Report
+80.00%-
+3.949
+-51.00%-
+51.00% Shenwan Energy Co., Ltd.
+Shenhua Baoshen Railway Group Co., Ltd.
+88.16%
+-100.00%
+100.00% Shenhua Sales Group Co., Ltd.
+Shenhua Australia Holdings Pty Limited
+Shendong Coal Branch
+Ha'erwusu Coal Branch
+Companies
+70.00%- PT GH EMM Indonesia
+Major
+Controlling
+Tianjin Guohua Jinneng Power Co., Ltd.
+55.00%-Jiangsu Guohua Chenjiagang Power Co., Ltd.
+88.46%
+65.00%-
+80.00% Guangdong Guohua Yudean Taishan Power Co., Ltd.
+Shenhua Guohua International Power Co., Ltd.
+70.00%- Shaanxi Guohua Jinjie Energy Co., Ltd.
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+40.50%-
+Hebei Guohua Cangdong Power Co., Ltd.
+51.00%-
+80.00% Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+73.33%- Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+60.00% Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+70.00%-
+Shenhua Baoshen Railway Co., Ltd.
+Shenhua Ganquan Railway Co., Ltd.
+90.00%
+Shenhua Xinzhun Railway Co., Ltd.
+Shenhua Fujian Energy Co., Ltd.
+-100.00%-
+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.
+51.00% Shenhua (Tianjin) Financial Leasing Co., Ltd.
+-100.00% Shenhua Zhunneng Group Co., Ltd.
+100.00% Shenhua Hong Kong Limited
+-100.00% China Shenhua Overseas Development and Investment Co., Ltd. 100.00%
+-100.00% Shenhua Geological Exploration Co., Ltd.
+-100.00% Shenhua Information Technology Co., Ltd.
+100.00% Shenhua Logistics Group Corporation Limited
+indirectly controlled)
+(Directly and
+100.00% Shenhua Finance Co., Ltd.
+51.00% Shenhua Zhonghai Shipping Co., Ltd.
+40.00% Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+70.00% Shenhua Huanghua Harbour Administration Co., Ltd.
+55.00% Shenhua Tianjin Coal Dock Co., Ltd.
+Railway Track Mechanical Maintenance Branch
+Shenshuo Railway Branch
+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.
+-51.00%-
+3.55
+111.2
+3.705
+As at
+13.0
+62,597
+70,762
+percentage points
+Increased by 2.0
+5.9
+7.9
+As at
+percentage point
+4.5
+5.5
+RMB million
+EBITDA
+end of the period
+%
+Return on net assets as at the
+end of the period
+Increased by 1.0
+31 December
+2016
+31 December
+2015
+equity ratio
+Decreased by 1.1
+23.1
+22.0
+Total debt to total debt and total %
+percentage points
+Decreased by 1.8
+35.0
+33.2
+%
+Gearing ratio
+holders per share
+6.3
+14.99
+15.94
+RMB/share
+Equity attributable to equity
+(%)
+Change
+Return on total assets as at the %
+Change
+(%)
+2015
+2016
+RMB100 million
+Selling, general and
+1,233.41
+113.1
+1,104
+1,248.43
+RMB100 million
+Cost of sales
+1,770.69
+117.4
+1,560
+1,831.27
+RMB100 million
+Revenue
+210.45
+104.3
+211.40
+220.57
+Total power output dispatch Billion kWh
+140.58
+CLP Guohua Shenmu Power Co., Ltd.
+150
+148.13
+Major financial indicators of the Group for 2016 are as follows:
+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.
+6.7%
+/ Year-on-year
+decrease of
+Year-on-year
+decrease of
+5%
+Year-on-year
+decrease of
+11.0%
+coal
+costs of self-produced
+Changes in unit production /
+and net finance costs
+administrative expenses
+(5.1)
+1.2
+3.4
+4.8
+6.6
+3.2
+364315
+26842-
+93.7
+51.00%-
+-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.
+Note: The equity structure diagram of China Shenhua (including major branches/
+subsidiaries) as at 31 December 2016 is for illustrative purpose only.
+| 鐵路 RAILWAY
+B15. 台山電力
+Shouguang Power
+B29.柳州電力
+Liuzhou Power
+B28. 壽光電力
+Yuyao Power
+B27. 余姚電力
+Zhuhai Wind
+EMM Nansu
+B26、珠海風能
+C1. 神朔鐵路
+Ningdong Power
+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
+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
+Shenshuo Railway
+C2.朔黃鐵路
+Shuchuang Railway
+C3.黃萬鐵路
+E1. 神華中海航運
+.航運 SHIPPING
+Baotou Coal Chemical
+F1. 包頭煤化工
+、煤化工 COAL CHEMICAL
+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
+D1.黃驊港
+港口 PORT
+C6.巴准鐵路
+Baoshen Railway
+C5. 包神鐵路
+Dazhun Railway
+C4. 大准鐵路
+Huangwan Railway
+B14.神木電力
+Jinjie Energy
+B13. 錦界能源
+Zheneng Power
+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
+主要資產分佈圖 Assets Distribution Map
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+Taiwan
+台灣:
+A6.澳大利亞沃特馬克煤礦項目(規劃審查中)
+Shenhua Zhonghai Shipping Company
+Watermark Coal Project in Australia (plans under review)
+Xinjie Taigemiao Exploration Area (preliminary work in progress)
+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
+Dingzhou Power
+B10. 綏中電力
+B3. 定洲電力
+Beijing Gas Power
+Sanhe Power
+B9. 北京燃氣
+B2. 三河電力
+Guohua Hulunbeler Power
+Cangdong Power
+A7. 新街台格廟勘查區(前期工作階段)
+percentage points
+Bazhun Railway
+C7.甘泉鐵路
+CB.准池鐵路
+Coal Production
+H Share
+Equity structure diagram
+Dajiawa
+Caofeidian Port
+「曹妃甸港
+Qinhuangdao Port
+秦皇島港
+Major Controlling Companies
+Suning North
+Dingzhou West
+Huanghua
+定州西
+黃驊
+SHANXI
+山西省
+SHAANXI
+陝西省
+肅寧北
+17.09%
+Shareholders
+Shenhua Group
+Corporation
+Major Controlling Companies
+Others
+Chemical Co., Ltd.
+100.00%
+Coal Chemical
+Shenhua Baotou Coal
+Major Branches
+Shipping
+Port
+Railway
+Major Controlling Companies
+Major Branches
+China Shenhua
+Energy Company Limited
+Power Generation
+9.85%
+Other A Share
+Shareholders
+Coal Sales
+73.06%
+Limited
+Shenmu North C
+神木北站
+Shenchi South
+神池南
+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
+內蒙古自治區
+Amo Railway (construction suspended)
+C11. 阿莫鐵路(級建)
+Huangda Railway (under construction)
+Tahan Railway
+C10. 塔韓鐵路
+C9. 黃大鐵路(在建)
+Zhunchi Railway
+Datong East
+Ganquan Railway
+包頭
+Baotou
+Diandaigou
+Shenchi
+神池
+B6
+Shendong
+Shuozhou West
+神東站
+A7
+HEBEI
+朔州西
+河北省
+Batuta
+巴圖塔
+Zhunge'er
+天津市
+TIANJIN
+SB
+Dongsheng
+東馬
+Hanjiacun
+韓家村
+地點位满
+Fujian
+Note: Please refer to the section headed "Definitions" of this report for the calculations of the above indicators.
+2016 Annual Report 31
+Repairs and maintenance
+2.9
+17.1
+21,134
+17.4
+21,744
+Depreciation and amortization
+6.6
+9,509
+9.6
+10.1
+12,661
+Personnel expenses
+3.7
+12.8
+15,816
+13.1
+16,405
+11,874
+7.6
+8,619
+7.0
+(30.9)
+24.9
+30,608
+16.9
+21,144
+Others
+18.7
+4.7
+5,833
+5.6
+6,922
+Taxes and surcharges
+(16.6)
+9.9
+12,193
+8.2
+10,172
+Transportation charges
+10.3
+Materials, fuel and power
+Total cost of sales
+52.3
+17,264
+Percentage
+Section V Directors' Report (Continued)
+2016 Annual Report 33
+Changes in costs
+(2)
+nautical miles
+72.2
+(1.7)
+Unit: RMB million
+64.1
+Billion tonne
+4. Shipment turnover
+87.7
+(0.8)
+79.8
+79.2
+Million tonnes
+3. Shipping volume
+63.0
+Percentage
+Change in
+amount for
+the year
+21.1
+26,286
+Cost of coal purchased
+(%)
+(%)
+(%)
+year
+previous year
+year
+the year
+the previous
+sales for the
+to cost of
+Amount for
+the previous
+sales for
+Amount for
+the year
+Breakdown of cost items
+to cost of
+over that of
+14.0
+124,843
+100.0
+123,341
+5,040
+Port
+percentage points
+Increased by 1.9
+18.9
+23.1
+48.3
+17,350
+2,523
+33,530
+percentage points
+Decreased by 9.0
+8.3
+(4.4)
+22.8
+53,939
+69,850
+Power
+Railway
+49.9
+33.7
+24.5
+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.
+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;
+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;
+(3)
+The percentages of the profit from operations attributable to the coal, power,
+transportation and coal chemical segments of the Group before elimination on
+consolidation changed from 17%, 50%, 31% and 2% in 2015 to 36%, 25%, 38%
+and 1% in 2016 respectively, such significant changes were mainly due to the
+following reasons:
+(3.0) Increased by 7.1
+percentage points
+(8.3) Decreased by 4.6
+percentage points
+chemical
+(13.0)
+10.4
+4,330
+4,831
+Coal
+5.5
+19.2
+1,707
+2,112
+Shipping
+percentage points
+Increased by 3.7
+percentage points
+Increased by 5.2
+1.8
+8.2
+Increase/
+Major business segments in 2016 (before eliminations)
+Unit: RMB million
+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.
+→
+(3) Major Business segments
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+34
+Other costs represented a year-on-year decrease of 30.9%, which was mainly
+attributable to the decrease in the materials trading business volume.
+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;
+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;
+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;
+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;
+(5)
+(3
+The cost of sales of the Group in 2016 represented a year-on-year increase of 1.2%,
+of which:
+1.2
+100.0
+decrease in
+5.8
+Increase/
+decrease in
+compared as compared
+16.7
+109,404
+131,357
+Coal
+(%)
+(%)
+(%)
+with last year
+year
+year
+margin
+Revenue Cost of sales
+segment
+margin as compared
+with last
+with last
+Gross profit
+Business
+Increase/decrease
+in gross profit
+revenue as cost of sales
+(51.5)
+6.6
+3.2
+46,341
+92,564
+Company
+Net cash generated from operating activities
+excluding the effect of Shenhua Finance
+(217.8)
+9,065
+(10,681)
+47.8
+99.7
+55,406
+(2.9)
+(9,561)
+(9,283)
+(44.6)
+428
+237
+operating activities of Shenhua
+Finance Company Note
+Of which: Net cash (used in)/generated from
+81,883
+Net cash used in investing activities
+(64,654)
+(26,123)
+A decrease in the materials trading business volume.
+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%;
+(3
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+32
+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%;
+The revenue of the Group in 2016 recorded a year-on-year increase of 3.4%. The
+main reasons for such change are:
+Factors affecting the revenue
+(1)
+Revenue and costs
+1.
+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.
+Note:
+(20.2)
+(23,157)
+(18,490)
+Net cash used in financing activities
+147.5
+Net cash generated from operating activities
+Share of results of associates
+Income tax expense
+12.2
+1.2
+(123,341)
+(124,843)
+3.4
+177,069
+183,127
+Cost of sales
+Revenue
+(%)
+Change
+2015
+2016
+Unit: RMB million
+Items
+Changes in the Major Items in the Consolidated Statement of Profit or Loss and Other
+Comprehensive Income and Consolidated Statement of Cash Flows
+Analysis on principal business
+(I)
+DISCUSSION AND ANALYSIS ON MAJOR OPERATION DATA DURING THE
+REPORTING PERIOD
+Section V Directors' Report (Continued)
+General and administrative expenses
+Changes
+for 2016
+compared
+(8,423)
+(13.3)
+(5,123)
+(5,748)
+Finance costs
+18.9
+608
+723
+141.4
+(626)
+(1,511)
+Interest income
+Other expenses
+(16.9)
+1,659
+1,379
+Other income
+(47.4)
+(5,856)
+(3,078)
+Other gains and losses
+(9,714)
+II.
+with that
+Unit
+22.2
+200.1
+244.6
+1. Turnover of self-owned railway Billion tonne km
+(IV) Transportation
+tonnes
+268.1
+(9.8)
+223.8
+312.9
+Thousand
+2. Sales of polypropylene
+tonnes
+265.5
+(8.3)
+319.2
+292.6
+Thousand
+282.1
+2. Seaborne coal
+Million tonnes
+226.4
+Million tonnes
+Via Shenhua Zhuhai
+Coal Dock
+Coal Dock
+36.6
+(2.0)
+40.3
+39.5
+Million tonnes
+Via Shenhua Tianjin
+131.6
+42.1
+111.6
+158.6
+Million tonnes
+Via Huanghua Port
+Of which:
+235.8
+11.1
+203.8
+1. Sales of polyethylene
+(III) Coal chemical
+218.42
+4.8
+Of which:
+451.1
+6.6
+370.5
+394.9
+Million tonnes
+2. Coal sales
+306.6
+3.2
+280.9
+289.8
+Million tonnes
+1. Commercial coal production
+(I) Coal
+(%)
+2014
+for 2015
+2015
+2016
+Self-produced coal
+Major operating indicators
+Million tonnes
+289.3
+210.45
+220.57
+Billion kWh
+2. Total power output dispatch
+234.38
+4.5
+225.79
+236.04
+Billion kWh
+1. Gross power generation
+(II) Power generation
+152.4
+34.7
+81.2
+109.4
+Million tonnes
+Purchased coal
+298.7
+(1.3)
+285.5
+8,187
+福建
+塔然高勒
+1,760
+1
+(0.9)
+538
+533
+(73)
+3.918
+3.632
+200.0
+(3.0
+(3.1
+(48.0
+612
+(54.2
+260
+139.0
+233
+424
+168
+1.759
+165
+264
+(37.5)
+1,952
+03
+0.3
+South China Power Grid Guangdong
+Zhuhai Wind Energy
+Percentage
+to total
+million sales volume
+Price RMB/
+volume
+to total
+Sales
+Sales Percentage
+volume
+million sales volume
+Table 15 Railway Cargo Transportation Turnover
+Other power plants
+Change
+2015
+2016
+(83
+4,720
+4.330
+ཀཽ ཀྐོཎྞ – ཨ ཀྑཛིརྦཎྷནྟ་ ཀ ཏི
+-
+24.5
+143.8
+308
+22.9
+258
+20.2
+2034
+1147
+19.3
+1.810
+20.8
+(29.9)
+16.0
+14,331
+%
+RMB million
+RMB million
+%
+RMB million
+% RMB million
+% RMB million RMB milion
+12352
+1
+1,968
+2,269
+16
+20.0
+60
+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)
+2,026
+Sales
+Shenhua Sichuan Energy
+Sichuan Provincial Local
+94.8
+374.4
+Self-produced coal and purchased coal
+(1)
+Shenhua Tianjin Coal Dock
+624
+780
+Huanghua Port
+316
+950
+Self-owned ports
+48
+125
+125
+12
+16
+ཁྐྲཎྜ
+780
+950
+354.1
+95.6
+292
+376
+56.5
+223.1
+2. Seaborne
+བ���ིཝོཔྤཡོ པི
+Third-party ports
+Table 13 Coal Resources Reserve
+3.6
+(0.1)
+221
+40.9
+151.5
+229
+38.3
+151.3
+1. Direct arrival
+Shenhua Zhuhai Coal Dock
+8.2
+5.7
+950
+༄བ་ བྷཊྛ
+608
+509
+Beijing Gas-fired Power
+%
+%
+tonne
+%
+tonnes
+tonne
+%
+tonnes
+Power Grid
+(hydropower)
+Price
+volume
+Price RMB/
+-
+5.331
+65
+6.7
+Sichuan
+North China Power Grid Beijing
+RMB million RMB milion
+40.1
+4,218
+223
+596
+བྷྱཿཀྑུ ཨྰཿཀྑུ
+231
+2,055
+15.6
+16.0
+East China Power Grid Zhejiang
+Yuyao Power
+8.2
+5.7
+293
+98.7
+365.5
+317
+97.8
+386.2
+I. Domestic sales
+211
+39.1
+2015 Change
+2016
+2015 Change
+Tax and surcharges
+501
+1,300
+1,300
+4.313
+Other operating costs
+1,285
+228
+5.287
+ཟླ་ ཨོ་ཨཽ་ཕི་ཡ
+11.3 1,941
+2.205.7
+2.487
+Others
+2,520
+2,520
+38.488
+42.221
+2.104.5
+2,520
+2,520
+1,021
+Table 11 Cost of Sales of Transportation and
+2,640
+4,400
+4.400
+660
+660
+660
+4,000
+5.000
+5.000
+823
+696
+49,788
+53,939
+Total cost of sales
+483
+984
+Tax and surcharges
+Other operating costs
+11,645
+4.442
+107,493
+109,404
+Total cost of sales
+Cost of coal transportation
+amortization
+(14.7)
+505
+9.095 2,205.7
+Depreciation and
+21.9 7.282 289.3 25.2 (13.1)
+2.732 2.205.7
+Repairs and maintenance
+3.720 2.205.7
+Personnel expenses
+(0.6)
+(5.4)
+9.2
+8.7 2.674 289.3
+17.6 5,122 289.3 17.7
+2,205.7
+Materials, fuel and power 34,438
+****
+12.313 285.5
+Others
+6.260 285.5
+Depreciation and amortization
+7.534
+Cost dispatch Unit cost Cost dispatch
+910
+RMB 100 million
+kWh RMB/mWh RMB million
+43.1 14,627 289.3
+1.7
+-
+0.6
+3.7
+3.7
+%
+RMB/mWh
+kWh
+unit cost
+100 million
+Unit cost Change in
+2015
+Power
+output
+156.1
+41.2 8.517 2,104.5
+124 2.609 2,104.5
+16.9 3,526 2.104.5
+31,676 2,104.5
+237.9 48.269 2,104.5
+million
+202.6
+464
+4,600
+Total cost of sales
+Tax and surcharges
+Other operating costs
+35,089
+54,417
+52,257
+210
+300
+Table 14 Seaborne Coal at Ports
+364
+700
+660
+660
+Sub-total cost of prime business
+482
+1,060
+Cost of external transportation business
+Others
+700
+ༀ || ཧྲྰི ཎྜ ཨྰཿ ཚོ ཚོ ཛི ཀཽ ཀླི ཛྫི ཝི ཋིཊྛི
+דוית
+(1.6)
+2015 Change
+Change
+2015
+2016
+Chemical
+Port
+Railway
+Coal
+ༀ རྒྱུུ ཀྲི ཇི ཀཽ བོ ü 3 ཊཿ ཕྲུ་ ཋ བྷ
+18.9
+14,595
+72.9
+218
+214.6
+158
+15.9
+14.219
+14.9
+1.867
+External transportation charges
+Depreda
+Depreciation and amortization
+Repairs and maintenance
+2,000
+2,000
+726
+1320
+осо
+.......
+1,260
+220
+2,400
+(540)
+3,240
+3,760
+2,000
+1.320
+630
+1.260
+1,260
+Coal Chemical Segments
+2,346
+Cost of internal transportation business
+4.600
+3,760
+Materials, fuel and power
+Personnel expenses
+1,200
+2,000
+612
+1,200
+,ཊྛོ,,Ë,
+300
+660
+1,060
+2,000
+1,200
+604
+1,260
+112
+220
+1,680
+2,400
+1,324
+2,700
+1,880
+Tarangaole
+54.7
+10.1
+5.5
+0.9
+292
+22.8
+84.6
+308
+21.6
+85.4
+Sales to internal coal chemical segment
+Sales to internal power segment
+0.1
+0.4
+0.4
+0.5
+0.5
+Baotou Mines
+completion year
+9.2
+0.1
+4.0
+1.0
+237
+27.5
+18.5
+Total of shipping volume
+External customers
+8.7
+81.4
+88.5
+(2.0)
+157.4
+154.3
+(1.2)
+243.1
+240.1
+Total of China Shenhua
+0.4
+(7.0)
+236
+1.2
+4.3
+8.5
+(32.7)
+294
+281.6
+transportation Commencement
+Self-owned railways under
+Shenhua Zhonghai Shipping Company
+(65.8)
+7.3
+2.5
+(0.7)
+14.2
+Estimated
+14.1
+20.6
+Shengli Mines
+8.2
+6.6
+293
+100.0
+370.5
+100.0
+20.7
+Baorixile Mines
+14.4
+14.6
+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)
+76.0
+Huangda Railway (under construction)
+210.2km
+40 million tonnes
+廣西
+廣東
+Hunan
+Jiangxi
+湖南
+江西
+Hebei
+河北
+Guangdong
+Hubei
+Guizhou
+貴州
+Henan
+Shaanxi
+河南
+陝西
+Gansu
+甘肅
+湖北
+Guangxi
+海南
+Hainan
+Diaoyu Islands.
+釣魚島
+Ganqimaodu
+甘其毛都
+Jilin
+吉林
+Liaoning
+遼寧
+Zhejiang
+浙江
+Jiangsu
+江蘇
+Anhui
+安徽
+Shandong
+山東
+Hongkong
+香港
+澳門
+Shanxi
+山西
+Inner Mongolia Autonomous Region
+內蒙古自治區
+State-owned or Local Railway
+國有或地方鐵路線
+Provincial Boundary
+省界線
+圖例 Legend
+Qinghai
+青海
+Xinjiang
+新疆
+Tibet
+西藏
+中國 CHINA
+97km 15.52 million tonnes
+Amo Railway (construction suspended]
+(0.8)
+79.8
+79.2
+2018
+2015
+自有運營鐵路
+394.9
+Self-owned Railway (in operation)
+Self-owned Railway (under construction)
+Tavan Tolgoi
+塔本陶勒盖
+Qiqihar
+Heilongjiang
+● 齊齊哈商
+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
+自有在建鐵路
+Planned annual
+12.4
+19.3
+222
+200.1
+244.6
+%
+billion tonnes km
+billion tonnes km
+Change
+2015
+49.2
+2016
+Bazhun Railway
+11.1
+203.8
+226.4
+Ganquan Railway
+Baoshen Railway
+(44.6)
+45.3
+Zhunchi Railway
+45.6
+79
+154.3
+II. Export sales
+0.5
+4357
+14
+75
+200.0
+0.4
+12
+80.0
+05
+0.9
+(6.4)
+78
+73
+(5.8)
+25.7
+24.2
+30.0
+118.7
+Dazhun Railway
+(51.5)
+6.6
+Shuchuang-Huangwan Railway
+413
+0.1
+0.2
+415
+0.1
+0.2
+(II) Sales of imported coal
+Total seaborne coal
+Marketable reserve (under JORC standard)
+Recoverable reserve (under PRC standard)
+Coal resources (under PRC standard)
+6.6
+3.6
+318
+3.0
+11.2
+339
+(II) Sales of domestic trading coal
+9.0
+As at
+III. Overseas coal sales
+As at
+As at
+(2.0)
+40.3
+39.5
+Shenshuo Railway
+42.1
+111.6
+158.6
+Self-owned railways
+27.0
+158.5
+201.3
+%
+million tonnes
+million tonnes
+Change
+2015
+2016
+As at
+As at
+As at
+345
+3.3
+1.2
+million tonnes
+million tonnes
+23.2
+41.9
+51.6
+(2.3)
+97.6
+95.4
+%
+(1.3)
+164.5
+Shendong Mines
+15.5
+(5.3)
+84
+0.5
+1.9
+97
+166.6
+Total railway tumover
+271.2
+241.4
+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
+0.5
+1.8
+(II)
+EMM Indonesia
+100 million tonnes
+100 million tonnes
+-
+Tahan Railway
+Table 16 Shipping Volume
+Change
+31 December 2015
+31 December 2016
+Change
+31 December 2015
+31 December 2016
+Change
+31 December 2015
+31 December 2016
+Mines
+(8.1)
+175.0
+443
+0.3
+%
+0.8
+100 million tonnes
+%
+(1)
+Change
+2015
+2016
+26.6
+42.1
+218
+1.0
+3.8
+276
+1.4
+5.4
+35.6)
+41.3
+26.6
+State-owned railways
+%
+100 million tonnes
+100 million tonnes
+100 million tonnes
+North China Power Grid Hebei
+Sichuan Power Grid
+13.5
+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
+2016
+2015
+2016
+2015
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+(131,373)
+(134,519)
+207,879
+RMB million
+As at
+As at
+Change in unit production costs of
+1
+year-on-year
+year-on-year
+1
+operating activities
+31 December 2016
+31 December 2015
+31 December 2016
+self-produced coal
+RMB million
+decrease of
+excluding Shenhua
+RMB million
+RMB million
+1% to 2%
+11.0%
+Finance Company
+Segment total assets
+198,140
+246,972
+Segment total liabilities
+(116,711)
+(115,814)
+decrease of
+As at
+RMB million
+4.174
+2.302
+1,350
+266
+133
+254
+649
+As at
+As at
+As at
+As at
+31 December 2016
+31 December 2015
+31 December 2016
+31 December 2015
+31 December 2016
+RMB million
+RMB million
+RMB million
+RMB milion
+125,152
+(65,396)
+124,661
+22,489
+22,303
+(61,284)
+(10,135)
+10,070
+15.000
+(4,720)
+(4,330)
+3,420
+575
+317
+380
+541
+4.831
+5.547
+23,812
+4.465
+3,452
+1,732
+1,461
+RMB million
+33.530
+5.040
+3,769
+2,112
+2,002
+4.831
+5,550
+(17,350)
+(14,595)
+(2,523)
+(2,026)
+(1,707)
+(1,760)
+27,232
+99.7
+46,341
+92,564
+100 million
+2.98
+2.898
+28
+RMB million
+RMB million
+RMB million
+Profit for the year
+RMB million
+31,970
+24,959
+28.1
+Revenue from external customers
+102,283
+93,502
+EBITDA
+RMB milion
+70,762
+62.597
+13.0
+Coal sales volume
+100 million
+4.07
+3.949
+3.1
+Commercial coal production
+3.4
+177,069
+183,127
+Cangdong Power
+Section V Directors' Report
+☐
+h
+Overview of China Shenhua's Operating Results for the year of 2016
+Table 1
+Business targets for 2017
+Table 2 Financial Indicators
+Table 3 Results of Each Segment
+Target for
+Actual amount for
+Coal
+Inter-segment revenue
+2016
+Change %
+Item
+Unit
+2017
+2016
+Change %
+2016
+2015
+2016
+Power
+Revenue
+RMB million
+2015
+29,074
+27,956
+69,613
+0.887
+411
+Segment profit loss) from
+Cost of sales
+RMB100 million
+1428
+1,248.43
+144
+Net cash generated from
+RMB million
+81,883
+55,406
+1.252
+47.8
+17.017
+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
+operations
+(10,950)
+RMB/share
+112
+237
+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
+Basic eamings per share
+equity holders of the Company
+billion kWh
+214.7
+220.57
+(2.7)
+Segment cost of sales
+(109,404)
+(107.493)
+(53,939)
+Revenue
+RMB100 million
+2.036
+1,831.27
+Power output dispatch
+རམྦྷམྦྷཝཝཱ
+29.356
+As at
+25.0
+25.1
+(0.4)
+Zhunge'er Power
+Polyethylene sales
+thousand tonnes
+292.6
+3192
+(8.3)
+Baotou Mines
+1.1
+1.2
+(83)
+Guchua Zhungeler
+Polypropylene sales
+thousand tonnes
+282.1
+As at
+(9.8)
+Others
+18
+19
+(5.3)
+Guohua Hulunbeer Power
+North China Power Grid
+North China Power Grid
+Northeast Power Grid
+Baorixile Mines
+322
+12.1
+16.0
+Shendong Mines
+183.0
+177.0
+34
+Power plants
+Regional grid
+Location
+generation
+dispatch
+Gross power generation
+billion kWh
+236.04
+Inner Mongolia
+Inner Mongolia
+Inner Mongolia
+225.79
+Zhunge'er Mines
+62.9
+63.6
+(1.1)
+100 million kWh 100 million kWh
+hours
+Total power output dispatch
+billion kWh
+220.57
+210.45
+4.8
+Shengli Mines
+45
+36.3
+48.4
+46.4
+2016
+2015
+self-owned railway
+Inner Mongolia
+191.1
+183.2
+43
+Shaanxi Provincial Local
+Seabome coal
+million tonnes
+226.4
+203.8
+Increase/
+11.1
+92.7
+92.1
+0.7
+Power Grid
+Shipping volume
+million tonnes
+79.2
+79.8
+(0.8)
+Shanxi
+42
+3.7
+Shaanxi
+34.7
+2015
+capacity as at
+Transportation turnover of
+billion tonne km
+244.6
+200.1
+222
+By regions
+Shendong Power
+Northwest/North China/ Inner Mongolia
+297.1
+ཡསཔཐཱ
+32.1
+3,784
+31 December capacity for
+3.669
+3,864
+273.8
+3.629
+******!!!
+ཙྪི』,Rཋ
+Standard coal
+consumption
+Average rate for power
+output
+hours dispatch Power tariff
+RMB/mWh
+Total installed
+41.5
+81.2
+312.9
+million tonnes
+2015
+RMB million
+RMB million
+RMB million
+183,127
+177,069
+(65,830)
+(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
+31 December 2015
+2016
+2015
+Total
+Eliminations
+As at
+31 December 2015
+31 December 2016
+RMB million
+RMB milion
+RMB million
+RMB million
+109.4
+ནྡྲ རྐནྡྷམྦྷ
+2016
+2015
+RMB million
+RMB million
+RMB million
+966
+974
+864
+2.237
+1,838
+(67)
+(196)
+1,261
+808
+As at
+As at
+31 December 2015 31 December 2016 31 December 2015 31 December 2016 31 December 2015
+ཨཽཎྞཱ･ཎྜཎྜ༔ ར
+1,271
+RMB million
+RMB million
+RMB million
+32
+million tonnes
+394.9
+370.5
+66
+Total production
+2016
+2015
+Change
+million tonnes
+million tonnes
+%
+280.9
+289.8
+32
+Total power
+Including: Self-produced coal
+million tonnes
+285.5
+289.3
+(1.3)
+Gross power
+output
+utilisation
+Purchased coal
+RMB million
+280.9
+289.8
+By mines
+Commercial coal production
+Coal sales
+RMB million
+million tonnes
+8,038
+8,189
+12,564
+377,853
+348,720
+(374,443)
+(433,391)
+576,729
+559,791
+(2,063)
+(2,363)
+11,621
+(5.593)
+(4,686)
+2016
+Table 7 Cost of Sales of Coal Segment
+(195,870
+(191,760)
+Table 8 Cost of Sales of Power Segment
+316,985
+278,929
+(185,478)
+(137,179)
+Change %
+2015
+32.2
+21.7
+0.4
+20.6
+14.1
+2.5
+14.4
+12.2
+12.6
+0.5
+44
+240.1
+154.3
+88.5
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(6)
+Characteristics of the commercial coal produced in the Company's major mines are as
+follows:
+No. Mines
+40.1
+Major types of coal
+Calorific value
+of major
+commercial
+coal products
+(kcal/kg)
+0.1
+51.6
+Baorixile Mines
+164.5
+(5)
+Sulphur
+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
+95.4
+Zhunge'er Mines
+Baotou Mines
+Total
+Recoverable
+Coal resources
+coal reserve
+(under the PRC (under the PRC
+Standard)
+Standard)
+Unit: '00 million tonnes
+Marketable
+coal reserve
+(under
+the JORC
+Standard)
+Shengli Mines
+content
+14.5
+1
+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.
+Operating results
+The operating results of the coal segment of the Group before elimination on
+consolidation
+2016
+3,650
+2015
+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
+(4)
+Change Main reasons for changes
+(%)
+Ash content
+(%) (average, %)
+≤0.22 Approximately
+Lignite
+Shendong Mines
+Long flame coal/
+Approximately
+<0.49 Approximately
+non-caking coal
+5,500
+11.8
+2
+Zhunge'er Mines
+Long flame coal
+Approximately
+Approximately
+4,680
+26.3
+3
+Shengli Mines
+Lignite
+Approximately
+≤0.81 Approximately
+3,095
+20.2
+4
+Baorixile Mines
+≤0.48 Approximately
+Section V Directors' Report (Continued)
+2016 Annual Report 43
+Efforts in ensuring safe coal production are detailed in the 2016 CSR Report of the
+Group.
+Increase in materials for power
+business projects
+Other non-current assets
+36,749
+6.4
+34,562
+6.2
+6.3
+Increase in loan balance issued by
+Accounts and bills
+20,573
+3.6
+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
+of bank acceptance bills; and
+decrease in receivables from coal
+sales of coal segment
+Increase in purchase of wealth
+management products by the
+Company and Shenhua Finance
+Company
+4.8
+Restricted bank deposits
+6.0
+6.1
+(III) Analysis on Assets and Liabilities
+1.
+Assets and Liabilities
+Unit: RMB million
+Percentage of
+Percentage of
+Amount at
+total assets at
+Amount at the
+total assets at
+the end of
+the end of
+end of the
+the end of the
+Items
+the year
+the year
+previous year
+previous year
+the amount
+Change of
+Main reasons for changes
+(%)
+(%)
+(%)
+Construction in progress
+35,220
+33,610
+Section V Directors' Report (Continued)
+6,141
+4,611
+47,519
+8.5
+other payables
+Current portion of
+19,989
+3.5
+0
+0.0
+medium-term notes
+Long-term borrowings
+58,462
+10.1
+54,179
+9.7
+7.9
+Medium-term notes
+4,985
+0.9
+99
+24,955
+4.5
+45
+acceptance bills from power
+segment
+(13.0) Decrease in balance of deposits
+placed with Shenhua Finance
+Company
+/ Increase of medium-term notes
+due within one year
+Increase in balance of long-term
+borrowings from power segment
+7.2
+1.1
+41,361
+Increase in payables of bank
+0.8
+33.2
+Increase in statutory deposit
+Time deposits with
+3,428
+90
+0.6
+90
+916
+0.2
+reserves balance of Shenhua
+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
+0.9
+6.1
+33,990
+6.1
+(100.0)
+3.4
+Maturity of super short-term
+Accrued expenses and
+(80.0) Medium-term notes to be due
+within one year were reclassified
+to non-current liabilities due
+China Shenhua Energy Company Limited
+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.
+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
+7,656
+29.4 million
+4.2
+289.8 million 394.9 million
+tonnes
+tonnes
+236.04 billion 220.57 billion
+kWh
+Coal
+(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
+(%)
+(%)
+(%)
+Power
+38
+Fourth
+Fifth
+7,286
+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.
+Net cash used in financing activities: representing a year-on-year decrease of 20.2%
+in 2016. This was mainly due to the decrease in cash paid for dividend for 2016, and
+the consideration paid for merger of subsidiaries under common control in 2015.
+Explanation on the material changes in profit incurred from non-principal business
+✓ Applicable
+Not applicable
+2016 Annual Report 37
+Total
+(II)
+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.
+4.0
+6,943
+3.8
+42,137
+23.0
+Among the above major customers, the sales revenue generated from connected
+parties amounted to RMB11,481 million, which accounted for 6.3% of the revenue
+for the year.
+Major suppliers
+During the reporting period, the total procurement from the top five suppliers of
+the Company amounted to RMB14,340 million, accounting for 14.4% of the total
+procurement for the year. Among which, the procurement made from connected
+parties were RMB6,484 million, accounting for 6.5% of the total procurement for the
+year.
+36
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+2.
+Other items of income statement
+(1)
+(2)
+(3)
+(4)
+(5)
+(6)
+(7)
+(8)
+General and administrative expenses: representing a year-on-year decrease of
+13.3% in 2016, which was mainly attributable to the inclusion of tax on vehicles and
+vessels, real estate tax, land-use tax and stamp duty originally included in general
+and administrative expenses to taxes and surcharges under cost of sales since 2016
+based on relevant requirements.
+Other gains and losses: representing a year-on-year decrease of 47.4% in 2016,
+which was mainly attributable to the decrease in losses on asset impairment as
+compared with last year. Pursuant to the assessment result of asset impairment at
+the end of 2016, the Group made provision for impairment on electric machinery
+and equipment demolished due to energy saving and environmental protection
+reconstruction, the power generators and related equipment in closed Longyan
+Power Plant of Fujian Energy Company and parts of inventories.
+Other income: representing a year-on-year decrease of 16.9% in 2016, which
+I was mainly attributable to the decrease in government grants for power and
+transportation segments.
+Other expenses: representing a year-on-year increase of 141.4% in 2016, which was
+mainly attributable to the increase of donation for public welfare.
+Interest income: representing a year-on-year increase of 18.9% in 2016, which was
+mainly attributable to the increase of time deposits.
+Finance costs: representing a year-on-year increase of 12.2% in 2016, which was
+mainly attributable to the decrease in capitalised interests for 2016 as a result of the
+commencement of operation of Bazhun Railway, Zhunchi Railway and other projects
+in 2015, which in turn increased the interest expenses included in finance costs.
+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.
+within one year
+4,998
+Section V Directors' Report (Continued)
+0.5
+97
+1.9
+0.5
+84
+2016 Annual Report 39
+15.5
+(II) Re-export trade
+3.6
+0.9
+367
+1.9
+0.5
+358
+89.5
+2.5
+Total sales volume/average
+price
+394.9
+100.0
+317
+370.5
+100.0
+293
+6.6
+8.2
+Note: Sales prices of coal in this report are all exclusive of tax.
+42
+1.8
+China Shenhua Energy Company Limited
+(I) EMM Indonesia
+42.1
+6.6
+(II) Sales of imported
+coal
+0.2
+0.1
+415
+0.2
+0.1
+413
+0.0
+0.5
+II. Export Sales
+3.3
+0.8
+407
+1.2
+0.3
+443
+175.0
+(8.1)
+III. Overseas coal sales
+5.4
+1.4
+276
+3.8
+1.0
+218
+26.6
+90
+Section V Directors' Report (Continued)
+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.
+308
+84.6
+22.8
+292
+5.5
+Sales to internal coal chemical
+segment
+4.0
+1.0
+237
+4.3
+1.2
+236
+0.4
+Total sales volume/average
+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.
+21.6
+(3)
+85.4
+Sales to internal power
+By internal and external customers
+2016
+2015
+Sales
+Sales
+volume
+Percentage Price
+volume
+Percentage
+Price
+Change in
+price
+Million
+Million
+tonnes
+RMB/tonne
+tonnes
+% RMB/tonne
+%
+Sales to external customers
+305.5
+77.4
+321
+281.6
+76.0
+294
+9%
+9.2
+segment
+3.6
+(5.3)
+3.0
+25,526
+0
+Total
+394.9
+125,330
+99,804
+25,526
+In 2016, the Company's coal exploration expenses (which were incurred before the
+conclusion of feasibility study and represented the expenses related to exploration
+and evaluation of coal resources) amounted to approximately RMB25 million
+(2015: RMB96 million), which was mainly attributable to the relevant expenses of
+Watermark Coal Project in Australia and Guohua Sumsel Coal Power Project (Phase
+I) in Indonesia. The Company's relevant capital expenditure of mining development
+and exploration amounted to approximately RMB4,551 million (2015: RMB3,539
+million), which was mainly attributable to the expenditure related to coal mining,
+consideration payment for mining rights and acquisition of fixed assets for Shendong
+Mines, Zhunge'er Mines and Shenbao Mines as well as the exploration expenditure
+of Guojiawan Coal Mine and Qinglongsi Coal Mine.
+The Group has independently operated railway collection and distribution channels.
+These channels are centralized and distributed in the rim of self-owned core mines,
+and can transport coal in the core mines.
+Sales of coal
+The Group implemented specialized division management. Production enterprises
+are responsible for production of coal, and Shenhua Trading Group is mainly
+responsible for sales of coal. Customers have different industry background, such
+as power, metallurgy, chemical and construction materials. In 2016, the Group
+adopted various measures to cope with the market volatility, increased the number
+of channels for coal resources procurement, enhanced the marketing efforts in the
+region of "the movement towards the shipping route from the northern sea to the
+Yangtze River" and clean coal market, and proactively promoted coal trading. Thus,
+the sales volume of coal amounted to 394.9 million tonnes (2015: 370.5 million
+tonnes), representing a year-on-year increase of 6.6%; among which the domestic
+sales volume of coal amounted to 386.2 million tonnes, accounting for 12.1% of the
+domestic sales volume of coal for the same period which amounted to 3.18 billion
+tonnes¹.
+1
+Data source: State Administration of Coal Mine Safety
+2016 Annual Report 41
+Section V Directors' Report (Continued)
+To maximize the efficiency of the integrated operation, the Group increased the
+sales volume of seaborne coal by an optimised arrangement of coal with a higher
+loading volume at self-owned ports. The annual seaborne coal sales was 226.4
+million tonnes (2015: 203.8 million tonnes), representing a year-on-year increase of
+11.1%. The seaborne coal sales through self-owned Huanghua Port and Shenhua
+Tianjin Coal Dock, accounted for 87.5% of the total seaborne coal sales of the Group,
+representing a year-on-year increase of 13.0 percentage points.
+The Group increased the number of sales channels and the procurement volume
+of coal through Shenhua Coal Trading Network (https://www.e-shenhua.com)
+developed by the Group, and effectively cut the cost. In 2016, the coal sales volume
+and coal procurement volume of the Group through Shenhua Coal Trading Network
+reached 191.4 million tonnes and 10.2 million tonnes, respectively.
+In view of the rebound of thermal coal prices in the second half of the year, the Group
+recorded an average coal sales price of RMB317 /tonne in 2016 (2015: RMB293/
+tonne) (excluding tax), representing a year-on-year increase of 8.2%.
+By sales regions
+2016
+Proportion
+2015
+Proportion
+Change
+Sales
+of total
+Sales
+of total
+Sales
+volume
+99,663
+141
+sales
+125,189
+141
+394.7
+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)
+Production, operation and construction
+The majority of the coal products produced and sold by the Group were thermal
+coal. In 2016, under the continued deepening the supply-side reform of the coal
+industry, the Group proactively coped with the changes in industrial policies and
+market conditions to adjust the production volume in time according to regulations,
+so as to strengthen the profitability of the coal segment by quality enhancement
+and structural adjustment. During the year, commercial coal production volume of
+the Group reached 289.8 million tonnes (2015: 280.9 million tonnes), representing
+a year-on-year increase of 3.2%. The total footage of advancing tunnels was 380
+thousand meters (2015: 564 thousand meters), representing a year-on-year decrease
+of 32.6%. Specifically, Shendong Mines recorded footage of advancing tunnels of
+366 thousand meters (2015: 547 thousand meters), and Baotou Mines recorded
+footage of advancing tunnels of 14 thousand meters (2015: 17 thousand meters).
+The calorific value of thermal coal has been increasing, and the average calorific value
+of commercial coal for the year reached 5,003 kcal/kg, representing a year-on-year
+increase of 36 kcal/kg. With the further optimisation of coal product structure, the
+proportion of low-sulphur eco-friendly coal and high value-added special coal output
+has further increased.
+Shendong Mines coordinated its coal production and loading in a scientific way which
+optimised production and loading according to market demand, so as to maximize
+the production of marketable products. Zhunge'er Mines enhanced its efficiency by
+way of improvement of quality and efficiency, lump coal sales, accurate loading and
+collaborative mining. Guided by the market and efficiency, Shengli Mines, Shenbao
+Mines and Baotou Mines organized the coal production.
+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
+318
+Million
+tonnes
+Million
+tonnes RMB million RMB million RMB million
+Thermal coal
+Coking coal
+289.8
+0.2
+Price
+sales Gross profit
+sales
+1. Direct arrival
+151.3
+38.3
+229
+151.5
+40.9
+221
+2. Seaborne
+223.1
+56.5
+376
+202.6
+54.7
+345
+10.1
+དྨེདྨེ
+3.6
+18800
+8.2
+9.0
+(II) Sales of domestic
+trading coal
+11.6
+2.9
+339
+11.2
+volume
+5.7
+292
+(0.1)
+354.1
+Price
+95.6
+volume
+Price
+Million
+Million
+tonnes
+tonnes
+% RMB/tonne
+%
+1. Domestic sales
+386.2
+97.8
+78
+% RMB/tonne
+365.5
+94.8
+317
+374.4
+coal
+and purchased
+316
+(I) Self-produced coal
+8.2
+5.7
+23
+293
+98.7
+31,996
+64.7
+29,958
+Raw material, fuel and
+Personnel expenses
+power
+3,667
+7.5
+3,477
+58
+65.0
+15
+6.8
+59
+%
+5.5
+7.4
+%
+48,269
+RMB million
+Total
+Repairs and
+69,146
+70,345
+(1.7) 52,472
+100.0
+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
+% RMB million
+maintenance
+54
+5.3
+plant
+49,507
+100.0
+46,123
+100.0
+7.3
+China Shenhua Energy Company Limited
+coal-fired power
+Section V Directors' Report (Continued)
+Railway segment
+(1) Overview of production and operations
+(2)
+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%.
+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.
+40.2
+3.
+output dispatch of
+Total cost of power
+19
+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
+2,645
+4.3
+321 (6.5)
+5.5
+2016
+2015
+Change Main reasons for changes
+(%)
+Materials, fuel and
+18.3
+20.6
+power
+Personnel expenses
+17.6
+17.7
+(0.6)
+Repairs and
+8.7
+9.2
+(5.4)
+maintenance
+Depreciation and
+amortization
+21.9
+25.2
+Other costs
+43.1
+Unit: RMB/tonne
+Unit production cost of self-produced coal
+(4)
+Section V Directors' Report (Continued)
+Domestic
+122,486 97,487
+24,999
+20.4 107,041
+90,179
+16,862
+15.8
+Export and
+overseas
+2,844 2,317
+527
+50.5
+18.5 1,372
+143
+10.4
+Total
+125,330 99,804 25,526
+20.4 108,413
+91,408 17,005
+15.7
+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).
+46
+China Shenhua Energy Company Limited
+1,229
+(11.2) Decrease in tunneling footage
+for underground mines
+year-on-year through
+optimizing the production
+units; Decrease in fuel price
+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
+Unit production cost
+of self-produced
+coal
+Total power output dispatch
+Power tariff
+(billion kWh)
+(billion kWh)
+(RMB/mWh)
+Power type
+2016
+2015 Change
+2016
+2015 Change
+Gross power generation
+2016
+(%)
+(%)
+(%)
+Coal-fired power
+229.73
+221.75
+3.6
+214.42
+206.51
+3.8
+2015 Change
+%
+Classified by power type
+(2)
+109.6
+123.2
+(11.0)
+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%.
+Cost of coal purchased from third parties
+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.
+2016 Annual Report 47
+Section V Directors' Report (Continued)
+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
+Power consumption and power tariffs
+2.
+Production and operations
+In 2016, under the overall downturn of the domestic thermal power market, the
+Group enhanced its marketing efforts based on its advantage of clean power
+generation to strive for a higher amount of power generation. The gross power
+generation amounted to 236.04 billion kWh (2015: 225.79 billion kWh), representing a
+year-on-year increase of 4.5%; and total power output dispatch of 220.57 billion kWh
+(2015: 210.45 billion kWh), representing a year-on-year increase of 4.8%, accounting
+for 3.7% of 5,919.8 billion kWh¹ of the total power consumption of society at the
+same period.
+The Group continued to promote the clean development of coal-fired power
+by proactively implementing the "ultra-low emission" renovation of coal-fired
+generators, and its proportion of the installed capacity of "ultra-low emission"
+coal-fired generators maintained at an industry-leading level. The Group has
+completed the "ultra-low emission" renovation for all coal-fired power plants in
+the Beijing-Tianjin-Hebei region. Following the completion of construction and
+commencement of operation, Guohua Shouguang Power Plant and Liuzhou Power
+Plant became the first "ultra-low emission" power plant in Shandong Province and
+Guangxi Province, respectively.
+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.
+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.
+1
+Data Source: National Energy Administration
+48
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(1)
+million
+million
+% million
+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)
+Type of power
+2016 Annual Report 49
+LOLO
+(6.5)
+321
+300
+10.1
+15.37 13.96
+10.1
+14.90
+16.41
+coal-fired power
+гл
+300
+2016
+2016
+280
+11.0
+8.99
+9.98
+10.7
+9.49
+10.51
+coal-fired power
+11.0 280
+8.99
+2015 year
+9.98
+9.49
+10.51
+Fujian
+(%)
+(%)
+(%)
+year
+2015
+2016
+2015 year
+10.7
+Wind power
+10.1
+15.37
+13.0
+5.3
+Increased
+by 7.7
+operations
+percentage
+points
+trading business and the
+impairment loss of coal-
+related assets recorded
+a significant year-on-year
+decrease
+2016
+2015
+%
+Gross
+Gross profit
+Gross profit
+Revenue
+RMB
+million
+Costs
+profit margin Revenue
+Costs profit margin
+RMB
+million
+RMB
+RMB RMB RMB
+million
+Gross
+13.96
+Profit margin
+from
+operations million
+10.1
+14.90
+16.41
+2016 Annual Report 45
+Section V Directors' Report (Continued)
+2016
+2015
+Change Main reasons for changes
+(%)
+Gross profit
+margin
+%
+the volume of material
+16.7
+Increased
+by 5.2
+percentage
+points
+Profit from
+RMB
+17,017
+6,433
+164.5
+Other than the above factors,
+11.5
+Xinjiang
+0.03 0.02
+0.03
+1.76
+(11.4) 608
+698
+(12.9)
+Inner Mongolia
+20.95
+23.51
+(10.9)
+18.88
+21.09
+(10.5)
+209
+239
+(12.6)
+coal-fired power
+Guangdong
+20.85
+20.95 23.51
+22.74
+coal-fired power
+20.82
+22.72
+(11.1) 1.56
+1.80
+1.60
+gas-fired power
+329
+(4.9)
+Zhejiang
+25.84
+25.43
+1.6
+24.42
+24.07
+1.5
+360
+21.15
+409
+coal-fired power
+24.24
+23.63
+2.6
+22.86
+22.31
+2.5
+343
+387
+(11.4)
+(12.0)
+wind power
+0.03 0.02
+(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
+22.11 20.17
+9.6
+252
+292
+(13.7)
+Anhui
+21.48
+17.49
+22.8
+20.45 16.59
+9.8
+23.3
+342
+(12.6)
+coal-fired power
+21.48 17.49
+22.8
+20.45 16.59
+23.3
+299
+342 (12.6)
+2,062
+299
+313
+24.25 22.08
+(13.7)
+239
+(12.6)
+21.17 (8.4)
+376
+409
+(8.1)
+(8.5)
+375
+409
+(8.3)
+coal-fired power
+596
+(0.3)
+Shaanxi
+24.25
+22.08
+9.8
+22.11
+20.17
+9.6
+252
+292
+598
+(8.8)
+24.94
+(9.0) 22.74
+Total
+236.04
+225.79
+4.5
+220.57
+210.45
+4.8
+307
+334
+344
+(4.1)
+(8.1)
+Power generation
+Power output dispatch
+(billion kWh)
+(billion kWh)
+Power tariff
+(RMB/mWh)
+Location/
+Year-on-
+Year-on-
+Year-on-
+Type of power
+Classified by location
+2016
+560
+(3.9)
+0.02
+50.0 596
+Hydro power
+0.67
+0.67
+0.0
+0.65
+0.65
+0.0 223
+Gas-fired power
+537
+5.61 3.35
+5.47
+3.27
+67.3
+គ៖នទ
+301
+331
+(9.1)
+598
+(0.3)
+232
+67.5
+50.0
+2015 year
+2015 year
+32.30
+5.2
+31.84
+30.12
+5.7
+300
+335
+(10.4)
+Jiangsu
+23.87
+33.99
+26.23
+22.74
+24.94
+(8.8)
+313
+329
+(4.9)
+coal-fired power
+23.87
+26.23
+Liaoning
+(9.0)
+2016
+coal-fired power
+335
+2016
+2015 year
+(%)
+(%)
+(%)
+Domestic in total/
+weighted average
+234.40
+223.81
+4.7
+(10.4)
+219.14 208.69
+306
+333
+(8.1)
+Hebei
+33.99
+32.30
+5.2 31.84
+30.12
+5.7
+300
+5.0
+4.16
+The sales and gross profit of the coal of the Group before elimination on
+consolidation
+(27.3)
+32.1
+1,478
+1,952
+Wind power
+percentage point
+power
+Decreased by 0.19
+6.14
+5.95
+(4.4)
+0.90
+4,631
+Coal-fired
+(%)
+2015 Change
+2016
+2015 Change
+2016
+Power type
+Power consumption
+ratio of power plant
+(%)
+Average utilisation hours
+(Hour)
+In 2016, the growth of the total power consumption of China has rallied. However,
+affected by the significant growth of non-fossil fuel power generation as well as
+the increase in the installed capacity of thermal power generators, the average
+utilisation hours of thermal power equipment in the PRC recorded a continuous
+decrease year-on-year. The average utilisation hours of coal-fired generators
+of the Group reached 4,428 hours for the year, representing a year-on-year
+decrease of 203 hours and 263 hours above the national average utilisation
+hours of 4,165 hours¹ of thermal power equipment with capacity of 6,000kW
+and above. The efficiency of power generation improved constantly and the
+power consumption rate of the power plant decreased 0.25 percentage point as
+compared with the same period last year. As at the end of the reporting period, the
+installed capacity of circulating fluidized bed generating units of the Group reached
+6,484MW, which was 11.9% of the installed capacity of the coal-fired generating
+units of the Group.
+4,428
+(4) Utilisation Rate of power generation equipment
+1.08
+percentage point
+Decreased by 0.25
+percentage point
+average
+6.09
+(4.4) 5.84
+4,391 4,591
+Weighted
+percentage point
+power
+Decreased by 0.12
+2.15
+Decreased by 0.18
+2.03
+3,243 2,889
+5.72
+percentage point
+Decreased by 0.02
+0.25
+0.23
+(0.6)
+5,364
+5,331
+Hydropower
+12.3
+(5)
+Section V Directors' Report (Continued)
+Data source: China Electricity Council
+125
+Hydro power
+16
+16
+Wind power
+54,417
+2,160
+52,257
+2016
+period
+125
+2015
+Power type
+reporting 31 December
+during the capacity as at
+installed
+(decreased)
+Gross installed
+capacity as at
+31 December
+Gross
+increased/
+Unit: MW
+capacity
+Coal-fired power
+2016 Annual Report 51
+Gas-fired power
+1,730
+1
+According to the Shut-down Programme of Small-scale Coal-fired Power Generators
+in Fujian Province, the 4×135MW coal-fired generators in Longyan Power Plant
+under Fujian Energy Company were shut down at the end of 2016, but the power
+generation quota planned for the future three years was retained for disposal and
+replacement.
+2,700
+Total
+2x350
+Liuzhou City, Guangxi Zhuang
+Autonomous Region
+Liuzhou Power
+2x1,000
+Shouguang City, Shandong
+Province
+Shouguang Power
+1,730
+(MW)
+installed
+added
+Location
+the reporting period
+Projects put into
+operation during
+Newly
+56,288
+2,160
+54,128
+Total
+capacity
+Installed
+Environmental protection
+1
+94.4
+49,507
+(3.4)
+68,349
+66,047
+Coal-fired power
+(%)
+(%)
+(%)
+(%)
+46,123
+2015
+2015
+2016
+2016
+Change
+2015
+2016
+Power type
+costs of 2016 over
+costs of
+to total Change in
+2015
+to total
+95.5
+Wind power
+2,890
+60.4
+1,830
+2,936
+Gas-fired power
+(10.8)
+0.2
+74
+0.1
+66
+7.3
+(4.6)
+145
+Hydro power
+(10.0)
+0.0
+10
+0.0
+9
+28.6
+14
+18
+152
+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.
+Percentage
+Cost of sale of power
+million
+49,788
+53,939
+RMB
+Cost of sales
+73,053
+69,850
+RMB
+million
+Revenue
+Change Main reasons for changes
+(%)
+(4.4) Decrease in power output
+2015
+The operation results of the power segment of the Group before elimination
+on consolidation:
+Analysis of operation results
+In 2016, the completed capitalized expenses of the power segment of the Group
+were RMB17.83 billion, primarily used in projects including the Shenhua Guohua
+Jiangxi Jiujiang New Coal Reserve (Transit) and Power Generation Integration
+Project (2x1,000MW), Shenhua Fujian Luoyuan Bay Coal Storage Integrated Power
+Plant Project (2×1,000 MW), Shenhua Bashu Jiangyou New Coal-fired Power
+Generator Construction Project (2×1,000MW) and Phase II of Guohua Ningdong
+Power Expansion Project (2×660MW), and technical reformation expenditure on
+environmental protection at plants.
+(7)
+Capitalized Expenses
+(6)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+52
+Data source: China Electricity Council
+2016
+Percentage
+sales prices due to the
+reduction in on-grid power
+tariff of coal-fired power
+generation
+resulting from the growth
+in coal price; Power
+output dispatch increased
+year-on-year
+Revenue from sale of power
+Unit: RMB million
+consolidation
+Revenue and cost from the sale of power of the Group before elimination on
+Section V Directors' Report (Continued)
+2016 Annual Report 53
+by 9.0
+percentage
+points
+from operations
+Decreased
+25.7
+8.3 Increase in purchase costs
+of coal of power plants
+16.7
+million
+(37.9)
+18,810
+11,689
+Profit from RMB
+operations
+points
+by 9.0
+percentage
+31.8 Decreased
+22.8
+Gross profit %
+margin
+Profit margin %
+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.
+Gas-fired
+(3)
+3.42
+coal-fired power
+(2.5)
+3.14
+3.06
+(1.7)
+3.48
+3.42
+Ningxia
+0.65 0.65
+0.67
+0.67
+hydropower
+375
+(22.2)
+2.79
+2.17
+(22.4)
+3.08
+2.39
+coal-fired power
+3.48
+(1.7)
+3.06
+3.14
+96.5
+1.99
+3.91
+90.0
+2.11
+4.01
+Beijing
+70.3
+3.20
+5.45
+340
+70.4
+5.71
+coal-fired power
+70.3
+3.20
+5.45
+70.4
+3.35
+5.71
+Chongqing
+(2.5)
+3.35
+(18.0)
+3.44
+2.82
+coal-fired power
+331
+(2.0)
+5.06
+4.96
+(2.2)
+5.41
+5.29
+Installed capacity
+208
+5.29
+197
+5.31
+3.82
+(27.3)
+5.72
+4.16
+coal-fired power
+197
+(28.1)
+5.31
+3.82
+(28.1)
+coal-fired power
+5.41
+4.96
+(18.4)
+3.75
+3.06
+Sichuan
+307
+(8.9)
+4.59
+4.18
+(8.8)
+4.87
+(2.2)
+4.44
+307
+4.59 (8.9)
+4.18
+(8.8)
+4.87
+4.44
+Henan
+331
+(2.0)
+5.06
+coal-fired power
+0.56
+Tianjin
+0.48 (100.0)
+1.64
+coal-fired power
+1.64
+Indonesia
+10.4
+431
+(18.8) 476
+1.76
+1.98 (17.2) 1.43
+1.64
+តុតុ
+weighted average
+294
+294
+(18.2)
+292
+292 (18.2)
+401 26.9
+509
+(100.0)
+26.0
+404
+Overseas in total/
+3.0
+1.98 (17.2)
+1.76
+(100.0)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+50
+(8.1)
+334
+307
+4.8
+220.57
+4.5
+1.43
+236.04 225.79
+10.4
+431
+476
+(18.8)
+1.76
+1.98 (17.2) 1.43
+10.4
+431
+476
+(18.8)
+Total/weighted
+average
+3.0
+210.45
+(9.3)
+2.41
+2.56
+coal-fired power
+2.41
+2.56
+Shandong
+3.16 0.86 267.4
+256.8
+0.95
+3.39
+Guangxi
+coal-fired power
+256.8
+0.95
+3.39
+Shanxi
+1.51 158.9
+158.7
+1.55
+4.01
+(9.3)
+gas-fired power
+3.16 0.86 267.4
+0.21
+3.91
+coal-fired power
+0.19
+(6.6)
+364
+395 (5.1)
+(3.9)
+347 (11.5)
+(5.4)
+350
+350 (5.4)
+(5.3)
+(5.3)
+347 (11.5)
+(14.9)
+208
+0.19
+205
+205
+343
+3222222222'22222
+222222IIIEL23312
+(14.9)
+509
+0.21
+1,707
+12.1
+1,760
+million
+Gross profit
+%
+RMB
+19.2
+points
+margin
+by 7.1
+percentage
+Profit from
+RMB
+266
+133
+100.0
+operations
+Increased
+Cost of sales
+(%)
+in coastal areas and the weather;
+Increase in coal transportation
+Shipping Segment
+2016 Annual Report 57
+million
+Section V Directors' Report (Continued)
+(1) Overview of production and operations
+The shipping segment strengthened the self-owned vessel management and vessel
+allocation and coordinated with coal sales activities to contribute to the integrated
+operation. In 2016, shipping volume amounted to 79.2 million tonnes, and shipment
+turnover amounted to 63.0 billion tonne nautical miles.
+(2)
+Operating results
+The operating results of the shipping segment of the Group before eliminations on
+consolidation are as follows:
+2016
+2015
+Change Main reasons for changes
+Revenue
+RMB
+2,112
+2,002
+5.5
+million
+Increase in shipping price in coastal
+markets affected by factors
+including the tight supply of coal
+volume over internal power plants
+(3.0) Decrease in fuel price, and improved
+control on costs
+Profit margin
+Price
+12.6
+Thousand
+Thousand
+tonnes RMB/tonne
+tonnes RMB/tonne
+%
+%
+Polyethylene
+Polypropylene
+292.6
+Price
+7,222
+7,432
+(8.3)
+(2.8)
+282.1
+5,958
+312.9
+5.
+6,508
+319.2
+Sales
+volume
+Change
+2015
+Sales
+volume
+6.6
+Increased
+from
+by 6.0
+operations
+percentage
+points
+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.
+58
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+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.
+The sales of polyethylene and polypropylene products of the Group in 2016 is as follows:
+2016
+Sales
+volume
+Price
+%
+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.
+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%).
+Increase in relevant transportation
+costs as a result of the increase in
+seaborne coal sales
+%
+48.3
+46.4
+Increased
+by 1.9
+percentage
+Profit from
+RMB
+15,000
+10,070
+Gross profit
+margin
+points
+49.0
+Profit margin
+million
+%
+44.7
+from
+operations
+37.0 Increased
+by 7.7
+percentage
+points
+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
+operations
+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
+18.9 Increase in depreciation and
+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
+(9.8)
+(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
+2015
+Change Main reasons for changes
+(%)
+Revenue
+RMB
+million
+33,530 27,232
+23.1
+Cost of sales RMB
+17,350
+14,595
+million
+With the recovery of coal market,
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+4.
+Port Segment
+%
+49.9
+46.2
+Increased
+by 3.7
+percentage
+points
+Profit from
+RMB
+2,302
+1,350
+70.5
+operations
+Profit margin
+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
+Gross profit
+margin
+by 9.9
+percentage
+points
+million
+2,026
+(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:
+2016
+2015
+Change Main reasons for changes
+(%)
+Revenue
+RMB
+5,040
+3,769
+33.7
+Increase in sales of seaborne coal
+million
+Cost of sales
+RMB
+2,523
+24.5
+(8.5)
+In 2016, the Risk Management Committee held one meeting.
+The operating results of the coal chemical segment of the Group before eliminations
+on consolidation are as follows:
+In 2016, the board of Shenhua Finance Company held three meetings.
+64
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+B.
+Board Committees
+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.
+The board of Shenhua Finance Company currently has three board
+committees, namely the Related Party Transaction Control Committee, Risk
+Management Committee and Audit Committee.
+(B)
+(C)
+Related Party Transaction Control Committee of Shenhua Finance
+Company is responsible for administration over the related party
+transactions of the company, including identification, statistics,
+forecasts, reporting, limit management and recommendations in
+respect of the related party transactions.
+In 2016, the Related Party Control Transaction Committee held one
+meeting.
+Risk Management Committee
+Risk Management Committee of the board of Shenhua Finance
+Company is responsible for assisting the board of Shenhua Finance
+Company to review the company's overall target of risk management,
+risk management policies, risk management procedures and internal
+control processes, and monitor and assess the risk management
+endeavors of relevant senior management members and the risk
+management function.
+(A) Related Party Transaction Control Committee
+Audit Committee
+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.
+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.
+Du Shengli
+7
+Zhang Donghui
+Chairman
+Executive director, general
+manager
+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
+general manager
+Non-executive director
+Independent director
+Employee director
+Note: According to the resolutions passed at the second shareholder's general meeting of
+Shenhua Finance Company in 2016, it was proposed to recommend the appointment
+of Mr. Xu Shancheng to serve as a director of the company, and Mr. Hao Jianxin will no
+longer serve as a director of the company. The approval procedure on the qualification
+for appointment of Mr. Xu Shancheng is under progress and will be duly valid upon the
+approval from the Beijing Branch of China Banking Regulatory Commission.
+2016 Annual Report 63
+Section V Directors' Report (Continued)
+Dr. Zhang Kehui, the chairperson of Shenhua Finance Company, has many
+years of financial management and auditing experience, she has served as
+the deputy general manager of the financial department of Shenhua Group
+Corporation and head of the auditing department of China Shenhua. Dr. Zhang
+Kehui also serves concurrently as the chief financial officer of China Shenhua.
+Executive director, deputy
+6
+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.
+506
+24,844
+1,889
+Shenhua Trading Group
+4
+tariff
+dispatch and power
+5,888
+in the power output
+2,374
+1,469
+5,564
+9,193
+2,278
+Jinjie Energy
+(38.1) Impact of the decrease
+In 2016, the Audit Committee did not hold any meeting.
+1,465
+(487.6) Sales model was changed
+1,213
+9,385
+6,790 15,787
+Huanghua Harbour
+6
+Company
+(378)
+(2.1)
+1,278
+24,678
+7,102 31,584
+5 Zhunge'er Energy
+to agency model
+from the buyout model
+1,305
+3
+Feng Ning
+Zhang Ying
+4,696
+13,437
+8,115
+886 1,212
+(26.9)
+10 Dingzhou Power
+Shenwan Energy
+Company
+1,561 6,237 2,987
+Analysis of operating results
+991
+(12.3)
+Note:
+1. The financial information of the major subsidiaries disclosed in the above table (unassessed
+adjustment before consolidation) was prepared in accordance with the Accounting Standards for
+Business Enterprises. The data have not been audited or reviewed.
+2. Shendong Coal Group Corporation recorded a revenue of RMB39,256 million and a profit from
+operations of RMB9,004 million in 2016.
+869
+3. Shuohuang Railway Company recorded a revenue of RMB17,250 million and a profit from operations
+of RMB8,557 million in 2016.
+9
+(36.1) Decrease in the power
+7
+Taishan Power
+4,670
+12,467
+7,320
+1,059
+tariff
+1,701
+(37.7) Decrease in the power
+output dispatch and
+power tariff
+8 Zheneng Power
+3,255 11,616
+5,529
+1,034 1,618
+139.7 Increase in the loading
+volume of vessels at
+the port
+5
+Company
+62
+During the reporting period, Shenhua Finance Company strictly implemented the following
+resolutions passed at the 12th meeting of the second session of the Board of China
+Shenhua held on 25 March 2011: (1) China Shenhua currently had no intention or plan to
+change the existing operation policies and strategies of Shenhua Finance Company; (2)
+the deposits placed by China Shenhua and its subsidiaries and branches with Shenhua
+Finance Company would be used solely for the credit business of China Shenhua and its
+subsidiaries and branches, and would be deposited in the People's Bank of China and the
+five major commercial banks (namely, Industrial and Commercial Bank of China, Agricultural
+Bank of China, Bank of China, China Construction Bank and Bank of Communications), and
+would not be invested in the public market/private equity market and real estate, etc.
+(1)
+Governance of Shenhua Finance Company is as follows:
+A.
+Board of directors
+No.
+100.00
+Members of the board at the end
+of the reporting period
+1
+Zhang Kehui
+2
+Han Weiping
+34
+Mei Xueyan
+Position
+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.
+4.29
+7.14
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+2.
+Shenhua Finance Company
+As of the end of the reporting period, the Company directly and indirectly held 100% equity
+interest in Shenhua Finance Company.
+No.
+7.14
+Name of Shareholder
+Total
+China Shenhua Energy Company Limited
+Shuohuang Railway Development Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Baoshen Railway Co., Ltd.
+Percentage
+of equity
+interest held
+(%)
+81.43
+1234
+Ltd.
+Administration
+28.2
+284.0
+(6.4)
+5,348
+314.7
+5,839
+294.6
+Polyethylene
+Polypropylene
+%
+tonnes RMB/tonne
+tonnes RMB/tonne
+cost
+production
+Production
+volume
+production
+cost
+Production
+volume
+Thousand
+cost
+volume
+Thousand
+Production production
+Unit
+5,373
+Unit
+308.7
+(8.0)
+China Shenhua Energy Company Limited
+60
+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.
+Revenue from external customers was classified based on the locations where the services were provided or the
+products were purchased.
+Note:
+177,069
+183,127
+Total
+175,129
+1,940
+179,859
+3,268
+Revenue from external transactions in domestic markets
+Revenue from external transactions in overseas markets
+2015
+Development Co.,
+Unit: RMB million
+(V) Regional operation analysis
+In 2016, Baotou Coal Chemical Company contributed approximately RMB27 million
+on environmental protection, mainly for desulfurization and water-saving renovation.
+During the reporting period, the coal-to-olefins project is in compliance with the
+emission standard with no occurrence of major environmental pollution incidents.
+All the coals consumed by the coal chemical segment were the Group's coals. The
+coals consumed in 2016 were 4.0 million tonnes, representing a decrease of 4.8%
+as compared to 4.2 million tonnes of last year. The year-on-year increase in unit
+production cost of olefin products was mainly due to the suspension of operation
+for all equipment of the coal-to-olefins project in early April 2016 due to the system
+overhaul lasted for about one month, which in turn reduced the production volume
+of olefin products.
+9.2
+5.9
+95
+5,074
+Section V Directors' Report (Continued)
+Unit
+2015
+10.4
+%
+Gross profit
+million
+4,720
+4,330
+RMB
+Cost of sales
+(8.3) Decrease in production and sales
+volume in olefins products
+Decrease in production and sales
+volume of olefins products resulting
+from the suspended production
+for repairs for about one month in
+2016; Decrease in sales price in
+olefins products as affected by the
+fluctuation of fossil oil price at the
+low level
+million
+(13.0)
+5,550
+4,831
+RMB
+Revenue
+(%)
+2015 Change Main reasons for changes
+2016
+15.0 Decreased
+Change
+margin
+Profit from
+2016
+Unit production cost of main products
+(3)
+Section V Directors' Report (Continued)
+2016 Annual Report 59
+points
+by 6.4
+percentage
+operations
+from
+11.7 Decreased
+5.3
+%
+Profit margin
+million
+operations
+points
+(60.9)
+649
+254
+RMB
+by 4.6
+percentage
+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
+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.
+Not applicable
+(VI) Analysis on Investments
+1.
+Major subsidiaries
+Unit: RMB million
+Net profit attributable to
+Registered
+capital
+Total
+Net
+No. Company
+assets assets
+As at 31 December 2016
+2016
+the equity holders of the parent company
+2015
+Change
+(%)
+Main reasons for changes
+1
+5,059
+6,487
+29,308
+37,057
+5,880
+2 Shuohuang Railway
+Applicable
+and sales volume
+106.4
+3,601
+7,433
+35,627 14,565
+4,989
+Shendong Coal Group
+Co., Ltd.
+Increase in coal prices
+(VII) Disposal of material assets and equity interest
+(VIII) Analysis on major holding and associated companies
+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)
+(3)
+Not applicable
+Applicable
+Material investment in non-equity interest
+Not applicable
+Applicable
+(2)
+Material investment in equity interest
+(1)
+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.
+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.
+5
+9
+703
+Shenhua Wuhai Energy Co., Ltd.
+8
+798
+Guohua Energy Investment Co., Ltd.
+7
+Protection Group
+1,017
+China Energy Conservation and Environmental
+6
+Company Limited
+China Shenhua International Construction
+Name of customer
+China Shenhua Energy Company Limited
+33,111
+2
+Shenhua Guoneng Group Company Limited
+3,777
+3
+1,193
+1,736
+Company Limited
+4
+Beijing Guohua Power Company Limited
+1,647
+123
+China Shenhua Coal Liquefaction and Chemical
+46,603
+(2)
+Balance of deposits of the top ten customers
+(a)
+Balance of deposits and borrowings of the top ten customers
+B.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+66
+0
+0
+guaranteed loans
+Of which: balance of
+4.4
+29,380
+30,672
+Balance of loans
+(9.1)
+51,282
+Unit: RMB million
+Balance of deposits
+As at
+Shenhua Ningxia Coal Industry Group Co., Ltd.
+(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
+As at
+31 December
+2016
+31 December
+2015
+Change
+(%)
+31 December
+684
+2.
+Shenhua Group Corporation Limited
+Affected by a tight supply of domestic coals at certain stages, the import volume
+of coal was significantly rebounded. The accumulated import volume of coal for the
+year amounted to 256 million tonnes, representing a year-on-year increase of 25.2%.
+70
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(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.
+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%.
+Prospects for 2017
+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.
+2016 Annual Report 71
+Section V Directors' Report (Continued)
+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.
+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%.
+(4.7)
+1,900
+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
+railway (million tonnes)
+2016
+1,994
+Year-on-year
+change
+(%)
+3,410
+3,747
+(9.0)
+255.6
+204.1
+25.2
+2015
+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.
+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
+Development Strategy of the Company
+Section V Directors' Report (Continued)
+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.
+2.
+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.
+Section V Directors' Report (Continued)
+2016 Annual Report 73
+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)
+4.
+Thermal power generation by power plants above the scale in the PRC amounted to
+4,395.8 billion kWh, representing a year-on-year growth of 2.6%; while hydropower
+generation amounted to 1,051.8 billion kWh, representing a year-on-year growth of 5.9%. As
+influenced by the relative overcapacity of thermal power generation, the increase in power
+generation capacity by non-fossil energy and other factors, the utilisation hours of thermal
+power generators was 4,165 hours during the year, representing a year-on-year decrease
+of 199 hours and being a new low since 1964; the average utilisation hours of hydropower
+and wind power generators remained a year-on-year increase.
+The nationwide demand and supply of power was generally on ease. There was a balanced
+demand and supply of power in northern region and an easing demand and supply of
+power in eastern, central and southern regions in general, while there was sufficient power
+supply in northeastern and northwestern regions.
+Prospects for 2017
+In 2017, in consideration of factors including the macro economy and the expected growth
+in power consumption of the service industry and for domestic use, it is expected that the
+demand of power consumption for the year will remain at a growing momentum.
+In 2017, the power supply nationwide will be adequate. It is expected that the momentum
+of rapid increase of installed capacity of thermal power generators will be under effective
+control and the proportion of installed capacity of power generation by non-fossil energy
+will further increase.
+The demand and supply of power nationwide in 2017 will remain at the overall stagnant
+trend and the power consumption structure and regional demand and supply distribution
+will remain basically the same as last year. It is expected that the utilisation hours of
+thermal power generators for the year will continue to experience a year-on-year downturn
+under the influence of the increase in power generation capacity by non-fossil energy and
+other factors. By virtue of the rise of coal-fired power generation costs, thermal power
+generation enterprises will encounter more severe difficulties and challenges.
+Impact of the "Thirteen Five-Year" Plan on Coal and Electricity Market
+Adhering to the "clean, low-carbon, efficient and concentrated" principal determined
+by the "Thirteen Five-Year" Plan for the Development of Coal Industry, excessive and
+obsolete production capacity will be eliminated by approximately 800 million tonnes per
+year while advanced production capacity will be increased by 500 million tonnes per year
+through replacement of existing capacities with less amount and layout optimisation during
+the "Thirteen Five-Year" Plan Period, hence the production capacity of coal is expected
+to reach 3.9 billion tonnes by 2020. The country strives to further centralise the national
+coal production and development towards large-scale coal production bases and further
+optimise the coal production structure in order to further raise the degree of concentration
+of the industry. Meanwhile, the construction of intelligent coal mines and eco-civilized
+mining areas will be proactively pushed forward to enhance the quality and the clean and
+efficient use of coal products, which enables the clean development and utilisation of coal
+to enter into a new stage. It is expected that, by the end of the "Thirteen Five-Year" Plan
+Period, the overcapacity coal industry will be further mitigated with a more balanced
+market demand and supply and a significantly optimised industry structure, and substantive
+progress will be achieved for transformation to clean and efficient coal utilisation in the coal
+industry.
+(II)
+Review of 2016
+10
+(1) Thermal coal market in the PRC
+2016
+Shenhua Bayannur Energy Co., Ltd.
+2,129
+7
+Shenhua Ganquan Railway Co., Ltd.
+1,857
+8
+Shenhua Guoneng Jiaozuo Power Plant
+1,500
+2,198
+Company Limited
+Shenhua Group Corporation Limited
+1,000
+10
+China Shenhua Coal Liquefaction and Chemical
+1,000
+Company Limited
+11
+Inner Mongolia Dayan Mining Industry Group
+9
+1,000
+Shenhua Yili Energy Co., Ltd.
+Shenhua Zhunchi Railway Company Limited
+620
+Note: Data of all companies were consolidated except those of Shenhua Group
+Corporation, which were based on the headquarters of the company.
+(b)
+Balance of loans of the top ten customers
+Unit: RMB million
+As at
+31 December
+2016
+3,000
+No. Name of customer
+Shenhua Ningxia Coal Industry Group Co., Ltd.
+4,500
+Shenhua Xinzhun Railway Co., Ltd.
+3,500
+State Grid Energy Hami Coal and Electricity
+3,000
+Co., Ltd.
+456900
+123
+Co., Ltd.
+2016 Annual Report 67
+Section V Directors' Report (Continued)
+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.
+(XII) Relationship with Stakeholders
+DISCUSSION AND ANALYSIS ON FUTURE DEVELOPMENT OF THE COMPANY¹
+Competition and Development Trend in the Industry
+1.
+Macro economy
+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.
+In 2017, Chinese economy is still confronted with various uncertainties. The government
+will adhere to the general principle of making progress while ensuring stability, and focus
+on the quality and effectiveness enhancement. With the key target of promoting the
+supply-side reform, it will properly expand the overall demand, and take various measures
+including maintaining a stable growth of the economy, promoting reforms, making
+structural adjustments, benefitting people's livelihood and preventing risks to facilitate
+stable and healthy development of the economy. It is expected that in 2017, the GDP
+growth will be around 6.5%, the CPI increase will maintain at around 3%, and the PPI will
+increase compared with the same period of last year. The all-year coal demand is expected
+to remain stable, and electricity demand is expected to remain at a growing momentum.
+1 This section is for reference only and does not constitute any investment advice. The Company has used its best endeavors
+to ensure the accuracy and reliability of information in this section, but does not assume any liability or provide any form of
+guarantee for the accuracy, completeness or validity of all or part of its content. If there is any error or omission, the Company
+does not assume any liability. The content in this section may contain certain forward-looking statements based on subjective
+assumptions and judgments of future political and economic developments; therefore there may exist uncertainties in these
+statements. The Company does not undertake any responsibility for updating the information or correcting any subsequent
+error that may appear. The opinions, estimates and other data set out herein can be amended or withdrawn without further
+notice. The data contained in this section are mainly derived from sources such as the National Bureau of Statistics, China Coal
+Market Network, China Coal Resource Network, China Electricity Council, and China Coal Transportation & Sales Society etc.
+2016 Annual Report 69
+Section V Directors' Report (Continued)
+(I)
+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.
+(XI) Compliance with Relevant Laws and Regulations
+Please refer to the Social Responsibility Report of the Group for information in respect of
+environmental protection of the Company.
+C.
+Approval of loans during the reporting period
+Unit: RMB million
+Item
+2016
+Amount of contracted loans
+10,620
+Amount of granted loans (including discounted assets) Note
+8,082
+Of which: amount of guaranteed loans
+(including discounted assets) Note
+Amount of rejected loans
+/
+Note: The amount of granted loans refers to the balance as at 31 December 2016 of the loans
+granted in the current year in connection with the loans contracts signed in 2016.
+(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.
+Market environment of the coal industry
+No.
+2.
+Item
+accordance
+consolidated
+financial
+statements of
+the respective
+dividend year in
+to equity
+the year
+attributable
+Profit for
+1. Final dividend scheme/plan for the year
+Profit distribution scheme/plan
+(II)
+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 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.
+with
+Formulation, implementation or adjustment of cash dividend policy
+I. PROFIT DISTRIBUTION PLAN
+Significant Events
+Section VI
+2016 Annual Report 83
+Section VI Significant Events
+S
+Please refer to "Significant Events" to this report.
+V.
+PROFIT DISTRIBUTION PLAN
+Applicable ✓ Not applicable
+(1)
+REASONS AND CAUSES OF FAILURE TO DISCLOSE PURSUANT TO GUIDELINES
+BY THE COMPANY DUE TO NON-APPLICATION OF GUIDELINES OR SPECIAL
+REASONS
+Percentage
+to equity
+3.2
+Final dividend for 2015
+40.3
+22,712
+9,149
+4.6
+(Proposed)
+Final dividend for 2016
+%
+RMB million
+to the profit
+for the year
+attributable
+statements
+financial
+Enterprises
+consolidated
+for Business
+Amount of
+cash dividend
+(inclusive of tax)
+RMB million
+Dividend
+per 10 shares
+(inclusive of tax)
+RMB
+Standards Company in the
+holders of the
+Accounting
+Year
+(Unrestated)
+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.
+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.
+Risk of rising costs
+To cope with the risk of changes in industry policies, the Group will strengthen its research
+on the latest industry policies and regulations in the PRC and promote industrial upgrading
+and structural adjustment through a rational investment portfolio across the business
+segments and further regulating on projects approval and construction works of the Group.
+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.
+4.
+Risk of changes in industry policies
+3.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+78
+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.
+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.
+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.
+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.
+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.
+Risk of macroeconomic fluctuations
+1.
+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.
+(V) Major risks faced
+Section V Directors' Report (Continued)
+2016 Annual Report 77
+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.
+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.
+Risk of market competition
+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.
+2016 Annual Report 79
+Section V Directors' Report (Continued)
+Risk of natural disasters
+To cope with the risk of international operations, the Group will actively respond to the
+national promotion of "the Belt and Road", and conscientiously carry out overseas resource
+evaluation and project assessment based on sound information analysis prior to making any
+decision on overseas project investment so as to ensure economic feasibility. Furthermore,
+the Company will strengthen the cultivation and introduction of interdisciplinary talents to
+lay a solid cornerstone for its "Going Overseas" strategy.
+Due to the complex economic, social, political and religious conditions in the globe and
+the fluctuations in exchange rates, the risk of investments in different countries varies
+significantly. Given the highly competitive energy market worldwide, the uncertainties in
+the Group's international operations may have an impact on its overseas business.
+Risk of international operations
+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.
+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 integrated operations
+9.
+8.
+7.
+IV.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+80
+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.
+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.
+Risks of production safety for coal mines
+6.
+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.
+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 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.
+Risk of environmental protection
+5.
+6,365
+16,144
+holders of the
+Company in the
+Final dividend for 2014
+11.2
+Cost of sales
+RMB100 million
+1,428
+1,248.43
+14.4
+Selling, general and administrative
+RMB100 million
+147
+140.58
+1,831.27
+4.6
+Percentage change of unit production
+cost of the self-produced coal
+1
+Year-on-year
+decrease
+ranging 1% to
+2%
+Year-on-year
+1
+decrease of
+11.0%
+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%.
+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
+expenses and net finance costs
+2,036
+RMB100 million
+Revenue
+2016 Annual Report 75
+Section V Directors' Report (Continued)
+Accomplishment
+Increase/
+Unit
+Target of 2017
+in 2016
+(decrease)
+(%)
+Commercial coal production
+Coal sales
+100 million tonnes
+2.98
+2.898
+2.8
+100 million tonnes
+4.07
+3.949
+3.1
+Power output dispatch
+billion kWh
+214.7
+39.4
+(2.7)
+1. Coal segment
+2. Power segment
+220.57
+Of which: Railway
+350
+169.5
+293.8
+76
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+Total capital expenditures of 2016 amounted to RMB29.38 billion, which were mainly used for
+(1) power segment: constructions including the Jiangxi Jiujiang New Coal Reserve (Transit) and
+Power Generation Integration Project of Shenhua Guohua, Phase II of Guohua Ningdong Power
+Expansion Project, Luoyuan Bay Coal Storage Integrated Power Plant Project of Shenhua Fujian,
+and Fuping Thermal Power Project; (2) coal segment: coal mining in and consideration payment
+for mining rights for Shendong Mines, Zhunge'er Mines and other mines, and the construction of
+Qinglongsi Coal Mine and Coal Processing Plant; and (3) transportation segment: the construction
+of Huangda Railway, constructions along Zhunchi Railway and Shenshuo 10,000-tonne Train
+Expansion Project. Total capital expenditures of 2016 exceeded the annual budget plan, mainly
+attributable to the consideration payment for mining rights for certain mines in Shendong Mines,
+Zhunge'er Mines and Baorixile Mines, and the acquisition of land use rights by Shenhua Zhuhai
+Coal Dock.
+(III) Business Targets for 2017
+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.
+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.
+0.5
+Special Dividend Plan
+3.
+2.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+84
+40.0
+36,807
+14,718
+3. Transportation segments
+7.4
+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.
+0.0
+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.
+0.8
+Port
+Shipping
+4. Coal chemical segment
+1.0
+5. Others
+Total
+Unit: RMB100 million
+Accomplishment
+Plans for 2017
+Total amount
+Of which:
+first batch
+17.6
+in 2016
+109.5
+178.3
+41.6
+55.7
+38.2
+38.2
+3.0
+17.4
+58.3
+0.1
+0.4
+(d)
+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.
+(b)
+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:
+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;
+(a)
+(c)
+Section VI Significant Events (Continued)
+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.
+2016 Annual Report 93
+(3)
+(6)
+The quantity of coal; and
+(5)
+The quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+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;
+The specified guidelines issued by NDRC setting out the coal purchase prices (if
+any);
+The national industrial policy as well as industry and market conditions in the
+PRC;
+(4)
+(2)
+(1)
+The supply price under the new Mutual Coal Supply Agreement is the product of the
+unit price RMB/tonne multiplied by the actual weight. The unit price of coal shall be
+determined by both parties after arm's length negotiations with reference to the then
+market price and conditions and the following factors, provided that the transaction
+terms shall not be less favourable than those provided by third parties:
+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;
+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 transportation fees.
+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
+(1)
+94
+Section VI Significant Events (Continued)
+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%).
+Social security and pension management services and staff data recording
+services: agreed price (cost plus a profit margin of approximately 5%); and
+Logistics and support services and training services: agreed price (cost plus a
+profit margin of approximately 5%);
+Information technology services: the 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;
+Technical consulting services: agreed price with a profit margin of
+approximately 10%;
+(m)
+(k)
+(j)
+(i)
+Tendering services: price prescribed by NDRC;
+(h)
+(g) Production equipment and spare parts, office products: market price;
+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.
+Chemical products: market price;
+Hardware and software equipment and related services: market price (including
+tender and bidding price);
+Alternative power generation: price prescribed by NDRC or other related
+government competent authorities;
+Oil products: government-guided price;
+Construction: where tender and bidding process is necessary under applicable
+laws and regulations, the price ultimately determined in accordance with
+the tender and bidding process; where tender and bidding process is not
+necessary under applicable laws, the market price;
+Rail transportation: price prescribed by NDRC or other related government
+competent authorities;
+(e)
+(d)
+(c)
+(b)
+(a)
+In addition to the above, for certain types of product or service, specific pricing policy
+adopted as follows:
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+(f)
+China Shenhua Energy Company Limited
+Not applicable
+The Company entered into the Mutual Coal Supply Agreement with Shenhua
+Group Corporation on 22 March 2013. The Mutual Coal Supply Agreement was
+effective between 1 January 2014 and 31 December 2016. Pursuant to the Mutual
+Coal Supply Agreement, the Group and Shenhua Group mutually sold and supplied
+various types of coal. The price of the coal supplied under the Mutual Coal Supply
+Agreement is market price, namely, the price charged by an independent third party
+for the supply of coal of the same grade based on the normal commercial terms
+concluded on the normal commercial conditions in the same region or its vicinity, or
+the price of coal of the same grade supplied to or purchased from an independent
+third party by the parties separately based on the normal commercial terms
+concluded on the normal commercial conditions. The price of the coal supplied
+under the Mutual Coal Supply Agreement was determined by the Company and
+Shenhua Group Corporation through fair negotiation with reference to the Bohai-Rim
+Steam-Coal Price Index. In accordance with the provisions of the Mutual Coal Supply
+Agreement, priority will be given to the other party when one party purchases coal
+unless the terms of sales provided by a third party are more favorable.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+88
+The Company assumes no responsibility arising from any delayed or inaccurate
+determination of the status of the shareholders or any dispute over the mechanism of
+withholding. Shareholders should consult their tax advisers regarding the PRC, Hong Kong
+and other tax implications of owning and disposing of the Company's H shares.
+According to the relevant provisions under the "Notice on Tax Policies for
+Shanghai-Hong Kong Stock Connect Pilot Programme (Cai Shui [2014] No. 81)", the
+Company shall withhold individual income tax at the rate of 20% with respect to dividends
+received by Mainland individual investors for investing in H-shares listed in Hong Kong
+Stock Exchange through Shanghai-Hong Kong Stock Connect. For Mainland securities
+investment funds investing in shares listed on Hong Kong Stock Exchange through
+Shanghai-Hong Kong Stock Connect, the above rules also apply and individual income tax
+shall be levied on dividends derived therefrom. The Company is not required to withhold
+income tax on dividends derived by Mainland enterprise investors, and such enterprises
+shall report the income and make tax payment by themselves. The record date and the
+relevant arrangements of dividend distribution for Southbound Investors are the same as
+that of the Company's shareholders of H shares.
+With respect to the Southbound Shareholders, according to the relevant requirements of
+China Securities Depository and Clearing Corporation Limited, China Securities Depository
+and Clearing Corporation Limited Shanghai Branch shall receive cash dividends distributed
+by the Company as the nominee of the Southbound Shareholders and distribute such cash
+dividends to the relevant Southbound Shareholders through its depository and clearing
+system.
+The Company shall use the registered address (hereinafter referred to as "registered
+address") as recorded in the register of members of H shares on 7 July 2017 as the
+criterion in determining the residence of the individual shareholders of H shares who are
+entitled to receive the final dividend for year 2016 and the special dividend of the Company,
+and withhold and pay individual income tax accordingly. If the residence of the individual
+shareholders of H shares is inconsistent with the registered address, such shareholders
+shall notify the Company's share registrar for H shares at or before 4:30 p.m. on 30 June
+2017 with the relevant evidence at Computershare Hong Kong Investor Services Limited of
+17M Floor, Hopewell Centre, 183 Queen's Road East, Wan Chai, Hong Kong.
+10.
+II. PERFORMANCE OF COMMITMENTS
+9.
+2016 Annual Report 87
+If the individual shareholders of the H shares who are Hong Kong or Macau residents or
+residents of the countries which have an agreed tax rate of 10% with China, the Company
+shall withhold individual income tax at a rate of 10%. If the individual shareholders of the
+H shares are residents of countries which have an agreed tax rate of less than 10% with
+China, the Company shall withhold individual income tax on behalf of them in accordance
+with relevant provisions required by the Announcement of the State Administration of
+Taxation in relation to the Administrative Measures on Preferential Treatment Entitled
+by Non-resident Taxpayers under Tax Treaties (No. 60 Announcement of the State
+Administration of Taxation in 2015). If the individual shareholders of the H shares are
+residents of countries which have an agreed tax rate of over 10% but less than 20% with
+China, the Company shall withhold the individual income tax at the agreed actual rate. In
+case the individual shareholders of the H shares are residents of countries which have not
+entered into any tax agreement with China, or the agreed tax rate with China is 20% or
+otherwise, the Company shall withhold the individual income tax at a rate of 20%.
+According to Guo Shui Han [2011] No. 348 issued by the State Administration of Taxation,
+the Company shall withhold and pay individual income tax for dividend payable to the
+individual shareholders of H shares. The individual shareholders of H shares are entitled
+to the relevant preferential tax treatment pursuant to the provisions in the tax agreements
+entered into between their countries of residence and China or the tax arrangements
+between mainland China and Hong Kong (Macau).
+In accordance with the Enterprise Income Tax Law of the PRC and its implementation
+regulations which came into effect on 1 January 2008, the Company is required to withhold
+and pay enterprise income tax at the rate of 10% on behalf of the non-resident enterprise
+shareholders whose names appear on the register of members for H shares of the
+Company when distributing final dividends. The Company shall withhold and pay enterprise
+income tax in respect of the final dividend for year 2016 and the special dividend of the
+Company for the non-resident enterprise shareholders whose name would appear on the
+register of members for H shares of the Company on 7 July 2017.
+8.
+7.
+Limited
+Services
+Section VI Significant Events (Continued)
+Detailed
+Further steps
+Timely
+Yes, in process N/A
+24 May 2005, Yes
+Shenhua Group The Company and Shenhua Group
+Non-
+Commitment
+in time
+Commitment in time
+is not fulfilled
+is not fulfilled
+Any Time Limit
+for Commitment
+commitment commitment
+specified if
+be specified if
+and Strict
+Performance
+Date and
+Duration of
+Commitment
+Commitment Commitment Covenantor Commitment
+Background of Type of
+shall be
+reasons shall
+Hong Kong
+Investor
+Computershare
+Limited
+Services
+No.
+The
+Temporary closure of the register of members
+The arrangement of temporary closure of the register of members of H shares of the
+Company:
+6.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+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.
+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;
+(2)
+(1)
+Pursuant to the Articles of Association:
+In accordance with the preliminary arrangement of profit distribution plan and annual
+general meeting, the 2016 final dividend and the special dividend for the Company's H
+shareholders are estimated to be distributed on or about 22 August 2017.
+The final dividend for year 2016 and the special dividend are denominated and declared in
+RMB, which will be distributed together. The final dividend for year 2016 and the special
+dividend will be paid in RMB to holders of the Company's A shares, including holders of
+the Company's A shares through the Northbound Trading Link of the Shanghai-Hong Kong
+Stock Connect (hereinafter referred to as the "Northbound shareholders") and holders of
+the Company's H shares through the Southbound Trading Link (hereinafter referred to as
+the "Southbound Shareholders"). Dividends to holders of the Company's H shares, except
+the Southbound Shareholders, are paid in HKD. The dividend paid in HKD is calculated
+according to the exchange rate based on the average benchmark rate of RMB against HKD,
+as published by the Bank of China five business days preceding the date of declaration of
+such dividend.
+5.
+4.
+Section VI Significant Events (Continued)
+2016 Annual Report 85
+92
+Corresponding
+Rights
+N/A
+First Day
+(inclusive)
+The last day for
+special dividend
+2016 and the
+30 June 2017,
+Friday 4:30 p.m.
+7 July 2017,
+Friday
+3 July 2017,
+Monday
+dividend for year
+Entitled to the final
+2
+Computershare
+Hong Kong
+Investor
+Tuesday 4:30 p.m.
+general meeting
+23 May 2017,
+23 June 2017,
+Friday
+24 May 2017,
+Wednesday
+at the 2016 annual
+Attending and voting
+1
+Company's
+share
+registrar for
+H shares
+registering members
+Last Day
+(inclusive)
+in relation to
+86
+Corporation
+The above auditors also served as the external auditors of several subsidiaries of the Company and their
+remuneration relating to audit services amounted to approximately RMB2.08 million during the reporting
+period. Deloitte Touche Tohmatsu Certified Public Accountants LLP did not provide non-audit services to
+the Company and its subsidiaries during the reporting period.
+VI.
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+90
+RMB1.59 million
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+Internal Control Auditors
+INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+Remuneration
+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)
+Term of Auditing of International Auditors of
+(RMB million)
+Name
+Applicable ✓ Not applicable
+VII. MATERIAL LITIGATION AND ARBITRATION
+Applicable
+Mutual Coal Supply Agreement
+competition
+In order to ensure a reliable and quality-assured provision of materials and services for the
+Company, lower operation risks and costs, and allow Shenhua Finance Company, in which
+the Company has controlling shareholding, to provide financial services to the companies
+under the Group and Shenhua Group Corporation so that it can fully leverage on its
+functions as an internal financing platform and capital management platform, and to further
+contain risks and increase income. The Company entered into the following continuing
+connected transaction agreements with Shenhua Group Corporation:
+Non-exempt continuing connected transactions between the Group and Shenhua
+Group
+(1)
+Pursuant to the requirements under the Guidelines of Shanghai Stock Exchange on Connected
+Transactions of Listed Companies, the Audit Committee of the Board of the Company shall
+perform the duties of control and daily management of connected transactions of the Company.
+The Company has a connected transaction team under the direct supervision of the Chief
+Financial Officer, which is responsible for the management of connected transactions; and has
+established a business process, which properly delineates the responsibilities of the Company,
+its subsidiaries and branches in the management of connected transactions. The team has
+also established routine examinations, reporting systems and accountability systems in the
+subsidiaries and branches of the Company.
+Connected transactions during the daily operation
+(1)
+XI. MATERIAL CONNECTED TRANSACTIONS
+Applicable ✓ Not applicable
+X. THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY AND
+THEIR IMPACTS
+Section VI Significant Events (Continued)
+2016 Annual Report 91
+Upon self-investigation, as at the end of the reporting period, there has been no failure in fulfilling
+the judgment from court or relatively large amount of outstanding debt such as failure in fulfilling the
+judgment from court or debit interests owed to external financial institutions due of the Company and
+Shenhua Group Corporation.
+IX. EXPLANATION FOR CREDIT OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDERS AND DE FACTO CONTROLLER
+Applicable ✓ Not applicable
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY,
+DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDERS, DE FACTO CONTROLLER AND OFFEROR
+As at the end of the reporting period, the Group was not involved in any material litigation or arbitration. As
+far as the Group was aware, the Group did not have any material litigation or claim which was pending
+or threatened against the Group. As at 31 December 2016, the Group was the defendant or the party of
+certain non-material litigations. The management of the Company believes that any possible legal liability
+which may be incurred from the aforesaid cases will not have any material impact on the financial
+position of the Group.
+Not applicable
+Remuneration of International Auditors of the Company
+Term of Auditing of Domestic Auditors of the Company (year)
+Name of International Auditors of the Company
+Applicable
+Remuneration of Domestic Auditors of the Company
+7 July 2016
+2015 to
+Yes, completed N/A
+Yes
+From 8 July
+shareholding of A shares in the
+Company in its own name via the
+trading system of the Shanghai
+Stock Exchange within 12 months
+after 8 July 2015. Shenhua Group
+Corporation undertakes that
+it will not dispose any share it
+holds in the Company during the
+period of the implementation of
+the increase plan and within the
+statutory period.
+proposed to increase its
+Corporation
+in relation to
+increase in
+shares
+Shenhua Group Corporation
+Commitment Shenhua Group
+Other
+commitment
+competition.
+"Non-competition Agreement"
+on 24 May 2005. Pursuant to
+such agreement, Shenhua Group
+Corporation has committed not
+to compete with the Company
+in respect of the Company's
+principal businesses whether
+inside or outside of the PRC, and
+granted the Company priority
+trading and pre-emptive right to
+acquire and be transferred from
+Shenhua Group Corporation
+any business opportunities and
+assets which may pose potential
+undertaking
+initial public
+offering
+(RMB million)
+long-term
+Corporation entered into a
+N/A
+NA
+A.
+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.
+Name of Domestic Auditors of the Company
+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.
+Applicable
+Applicable ✓ Not applicable
+The Board's analysis and explanation about the reasons for and impact of changes in
+accounting policies, accounting estimates or accounting method
+(II)
+V. APPOINTMENT AND REMOVAL OF AUDITORS
+Not applicable
+Applicable
+Explanation from the board and the supervisory committee for the "non-standard
+audit report" issued by the auditors
+(III) The Board's analysis and explanation about the reasons for and impact of correction
+to material previous errors
+Not applicable
+AUDIT OPINIONS AND OTHER EXPLANATIONS
+✓ Not applicable
+Applicable
+APPROPRIATION OF FUNDS AND PROGRESS OF THE COLLECTION DURING THE
+REPORTING PERIOD
+Section VI Significant Events (Continued)
+2016 Annual Report 89
+III.
+(I)
+IV.
+China Energy Group/
+Shenhua Group
+China Guodian
+Guodian Group
+GD Power
+Shendong Coal Group
+Shendong Power Company
+Zhunge'er Energy Company
+Shuohuang Railway Company
+China Energy Investment Corporation Limited (£*œF£¤¶¶Ð
+R), the new name of Shenhua Group Corporation Limited
+(神華集團有限責任公司)
+Huanghua Harbour Administration
+Company
+Baotou Energy Company
+Baotou Coal Chemical Company
+Shenbao Energy Company
+Shenhua Zhuhai Coal Dock
+China Shenhua Energy Company Limited
+The Company and its subsidiaries
+Shenhua Group Corporation
+Shenhua Trading Group
+Railway Transportation Company
+301
+The Group
+Independent Auditor's Report and Financial Statements
+179
+Section XIV
+Documents Available for Inspection
+298
+Section XV
+Signing Page for Opinions
+299
+Section XVI
+Summary of Major Financial Information for the Recent Five Years
+China Energy and its subsidiaries (excluding the Group)
+• DGOOD GODD
+888
+BOD
+OR 60000 600
+Section | Definitions
+I
+Unless the context otherwise requires, the following terms used in this report have the following
+meanings:
+China Shenhua/the Company
+China Energy/
+China Guodian Group Co., Ltd. (+III£¥ÁRA)
+Shenhua Baotou Coal Chemical Co., Ltd.
+GD Power Development Co., Ltd.
+Shenwan Energy Company Limited
+Shenhua Fujian Energy Co., Ltd.
+Shenhua Finance Co., Ltd.
+PT.GH EMM INDONESIA
+Tianjin Guohua Panshan Power Generation Co., Ltd.
+Sanhe Power Co., Ltd.
+Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+Shenmu Power
+Power-generating division controlled and operated by Zhunge'er
+Energy Company
+CLP Guohua Shenmu Power Co., Ltd.
+Guangdong Guohua Yudean Taishan Power Co., Ltd.
+Taishan Power
+Cangdong Power
+Suizhong Power
+Section XIII
+Hebei Guohua Cangdong Power Co., Ltd.
+Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+China Guodian and its subsidiaries
+Zheneng Power
+Sanhe Power
+Shenhua Shendong Coal Group Co., Ltd.
+Shenhua Shendong Power Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+Shuohuang Railway Development Co., Ltd.
+Shenhua Trading Group Limited
+Shenhua Huanghua Harbour Administration Co., Ltd.
+Shenhua Railway Transportation Co., Ltd.
+Shenhua Baotou Energy Co., Ltd.
+Zhunge'er Power
+Shenhua Baorixile Energy Co., Ltd.
+4 China Shenhua Energy Company Limited
+Section Definitions (Continued)
+Shenwan Energy
+Fujian Energy
+Shenhua Finance Company
+EMM Indonesia
+Panshan Power
+Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+Guohua Zhunge'er
+Contents
+Index to Information Disclosure
+Internet Security
+D
+Efficiency
+Fault Diagnosis
+Health
+(a joint stock limited company incorporated in the People's Republic of China with limited liability)
+CHINA SHENHUA ENERGY COMPANY LIMITED
+Stock Code: 01088
+中国神华能源股份有限公司
+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 adjustment to industrial policies, the Group is exposed to some uncertainties on achieving the
+business targets for 2019. In addition, investors please note that the Company has disclosed risks
+including market competition, industrial policies, increase in cost, environmental protection and
+production safety, etc. in the section headed "Directors' Report".
+2018 Annual Report
+1
+ED
+The Board proposed the payment of a final dividend in cash of RMB0.88 per share (inclusive of
+tax) or RMB17,503 million (inclusive of tax) for the year 2018 based on the total share capital of
+19,889,620,455 shares of the Company as at 31 December 2018. The profit distribution proposal is
+pending the approval by shareholders at the general meeting.
+Section I
+2018 Annual Report
+Environmental
+Protection
+Jinjie Energy
+This report was approved at the 18th meeting of the fourth session of the Board of the Company.
+Nine out of ten eligible directors attended the meeting in person. Gao Song, a director, asked for
+leave due to business appointment, and appointed Mi Shuhua, a director, to act as his proxy and
+vote on behalf of him at the meeting.
+The Board, supervisory committee and directors, supervisors and senior management of the
+Company warrant that this report does not contain any misrepresentations, misleading statements
+or material omissions, and are jointly and severally liable for the authenticity, accuracy and
+completeness of the information contained in this report.
+IX.
+VIII.
+VII.
+VI.
+Safety
+V.
+III.
+II.
+I.
+Important Notice
+Smart Coal Mine
+Information
+Integration
+Unattended
+Operation
+IV.
+172
+Definitions
+Section II
+129
+0400
+100
+610
+010
+000
+Section IX
+Directors, Supervisors, Senior Management and Employees
+Corporate Governance and Corporate Governance Report
+Section X
+Supervisory Committee's Report
+168
+Section XI
+Investor Relations
+171
+Section XII
+155
+4
+Section VIII
+Changes in Share Capital and Shareholders
+Company Profile and Major Financial Indicators
+8
+Section III
+Business Overview
+13
+Section IV
+Chairman's Statement
+121
+Section V
+362
+16
+22
+Section VI
+Significant Events
+84
+Section VII
+Directors' Report
+Dingzhou Power
+(8610) 5813 3399
+Taicang Power
+Registered Address of the Company
+Postal Code of Registered Address of
+the Company
+Office Address of the Company
+Postal Code of Office Address of
+the Company
+Company Website
+E-mail
+Hong Kong Office of the Company
+Room B, 60th Floor, Bank of China
+Tower, 1 Garden Road, Central,
+Hong Kong
+(852) 2578 1635
+(852) 2915 0638
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing
+(Postal Code: 100011)
+(8610) 5813 1088/3399/3355
+(8610) 5813 1804/1814
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+http://www.csec.com or http://www.shenhuachina.com
+ir@shenhua.cc
+8
+China Shenhua Energy Company Limited
+Section II Company Profile and
+Major Financial Indicators (Continued)
+IV. INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+Designated Media for Information
+Disclosure
+Internet website designated by
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+CSRC for publishing annual report
+Annual report is available at
+Board and Supervisory Committee
+Affairs and Investor Relations
+Department of the Company
+III.
+中國神華
+China Shenhua Energy Company Limited
+CSEC/China Shenhua
+Ling Wen
+Ling Wen, Huang Qing
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing (Postal
+Code: 100011)
+Deloitte Touche Tohmatsu has issued a standard unqualified independent auditor's report to the
+Company under the Hong Kong Standards on Auditing, in connection with the Company's 2018
+financial statements prepared under IFRSS.
+PARTICULARS
+(8610) 5813 1804/1814
+1088@shenhua.cc
+Sun Xiaoling
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing (Postal
+Code: 100011)
+(8610) 5813 3355
+(8610) 5813 1804/1814
+ir@shenhua.cc
+Address
+Tel
+Fax
+Representative of Securities Affairs
+中國神華能源股份有限公司
+China Securities Journal, Shanghai Securities News,
+Securities Times and Securities Daily
+Shanghai Stock Exchange, Board and Supervisory Committee
+Affairs and Investor Relations Department of the Company
+and Hong Kong Office of the Company
+Signing Auditors Chen Wenlong, Yu Chunhui
+Name
+Deloitte Touche Tohmatsu
+Auditor engaged by the
+Company (Hong Kong)
+Office Address
+Share Registrar Name
+and Transfer
+Office
+Address
+8th Floor, Tower W2, The Towers, Oriental Plaza,
+1 East Chang An Avenue, Beijing
+35th Floor, One Pacific Place, 88 Queensway,
+Hong Kong
+A Share
+China Securities Depository and
+Clearing Corporation Limited
+Shanghai Branch
+3rd Floor, China Insurance
+Building, 166 Lujiazui East Road,
+Pudong New Area, Shanghai
+H Share
+Computershare Hong Kong
+Investor Services Limited
+Rooms 1712-1716, 17th
+Floor, Hopewell Centre,
+183 Queen's Road East,
+Wanchai, Hong Kong
+2018 Annual Report 9
+Signing Auditors Yam Siu Man
+http://www.sse.com.cn and http://www.hkex.com.hk
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+Name
+BASIC INFORMATION ON SHARES
+V.
+Type
+A Share
+H Share
+Stock Exchange
+Abbreviation
+Office Address
+Stock Code
+China Shenhua
+601088
+Hong Kong Stock
+Exchange
+China Shenhua
+01088
+VI. OTHER RELEVANT INFORMATION
+Auditor engaged by the
+Company (the PRC)
+Shanghai Stock
+Exchange
+Guohua Hulunbei'er Power
+Huang Qing
+E-mail
+Beijing Gas-fired Power
+Shouguang Power
+Liuzhou Power
+Guohua Ningdong
+Fuping Thermal Power
+Lujiang Power Plant
+Jawa Company
+Zhoushan Power
+Shenhua Finance Lease Company
+Shanghai Stock Exchange
+Hong Kong Stock Exchange
+Shanghai Listing Rules
+Hong Kong Listing Rules
+Ningxia Guohua Ningdong Power Generation Co., Ltd.
+Guohua Xuzhou Power Generation Company Limited
+Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+Shenhua Guohua (Beijing) Gas-fired Power Co., Ltd.
+Shenhua Guohua Shouguang Power Generation Company Limited
+Shenhua Guohua Guangtou (Liuzhou) Power Generation Co., Ltd.
+Shenhua Ningxia Guohua Ningdong Power Generation Co., Ltd.
+JORC
+Fuping Thermal Power Plant of Shenhua Shendong Power Co., Ltd.
+Shenwan Hefei Lujiang Power Generation Co., Ltd.
+Xuzhou Power
+Section Definitions (Continued)
+Mengjin Power
+Yuyao Power
+Jiujiang Power
+Zhuhai Wind Energy
+Huizhou Thermal
+Suizhong Power Co., Ltd.
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+Ningdong Power
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+Guohua Taicang Power Generation Co., Ltd.
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+Shenhua Guohua Jiujiang Power Co., Ltd.
+Zhuhai Guohua Huidafeng Wind Energy Development Co., Ltd.
+Guohua Huizhou Thermal Power Branch of China Shenhua
+2018 Annual Report 5
+Inner Mongolia Guohua Hulunbei'er Power Generation Co., Ltd.
+Secretary to the Board
+Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+A mutual access and connect mechanism for transactions in stock
+markets between Shanghai Stock Exchange and Hong Kong Stock
+Exchange
+A mutual access and connect mechanism for transactions in stock
+markets between Shenzhen Stock Exchange and Hong Kong Stock
+Exchange
+Renminbi unless otherwise specified
+2018 Annual Report 7
+Section II Company Profile and
+Major Financial Indicators
+I.
+Long term interest bearing debt + Short term interest bearing debt
+(including Notes payable)/Long term interest bearing debt + Short
+term interest bearing debt (including Notes payable) + Total equity
+INFORMATION OF THE COMPANY
+Abbreviation of Chinese Name of the Company
+English Name of the Company
+Abbreviation of English Name of the Company
+Legal Representative of the Company
+Authorised Representatives of the Company
+under the Hong Kong Listing Rules
+II. CONTACTS AND CONTACT DETAILS
+Name
+Address
+Tel
+Fax
+Chinese Name of the Company
+Shenhua (Tianjin) Finance Lease Co., Ltd.
+total liabilities/total assets
+RMB
+Shanghai Stock Exchange
+The Stock Exchange of Hong Kong Limited
+Rules Governing the Listing of Stocks on Shanghai Stock Exchange
+Rules Governing the Listing of Securities on the Hong Kong Stock
+Exchange
+Accounting Standards for Business the latest Accounting Standards for Business Enterprises issued
+Enterprises
+by the Ministry of Finance of the People's Republic of China and
+the related application guidance, interpretations and other related
+requirements
+International Financial Reporting
+Standards
+International Financial Reporting Standards issued by the
+International Accounting Standards Board
+Articles of Association of China Shenhua Energy Company Limited
+profit for the year + net finance costs + Income tax + Depreciation
+and amortization - Share of results of associates
+6
+Section Definitions (Continued)
+Articles of Association
+EBITDA
+Gearing ratio
+Total debt to total debt and total
+equity ratio
+Shanghai-Hong Kong
+Stock Connect
+Shenzhen-Hong Kong
+Stock Connect
+China Shenhua Energy Company Limited
+Ling Wen, Chairman of the Company, Xu Shancheng, Chief Financial Officer, and Ban Jun, person-
+in-charge of the accounting department, warrant the authenticity, accuracy and completeness of
+the financial statements contained in this report.
+1.4
+For the details of the Group and Guodian Group establishing a Joint Venture Company with
+the equity and assets of the related coal-fired companies which held by the Group and
+Guodian Group, please refer to Section V "Subsequent Events" of this report.
+The pricing of the transactions under the Continuing Connected Transactions
+Framework Agreement shall be agreed in the implementation agreements, but
+shall be determined in accordance with the general principles and order of this
+section:
+(a)
+The price of transportation service mutually provided by the China Railway
+Group and the Group shall be determined in the following priority:
+(i)
+the prices as determined by the government;
+(ii)
+On 26 December 2018, the Company and Taiyuan Railway Bureau entered into
+a Continuing Connected Transaction Framework Agreement. The Continuing
+Connected Transactions Framework Agreement came into effect on the signing
+date and valid until 31 December 2019. In accordance with the Continuing
+Connected Transactions Framework Agreement, the Group, China Railway and
+its subsidiaries (excluding Taiyuan Railway Bureau and its subsidiaries) (the
+"China Railway Group") have agreed to provide transportation service, supply
+coal and provide other products and services to the Group, in which excluded
+rolling stock usage, overhaul services, equipment supply, business consulting,
+technical services, and railway track maintenance services.
+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;
+100
+Section VI Significant Events (Continued)
+(b)
+(iii)
+(iv)
+(v)
+2018 Annual Report 99
+(vi)
+China Railway Corporation ("China Railway") is a controlling shareholder of
+regional railway bureau including Taiyuan Railway Bureau, therefore China
+Railway constituted a connected person of the Company under the Hong Kong
+Listing Rules. Therefore, the Continuing Connected Transactions Framework
+Agreement and the transactions contemplated thereunder constitute continuing
+connected transactions of the Company under the Hong Kong Listing Rules.
+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.
+(4)
+Government-prescribed price and government-guided price: if at any time,
+the government-prescribed price is applicable to any particular service,
+such service shall be supplied at the applicable government-prescribed
+price. Where a government-guided fee standard is available, the price
+shall be agreed within the range of the government guided price.
+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.
+Market price: shall be determined according to the normal commercial
+terms and the following basis: the price of the same or similar services
+provided by an independent third party during the ordinary course of
+business on normal commercial terms. The management shall consider
+at least two comparable transactions with independent third party for
+the same period when determining whether the price for any transaction
+under the Agreement is market price.
+Agreed price: shall be determined by adding a reasonable profit
+over a reasonable cost. The management shall consider at least two
+comparable transactions with independent third party for the same period
+when determining the reasonable profit of any transaction under the
+Agreement.
+98
+The Continuing Connected Transactions Framework Agreement between the
+Company and China Railway Corporation
+Section VI Significant Events (Continued)
+In addition to the above, for certain type of service, specific pricing policy is
+adopted as follows:
+(1)
+(2)
+(3)
+Transportation and related services provided by the Taiyuan Railway
+Bureau Group to the Group: price prescribed by NDRC or other related
+government authorities.
+Rolling stock leasing and other related services provided by the Group to
+the Taiyuan Railway Bureau Group: price prescribed by NDRC or other
+related government authorities.
+E.
+(3)
+if the prices are not specified by the government and the
+government has not set applicable guidance prices, the prices shall
+be determined in accordance with the applicable industry price
+settlement rules;
+if 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;
+(i)
+(ii)
+(iii)
+(iv)
+Government-prescribed price and government-guided price: if at
+any time, the government-prescribed price is applicable to any
+particular product or service, such product or service shall be
+supplied at the applicable government-prescribed price. Where
+a government-guided fee standard is available, the price will be
+agreed within the range of the government-guided price;
+Tender and bidding price: where tender and bidding process is
+necessary under applicable laws, regulations and rules, the price
+shall be ultimately determined in accordance with the tender and
+bidding process;
+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:
+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
+In addition to the above, for certain types of product or service, specific
+pricing policy is adopted as follows:
+(i)
+Rolling stock usage: agreed price (cost plus a profit margin of
+approximately 5%).
+(ii)
+Overhaul services and railway track maintenance services: the price
+is negotiated and agreed by the parties on the basis of the unit
+price that the China Railway Group agreed with third parties in the
+previous year or the same year.
+(iii)
+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.
+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;
+(c)
+China Shenhua Energy Company Limited
+if neither comparable market prices nor prices of non-connected
+transactions are available for reference, the prices shall be
+determined upon negotiation according to the aggregate of the total
+actual costs for providing the relevant services, reasonable profits
+and taxes and additional charges paid.
+The price of coal mutually supplied by the China Railway Group and
+the Group is the product of the unit price RMB/tonne multiplied by the
+actual weight. The unit price of coal shall be determined by both parties
+after arm's length negotiations with reference to the market price and
+conditions and the following factors, provided that the transaction terms
+shall not be less favourable than those provided by independent third
+parties:
+(i)
+the national industrial policy as well as industry and market
+conditions in the PRC;
+(ii)
+the specified guidelines issued by NDRC setting out the coal
+purchase prices (if any);
+Section VI Significant Events (Continued)
+(iii)
+(www.cctd.com.cn) organised by China Coal Transportation
+& Sale Society («+¤¤¤¤#B) in the PRC; (ii) the sale price
+of local large coal enterprises as published by each coal industry
+website (if any); and/or (iii) price quotation of one or more other
+enterprises with comparable quality, quantity and location (if any);
+(iv)
+(v)
+the quantity of coal; and
+(vi)
+the estimated transportation fees.
+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
+Equipment supply: tender and bidding price.
+(2)
+The pricing of the services under the new Transportation Service Framework
+Agreement shall be agreed in the implementation agreements, but shall be
+determined in accordance with the general principles and order below:
+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.
+2018 Annual Report 95
+96
+Section VI Significant Events (Continued)
+In addition to the above, for certain types of product or service, specific pricing
+policy is adopted as follows:
+(a)
+Market price: the price of the same or similar products or services
+provided by an independent third party during its ordinary course of
+business on normal commercial terms. The management shall consider at
+least two comparable deals with independent third parties for the same
+period when determining whether the price for any product or service
+transaction under this Agreement is the market price; and
+(b)
+Construction: where tender and bidding process is necessary under
+applicable laws and regulations, the price ultimately determined in
+accordance with the tender and bidding process; where tender and
+bidding process is not necessary under applicable laws, the market price;
+(c)
+Oil products: government-guided price;
+(d)
+(e)
+Alternative power generation: price prescribed by NDRC or other related
+government competent authorities;
+Rail transportation: price prescribed by NDRC or other related government
+competent authorities;
+Hardware and software equipment and related services: market price
+(including tender and bidding price);
+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;
+(d)
+(4)
+Section VI Significant Events (Continued)
+The quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+(5)
+The quantity of coal; and
+(6)
+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;
+The transportation fees.
+Mutual Supplies and Services Agreement
+On 24 March 2016, the Company entered into the Mutual Supplies and Services
+Agreement with China Energy. The Mutual Supplies and Services Agreement is
+effective from 1 January 2017 and will expire on 31 December 2019. Pursuant
+to the Mutual Supplies and Services Agreement, the Group and China Energy
+Group mutually sells and provides various types of products and services.
+The pricing of the products and services provided under the Mutual Supplies
+and Services Agreement shall be determined in accordance with the general
+principles and in the order of the section below:
+(a)
+(b)
+(c)
+B.
+(1)
+(f)
+(g) Production equipment and spare parts, office products: market price;
+(1)
+(2)
+(3)
+the interest rates for deposits placed by members of China Energy Group
+with Shenhua Finance Company shall be in compliance with relevant
+regulations of the PBOC and with reference to the benchmark deposit
+rate (if any) regularly promulgated by the PBOC, interest rates determined
+by major commercial banks for the same type of deposit provided to
+members of China Energy Group, and shall be determined on normal
+commercial terms;
+the interest rates for loans granted by Shenhua Finance Company to
+members of China Energy Group shall be in compliance with relevant
+regulations of the PBOC and with reference to the benchmark lending
+rate (if any) regularly promulgated by the PBOC, interest rates determined
+by the major commercial banks for the same type of loan provided to
+members of China Energy Group, and shall be determined on normal
+commercial terms; and
+the service fees charged by Shenhua Finance Company for the provision
+of the financial services to members of China Energy Group shall be
+determined according to the fee rates fixed by the PBOC or the CBRC,
+and if such fixed fee rates are not available, the service fees shall be
+with reference to the fee rates charged by major commercial banks for
+comparable financial services provided to members of China Energy
+Group, and shall be determined on normal commercial terms.
+The pricing policy of the Financial Services Agreement is as follows:
+2018 Annual Report 97
+2.
+Non-exempt continuing connected transactions between the Group and other
+parties
+D.
+Transportation Service Framework Agreement between the Company and
+Taiyuan Railway Bureau
+Taiyuan Railway Bureau is the parent company of Daqin Railway, which is a
+substantial shareholder of 10% shareholding or above of Shuohuang Railway
+Company, a significant subsidiary of the Company under the Hong Kong
+Listing Rules. Therefore, Taiyuan Railway Bureau is a connected person of
+the Company under the Hong Kong Listing Rules, and the Transportation
+Service Framework Agreement and the transactions contemplated thereunder
+constitute continuing connected transactions of the Company under the Hong
+Kong Listing Rules.
+In order to secure coal transportation service for the Group, the Company
+entered into the Transportation Service Framework Agreement with Taiyuan
+Railway Bureau on 24 March 2016. The Transportation Service Framework
+Agreement is effective from 1 January 2017 and will expire on 31 December
+2019.
+Section VI Significant Events (Continued)
+Chemical products: market price;
+On 24 March 2016, the Company entered into the Financial Services Agreement
+with China Energy. The Financial Services Agreement is effective from 1
+January 2017 and will expire on 31 December 2019. In accordance with the
+Financial Services Agreement, the Company provided relevant financial services
+to China Energy Group through Shenhua Finance Company.
+Section VI Significant Events (Continued)
+(h)
+Tendering services: price prescribed by NDRC;
+(i)
+(j)
+(k)
+(I)
+Financial Services Agreement
+(m)
+Information technology services: The parties negotiate and agree on
+the service price within the scope of budget, which is reviewed by
+professional institution(s) with pricing reviewing qualification according
+to relevant national and industrial rules and regulations on construction
+pricing, pricing mechanism and fee standards, with reference to the
+market customs of the information technology industry, actual standards
+and market price, taking into account the actual condition of the
+Company's information technology construction;
+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
+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%).
+China Shenhua Energy Company Limited
+C.
+Technical consulting services: agreed price with a profit margin of
+approximately 10%;
+(iv) Business consulting and technical services: market price.
+The agreements A to C above are daily related transactions under the Shanghai
+Listing Rules, while the agreements A to E above are continuing connected
+transactions under the Hong Kong Listing Rules.
+2018 Annual Report 101
+58,500
+30,674
+28,600
+16,301
+(4) Maximum daily balance of loans, consumption credit,
+buyer's credit and financial leasing (including relevant
+accrued thereon) granted to members of China Energy
+Group
+(5) Maximum daily balance (including interests accrued
+thereon) of entrusted loans granted by China Energy and
+its subsidiaries to the Company and/or its subsidiaries
+through Shenhua Finance Company
+(3) Maximum daily balance (including interests accrued
+thereon) of deposits placed by members of China Energy
+Group
+(6) Annual total fee charged for providing the members of
+China Energy Group with consultancy, agency, settlement,
+transfer, investment, lease finance, letter of credit, online
+banking, entrusted loan, guarantee, acceptance of bill and
+other financial services
+China Shenhua Energy Company Limited
+13,000
+913
+221
+24
+24
+102
+Section VI Significant Events (Continued)
+67
+(2) Annual total transaction amount of bill acceptance and
+discount services
+Transaction
+amount
+Prevailing
+during the
+transaction
+сар
+10,400
+RMB million
+4,420
+0
+C
+Financial
+Services
+Agreement
+(1) Total amount in relation to the provision of financial
+services of guarantee (including guarantee business
+within the business scope of financial enterprises, such as
+performance guarantee and quotation sharing) to members
+of China Energy Group
+reporting
+period
+RMB million
+Transaction item
+4.
+The independent non-executive directors of the Company have confirmed to the
+Board of the Company that they have reviewed the transactions contemplated under
+the agreements A to E above and are of the view that (1) those transactions were
+entered into in the ordinary course of business of the Group; (2) those transactions
+were on normal commercial terms or better terms; and (3) those transactions were
+conducted according to the agreements governing them on terms that are fair and
+reasonable and in the interest of the shareholders of the Company as a whole.
+and other
+outflows
+RMB million
+14,255
+14,239
+16
+845
+Purchase of
+supplies and
+services from
+related parties
+by the Group
+766
+(II)
+The total transaction amount of mutual coal supply and mutual supplies and services
+between the Group and China Energy Group (including Guodian Group) in 2018 does
+not exceed the 2018 annual caps set out in the Mutual Coal Supply Agreement
+and the Mutual Supplies and Services Agreement. The independent Directors of
+the Company are of the view that above transactions were entered into in the
+ordinary course of business of the Group and conducted on normal commercial
+terms or better. The transactions are fair and reasonable and in the interests of the
+shareholders of the Company as a whole.
+Related transactions regarding acquisition and disposal of assets or equity
+Applicable
+✓ Not applicable
+(III) Material related transactions regarding joint external investments
+79
+The above continuing related/connected transactions were in the ordinary course of
+business of the Company, and were strictly in compliance with procedures of review
+and approval by independent directors and independent shareholders as well as
+disclosure requirements.
+RMB million
+services by
+the Group to
+related parties
+Deloitte Touche Tohmatsu, the international auditors of the Company, have reviewed
+the continuing connected transactions under the agreements A to E above and issued
+a letter to the Board, indicating that they were not aware of any matter for which
+they would consider that the continuing connected transactions above (1) were not
+approved by the Board; (2) were not conducted according to the Company's pricing
+policy in terms of all material aspects; (3) were not conducted according to the
+terms of the relevant agreements in terms of all material aspects; and (4) occurred
+an aggregate amount for the year ended 31 December 2018 that had exceeded the
+annual caps disclosed in the Company's announcements on the continuing connected
+transactions.
+Twenty three types of related party transactions were disclosed in Note 44 of
+the financial statements for the year 2018 prepared by the Company under the
+International Financial Reporting Standards. According to the Hong Kong Listing
+Rules, except for the transactions under item (ii) "income from entrusted loans"
+and the transactions in relation to the purchase of coal from associates of the Group
+under item (x) "purchase of coal", all of the other related party transactions disclosed
+in Note 44 constituted connected transactions under the Hong Kong Listing Rules
+and were required to be disclosed in accordance with Chapter 14A of the Hong
+Kong Listing Rules. The Company has complied with the disclosure requirements of
+Chapter 14A of the Hong Kong Listing Rules in respect of disclosure of the above
+connected transactions and continuing connected transactions.
+Daily related transaction between the Group and Guodian Group prior to the
+Merger of Group Companies
+According to the "Notice regarding the Reorganization of China Guodian Corporation
+and Shenhua Group Corporation Limited" (Guo Zi Fa Gai Ge 2017 No. 146) received
+from SASAC on 28 August 2017, after Shenhua Group Corporation was renamed
+as China Energy Investment Corporation Limited, it will merge with China Guodian
+Corporation by way of merger by absorption of China Guodian Corporation (the
+"Merger of Group Companies").
+2018 Annual Report 103
+104
+and other
+inflows
+Section VI Significant Events (Continued)
+Daily related transactions between the Group
+and Guodian Group
+Of which: (1) Coal supply
+(2)
+Mutual supply of products and
+services
+Provision of
+supplies and
+According to the Shanghai Listing Rules and the "Guidelines of the Shanghai Stock
+Exchange on Related Transactions", since 28 August 2017, Guodian Group is
+considered as the related parties of the Company. From January to August 2018,
+prior to the completion of the Merger of Group Companies, the Group's daily related
+transactions including the transactions for purchase and sale of coal, supplies and
+services with Guodian Group are as follows:
+Name of
+No. Agreement
+4.5
+5,874
+the same type
+period
+of transactions
+transaction cap
+period
+of transactions
+the reporting
+RMB million
+%
+RMB million
+RMB million
+A Mutual Coal Supply
+Agreement
+65,500
+18,708
+RMB million
+12.0
+Prevailing
+the reporting
+Section VI Significant Events (Continued)
+3.
+Implementation of and review opinions on the non-exempt continuing related/connected
+transactions
+In 2018, the implementation of the agreements A to E above is set out in the table
+below. Since September 2018, China Energy Group, the Group's related/connected
+person, includes Guodian Group. The total amount of related/connected transactions
+for sale of products and provision of services by the Group to China Energy Group
+during the reporting period amounted to RMB25,667 million, which accounted for
+9.7% of the operating revenue of the Group during the reporting period.
+Purchase of products and services from related/connected
+persons by the Group and other outflows
+Transaction
+the same type
+Provision of products and services by the Group to
+related/connected persons and other inflows
+amount during
+Proportion in
+amount during
+Proportion in
+No. Name of agreement
+Prevailing
+transaction cap
+Transaction
+20,700
+8,608
+15.3
+D Transportation Service
+Framework Agreement
+1,700
+320
+4.9
+14,000
+62
+4,336
+E Continuing Connected
+Transactions Framework
+Agreement
+4,949
+2,241
+8,041
+26.1
+6.2
+1,648
+2.5
+53
+B Mutual Supplies and Services
+Agreement
+13,000
+6,959
+23,500
+3,590
+including: (1) Products
+6,639
+(2) Services
+320
+22
+6.9
+1,942
+3.3
+China Shenhua Energy Company Limited
+China Shenhua Energy Company Limited
+the quality of the coal;
+entrusted wealth Source of
+management fund
+guarantor
+(execution Beginning
+and the listed
+Guarantor
+company
+Guaranteed
+Amount date of date of
+guaranteed agreement) guarantee
+Expiry date Type of
+of guarantee guarantee
+performance Whether Amount of counter
+has been guarantee is guarantee guarantee is related
+completed overdue overdue provided parties Relationship
+benefit of
+Shenbao
+Controlling
+Energy
+Subsidiary
+Company
+Hulunbei'er Liangyi
+Railway Company
+Limited
+96.59 2008.08.30 2008.08.30 2029.08.29 Joint and
+No
+No
+0
+No
+No
+N/A
+several liability
+guarantee
+Shendong Coal Wholly-owned Yulin Zhugaita Coal
+is for the
+76.31 2017.06.13 2017.06.13 2019.06.12 Joint and
+Whether
+Whether
+guarantee
+parties
+Total
+490.72
+(3.30)
+487.42 1,373.85 (500.00) 873.85
+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
+The above related debts and liabilities incurred were
+mainly due to the fact that the Group provided entrusted
+loans to an associated company of a subsidiary of the
+Company through a bank, and the Group took long-term and
+short-term loans from China Energy Group and performed
+internal decision procedures in accordance with relevant
+requirements.
+Currently, the principal and interests of the above entrusted
+loans and borrowings are repaid in a normal manner in
+accordance with the repayment schedule.
+N/A
+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.
+2018 Annual Report 105
+106
+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
+1. Guarantee provided by the Company to external parties (excluding guarantee granted to its subsidiaries
+Unit: RMB million
+Relationship
+between the
+Date of
+provision of
+guarantee
+Whether
+No
+No
+0
+Total balance of guarantee at the end of the reporting period (A) (excluding guarantee provided to its
+subsidiaries)
+147.30
+290.50
+2. Guarantee provided by the Company and its subsidiaries for the benefit of its subsidiaries
+Total amount of guarantee provided for the benefit of subsidiaries during the reporting period
+Total balance of guarantee provided for the benefit of subsidiaries at the end of the reporting period (B)
+(3,260.82)
+6,906.86
+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 Accounting Standards for Business Enterprises in 2018 (%)
+Including:
+7,197.36
+2.2
+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
+0
+7,003.45
+0
+7,003.45
+Please refer to below
+Please refer to below
+Description of guarantee
+Note: The balance of guarantee provided by the subsidiary to external parties of total amount of guarantee at the
+end of the reporting period equals to the amount of external guarantee of the subsidiary multiplies by the
+shareholding of the Company in the subsidiary.
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+Total amount of guarantee provided during the reporting period (excluding guarantee provided to its
+subsidiaries)
+several liability
+guarantee
+No No 0 No No NA
+58.80 2018.12.21 2018.12.21 2026.09.29 Joint and
+No
+No
+N/A
+Group
+subsidiary
+Cargo Transportation
+Co., Ltd.
+several liability
+guarantee
+Shenhua
+Controlling
+Zhuhai Port Co., Ltd.
+58.80 2018.06.13 2018.06.13 2026.09.29 Joint and
+Other related
+No
+0
+No
+No N/A
+NA
+Zhuhai Coal
+Subsidiary
+Dock
+several liability
+guarantee
+Shenhua
+Zhuhai Coal
+Dock
+Controlling
+Subsidiary
+Guangdong Yudean
+Farnon Investment
+Co., Ltd.
+No
+0
+0
+0
+The entrusted loan provided by the Company to Inner Mongolia Sanxin Railway
+Co., Ltd. ("Sanxin Railway Company") was not repaid when it was due in February
+2015, and both parties are under negotiation in respect of the subsequent relevant
+matters.
+Notes: 1.
+interest on
+quarterly basis
+0 Yes
+90
+19.0
+4.75%
+accrued interest
+upon expiry
+Settlement of
+Own fund Replacement
+of loans
+China
+company
+Yili Chemical
+420.0 2017/12/29 2020/12/29 3years
+Bank of
+Inner Mongolia joint stock
+of principal with
+0 Yes
+0
+6%
+One-off payment
+Own fund Working
+capital
+Beijing
+company
+37.4 2014/2/13 2015/2/13 1 year
+Bank of
+2.
+In December 2017, Shendong Power Company, being the wholly-owned subsidiary
+of the Company, entered into entrusted loan agreements with amounts of RMB420
+million and RMB200 million with Inner Inner Mongolia Yili Chemical Industry Co.,
+Ltd. ("Inner Mongolia Yili Chemical"), respectively, of which the entrusted loan
+agreement with RMB420 million has been performed on 29 December 2017, while
+the entrusted loan agreement with RMB200 million has not been performed.
+As of 31 December 2018, the Group did not grant entrusted loans with an
+amount exceeding 5% of the Group's latest audited net assets attributable to
+equity holders of the Company to any individual party. The Company did not
+utilise the proceeds raised to grant entrusted loans, and there was no entrusted
+loan that was involved in litigations. No provision for impairment for the above
+entrusted loans has been made by the Group.
+Under centralised capital management of the Group, the entrusted loans
+among the Company and its subsidiaries were used for meeting operating
+and development needs. The part of entrusted loans has been offset in the
+consolidated financial statements of the Group.
+Calculation basis of the capital expenditure for targeted poverty alleviation: capital expenditure of China Energy Public
+Welfare Foundation for targeted poverty alleviation × the proportion of donation made by the Group to China Energy
+Public Welfare Foundation + the capital expenditure of the Group directly used for targeted poverty alleviation.
+114
+Each poverty alleviation work of China Shenhua achieved remarkable results, and
+was well recognized by the local government and all walks of life. For the details of
+poverty alleviation work, please refer to the 2018 ESG Report disclosed in conjunction
+to this report.
+In 2018, China Shenhua contributed approximately RMB97.40 million to targeted
+poverty alleviation¹. The amount mainly used for (1) fostering the development
+of specified industries by adapting to local conditions. Concerning the local
+circumstances and conventions in targeted deprived providences, development
+which takes local limitation into concern would drive local specialized industries and
+raise the income of the underprivileged, thus broaden the means of income raise
+for poor farmers and herdsmen; (2) Increase investment in ecological protection
+and rehabilitation in poverty-stricken areas, achieve ecological improvement and
+poverty alleviation; (3) Fund local construction of roads and bridges construction,
+manage basic farmlands, renew saline-alkali land, and build new irrigation systems
+and water source points, erect agricultural power lines and establish medical and
+health facilities at village level, and dispatch cadres at the grass-roots level to assist in
+implementation; (4) Help the development of local education, assist schools, improve
+the teaching accommodation environment, and set up a school aid fund to subsidize
+students from poor areas to complete their studies, as well as help children with
+leukemia and congenital heart disease in poor families.
+Summary of the targeted poverty alleviation during the reporting period
+2.
+Section VI Significant Events (Continued)
+2018 Annual Report 113
+Proportion of Donation of China Shenhua is 83% among the donation funds received by the China Energy Public Welfare
+Foundation since its establishment
+1
+China Energy Public Welfare Foundation is the major entity of China Shenhua for
+execution of poverty alleviation work and China Shenhua is the key governing unit and
+the major donor of China Energy Public Welfare Foundation¹.
+The Group has intensified the implementation of the Opinions of the State Council
+on Winning the Tough Battle against Poverty and China Energy Group Working Plan
+on Poverty Alleviation 2018-2020 by establishing and improving the system for
+organization and guarantee of poverty alleviation work. Adhering to the principle of
+targeted contribution based on its ability to benefit the public, the Group has made
+full use of unique local resources and adopted different measures based on the
+local circumstances with emphasis on solving practical problems. With continuous
+improvement of the production capability, life quality and medical condition in
+provinces targeted for support, provinces under focused poverty alleviation and
+deprived villages as the intention and the foothold, the Group meticulously organized
+poverty alleviation projects and constantly invested supporting funds while carrying
+out various work including education support, hygiene improvement and medical
+support, enhancement in construction of rural infrastructure and production facilities
+and assistance in the development of special industries in deprived regions, as well
+as strengthening the promotion and application of new technologies, new industries,
+new business types and new business models in poverty alleviation.
+Sanxin Railway joint stock
+Company
+Targeted poverty alleviation plan
+(1) Poverty alleviation
+XIII. FULFILLING THE WORK OF SOCIAL RESPONSIBILITY
+Section VI Significant Events (Continued)
+China Shenhua Energy Company Limited
+The propose of exchange rate hedging conducted by the Group is to manage risks,
+but not to procure profits. The specific measures adopted are in line with the nature
+of risk-hedging.
+To avoid USD debt risk, according to the Annual Plan on Financial Derivatives
+Business of China Shenhua for 2018, which was approved in the eighth meeting of
+the fourth session of the Board of the Company after consideration, the Company,
+after subsequent standardised decision-making process, conducted exchange rate
+hedging of USD150 million of the USD debts by use of financial derivatives in 2018.
+USD-denominated debt hedging
+In January 2018, 3,800 lots for contract of thermal coal futures held by the Group
+completed delivery. As of the end of the year of 2018, the Group has not engaged in
+any other trading in thermal coal futures.
+Thermal coal futures
+2.
+1.
+(IV) Derivative investment
+1.
+As at the end of the reporting period, the total balance of the amount of guarantee provided
+by the Group amounted to RMB7, 197.36 million, including:
+redeemed through legal
+for the year procedures
+Source of
+Determination of Interest Actual gain
+funding Capital flow remuneration
+2.
+Entrusted loans
+As of the end of 2018, the total outstanding principal amount of entrusted
+wealth management products of the Group amounted to RMB30,000 million,
+which, under the precondition of guarantee of safety and liquidity, mainly
+consisted of banks' wealth management products which purchased in order to
+reasonably rise the capital revenue in the short term. The Group did not have
+any failure of redeeming or cashing principal when due and no provision for
+impairment for the above wealth management products has been made.
+etc.
+100 Yes
+19
+9.79
+4.95%
+Section VI Significant Events (Continued)
+(IV) Debts and liabilities between related parties
+Unit: RMB million
+Related parties
+Relationship
+Funds provided to related
+parties
+Funds offered by related
+parties to the Group
+Opening Amount Closing Opening Amount Closing
+balance incurred balance balance incurred balance
+China Energy and
+its subsidiaries
+Controlling shareholders and
+its subsidiaries
+Others
+0
+0
+0 1,373.85 (500.00) 873.85
+490.72
+(3.30)
+487.42
+(1)
+General status of entrusted loans
+Unit: RMB million
+Maximum balance
+Maturity
+loans
+Amount of Initial date Expiry date
+entrusted of entrusted of entrusted
+loans loans
+with the Group Trustee
+Borrower
+Relationship
+principal has been
+Amount of Whether it
+Unit: RMB million
+(2) Individual entrusted loan
+Section VI Significant Events (Continued)
+112
+rate for the year
+111
+type of the Group in 2018.
+Note: Maximum balance in 2018 refers to the daily highest balance of the entrusted loans of such
+37.4
+420.0
+457.4
+Own fund
+Entrusted loans
+Overdue
+ending balance uncollectible amount
+in 2018 Note
+Source of funding
+Type of products
+Outstanding
+2018 Annual Report
+(1)
+(2)
+As at the end of the reporting period, the guarantee provided by Shenbao Energy
+Company, a subsidiary of which the Company owns 56.61% of the shares, for the
+benefit of external parties was as follows: prior to the acquisition of Shenbao Energy
+Company by the Company in 2011 and pursuant to the Guarantee Agreement on the
+Syndicated Renminbi Loan for the Cooperative Railway Project Connecting Yimin
+and Yiershi Newly Constructed by Hulunbei'er Liangyi Railway Company Limited, in
+2008, Shenbao Energy Company, as one of the guarantors, provided joint and several
+liability guarantee to Hulunbei'er Liangyi Railway Company Limited (hereinafter
+referred to as the "Liangyi Railway Company", of which Shenbao Energy Company
+owns 14.22% of the shares) for the syndicated loans. The major liability guaranteed
+was the debts due to the lender with a maximum balance of RMB207.47 million from
+2008 to 2027, regardless of whether the debt is due when the above period expires.
+The above syndicated loans will fall due by tranches between 2011 and 2026. The
+Guarantee Agreement provides that the guarantee period of the debts borne by the
+guarantor shall be calculated from the due date of each tranche to two years after the
+due date of the last tranche, i.e. 2029.
+Own fund
+government bonds, One-off payment
+3.4%
+5.03
+13
+0 Yes
+financial bonds,
+of principal with
+central bank
+accrued interest
+bills, etc., and
+upon expiry
+other investment
+instruments with
+fixed income
+5
+China Shenhua Industrial Bank
+(China)
+Banks' wealth
+management
+products
+3,000 2018/12/26
+2019/06/26
+Own Fund Money market
+One-off payment
+3.9%
+1.92
+2019/06/25
+9,000 2018/12/26
+management
+products
+4 China Shenhua Agricultural Bank of Banks' wealth
+rate of gained for
+for the legal
+return
+the year
+year procedures
+3
+China Shenhua China Construction Banks' wealth
+8,000 2018/12/25
+2019/06/25
+Own fund
+Bank
+management
+products
+92
+Various types
+of bonds,
+3.45%
+5.29
+0 Yes
+of principal with
+repurchases,
+accrued interest
+interbank
+upon expiry
+deposits, etc., in
+interbank bond
+markets
+China
+One-off payment
+Determination of
+compensation
+0 Yes
+income short-
+the year
+year procedures
+6 Shenhua Finance CITIC Trust
+Entrusted
+50 2016/12/27
+2018/02/12
+Own fund
+Company
+wealth
+management
+Fixed-income asset Based on
+and cash asset net value
+and other financial
+4.23%
+2.39
+50
+50
+Yes
+products
+instruments or
+products with a
+high security
+7
+Shenhua Finance CITIC Securities
+Company
+Brokers' wealth
+management
+products
+100 2017/01/04
+for the legal
+rate of gained for
+return
+Determination of
+compensation
+Investment of
+fund
+term investment
+accrued interest
+upon expiry
+China Shenhua Energy Company Limited
+instruments, trust
+plans and asset
+management
+plans of brokers,
+etc.
+Section VI Significant Events (Continued)
+Type of
+Amount of Whether it
+instruments, fixed- of principal with
+entrusted
+Actual
+principal has been
+wealth
+No Trustor
+Trustee
+management
+products
+entrusted Initial date of
+wealth entrusted wealth
+management management
+Expiry date of
+Annualized
+profit
+redeemed through
+entrusted wealth Source of
+management fund
+Amount of
+China Shenhua Energy Company Limited
+fund
+entrusted wealth Source of
+management fund
+Overdue
+uncollectible
+balance
+amount
+Banks' wealth management products
+Own fund
+30,000
+30,000
+0
+Entrusted wealth management
+Own fund
+50
+0
+0
+products
+Brokers' wealth management
+Own fund
+100
+0
+0
+products
+Note: Maximum balance refers to the daily highest balance of the entrusted wealth management
+of such type of the Group in 2018.
+(2) Individual entrusted wealth management
+Unit: RMB million
+Type of
+entrusted
+wealth
+ending
+Maximum
+Balance Notes
+Source of funding
+Type of products
+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 of the end of the reporting period, Shenbao Energy Company, in proportion to its
+shareholding, repaid the principal on the loans on behalf of Liangyi Railway Company
+Limited amounting to a total of RMB30.99 million. Shenbao Energy Company
+already made full provision for impairment on its 14.22% equity interest in Liangyi
+Railway Company and the repayment amount paid on its behalf. Together with other
+shareholders, Shenbao Energy Company will continue to call for improvement of
+business operation of Liangyi Railway Company. As at 31 December 2018, Liangyi
+Railway Company had a gearing ratio of 138.89 %.
+As at the end of the reporting period, the guarantee provided by Shendong Coal
+Group, a wholly-owned subsidiary of the Company, to external parties was as follows:
+as stipulated in the Guarantee Agreement on Maximum Guarantee entered into on
+13 June 2017, Shendong Coal Group, as one of the guarantors, provided joint and
+several liability guarantee to Yulin Zhugaita Coal Cargo Transportation Co., Ltd. (of
+which Shendong Coal Group owns 33% of the shares) based on equity proportion for
+the debts under a facility agreement. The major credit guaranteed was the debts due
+to the creditor with a maximum balance of RMB400 million from 2017 to 2019. The
+guarantee above has been approved at the 19th meeting of the third session of the
+board of directors of the Company on 28 October 2016.
+As of 31 December 2018, the actual amount withdrawn by Yulin Zhugaita Coal Cargo
+Transportation Co., Ltd. amounted to RMB231.24 million, with a gearing ratio of
+57.1%.
+2018 Annual Report 107
+Section VI Significant Events (Continued)
+(3)
+(4)
+(5)
+As at the end of the reporting period, the external joint and several liability counter
+guarantee provided by Shenhua Zhuhai Coal Dock, a controlling subsidiary held as to
+40% by the Company is as follows:
+Each of Guangdong Yudean Farnon Investment Co., Ltd. ("Yudean Farnon") and
+Zhuhai Port Co., Ltd. ("Zhuhai Port") held 30% equity interests in Shenhua Zhuhai
+Coal Dock, respectively.
+Shenhua Zhuhai Coal Dock entered into a loan contract with Zhuhai branch of SPD
+Bank for a term of 10 years (from 30 September 2017 to 30 September 2027) with
+an amount of RMB336.0 million, pursuant to which Yudean Farnon and Zhuhai
+Port provided joint and several liabilities guarantee for such loan with an amount of
+RMB168 million, respectively. The guarantee periods are both two years from the
+expiry of term of debt performance by the debtor in the loan contract. Shenhua Zhuhai
+Coal Dock provided counter guarantee of joint and several liabilities to Yudean Farnon
+and Zhuhai Port with the caps of counter guarantee amount of RMB168 million,
+respectively. The above counter guarantee was approved at the eleventh meeting of
+the fourth session of the Board of the Company.
+No Trustor
+As at the end of the reporting period, Shenhua Zhuhai Coal Dock has entered into a
+counter guarantee contract for joint and several liabilities counter guarantee ("Counter
+Guarantee Contract") with Zhuhai Port and Yudean Farnon respectively, with the caps
+of counter guarantee amount of RMB168 million. The counter guarantee period would
+be from the effective date of the Counter Guarantee Contract to the settlement of all
+payment by Shenhua Zhuhai Coal Dock.
+At the end of the reporting period, the amount of guarantee provided by the Company
+to its subsidiaries is detailed as follows: on 23 December 2013, the Board approved
+the acquisition of Baotou Coal Chemical Company by the Company and the Company
+would replace Shenhua Group Corporation in providing guarantee for the loan of
+USD350 million granted by China Development Bank (for a term expired in August
+2018) to Baotou Coal Chemical Company.
+As at 31 December 2018, the USD-denominated loan has been repaid and the
+guarantee liability of the Company was discharged accordingly.
+As of the end of the reporting period, the amount of guarantee between subsidiaries
+in consolidated reports of the Company, in proportion to its shareholding, amounted
+to approximately RMB6,906.86 million, which was mainly due to the fact that
+Shenhua Hong Kong Limited, the wholly-owned subsidiary of the Company, provided
+guarantees for the issuance of USD1.0 billion bonds by China Shenhua Overseas
+Capital Co., Ltd., its wholly-owned subsidiary, and Shenhua Funeng Power Co., Ltd.
+of which the Company indirectly held 51% shares provided guarantees to its two
+controlling subsidiaries.
+For the details of the opinions of the independent Directors, please refer to the
+relevant reports disclosed in conjunction with the report.
+108 China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+(III) Entrusted cash asset management
+1.
+Entrusted wealth management
+(1) General status of entrusted wealth management
+Unit: RMB million
+Outstanding
+As of 31 December 2018, Zhuhai branch of SPD bank granted a loan of RMB294
+million to Shenhua Zhuhai Coal Dock, the principal and interest of which being repaid
+in a regular basis.
+Investment of
+Trustee
+Amount of
+entrusted Initial date of
+wealth entrusted wealth
+management management
+Commercial Bank of management
+China
+products
+plans for assets upon expiry
+Fixed income assets One-off payment
+such as bonds of principal with
+and management accrued interest
+plans for assets upon expiry
+3.45%
+5.20
+20
+0 Yes
+2018 Annual Report 109
+110
+Section VI Significant Events (Continued)
+Type of
+Amount of Whether it
+entrusted
+wealth
+Amount of
+Actual
+principal has been
+entrusted Initial date of
+Expiry date of
+Annualized profit
+redeemed through
+No Trustor
+Trustee
+management
+products
+wealth entrusted wealth
+management management
+Own fund
+2019/06/25
+5,000 2018/12/21
+Banks' wealth
+Amount of Whether it
+Actual principal has been
+Expiry date of
+Annualized
+profit
+redeemed through
+Fixed-income asset Based on
+and cash asset,
+net value
+financial products,
+Investment of
+fund
+Determination of
+compensation
+rate of
+gained for
+for the legal
+return
+management
+products
+the year
+1
+China Shenhua China Development Banks' wealth
+5,000 2018/12/25
+2019/06/30
+Own fund
+Bank
+management
+products
+Fixed income assets One-off payment
+such as bonds of principal with
+and management accrued interest
+3.8%
+3.64
+0 Yes
+2 China Shenhua Industrial and
+year procedures
+2018/12/28
+Own fund
+Mainly used as aids to children with leukemia and congenital heart disease in impoverished
+families.
+I. General
+Index
+Targeted poverty alleviation results¹
+Section VI Significant Events (Continued)
+3.
+5.
+Applicable
+Not applicable
+2018 Annual Report 119
+120
+Section VI Significant Events (Continued)
+2.
+3.
+Number and
+Circumstances
+4.
+In line with the principles of prevention from the source, control in the process and
+treatment at the end, the Group conducted clean production, as well as pollution
+prevention and control to minimize the impact of production on environment. It also
+strengthened comprehensive treatment and reuse of wastewater to improve its
+comprehensive utilization efficiency. With ultra-low emission renovation of coal-fired
+generating units taking the lead, the Group focused on dust prevention and control,
+as well as technical transformation of boilers to reduce air pollutant emissions,
+completing successfully the stage task of air pollution prevention and control in
+Beijing, Tianjin, Hebei and the surrounding regions. By further exploiting the values of
+solid wastes such as coal gangue, coal ash and boiler slag, the Group increased their
+comprehensive utilization, and make sure that all solid wastes are safely disposed.
+The Group also conducted such works as water and soil conservation, windbreaks
+and sand fixation, land subsidence treatment, land reclamation and afforestation, as
+well as ecological construction, so as to preserve and improve the local ecological
+environment.
+Explanation of reasons for non-disclosure of environmental information by
+companies other than those classified as the key pollutant discharging units
+Applicable ✓ Not applicable
+Explanation of the follow-up progress of or changes in the disclosure of
+environmental information during the reporting period
+Applicable ✓ Not applicable
+For the details of the related environmental protection work, please refer to the 2018
+Environmental, Society and Governance Report disclosed as the same time of the
+report.
+XIV. CONVERTIBLE COMPANY BOND
+Applicable
+✓ Not applicable
+China Shenhua Energy Company Limited
+Section VII Changes in Share Capital and Shareholders
+I.
+Environmental issues of companies other than those classified as the key pollutant
+discharging units
+In which: 1. Capital (RMB0'000)
+2. Number of filed poverty-stricken people who
+overcome poverty
+9,739.51
+(RMB0'000)
+3. Education support
+70
+get employed (persons)
+Number of filed poverty-stricken people who
+2.3
+132
+Number of people received vocational skill
+training
+2.2
+523.06
+training (RMB0'000)
+Amount of subsidy for vocational skill
+2.1
+In which:
+523.06
+2. Employment transfer for poverty alleviation (RMB0'000)
+1,120.05
+(RMB0'000)
+8
+Number of industry support project (unit)
+Amount of industry support project
+1.2
+1.1
+support project
+1,120.05
+Agriculture and
+forestry
+Category of industry support project
+In which:
+1. Industry development support (RMB0'000)
+II. Contribution By Category
+1,186
+CHANGE IN ORDINARY SHARE CAPITAL
+5,259.9
+(1)
+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.
+SHAREHOLDERS
+(I)
+Total number of shareholders
+Total number of shareholders of ordinary shares as at the end of
+the reporting period (accounts)
+183,150
+Including: Holders of A shares (including China Energy)
+180,995
+Registered holders of H shares
+2,155
+Total number of ordinary shareholders at the end of last month prior to
+the date of this annual report (accounts)
+176,341
+III.
+Including: Holders of A shares (including China Energy)
+Registered holders of H shares
+(II)
+2,157
+Note: The number of holders of A shares is a combination of ordinary securities accounts and margin financing
+and securities lending accounts, pursuant to the information provided by Shanghai Branch of China
+Securities Depository and Clearing Corporation Limited.
+Shareholdings of top ten shareholders and top ten holders of marketable shares
+(or shareholders without selling restrictions) as of the end of the reporting
+period
+Unit: share
+Shareholdings of the top ten shareholders
+Shares subject to
+pledge or lock-up
+Increase/
+decrease
+Number of
+shares held at
+during the
+the end of
+174,184
+Section VII Changes in Share Capital and Shareholders (Continued)
+122
+2018 Annual Report 121
+1. Shares with selling restrictions
+II. Shares without selling restrictions
+1. RMB ordinary shares
+2. Overseas listed foreign shares
+III. Total number of shares
+As at 31 December 2018
+Number
+Percentage
+%
+0
+0.00
+19,889,620,455
+100.00
+16,491,037,955
+82.91
+3,398,582,500
+17.09
+19,889,620,455
+100.00
+II.
+For the year ended 31 December 2018, the Group did not purchase, sell, or redeem any of
+the Company's securities as defined under the Hong Kong Listing Rules.
+As of the disclosure date of this report, so far as our Directors are aware, the Company has
+satisfied minimum public float requirement under Rule 8.08 of the Hong Kong Listing Rules.
+(II) Changes of shares with selling restrictions
+Applicable ✓ Not applicable
+ISSUANCE AND LISTING OF SECURITIES
+The 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.
+Change in the number of ordinary shares
+Name of shareholders
+In which:
+Subsidy for poor students (RMB0'000)
+emission
+2018
+(Tonne)
+1,229.75
+Yudean Taishan
+NOX
+2,524.39
+9,560
+Power Co., Ltd.
+Soot
+150.8
+N/A Note
+Shaanxi Guohua Jinjie
+Total
+SO2
+Energy Co., Ltd.
+NOX
+2,304.95
+1,535
+4,910.97
+Soot
+263.15
+1,314.35
+Shenhua Yili Energy
+SO2
+1,029.0
+3,200
+Co., Ltd.
+NOX
+1,281.75
+4,780
+(Tonnes/year)
+permit
+Stage progress in fulfilling the social responsibility of targeted poverty alleviation
+The Company has undertaken the pairing assistance work in three counties - Wubu
+county and Mizhi county in Shaanxi province, as well as Butuo county in Sichuan
+province. Meanwhile, the Company carried out education and medical poverty
+alleviation work through the platform of China Energy Public Welfare Foundation,
+and the one-on-one supporting scheme in deprived villages near 13 subsidiaries of
+Zhunge'er Energy Group. At present, the company has sent a total of 7 cadres to
+three designated poverty alleviation counties, ensuring that at least one county-level
+cadre and one resident secretary of the village are in charge of poverty alleviation
+work in each county. In 2018, all the poverty alleviation funds in the counties
+have been allocated, the key support projects are progressing smoothly, and the
+implementation effect is expected. Mizhi County and Wubu County have entered the
+poverty alleviation assessment.
+In the targeted poverty alleviation and poverty shed off sharing 2018, the Company is
+honored the "most influential company in targeted poverty alleviation". Comrade Hu
+Xiaoming, the first secretary of Bozuo Village in Butuo County, was awarded the title
+of "National Poverty Leader".
+Subsequent targeted poverty alleviation plan
+In 2019, the Group will commit to implement the deployment of poverty alleviation
+plan by the central government, promoting poverty alleviation work in accordance
+with the annual plan to help the counties complete the task of poverty alleviation
+as scheduled. The highlights are: (1) stick to the targeted poverty alleviation areas
+according to local conditions and characteristics; (2) give full play to the role of
+cadres, concentrate funds and resources, and (3) Adhere to the "Zhizhi Double Help",
+continue increasing donation and education and vocational skills training, and improve
+self-development capabilities; (4) Actively apply new technologies, new industries,
+new formats and new business models. Cultivate and strengthen local characteristic
+agriculture, red tourism and other industries; (5) Support infrastructure construction
+and improve the production and living conditions of poor people; (6) Increase the
+"purchase by donation" and actively promote the sales of agricultural products
+in poverty-stricken counties, indicating local The masses establish rural product
+brands; (7) adhere to the combination of poverty alleviation and ecological protection,
+and achieve a win-win situation for poverty alleviation and ecological civilization
+construction.
+Corporate social responsibilities
+For the work of the Group's social responsibility, please refer to the 2018 Environmental,
+Social and Governance Report disclosed at the same time as this report.
+(III) Donations
+During the reporting period, the Group made external donations of approximately RMB460
+million.
+116 China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+(IV) Environmental information
+1.
+Environmental issues of listed companies and their significant subsidiaries
+classified as the key pollutant discharging units as published by the competent
+environmental protection authorities of the PRC
+(1)
+Information on pollutant discharge
+During the reporting period, total emission of major pollutants of enterprises
+whose pollution sources were under key supervision and control of the state
+and enterprises whose pollution sources were under key supervision and
+control of the Company is as follows: sulfur dioxide of 19.6 thousand tonnes,
+nitrogen oxides of 38.6 thousand tonnes, soot of 4.3 thousand tonnes and
+chemical oxygen demand (COD) of 671 tonnes. In particular, total emission of
+major air pollutants produced by the enterprises categorized as national major
+pollution source under supervision is as follows: sulfur dioxide of 18.9 thousand
+tonnes, nitrogen oxides of 37.3 thousand tonnes, soot of 3.1 thousand tonnes
+and chemical oxygen demand (COD) of 441 tonnes.
+As at 31 December 2018, 49 subsidiaries of the Group were categorized as
+national major pollution source under supervision (among which 43 were
+waste gas exhausting enterprises, 6 were wastewater discharging enterprises
+(inclusive of 1 waste gas exhausting enterprise concurrently), hazardous solid
+waste discharging enterprise (also was a waste gas exhausting enterprise
+and a wastewater discharging enterprise), mainly are coal-fired power plants,
+coal chemical plants and coal washing plants, etc. which are located in places
+including Inner Mongolia, Shaanxi, Fujian, Hebei, Anhui, Jiangsu and Zhejiang.
+The main pollutants emitted by waste gas exhausting enterprises are sulfur
+dioxide, nitrogen oxides and soot, which are emitted to the atmosphere through
+the chimneys. Waste gas exhausting enterprises are mainly distributed in public
+thermal power plants, coal-to-chemical captive power plants, heating boilers for
+mines and coking plants. Emission standards implemented include Emission
+Standards for Air Pollutants Produced by Thermal Plants (GB13223-2011),
+Emission Standards for Air Pollutants Produced by Boilers (GB13271-2014)
+and Emission Standards for Pollutants Produced by Coking Chemical Industry
+(GB16171-2012).
+The main pollutants discharged by wastewater discharging enterprises are
+chemical oxygen demand (COD), which are discharged to the surface water
+through the sewage outfall of the enterprises. Wastewater enterprises
+are mainly distributed in coal mining and coal-to-chemical enterprises and
+wastewater treatment plants. The emission standard implemented was the
+Comprehensive Emission Standards for Sewage (GB8978-1996).
+2018 Annual Report 117
+Section VI Significant Events (Continued)
+Major
+pollutant
+Guangdong Guohua
+SO2
+In 2018, top three enterprises under the state's key supervision and control of
+pollution sources of the Group with the largest total emission of sulfur dioxide
+and nitrogen oxides are as follows:
+Subsidiary
+Approved total
+emission by
+the pollutant
+discharge
+2,380.1
+3.1
+3,200
+193.9
+Investment amount (RMB0'000)
+Other details of the projects
+5.3.
+5.2
+Number of projects (unit)
+5.1
+In which:
+1,290
+5. Other projects (RMB0'000)
+19,813
+serious illness
+Number of population received treatment for
+4.2
+1,546.5
+1,290
+illness(RMB0'000)²
+Investment amount for helping poor
+4.1
+In which:
+1,546.5
+4. Health support (RMB0'000)
+4,684.5
+educational resources in deprived regions
+(RMB0'000)
+Investment amount for improving
+3.3
+1,100
+Number of subsidized poor students
+3.2
+575.4
+people with treatment for serious
+Undertake poverty
+alleviation through
+Notes: 1
+450
+Note: the soot emission concentration limit ratified by the pollutant discharge permit is 20mg/Nm³.
+In 2018, top three enterprises under the state's key supervision and control of
+pollution sources of the Group with the largest emission of chemical oxygen
+demand (COD) were: Baotou Coal Chemical Company (147 tonnes), Jinjie
+Energy (coal mine) (126.5 tonnes), and wastewater treatment plants of Daliuta
+Coal Mine of Shendong Coal Group (42.5 tonnes).
+In 2018, solid waste discharge of enterprise under the state's key supervision
+and control of pollution sources of the Group is as follows: 1,379.56 tonnes from
+Baotou Coal Chemical Company (inspection were arranged in the second half
+of the year, resulting in relatively substantial volume of hazardous solid waste).
+The above hazardous waste are all disposed of and transferred in a compliance
+with regulations without being discharged;
+Investors should be aware that the above data are from internal self-monitoring
+of the Company, which are not confirmed by the local environmental protection
+regulatory authority and may be different from the final data determined by the
+local environmental protection regulatory authority.
+With regard to the provisions under the existing laws, the management believes
+that there is no contingent risk in relation to environmental protection that may
+bring material and adverse effect to the financial position and operating results
+of the Group. Contingent liabilities which may arise in the future cannot be
+accurately predicted.
+118 China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+(2)
+Construction and operation of pollution prevention and control facilities
+During the reporting period, all subsidiaries of the Group were well-equipped
+with pollution prevention and control facilities that were under stable operation.
+They fully implemented the Water Pollution Control Action Plan for 2015-2020,
+constructed underground reservoir in goaf areas, as well as constructed
+wastewater treatment plants and advanced water treatment plants to achieve
+comprehensive treatment and utilization of wastewater.
+Such comprehensive measures as full closure of the coal storage yard,
+installation of wind and dust prevention walls, and spray facilities, as well as
+solidification and dust sealing for outbound coal by railway transportation,
+were implemented well as dust reduction in the underground mines, so as
+to strengthen dust treatment. The environmental protection facilities for dust
+removal, desulfurization and denitrification of coal-fired generating units and
+thermoelectric boilers were under stable operation, with the emission of soot
+reaching the standard. In particular, 89.9% coal-fired generating units achieved
+ultra-low emission (calculated by installed capacity). The hydrogen sulfide gas
+produced by the chemical industry was treated with the Level 2 Claus + tail-
+gas hydrogenation technology, after which the emission of tail gas was able to
+reach the standard of discharge. The general solid waste by-products, such as,
+coal gangue, furnace ash and desulphurization gypsum, were comprehensively
+utilized in the forms of power generation and brick making, and all hazardous
+wastes were disposed of and transferred in compliance with the relevant
+requirements.
+(3) Environmental effect appraisal of construction project and other
+administrative approvals on environmental protection
+(4)
+(5)
+(6)
+In terms of construction project, the Group carried out simultaneously three
+management measures, being environmental effect appraisal and energy
+conservation appraisal, soil conservation inspection and acceptance, as well as
+environmental protection inspection and acceptance. The environmental impact
+appraisal, as well as environmental protection inspection and acceptance
+of construction completion, water environmental protection inspection and
+acceptance and other relevant tasks have been conducted, respectively, in
+accordance with the law.
+Emergency plan for unexpected environmental incidents
+During the reporting period, all subsidiaries of the Group have formulated
+their emergency plans for unexpected environmental incidents and conducted
+regular drills.
+Environment self-monitoring plan
+The Group standardized the management of the online environmental protection
+monitoring system, and formulated the Administration Measures for the Online
+Environmental Protection Monitoring System (Trial) (EUKKTIR
+()) in accordance with the relevant national standards and administrative
+regulations for online monitoring of pollution source. All subsidiaries of the
+Group have completed the preparation of their self-monitoring plans. All the
+data in relation to wastewater and exhaust gas from automatic monitoring and
+entrusted monitoring were uploaded to the monitoring platform of the local
+environmental protection department according to the monitoring frequency
+and time limit for publication as determined in the monitoring plan. During the
+reporting period, all facilities were under normal operation.
+Other environmental information that should be disclosed
+(II)
+Section VI Significant Events (Continued)
+2018 Annual Report 115
+The above statistical table is based on the Notice of the State Council on the Publication of
+Poverty Alleviation Plan for the "13th Five-Year" Plan Period (Guo Fa 2016 No. 64).
+bridges and culverts,
+ensuring safe drinking
+water, and
+ecological protection
+infrastructure by
+building roads,
+2
+Soot
+reporting
+period
+4.
+Number
+shares with
+Short position
+manager; guarantee equity
+owner; approved lending agent
+Chase & Co.
+1.08
+6.34
+215,485,407
+H shares Long position
+0.02
+0.11
+3,627,500
+Short position
+1.22
+8,519,392
+7.12
+Long position
+Interest of corporation controlled by H shares
+the substantial shareholder
+Beneficial owner; investment
+JPMorgan
+3
+BlackRock, Inc.
+2
+73.06
+88.11
+14,530,574,452
+N/A
+A shares
+Beneficial owner
+242,144,123
+China Energy
+0.25
+Shares available
+124
+Save as disclosed above, as at 31 December 2018, no other person held any interest and/
+or short position in the shares or underlying shares of the Company which is required to
+be recorded in the register to be kept thereunder, or was a substantial shareholder of the
+Company pursuant to section 336 of Part XV of the SFO.
+In 178,294,047 H shares in long position held by Citigroup Inc., 8,759,802 H shares are held in
+its capacity as the beneficial owner, 24,500 H shares are held in its capacity as the the guarantee
+equity owner, 169,509,745 H shares are held in its capacity as the approved lending agent.
+In 215,485,407 H shares in long position held by JPMorgan Chase & Co., 55,585,728 H shares
+are held in its capacity as the beneficial owner, 49,826,939 H shares are held in its capacity as the
+investment manager, 11,426,446 H shares are held in its capacity as the guarantee equity owner,
+18,592 H shares are held in its capacity as the trustee, 48,820 H shares are held in its capacity as
+the approved lending agent.
+China Energy Investment Corporation Limited
+HKSCC NOMINEES LIMITED
+the reporting
+Among H shares in long position and short position held by BlackRock, Inc., 790,665 H shares in
+long position involve derivatives, and their type is unlisted derivatives - cash settled.
+(3)
+(2)
+Notes: (1)
+0.85
+4.98
+0.04
+169,509,745
+0.02
+904,500
+0.90
+5.24
+178,294,047
+Beneficial owner; guarantee equity H shares Long position
+owner; approved lending agent
+Short position
+Shares available
+for lending
+Citigroup Inc.
+4
+for lending
+0.50
+2.90
+98,597,474
+0.00
+1
+of the
+Company
+A shares
+respectively
+12,418,772
+Bank of Communications Co., Ltd.-Hua'an
+Index Securities Investment Fund
+China-Shanghai Index 50 Trading Open-end
+20,975,346
+RMB ordinary shares
+20,975,346
+Industrial and Commercial Bank of
+Securities Investment Fund
+24,080,916
+RMB ordinary shares
+24,080,916
+RMB ordinary shares
+Bank of Communications-E Fund 50 Index
+RMB ordinary shares
+73,501,578
+Hong Kong Securities Clearing Company Limited
+110,027,300
+RMB ordinary shares
+110,027,300
+594,718,049
+RMB ordinary shares
+594,718,049
+China Securities Finance Corporation Limited
+Central Huijin Asset Management Ltd.
+14,530,574,452
+3,390,476,296
+RMB ordinary shares
+Overseas listed foreign
+shares
+73,501,578
+12,418,772
+Strategic Chosen Hybrid Securities Investment
+Fund
+H shares/
+A shares held
+A shares interest
+Capacity
+No. Name of shareholders
+H shares/ Nature of
+total issued
+share capital
+Percentage of
+Percentage of
+H shares/
+A shares over
+total issued
+H shares/
+Number of
+As at 31 December 2018, persons set out in the table below had an interest and/or short
+position in the shares or underlying shares of the Company which is required to be recorded
+in the register of equity interests and/or short positions pursuant to section 336 of Part
+XV of the Securities and Futures Ordinance (the "SFO", Chapter 571 of the Laws of Hong
+Kong):
+(III) Substantial shareholders' interests and short positions in the shares of the
+Company
+Section VII Changes in Share Capital and Shareholders (Continued)
+2018 Annual Report 123
+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.
+N/A
+Statement on holders of preference shares
+with voting rights restored and number of
+shares held
+Both of HKSCC Nominees Limited and Hong Kong Securities
+Clearing Company Limited are wholly-owned subsidiaries of Hong
+Kong Exchanges and Clearing Limited; The trustee bank of Bank of
+Communications-E Fund 50 Index Securities Investment Fund and
+Bank of Communications Co., Ltd.-Hua'an Strategic Chosen Hybrid
+Securities Investment Fund is Bank of Communications; The
+trustee bank of Industrial and Commercial Bank of China-Shanghai
+Index 50 Trading Open-end Index Securities Investment Fund
+and Industrial and Commercial Bank of China Limited-Huitianfu
+Intelligent Manufacturing Stock Securities Investment Fund is
+Industrial and Commercial Bank of China; Saved as disclosed
+above, the Company is not aware of any connected relationships
+between the top ten shareholders without selling restrictions and
+the top ten shareholders, and whether they are parties acting
+in concert as defined in the Measures for Administration of
+Acquisition of Listed Companies of CSRC.
+10,384,380
+RMB ordinary shares
+10,384,380
+Statement on the connected relationships
+among the above shareholders or whether
+they are parties acting in concert
+Securities Investment Fund
+Industrial and Commercial Bank of China
+Limited-Huitianfu Intelligent Manufacturing
+Stock Securities Investment Fund
+Growth Flexible Configuration Hybrid
+12,337,542
+RMB ordinary shares
+12,337,542
+Industrial Bank Co., Ltd.-Xingquan Organic
+China Shenhua Energy Company Limited
+3,390,476,296
+14,530,574,452
+Section VII Changes in Share Capital and Shareholders (Continued)
+Securities Investment Fund
+-Hua'an Strategic Chosen Hybrid
+0.06
+12,418,772
++12,418,772
+Bank of Communications Co., Ltd.
+Index Securities Investment Fund
+Shanghai Index 50 Trading Open-end
+Industrial Bank Co., Ltd.-Xingquan
+N/A Others
+0.11
+20,975,346
+Industrial and Commercial Bank of China- +5,826,282
+Index Securities Investment Fund
+N/A Others
+Nil
+0
+0.12
+0 Nil
++12,337,542
+12,337,542
+0.06
+Number
+Type
+Type and number of shares
+shares
+without selling
+restrictions
+Name of shareholders
+Number of
+Shareholdings of top ten shareholders without selling restrictions
+China Shenhua Energy Company Limited
+China Limited-Huitianfu Intelligent
+Manufacturing Stock Securities
+Investment Fund
+N/A Others
+95
+0.05
+10,384,380
++10,384,380
+Industrial and Commercial Bank of
+Hybrid Securities Investment Fund
+Organic Growth Flexible Configuration
+N/A Others
+O Nil
+24,080,916
++11,057,276
+N/A Others
+corporate
+corporate
+N/A Overseas
+Unknown
+0
+17.05
+3,390,476,296
+-303,503
+HKSCC NOMINEES LIMITED
+Limited
+N/A State-owned
+0 Nil
+73.06
+14,530,574,452
+0
+Bank of Communications-E Fund 50
+Status Number shareholders
+period Percentage restrictions
+Nature of
+selling
+China Securities Finance Corporation
+-81,697,594
+China Energy Investment Corporation
+2.99
+594,718,049
+N/A Overseas
+Nil
+0.37
+73,501,578
++26,669,612
+Hong Kong Securities Clearing Company
+Limited
+N/A State-owned
+Nil
+0
+0.55
+110,027,300
+0
+Central Huijin Asset Management Ltd.
+Limited
+N/A Others
+Nil
+0
+0
+(1)
+(2)
+Other Information
+(1)
+(2)
+Controlled listed companies: holding
+58.44% shares of China Longyuan Power
+Group Corporation Limited; holding
+46.09% shares of GD Power Development
+Co., Ltd.; holding 78.4% shares of
+Guodian Technology & Environment Group
+Corporation Limited; holding 37.39%
+shares of Guodian Changyuan Electric
+Power Co., Ltd.. Actual control of 61.42%
+shares of Inner Mongolia Pingzhuang
+Energy Co., Ltd.; actual control of 51.25%
+shares of Ningxia Yinglite Chemicals Co.,
+Ltd.; actual control of 23.25% shares of
+Yantai Longyuan Power Technology Co.,
+Ltd..
+Listed companies with direct participation:
+holding 2.90% shares of China National
+Chemical Engineering Co., Ltd..
+There was no change in the controlling shareholder of the Company during the
+reporting period.
+On 30 January 2019, China Energy
+received a confirmation document on
+the share transfer registration from
+China Securities Depository and Clearing
+Corporation Limited, confirming that shares
+of China National Chemical Engineering
+Co., Ltd. have been transferred to Beijing
+Chengtong Financial Control Investment
+Co., Ltd. and Guoxin Investment Co.,
+Ltd. for nil consideration, and the transfer
+registration has been completed.
+Index and date of changes in controlling shareholders during the reporting period
+China Shenhua Energy Company Limited
+Section VII Changes in Share Capital and Shareholders (Continued)
+Diagram of the equity and controlling relationship between the Company and the
+controlling shareholder
+and overseas listed subsidiaries
+and associates during the
+reporting period
+3.
+On 22 November 2017, Shenhua Group
+Corporation Limited changed its name
+into China Energy Investment Corporation
+Limited, and completed the changes in
+industrial and commercial registration.
+For details, please refer to the A share
+announcement of the Company on
+28 November 2017 and the H share
+announcement of the Company on 27
+November 2017.
+Shareholdings in other domestic
+Name
+Section VII Changes in Share Capital and Shareholders (Continued)
+China Energy Investment Corporation Limited
+Prior to the foregoing, Mr. Mi had served in various
+capacities, including the deputy general manager and a
+member of the Leading Party Members' Group of China
+Guodian Group Co. Ltd.,, the general manager and deputy
+secretary to the Leading Party Members' Group of GD
+Power, the general manager assistant of China Guodian
+Group Co. Ltd.,, the secretary to the Leading Party
+Members' Group, an executive director and the general
+manager of Guodian Northeast Electric Power Co., Ltd.
+134
+China Shenhua Energy Company Limited
+Section VII Changes in Share Capital and Shareholders (Continued)
+IV. CHANGES IN CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+(1)
+2.
+Controlling shareholder as at the end of the reporting period
+Legal representative
+Date of incorporation
+Principal business
+China Energy Investment Corporation Limited
+Qiao Baoping
+23 October 1995
+State-owned assets operating activities within
+the scope authorized by the State Council;
+investment and management activities in various
+sectors, including resource products (such as
+coal), coal-to-liquids, coal chemical, power,
+thermal, port, various transportation, finance,
+domestic and international trade and logistics,
+real estate, advanced technology and information
+consultation and etc.; planning, organizing,
+coordinating and managing the production and
+operating activities in above sectors of members
+of China Energy Group; and sales of chemical
+materials and chemical products (excluding
+hazardous chemicals), textiles, construction
+materials, machinery, electronic equipment
+and office equipment. (Enterprise is allowed to
+choose the business to be engaged in and carry
+out such business activities pursuant to laws; for
+projects that are subject to approval pursuant to
+the law, business operations shall commence in
+accordance with the business scope approved
+upon receipt of the approval from relevant
+authorities; no business activities which are
+prohibited or restricted by the industrial policies
+shall be carried out.)
+2018 Annual Report 125
+126
+1. Legal person
+73.06%
+31 May 2018
+On 30 January 2019, the share transfer registration by China Energy for nil
+consideration was completed. After this transfer for nil consideration, China Energy
+holds 13,812,709,196 A shares of the Company, representing approximately 69.45%
+of the share capital of the Company. For details, please refer to the H shares
+announcement dated 30 January 2019 and the A shares announcement dated 31
+January 2019 of the Company.
+OTHER CORPORATE SHAREHOLDERS WITH MORE THAN 10% SHAREHOLDING
+IN THE COMPANY
+As at the end of the reporting period, there was no other corporate shareholder with more than
+10% shareholding in the Company.
+VI. RESTRICTIONS ON THE REDUCTION IN THE SHAREHOLDING
+Applicable ✓ Not applicable
+China Shenhua Energy Company Limited
+I.
+Section VIII
+Directors, Supervisors,
+Senior Management and Employees
+CHANGES IN SHAREHOLDING AND REMUNERATION
+(1) Changes in shareholding and remuneration
+1. Directors, supervisors and senior management as at the end of the reporting period
+Whether
+received
+Mr. Mi has served as an Executive Director of the fourth
+session of the Board of the Company since April 2018,
+served as the deputy general manager and a member of
+the Leading Party Members' Group of China Energy Group
+since November 2017, worked as the dean of Guodian New
+Energy Technology Research Institute since December
+2016 and a director of GD Power since April 2014.
+V.
+Section VII Changes in Share Capital and Shareholders (Continued)
+128
+2018 Annual Report 127
+De facto controller
+(II)
+1.
+Legal person
+2.
+3.
+Name: State-owned Assets Supervision and Administration Commission of the
+State Council
+China Shenhua Energy Company Limited
+Index and date of changes in de facto controller during the reporting period
+Diagram of the equity and controlling relationship between the Company and the
+de facto controller
+State-owned Assets Supervision and
+Administration Commission of the State Council
+100%
+China Energy Investment Corporation Limited
+73.06%
+China Shenhua Energy Company Limited
+There was no change in de facto controller of the Company during the reporting
+period.
+Born in October 1962, male, Chinese, a senior engineer
+and a member of the Communist Party of China. Mr.
+Mi has extensive management experience in power
+enterprises. He received a bachelor's degree in thermal
+power engineering from Northeast Electric Power Institute
+in 1984.
+130
+Executive Director
+Chief Financial Officer Female
+Zhang Kehui
+2018
+14.0
+74.5
+63.9
+13 September
+17 March 2017
+54
+Male
+Vice President
+remuneration
+China Shenhua Energy Company Limited
+3.
+Section VIII Directors, Supervisors,
+55 22 January 2007
+14 December
+112.0
+28.2
+(4) The ages were calculated as of 31 December 2018.
+Other than Lv Zhiren, who holds 1,500 A shares of the Company, none of the personnel
+mentioned above hold any shares in the Company during the term of service in the reporting
+period.
+The remuneration package of Directors for 2018 is subject to approval by the Company at
+the 2018 annual general meeting; the remuneration package of the senior management
+was approved by the Board; the remunerations before tax include salaries, social benefit
+payment, retirement scheme contributions and performance based salary.
+The remuneration of Directors and senior management received from shareholders of the
+Company for 2018 will be disclosed on the website of China Energy upon completion of
+assessment made by the SASAC of the State Council.
+(3)
+(2)
+67.0
+Senior Management and Employees (Continued)
+250.4
+Note:
+Total
+2018
+No
+No
+No
+z zzááá
+(1)
+Biographical details
+Biographical details of the Directors, supervisors and senior management as at the
+end of the reporting period
+Name
+Section VIII
+Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Gao Song
+24.8
+Biographical details
+Born in February 1961, male, Chinese, a professor-level
+senior engineer and a member of the Communist Party
+of China. Mr. Gao has extensive management experience
+in power enterprises. He received a bachelor's degree in
+thermal power engineering from Zhejiang University in
+1982.
+Mr. Gao has served as an Executive Director of the fourth
+session of the Board of the Company since April 2018,
+served as the deputy general manager and a member
+of the Leading Party Members' Group of China Energy
+Group since November 2017, and worked as a director of
+GD Power since September 2012. Mr. Gao also serves
+as the Chairman of CHN Energy Dadu River Hydropower
+Development Co., Ltd., the Chairman of CHN Energy
+Jinsha River Xulong Hydropower Development Co., Ltd.
+and the Chairman of CHN Energy Jinsha River Benzilan
+Hydropower Development Co., Ltd.
+Prior to the foregoing, Mr. Gao had served in various
+capacities, including the deputy general manager, a
+member of the Leading Party Members' Group and the
+director of the working committee of China Guodian Group
+Co., Ltd, the general manager and deputy secretary to the
+Leading Party Members' Group of GD Power Development
+Co., Ltd., the general manager assistant of China Guodian
+Corporation, the secretary to the Leading Party Members'
+Group and general manager of the North China branch of
+China Guodian Corporation and chief engineer of Hebei
+Electric Power Corporation.
+2018 Annual Report 133
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Mi Shuhua
+China Shenhua Energy Company Limited
+132
+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.
+Dr. Li served as senior Vice President of the Company from
+May 2011 to October 2018, an Executive Director of the
+third session of the Board of the Company from June 2016
+to June 2017, the Deputy General Manager of Shenhua
+Group Corporation from August 2006 to April 2010, and a
+member of the Leading Party Members' Group and Deputy
+General Manager of Shenhua Group Corporation from April
+2010 to November 2017.
+Ling Wen
+Chairman and
+Executive Director
+Biographical details
+Born in February 1963, male, Chinese, a professor and
+Academician of Chinese Academy of Engineering, and
+a member of the Communist Party of China (CPC). Dr.
+Ling has extensive management experience in financial
+institutions and enterprises. He received a Ph.D. degree
+from Harbin Institute of Technology in 1991, and conducted
+postdoctoral research in Shanghai Jiao Tong University
+from 1992 to 1994.
+Dr. Ling has served as the Chairman and an Executive
+Director of the fourth session of the Board of the Company
+since January 2018, and a Director, General Manager and
+deputy secretary to the Leading Party Members' Group of
+China Energy since November 2017.
+Dr. Ling served as the Vice Chairman and an Executive
+Director of the fourth session of the Board of the Company
+from June 2017 to January 2018, and the President of the
+Company from January 2017 to January 2018. Dr. Ling
+served as a member of the Leading Party Members' Group
+of Shenhua Group Corporation from August 2003 to May
+2016, the deputy secretary to the Leading Party Members'
+Group of Shenhua Group Corporation from May 2016 to
+November 2017, a Director of Shenhua Group Corporation
+from April 2010 to November 2017, and the General
+Manager of Shenhua Group Corporation from May 2014 to
+November 2017.
+Prior to the foregoing, Dr. Ling had served in various
+capacities, including the deputy General Manager of
+Shenhua Group Corporation, Executive Director of the first
+session of the Board, the Vice Chairman and Executive
+Director of the second session of the Board, the Vice
+Chairman and Executive Director of the third session of
+the Board of the Company, the President, executive Vice
+President and chief financial officer of the Company, the
+Chairman of Shenhua Finance Company, Deputy General
+Manager of the International Business Department of the
+Industrial and Commercial Bank of China, Deputy General
+Manager of Industrial and Commercial Bank of China (Asia)
+Limited and Chairman of UB China Business Management
+Company Limited.
+(1) Directors
+2018 Annual Report 131
+Senior Management and Employees (Continued)
+Name
+Li Dong
+Executive Director
+Biographical details
+Born in January 1960, male, Chinese, a senior engineer
+with the qualification as a professor and a member of the
+CPC. Dr. Li has extensive experience in the management
+of coal enterprises in China. He obtained a master's degree
+from China Europe International Business School in 2005
+and a Ph.D. degree from Liaoning Technical University in
+2005.
+Dr. Li has served as an Executive Director of the fourth
+session of the Board of the Company since June 2017, and
+the Deputy General Manager and member of the Leading
+Party Members' Group of China Energy since November
+2017.
+Section VIII Directors, Supervisors,
+Total
+remuneration
+before tax
+Executive Director
+shareholders
+22 June 2020
+Han Jianguo
+Wang Jinli
+Executive Director
+Male
+60 24 May 2011
+15 May 2018
+ten thousand
+Yes
+59
+27 September 2013
+19 October 2018
+Yes
+Wang Shumin
+Zhang Zifei
+Lv Zhiren
+Vice President
+Senior Vice President Male
+Male
+ten thousand
+years
+RMB
+Company
+remuneration
+during the
+received for
+of the
+Company
+during the
+reporting
+period
+Name
+Gender
+Date of
+Age appointment
+Date of
+resignation
+reporting
+period
+RMB
+Position before
+resignation
+performance
+56
+19 October 2018
+Zhai Richeng
+Executive Director
+No
+NO
+26.3
+22 June 2020
+Chairman of the
+54 27 April 2018
+Independent Non-
+Huang Ming
+Executive Director
+Christina
+No
+DO
+Male
+25 November 2015
+Male
+22 June 2020
+Yes
+Vice President
+Male
+60
+25 November 2015
+53 17 June 2016
+54 22 August 2014
+Male
+Zhou Dayu
+Committee
+Supervisory
+Yes
+40.7
+107
+Supervisor
+received from
+from
+shareholders
+Including:
+Xu Mingjun
+Vice President
+Male
+55 29 November 2018
+7.6
+Jia Jinzhong
+24.9
+Vice President
+55 17 March 2017
+101.4
+18.7
+Huang Qing
+Secretary to the Board
+Male
+Male
+53 6 November 2004
+119.0
+55 13 September 2018
+17.7
+from
+Yes
+Shen Lin
+Supervisor
+Male
+-
+58 22 August 2014
+60.1
+18.8
+Yes
+Zhang Jiming
+President
+Male
+22 June 2020
+114.5
+29.9
+Zhang Guangde
+(2)
+(3)
+(4)
+(5)
+(6)
+The remuneration package of Directors and supervisors for 2018 is subject to approval by
+the Company at the 2018 annual general meeting; the remuneration package of the senior
+management was approved by the Board; the remunerations before tax include salaries,
+social benefit payment, retirement scheme contributions and performance based salary.
+(1) The remuneration of Directors received from shareholders of the Company for 2018 will
+be disclosed on the website of China Energy upon completion of assessment made by the
+SASAC of the State Council.
+Zhai Richeng, Zhou Dayu and Shen Lin received remuneration from the Company from
+January to June 2018, and received remuneration from China Energy from July to December
+2018; and the remuneration received by other personnel from the Company covers the
+year of 2018 or the period from the commencement of term of office of the Company to 31
+December 2018.
+The 2016 annual general meeting of the Company approved that term of service of the
+fourth session of the Board and the supervisory committee is three years (23 June 2017 to
+22 June 2020).
+The ages were calculated as of 31 December 2018.
+Directors and senior management resigned during the reporting period
+59.7
+Whether
+Total
+remuneration
+before tax
+received
+remuneration
+None of the personnel mentioned above hold any shares in the Company during the term of
+service in the reporting period.
+Notes:
+2.
+Senior Management and Employees (Continued)
+Vice President
+Male
+56 24 August 2018
+27.4
+Xu Shancheng
+Chief Financial Officer
+Male
+54 28 December 2018
+z z z z z z
+No
+718.0
+110.0
+Total
+2018 Annual Report 129
+Section VIII Directors, Supervisors,
+45
+22 June 2020
+previous
+Female
+Executive Director
+Mi Shuhua
+22 June 2020
+57 27 April 2018
+Male
+Executive Director
+Male
+Gao Song
+19 October 2018
+24 May 2011
+Senior Vice President
+22 June 2020
+58 17 June 2016
+Male
+(Resigned)
+Executive Director
+56
+22 June 2020
+Yes
+45
+22 June 2020
+73 23 June 2017
+Female
+Independent Non-
+27 April 2018
+Tam Wai Chu,
+22 June 2020
+17 June 2016
+66
+Male
+Non-Executive
+Zhao Jibin
+Director
+Yes
+Li Dong
+6 November 2004
+50 23 June 2017
+reporting
+expiration of
+(from the first
+associates
+during the
+received for
+reporting
+during the
+Company or
+of the
+Including
+performance
+remuneration
+the Company
+Date of
+appointment
+received from
+Scheduled
+22 June 2020
+Name
+Gender
+Executive Director
+22 June 2020
+55 2 January 2018
+Male
+Chairman
+Ling Wen
+Positions
+ten thousand
+RMB
+RMB
+period
+years
+period
+Age appointment date) term of office
+ten thousand
+Yes
+previous
+Female
+Independent Non-
+Executive Director
+Independent Non-
+Executive Director
+No
+63 23 June 2017
+22 June 2020
+No
+୨
+NO
+26.3
+22 June 2020
+Zhong Yingjie,
+59 27 April 2018
+Independent Non-
+45
+Peng Suping
+Executive Director
+Maria
+No
+Yes
+Yes
+Yes
+Male
+Jiang Bo
+Biographical details
+Section VIII Directors, Supervisors,
+Zhang Jiming
+President and
+Deputy Secretary
+to the Party
+Committee
+Zhou Dayu
+Supervisor
+Biographical details
+2018 Annual Report 137
+Mr. Zhou has served as a Supervisor of the fourth session
+of Supervisory Committee of the Company since June 2017
+and a Director of the Industrial Coordination Department of
+the China Energy Group since May 2018.
+Mr. Zhou has served as the General Manager of the
+Capital Operation Department of the Company and the
+General Manager of the Capital Operation Department
+of Shenhua Group Corporation from March 2016 to May
+2018, a Supervisor of the third session of the Supervisory
+Committee of the Company from June 2016 to June 2017,
+and the General Manager of the Business Administration
+Department of the Company and the General Manager of
+the Business Administration Department of Shenhua Group
+Corporation from November 2009 to March 2016.
+Prior to the foregoing, Mr. Zhou had successively held the
+post of the General Manager of the Planning Department
+and a Deputy Director of the Policy and Law Research
+Office of Shenhua Group Corporation.
+Shen Lin
+Supervisor
+Born in May 1960, male, Chinese, a senior economist and
+a member of the CPC. Mr. Shen graduated from Harbin
+Institute of Technology in 2006 with a master's degree.
+Mr. Shen has served as an Employee Representative
+Supervisor of the fourth session of the Supervisory
+Committee of the Company since June 2017, and served
+as a full-time Director (director level) of China Energy since
+May 2018.
+Mr. Shen has served as the Chief of the Department
+of Enterprise Culture of the Company and Chief of
+the Department of Party Building of Shenhua Group
+Corporation from July 2010 to May 2018, and served as an
+Employee Representative Supervisor of the third session of
+the Supervisory Committee of the Company from August
+2014 to June 2017.
+Prior to the foregoing, Mr. Shen had served for Shenhua
+Baoshen Railway Co., Ltd. in various positions such as
+Human Resource Manager, Deputy Chief Economist, Chief
+Economist, Deputy Secretary to the Party Committee and
+Secretary to the Discipline Committee to the Party.
+140 China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+(3) Senior management
+Name
+Born in November 1963, male, Chinese, a senior engineer
+and a member of the Communist Party of China, expert on
+"government special allowance" of the State Council. Mr.
+Zhang has extensive experience in business administration.
+In 1985, he graduated from Liaoning Petrochemical School.
+Mr. Zhang has served as the president and the deputy
+secretary to the Party Committee of the Company since
+September 2018.
+Mr. Zhang served as the vice president of the Company
+from July 2016 to September 2018, as the deputy secretary
+to the Party Committee, the chairman and the general
+manager of China Shenhua Coal to Liquid and Chemical
+Co., Ltd. from August 2012 to July 2016, and as a Director
+and a Vice President (subsidiary chief level) of China
+Shenhua Coal to Liquid and Chemical Co., Ltd., and as the
+general manager, the secretary to the Party Committee and
+the deputy secretary to the Party Committee of Ordos Coal
+to Liquid Branch Company of China Shenhua Coal to Liquid
+and Chemical Co., Ltd. from May 2008 to August 2012.
+Prior to the foregoing, Mr. Zhang had successively held
+the positions of the director and a vice director of Liaoyang
+Petrochemical Branch Company Refinery Plant.
+Committee
+Prior to the foregoing, Mr. Jia had successively held the
+post of Deputy Section Head of Yuanping Train Depot of
+Taiyuan Railway Branch, Deputy Director of Taiyuan West
+Railway Station of Taiyuan Railway Branch and Manager of
+Yuanping Branch of Shuohuang Railway Company.
+Huang Qing
+Secretary to the Board
+and member to the
+Party Committee
+Born in November 1965, male, Chinese, a senior engineer
+and a member of the CPC. Mr. Huang obtained a board
+secretary certification from the Shanghai Stock Exchange
+in 2004. Mr. Huang is a fellow of the Hong Kong Institute
+of Chartered Secretaries and a senior visiting scholar of the
+Eisenhower Foundation. Mr. Huang received a master's
+degree from Guangxi University in 1991.
+Mr. Huang has served as Secretary to the Board of the
+Company and Company Secretary of the Company since
+November 2004, a member to the Party Committee of the
+Company since June 2018 and the Vice Chairman of Beijing
+GD Power Co., Ltd. since March 2019.
+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.
+2018 Annual Report 143
+144
+Mr. Jia has served as the Chairman of Shuohuang Railway
+Development Co., Ltd., a subsidiary of the Company, from
+member to the Party August 2014 to March 2017, and the Deputy General
+Manager of Shuohuang Railway Development Co., Ltd.
+from April 2011 to August 2014.
+Section VIII Directors, Supervisors,
+Name
+Zhang Guangde
+Vice President and
+member to the Party
+Committee
+Biographical details
+Born in May 1962, male, Chinese, a professor-level
+senior engineer and a member of the Communist Party of
+China. Mr. Zhang has extensive experience in corporate
+management. He obtained a bachelor's degree from
+Huainan Mining Institute in 1983 and a master's degree
+from Jiaozuo Mining Institute in 1990.
+Mr. Zhang has served as the Vice President of the Company
+since August 2018, a member to the Party Committee of
+the Company since June 2018, and a Director of Beijing GD
+Power Co., Ltd. since March 2019.
+Mr. Zhang has served as a director of the Safety.
+Supervision Bureau of the Company and a director of the
+Safety Supervision Bureau of Shenhua Group Corporation
+Limited from May 2013 to June 2018, a director of the
+Safety Supervision Bureau of the Company and a deputy
+director of the Safety Supervision Bureau of Shenhua
+Group Corporation Limited from November 2009 to May
+2013, and a general manager of the Safety, Health and
+Environment Department of the Company from November
+2004 to November 2009.
+Prior to the foregoing, Mr. Zhang has served as an
+engineer, deputy chief engineer and chief engineer of the
+Scientific Research Institute of Jiaozuo Mining Bureau, a
+deputy chief engineer of Jiaozuo Mining Bureau, a chief
+engineer of Jiaozuo Coal Industry (Group) Co., Ltd., and a
+deputy manager and manager of the Safety Supervision and
+Quality Control Department of Shenhua Group Corporation
+Limited.
+China Shenhua Energy Company Limited
+Senior Management and Employees (Continued)
+Mr. Jia has served as a Vice President of the Company
+since March 2017, a member to the Party Committee of
+the Company since June 2018, and the chief economist of
+China Energy Group since May 2018.
+Born in July 1963, male, Chinese, a professor-level
+senior engineer and a member of the CPC. Mr. Jia has
+extensive management experience in railway transportation
+enterprises. He graduated from Taiyuan Railway Machinery
+School in 1980 and obtained a master's degree from
+Southwest Jiaotong University in 2005.
+Biographical details
+2018 Annual Report 141
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Xu Mingjun
+Secretary to the Party
+Committee and Vice
+President
+Biographical details
+Born in October 1963, male, Chinese, a senior political
+engineer and a graduate of postgraduate program, a
+member of the Communist Party of China. Mr. Xu has
+extensive experience in corporate management.
+Mr. Xu has served as the secretary to the Party Committee
+of the Company since September 2018, the Vice President
+of the Company since November 2018 and the assistant to
+the general manager of the China Energy since May 2018.
+Mr. Xu served as assistant to general manager of China
+Guodian Corporation, secretary to the Leading Party Group,
+secretary to the Party Committee and deputy general
+manager of GD Power, assistant to general manager of the
+China Energy and secretary to the Party Committee and
+deputy general manager of GD Power from May 2016 to
+September 2018. He served as the secretary to the board
+of directors, assistant to the general manager and the
+head of general office of China Guodian Corporation from
+January 2012 to May 2016.
+Prior to the foregoing, Mr. Xu had served in various
+capacities, including the director of people work division
+of the Departmental Party Committee of the State Bureau
+of Coal Industry, the deputy director of labour union
+working division, deputy director of general division of
+people work department and a director-level investigator
+and researcher under the Central Enterprise Working
+Committee, the director of news division and assistant
+inspector of the bureau of publicity under the State-owned
+Assets Supervision and Administration Commission of the
+State Council, a deputy secretary of prefectural committee
+in Tacheng, Xinjiang, a deputy inspector of the bureau of
+publicity under the SASAC, the chief of political work office,
+a member and a deputy secretary to the Party Committee
+directly under China Guodian Corporation and the head of
+general office of China Guodian Corporation.
+142
+China Shenhua Energy Company Limited
+Section VIII
+Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Jia Jinzhong
+Vice President and
+Name
+Senior Management and Employees (Continued)
+Born in October 1965, male, Chinese, a researcher and
+a member of the CPC. Mr. Zhou obtained a bachelor's
+degree in Economic Management at Peking University in
+1986 and a master's degree in International Finance at
+Peking University in 2001.
+2018 Annual Report 139
+Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Zhao Jibin
+Non-Executive
+Director
+Biographical details
+Born in July 1952, male, Chinese, a senior engineer and a
+member of the CPC. Mr. Zhao has extensive experience
+in business administration and railway transportation
+administration. He graduated from Southwest Jiaotong
+University majored in transportation in 1984, and obtained
+a master's degree from Changchun Institute of Optics and
+Fine Mechanics.
+Mr. Zhao has served as a non-Executive Director of the
+fourth session of the Board of the Company since June
+2017, an external Director of China Energy Group since
+November 2017 and of China National Building Material
+Group Corporation since December 2014.
+Mr. Zhao had served as an external Director of Shenhua
+Group Corporation from April 2015 to November 2017, a
+Non-Executive Director of third session of the Board of the
+Company from June 2016 to June 2017, a Deputy General
+Manager of China Mobile Communications Corporation
+from May 2008 to June 2013, an Independent Non-
+Executive Director of China South Locomotive and Rolling
+Stock Corporation Limited from December 2007 to June
+2014.
+Prior to the foregoing, Mr. Zhao had successively held
+the posts as the Master of Changchun Railway Station,
+Director of Changchun Railway Sub-bureau, Director of
+Hohhot Railway Bureau and Zhengzhou Railway Bureau,
+the Chairman of China Tietong Telecommunications
+Corporation, deputy to the ninth and tenth National
+People's Congress, an honorary professor of Beijing
+Jiaotong University and Changchun University of Science
+and Technology.
+2018 Annual Report 135
+136
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Section VIII
+Section VIII Directors, Supervisors,
+Born in November 1945, female, Chinese, a barrister in
+Hong Kong. She graduated from the University of London
+in 1970 with a bachelor's degree, and received an honorary
+Ph.D. degree in Laws from the Chinese University of Hong
+Kong in 1989. She has extensive experience in legal affairs
+and supervision.
+Dr. Tam has served as an Independent Non-Executive
+Director of the Company since June 2017, deputy to the
+twelfth National People's Congress since March 2013,
+and a Hong Kong SAR convener to the National People's
+Congress. She has served as a member of the Basic Law
+Committee of the Hong Kong Special Administrative Region
+since July 1997 and currently serves as the deputy director
+of the committee. Dr. Tam currently serves as the director
+of the Joint Committee for the Promotion of the Basic Law
+of Hong Kong, and has also served as an Independent Non-
+Executive Director in various listed companies, including
+Wing On Company International Limited, Sinopec Kantons
+Holdings Limited, Sa Sa International Holdings Limited,
+Nine Dragons Paper (Holdings) Limited and Macau Legend
+Development Limited.
+Dr. Tam served as the Chairman of Operations Review
+Committee and an ex-officer of the Advisory Committee
+on Corruption under the Independent Commission
+Against Corruption of Hong Kong from January 2015 to
+December 2017. She served as a member of the Advisory
+Committee on Corruption and Witness Protection Review
+Board of Independent Commission Against Corruption of
+Hong Kong from January 2010 to December 2017. She
+served as an Independent Non-Executive Director of Tong
+Ren Tang Technologies Company Limited from October
+2000 to May 2018. She served as an Independent Non-
+Executive Director of Minmetals Land Limited from April
+1997 to March 2018. Prior to the foregoing, Dr. Tam
+had successively served as a deputy to the ninth, tenth
+and eleventh National People's Congress. Dr. Tam was
+awarded the Gold Bauhinia Star in 1998 and awarded the
+Grand Bauhinia Medal, symbolizing the highest honor of
+the Hong Kong Government, in 2013.
+China Shenhua Energy Company Limited
+Section VIII
+Directors, Supervisors,
+Senior Management and Employees (Continued)
+Name
+Peng Suping
+Independent Non-
+Executive Director
+Biographical details
+Born in June 1959, male, Chinese, a professor of China
+University of Mining and Technology and a member
+of the Communist Party of China. Dr. Peng has long
+engaged in the teaching and research of mining geology
+and geophysical prospecting of mine engineering, with
+rich experience in coal industry. Dr. Peng received a Ph.
+D degree in coal geology & exploration from the Beijing
+Postgraduate Department of China University of Mining
+and Technology in 1988. He was elected as an academician
+of Chinese Academy of Engineering in 2007.
+Dr. Peng has worked as the director of State Key
+Laboratory of Coal Resources and Safe Mining (China
+University of Mining and Technology, Beijing) since January
+2007, the director of the Department of Energy and Mining
+Engineering of Chinese Academy of Engineering from
+July 2014 to June 2018, an Independent Director of Tiandi
+Science & Technology Co., Ltd. from June 2010 to October
+2018, and an Independent Director of Tibet Huayu Mining
+Co., Ltd. from October 2012 to October 2018.
+Prior to the foregoing, Dr. Peng had served in various
+capacities, including the vice director of the Department
+of Energy and Mining Engineering of Chinese Academy
+of Engineering and an Independent Director of Beijing
+LongRuan Technologies Inc.
+Senior Management and Employees (Continued)
+Biographical details
+Name
+Tam Wai Chu, Maria
+Independent Non-
+Executive Director
+Biographical details
+Jiang Bo
+Independent Non-
+Executive Director
+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 has served as Director of Property Ownership
+Administration of the Company and Director of Property
+Ownership Administration of Shenhua Group Corporation
+from June 2015 to May 2018, Chairman of the third session
+of the Supervisory Committee of the Company from August
+2014 to June 2017 and General Manager of the financial
+department of Shenhua Group Corporation from November
+2004 to June 2015.
+Mr. Zhai has served as the Chairman of the fourth session
+of Supervisory Committee of the Company since June 2017
+and a full-time Director (director level) of China Energy
+since May 2018.
+Born in July 1964, male, Chinese, a senior accountant and
+a member of the CPC. Mr. Zhai received a master's degree
+from China University of Mining and Technology in 2003.
+Biographical details
+Zhai Richeng
+Chairman of the
+Supervisory
+Committee
+Name
+(2) Supervisors
+Dr. Huang has served as a tenured professor of finance of
+the Johnson School of Management of Cornell University
+since July 2005, a professor of finance of China Europe
+International Business School concurrently since July 2010,
+an independent director of Yingli Green Energy Holding Co.,
+Ltd. since August 2008, an independent director of Fantasia
+Holdings Group Co., Limited since October 2009, an
+Independent Director of JD.com, Inc. since March 2014, an
+Independent Director of WH Group Limited since July 2014
+and an Independent Director of 360 Security Technology
+Inc. since February 2018.
+Biographical details
+Executive Director
+Huang Ming
+Independent Non-
+Name
+Senior Management and Employees (Continued)
+Born in March 1964, male, American, a tenured professor
+of finance of the Johnson School of Management of Cornell
+University. He has long been engaged in the academic
+research in finance and is familiar with China's financial
+market and corporate finance. Dr. Huang received two Ph.D
+degrees of physics and finance respectively from Cornell
+University of in America in 1991 and Stanford University in
+America in 1996.
+Dr. Jiang has served as an Independent Non-Executive
+Director of the Company since June 2017, and an
+Independent Non-Executive Director of Sinopec Oilfield
+Service Corporation since February 2015.
+Born in December 1955, female, Chinese, a senior
+accountant and senior economist and a member of the
+CPC. Dr. Jiang has extensive experience in financial theory
+and knowledge and practice of corporate management.
+Dr. Jiang graduated from Jilin Finance and Trade College
+in 1983, and received a Ph.D. degree in Economics from
+Renmin University of China in 2004.
+Prior to the foregoing, Dr. Jiang had served in various
+capacities, including the Chief Financial Officer and the
+Chairman of the labor union of China Everbright Group
+Ltd., a Director of China Everbright Group Company
+Limited (Hong Kong), a Director of Sun Life Everbright
+Life Insurance Co., Limited, a Director of equity interest of
+Everbright Financial Holding Asset Management Co., Ltd.,
+a Director of Shenyin & Wanguo Securities Co., Ltd., an
+Executive Director, the Vice President, a member of the
+CPC Committee and the Chief Auditing Officer (concurrent
+position) of China Everbright Bank.
+Zhong Yingjie,
+Christina
+Independent Non-
+Executive Director
+Born in November 1968, female, Chinese, a certified
+public accountant. She graduated from Wuhan University
+in Auditing in 1990 with a bachelor's degree. She also
+obtained a master's degree in Business and Administration
+from China Europe International Business School (CEIBS) in
+2000. Ms. Zhong has extensive experience in finance and
+capital markets.
+Prior to the foregoing, Ms. Zhong had worked for Morgan
+Stanley Asia Limited from May 2008 to April 2017 and
+served as a Managing Director and the head of division
+of financial institutions in China. Ms. Zhong had served
+in various capacities, including an Executive Director of
+Goldman Sachs Gao Hua Securities Company Limited and
+a Vice President of China International Capital Corporation
+Limited. She had also worked for the National Audit Office
+of the PRC.
+Ms. Zhong has served as an Independent Non-Executive
+Director of the Company since June 2017.
+China Shenhua Energy Company Limited
+Section VIII
+Directors, Supervisors,
+138
+Name
+(11)
+Senior Management and Employees (Continued)
+Positions held in other entities
+Section VIII Directors, Supervisors,
+Commencement of Expiry of
+Zhao Jibin
+Tam Wai Chu, Maria
+Positions
+term of office
+term of office
+China National Building
+Material Group Corporation
+Tong Ren Tang Technologies
+Company Limited
+Wing On Company
+China Shenhua Energy Company Limited
+December 2014
+External Director
+Name of shareholder
+March 2019
+China Energy
+Co., Ltd.
+Beijing GD Power
+Co., Ltd.
+Manager
+China Shenhua
+Jia Jinzhong
+Independent Non-
+Executive Director
+Chief Economist
+May 2018
+Huang Qing
+Beijing GD Power
+Vice Chairman
+March 2019
+Co., Ltd.
+Zhang Guangde Beijing GD Power
+Director
+March 2019
+Xu Shancheng
+Chairman of the Board
+of Supervisors
+October 2000
+Position
+Independent Non-
+retirement
+Resigned from the position of Senior Vice
+President on 19 October 2018 due to
+adjustments to work arrangements,
+but continued to serve as an Executive
+Director and relevant posts in
+committees under the Board
+Resigned on 19 October 2018 due to
+adjustments to work arrangements
+Resigned on 19 October 2018 due to
+adjustments to work arrangements
+Resigned on 31 May 2018 due to
+retirement
+Resigned on 13 September 2018 due to
+adjustments to work arrangements
+Resigned on 14 December 2018 due to
+retirement
+2018 Annual Report 151
+152
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+V.
+VI.
+SANCTION FROM SECURITIES REGULATORY AUTHORITIES IN THE LAST
+THREE YEARS
+Resigned on 15 May 2018 due to
+Applicable ✓ Not applicable
+During the reporting period, Mr. Lv Zhiren, the former Vice President of the Company, held 1,500
+A shares of the Company. Mr. Lv Zhiren did not transfer any shares of the Company during the
+reporting period. Save as the matters mentioned above, none of the change in shareholding of
+other directors, supervisors or senior management of the Company shall be disclosed pursuant
+to the Administrative Rules Concerning the Holding and Change of Shares held by Directors,
+Supervisors and Senior Management of A Listed Company promulgated by the CSRC.
+As of 31 December 2018, none of the directors, supervisors or chief executives of the Company
+hold any shares of the Company, nor did they have any interest or short position in the shares or
+underlying shares of the Company or of any of its associated corporations within the meaning of
+Part XV of the SFO (Chapter 571 of the Laws of Hong Kong) required, pursuant to section 352
+of the SFO, to be recorded in the register which shall be kept by the Company, or to be notified
+to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities
+Transactions by Directors of Listed Issuers.
+The securities transactions of the directors of the Company have been carried out in accordance
+with the "Model Code for Securities Transactions by Directors of Listed Issuers" (the "Model
+Code") set out in Appendix 10 of the Hong Kong Listing Rules. The Model Code is also applicable
+to the supervisors and senior management of the Company. The directors, supervisors or senior
+management have confirmed that they have fully complied with the Model Code in 2018 or during
+their respective terms of office.
+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, the Supplemental Agreement to the Non-Competition Agreement entered
+into between the Company and China Energy (effective after conditions are satisfied) on 2 March
+2018, revision of annual caps of the daily related/connected transactions with China Energy for
+the year 2018 and 2019, the establishment of a joint venture company and entering into of the
+Agreement on Establishment of the Joint Venture Company by way of Assets Reorganizations
+with GD Power, and entering into the Supplemental Agreement to the Agreement on Establishment
+of the Joint Venture Company by way of Assets Reorganizations entered into between GD Power
+Development Co., Ltd. and China Shenhua Energy Company Limited and Articles of Association
+of the Joint Venture Company on 30 November 2018, none of the directors and supervisors of
+the Company has any material personal interests, directly or indirectly, in material contracts,
+transactions or arrangements entered into by the Company or any of its subsidiaries in 2018 and
+subsisting during or at the end of the year of 2018; the directors and supervisors of the Company
+have confirmed that they and their associates have not entered into any connected transaction
+with the Company and its subsidiaries.
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+The Company has entered into service contracts with all of its directors and supervisors. None of
+the directors or supervisors has entered into or proposed to enter into any service contract with
+members of the Group which cannot be terminated by the Group within one year without any
+compensation (other than the statutory compensation). The Company has maintained appropriate
+liability insurance for its directors, supervisors and senior management. Directors of the Company
+are entitled to be indemnified for the verification and inspection costs, individual investigation
+costs, tax liabilities and loss prevention expenses incurred by or relating to the execution and
+performance of duties subject to the applicable laws and under the coverage of directors liability
+insurance taken out by the Company for the directors. These provisions are valid during the period
+ended 31 December 2018 and remain to be valid as at the date of this report.
+Other than their working relationships in the Company, none of the directors, supervisors or the
+senior management has any financial, business or family relationship or any relationship in other
+material aspects with each other. For the year ended 31 December 2018, the Company had not
+granted any equity securities or warrants to its directors, supervisors and senior management or
+their respective spouses or children under the age of 18.
+VIII. EMPLOYEES OF THE GROUP
+OTHER SIGNIFICANT MATTERS
+Reason for the change
+Resigned
+Chief Financial
+Officer
+Approved at the thirteenth meeting
+of the fourth session of the Board
+on 13 September 2018 due to work
+arrangements
+Approved at the fifteenth meeting of
+the fourth session of the Board on 29
+November 2018
+Approved at the twelfth meeting of the
+fourth session of the Board on 24
+August 2018
+Approved at the sixteenth meeting of
+the fourth session of the Board on 28
+December 2018
+Particular of
+movements
+Name
+Position
+Han Jianguo
+Executive Director Resigned
+Li Dong
+Senior Vice
+Resigned
+President
+Wang Jinli
+Wang Shumin
+Senior Vice
+President
+Vice President
+Resigned
+Resigned
+Zhang Zifei
+Vice President
+Resigned
+Lv Zhiren
+Vice President
+Resigned
+Zhang Kehui
+(I)
+Employees
+Number of current employees of the headquarter of the Company
+(Number of person)
+120
+Senior Management and Employees (Continued)
+Education Level
+(II)
+Postgraduate and above
+University graduate
+College graduate
+Specialized secondary school graduate
+Graduate of technical school, high school and below
+Total
+Remuneration policy
+Number of
+person
+3,093
+31,965
+23,039
+12,824
+15,935
+86,856
+The Company has formulated a remuneration policy comprising basic salary and
+performance assessment. The remuneration policy is competitive within the industry and is
+favoring the frontline employees.
+(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 2018, the accrued capital used for training was approximately
+RMB412 million. The number of attendances in training was approximately 0.64 million with
+training hours of approximately 6.18 million hours in aggregate. For details, please refer to
+the 2018 ESG Report of the Group.
+(IV) Outsourced Work
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+Approximately 79.73 million hours
+RMB3.059 billion
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors,
+Elected at the extraordinary general
+meeting on 27 April 2018
+154
+86,856
+Number of current employees of the branches/subsidiaries of the
+86,736
+Company (Number of person)
+Total number of current employees of the Group (Number of person)
+Number of retired employees in respect of which the Company and
+subsidiaries bore cost (Number of person)
+86,856
+15,112
+Function
+Function
+Operation and repair
+Management and administration
+Finance
+Research and development
+Technical support
+Sales and marketing
+Others
+Total
+Number of
+person
+53,233
+13,218
+1,830
+2,603
+11,364
+902
+3,706
+2018 Annual Report 153
+May 2018
+Elected at the extraordinary general
+meeting on 27 April 2018
+Elected at the extraordinary general
+meeting on 27 April 2018
+Approved at the eighth meeting of
+the fourth session of the Board
+on 2 January 2018 due to work
+arrangements
+Engineering
+Tiandi Science & Technology Independent Director
+June 2010
+October 2018
+Co., Ltd.
+Tibet Huayu Mining Co., Ltd.
+Independent Director
+October 2012
+October 2018
+Jiang Bo
+Huang Ming
+Chinese Academy of
+Sinopec Oilfield Service
+Independent Non-
+February 2015
+Corporation
+Executive Director
+Tenured Professor of July 2005
+Management of Cornell
+University
+Finance
+China Europe International
+Professor of Finance
+July 2010
+Business School
+Johnson School of
+June 2018
+July 2014
+Director
+January 1994
+International Limited
+Minmetals Land Limited
+Executive Director
+Independent Non-
+April 1997
+April 2018
+Executive Director
+Sinopec Kantons Holdings
+Independent Non-
+March 1998
+Limited
+Executive Director
+Sa Sa International Holdings Independent Non-
+June 2004
+Limited
+Peng Suping
+Nine Dragons Paper
+(Holdings) Limited
+Macau Legend Development
+Limited
+State Key Laboratory of Coal
+Resources and Safe Mining
+(China University of Mining
+and Technology, Beijing)
+Department of Energy and
+Mining Engineering of
+Executive Director
+Independent Non-
+Executive Director
+February 2006
+Independent Non-
+Executive Director
+June 2013
+Director
+January 2007
+Yingli Green Energy Holding Independent Director August 2008
+Co., Ltd.
+Fantasia Holdings Group Co., Independent Director
+October 2009
+Particular of
+movements
+Vice Chairman,
+President
+Appointed
+Resigned
+Executive Director Elected
+Executive Director Elected
+Peng Suping
+Huang Ming
+Independent
+Non-Executive
+Director
+Independent
+Elected
+Elected
+Non-Executive
+Director
+Zhang Jiming
+President
+Vice President
+Appointed
+Resigned
+Xu Mingjun
+Vice President
+Appointed
+Zhang Guangde
+Vice President
+Appointed
+Xu Shancheng
+Chief Financial
+Officer
+Appointed
+Reason for the change
+Chairman
+Elected at the extraordinary general
+meeting on 27 April 2018
+Mi Shuhua
+Ling Wen
+Limited
+JD.com, Inc.
+WH Group Limited
+Independent Director
+Independent Director
+360 Security Technology Inc. Independent Director
+March 2014
+July 2014
+February 2018
+2018 Annual Report 149
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+III. REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Decision-making procedures The remuneration package of directors and supervisors was
+Basis for determination
+Actual payment of
+remuneration
+Total remuneration actually
+obtained as at the end of
+the reporting period
+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.
+The remuneration package of relevant directors and supervisors
+was proposed by the Company in accordance with international
+and domestic practices and with reference to the remuneration of
+directors and supervisors of large-scale listed companies in China.
+The remuneration package of 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.
+Please refer to "Changes in shareholding and remuneration" in this
+section
+Please refer to "Changes in shareholding and remuneration" in this
+section
+150
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+IV. CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Name
+Gao Song
+Education Level
+Senior Management and Employees (Continued)
+Assistant to General
+Deputy General
+November 2017
+Manager, member
+of the Leading Party
+Members' Group
+GD Power
+Director
+September 2012
+CHN Energy Dadu
+Chairman
+July 2018
+River Hydropower
+Development Co.,
+Ltd.
+Management of
+China Energy
+Gao Song
+Members' Group
+of the Leading Party
+Commencement of Expiry of
+Positions
+term of office
+term of office
+Directors of China Ling Wen
+Shenhua
+China Energy
+Director, General
+CHN Energy Jinsha Chairman
+November 2017
+secretary to the
+Leading Party
+Members' Group
+Deputy General
+Li Dong
+China Energy
+November 2017
+Manager, member
+manager, Deputy
+Name of
+shareholder
+June 2018
+Hydropower
+Energy
+Technology
+Research Institute
+Zhao Jibin
+China Energy
+External Director
+November 2017
+2018 Annual Report 147
+148
+Section VIII Directors, Supervisors,
+Category
+Commencement of Expiry of
+Name
+Name of
+shareholder
+May 2018
+December 2016
+April 2014
+Dean
+Guodian New
+Development Co.,
+CHN Energy Jinsha Chairman
+River Benzilan
+Hydropower
+Development Co.,
+Ltd.
+Mi Shuhua
+River Xulong
+China Energy
+Manager, member
+of the Leading Party
+June 2018
+November 2017
+Members' Group
+GD Power
+Director
+Deputy General
+Name
+Ltd
+(1) Positions held in the shareholders of the Company
+Shenhua Group
+Department of Former
+Capital Operation
+May 2018
+March 2016
+General manager of
+China Energy
+Zhou Dayu
+(director level)
+May 2018
+Full-time Director
+Group Corporation
+Former Shenhua
+Ownership
+Administration of
+May 2018
+Corporation
+Director of Industrial
+Coordination
+Department
+China Energy
+Category
+Xu Mingjun
+Senior
+(director level)
+May 2018
+Full-time Director
+June 2015
+Corporation
+Building of Former
+Department of Party
+May 2018
+July 2010
+General manager of
+China Energy
+Shen Lin
+Shenhua Group
+Director of Property
+May 2018
+Zhai Richeng
+In June 2018, China Shenhua established the new session of Party Committee.
+As of the end of the reporting period, Xu Mingjun served as the secretary of
+China Shenhua Party Committee; Zhang Jiming served as the deputy secretary
+to the Party Committee; Jia Jinzhong, Huang Qing, Zhang Guangde, Yang
+Suping and Xu Shancheng served as members to the Party Committee, and
+Yang Suping also served as secretary to the Disciplinary Committee. Please see
+below for the biographical details of Yang Suping. For the biographical details
+of other Party Committee members, please refer to the paragraph headed
+"Biographical details of the Directors, supervisors and senior management as at
+the end of the reporting period" of this section.
+Name
+Yang Suping
+Secretary to the
+Disciplinary
+Committee and
+member to the Party
+Committee
+Biographical details
+Dr. Yang served as an assistant researcher in the Planning
+Division under the Planning Department of the Ministry
+of Energy Department of the State, deputy director of
+the Planning Department of Comprehensive Planning,
+Investment and Financing Department of the State
+Power Corporation, deputy director of the Planning and
+Development Department and head of the Leading Party
+Members' Group Inspection Office of China Guodian.
+The Directors and supervisors of the Company have performed their duties
+in accordance with the requirements of the Articles of Association, Rules
+of Procedure of Board Meeting and Rules of Procedure of the Supervisory
+Committee Meeting of the Company. Under the decision and authorization
+of the Board, the senior management is responsible for business operation
+of the Company. Zhang Jiming, President and Deputy Secretary to the Party
+Committee, responsible for the Board and exercises his responsibilities
+as the President in accordance with the requirements of the Articles of
+Association. Mr. Zhang presides over the daily administrative and overall work
+of the Company, and is responsible for administrative management, scientific
+and technological innovation, auditing, strategic planning, coal-to-oil chemical
+industry coordination and other works of the Company. Xu Mingjun, Secretary
+to the Party Committee and Vice President, is in charge of Party building,
+establishment of integrity, ideology and politics, cadre talents, organization of
+work, news propaganda, united front, labour union and groups and construction
+of corporate culture. Vice President and member to the Party Committee Jia
+Jinzhong is in charge of corporate governance, legal affairs and transportation
+industry work. Secretary to the Board and member to the Party Committee
+Huang Qing is in charge of Board affairs, board of supervisors affairs,
+information disclosure and investor relationship management. Zhang Guangde,
+Vice President and member to the Party Committee, is in charge of coordination
+of coal and power industry and international business. Xu Shancheng, Chief
+Financial Officer and member to the Party Committee, is in charge of financial
+operation, cost control, capital operation, property rights management and
+labour union. Yang Suping, the secretary to the Disciplinary Committee and
+member to the Party Committee, is in charge of discipline supervision and
+inspection, anti-corruption of the Party and daily patrol.
+146
+China Shenhua Energy Company Limited
+Section VIII Directors, Supervisors,
+Senior Management and Employees (Continued)
+II.
+(II) Share incentive plan awarded to directors, supervisors and senior management
+during the reporting period
+China Energy
+Applicable ✓ Not applicable
+Senior Management and Employees (Continued)
+Section VIII Directors, Supervisors,
+Born in August 1965, female, Chinese, a graduate of
+postgraduate program, with, a Ph.D degree in management,
+a senior engineer. She currently serves as the secretary
+to the Disciplinary Committee and a member to the Party
+Committee of China Shenhua Energy Company Limited.
+POSITIONS OF EXISTING DIRECTORS, SUPERVISORS AND SENIOR
+MANAGEMENT DURING THE REPORTING PERIOD
+Supervisors of
+China Shenhua
+2018 Annual Report 145
+term of office
+term of office
+Positions
+Section VIII
+Senior Management and Employees (Continued)
+Name
+Directors, Supervisors,
+Chief Financial Officer
+and member to the
+Party Committee
+Biographical details
+Born in March 1964, male, Chinese, a senior accountant
+and a member of the Communist Party of China. Mr. Xu
+has extensive experience in financial management. He
+obtained a master's degree in Economics from Renmin
+University of China in 2001.
+Mr. Xu has served as the Chief Financial Officer and
+member to the Party Committee of the Company since
+December 2018, the chairman of Shenhua (Tianjin) Finance
+Lease Co., Ltd. since August 2016, a Non-Executive
+Director of Shenhua Finance Company since August 2017
+and the Chairman of the board of supervisors of Beijing GD
+Power Co., Ltd. since March 2019.
+Mr. Xu was the secretary and deputy officer of the financial
+property department of China Energy from May 2018 to
+December 2018. He served as the general manager of the
+financial department of the Company and Shenhua Group
+Corporation Limited from August 2016 to May 2018. He
+served as the deputy general manager and chief financial
+officer of Beijing Guohua Power Company Limited, and
+Guohua Power Branch of the Company from March 2015
+to August 2016. He served as the deputy general manager
+and chief financial officer of Shenhua Guoneng Group
+Co., Ltd. and Shenhua Shendong Power Co., Ltd. from
+December 2012 to March 2015.
+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..
+The Company resolutely implemented the new requirements of political
+construction in the new era, and strengthened the overall leadership of
+the Party. The Company has formulated a Party building work plan, revised
+and improved the Articles of Association and rules and regulations of the
+Company, institutionalized the Party Committee research and discussion as a
+pre-procedure of major decision-making, and organically integrated the Party
+leadership with the improvement of corporate governance.
+Xu Shancheng
+Zhao Jibin
+Li Dong
+No
+Mi Shuhua
+No
+Gao Song
+No
+No
+meetings/
+Current Directors as at the end of the reporting period
+Board meetings Attendance in Attendance by Attendance by
+this year
+required
+attendance
+meetings in
+person or not
+Absence
+consecutive
+Person correspondence
+Tam Wai Chu, Maria Yes
+Ling Wen
+proxy
+4
+Peng Suping
+0
+at general
+1
+حب
+996 6 0 26996
+9
+98347095096
+3433343333
+No
+No
+Resigned Directors during the reporting period
+Yes
+Huang Ming
+Yes
+Zhong Yingjie, Christina
+Yes
+Jiang Bo
+Yes
+Han Jianguo
+Absent at two
+During the year ended 31 December 2018, the Company has been in full compliance with the
+provisions of principle and codes and most of the recommended best practices as specified
+therein. For the terms of functions and powers of the Board and the Board Committees under the
+Corporate Governance Code, please refer to the Articles of Association, Rules of Procedure of
+the Board and the Board Committees, which have been published on the websites of the stock
+exchanges where the Company is listed and on the Company's website. During the reporting
+period, the Company has made two amendments to the Articles of Association. For details, please
+refer to the H Share Announcements of the Company dated 27 April and 22 June 2018 and the A
+Share Announcements of the Company dated 28 April and 23 June 2018.
+Attendance at Board meetings
+Pursuant to Articles 66, 69 and 75 of the Articles of Association of China Shenhua,
+shareholders may submit written request to the Board for the convening of extraordinary
+general meetings or class meetings and submit proposals to the Company at general
+meetings. Upon providing the Company with written evidence of the class and number of
+shares of the Company held, and following verification of the shareholders' identity by the
+Company, shareholders are entitled to inspect the relevant information of the Company or
+obtain the Articles of Association, the register of shareholders, minutes of general meetings,
+resolutions of meetings of the Board and the supervisory committee, regular reports and
+financial and accounting reports, etc.
+As owners of the Company, the shareholders of the Company are entitled to the rights
+as stipulated in laws, administrative regulations and the Articles of Association of China
+Shenhua. The shareholders' general meeting is the highest authoritative body of the
+Company, through which shareholders can exercise their rights. The controlling shareholder
+takes part in the Company's operations and decision-makings through shareholders' general
+meetings and the Board.
+Shareholders' rights
+2.
+1.
+GENERAL MEETINGS
+II.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+The Company discloses information in strict compliance with the listing rules of its places
+of listing. The Company makes its investor relations hotline, fax and email available (please
+see the section headed "Company Profile and Major Financial Indicators" in this report
+for details). The Company has established an effective communication channel with
+shareholders through such information disclosure system and an investor reception system.
+156
+For the composition of the Board and securities transactions, continuous training and term
+of office of the Directors, please refer to the section headed "Directors, Supervisors, Senior
+Management and Employees" of this report. For the auditors' remuneration, please refer to the
+section headed "Significant Events" of this report. For the strategy and risk assessment of the
+Company, please refer to the section headed "Directors' Report" of this report.
+The Board of the Company has set out the board diversity policy for members of the Board, which
+I was set out in the terms of reference of the nomination committee of the Board of the Company
+and has been disclosed. When selecting the candidates in accordance with the board diversity
+policy of the Company, the Board will use a series of diversified terms, including but not limited
+to gender, age, culture and educational background, race, skills, knowledge and professional
+experience as standard, and will determine in conjunction with the characteristics and role of
+the personnel. As at the end of the reporting period, the Board of the Company consisted of
+10 Directors, including 4 Executive Directors, 1 Non-Executive Director and 5 Independent
+Non-Executive Directors; among whom 3 female Directors were included. Directors are from
+various domestic and overseas industries, and the composition of the members features diversity.
+Each Director's knowledge base and field of expertise are professional and complementary in the
+overall board structure, which guarantees the scientific decision-making of the Board.
+The convening, voting and disclosure procedures of board meetings of the Company, rules
+of procedure of the Board and procedures for nomination and appointment of Directors are in
+compliance with relevant requirements. Being a standing decision-making body of the Company,
+the Board is accountable to the shareholders' general meeting, and exercises function and power
+in accordance with the requirements of article 130 of the Articles of Association and relevant
+applicable regulatory requirements. Being a standing executive body of the Company, operating
+management comprising senior management including the President, is accountable to the Board
+and exercises function and power in accordance with the requirements of article 149 of the
+Articles of Association and relevant applicable regulatory requirements. The Articles of Association
+sets out the respective duties of the Chairman of the Board and the President in detail. The
+Chairman of the Board and the President are held by different personnel.
+The Board is responsible for implementing good corporate governance of the Company. The
+Company has been in compliance with the requirements of corporate governance policies as
+set out in Appendix 14 of the Hong Kong Listing Rules to establish its own system of corporate
+governance.
+CORPORATE GOVERNANCE
+I.
+Section IX Corporate Governance and Corporate Governance Report
+0
+2018 Annual Report 155
+Attendance
+Convening of general meetings during the reporting period
+Date
+Required
+attendance at
+Independent
+Director or not
+Name of Director
+(1) Attendance at Board meetings and general meetings
+PERFORMANCE OF DUTIES OF THE BOARD
+The shareholders' representative, supervisors' representative, witness lawyers and the
+representative of Computershare Hong Kong Investor Services Limited acted as scrutineer
+at the general meeting. The PRC legal advisor of the Company issued the legal opinion.
+Representatives of the auditors attended the Annual General Meeting and announced their
+audit opinions.
+III.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+Meetings
+China Shenhua Energy Company Limited
+All the resolutions tabled at the general meeting above were passed. The voting results
+were disclosed on the website of the Hong Kong Stock Exchange on 27 April 2018 and 22
+June 2018, respectively, and were also disclosed on the website of the Shanghai Stock
+Exchange on 28 April 2018 and 23 June 2018, respectively.
+23 June 2018
+28 April 2018
+Date of disclosure
+of the publication of
+the voting results
+The website of the Shanghai
+Stock Exchange
+The website of the Shanghai
+Stock Exchange
+Inquiry index for the
+designated website for
+publishing the voting results
+22 June 2018
+2018 First Extraordinary 27 April 2018
+General Meeting
+2017 Annual General
+Meeting
+The Company accepted registration of shareholders' attendance, and arranged a special
+session for the shareholders' effective consideration of proposals at the meeting.
+Shareholders actively participated in the meeting and were entitled to exercise their various
+rights, such as the right to know, the right of speech, the right to question and the right to
+vote. Directors, supervisors and senior management of the Company attended the meeting.
+Arranging special Q&A session in the meeting enabled interactions between shareholders
+and the management.
+0
+2/2
+0
+(1)
+(II)
+Composition of the committees
+At the end of the reporting period, the Company has established five committees under the
+Board, and the details are as follows:
+Strategy Committee
+Audit Committee
+The fourth session of the Board committees
+Remuneration Committee
+Nomination Committee
+Safety, Health and
+IV. THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD
+DURING THE REPORTING PERIOD
+Environment Committee
+Zhong Yingjie, Christina (Chairwoman), Tam Wai Chu, Maria,
+Jiang Bo
+Tam Wai Chu, Maria (Chairwoman), Jiang Bo, Zhong Yingjie,
+Christina
+Jiang Bo (Chairwoman), Huang Ming, Zhao Jibin
+Zhao Jibin (Chairman), Li Dong, Mi Shuhua, Tam Wai Chu,
+Maria, Zhong Yingjie, Christina
+Notes: 1. On 15 May 2018, Han Jianguo resigned as Director of the Company and members of Strategy
+Committee and Nomination Committee.
+2.
+3.
+On 27 April 2018, four Directors of the fourth session of the Board were elected at the 2018 first
+extraordinary general meeting of the Company, namely executive Directors Gao Song and Mi
+Shuhua, and independent non-executive Directors Peng Suping and Huang Ming.
+On 24 August 2018, the Company resolved to appoint Peng Suping as Vice Chairman of the
+Strategy Committee, Gao Song as member of the Strategy Committee under the Board, Huang
+Ming as member of the Nomination Committee, and Mi Shuhua as member of the Safety, Health
+and Environment Committee at the 12th meeting of the fourth session of the Board.
+Ling Wen (Chairman), Peng Suping (Vice Chairman), Gao
+Song, Zhao Jibin
+The duties and performance of duties of the committees
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+160
+China Shenhua,
+the Company will
+carry out the non-
+competition-related
+work.
+2018 Annual Report 159
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+No. General Meeting
+2
+2017 Annual General
+Meeting
+Subject Matter
+To approve the Agreement on
+Establishment of Joint Venture Company
+by way of Assets Reorganization
+entered between the Company and GD
+Power and to authorize the committee
+of Directors comprising Chairman,
+President (Director) and Chairman of
+the Audit Committee, to handle various
+specific matters in connection with the
+transaction at its absolute discretion.
+China Shenhua Energy Company Limited
+To approve the revision of the annual
+To approve the profit distribution plan of
+the Company for the year 2017, and to
+authorize the Chairman, the President
+(Director) to specifically implement the
+matters of profit distribution.
+To approve re-appointment of the
+external auditors for the year 2018,
+and to authorize the committee of
+Directors comprising the Chairman, the
+President (Director) and Chairman of
+the Audit Committee to determine the
+remuneration of auditors.
+Status
+The joint venture
+company has
+completed the
+industrial and
+commercial
+registration and
+obtained business
+license. Such
+transaction had been
+completed on 31
+January 2019.
+The Company has
+implemented the
+revised annual
+caps for the year
+2018 for certain
+daily connected
+transactions.
+The relevant matters
+of profit distribution
+of the Company for
+the year 2017 has
+been completed in
+the third quarter of
+2018.
+The appointment and
+the remuneration of
+auditors for the year
+2018 are set out in
+the section headed
+"Significant Events"
+in the report.
+caps of partial daily connected/related
+party transactions for the year 2018 and
+2019, and to authorize the committee
+of Directors comprising the Chairman,
+the President (Director) and Chairman of
+the Audit Committee to handle relevant
+matters.
+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:
+1.
+Strategy Committee
+Nomination Committee
+The main duties of the Nomination Committee are to formulate the board diversity
+policy, regularly review the structure, size and diversity of the Board, and to make
+recommendations to the Board with regard to any proposed changes; to assess and
+verify the independence of independent non-Executive Directors; to draft procedures
+and criteria for election and appointment of Directors, the President and other senior
+management and make recommendations to the Board; to extensively seek for
+qualified candidates of Directors, the President and other senior management; to
+examine the aforementioned candidates and make recommendations; to nominate
+candidates for members of the Board Committees (other than members of the
+Nomination Committee and the Chairman of any Board Committee); to draft
+development plans for the President, other senior management and key reserve
+talents; to review the board diversity policy where appropriate, and review the
+quantitative objectives set up by the Board to implement the board diversity policy
+and their progress of achievement, as well as to disclose the results of review in
+the Corporate Governance Report annually; and to carry out any other matters as
+authorized by the Board.
+In 2018, the Nomination Committee held five meetings to consider proposals
+including the nominations of candidates for President, Vice President, Directors of
+the fourth session of the Board and members of relevant committees under the
+fourth session of Board, all of which were approved at the meetings and all members
+attended all meetings in person.
+2018 Annual Report 163
+164
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+V.
+VI.
+5.
+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.
+Safety, Health and Environment Committee
+In 2018, the Safety, Health and Environment Committee held one meeting to consider
+and approved the 2017 CSR Report, and all members attended the meeting in person.
+THE SUPERVISION OPINION OF THE SUPERVISORY COMMITTEE
+During the reporting period, the Supervisory Committee did not have any dissenting view over
+the matters supervised by the Supervisory Committee. For details, please refer to the section
+headed" Supervisory Committee's Report" in this report.
+EXPLANATION OF INDEPENDENCE AND COMPETITION
+As at the end of the reporting period, two Vice Presidents of China Shenghua also acted
+concurrently as chief economist and general manager assistant of China Energy, but they were
+not entitled to remuneration from China Energy.
+During the reporting period, China Shenhua established a new session of Party committee,
+carried out restructuring of the headquarters and personnel reform, established several functional
+departments and industrial centers, improved the management system and process, and
+optimized operating management mechanism, establishing the daily operation mechanism of the
+state-owned enterprise in line with its own characteristics.
+There are potential peer competitions between the coal business and other business of China
+Energy Group and the major business of the Company. In accordance with the resolution on
+entering into Supplemental Agreement to the Existing Non-Competition Agreement with China
+Energy Group (effective after conditions are satisfied) considered and approved at the 2018 first
+extraordinary general meeting of the Company, China Shenhua, as an integration platform of the
+coal business of China Energy Group, will discretionally exercise the Options, the Pre-emptive
+Rights and the option to acquire pursuant to the Existing Non-Competition Agreement and the
+supplemental agreement entered between the two parties, thereby gradually reducing horizontal
+competition. For details, please refer to Section VI Performance of Commitment of this report.
+Save as disclosed above, during the reporting period, there was no material difference between
+the corporate governance of the Company and the relevant rules and requirements of the CSRC.
+China Shenhua has an independent and complete business system as well as a market-oriented
+self-operation capability. The Company is independent from its controlling shareholder in terms of
+business, personnel, assets, organization and finance.
+China Shenhua Energy Company Limited
+The principal duties of the Safety, Health and Environment Committee are to
+supervise the implementation of health, safety and environmental protection plans of
+the Company; to make recommendations to the Board or the President on material
+issues in respect of health, safety and environmental protection of the Company; to
+inquire into the material incidents regarding the Company's production, operations,
+property assets, staff or other facilities; as well as to review and supervise the
+resolution of such incidents and carry out other matters as authorized by the Board.
+In 2018, the Remuneration Committee held three meetings to consider proposals
+including the remuneration packages of Directors, supervisors and senior
+management for the year 2017 and the proposed value of the assessment indicators
+for the 2018 operating results of the Company management, all of which were
+approved at the meeting and all members attended the meetings in person or by
+phone. During the reporting period, the Remuneration Committee reviewed the
+remuneration management system of the Company and the remuneration level for
+Directors, supervisors, President and other senior management for the relevant
+period.
+The main duties of the Remuneration Committee are to make recommendations
+to the Board on formulation of the remuneration plan or proposal for Directors,
+supervisors, President and other senior management, including but not limited to the
+criteria, procedures and the major systems of performance assessment, key incentive
+and punishment plans and systems; to examine how Directors, supervisors, President
+and other senior management of the Company perform their duties and carry out
+annual performance assessment on them; to supervise the implementation of the
+remuneration system of the Company; to ensure that none of the Directors or any of
+their associates can determine their own remuneration; and to execute other matters
+as authorized by the Board.
+Remuneration Committee
+The principal duties of the Strategy Committee are to conduct researches and submit
+proposals regarding the long-term development strategies and material investment
+decisions of the Company; to conduct researches and submit proposals regarding
+material investments and financing plans which require approval of the Board; to
+conduct researches and submit proposals regarding material capital operations
+and assets operation projects which require approval from the Board; to conduct
+researches and submit proposals regarding other material matters that may affect the
+Company's development; to examine the implementation of the above matters; and
+to execute other matters as authorized by the Board.
+2018 Annual Report 161
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+2.
+In 2018, the Strategy Committee of the Board held two meetings to consider
+proposals such as the Asset Transfer Agreement entered into with Shenhua
+Shendong Power Co., Ltd., a wholly-owned subsidiary, establishment of a joint
+venture company, supplemental agreement to non-competition agreement and the
+special plan for the first batch of equity investment project in 2018, all of which were
+approved at the meetings and all members attended all meetings in person.
+Audit Committee
+The main duties of the Audit Committee were to supervise and assess the work of
+the external audit institutions; to guide the internal audit work; to review and provide
+opinions on the financial reports of the Company; to evaluate the effectiveness of
+risk management and internal control; to coordinate communications between the
+management, internal audit department, relevant departments and the external
+audit institutions; other duties authorized by the Board and other issues related to
+the relevant laws and regulations. During the reporting period, the Audit Committee
+fulfilled its duties strictly in accordance with the Rules of Procedure of Meetings of
+the Audit Committee of the Board, Rules on Work of the Audit Committee of the
+Board and Rules on Work of Annual Reports of the Audit Committee of the Board of
+China Shenhua.
+In 2018, the Audit Committee held 11 meetings to consider proposals such as the
+financial reports and internal control reports of the Company, advising on utilizing idle
+funds to increase the investment gains of the Company, improving the utilization of
+capital and rectifying problems found in internal control assessment, all of which were
+approved at the meetings and all members attended all meetings in person.
+The Audit Committee has performed required procedures for the preparation of the
+2018 annual report and internal control report of the Company:
+(1)
+(2)
+(3)
+Before the accounting firms for 2018, namely Deloitte Touche Tohmatsu
+Certified Public Accountants LLP and Deloitte Touche Tohmatsu ("Deloitte"),
+proceeded with on-site auditing, the Audit Committee had negotiation with
+Deloitte on the determination of the schedule of the Company's 2018 audit. On
+17 October 2018, the Audit Committee reviewed the Company's plans for the
+audit plan for the year 2018 and the internal control assessment plan for the
+year 2018.
+After the issue of preliminary audit opinions by Deloitte, the Audit Committee
+reviewed the draft internal control assessment report and financial statements
+for 2018. On 13 March 2019, the Audit Committee reviewed the 2018
+Assessment Report on Internal Control (Draft) and 2018 Financial Statements
+(Draft) of China Shenhua prepared by the Company.
+Deloitte completed all audit procedures within the agreed time and reported to
+the Audit Committee its intention to issue a standard unqualified audit report for
+2018. On 18 March 2019, the Audit Committee voted on and formed resolutions
+in respect of the audited annual financial and accounting statements, the
+assessment report on internal control and the social responsibility report for the
+year 2018 and agreed to submit such reports to the Board for consideration.
+The Audit Committee discussed separately with the external auditors and no
+inconsistency was found in the briefings by the management.
+162
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+3.
+4.
+resolution passed at
+the general meeting
+and the development
+strategies of
+Based on the
+The resolution passed
+at the general
+meetings has been
+implemented,
+and corporate
+governance has
+been carried out in
+accordance with the
+amended Articles of
+Association.
+Status
+0
+No
+1/1
+Number of Board meetings held during the year
+Including: Number of meetings held on-site
+Number of meetings held by correspondence
+Number of meetings held on-site with correspondence
+1432
+2018 Annual Report 157
+158
+1
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+In 2018, the Board of the Company held a total of 9 meetings, at which all the proposals
+were considered and approved. Details of the meetings are as follows:
+No. Name
+Methods
+1
+The 8th meeting of the fourth session
+of the Board
+2 January 2018
+On-site with
+correspondence
+2
+The 9th meeting of the fourth session
+of the Board
+(11)
+0
+1/1
+No
+0
+O O O O O O O O
+0132
+2
+0
+0
+0
+0
+3
+0
+0
+22222 ≥ ≥ ≥ ≥ 2
+2/2
+1/2
+1/1
+0/1
+2/2
+222
+2/2
+1/1
+2/2
+1 March 2018
+0
+On-site
+The 10th meeting of the fourth session
+of the Board
+28 December 2018
+Correspondence
+Performance of duties of independent Directors
+During the reporting period, the fourth session of the Board of the Company had five
+Independent Non-Executive Directors, namely Tam Wai Chu, Maria, Peng Suping, Jiang Bo,
+Zhong Yingjie, Christina, Huang Ming, among whom Jiang Bo and Zhong Yingjie, Christina
+are accounting professionals.
+The Company has received written confirmation from each of the Independent
+Non-Executive Directors confirming their independence. The Company is of the view that all
+of the Independent Non-Executive Directors are independent. The number and background
+of the independent Directors are in compliance with the requirements of the listing rules of
+the places of listing.
+During the reporting period, the independent Directors of the Company strictly complied
+with the requirements of relevant laws and regulations, the Articles of Association of China
+Shenhua, relevant rules of procedure of meetings and the independent Directors system of
+China Shenhua. They maintained their independence as independent Directors, performed
+their functions of supervision, participated in the formation of various important decisions of
+the Company and reviewed regular reports and financial reports of the Company. Therefore,
+the independent Directors of the Company played an important role in the regulated
+operation of the Company and protected the legitimate interests of minority shareholders.
+The Company ensured that proper conditions are in place for independent Directors to
+perform their duties and proactively adopted opinions and suggestions from independent
+Directors. The Company formulated the independent Directors system to provide, in a
+systematic way, guarantee for the independent Directors to perform their duties, and
+designated departments to undertake work related to independent Directors' affairs and
+independent board committee, assisting the independent Directors in conducting research
+and investigation, convening meetings and expressing independent opinions, etc..
+China Shenhua Energy Company Limited
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+According to the requirements of the CSRC, as the Independent Non-Executive Directors of
+China Shenhua, five Directors, namely Tam Wai Chu, Maria, Peng Suping, Jiang Bo, Zhong
+Yingjie, Christina and Huang Ming, issued independent opinions on the performance of
+duties of Li Dong and Wang Jinli as Senior Vice President of China Shenhua and the deputy
+General Manager of China Energy concurrently from March 2018 to October 2018, Wang
+Shumin as the vice president of China Shenhua and the General Manager of China Energy
+concurrently from March 2018 to October 2018, and Xu Mingjun as the vice president of
+China Shenhua and the General Manager Assistant of China Energy concurrently from
+November 2018 to December 2018 as follows: 1. Li Dong, Wang Jinli, Wang Shumin,
+Xu Mingjun was diligent and responsible to implement the development strategies and
+mission targets formulated by the Board; 2. fulfilled their commitments, handled properly
+the relationship between China Shenhua and its controlling shareholder, which safeguarded
+the interests of the Company and the shareholders as a whole, and did not prejudice the
+interests of China Shenhua and its minority shareholders due to his concurrent positions.
+The 16th meeting of the fourth session
+of the Board
+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.
+Applicable
+✓ Not applicable
+Implementation of resolutions passed at the general meetings by the Board in 2018:
+No. General Meeting
+1
+2018 First Extraordinary
+General Meeting
+Subject Matter
+To approve the amendments to the Articles
+of Association, and to authorize the
+Chairman to make amendments to the
+Articles of Association of the Company
+as he may consider necessary and
+appropriate as required by relevant
+regulatory authorities from time to time
+in the course of proposing for approval
+of/filing the Articles of Association with
+such regulatory authorities, and carry out
+or authorize to carry out relevant legal
+proceedings necessary for amendments
+to the Articles of Association.
+To approve the Supplemental Agreement
+to Non-Competition Agreement entered
+between China Shenhua and China
+Energy.
+Dissenting views of independent Directors on matters of the Company:
+9
+Correspondence
+29 November 2018
+23 March 2018
+On-site with
+correspondence
+4
+The 11th meeting of the fourth session
+of the Board
+27 April 2018
+On-site
+LO
+24 August 2018
+On-site
+5
+6
+The 12th meeting of the fourth session
+of the Board
+The 13th meeting of the fourth session
+of the Board
+13 September 2018 Correspondence
+7
+The 14th meeting of the fourth session
+of the Board
+30 October 2018
+On-site
+8
+The 15th meeting of the fourth session
+of the Board
+3
+Date
+(III) Others
+21
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 13TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+74
+2018-09-04
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 2 OF THE NEWLY CONSTRUCTED
+PROJECT OF FUPING THERMAL POWER
+73
+2018-08-29
+ANNOUNCEMENT OF CHINA SHENHUA ON THE PROPOSED IMPLEMENTATION OF
+JOINT RESTRUCTURING OF GROUP COMPANIES
+72
+2018-08-25
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 12TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+71
+2018-08-25
+SUMMARY OF 2018 INTERIM REPORT OF CHINA SHENHUA
+70
+2018-08-25
+2018 INTERIM REPORT OF CHINA SHENHUA
+69
+2018
+2018-08-18
+2018-09-14
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF JULY
+75
+ANNOUNCEMENT OF CHINA SHENHUA ON CHANGE IN SENIOR MANAGEMENT
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+AUGUST 2018
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 15TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+83
+2018-11-17
+2018-10-31
+2018-10-31
+THIRD QUARTERLY REPORT OF CHINA SHENHUA FOR THE YEAR 2018
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING ONLINE FORUM FOR INVESTORS
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+OCTOBER 2018
+82
+81
+80
+2018-10-24
+2018-10-20
+ANNOUNCEMENT OF CHINA SHENHUA ON CHANGE IN SENIOR MANAGEMENT
+INDICATIVE ANNOUNCEMENT OF CHINA SHENHUA ON TRANSFER OF STATE-OWNED
+SHARES FOR NIL CONSIDERATION
+79
+78
+2018-10-17
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+SEPTEMBER 2018
+77
+2018-09-19
+2018-09-14
+76
+2018-11-30
+68
+2018-07-30
+2018-08-04
+Date of
+Publication
+(published on the website of the Shanghai Stock Exchange)
+No.
+Disclosure Document for A Shares
+Section XII Index to Information Disclosure (Continued)
+173
+2018 Annual Report
+2018-06-23
+59 ARTICLES OF ASSOCIATION OF CHINA SHENHUA (SECOND AMENDMENT IN 2018)
+2018-06-23
+2018-06-23
+LEGAL OPINION OF CHINA SHENHUA ON THE 2017 ANNUAL GENERAL MEETING
+ANNOUNCEMENT OF CHINA SHENHUA ON RESOLUTIONS APPROVED AT THE 2017
+ANNUAL GENERAL MEETING
+58
+57
+2018
+2018-06-15
+2018-06-01
+2018-06-01
+2018-05-23
+60
+88
+60
+2018-06-28
+2018-07-24
+2018
+ANNOUNCEMENT OF CHINA SHENHUA ON PROGRESS OF THE WATERMARK PROJECT
+ANNOUNCEMENT OF CHINA SHENHUA ON PROFIT ALERT FOR THE FIRST HALF OF
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 1 OF THE NEWLY CONSTRUCTED
+PROJECT OF FUPING THERMAL POWER
+2018
+67
+86
+66
+65
+69
+2018-07-18
+2018-07-14
+2018-07-12
+ANNOUNCEMENT OF CHINA SHENHUA ON THE DISTRIBUTION OF 2017 FINAL DIVIDEND 2018-06-30
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 1 OF THE NEWLY CONSTRUCTED
+PROJECT OF JIANGXI SHENHUA JIUJIANG POWER PLANT
+ANNOUNCEMENT OF CHINA SHENHUA ON THE UNAUDITED BALANCE SHEET AND
+PROFIT STATEMENT OF SHENHUA FINANCE CO., LTD. FOR THE FIRST HALF OF 2018
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF JUNE
+64
+63
+80
+61
+62
+ཅ8
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 2 OF THE NEWLY CONSTRUCTED
+PROJECT OF JIANGXI SHENHUA JIUJIANG POWER PLANT
+2018-05-16
+84
+85
+supervisors
+Subject matter
+Poll results
+The 9th meeting of the fourth session 30 October
+Beijing
+On-site
+All
+Proposal of the 2018 Third
+Passed
+of the Supervisory Committee
+Quarterly Report of the
+unanimously
+Company
+Proposal of the 2018 Third
+Passed
+Company
+The 10th meeting of the fourth
+session of the Supervisory
+Committee
+29 November Beijing
+In writing All
+Meeting
+Proposal of entering into the
+Venue
+Meeting
+Proposal of the 2018 First
+Passed
+Quarterly Financial Report of the
+unanimously
+Company
+The 8th meeting of the fourth session 24 August Beijing
+of the Supervisory Committee
+On-site All
+Proposal of the 2018 Interim
+Report of the Company
+Passed
+unanimously
+Proposal of the 2018 Interim
+Financial Report of the Company unanimously
+Passed
+168
+China Shenhua Energy Company Limited
+II.
+Section X Supervisory Committee's Report (Continued)
+Method of Attendance of
+Date
+86
+Quarterly Financial Report of the unanimously
+Agreement on Establishment of
+Energy Company Limited
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE LAWFUL
+OPERATION OF THE COMPANY
+The Supervisory Committee is of the opinion that the Board and the management of the Company
+I have acted in strict accordance with the Company Law, the Articles of Association and the
+relevant regulations of the jurisdiction where the Company is listed, performed their duties with
+integrity and diligence and conscientiously implemented the resolutions of, and exercised the
+power granted by the general meetings; and that the decisions and operations are in compliance
+with the laws and regulations and the Articles of Association. During the reporting period, the
+Supervisory Committee is not aware of any act committed by the Board and the management of
+the Company during their performance of duties which were in breach of laws, regulations and
+the Articles of Association or prejudicial to the interests of the Company.
+2018 Annual Report 169
+170
+Section X Supervisory Committee's Report (Continued)
+III.
+INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+FINANCIAL POSITION OF THE COMPANY
+The Supervisory Committee is of the opinion that the financial statements of the Company give
+an objective, true and fair view of the financial position and the operating results of the Company
+in all material aspects and are true and reliable with its regulated financial audit and sound internal
+control system.
+IV. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE MAJOR
+ACQUISITION AND DISPOSAL OF ASSETS OF THE COMPANY
+During the reporting period, there were no major acquisition and disposal of assets of the
+Company.
+China Shenhua Energy Company Limited
+174
+2018-11-30
+ANNOUNCEMENT OF CHINA SHENHUA ON FOREIGN INVESTMENT AND PROGRESS
+OF CONNECTED TRANSACTIONS
+86
+2018-11-30
+2018-11-30
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE TENTH
+MEETING OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE
+INDEPENDENT OPINIONS OF INDEPENDENT NON-EXECUTIVE DIRECTORS OF CHINA
+SHENHUA ON RELEVANT RESOLUTIONS REGARDING THE 15TH MEETING OF THE
+FOURTH SESSION OF THE BOARD
+Railway and China Shenhua
+Supplemental Agreement to the
+Agreement between the China
+Transactions Framework
+the Joint Venture Company by
+way of Assets Reorganizations
+between GD Power
+Development Co., Ltd. and
+China Shenhua Energy Company
+Limited
+Proposal of the Articles of
+Association of the Joint Venture
+Company established by way
+of Assets Reorganizations
+entered into between GD Power
+Development Co., Ltd. and
+China Shenhua Energy Company
+Limited
+Passed
+unanimously
+Passed
+unanimously
+The 11th meeting of the fourth
+session of the Supervisory
+Committee
+28 December Beijing In writing All
+Proposal of entering into the
+Passed
+Continuing Connected
+unanimously
+2018-05-16
+ANNOUNCEMENT OF CHINA SHENHUA ON THE PARTICIPATION IN GROUP RECEPTION
+DAY FOR INVESTORS OF LISTED COMPANIES IN BEIJING
+ANNOUNCEMENT OF CHINA SHENHUA ON RESIGNATION OF DIRECTORS
+ANNOUNCEMENT OF CHINA SHENHUA ON RESIGNATION OF SUPERVISORS
+INFORMATION ON 2017 ANNUAL GENERAL MEETING OF CHINA SHENHUA
+ANNOUNCEMENT OF CHINA SHENHUA ON RESIGNATION OF VICE PRESIDENT
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF MAY
+56
+23
+2018-03-02
+22
+21 ANNOUNCEMENT OF CHINA SHENHUA ON ENTERING INTO THE SUPPLEMENTAL
+AGREEMENT TO THE EXISTING NON-COMPETITION AGREEMENT THAT WILL
+BECOME EFFECTIVE AFTER CONDITIONS ARE SATISFIED
+ANNOUNCEMENT OF CHINA SHENHUA ON DAILY RELATED TRANSACTIONS
+2018-03-02
+1
+2018-03-02
+2018-03-02
+2018-03-02
+STATEMENT OF CANDIDATES FOR INDEPENDENT DIRECTORS OF CHINA SHENHUA
+STATEMENT OF NOMINEES FOR INDEPENDENT DIRECTORS OF CHINA SHENHUA
+ANNOUNCEMENT OF CHINA SHENHUA ON FOREIGN INVESTMENT AND CONNECTED
+TRANSACTIONS
+20
+19
+18
+2018-03-02
+2018-03-02
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE FIFTH
+MEETING OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE
+INDEPENDENT OPINIONS OF INDEPENDENT DIRECTORS OF CHINA SHENHUA ON
+RELEVANT RESOLUTIONS REGARDING THE NINTH MEETING OF THE FOURTH
+SESSION OF THE BOARD
+17
+16
+2018-03-02
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE NINTH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+H SHARES CIRCULAR OF CHINA SHENHUA
+15
+2018-03-13
+NOTICE OF CHINA SHENHUA ON CONVENING OF 2018 FIRST EXTRAORDINARY
+GENERAL MEETING
+29
+28
+2018-03-24
+27
+Date of
+Publication
+SUMMARY OF 2017 ANNUAL REPORT OF CHINA SHENHUA
+(published on the website of the Shanghai Stock Exchange)
+No.
+Disclosure Document for A Shares
+Section XII Index to Information Disclosure (Continued)
+172 China Shenhua Energy Company Limited
+2018-03-24
+2017 ANNUAL REPORT OF CHINA SHENHUA
+26
+FEBRUARY 2018
+2018-03-17
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+25
+2018-03-13
+24
+2017 EVALUATION REPORT OF INTERNAL CONTROL OF CHINA SHENHUA
+2017 CSR REPORT OF CHINA SHENHUA
+ESTABLISHMENT OF JOINT VENTURE COMPANY WITH GD POWER DEVELOPMENT
+CO., LTD.
+ASSET AUDIT REPORT OF CHINA SHENHUA ON THE TARGET OF JOINT
+In 2018, capital market maintained a high attention to leading enterprises in various industries.
+By utilizing this favourable timing, the Company actively strengthened investor relation work.
+The Company also continuously engaged in honest and sufficient communication with investors
+and analysts through results announcement conferences, trading roadshows, online forums and
+other means. We have communicated with over 800 analysts and fund manager. In particular:
+communications have been made with over 270 persons at roadshows and results announcement
+conference, over 140 persons at investment forums and over 390 persons during reverse
+roadshows, investor research and conference calls and the Company has also held three online
+forums.
+SEIZING FAVORABLE OPPORTUNITIES TO ENHANCE INVESTOR RELATIONS
+In 2018, under the circumstances of the ever-changing supply and demand situation of the
+domestic coal industry, the stable coal prices with a slight decline, further promotion of
+reorganization and integration by the controlling shareholders of the Company, China Shenhua
+focused on core concerns in capital market. Firstly, the Company was engaged in in-depth and
+direct communication with investors focusing on shareholders return, use of capital, project
+investment, sales model, progress of establishment of new joint ventures and so on, and
+secondly, the Company strengthened the analysis on the changes in policy and industry, focused
+on the explanation of understanding and judgement of the Company on the future coal and
+power industry to the capital markets. Through responding to hot topics of market concerns,
+the Company enables the capital market to better understand its operating conditions and
+development direction, so as to boost the confidence of capital markets in the Company's future
+prospect.
+PROVIDING VALID INFORMATION AND RESPONDING TO MARKET CONCERNS
+In 2018, in accordance with the requirements of regulators and listing rules, the Company
+continued to promote investor protection work, in particular medium and small investors. Firstly,
+the Company actively implemented the appeals of investors. According to the recommendations
+of China Securities Investor Service Center, the contents the Company added in the Articles
+of Association including separate vote counting of minority shareholders, cumulative voting
+system, not imposing any minimum shareholding limitation for soliciting voting rights, and the
+Company shall attach attention to the opinions of minority shareholders, to further improve
+the investor protection work level of the Company, all of which were approved by a majority of
+votes at the general meeting. Secondly, the Company expanded channels and enhanced investor
+communications. The Company actively participated in the Listed Companies Reception Day
+activity in Beijing and increased the frequency of communications with investors. In investigation
+and survey on the reception site, the Company specially designated persons to answer investor
+hotline, to keep the hotline available and the daily average calls were over five. Thirdly, the
+Company improved information disclosure with 222 announcements disclosed throughout the
+year, which effectively guaranteed the investors' rights to information, thereby maintaining Grade
+A of the information disclosure evaluated by the SSE.
+PROTECT INVESTORS' LEGITIMATE RIGHTS AND INTERESTS IN COMPLIANCE
+WITH LAWS AND REGULATIONS
+III.
+II.
+I.
+In 2018, China Shenhua proactively optimised investor relations work to promote investor protection
+work and good results have been obtained.
+Section XI Investor Relations
+China Shenhua Energy Company Limited
+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.
+The insider information and insider registration and management system of the Company is
+sound and comprehensive, effective in its implementation and able to keep all insider information
+confidential.
+VII. INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE MEASURES ON INSIDER
+MANAGEMENT
+The self-assessment report on internal control of the Company has truthfully reflected the
+establishment and implementation of the internal control of the Company and its internal control
+system is sound and effective.
+VI. 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
+2018 Annual Report
+2018-03-02
+171
+Disclosure Document for A Shares
+14
+2018-03-02
+ASSET VALUATION REPORT OF CHINA SHENHUA ON THE TARGET OF JOINT
+ESTABLISHMENT OF JOINT VENTURE COMPANY WITH GD POWER DEVELOPMENT
+CO., LTD.
+13
+2018-02-13
+2018-02-06
+ANNOUNCEMENT OF CHINA SHENHUA ON FURTHER DEVELOPMENT OF PROPOSED
+IMPLEMENTATION OF JOINT RESTRUCTURING OF GROUP COMPANIES
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+JANUARY 2018
+12
+11
+2017
+2018-01-30
+ANNOUNCEMENT OF CHINA SHENHUA ON POSITIVE PROFIT ALERT FOR THE YEAR
+10
+2018-01-23
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+DECEMBER 2017
+9
+Date of
+Publication
+(published on the website of the Shanghai Stock Exchange)
+No.
+Section XII Index to Information Disclosure
+2018-03-24
+2018-03-24
+30
+ARTICLES OF ASSOCIATION OF CHINA SHENHUA (FIRST AMENDMENT IN 2018)
+ANNOUNCEMENT OF CHINA SHENHUA ON THE PROVISION OF COUNTER GUARANTEE
+BY THE SUBSIDIARY CONTROLLED BY THE COMPANY
+45
+44
+2018-04-28
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 11TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+43
+2018-04-28
+FIRST QUARTERLY REPORT OF CHINA SHENHUA FOR THE YEAR 2018
+42
+2018 FIRST EXTRAORDINARY GENERAL MEETING
+2018-04-28
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS APPROVED AT
+111
+41
+2018-04-28
+LEGAL OPINION OF CHINA SHENHUA ON 2018 FIRST EXTRAORDINARY GENERAL
+MEETING
+40
+40
+2018-04-17
+2018-04-28
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+MARCH 2018
+2018-04-28
+46
+55
+54
+53
+52
+གྷགུ
+559
+51
+2018-05-16
+2018-05-08
+NOTICE OF CHINA SHENHUA ON CONVENING OF 2017 ANNUAL GENERAL MEETING
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+APRIL 2018
+50
+49
+2018-05-08
+2018-05-04
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING ONLINE FORUM FOR INVESTORS
+H SHARES CIRCULAR OF CHINA SHENHUA
+48
+47
+2018-04-28
+ANNOUNCEMENT OF CHINA SHENHUA ON AMENDMENTS TO THE ARTICLES OF
+ASSOCIATION
+46
+39
+2018-04-11
+INFORMATION ON 2018 FIRST EXTRAORDINARY GENERAL MEETING OF CHINA
+SHENHUA
+4
+2018-01-03
+ANNOUNCEMENT OF CHINA SHENHUA ON 2018 ANNUAL BUSINESS PLAN FOR
+FINANCIAL DERIVATIVES
+3
+2018-01-03
+2018-01-03
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE EIGHTH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+ARTICLES OF ASSOCIATION OF CHINA SHENHUA
+2
+35
+34
+2018-03-24
+2018-03-24
+2017 AUDIT REPORT OF INTERNAL CONTROL OF CHINA SHENHUA
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE TENTH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+33
+32
+2018-03-24
+2018-03-24
+2017 FINANCIAL STATEMENTS AND AUDIT REPORT OF CHINA SHENHUA
+CHINA SHENHUA SPECIAL STATEMENT OF FUND UTILIZATION BY CONTROLLING
+SHAREHOLDERS AND OTHER RELATED PARITIES IN 2017
+31
+ANNOUNCEMENT OF CHINA SHENHUA ON AMENDMENTS TO THE ARTICLES OF
+ASSOCIATION
+2018-01-03
+LO
+5
+38
+38
+2018-03-24
+2018-03-24
+2017 WORK REPORT OF INDEPENDENT DIRECTORS OF CHINA SHENHUA
+SPECIAL STATEMENT AND INDEPENDENT OPINIONS OF INDEPENDENT NON-
+EXECUTIVE DIRECTORS OF CHINA SHENHUA ON EXTERNAL GUARANTEE OF THE
+COMPANY
+SHENHUA
+37
+36
+2018-03-24
+Company
+2018-03-24
+2018-01-17
+2018-01-13
+ANNOUNCEMENT OF CHINA SHENHUA ON RECEIPT OF THE QUALIFICATION OF
+NATIONAL MINE PARK FROM INNER MONGOLIA ZHUNGEER MINE PARK
+ANNOUNCEMENT OF CHINA SHENHUA ON 2017 UNAUDITED BALANCE SHEET AND
+PROFIT STATEMENTS OF SHENHUA FINANCE CO., LTD.
+8
+7
+2018-01-11
+2018-01-05
+ANNOUNCEMENT OF CHINA SHENHUA ON FURTHER DEVELOPMENT OF PROPOSED
+IMPLEMENTATION OF JOINT RESTRUCTURING OF GROUP COMPANIES
+ANNOUNCEMENT OF CHINA SHENHUA ON COMPLETION OF INDUSTRIAL AND
+COMMERCIAL REGISTRATION OF CHANGES
+6
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE SIXTH
+MEETING OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE
+2017 PERFORMANCE REPORT OF THE AUDIT COMMITTEE OF THE BOARD OF CHINA
+Passed
+unanimously
+V.
+Proposal of the 2018 First
+IX.
+DESCRIPTION OF THE AUDIT REPORT ON INTERNAL CONTROL
+Deloitte Touche Tohmatsu Certified Public Accountants LLP, engaged by the Company, has issued
+the standard unqualified Audit Report on Internal Control. The Audit Report on Internal Control
+is of the opinion that as at 31 December 2018, China Shenhua had maintained effective internal
+control over its financial reporting in all material aspects in accordance with the Basic Standard
+for Enterprise Internal Control and the relevant requirements. The above audit opinions are in line
+with the opinions set out in the Self-assessment Report of the Board.
+Please refer to the relevant announcement disclosed by the Company on the website of the
+Shanghai Stock Exchange on 23 March 2019 for the 2018 Assessment Report on Internal Control
+and Audit Report on Internal Control.
+2018 Annual Report 167
+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.
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+I.
+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.
+In 2018, the Supervisory Committee of the Company held seven meetings in total.
+Method of Attendance of
+Meeting
+Date
+Venue
+Meeting
+PERFORMANCE OF DUTIES OF THE SUPERVISORY COMMITTEE
+supervisors
+China Shenhua Energy Company Limited
+Material defects in the internal control during the reporting period:
+Quarterly Report of the
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+VII. THE EXAMINATION AND EVALUATION AND THE INCENTIVE MECHANISM
+FOR THE SENIOR MANAGEMENT
+The Company established the remuneration package of the senior management in accordance
+with the Provisional Measures for the Administration of the Annual Remuneration of the
+Senior Management of China Shenhua Energy Company Limited. The Company has adopted
+a performance appraisal system for senior management which combines annual appraisal of
+operational performance and appraisal of operational performance over the terms of office. Such
+annual appraisal and appraisal over the terms of office are conducted based on the letter of
+responsibility of operational performance signed by the Board and the management.
+The remuneration of the management is determined in accordance with the Provisional Measures
+for the Administration of the Annual Remuneration of the Senior Management. In addition to
+the basic salary, the Board of the Company conducts appraisal based on the performance of the
+management, and a performance bonus is determined based on the results of such appraisal.
+VIII. INTERNAL CONTROL AND RISK MANAGEMENT
+The Company has established a risk-oriented internal control system. The internal control and risk
+management procedures of the Company include risk assessment and reporting at the beginning
+of the year, quarterly major risk monitoring, daily system risk review and specialized supervision
+and inspection on internal control, and annual internal control evaluation, forming an integrated
+closed-loop management system. Also, a hierarchical work organizational structure comprising
+the Board and the Audit Committee, the functional departments of the headquarters and the
+subsidiaries and branches of the Company was established to safeguard the effective operation of
+internal control and risk management. The Board is responsible for risk management and internal
+monitoring and control systems, and is accountable for reviewing the effectiveness of such
+systems. The Board conducts review on risk management and internal monitoring and control
+systems once a year. The Board considers that the risk management and internal monitoring and
+control systems of the Group were effectively operated in 2018.
+Applicable ✓ Not applicable
+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.
+2018 Annual Report 165
+166
+An internal control supervision and inspection mechanism was formed to conduct evaluation on
+internal control on annual basis. Procedures for internal control evaluation include: formulating
+a proposal for internal control evaluation, establishing a working committee of internal control
+inspection, conducting self-evaluation on internal control, conducting evaluation on internal
+control by inspectors, communicating and identifying deficiencies in internal control, rectifying
+deficiencies in internal control and preparing report on internal control. The Company has
+evaluated the effectiveness of internal control for 2018 in accordance with the aforementioned
+procedures.
+The 2018 Proposal for Internal Control Evaluation of the Company was considered and approved
+by the Audit Committee under the Board, and the 2018 Annual Report on Internal Control
+Evaluation was considered and approved by the Board. The Board and the Audit Committee of the
+Company are of the view that such inspection and supervision mechanism is able to evaluate the
+effectiveness of internal control and risk management operation of the Company.
+According to the evaluation, during the reporting period, all businesses and matters involving
+major risks have been included in the scope of evaluation, and internal control system has
+been established for and effectively implemented on major businesses and matters, which
+accomplished the objectives of internal control of the Company.
+As presented in the 2018 Annual Self-assessment Report on Internal Control of the Board, no
+material defects were found in the internal control of financial reporting as at the base date of the
+Assessment Report on Internal Control, pursuant to the identification of material defects the
+internal control over the financial reporting of the Company. The Board is of the opinion that the
+Company has maintained effective internal control over its financial reporting in all material aspects
+in accordance with the requirements under the Enterprise Internal Control Normative System and
+relevant regulations and its supplementary guidelines as well as other regulatory requirements
+on internal control. Based on the identification of material defects in the internal control over
+non-financial reporting of the Company, no material defects were identified by the Company in
+the internal control over non-financial reporting as at the base date of the Assessment Report on
+Internal Control. Nothing that would affect the evaluation result of the effectiveness of internal
+control occurred from the base date of the Assessment Report on Internal Control to the date of
+issuance of the Assessment Report on Internal Control.
+Regarding the treatment and publishing of inside information, the Company has formulated
+internal systems such as the Administrative Measures for the Insider Information and Insider
+Registration and the Administrative Measures for Information Disclosure of Internal Report for
+Material Matters, which stipulated, among others, the scope of insider information and insiders,
+reporting process, registration and filing, and prohibited behaviors. The scope of insiders is under
+strict control so as to eliminate the risk of insider information leakage.
+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.
+Subject matter
+Section IX Corporate Governance and Corporate Governance Report (Continued)
+Beijing
+distribution plan of the Company unanimously
+Proposal of the 2017 CSR Report
+Passed
+of the Company
+unanimously
+Proposal of the 2017 Assessment
+Passed
+Passed
+Report on Internal Control of the
+Proposal of the Supervisory
+Committee's report of the
+Company for the year 2017
+The 7th meeting of the fourth session 27 April Beijing
+of the Supervisory Committee
+On-site
+The 5th meeting of the fourth session 1 March
+of the Supervisory Committee
+All
+unanimously
+Proposal of the 2017 profit
+Company
+Report of the Company
+Proposal of entering into the
+Supplemental Agreement to
+the Existing Non-Competition
+Agreement with the China
+Energy Investment Corporation
+Limited that will become
+effective after conditions are
+satisfied
+On-site All
+unanimously
+Proposal of the establishment
+of joint venture company and
+entering into the Agreement on
+Establishment of Joint Venture
+Company by way of Assets
+Passed
+unanimously
+Passed
+unanimously
+Reorganization
+Poll results
+All
+Passed
+Proposal of the 2017 Annual
+Passed
+Report of the Company
+Proposal of the 2017 Financial
+The 6th meeting of the fourth session 23 March Beijing On-site
+of the Supervisory Committee
+unanimously
+2018 ANNUAL BUSINESS PLAN FOR FINANCIAL DERIVATIVES
+2018-01-02
+OVERSEAS REGULATORY ANNOUNCEMENT
+234
+2018-01-02
+Date of
+publication
+2018-01-02
+1
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 DECEMBER 2017
+LO
+APPOINTMENT OF NEW CHAIRMAN AND RE-DESIGNATION OF DIRECTOR AND
+CHANGE OF PRESIDENT
+7
+5
+POSITIONS HELD BY CURRENT DIRECTORS AT THE BOARD AND THE BOARD
+COMMITTEES
+2018-01-02
+6
+AMENDMENTS TO THE ARTICLES OF ASSOCIATION
+2018-01-02
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-01-02
+8
+FURTHER DEVELOPMENT OF PROPOSED IMPLEMENTATION OF JOINT
+No. (published on the website of Hong Kong Stock Exchange)
+2018-01-04
+2018-01-02
+Disclosure document for H Shares
+80
+2018-12-29
+RESTRUCTURING OF GROUP COMPANIES
+178
+177
+2018 Annual Report
+2018-09-18
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF AUGUST 2018
+109
+2018-09-13
+No.
+87
+Section XII Index to Information Disclosure (Continued)
+Disclosure Document for A Shares
+2018-12-29
+(published on the website of the Shanghai Stock Exchange)
+Date of
+Publication
+2018-12-01
+88
+89
+ANNOUNCEMENT OF CHINA SHENHUA ON CHANGE IN SENIOR MANAGEMENT
+ANNOUNCEMENT OF CHINA SHENHUA ON THE MAJOR OPERATIONAL DATA OF
+NOVEMBER 2018
+2018-12-15
+2018-12-18
+90
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 16TH
+MEETING OF THE FOURTH SESSION OF THE BOARD
+2018-12-29
+91
+92
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING RESOLUTIONS AT THE 11TH
+MEETING OF THE FOURTH SESSION OF THE SUPERVISORY COMMITTEE
+ANNOUNCEMENT OF CHINA SHENHUA ON CONTINUING CONNECTED TRANSACTION
+ANNOUNCEMENT OF CHINA SHENHUA REGARDING THE COMPLETION OF THE 168-
+HOUR TRIAL OPERATION OF GENERATOR No. 1 OF SHENWAN LUJIANG POWER
+PLANT
+9
+2018-03-01
+2018-01-10
+22222222
+19 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-01
+20
+OVERSEAS REGULATORY ANNOUNCEMENT
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-01
+Section XII Index to Information Disclosure (Continued)
+OVERSEAS REGULATORY ANNOUNCEMENT
+23 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-01
+2018-03-01
+24
+OVERSEAS REGULATORY ANNOUNCEMENT
+25
+OVERSEAS REGULATORY ANNOUNCEMENT
+26
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-01
+APPOINTMENT OF NEW PRESIDENT
+108
+2018-09-13
+CHANGE OF SENIOR MANAGEMENT
+107
+2018-09-13
+2018-09-07
+21
+COMPLETION OF INDUSTRIAL AND COMMERCIAL REGISTRATION OF CHANGES
+2018-02-28
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF JANUARY 2018
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 28 FEBRUARY 2018
+10
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-01-12
+11
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-01-16
+12
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF DECEMBER 2017
+2018-01-22
+13
+ANNOUNCEMENT ON POSITIVE PROFIT ALERT FOR 2017
+2018-01-29
+14
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-01-29
+15
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 JANUARY 2018
+2018-01-31
+16
+FURTHER DEVELOPMENT OF PROPOSED IMPLEMENTATION OF JOINT
+2018-02-05
+RESTRUCTURING OF GROUP COMPANIES
+17
+18
+100
+2018-02-12
+Disclosure document for H Shares
+2018-11-29
+(published on the website of Hong Kong Stock Exchange)
+evaluating the historical accuracy of the
+forecasted future cash flows by comparing
+them to the actual results in the current year
+on a sampled basis and understanding the
+causes of any significant variances; and
+evaluating the sensitivity analysis performed
+by management;
+analysing and reviewing the specific discount
+rates used by management in impairment
+tests;
+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;
+assessing the valuation methodology;
+testing the key controls related to the
+assessment on the carrying value of its non-
+current assets;
+•
+Our procedures in relation to impairment
+assessment on coal mines related non-current
+assets included:
+As set out in Note 17 to the consolidated financial
+statements, the management concluded that
+the recoverable amount of each separate cash-
+generating unit was higher than their carrying value
+and no impairment provision was required for the
+current year. The recoverable amounts of each
+cash-generating unit were determined by value in
+use method.
+Owing to the unsatisfactory financial performance of
+certain Group's mines, the management identified
+certain non-current assets relating to coal mines
+having impairment indications. The impairment
+assessment involves management's judgment in
+certain areas including the discount rate and the
+underlying cash flows projection based on the
+future market supply and demand conditions. Any
+changes in management's judgement may result in
+significant financial impact to the Group.
+We identified non-current assets impairment
+assessment on coal mines related non-current
+assets as a key audit matter due to significant
+judgment made by management in determining the
+recoverable amounts of the corresponding cash-
+generating units.
+Impairment assessment on coal mines related non-current assets
+How our audit addressed the key audit matter
+Key audit matter
+KEY AUDIT MATTERS (CONTINUED)
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+180
+2018 Annual Report 179
+Key audit matters are those matters that, in our professional judgment, were of most significance in our
+audit of the consolidated financial statements of the current period. These matters were addressed in
+the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
+thereon, and we do not provide a separate opinion on these matters.
+KEY AUDIT MATTERS
+We conducted our audit in accordance with Hong Kong Standards on Auditing ("HKSAS") issued by the
+Hong Kong Institute of Certified Public Accounts ("HKICPA"). Our responsibilities under those standards
+are further described in the Auditor's Responsibilities for the Audit of the Consolidated Financial
+Statements section of our report. We are independent of the Group in accordance with the HKICPA's
+Code of Ethics for Professional Accountants (the "Code"), and we have fulfilled our other ethical
+responsibilities in accordance with the Code. We believe that the audit evidence we have obtained is
+sufficient and appropriate to provide a basis for our opinion.
+BASIS FOR OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated
+financial position of the Group as at 31 December 2018, and of its consolidated financial performance
+and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") issued by the International Accounting Standard Board ("IASB") and have
+been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies
+Ordinance.
+We have audited the consolidated financial statements of China Shenhua Energy Company Limited
+(the "Company") and its subsidiaries (collectively referred to as the "Group") set out on pages 183 to
+297, which comprise the consolidated statement of financial position as at 31 December 2018, and the
+consolidated statement of profit or loss and other comprehensive income, consolidated statement of
+changes in equity and consolidated statement of cash flows for the year then ended, and notes to the
+consolidated financial statements, including a summary of significant accounting policies.
+OPINION
+reconciling input data to supporting
+evidence, such as approved budgets and
+considering the reasonableness of these
+budgets.
+TO THE SHAREHOLDERS OF CHINA SHENHUA ENERGY COMPANY LIMITED
+(incorporated in the People's Republic of China with limited liability)
+OTHER INFORMATION
+Our opinion on the consolidated financial statements does not cover the other information and we do
+not express any form of assurance conclusion thereon.
+Hong Kong
+Certified Public Accountants
+Deloitte Touche Tohmatsu
+The engagement partner on the audit resulting in the independent auditor's report is Yam Siu Man.
+From the matters communicated with those charged with governance, we determine those matters
+that were of most significance in the audit of the consolidated financial statements of the current period
+and are therefore the key audit matters. We describe these matters in our auditor's report unless law or
+regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
+determine that a matter should not be communicated in our report because the adverse consequences
+of doing so would reasonably be expected to outweigh the public interest benefits of such
+communication.
+We also provide those charged with governance with a statement that we have complied with relevant
+ethical requirements regarding independence, and to communicate with them all relationships and other
+matters that may reasonably be thought to bear on our independence, and where applicable, related
+safeguards.
+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.
+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 XIII Independent Auditor's Report and Financial Statements (Continued)
+2018 Annual Report 181
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
+estimates and related disclosures made by the directors.
+Obtain an understanding of internal control relevant to the audit in order to design audit
+procedures that are appropriate in the circumstances, but not for the purpose of expressing an
+opinion on the effectiveness of the Group's internal control.
+Identify and assess the risks of material misstatement of the consolidated financial statements,
+whether due to fraud or error, design and perform audit procedures responsive to those risks, and
+obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
+of not detecting a material misstatement resulting from fraud is higher than for one resulting from
+error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
+override of internal control.
+As part of an audit in accordance with HKSAs, we exercise professional judgment and maintain
+professional skepticism throughout the audit. We also:
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
+as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's
+report that includes our opinion solely to you, as a body, in accordance with our agreed terms of
+engagement, and for no other purpose. We do not assume responsibility towards or accept liability to
+any other person for the contents of this report. Reasonable assurance is a high level of assurance,
+but is not a guarantee that an audit conducted in accordance with HKSAs will always detect a material
+misstatement when it exists. Misstatements can arise from fraud or error and are considered material if,
+individually or in the aggregate, they could reasonably be expected to influence the economic decisions
+of users taken on the basis of these consolidated financial statements.
+Those charged with governance are responsible for overseeing the Group's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS
+In preparing the consolidated financial statements, the directors are responsible for assessing the
+Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern
+and using the going concern basis of accounting unless the directors either intend to liquidate the Group
+or to cease operations, or have no realistic alternative but to do so.
+The directors of the Company are responsible for the preparation of the consolidated financial
+statements that give a true and fair view in accordance with IFRSS issued by the IASB and the disclosure
+requirements of the Hong Kong Companies Ordinance, and for such internal control as the directors
+determine is necessary to enable the preparation of consolidated financial statements that are free from
+material misstatement, whether due to fraud or error.
+RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE
+FOR THE CONSOLIDATED FINANCIAL STATEMENTS
+Section XIII Independent Auditor's Report and Financial Statements (Continued)
+China Shenhua Energy Company Limited
+In connection with our audit of the consolidated financial statements, our responsibility is to read the
+other information and, in doing so, consider whether the other information is materially inconsistent with
+the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to
+be materially misstated. If, based on the work we have performed, we conclude that there is a material
+misstatement of this other information, we are required to report that fact. We have nothing to report in
+this regard.
+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.
+德勤
+Deloitte.
+Section XIII Independent Auditor's Report and Financial Statements
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 OCTOBER 2018
+118
+2018-10-30
+OVERSEAS REGULATORY ANNOUNCEMENT
+117
+2018-10-30
+OVERSEAS REGULATORY ANNOUNCEMENT
+116
+2018-10-30
+THIRD QUARTERLY REPORT FOR THE YEAR 2018
+115
+2018-10-23
+TRANSFER OF A SHARES BY THE CONTROLLING SHAREHOLDER FOR NIL
+CONSIDERATION
+114
+2018-10-19
+CHANGE OF SENIOR MANAGEMENT
+113
+2018-10-16
+2018-10-16
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF SEPTEMBER 2018
+NOTICE OF BOARD MEETING
+112
+111
+2018-10-02
+110 MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 30 SEPTEMBER 2018
+Date of
+publication
+2018-10-31
+119
+120
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF OCTOBER 2018
+DISCLOSEABLE TRANSACTION; CONNECTED TRANSACTION- ANNOUNCEMENT ON
+China Shenhua Energy Company Limited
+2018-12-28
+CONTINUING CONNECTED TRANSACTIONS-ENTERING INTO CONTINUING CONNECTED
+TRANSACTIONS FRAMEWORK AGREEMENT
+130
+2018-12-28
+CHANGE IN SENIOR MANAGEMENT
+129
+2018-12-28
+2018-12-17
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF NOVEMBER 2018
+OVERSEAS REGULATORY ANNOUNCEMENT
+128
+127
+No.
+2018-12-14
+126
+2018-11-30
+125 MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 30 NOVEMBER 2018
+2018-11-30
+NOTIFICATION LETTER AND REQUEST FORM TO REGISTERED SHAREHOLDER
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-11-29
+122 OVERSEAS REGULATORY ANNOUNCEMENT
+123 OVERSEAS REGULATORY ANNOUNCEMENT
+124 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-11-29
+FURTHER DEVELOPMENT OF THE ESTABLISHMENT OF JOINT VENTURE COMPANY
+CHANGE IN SENIOR MANAGEMENT
+121
+2018-11-29
+2018-11-16
+CHANGE OF SENIOR MANAGEMENT
+106
+2018-08-03
+2018-09-07
+38
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-12
+39
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF FEBRUARY 2018
+2018-03-16
+40 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-23
+41
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-23
+42
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-23
+43
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-03-23
+44
+45
+ANNOUNCEMENT OF ANNUAL RESULTS FOR THE YEAR ENDED 31 DECEMBER 2017
+2017 ANNUAL REPORT
+2018-03-23
+2018-03-25
+46
+2017 CSR REPORT
+2018-03-25
+2018-03-12
+47
+2018-03-12
+NOTIFICATION LETTER AND REQUEST FORM TO REGISTERED SHAREHOLDER
+NOTIFICATION LETTER AND REQUEST FORM TO NON REGISTERED HOLDER
+NOTICE OF BOARD MEETING
+(published on the website of Hong Kong Stock Exchange)
+27
+28
+DISCLOSEABLE TRANSACTION; CONNECTED TRANSACTION – ENTERING INTO JOINT
+VENTURE AGREEMENT
+CONNECTED TRANSACTION - AMENDMENTS TO THE EXISTING NON-COMPETITION
+AGREEMENT
+29 CONTINUING CONNECTED TRANSACTIONS - REVISION OF ANNUAL CAPS OF THE
+CONTINUING CONNECTED TRANSACTIONS
+23
+30 PROPOSED APPOINTMENTS OF DIRECTORS
+31
+DISCLOSEABLE TRANSACTION; CONNECTED TRANSACTION; CONTINUING
+CONNECTED TRANSACTION - ENTERING INTO JOINT VENTURE AGREEMENT;
+REVISION OF ANNUAL CAPS OF CONTINUING CONNECTED TRANSACTIONS;
+AMENDMENTS TO THE EXISTING NON-COMPETITION AGREEMENT; PROPOSED
+APPOINTMENTS OF DIRECTORS; AND AMENDMENTS TO THE ARTICLES OF
+ASSOCIATION
+Date of
+publication
+2018-03-01
+2018-03-01
+2018-03-01
+2018-03-01
+2018-03-12
+32
+33
+NOTICE OF EXTRAORDINARY GENERAL MEETING
+FORM OF PROXY FOR EXTRAORDINARY GENERAL MEETING
+2018-03-12
+2018-03-12
+34
+REPLY SLIP - EXTRAORDINARY GENERAL MEETING
+2018-03-12
+35
+36
+37
+2018-03-12
+No.
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 MARCH 2018
+48
+AMENDMENTS TO THE ARTICLES OF ASSOCIATION
+57
+2018-04-27
+2018-04-27
+VOTING RESULTS OF 2018 FIRST EXTRAORDINARY GENERAL MEETING
+ARTICLES OF ASSOCIATION OF CHINA SHENHUA
+56
+55
+2018-04-27
+OVERSEAS REGULATORY ANNOUNCEMENT
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-04-10
+49
+NOTIFICATION LETTER AND REQUEST FORM TO REGISTERED SHAREHOLDER
+2018-04-13
+50
+51
+54
+2018-04-13
+2018-04-16
+52
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF MARCH 2018
+2018-04-16
+53
+2018-04-27
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-04-27
+2018-04-03
+58
+2018-04-27
+2018-05-07
+NOTIFICATION LETTER AND REQUEST FORM TO REGISTERED SHAREHOLDER
+66
+2018-05-07
+65 REPLY SLIP - ANNUAL GENERAL MEETING
+2018-05-07
+FORM OF PROXY FOR ANNUAL GENERAL MEETING
+64
+2018-05-07
+AMENDMENTS TO THE ARTICLES OF ASSOCIATION
+63
+2018-05-07
+NOTICE OF ANNUAL GENERAL MEETING
+62
+2018-05-03
+OVERSEAS REGULATORY ANNOUNCEMENT
+61
+222222
+MONTH ENDED 30 APRIL 2018
+2018-05-02
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+60
+2018-04-27
+FIRST QUARTERLY REPORT FOR THE YEAR 2018
+59
+POSITIONS HELD BY CURRENT DIRECTORS AT THE BOARD AND THE BOARD
+COMMITTEES
+Disclosure document for H Shares
+Section XII Index to Information Disclosure (Continued)
+2018 Annual Report 175
+94 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-08-17
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF JULY 2018
+93
+2018-08-08
+NOTICE OF BOARD MEETING
+92
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-08-03
+ANNOUNCEMENT ON PROFIT ALERT FOR THE FIRST HALF OF 2018
+90
+91
+2018-08-02
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 JULY 2018
+89
+WATERMARK PROJECT
+2018-07-29
+VOLUNTARY ANNOUNCEMENT-ANNOUNCEMENT ON PROGRESS OF THE
+88
+2018-07-23
+OVERSEAS REGULATORY ANNOUNCEMENT
+87
+2018-07-17
+OVERSEAS REGULATORY ANNOUNCEMENT
+86
+2018-07-13
+2018-08-24
+OVERSEAS REGULATORY ANNOUNCEMENT
+2018-08-24
+2018-08-24
+NOTIFICATION LETTER AND REQUEST FORM TO NON REGISTERED HOLDER
+104
+2018-09-03
+OVERSEAS REGULATORY ANNOUNCEMENT
+103
+2018-08-31
+2018-08-28
+INSIDE INFORMATION ANNOUNCEMENT - FURTHER DEVELOPMENT OF PROPOSED
+IMPLEMENTATION OF JOINT RESTRUCTURING OF GROUP COMPANIES
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 AUGUST 2018
+102
+101
+2018-08-26
+2018-08-24
+ANNOUNCEMENT OF INTERIM RESULTS FOR THE SIX MONTHS ENDED 30 JUNE 2018
+2018 INTERIM REPORT
+100
+99
+2018-08-24
+CHANGE IN SENIOR MANAGEMENT
+98
+COMMITTEES
+POSITIONS HELD BY CURRENT DIRECTORS AT THE BOARD AND THE BOARD
+97
+APPOINTMENT OF BOARD COMMITTEE MEMBERS
+96
+OVERSEAS REGULATORY ANNOUNCEMENT
+95
+2018-08-24
+85
+2018-07-11
+OVERSEAS REGULATORY ANNOUNCEMENT
+73
+2018-05-15
+OVERSEAS REGULATORY ANNOUNCEMENT
+72
+2018-05-15
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF APRIL 2018
+71
+2018-05-15
+POSITIONS HELD BY CURRENT DIRECTORS AT THE BOARD AND THE BOARD
+COMMITTEES
+70
+2018-05-07
+2018-05-07
+2018-05-15
+NOTIFICATION LETTER AND REQUEST FORM TO NON REGISTERED HOLDER
+RESIGNATION OF AN EXECUTIVE DIRECTOR
+69
+OVERSEAS REGULATORY ANNOUNCEMENT
+68
+67
+Date of
+publication
+(published on the website of Hong Kong Stock Exchange)
+No.
+Disclosure document for H Shares
+Section XII Index to Information Disclosure (Continued)
+176 China Shenhua Energy Company Limited
+2018-03-01
+2018-03-01
+RESIGNATION OF A SUPERVISOR
+2018-05-22
+74
+OVERSEAS REGULATORY ANNOUNCEMENT
+84
+80 00 00 00 00
+2018-07-04
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 30 JUNE 2018
+83
+2018-06-29
+2018-06-27
+2018-06-22
+81 OVERSEAS REGULATORY ANNOUNCEMENT
+82 OVERSEAS REGULATORY ANNOUNCEMENT
+80 OVERSEAS REGULATORY ANNOUNCEMENT
+2018-06-22
+ARTICLES OF ASSOCIATION OF CHINA SHENHUA
+105
+79
+VOTING RESULTS OF 2017 ANNUAL GENERAL MEETING
+78
+2018-06-14
+ANNOUNCEMENT ON THE MAJOR OPERATIONAL DATA OF MAY 2018
+77
+2018-05-31
+MONTHLY RETURN OF EQUITY ISSUER ON MOVEMENTS IN SECURITIES FOR THE
+MONTH ENDED 31 MAY 2018
+76
+2018-05-31
+RESIGNATION OF A VICE PRESIDENT
+75
+2018-05-31
+2018-06-22
+NOTIFICATION LETTER AND REQUEST FORM TO NON REGISTERED HOLDER
+NOTICE OF BOARD MEETING
+182
+Year ended 31 December
+2018
+Remeasurement of defined benefit obligations
+of income tax:
+Other comprehensive (expense) income for the year
+Items that will not be reclassified to profit or loss, net
+Profit for the year
+Income tax expense
+Profit before income tax
+Share of results of associates
+534
+1,205
+(4,416)
+448
+1,479
+(5,421)
+66
+Finance costs
+Interest income
+(1,262)
+Fair value gain on investments in equity
+Other expenses
+instruments at fair value through other
+70,141
+120
+Exchange differences
+Items that may be reclassified subsequently to profit or
+loss, net of income tax:
+11
+36
+66
+11
+(30)
+57,138
+54,164
+12
+(16,155)
+(15,977)
+10
+73,293
+comprehensive income
+(210)
+894
+(1,880)
+(173,677)
+264,101
+57
+Cost of sales
+Goods and services
+Revenue
+RMB million
+2017
+RMB million
+NOTES
+2018
+Year ended 31 December
+For the year ended 31 December 2018
+Consolidated Statement of Profit or Loss and Other Comprehensive Income
+China Shenhua Energy Company Limited
+248,746
+(160,460)
+744
+Gross profit
+88,286
+(2,844)
+12
+282
+12
+Impairment losses, net of reversal
+Other income
+Other gains and losses
+(341)
+(454)
+Research and development costs
+(9,115)
+(612)
+(725)
+(9,854)
+General and administrative expenses
+Selling expenses
+90,424
+Share of other comprehensive income (expense) of
+associates
+(152)
+(3,504)
+(3)
+9,343
+54,164
+57,138
+Total comprehensive income for the year
+attributable to:
+Equity holders of the Company
+Non-controlling interests
+44,262
+10,071
+9,303
+54,333
+56,940
+Earnings per share (RMB)
+- Basic
+16
+2.219
+2.403
+China Shenhua Energy Company Limited
+13
+22 March 2019
+10,027
+47,795
+47,637
+Equity holders of the Company
+Non-controlling interests
+4
+44,137
+Fair value gain on available-for-sale financial assets
+Other comprehensive income (expense) for the
+year, net of income tax
+Total comprehensive income for the year
+133
+(209)
+169
+54,333
+56,940
+(198)
+NOTES
+184
+Consolidated Statement of Profit or Loss and Other Comprehensive Income (Continued)
+For the year ended 31 December 2018
+Profit for the year attributable to:
+2017
+2018 Annual Report 183
+RMB million
+RMB million
+million
+million
+million
+million
+million
+RMB
+million
+million
+million
+million
+85,001
+(Note 38)
+(Note (i)) (Note (ii))
+(Note (i))
+(Note (iv))
+(Note (v))
+At 1 January 2017
+19,890
+3,612
+105
+RMB
+20,827
+million
+RMB
+Share
+RMB
+188
+Consolidated Statement of Changes in Equity (Continued)
+For the year ended 31 December 2018
+Equity attributable to equity holders of the Company
+Non-
+(14,227)
+Share
+Capital Exchange Statutory
+Other
+Retained
+controlling
+RMB
+Total
+premium
+reserve
+reserve reserves
+reserves
+earnings
+Total interests
+equity
+RMB
+RMB
+RMB
+RMB RMB
+capital
+201,767
+811
+67,994
+3,798
+358,330
+438,958
+Total non-current assets
+Current assets
+Inventories
+Accounts and bills receivables
+Prepaid expenses and other current assets
+Restricted bank deposits
+29
+2282
+26
+9,967
+11,647
+27
+13,055
+19,455
+28
+54,702
+20,452
+8,607
+2018 Annual Report 187
+production funds (Note (i))
+3,083
+316,975
+31
+16,425
+384,969
+Profit for the year
+Other comprehensive (expense) income
+47,795
+47,795 9,343 57,138
+(170)
+12
+(158)
+(40)
+(198)
+for the year
+Total comprehensive (expense) income
+for the year
+--- (170)
+12
+47,795
+47,637
+9,303 56,940
+Dividend declared (Note 15)
+Appropriation of maintenance and
+production funds (Note (i))
+Utilisation of maintenance and
+24
+29,456
+33,466
+25
+17,858
+408,837
+77,144
+331,693
+44,137
+44,137
+379,105
+73,564
+305,541
+187,516
+(14,906)
+(65) 24,493
+3,612
+85,001
+19,890
+10,027 54,164
+692
+379,105
+73,564
+305,541
+24,493 (14,214) 186,824
+(65)
+3,612
+85,001
+19,890
+(Note (iii) (Note (iv)) (Note (v))
+(Note 38) (Note (i)) (Note (ii))
+million
+(692)
+million
+-
+76
+(5,457)
+5,457
+(18,100)
+(18,100) (18,100)
+54,333
+10,071
+44,137 44,262
+49
+-
+--- 76
+Distributions to non-controlling
+16
+shareholders
+Appropriation of general reserve (Note
+production funds (Note (iii)
+Dividend declared (Note 15)
+Appropriation of maintenance and
+production funds (Note (iii)
+Utilisation of maintenance and
+income for the year
+Total comprehensive
+169
+44
+125
+-
+49
+-
+Contributions from non-controlling
+million
+million
+million million
+Profit for the year
+At 1 January 2018
+application of IFRS 9 (Note 2.2)
+Adjustment at the date of initial
+For the year ended 31 December 2018
+Consolidated Statement of Changes in Equity
+At 31 December 2017
+China Shenhua Energy Company Limited
+Executive Director
+Li Dong
+Ling Wen
+Chairman
+Other comprehensive
+The consolidated financial statements on pages 183 to 297 were approved and authorised for issue by
+the board of directors on 22 March 2019, and are signed on its behalf by:
+408,837
+73,564
+77,144
+305,541
+331,693
+285,651
+311,803
+19,890
+19,890
+38
+Total equity
+379,105
+income for the year
+Equity attributable to equity holders of the Company
+Share
+capital premium
+million
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+million
+million
+RMB
+equity
+Total interests
+earnings
+reserves
+reserve reserves
+reserve
+Total
+Non-
+controlling
+Retained
+Other
+Capital Exchange Statutory
+Share
+(3,668)
+3,668
+258
+(258)
+26,884
+33,914
+Accrued expenses and other payables
+35
+52,737
+51,995
+Current portion of medium-term notes
+33
+4,995
+Current portion of bonds
+33
+34
+3,267
+36
+457
+Income tax payable
+Contract liabilities
+4,213
+3,404
+345
+5,604
+93,467
+115,905
+Liabilities associated with assets classified
+as held for sale
+11
+29,914
+Current portion of long-term liabilities
+Accounts and bills payables
+15,785
+5,772
+(14,867) 211,506
+26,540
+11
+3,612
+85,001
+7,348
+Time deposits with original maturity over three
+months
+1,735
+1,870
+Cash and cash equivalents
+50
+30
+61,863
+71,872
+149,929
+132,644
+Assets classified as held for sale
+Total current assets
+11
+83,367
+233,296
+132,644
+Current liabilities
+Borrowings
+32
+Total current liabilities
+Deferred tax assets
+123,381
+Net current assets
+37
+3,191
+2,745
+537
+749
+Total non-current liabilities
+59,408
+76,592
+Net assets
+408,837
+379,105
+2,292
+Equity
+19,890
+At 31 December 2018
+(10)
+(10)
+(10)
+Others
+(6,867)
+(6,867)
+shareholders
+376
+376
+Share capital
+2,092
+36
+6,485
+109,915
+16,739
+Total assets less current liabilities
+468,245
+455,697
+2018 Annual Report 185
+186
+Consolidated Statement of Financial Position (Continued)
+At 31 December 2018
+Non-current liabilities
+NOTES
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Borrowings
+Bonds
+Long-term liabilities
+Accrued reclamation obligations
+Deferred tax liabilities
+33333
+32
+46,765
+64,321
+6,823
+115,905
+854
+(i)
+9,513
+Investments in bonds
+2,627
+(1,368)
+(3,431)
+Purchase of derivative financial instruments
+(111)
+(100)
+Dividend received from associates
+247
+232
+Interest received
+1,413
+1,097
+Purchase of wealth management products
+(32,447)
+(24,100)
+Offering entrusted loans
+Investments in associates
+(2,220)
+Proceeds on entrusted loans
+106
+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
+(19,385)
+(19,602)
+Increase in lease prepayments
+(1,550)
+(666)
+Proceeds on disposal of property, plant and equipment, intangible
+assets, lease prepayments and other non-current assets
+Proceeds on disposal of equity instruments at fair value through
+942
+1,342
+other comprehensive income
+2
+Proceeds on disposal of wealth management products
+108
+57,885
+Proceeds on disposal of derivative financial instruments
+59
+NET CASH GENERATED FROM OPERATING ACTIVITIES
+Increase in restricted bank deposits
+(1,207)
+(5,762)
+Proceeds on borrowings
+35,389
+24,651
+Repayments of borrowings
+(39,571)
+(14,490)
+Repayments of bonds
+(3,208)
+Repayments of short-term debentures and medium-term notes
+(5,000)
+(20,000)
+Proceeds on bills discounted
+455
+137
+Contributions from non-controlling shareholders
+376
+(5,541)
+(1,259)
+Interest paid
+RMB million
+Increase in time deposits with original maturity over three
+months
+(2,409)
+(1,827)
+Maturity of time deposits with original maturity over three
+months
+2,544
+3,385
+NET CASH (USED IN) GENERATED FROM INVESTING
+ACTIVITIES
+(53,056)
+13,363
+190
+China Shenhua Energy Company Limited
+Consolidated Statement of Cash Flows (Continued)
+For the year ended 31 December 2018
+Year ended 31 December
+2018
+RMB million
+2017
+FINANCING ACTIVITIES (Note 41)
+1,164
+95,152
+(14,008)
+Other reserves
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, and share of
+other reserves of associates.
+(v)
+Retained earnings
+Included in the retained earnings of the Group were its share of the surplus reserve of its domestic subsidiaries amounted
+to RMB25,198 million (31 December 2017: RMB22,573 million) as at 31 December 2018.
+2018 Annual Report 189
+Consolidated Statement of Cash Flows
+For the year ended 31 December 2018
+Year ended 31 December
+2018
+RMB million
+2017
+RMB million
+OPERATING ACTIVITIES
+Profit before income tax
+Adjustments for:
+Depreciation and amortisation (Note 12)
+Other gains and losses (Note 12)
+Interest income (Note 9)
+(iv)
+70,141
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve in
+2018 and 2017.
+Discretionary surplus reserve
+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 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).
+China Shenhua Energy Company Limited
+Consolidated Statement of Changes in Equity (Continued)
+For the year ended 31 December 2018
+Notes: (Continued)
+(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 maintenance and production funds
+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.
+General reserve
+Pursuant to relevant regulations issued by the Ministry of Finance, the Company's subsidiary, Shenhua Finance Co., Ltd.
+("Shenhua Finance"), is required to set aside a general reserve by the end of each financial year through appropriations
+of profit after tax as determined in accordance with China Accounting Standards at a certain ratio of the ending balance of
+gross risk-bearing assets to cover potential losses against such assets.
+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.
+88,248
+73,293
+25,340
+Decrease in accounts and bills receivables
+851
+361
+Increase in prepaid expenses and other receivables
+(762)
+(89)
+Increase (decrease) in accounts and bills payables
+40
+(1,802)
+Increase in accrued expenses and other payables
+Decrease in contract liabilities
+6,757
+5,912
+(2,027)
+Cash generated from operations
+Income tax paid
+105,077
+109,160
+(16,829)
+1,588
+23,728
+(141)
+103,190
+2,844
+1,880
+(1,479)
+(1,205)
+Share of results of associates
+(448)
+(534)
+Impairment loss, net of reversal (Note 12)
+152
+Interest expenses
+4,903
+4,910
+Exchange loss (gain), net (Note 9)
+518
+(494)
+Operating cash flows before movements in working capital
+100,359
+(Increase) decrease in inventories
+23
+Distributions to non-controlling shareholders
+(4,249)
+(5,733)
+(5,733)
+379,105
+73,564
+305,541
+(14,214) 186,824
+(65) 24,493
+3,612
+19,890 85,001
+At 31 December 2017
+Others
+shareholders
+Distributions to non-controlling
+2,000
+2,000
+shareholders
+Contributions from non-controlling
+1
+(344)
+China Shenhua Energy Company Limited
+56,141
+Current Liabilities
+Accrued expenses and other payables
+Contract liabilities
+51,995
+(5,530)
+5,530
+46,465
+5,530
+*
+The amounts in this column are before the adjustments from the application of IFRS 9.
+The following table summarises the impact of applying IFRS 15 on the Group's consolidated
+statement of financial position as at 31 December 2018 for each of the line items affected.
+Line items that were not affected by the changes have not been included.
+Impact on the consolidated statement of financial position
+As reported
+RMB million
+Adjustments
+RMB million
+Current Liabilities
+Accrued expenses and other payables
+Contract liabilities
+52,737
+3,404
+Amounts
+without
+application of
+IFRS 15
+RMB million
+3,404
+(3,404)
+Upon application of IFRS 15, advances received from customers for the sales of coal,
+power, and coal chemical products, and the provision of transportation services have been
+classified as contract liabilities instead of being included as part of accrued expenses and
+other payables under IAS 18.
+RMB million
+344
+(1,994)
+Equity instruments at fair value through other
+comprehensive income
+Other non-current assets
+Lease prepayments
+182222 222
+17
+257,349
+329,970
+36,585
+39,054
+19
+951
+998
+20
+3,623
+3,447
+10,047
+Available-for-sale investments
+1,994
+Interests in associates
+Exploration and evaluation assets
+(5,316)
+5,316
+(59,072)
+(59,072)
+(59,072)
+Appropriation of general reserve (Note
+Reserves
+Notes:
+Consolidated Statement of Financial Position
+At 31 December 2018
+NOTES
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Non-current assets
+Property, plant and equipment
+Construction in progress
+Intangible assets
+(9,515)
+2018*
+RMB million
+192
+Notes to the Consolidated Financial Statements
+For the year ended 31 December 2018
+1. PRINCIPAL ACTIVITIES AND ORGANISATION
+Principal activities
+China Shenhua Energy Company Limited (the "Company") and its subsidiaries (hereinafter
+collectively referred to as the "Group") are principally engaged in: (i) the production and sale
+of coal; and (ii) the generation and sale of coal-based power to provincial/regional electric grid
+companies in the People's Republic of China (the "PRC"). The Group operates an integrated
+railway network and seaports that are primarily used to transport the Group's coal sales from its
+mines. The primary customers of the Group's coal sales include power plants, metallurgical and
+coal chemical producers in the PRC.
+Organisation
+The Company was established in the PRC on 8 November 2004 as a joint stock limited company
+as part of the Restructuring (as defined below) of Shenhua Group, a state-owned enterprise under
+the direct supervision of the State Council of the PRC.
+Effective on 31 December 2003, the coal production and power generation operations previously
+operated by various entities wholly-owned or controlled by Shenhua Group were restructured
+and managed separately (the "Restructuring"), and those assets and liabilities related to the
+operations and businesses that were transferred to the Company were revalued by China
+Enterprise Appraisal Co., Ltd., an independent valuer registered in the PRC, as at 31 December
+2003 as required by the PRC rules and regulations.
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares
+issued to Shenhua Group represented the entire registered and paid-up share capital of the
+Company at that date.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a
+price of 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
+On 28 August 2017, Shenhua Group received the Notice regarding the Restructuring of China
+Guodian Corporation and Shenhua Group Corporation Limited (Guo Zi Fa Gai Ge [2017] No. 146)
+from the State-owned Assets Supervision and Administration Commission of the State Council,
+which approves that China Guodian Corporation (the "China Guodian") and Shenhua Group shall
+implement the joint restructuring, China Guodian shall be merged into Shenhua Group, and the
+company name of Shenhua Group shall be changed to China Energy Investment Corporation
+Limited (the "China Energy Group"). China Energy Group will be the parent company after the
+completion of the restructuring.
+On 27 November 2017, Shenhua Group has completed the industrial and commercial registration
+of changes in the business license. At 31 December 2018, the Directors consider the immediate
+parent and ultimate holding company of the Group to be China Energy Group.
+China Shenhua Energy Company Limited
+2.
+2018 Annual Report 191
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+71,872
+Cash and cash equivalents, at the end of the year
+Dividend paid to equity holders of the Company
+(18,100)
+(59,072)
+NET CASH USED IN FINANCING ACTIVITIES
+(44,715)
+(77,621)
+Net (decrease) increase in cash and cash equivalents
+(9,523)
+30,894
+Cash and cash equivalents, at the beginning of the year
+71,872
+41,188
+Effect of foreign exchange rate changes
+49
+(210)
+Cash and cash equivalents included in assets classified as held for
+sale
+(535)
+61,863
+Reclassification
+RMB million
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS")
+The Group has applied the following new and amendments to IFRSS issued by the International
+Accounting Standard Board ("IASB") for the first time in the current year:
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2.
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+New and Amendments to IFRSS that are mandatorily effective for the current year
+(Continued)
+2.1 IFRS 15 Revenue from Contracts with Customers (Continued)
+Summary of effects arising from initial application of IFRS 15
+There is no impact on retained earnings of transition to IFRS 15 at 1 January 2018.
+The following adjustments were made to the amounts recognised in the consolidated
+statement of financial position at 1 January 2018. Line items that were not affected by the
+changes have not been included.
+Carrying
+amounts
+previously
+reported at
+Carrying
+amounts
+under
+IFRS 15 at
+1 January
+31 December
+2017
+194
+New and Amendments to IFRSS that are mandatorily effective for the current year
+2018 Annual Report 193
+sale of coal chemical products
+IFRS 9
+IFRS 15
+IFRIC 22
+Amendments to IFRS 2
+Amendments to IFRS 4
+Amendments to
+International Accounting
+Standard ("IAS") 28
+Amendments to IAS 40
+Financial Instruments
+Revenue from Contracts with Customers and the related Amendments
+Foreign Currency Transactions and Advance Consideration
+Classification and Measurement of Share-based Payment Transactions
+Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
+As part of the Annual Improvements to IFRSS 2014-2016 Cycle
+Transfers of Investment Property
+Except as described below, the application of the new and amendments to IFRSS in the current
+year has had no material impact on the Group's financial performance and positions for the current
+and prior years and/or on the disclosures set out in these consolidated financial statements.
+2.1
+IFRS 15 Revenue from Contracts with Customers
+The Group has applied IFRS 15 for the first time in the current year. IFRS 15 superseded
+IAS 18 Revenue, IAS 11 Construction Contracts and the related interpretations.
+The Group has applied IFRS 15 retrospectively with the cumulative effect of initially applying
+this Standard recognised at the date of initial application, 1 January 2018. Any difference
+at the date of initial application is recognised in the opening retained earnings (or other
+components of equity, as appropriate) and comparative information has not been restated.
+Furthermore, in accordance with the transition provisions in IFRS 15, the Group has elected
+to apply the Standard retrospectively only to contracts that are not completed at 1 January
+2018 and has used the practical expedient for all contract modifications that occurred before
+the date of initial application, the aggregate effect of all of the modifications was reflected
+at the date of initial application. Accordingly, certain comparative information may not be
+comparable as comparative information was prepared under IAS 18 Revenue and IAS 11
+Construction Contracts and the related interpretations.
+The Group recognises revenue from the following major sources which arise from contracts
+with customers:
+sale of coal
+sale of power
+rendering of railway, port, shipping services
+Information about the Group's performance obligations and the accounting policies resulting
+from application of IFRS 15 are disclosed in notes 5 and 3 respectively.
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Section IV Chairman's Statement (Continued)
+China Shenhua Energy Company Limited
+Explanation on the adjustment to the separation and transfer cost of "Special payables
+for water/power/gas supply and property management": In accordance with the Notice
+of the Office of the State Council on the State-owned Assets Supervision and Administration
+Commission of the State Council and the Ministry of Finance Regarding the Guidelines Related
+to the Separation and Transfer of "Water/Power/Gas Supply and Property Management" in
+the Employee Living Areas of the State-owned Enterprises (Guo Ban Fa 2016 No. 45) ((I
+院辦公廳轉發國務院國資委、財政部關於國有企業職工家屬區「三供一業」分離移交工作指導意見
+)(201645)), the Group separated its functions of water, power and heat (gas)
+supply and property management in the employee living areas of the Group and transferred to a
+professional enterprise or institution for socialized management. In 2018, the expenses arising
+from the separation and transfer of "water/power/gas supply and property management" of
+the Group amounted to RMB1,831 million, among which, RMB1,395 million was attributable to
+equity holders of the Company. In accordance with the regulations of the relevant authorities of
+the Chinese government, the transferred assets in relation to the "water/power/gas supply and
+property management" and certain expenses in relation to the transfer shall be offset against the
+equity. While under the IFRSS, the transferred assets and related expenses shall be recognised as
+current profits and losses.
+2018 Annual Report 11
+12
+Section II Company Profile and
+Major Financial Indicators (Continued)
+IX. MAJOR FINANCIAL DATA OF EACH QUARTER OF 2018
+Revenue
+First quarter Second quarter
+Third quarter
+Fourth quarter
+(January-
+(April -
+(July-
+(October-
+March)
+June)
+September)
+operating activities
+Net cash generated from
+6,930
+12,687
+12,317
+12,203
+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.
+holders of the Company
+Profit for the period
+70,017
+66,704
+64,401
+62,979
+December)
+attributable to equity
+305,541
+331,693
+47,795
+43,867
+Enterprises
+Standards for Business
+end of 2017
+end of 2018
+2017
+45,037
+2018
+At the
+Net assets attributable to equity
+holders of the Company
+Net profit attributable to equity
+holders of the Company
+Unit: RMB million
+Under China Accounting
+VIII. DIFFERENCES IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+At the
+11,810
+327,763
+Adjustments for:
+44,137
+Reporting Standards
+(1,395)
+for water/power/gas supply
+and property management"
+Under International Financial
+cost of "Special payables
+The separation and transfer
+301,487
+4,054
+2,758
+1,665
+expenditure
+production and other related
+maintenance, safety
+Simple production
+3,930
+20,127
+35,885
+20,426
+Section IV Chairman's Statement (Continued)
+18
+2018 Annual Report 17
+MED
+୪୪୪
+As at 31 December 2018, the total market capitalisation of China Shenhua reached USD50.6 billion,
+ranking fifth, first among Chinese enterprises, in the 2018 Top 250 Global Energy Corporations published
+by PLATTS.
+2018: STRENGTHENED SYNERGY OF COAL-FIRED POWER AND ADVANTAGE OF
+INTEGRATION TO ACHIEVE OUTSTANDING PERFORMANCE
+In 2018, the Company recorded revenue of RMB264.101 billion, representing a year-on-year increase
+of 6.2%. The Company recorded profit before tax of RMB70.141 billion, profit for the year attributable
+to equity holders of the Company of RMB44.137 billion with basic earnings per share of RMB2.219,
+representing a year-on-year decrease of 4.3% and 7.7%, respectively.
+2018 was the first year of full implementation of the guiding principles of the 19th CPC National
+Congress. Guided by the Thought on Socialism with Chinese Characteristics for a New Era proposed
+by Xi Jinping, the Chinese government have upheld the underlying principle of pursuing progress while
+ensuring stability, responded effectively to the changes in the external environment in accordance with
+the requirement of high quality development, and advanced in-depth supply-side structural reform,
+through which sustained and sound development of economy, and social stability were maintained. The
+supply and demand in the national energy market continued to be generally loose, while the supply and
+demand in the coal market tended to be balanced, and thermal power generation achieved a significant
+recovery year-on-year.
+On behalf of the Board, I am delighted to present the 2018 annual report of China Shenhua and to report
+on the Company's performance for the period to all shareholders.
+Dear Shareholders,
+Section IV Chairman's Statement (Continued)
+Chairman
+Ling Wen
+China Shenhua adhered to clean development, gave full play to its advantage of integration to
+strengthen operation management, expand market, enhance quality and improve efficiency, resulting
+that the production and operation of the Company maintained at a high level. As calculated by the
+consolidated operating profit before amortisation under the IFRSS, the Company recorded RMB43.262
+billion for coal business, RMB20.743 billion for transportation business and RMB12.720 billion for power
+business in 2018 and each of the said businesses accounted for 56%, 27% and 16%, respectively. The
+high efficiency and synergy created in operation among the three major segments effectively enhanced
+the adaptability and competitiveness of the Company's business structure.
+China Shenhua Energy Company Limited
+Strong Root and Elevated Spiritual Level Guided by Party Building
+High Efficiency and Synergy, Made Further Success
+2018 Annual Report 19
+In terms of targeted poverty alleviation, the Company increased investment in poverty alleviation with
+focus on ecology, education and industry to cultivate and stimulate the endogenous power of the
+targeted subjects for assistance. In 2018, the Company invested RMB54 million poverty alleviation
+funds in three targeted counties, and carried out 22 assistance projects of all kinds, which helped 1,186
+impoverished people get removed from administrative record for poverty registering, and helped 70
+impoverished people transfer employment. The Company also invested approximately RMB43 million in
+the poverty alleviation on education and medical care through China Energy Public Welfare Foundation.
+13 subsidiaries, including Zhunneng Group, proactively invested poverty alleviation funds to provide
+targeted assistance for impoverished villages in the places where the companies are located.
+In terms of the prevention and resolution of material risks, the Company strictly strengthened
+investment management and control, with the annual investment controlled at RMB23.21 billion
+throughout the year. By advancing "lowered leverage and reduced liability", the Company recorded the
+gearing ratio of 30.9%, representing a decrease of 2.8 percentage points as compared to that at the
+beginning of the year. With the purpose of advancing in-depth supply-side structural reform, Beidian
+Shengli open pit mine implemented production capacity replacement by 8 million tonnes per year, six
+quality coal-fired generating units, including Lujiang Power Plant, were put into commercial operation,
+while the high-standard construction of Jinjie Energy Plant Phase III Project was commenced, and
+Shenmu Power was shut down.
+Exercised Responsibility, Overcame Difficulties with Joint Efforts
+The Company proactively pushed forward construction of mechanisation, automation, informationisation
+and intellectualisation, accompanied by the promotion of labor reduction and efficiency enhancement,
+and development in a safe manner. By constantly strengthening the implementation of safety and
+environmental protection responsibility, and promoting the "double prevention and control", being risk
+prevention and control and potential risk rectification, the standardisation construction of production
+safety and establishment of standard work flows of different positions were effectively promoted. In
+2018, the fatality rate per million tonne of raw coal output was 0.0126, maintaining its leading position
+worldwide in production safety. The transportation segment has achieved safe production for 1,052
+consecutive days, while 18 coal mines had a safe production cycle of over 1,000 days, and six coal
+mines and underground service units achieved safe production for 10 consecutive years.
+The Company strived to drive and stimulate new development momentum of the Company with
+technological innovation, and continuously improve the level of high-quality development. In 2018, the
+Company successfully carried out the trial production of the world's first "intelligent 8.8-meter ultra-
+mining height completed set equipment" for fully mechanized coal mining at Shendong Shangwan
+Mine; the first set of ultra-pure water hydraulic pressure support system in the country operated
+smoothly at Shendong Jinjie Mine; the "key technology of moving block system of heavy-haul railways"
+was successfully applied in the operation of Shuohuang Railway; and the automatic charged passing
+phase insulators for Shenshuo Railway was pioneering in the field in the world. Throughout the year,
+the Company obtained a total of 34 science and technology awards at provincial and ministerial level,
+including nine first awards; and was granted 581 patents, including 113 invention patents.
+Adhering to the Thought on Socialism with Chinese Characteristics for a New Era proposed by Xi
+Jinping and the Spirit of the 19th CPC National Congress, the Company implemented thoroughly the
+requirements of China Energy on party building, promoted every aspect of party building including
+persistence in anti-corruption, as well as simultaneous deployment, research, implementation and
+assessment of business and Party building; encouraged employees to make achievements in their
+positions by promoting "formation of socialism by construction", organized an ethics lecture on "a
+pillar of a great nation", the Party theme day of "new era, new mission and new responsibilities" and
+the "locomotive Pacesetter" labour competition in the transportation industry and other featured Party
+building activities, which promoted the continuous enhancement on employees' spiritual state and
+corporate governance.
+Innovation-driven, Safe Development
+The development of "macroscopic logistic" maintained a positive momentum. In 2018, the
+transportation volume of non-coal railway amounted to 15.48 million tonnes. The turnover of railway
+transportation services provided to external customers amounted to 30.7 billion tonne km, representing
+a year-on-year growth of 4.4%, which generated revenue of RMB5,877 million, representing a year-on-
+year increase of 4.7%.
+In terms of the transportation segment, the Company strengthened the connection and management
+between the upstream and the downstream, commenced operation of long-route trains, increased the
+routes of 10,000-tonne trains and 20,000-tonne trains, and enhanced the "quasi-liner shipping" operation
+mechanism, through which transportation efficiency was significantly improved. In 2018, the Company
+completed 283.9 billion tonne km of turnover volume of self-owned railway, representing a year-on-
+year increase of 4%, which recorded historical high; and 89.9 billion tonne nm of shipping volume,
+representing a year-on-year increase of 11.8%.
+In terms of the power segment, seizing the opportunities arising from the great demand of national
+electricity consumption and the favourable condition of thermal power generation, the Company
+continued to improve the reliability management of equipment to increase the volume of power
+generation. In 2018, the gross power generation reached 285.32 billion kWh and the total power
+output dispatch reached 267.59 billion kWh, representing a year-on-year increase of 8.5% and 8.7%,
+respectively. The average utilisation hours of coal-fired generating units were 4,877 hours, surpassing
+the national average utilisation hours of thermal power equipment (4,361 hours) by 516 hours. 19
+generating units won the National Thermal Power Efficiency Competition (¼ŒÂÀ¥À), and
+five generating units won the National Thermal Power Operation Reliability Competition (¼Œ¿‹ƒ³
+), with a proportion significantly higher than that of the total installed capacity of coal-fired
+generating units of the Company in the thermal power installed capacity of the state (5.4%).
+In response to national initiatives, the Company took the lead in signing a three-year long-term thermal
+coal purchase agreement, increased and guaranteed the supply of coal in the northeast and other
+regions, fully playing the role of an energy "stabiliser" and "ballast". Through scientific research and
+judgment of the market situation, careful formulation of marketing strategies and strengthening of
+organisation of coal procured externally, the Company realized maximum benefits. The sales volume of
+coal amounted to 460.9 million tonnes throughout the year, representing a year-on-year increase of 3.9%,
+of which the sales volume of seaborne coal amounted to 270.0 million tonnes, representing a year-on-
+year increase of 4.6%.
+Affected by decrease in production of certain coal mines, coal segment, however, optimized the
+production organisation in accordance with laws and regulations, resulting that the output of commercial
+coal remained relatively stable and the level of operation management was steadily improved. The
+production of commercial coal during the year amounted to 296.6 million tonnes, representing a year-
+on-year increase of 0.4%. 18 out of 19 underground coal mines of the Group were listed in the "2018
+Top 100 Chinese Coal Enterprises with Scientific Production Capacity" (2018+^*#$Æ✯¯),
+seven coal mines of which were included in Top eight, occupying top three positions.
+By leveraging the effect brought by the re-organisation and integration of China Energy Group, the
+Company continued to improve the level of integrated coal industry chain, with major indicators of
+production and operation maintaining at a high level.
+In terms of coal chemical segment, the Company continued to strengthen production organisation and
+process management to improve production efficiency, and optimise production and operation system
+to improve the level of long-term operation of equipment; kept abreast of the market conditions, and
+expanded sales channels to enhance earnings. The sales volume of coal-to-olefins products reached
+613.1 thousand tonnes in 2018, representing a year-on-year decrease of 3.2%.
+Section II Company Profile and
+Major Financial Indicators (Continued)
+16
+2018 Annual Report 15
+Section III Business Overview (Continued)
+14
+2018 Annual Report 13
+For industry conditions in which the Company operates, please refer to the section "Directors'
+Report" in the report.
+During the reporting period, the Group made no significant change in the scope of its principal
+businesses.
+In terms of sales, the Group is the largest listed coal company in China and globally with the sales
+volume of coal reaching 460.9 million tonnes and commercial coal production volume reaching
+296.6 million tonnes in 2018. The Company possesses high quality coal resources in Shendong
+Mines, Zhunge'er Mines, Shengli Mines and Baorixile Mines, etc. On 31 December 2018, the
+Company had recoverable coal reserves of 14.95 billion tonnes under the PRC Standard; the
+marketable coal reserve of 8.26 billion tonnes under the JORC Standard. The Group controls and
+operates large-scale and high capacity clean coal-fired power generators, the Group controls and
+operates power generators with installed capacity of 61,849MW by the end of 2018, with a total
+power output dispatch reaching 267.59 billion kWh in 2018. The Group controls and operates a
+network of concentric transportation railways around the major coal production bases in western
+Shanxi, northern Shaanxi and southern Inner Mongolia as well as "Shenshuo - Shuohuang Line",
+a major channel for coal transportation from western to eastern China, and it has controlled and
+operated railways with a total length of approximately 2,155 km. The transportation turnover of
+self-owned railway in 2018 reached 283.9 billion tonne km. The Group also controls and operates
+a number of ports and docks (approximately 270 million tonnes/year vessel loading capability
+in aggregate), such as Huanghua Port, possesses the shipping transportation team comprising
+its own vessels with approximately 2.18 million tonnes of loading capacity and conducts coal-
+to-olefins businesses with approximately 0.6 million tonnes/year of operation and production
+capacity. The Company's technology in coal exploitation and production safety has secured a
+leading position in the global market, and that of clean coal-fired power generation and heavy-
+loaded railway transportation has secured a leading position in domestic market. The Company
+owns or operates coal-fired power plants, coal mines and other projects in Indonesia, Australia
+and other countries.
+II.
+China Shenhua Energy Company Limited was established in Beijing in November 2004, and
+I was listed on the Hong Kong Stock Exchange in June 2005 and the Shanghai Stock Exchange in
+October 2007. The Group is principally engaged in the production and sale of coal and electricity,
+railway, port and shipping transportation, and coal-to-olefins businesses.
+I.
+Section III Business Overview
+China Shenhua Energy Company Limited
+✓ Not Applicable
+Applicable
+Explanation on the differences between quarterly data and disclosed regular reporting data:
+EXPLANATION ON PRINCIPAL BUSINESSES AND OPERATION MODEL OF THE
+COMPANY AND INDUSTRY CONDITIONS DURING THE REPORTING PERIOD
+Section IV Chairman's Statement
+III.
+In 2018, there was no material change in the major assets of the Group.
+In 2018, the Company focused on promoting the construction of digital mines and ultra-
+low emission transformation of coal-fired generators. During the reporting period, China
+Shenhua was granted a total of 581 patents, in which 113 patents were invention patents.
+(IV) Industrial technology and innovation capabilities: China Shenhua strengthens its
+industrial technology and innovation capabilities continuously. The Company's technology
+in coal green exploitation and production safety has secured a leading position in the
+global market, and that of clean coal-fired power generation and heavy-loaded railway
+transportation has secured a leading position in domestic market, basically establishing
+a unified operation model of technology and resources and a technological innovation-
+driven development model comprising scientific decision-making, systematic management,
+research and development, and transformation of achievements.
+In 2018, the Company persistently promoted the implementation of the development
+strategies of clean energy.
+(III) Management team focusing on principal business and advanced business concepts:
+The management team of China Shenhua has profound knowledge and management
+experience in the industry, attaches great importance to enhancement of the Company's
+capabilities in value creation, conducts operation with a focus on the principal businesses of
+the Company, and persistently focuses on clean generation, transportation and conversion
+in energy sector.
+Section III Business Overview (Continued)
+China Shenhua Energy Company Limited
+EXPLANATION ON MATERIAL CHANGES IN MAJOR ASSETS OF THE
+COMPANY DURING THE REPORTING PERIOD
+Coal reserve: The Group possesses an abundant pool of high-quality coal resources which
+are suitable for modern high-output and high-efficient mining. As of the end of 2018, among
+the coal mining rights possessed and controlled by the Group, the recoverable coal reserves
+are 14.95 billion tonnes under the PRC Standard; the marketable coal reserves are 8.26
+billion tonnes under the JORC Standard. The coal reserves of the Group is among the top of
+listed coal companies in China.
+Unique operation and profitability model: The Group has a large and efficient operation of
+coal and power generation business, and possesses a large-scale integrated transportation
+network consisting of railways, ports and ships, forming a core competitive advantage of
+integrated development of coal, power, transportation and coal-to-chemical industry, one-
+stop operation of production, transportation and sales, in-depth cooperation and effective
+synergy among various industrial sectors.
+(II)
+(1)
+ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+The core competitiveness of the Group is mainly:
+On 31 January 2019, the Company and Guodian Power completed the settlement of establishing
+a joint venture company, in which the equity interests and assets of the relevant coal-fired power
+companies were held by them respectively. The power generation assets of the Group decreased
+and the interests in associates increased accordingly. For details, please refer to Section V
+"Subsequent Events" of this report.
+As of 31 December 2018, the Group's total assets amounted to RMB591,626 million, representing
+an increase of 3.5% as compared with that at the end of last year, and the equity attributable to
+equity holders of the Company amounted to RMB331,693 million, representing an increase of 8.6%
+as compared with that at the end of last year. The total offshore assets of the Group (including
+Hong Kong, Macau and Taiwan) amounted to RMB25,024 million, representing 4.2% to total
+assets, which are mainly composed of the coal mine and power generation assets in Australia and
+Indonesia, and assets from U.S. dollar-denominated bonds issued in Hong Kong, the PRC.
+In 2018, the Company further promoted the in-depth supply-side structural reform,
+participated in the establishment of power generation companies, strengthened resource
+organization and transportation management, and fully developed its advantages of coal-
+power-transportation synergic effect and unified operation, resulting that the overall
+competitiveness continued to strengthen.
+China Shenhua Energy Company Limited
+Unit: RMB million
+19,890
+(5.2)
+Profit for the year attributable
+RMB million
+44,137
+47,795
+(7.7)
+to equity holders of
+the Company
+57,138
+Basic earnings per share
+2.219
+2.403
+(7.7)
+Net cash generated from
+operating activities
+RMB million
+88,248
+95,152
+RMB/share
+(7.3)
+54,164
+Profit for the year
+0.0
+10
+VII. MAJOR ACCOUNTING DATA
+Unit
+Increase/
+decrease
+in 2018 as
+compared with
+RMB million
+2018
+2017
+%
+Revenue
+RMB million
+264,101
+248,746
+6.2
+2017
+Net cash generated from
+Section II Company Profile and
+Major Financial Indicators (Continued)
+77,588
+192,497
+(5.0)
+Total equity
+RMB million
+408,837
+379,105
+7.8
+182,789
+Equity attributable to equity
+RMB million
+331,693
+305,541
+8.6
+Total share capital at the
+end of the period
+RMB million
+RMB million
+holders of the Company
+RMB million
+19,890
+571,602
+(11.8)
+87,931
+operating activities excluding
+the effect from Shenhua
+Finance Company
+Increase/
+decrease at
+the end of 2018
+3.5
+At the end of
+as compared with
+At the end of
+2018
+2017
+the end of 2017
+%
+Total assets
+Total liabilities
+RMB million
+591,626
+Unit
+Insurance Contracts³
+Leases¹
+Amendments to IAS 19
+Amendments to IAS 28
+Amendments to IFRSS
+Amendments to IFRS 3
+Amendments to IFRS 9
+Amendments to IFRS 10
+and IAS 28
+Amendments to IAS 1
+and IAS 8
+IFRIC 23
+IFRS 17
+Note: For the purposes of reporting cash flows from operating activities under indirect method for the year ended
+31 December 2018, movements in working capital have been computed based on opening statement of
+financial position as at 1 January 2018 as disclosed above.
+The Group has not early applied the following new and amendments to IFRSS that have been issued
+but are not yet effective:
+New and amendments to IFRSS in issue but not yet effective
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2.
+China Shenhua Energy Company Limited
+187,516
+IFRS 16
+Uncertainty over Income Tax Treatments'
+1
+Prepayment Features with Negative Compensation¹
+Except for the new and amendments to IFRSS mentioned below, the Directors anticipate that
+the application of all other new and amendments to IFRSS will have no material impact on the
+consolidated financial statements in the foreseeable future.
+(14,906)
+5
+Effective for business combinations and asset acquisitions for which the acquisition date is on or after the
+beginning of the first annual period beginning on or after 1 January 2020.
+4
+Effective for annual periods beginning on or after 1 January 2021.
+3
+Definition of a Business4
+Effective for annual periods beginning on or after a date to be determined.
+Effective for annual periods beginning on or after 1 January 2019.
+Annual Improvements to IFRSS 2015-2017 Cycle¹
+Long-term Interests in Associates and Joint Ventures'
+Plan Amendment, Curtailment or Settlement¹
+Definition of Material
+or Joint Venture²
+Sale or Contribution of Assets between an Investor and its Associate
+2
+Effective for annual periods beginning on or after 1 January 2020.
+FVTOCI
+46,465
+5,530
+Non-current Assets
+IFRS 9
+RMB million
+IFRS 15
+RMB million
+RMB million
+31 December
+2017
+(Audited)
+As a result of the changes in the Group's accounting policies above, the opening
+consolidated statement of financial position had to be restated. The following table shows
+the adjustments recognised for each of the line items affected. Line items that were not
+affected by the changes have not been included.
+2.3 Impacts on opening consolidated statement of financial position arising from the
+application of all new standards
+AFS investments
+New and Amendments to IFRSS that are mandatorily effective for the current year
+(Continued)
+2.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+198
+2018 Annual Report 197
+As at 1 January 2018, no additional credit loss allowance has been recognised against
+retained earnings.
+IFRS 16 Leases
+For outstanding financial guarantees provided to an associate of RMB19 million and
+to an investee of RMB171 million, the Group considers there has been no significant
+increase in credit risk since initial recognition and hence the loss allowance is
+measured on 12m ECL basis.
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+(692)
+692
+854
+Equity instruments at
+749
+749
+105
+105
+(854)
+1 January
+2018
+(Restated)
+RMB million
+(14,214)
+186,824
+Financial assets at FVTPL
+Retained earnings
+Equity
+(5,530)
+5,530
+51,995
+Contract liabilities
+payables
+Accrued expenses and other
+Current Liabilities
+Other reserves
+IFRS 16 introduces a comprehensive model for the identification of lease arrangements and
+accounting treatments for both lessors and lessees. IFRS 16 will supersede IAS 17 Leases and
+the related interpretations when it becomes effective.
+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:
+2018 Annual Report 199
+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.
+Furthermore, extensive disclosures are required by IFRS 16.
+In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,
+2 or 3 based on the degree to which the inputs to the fair value measurements are observable and
+the significance of the inputs to the fair value measurement in its entirety, which are described as
+follows:
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
+liabilities that the entity can access at the measurement date;
+Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
+observable for the asset or liability, either directly or indirectly; and
+Level 3 inputs are unobservable inputs for the asset or liability.
+202 China Shenhua Energy Company Limited
+3.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+The principal accounting policies are set out below:
+Basis of consolidation
+The consolidated financial statements incorporate the financial statements of the Company and
+entities controlled by the Company and its subsidiaries. Control is achieved when the Company:
+•
+has power over the investee;
+Historical cost is generally based on the fair value of the consideration given in exchange for
+goods and services.
+The consolidated financial statements have been prepared on the historical cost basis, except for
+certain financial instruments as disclosed in Note 40.3, which have been measured at fair value at
+the end of each reporting period, as explained in the accounting policies set out below.
+The consolidated financial statements have been prepared in accordance with IFRS issued by the
+International Accounting Standards Board. They are presented in Renminbi ("RMB") and all values
+are rounded to the nearest million (RMB' million) except when otherwise indicated. In addition, the
+consolidated financial statements include applicable disclosures required by the Rules Governing
+the Listing of Securities on the Stock Exchange of Hong Kong Limited ("Listing Rules") and by the
+Hong Kong Companies Ordinance ("CO").
+Basis of preparation
+Loss allowances for other financial assets at amortised cost mainly comprising of
+restricted bank deposits, time deposits with original maturity over three months,
+cash and cash equivalents, loans and advances to China Energy Group and fellow
+subsidiaries and entrusted loans, are measured on 12-month ECL ("12m ECL") basis
+as there had been no significant increase in credit risk since initial recognition.
+As at 31 December 2018, the Group has non-cancellable operating lease commitments of
+RMB3,792 million as disclosed in Note 42.2. A preliminary assessment indicates that these
+arrangements will meet the definition of a lease. Upon application of IFRS 16, the Group will
+recognise a right-of-use asset and a corresponding liability in respect of all these leases unless
+they qualify for low value or short-term leases.
+China Shenhua Energy Company Limited
+2.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+New and amendments to IFRSS in issue but not yet effective (Continued)
+is exposed, or has rights, to variable returns from its involvement with the investee; and
+IFRS 16 Leases (Continued)
+Upon application of IFRS 16, the Group will apply the requirements of IFRS 15 to assess whether
+sales and leaseback transaction constitutes a sale. For a transfer that does not satisfy the
+requirements as a sale, the Group will account for the transfer proceeds as financial liabilities
+within the scope of IFRS 9. In accordance with the transition provisions of IFRS 16, sale and
+leaseback transactions entered into before the date of initial application will not be reassessed but
+the new requirements may impact the Group's future sale and leaseback transactions.
+The application of new requirements may result in changes in measurement, presentation and
+disclosure as indicated above. The Group intends to elect the practical expedient to apply IFRS
+16 to contracts that were previously identified as leases applying IAS 17 and IFRIC 4 Determining
+Whether an Arrangement Contains a Lease and not apply this standard to contracts that were
+not previously identified as containing a lease applying IAS 17 and IFRIC 4. Therefore, the Group
+will not reassess whether the contracts are, or contain a lease which already existed prior to the
+date of initial application. Furthermore, the Group intends to elect the modified retrospective
+approach for the application of IFRS 16 as lessee and will recognise the cumulative effect of initial
+application to opening retained earnings without restating comparative information.
+2018 Annual Report 201
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+SIGNIFICANT ACCOUNTING POLICIES
+In addition, the Group currently considers refundable rental deposits paid of RMB96 million as
+rights under leases to which IAS 17 applies. Based on the definition of lease payments under IFRS
+16, such deposits are not payments relating to the right to use the underlying assets, accordingly,
+the carrying amounts of such deposits may be adjusted to amortised cost. Adjustments to
+refundable rental deposits paid would be considered as additional lease payments and included in
+the carrying amount of right-of-use assets.
+IFRS 16 distinguishes lease and service contracts on the basis of whether an identified asset is
+controlled by a customer. In addition, IFRS 16 requires sales and leaseback transactions to be
+determined based on the requirements of IFRS 15 as to whether the transfer of the relevant asset
+should be accounted as a sale. IFRS 16 also includes requirements relating to subleases and lease
+modifications.
+has the ability to use its power to affect its returns.
+the size of the Group's holding of voting rights relative to the size and dispersion of holdings
+of the other vote holders;
+Any difference between the amount by which the non-controlling interests are adjusted, and the
+fair value of the consideration paid or received is recognised directly in equity and attributed to
+owners of the Company.
+Business combinations
+Acquisitions of businesses, other than business combination under common control are accounted
+for using the acquisition method. The consideration transferred in a business combination is
+measured at fair value, which is calculated as the sum of the acquisition-date fair values of the
+assets transferred by the Group, liabilities incurred by the Group to the former owners of the
+acquiree and the equity interests issued by the Group in exchange for control of the acquiree.
+Acquisition-related costs are generally recognised in profit or loss as incurred.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised
+at their fair value, except that deferred tax assets or liabilities, and assets or liabilities related to
+employee benefit arrangements are recognised and measured in accordance with IAS 12 Income
+Taxes and IAS 19 Employee benefits respectively.
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount
+of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously
+held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
+identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the
+acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the
+sum of the consideration transferred, the amount of any non-controlling interests in the acquiree
+and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is
+recognised immediately in profit or loss as a bargain purchase gain.
+Non-controlling interests that are present ownership interests and entitle their holders to a
+proportionate share of the entity's net assets in the event of liquidation are initially measured at
+the non-controlling interests' proportionate share of the recognised amounts of the acquiree's
+identifiable net assets.
+China Shenhua Energy Company Limited
+The right-of-use asset is initially measured at cost and subsequently measured at cost (subject
+to certain exceptions) less accumulated depreciation and impairment losses, adjusted for any
+remeasurement of the lease liability. The lease liability is initially measured at the present value
+of the lease payments that are not paid at that date. Subsequently, the lease liability is adjusted
+for interest and lease payments, as well as the impact of lease modifications, amongst others.
+For the classification of cash flows, the Group currently presents upfront prepaid lease payments
+as investing cash flows in relation to leasehold lands for owned use and those classified as
+investment properties while other operating lease payments are presented as operating cash
+flows. Upon application of IFRS 16, lease payments in relation to lease liability will be allocated
+into a principal and an interest portion which will be presented as financing cash flows by the
+Group, upfront prepaid lease payments will continue to be presented as investing or operating
+cash flows in accordance to the nature, as appropriate.
+Distinctions of operating leases and finance leases are removed for lessee accounting, and is
+replaced by a model where a right-of-use asset and a corresponding liability have to be recognised
+for all leases by lessees, except for short-term leases and leases of low value assets.
+IFRS 16 Leases (Continued)
+New and amendments to IFRSS in issue but not yet effective (Continued)
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+2.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+200
+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
+Under IAS 17, the Group has already recognised an asset and a related finance lease liability for
+finance lease arrangement and prepaid lease payments for leasehold lands where the Group is a
+lessee. The application of IFRS 16 may result in potential changes in classification of these assets
+depending on whether the Group presents right-of-use assets separately or within the same line
+item at which the corresponding underlying assets would be presented if they were owned.
+Other than certain requirements which are also applicable to lessor, IFRS 16 substantially carries
+forward the lessor accounting requirements in IAS 17, and continues to require a lessor to classify
+a lease either as an operating lease or a finance lease.
+potential voting rights held by the Group, other vote holders or other parties;
+•
+rights arising from other contractual arrangements; and
+any additional facts and circumstances that indicate that the Group has, or does not have,
+the current ability to direct the relevant activities at the time that decisions need to be
+made, including voting patterns at previous shareholders' meetings.
+Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and
+ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a
+subsidiary acquired or disposed of during the year are included in the consolidated statement of
+profit or loss and other comprehensive income from the date the Group gains control until the
+date when the Group ceases to control the subsidiary.
+Profit or loss and each item of other comprehensive income are attributed to equity holders of
+the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is
+attributed to equity holders of the Company and to the non-controlling interests even if this results
+in the non-controlling interests having a deficit balance.
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
+accounting policies into line with the Group's accounting policies.
+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.
+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.
+2018 Annual Report 203
+204
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Basis of consolidation (Continued)
+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.
+The Group applies the IFRS 9 simplified approach to measure ECL which uses a
+lifetime ECL for all accounts and bills receivables. To measure the ECL, accounts and
+bills receivables have been grouped based on shared credit risk characteristics.
+2.2 IFRS 9 Financial Instruments and the related amendments (Continued)
+(b)
+IFRS 9 Financial Instruments and the related amendments
+In the current year, the Group has applied IFRS 9 Financial Instruments and the related
+consequential amendments to other IFRSS. IFRS 9 introduces new requirements for 1) the
+classification and measurement of financial assets and financial liabilities, 2) expected credit
+losses ("ECL") for financial assets and financial guarantee contracts.
+The Group has applied IFRS 9 in accordance with the transition provisions set out in IFRS 9,
+i.e. applied the classification and measurement requirements (including impairment under
+ECL model) retrospectively to instruments that have not been derecognised as at 1 January
+2018 (date of initial application) and has not applied the requirements to instruments that
+have already been derecognised as at 1 January 2018. The difference between carrying
+amounts as at 31 December 2017 and the carrying amounts as at 1 January 2018 are
+recognised in the opening retained earnings and other components of equity, without
+restating comparative information.
+Accordingly, certain comparative information may not be comparable as comparative
+information was prepared under IAS 39 Financial Instruments: Recognition and
+Measurement.
+Accounting policies resulting from application of IFRS 9 are disclosed in Note 3.
+Summary of effects arising from initial application of IFRS 9
+The table below illustrates the classification and measurement of financial assets and
+financial liabilities and other items subject to ECL under IFRS 9 and IAS 39 at the date of
+initial application, 1 January 2018.
+2018 Annual Report 195
+There is no impact of applying IFRS 15 on the consolidated statement of profit and loss and
+other comprehensive income for the current year.
+196
+2.
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSs”) (CONTINUED)
+New and Amendments to IFRSS that are mandatorily effective for the current year
+(Continued)
+Summary of effects arising from initial application of IFRS 9 (Continued)
+Closing balance at 31 December
+Note
+Available-for-
+Financial assets at
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+fair value through
+profit or loss
+(“FVTPL )
+required
+4,730
+6,757
+(2,027)
+Impairment under ECL model
+2.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+New and Amendments to IFRSs that are mandatorily effective for the current year
+(Continued)
+2.1 IFRS 15 Revenue from Contracts with Customers (Continued)
+Impact on the consolidated statement of cash flows
+Operating Activities
+(2,027)
+2,027
+Amounts
+application of
+IFRS 15
+As reported
+RMB million
+Adjustments
+RMB million
+RMB million
+Increase in accrued expenses and
+other payables
+Decrease in contract liabilities
+without
+Equity
+instruments
+2.2
+through other
+comprehensive
+749
+(692)
+692
+105
+749
+(14,906)
+From AFS equity investments to FVTOCI
+The Group elected to present in OCI for the fair value changes of all its equity.
+investments previously classified as AFS, of which RMB749 million related to
+unquoted equity investments previously measured at cost less impairment under IAS
+39. These investments are not held for trading and not expected to be sold in the
+foreseeable future. At the date of initial application of IFRS 9, RMB749 million relating
+to unquoted equity investments previously measured at cost less impairment under
+IAS 39 were reclassified from AFS investments to equity instruments at FVTOCI. No
+fair value change relating to those unquoted equity investments previously carried
+at cost less impairment was adjusted to equity instruments at FVTOCI and other
+reserves as at 1 January 2018. In addition, impairment losses previously recognised
+of RMB688 million were transferred from retained earnings to other reserves as at 1
+January 2018.
+China Shenhua Energy Company Limited
+2.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL
+REPORTING STANDARDS ("IFRSS") (CONTINUED)
+New and Amendments to IFRSs that are mandatorily effective for the current year
+(Continued)
+2.2 IFRS 9 Financial Instruments and the related amendments (Continued)
+Summary of effects arising from initial application of IFRS 9 (Continued)
+(a) AFS investments (Continued)
+From AFS investments to FVTPL
+at fair value
+Wealth management product investments with a fair value of RMB105 million were
+reclassified from AFS investments to financial assets at FVTPL. This is because
+even though the Group's business model is to hold financial assets in order to
+collect contractual cash flows, the cash flows of these investments do not meet the
+IFRS 9 criteria as solely payments of principal and interest on the principal amount
+outstanding. Related fair value gains of RMB4 million were transferred from other
+reserves to retained earnings as at 1 January 2018.
+49
+186,824
+187,516
+RMB million
+sale ("AFS") by IAS 39/IFRS 9 income ("FVTOCI")
+(14,214)
+RMB million
+2017-IAS 39
+854
+Effect arising from initial
+Reclassification
+From AFS
+(854)
+application of IFRS 9:
+15
+earnings
+RMB million
+Retained
+105
+RMB million
+AFS investments
+Other
+reserves
+RMB million
+Opening balance at 1 January 2018
+(a)
+Retirement benefit costs
+3.
+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.
+Payments to state-managed retirement benefit schemes and a supplemental defined contribution
+pension plan approved by the government are recognised as an expense when employees have
+rendered service entitling them to the contributions.
+2018 Annual Report 209
+210
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+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.
+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.
+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.
+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.
+Taxation
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+For the year ended 31 December 2018
+3.
+China Shenhua Energy Company Limited
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Revenue from contracts with customers (upon application of IFRS 15 in accordance
+with transitions in Note 2)
+Under IFRS 15, the Group recognises revenue when (or as) a performance obligation is satisfied,
+i.e. when "control" of the goods or services underlying the particular performance obligation is
+transferred to the customer.
+A performance obligation represents a good or service (or a bundle of goods or services) that is
+distinct or a series of distinct goods or services that are substantially the same.
+Control is transferred over time and revenue is recognised over time by reference to the progress
+towards complete satisfaction of the relevant performance obligation if one of the following
+criteria is met:
+•
+the customer simultaneously receives and consumes the benefits provided by the Group's
+performance as the Group performs;
+the Group's performance creates and enhances an asset that the customer controls as the
+Group performs; or
+the Group's performance does not create an asset with an alternative use to the Group and
+the Group has an enforceable right to payment for performance completed to date.
+Otherwise, revenue is recognised at a point in time when the customer obtains control of the
+distinct good or service.
+A contract asset represents the Group's right to consideration in exchange for goods or services
+that the Group has transferred to a customer that is not yet unconditional. It is assessed
+for impairment in accordance with IFRS 9. In contrast, a receivable represents the Group's
+unconditional right to consideration, i.e. only the passage of time is required before payment of
+that consideration is due.
+A contract liability represents the Group's obligation to transfer goods or services to a customer
+for which the Group has received consideration (or an amount of consideration is due) from the
+customer.
+Over time revenue recognition: measurement of progress towards complete satisfaction of a
+performance obligation
+Output method
+The progress towards complete satisfaction of a performance obligation is measured based on
+output method, which is to recognise revenue on the basis of direct measurements of the value
+of the goods or services transferred to the customer to date relative to the remaining goods or
+services promised under the contract, that best depict the Group's performance in transferring
+control of goods or services.
+2018 Annual Report 207
+Notes to the Consolidated Financial Statements (Continued)
+3.
+3.
+206 China Shenhua Energy Company Limited
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+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 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;
+Revenue is measured at the fair value of the consideration received or receivable. Provided it is
+probable that the economic benefits will flow to the Group and the revenue and costs can be
+measured reliably, revenue is recognised in profit or loss as follows:
+Revenue recognition (prior to 1 January 2018)
+212
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2018 Annual Report 211
+The Directors reviewed the estimated useful lives of the assets annually based on the Group's
+historical experience with similar assets and taking into account anticipated technological changes.
+Construction in progress intended to be used for production, supply or administrative purposes
+are carried at cost, less any recognised impairment loss. Costs include professional fees and, for
+qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy.
+Such properties are classified to the appropriate categories of property, plant and equipment when
+completed and ready for intended use. Depreciation of these assets, on the same basis as other
+property, plant and equipment, commences when the assets are ready for their intended use.
+Property, plant and equipment
+Property, plant and equipment, which consists of freehold land and buildings, mining structures
+and mining rights, mining related machinery and equipment, and others, held for use in the
+production or supply of goods or services, or for administrative purposes, are stated in the
+consolidated statement of financial position at cost less subsequent accumulated depreciation and
+subsequent accumulated impairment losses, if any.
+Depreciation is recognised so as to write off the cost of items of property, plant and equipment
+(other than freehold land and construction in progress, which are subject to impairment
+assessment) less their residual values over their estimated useful lives. The estimated useful
+lives, residual values and depreciation method are reviewed at the end of each reporting period,
+with the effect of any changes in estimate accounted for on a prospective basis.
+Property, plant and equipment, except for freehold land, and mining structures and mining rights,
+are depreciated on a straight-line basis at the following rates per annum:
+Category
+Buildings
+Mining related machinery and equipment
+Generators related machinery and equipment
+Railway and port
+Vessel
+Coal chemical related machinery and equipment
+Furniture, fixtures, motor vehicles and other equipment
+Term for deprecation (year)
+10-50 years
+5-20 years
+20 years
+30-45 years
+10-25 years
+10-20 years
+5-20 years
+An item of property, plant and equipment is derecognised upon disposal or when no future
+economic benefits are expected to arise from the continued use of the asset. Any gain or loss
+arising on the disposal or retirement of an item of property, plant and equipment is determined as
+the difference between the sales proceeds and the carrying amount of the asset and is recognised
+in profit or loss.
+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.
+exploratory drilling, trenching and sampling;
+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.
+how the intangible asset will generate probable future economic benefits;
+the availability of adequate technical, financial and other resources to complete the
+development and to use or sell the intangible asset; and
+the ability to measure reliably the expenditure attributable to the intangible asset during its
+development.
+2018 Annual Report 213
+214
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Intangible assets (Continued)
+Internally-generated intangible assets – research and development expenditure (Continued)
+-
+The amount initially recognised for internally-generated intangible asset is the sum of the
+expenditure incurred from the date when the intangible asset first meets the recognition criteria
+listed above. Where no internally-generated intangible asset can be recognised, development
+expenditure is recognised in profit or loss in the period in which it is incurred.
+Subsequent to initial recognition, internally-generated intangible asset is measured at cost less
+accumulated amortisation and accumulated impairment losses (if any), on the same basis as
+intangible assets acquired separately.
+Intangible assets acquired in a business combination not under common control
+Intangible assets acquired in a business combination are recognised separately from goodwill and
+are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite
+useful lives are reported at cost less accumulated amortisation and any accumulated impairment
+losses, on the same basis as intangible assets that are acquired separately.
+Derecognition of intangible assets
+An intangible asset is derecognised on disposal, or when no future economic benefits are
+expected from use or disposal. Gains and losses arising from derecognition of an intangible asset
+are measured as the difference between the net disposal proceeds and the carrying amount of
+the asset and are recognised in profit or loss in the period when the asset is derecognised.
+•
+Impairment of tangible and intangible assets other than goodwill
+the ability to use or sell the intangible asset;
+the intention to complete the intangible asset and use or sell it;
+determining and examining the volume and grade of the resource;
+surveying transportation and infrastructure requirements; and
+conducting market and finance studies.
+Expenditure during the initial exploration preparation stage of a project is charged to profit or loss as
+incurred. Exploration and evaluation costs, including the costs of acquiring licenses, are capitalised
+as exploration and evaluation assets on a project-by-project basis pending determination of the
+technical feasibility and commercial viability of the project.
+Once the final feasibility study has been completed and a development decision has been taken,
+accumulated capitalised exploration and evaluation expenditures in respect of an area of interest
+are transferred to property, plant and equipment. In circumstances when an area of interest
+is abandoned or management decides it is not commercially viable, any accumulated costs in
+respect of that area are written off in the period the decision is made.
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Obligations for land reclamation
+The Group's obligations for land reclamation consist of spending estimates at both surface and
+underground mines in accordance with the PRC rules and regulations. The Group estimates its
+liabilities for land reclamation and mine closure based upon detailed calculations of the amount
+and timing of the future cash flows for the required work. Spending estimates are escalated for
+inflation, then discounted at a discount rate that reflects current market assessments of the time
+value of money and the risks specific to the liability such that the amount of provision reflects
+the present value of the expenditures expected to be required to settle the obligation. The
+Group records a corresponding asset associated with the liability for final reclamation and mine
+closure. The obligation and corresponding asset are recognised in the period in which the liability
+is incurred. The asset is depreciated on the units-of-production method over its expected life
+and the liability is accreted to the projected spending date. As changes in estimates occur (such
+as mine plan revisions, changes in estimated costs, or changes in timing of the performance of
+reclamation activities), the revisions to the obligation and the corresponding asset are recognised
+at the appropriate discount rate.
+Costs for restoration of subsequent site damage which is caused on an ongoing basis during
+production are provided for at their net present values and charged to profit or loss as extraction
+progresses. Where the costs of site restoration are not anticipated to be significant, they are
+expensed as incurred.
+Intangible assets
+Intangible assets acquired separately
+Intangible assets with finite useful lives that are acquired separately are carried at costs less
+accumulated amortisation and any accumulated impairment losses. Amortisation for intangible
+assets with finite useful lives is recognised on a straight-line basis over their estimated useful
+lives. The estimated useful life and amortisation method are reviewed at the end of each reporting
+period, with the effect of any changes in estimate being accounted for on a prospective basis.
+Internally-generated intangible assets - research and development expenditure
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+An internally-generated intangible asset arising from development activities (or from the
+development phase of an internal project) is recognised if, and only if, all of the following have
+been demonstrated:
+the technical feasibility of completing the intangible asset so that it will be available for use
+or sale;
+•
+•
+When the Group is committed to a sale plan involving disposal of an investment, or a portion of an
+investment, in an associate or joint venture, the investment or the portion of the investment that
+will be disposed of is classified as held for sale when the criteria described above are met, and
+the Group discontinues the use of the equity method in relation to the portion that is classified as
+held for sale from the time when the investment (or a portion of the investment) is classified as
+held for sale.
+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).
+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.
+Goodwill
+Goodwill arising on an acquisition of a business is carried at cost as established at the date of
+acquisition of the business less accumulated impairment losses, if any.
+For the purposes of impairment testing, goodwill is allocated to each of the Group's cash-
+generating units (or group of cash-generating units) that is expected to benefit from the synergies
+of the combination, which represent the lowest level at which the goodwill is monitored for
+internal management purposes and not larger than an operating segment.
+A cash-generating unit to which goodwill has been allocated is tested for impairment annually or
+more frequently when there is indication that the unit may be impaired. For goodwill arising on
+an acquisition in a reporting period, the cash-generating unit to which goodwill has been allocated
+is tested for impairment before the end of that reporting period. If the recoverable amount of
+the cash-generating unit is less than its carrying amount, the impairment loss is allocated first
+to reduce the carrying amount of any goodwill allocated to the unit and then to the other assets
+of the unit on a pro-rata basis based on the carrying amount of each asset in the unit. Any
+impairment loss for goodwill is recognised directly in profit or loss. An impairment loss recognised
+for goodwill is not reversed in subsequent periods.
+On disposal of the relevant cash-generating unit or any of the cash-generating unit within the
+group of cash-generating units, the attributable amount of goodwill is included in the determination
+of the amount of profit or loss on disposal. When the Group disposes of an operation within
+the cash-generating unit (or a cash-generating unit within a group of cash-generating units), the
+amount of goodwill disposed of is measured on the basis of the relative values of the operation (or
+the cash-generating unit) disposed of and the portion of the cash-generating unit (or the group of
+cash-generating units) retained.
+Investments in associates
+An associate is an entity over which the Group has significant influence. Significant influence is
+the power to participate in the financial and operating policy decisions of the investee but is not
+control or joint control over those policies.
+The results and assets and liabilities of associates are incorporated in these consolidated financial
+statements using the equity method of accounting. The financial statements of associates
+used for equity accounting purposes are prepared using uniform accounting policies as those of
+the Group for like transactions and events in similar circumstances. Under the equity method,
+an investment in an associate is initially recognised in the consolidated statement of financial
+position at cost and adjusted thereafter to recognise the Group's share of the profit or loss and
+other comprehensive income of the associate. When the Group's share of losses of an associate
+exceeds the Group's interest in that associate (which includes any long-term interests that, in
+substance, form part of the Group's net investment in the associate), the Group discontinues
+recognising its share of further losses. Additional losses are recognised only to the extent that the
+Group has incurred legal or constructive obligations or made payments on behalf of that associate.
+On acquisition of the investment in an associate, any excess of the cost of acquisition over
+the Group's share of the net fair value of the identifiable assets, liabilities of the investee is
+recognised as goodwill, which is included within the carrying amount of the investment. Any
+excess of the Group's share of the net fair value of the identifiable assets and liabilities over the
+cost of investment, after reassessment, is recognised immediately in profit or loss in the period in
+which the investment is acquired.
+2018 Annual Report 205
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Investments in associates (Continued)
+The Group assesses whether there is an objective evidence that the interest in an associate may
+be impaired. When any objective evidence exists, the entire carrying amount of the investment
+(including goodwill) is tested for impairment in accordance with IAS 36 as a single asset by
+comparing its recoverable amount (higher of value in use and fair value less costs of disposal)
+with its carrying amount. Any impairment loss is recognised when the recoverable amount is
+less the carrying value of the investment in associates. Any reversal of that impairment loss is
+recognised in accordance with IAS 36 to the extent that the recoverable amount of the investment
+subsequently increases.
+When the Group reduces its ownership interest in an associate but the Group continues to use
+the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that
+had previously been recognised in other comprehensive income relating to that reduction in
+ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of the
+related assets or liabilities.
+When a group entity transacts with an associate of the Group, profits and losses resulting
+from the transactions with the associate are recognised in the Group's consolidated financial
+statements only to the extent of interests in the associate that are not related to the Group.
+Non-current assets held for sale
+Non-current assets and disposal groups are classified as held for sale if their carrying amount
+will be recovered principally through a sale transaction rather than through continuing use. This
+condition is regarded as met only when the asset (or disposal group) is available for immediate
+sale in its present condition subject only to terms that are usual and customary for sales of such
+asset (or disposal group) and its sale is highly probable. Management must be committed to the
+sale, which should be expected to qualify for recognition as a completed sale within one year from
+the date of classification.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+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.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+.
+China Shenhua Energy Company Limited
+Borrowing costs directly attributable to the acquisition, construction or production of qualifying
+assets, which are assets that necessarily take a substantial period of time to get ready for their
+intended use or sale, are added to as part of the cost of those assets, until such time as the assets
+are substantially ready for their intended use or sale. All other borrowing costs are expensed in
+the period in which they are incurred.
+Borrowing costs
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of
+the Group's foreign operations are translated into the presentation currency of the Group (i.e.
+RMB) using exchange rates prevailing at the end of each reporting period. Income and expenses
+items are translated at the average exchange rates for the period. Exchange differences arising, if
+any, are recognised in other comprehensive income and accumulated in equity under the heading
+of exchange reserve, attributed to non-controlling interests as appropriate.
+In preparing the financial statements of each individual group entity, transactions in currencies
+other than entity's functional currencies (foreign currencies) are recognised at the rates of
+exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary
+items denominated in foreign currencies are retranslated at the rates prevailing at that date.
+Non-monetary items that are measured in terms of historical cost in a foreign currency are not
+retranslated. Exchange differences on monetary items are recognised in profit or loss in the period
+in which they arise.
+Foreign currencies
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+208 China Shenhua Energy Company Limited
+In the event that lease incentives are received to enter into operating leases, such incentives are
+recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental
+expense on a straightline basis.
+Operating lease payments, including the cost of acquiring land held under operating leases, are
+recognised as an expense on a straight-line basis over the lease term. Contingent rentals arising
+under operating leases are recognised as an expense in the period in which they are incurred.
+The Group as lessee
+Leases
+Interest income is recognised as it accrues using the effective interest method.
+Dividend income from unlisted investments is recognised when the shareholder's right to
+receive payment is established.
+Revenue from the rendering of railway, port, shipping and other services is recognised upon
+the delivery or performance of the services.
+Revenue 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.
+3.
+•
+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.
+Notes to the Consolidated Financial Statements (Continued)
+an actual or expected significant deterioration in the financial instrument's external
+credit rating (if available);
+In particular, the following information is taken into account when assessing whether credit
+risk has increased significantly:
+In assessing whether the credit risk has increased significantly since initial recognition,
+the Group compares the risk of a default occurring on the financial instrument as at the
+reporting date with the risk of a default occurring on the financial instrument as at the date
+of initial recognition. In making this assessment, the Group considers both quantitative and
+qualitative information that is reasonable and supportable, including historical experience
+and forward-looking information that is available without undue cost or effort.
+(i) Significant increase in credit risk
+For all other instruments, the Group measures the loss allowance equal to 12m ECL, unless when
+there has been a significant increase in credit risk since initial recognition, the Group recognises
+lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on
+significant increases in the likelihood or risk of a default occurring since initial recognition.
+The Group always recognises lifetime ECL for accounts and bills receivables. The ECL on these
+assets are assessed individually for credit-impaired debtors or collectively using a provision matrix
+with appropriate groupings.
+Lifetime ECL represents the ECL that will result from all possible default events over the expected
+life of the relevant instrument. In contrast, 12m ECL represents the portion of lifetime ECL that
+is expected to result from default events that are possible within 12 months after the reporting
+date. Assessments are done based on the Group's historical credit loss experience, adjusted for
+factors that are specific to the debtors, general economic conditions and an assessment of both
+the current conditions at the reporting date as well as the forecast of future conditions.
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2) (Continued)
+significant deterioration in external market indicators of credit risk, e.g. a significant
+increase in the credit spread, the credit default swap prices for the debtor;
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2018
+2018 Annual Report 217
+The Group recognises a loss allowance for ECL on financial assets which are subject to
+impairment under IFRS 9 (including accounts and bills receivables, other receivables, long-term
+receivables, loans to China Energy Group and fellow subsidiaries, entrusted loans and financial
+guarantee contracts). The amount of ECL is updated at each reporting date to reflect changes in
+credit risk since initial recognition.
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2)
+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.
+Financial assets at FVTPL
+Financial instruments (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;
+an actual or expected significant deterioration in the operating results of the debtor;
+an actual or expected significant adverse change in the regulatory, economic, or
+technological environment of the debtor that results in a significant decrease in the
+debtor's ability to meet its debt obligations.
+3.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 219
+For internal credit risk management, the Group considers an event of default occurs when
+information developed internally or obtained from external sources indicates that the debtor
+is unlikely to pay its creditors, including the Group, in full (without taking into account any
+collaterals held by the Group).
+Definition of default
+The Group regularly monitors the effectiveness of the criteria used to identify whether there
+has been a significant increase in credit risk and revises them as appropriate to ensure that
+the criteria are capable of identifying significant increase in credit risk before the amount
+becomes past due.
+For financial guarantee contracts, the date that the Group becomes a party to the irrevocable
+commitment is considered to be the date of initial recognition for the purposes of assessing
+the financial instrument for impairment. In assessing whether there has been a significant
+increase in the credit risk since initial recognition of financial guarantee contracts, the Group
+considers the changes in the risk that the specified debtor will default on the contract.
+Despite the aforegoing, the Group assumes that the credit risk on a debt instrument has
+not increased significantly since initial recognition if the debt instrument is determined to
+have low credit risk at the reporting date. A debt instrument is determined to have low
+credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet its
+contractual cash flow obligations in the near term and iii) adverse changes in economic and
+business conditions in the longer term may, but will not necessarily, reduce the ability of
+the borrower to fulfil its contractual cash flow obligations.
+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.
+Significant increase in credit risk (Continued)
+(ii)
+(i)
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2) (Continued)
+Financial assets (Continued)
+Financial instruments (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+China Shenhua Energy Company Limited
+218
+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.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Investments in equity instruments at FVTOCI are subsequently measured at fair value with
+gains and losses arising from changes in fair value recognised in OCI and accumulated in
+the other reserves; and are not subject to impairment assessment. The cumulative gain or
+loss will not be reclassified to profit or loss on disposal of the equity investments, and will
+be transferred to retained earnings.
+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.
+Effective interest method
+Financial instruments (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+216
+2018 Annual Report 215
+Financial assets and financial liabilities are initially measured at fair value except for trade
+receivables arising from contracts with customers which are initially measured in accordance with
+IFRS 15 since 1 January 2018. Transaction costs that are directly attributable to the acquisition
+or issue of financial assets and financial liabilities (other than financial assets or financial liabilities
+FVTPL) are added to or deducted from the fair value of the financial assets or financial liabilities,
+as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of
+financial assets or financial liabilities FVTPL are recognised immediately in profit or loss.
+The effective interest method is a method of calculating the amortised cost of a financial asset or
+financial liability and of allocating interest income and interest expense over the relevant period.
+The effective interest rate is the rate that exactly discounts estimated future cash receipts and
+payments (including all fees and points paid or received that form an integral part of the effective
+interest rate, transaction costs and other premiums or discounts) through the expected life of
+the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying
+amount on initial recognition.
+Financial assets 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.
+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).
+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.
+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
+If the recoverable amount of an asset (or a cash-generating unit) is estimated to be less than its
+carrying amount, the carrying amount of the asset (or a cash-generating unit) is reduced to its
+recoverable amount. In allocating the impairment loss, the impairment loss is allocated first to
+reduce the carrying amount of any goodwill (if applicable) and then to the other assets on a pro-
+rata basis based on the carrying amount of each asset in the unit. The carrying amount of an asset
+is not reduced below the highest of its fair value less costs of disposal (if measurable), its value
+in use (if determinable) and zero. The amount of the impairment loss that would otherwise have
+been allocated to the asset is allocated pro rata to the other assets of the unit. An impairment loss
+is recognised immediately in profit or loss.
+Impairment of tangible and intangible assets other than goodwill (Continued)
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Financial instruments
+Financial assets
+Classification and subsequent measurement of financial assets (upon application of IFRS 9 in
+accordance with transitions in Note 2)
+Financial assets that meet the following conditions are subsequently measured at amortised cost:
+(iii)
+(ii)
+(i) Amortised cost and interest income
+Classification and subsequent measurement of financial assets (upon application of IFRS 9 in
+accordance with transitions in Note 2) (Continued)
+Financial assets (Continued)
+Financial instruments (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+China Shenhua Energy Company Limited
+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.
+it is a derivative that is not designated and effective as a hedging instrument.
+on initial recognition it is a part of a portfolio of identified financial instruments that the
+Group manages together and has a recent actual pattern of short-term profit-taking; or
+it has been acquired principally for the purpose of selling in the near term; or
+A financial asset is classified as held for trading if:
+All other financial assets are subsequently measured at FVTPL, except that at the date of initial
+application/initial recognition of a financial asset the Group may irrevocably elect to present
+subsequent changes in fair value of an equity investment in OCI if that equity investment is
+neither held for trading nor contingent consideration recognised by an acquirer in a business
+combination to which IFRS 3 Business Combinations applies.
+the contractual terms give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+the financial asset is held within a business model whose objective is achieved by both
+collecting contractual cash flows and selling; and
+Financial assets that meet the following conditions are subsequently measured at FVTOCI:
+the contractual terms give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+the financial asset is held within a business model whose objective is to collect contractual
+cash flows; and
+Equity instruments designated as at FVTOCI
+Financial instruments (Continued)
+Provisions
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2) (Continued)
+Loans and receivables
+(!!!)
+Classification and subsequent measurement of financial assets (before application of IFRS 9 on
+1 January 2018) (Continued)
+Financial assets (Continued)
+Financial instruments (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+222 China Shenhua Energy Company Limited
+Loans and receivables are non-derivative financial assets with fixed or determinable
+payments that are not quoted in an active market. Subsequent to initial recognition,
+loans and receivables (including accounts and bills receivables, other receivables, loans
+and advances to China Energy Group and fellow subsidiaries, entrusted loans, restricted
+bank deposits, time deposits with original maturity over three months and cash and cash
+equivalents) are measured at amortised cost using the effective interest method, less any
+identified impairment.
+Subsequent to initial recognition, held-to-maturity investments are measured at amortised
+cost using the effective interest method, less any impairment.
+it is a derivative that is not designated and effective as a hedging instrument.
+Held-to-maturity investments
+on initial recognition it is part of a portfolio of identified financial instruments that the
+Group manages together and has a recent actual pattern of short-term profit-taking; or
+it has been acquired principally for the purpose of selling it in the near term; or
+.
+•
+A financial asset is classified as held for trading if:
+Financial assets are classified as at FVTPL when the financial asset is either held for trading
+or it is designated as at FVTPL. 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.
+(ii)
+Financial assets at FVTPL
+Held-to-maturity investments are non-derivative financial assets with fixed or determinable
+payments and fixed maturity dates that are quoted in an active market and that the Group
+has the positive intention and ability to hold to maturity.
+Interest income is recognised by applying the effective interest rate, except for short-term
+receivables where the recognition of interest would be immaterial.
+(iv) AFS financial assets
+AFS financial assets are non-derivatives that are either designated as AFS or are not
+classified as other categories of financial assets. AFS financial assets are measured at
+fair value at the end of each reporting period except for unquoted equity investments
+whose fair value cannot be reliably measured. Changes in the carrying amount of AFS debt
+instruments relating to interest income calculated using the effective interest method, are
+recognised in profit or loss. Dividends on AFS equity instruments are recognised in profit
+or loss when the Group's right to receive the dividends is established. Other changes in
+the carrying amount of AFS financial assets are recognised in other comprehensive income
+and accumulated under the heading of fair value changes on AFS investment. When the
+investment is disposed of or is determined to be impaired, the cumulative gain or loss
+previously accumulated in the fair value changes on AFS investment is reclassified to profit
+or loss.
+Financial assets (Continued)
+224 China Shenhua Energy Company Limited
+In respect of AFS equity investments, impairment losses previously recognised in profit or loss are
+not reversed through profit or loss. Any increase in fair value subsequent to an impairment loss
+is recognised in other comprehensive income and accumulated under the heading of fair value
+changes on AFS investment. In respect of debt securities, impairment losses are subsequently
+reversed through profit or loss if an increase in the fair value of the investment can be objectively
+related to an event occurring after the recognition of the impairment loss.
+For financial assets measured at amortised cost, if, in a subsequent period, the amount of the
+impairment loss decreases and the decrease can be related objectively to an event occurring after
+the impairment was recognised, the previously recognised impairment loss is reversed through
+profit or loss to the extent that the carrying amount of the investment at the date the impairment is
+reversed does not exceed what the amortised cost would have been had the impairment not been
+recognised.
+For financial assets carried at amortised cost, the amount of the impairment loss recognised is
+the difference between the asset's carrying amount and the present value of the estimated future
+cash flows discounted at the financial asset's original effective interest rate.
+For financial assets carried at cost, the amount of the impairment loss is measured as the
+difference between the asset's carrying amount and the present value of the estimated future
+cash flows discounted at the current market rate of return for a similar financial asset. Such
+impairment loss will not be reversed in subsequent periods.
+it becoming probable that the borrower will enter bankruptcy or financial re-organisation.
+breach of contract, such as default or delinquency in interest and principal payments; or
+significant financial difficulty of the issuer or counterparty; or
+.
+•
+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 (before application of IFRS 9 on 1 January 2018)
+Financial assets (Continued)
+Financial instruments (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 223
+As the unlisted equity investments do not have a quoted market price in an active market
+and whose fair value cannot be reliably measured, they are measured at cost less any
+identified impairment losses at end of each reporting period. Dividends on the unlisted
+equity investment are recognised in profit or loss when the Group's right to receive the
+dividends is established in accordance with the policies set out for "Revenue recognition".
+(i)
+The Group's financial assets include financial assets at FVTPL, held-to-maturity investments,
+loans and receivables and AFS financial assets. The subsequent measurement of financial assets
+depends on their classification as follows:
+The carrying amount of the financial asset is reduced by the impairment loss directly for all
+financial assets with the exception of accounts receivables, other receivables, loans and advances
+to China Energy Group and fellow subsidiaries and entrusted loans, where the carrying amount is
+reduced through the use of an allowance account. When accounts receivable, other receivables,
+loans and advances to China Energy Group and fellow subsidiaries and entrusted loans are
+considered uncollectible, it is written off against the allowance account. Subsequent recoveries of
+amounts previously written off are credited to profit or loss.
+Classification and subsequent measurement of financial assets (before application of IFRS 9 on
+1 January 2018)
+3.
+220 China Shenhua Energy Company Limited
+Generally, the ECL is the difference between all contractual cash flows that are due to the
+Group in accordance with the contract and the cash flows that the Group expects to receive,
+discounted at the effective interest rate determined at initial recognition.
+The measurement of ECL is a function of the probability of default, loss given default (i.e.
+the magnitude of the loss if there is a default) and the exposure at default. The assessment
+of the probability of default and loss given default is based on historical data adjusted
+by forward-looking information. Estimation of ECL reflects an unbiased and probability-
+weighted amount that is determined with the respective risks of default occurring as the
+weights.
+Measurement and recognition of ECL
+The Group writes off a financial asset when there is information indicating that the
+counterparty is in severe financial difficulty and there is no realistic prospect of recovery,
+for example, when the counterparty has been placed under liquidation or has entered into
+bankruptcy proceedings. Financial assets written off may still be subject to enforcement
+activities under the Group's recovery procedures, taking into account legal advice where
+appropriate. A write-off constitutes a derecognition event. Any subsequent recoveries are
+recognised in profit or loss.
+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)
+a breach of contract, such as a default or past due event;
+(b)
+(v)
+(iv)
+(iii)
+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:
+Credit-impaired financial assets
+Financial assets within the scope of IAS 39 are classified into the following specific categories:
+financial assets FVTPL, held-to-maturity investments, loans and receivables and AFS financial
+assets. The Group determines the classification of its financial assets at initial recognition based
+on their nature and purpose. All regular way purchases or sales of financial assets are recognised
+and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of
+financial assets that require delivery of assets within the time frame established by regulation or
+convention in the marketplace.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+(a) significant financial difficulty of the issuer or the borrower;
+Financial assets (Continued)
+Financial instruments (Continued)
+Financial instruments (Continued)
+3.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 221
+Except for financial guarantee contracts, the Group recognises an impairment gain or
+loss in profit or loss for all financial instruments by adjusting their carrying amount, with
+the exception of accounts and bills receivables, where the corresponding adjustment is
+recognised through a loss allowance account.
+For financial guarantee contracts, the loss allowances are recognised at the higher of the
+amount of the loss allowance determined in accordance with IFRS 9; and the amount
+initially recognised less, where appropriate, cumulative amount of income recognised over
+the guarantee period.
+Interest income is calculated based on the gross carrying amount of the financial asset
+unless the financial asset is credit impaired, in which case interest income is calculated
+based on amortised cost of the financial asset.
+The grouping is regularly reviewed by management to ensure the constituents of each
+group continue to share similar credit risk characteristics.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Past-due status; and
+Impairment of financial assets (upon application IFRS 9 with transitions in accordance with
+Note 2) (Continued)
+External credit ratings where available.
+(v)
+Measurement and recognition of ECL (Continued)
+For a financial guarantee contract, the Group is required to make payments only in the event
+of a default by the debtor in accordance with the terms of the instrument that is guaranteed.
+Accordingly, the expected losses is the present value of the expected payments to
+reimburse the holder for a credit loss that it incurs less any amounts that the Group expects
+to receive from the holder, the debtor or any other party.
+Financial assets (Continued)
+Where ECL is measured on a collective basis or cater for cases where evidence at the
+individual instrument level may not yet be available, the financial instruments are grouped
+on the following basis:
+Nature of financial instruments (i.e. the Group's accounts and bills receivables and
+other receivables are each assessed as a separate group. Loans receivable are
+assessed for ECL on an individual basis);
+.
+For ECL on financial guarantee contracts for which the effective interest rate cannot be
+determined, the Group will apply a discount rate that reflects the current market assessment
+of the time value of money and the risks that are specific to the cash flows but only if, and
+to the extent that, the risks are taken into account by adjusting the discount rate instead of
+adjusting the cash shortfalls being discounted.
+580
+788
+5,615 733
+5,877
+160,845 155,370 88,176 79,246
+Total
+1,793 1,348 9,240 8,449
+I
+698
+337
+88
+788
+23
+5,877
+2,710 2,374
+146
+837
+837
+587
+837
+5,615 733
+788
+1,793
+89
+37
+837
+788
+788
+33
+733
+160,845 155,370 88,176 79,246 5,877 5,615
+Total
+1,348 261,330 245,230
+2,771 3,516
+1,793
+837 698 5,840 5,681
+733
+5,877 5,615
+158,831 152,562 87,419 78,538
+2,014 2,808 757 708
+Overseas markets
+Domestic markets
+Geographical markets
+1,348 264,101 248,746
+698 5,840 5,681
+5,106 4,797
+5,276 5,085
+580
+5,053 4,630 1,271 999
+Coal chemical products
+Others
+86,905 78,247
+Power
+155,792 150,740
+Coal
+Sales of goods
+Types of goods or service
+2017 2018 2017
+RMB RMB RMB
+million million million
+Total
+Others
+Shipping Coal chemical
+2017 2018 2017 2018 2017 2018 2017 2018
+RMB RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million million
+2018 2017 2018 2017 2018
+RMB RMB RMB RMB RMB
+million million million million million
+Segments
+Port
+Railway
+Power
+698
+Coal
+155,792 150,740
+86,905
+I 'g'
+78,247
+564
+ཆེ;
+818
+Shipping : 4520837 698 1.793 134
+771
+Others
+587
+Port
+4,797
+5,106
+Railway
+Transportation and other services
+254,861 240,297
+88
+5,681
+5,840
+I
+160,845 155,370 88,176 79,246
+6,888 6,225
+596
+5,276 5,085
+5,840 5,681 1,793
+205,191 195,918 88,452
+Timing of revenue recognition
+The Group produces and sells coal and coal chemical products to customers at spot market.
+For sales of coal and coal chemical products, revenue is recognised when control of the goods
+has transferred, being when the goods have been shipped to the customers' specific location.
+According to the Group's historical experiences, there was no exchange or return of coal and coal
+chemical products occurred. There is no sales-related warranties associated with coal and coal
+chemical products.
+Revenue
+1,793 1,348 264,101 248,746
+5,681
+160,845 155,370 88,176 79,246 5,877 5,615 733 788 837 698 5,840
+(1,040) (87,507) (81,302)
+(970)
+(5,391) (4,929) (3,252) (2,549)
+(265) (33,272) (31,971)
+(276)
+(44,346) (40,548)
+Adjustment and eliminations
+2,388 351,608 330,048
+2,763
+5,681
+3,247 5,840
+5,717 4,089
+6,124
+37,586
+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.
+79,511 39,149
+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.
+2018 Annual Report 233
+Disaggregation of revenue
+China Shenhua Energy Company Limited
+Coal chemical operations – which use coal from the coal operations segment to first
+produce methanol and further process into polyethylene and polypropylene, together with
+other by-products, for sale to external customers. The Group sells its polyethylene at spot
+market.
+Shipping operations - which provide shipment transportation services to the power
+operations segment, the coal operations segment and external customers. The rates of
+freight charges billed to the power operations segment, the coal operations segment and
+external customers are consistent.
+Port operations - which provide loading, transportation and storage services to the coal
+operations segment and external customers. The Group charges service fees and other
+expenses, which are reviewed and approved by the relevant government authorities.
+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.
+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.
+(6)
+(5)
+(4)
+(3)
+(2)
+(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.
+The Group manages its businesses by divisions, which are organised by business lines (products
+and services). In a manner consistent with the way in which information is reported internally to
+the Group's chief operating decision maker ("CODM"), including president, senior vice president
+and chief financial officer, for the purposes of resource allocation and performance assessment,
+the Group has presented the following six (2017: six) reportable segments. No operating
+segments have been aggregated to form the following reportable segments.
+SEGMENT AND OTHER INFORMATION
+6.
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+234
+All performance obligations of sales of coal, power and coal chemical products, railway and
+shipment transportation services, and port loading and storage services are part of contracts with
+an original expected duration of one year or less. As permitted under IFRS 15, the transaction
+price allocated to these unsatisfied contracts is not disclosed.
+1,793 1,348 264,101 248,746
+970 1,040 87,507 81,302
+5,681
+5,840
+China Shenhua Energy Company Limited
+The Group's revenue from contracts with customers is RMB262,308 million for the year ended 31
+December 2018.
+232
+1,348 264,101 248,746
+698 5,840 5,681 1,793
+733 788 837
+160,845 155,370 88,176 79,246 5,877 5,615
+Total
+1,348 9,240 8,449
+1,793
+698
+837
+88
+788
+5,877 5,615 733
+254,861 240,297
+5,840 5,681
+160,845 155,370 88,176 79,246
+A point in time
+Over time
+5.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+REVENUE FROM GOODS AND SERVICES (CONTINUED)
+Set out below is the reconciliation of the revenue with the amounts disclosed in the segment
+information.
+733
+788 837 698
+5,391 4,929 3,252 2,549
+5,615
+31,971
+5,877
+33,272
+79,246
+265
+160,845 155,370 88,176
+44,346 40,548 276
+External customers
+Inter-segment
+information
+2018 2017 2018 2017 2018 2017
+RMB RMB RMB RMB RMB
+million million million million million
+RMB
+million
+1,348 264,101 248,746
+2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
+RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million million million million
+Others
+Coal chemical
+Shipping
+Port
+Railway
+Power
+Coal
+Revenue disclosed in segment
+Segments
+Total
+REVENUE FROM GOODS AND SERVICES
+698
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+A financial liability is classified as held for trading if:
+.
+it has been acquired principally for the purpose of repurchasing it in the near term; or
+on initial recognition it is part of a portfolio of identified financial instruments that the Group
+manages together and has a recent actual pattern of short-term profit-taking; or
+it is a derivative, except for a derivative that is a financial guarantee contract or a designated
+and effective hedging instrument.
+A financial liability other than a financial liability held for trading or contingent consideration of an
+acquirer in a business combination may be designated as at FVTPL upon initial recognition if:
+such designation eliminates or significantly reduces a measurement or recognition
+inconsistency that would otherwise arise; or
+the financial liability forms part of a group of financial assets or financial liabilities or both,
+which is managed and its performance is evaluated on a fair value basis, in accordance with
+the Group's documented risk management or investment strategy, and information about
+the grouping is provided internally on that basis; or
+it forms part of a contract containing one or more embedded derivatives, and IFRS 9/IAS 39
+permits the entire combined contract to be designated as at FVTPL.
+China Shenhua Energy Company Limited
+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.
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial liabilities and equity (Continued)
+Financial liabilities at amortised cost
+Financial liabilities including borrowings, accounts and bills payables, other payables, long-term
+liabilities, medium-term notes and bonds are subsequently measured at amortised cost, using the
+effective interest method.
+Financial guarantee contracts
+A financial guarantee contract is a contract that requires the issuer to make specified payments to
+reimburse the holder for a loss it incurs because a specified debtor fails to make payments when
+due in accordance with the terms of a debt instrument. Financial guarantee contract liabilities are
+measured initially at their fair values. It is subsequently measured at the higher of:
+the amount of the loss allowance determined in accordance with IFRS 9 (since 1 January
+2018)/IAS 37 Provisions, Contingent Liabilities and Contingent Assets (before application of
+IFRS 9 on 1 January 2018); and
+the amount initially recognised less, where appropriate, cumulative amortisation recognised
+over the guarantee period.
+Derecognition of financial liabilities
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Financial liabilities at FVTPL
+Financial liabilities and equity (Continued)
+Financial instruments (Continued)
+5.
+3.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Financial instruments (Continued)
+Financial assets (Continued)
+Derecognition of financial assets
+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.
+On derecognition of an AFS financial asset, the cumulative gain or loss previously accumulated in
+the other reserves is reclassified to profit or loss.
+Financial liabilities and equity
+Classification as debt or equity
+Debt and equity instruments are classified as either financial liabilities or as equity in accordance
+with the substance of the contractual arrangements and the definitions of a financial liability and
+an equity instrument.
+Equity instruments
+An equity instrument is any contract that evidences a residual interest in the assets of an entity
+after deducting all of its liabilities. Equity instruments issued by the Company are recognised at
+the proceeds received, net of direct issue costs.
+Financial liabilities
+All financial liabilities are subsequently measured at amortised cost using the effective interest
+method or at FVTPL.
+2018 Annual Report 225
+226
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+The Group derecognises financial liabilities when, and only when, the Group's obligations are
+discharged, cancelled or have expired. The difference between the carrying amount of the
+financial liability derecognised and the consideration paid and payable is recognised in profit or
+loss.
+Derivative financial instruments
+The Group 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.
+2018 Annual Report 227
+For the year ended 31 December 2018
+4.
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty (Continued)
+Impairment losses (Continued)
+Notwithstanding that the Group has used all available information to make this estimation,
+inherent uncertainty exists and actual write-offs may be higher or lower than the amount
+estimated. The carrying amounts of the property, plant and equipment, construction in
+progress and interests in associates are disclosed in Notes 17, 18 and 21, respectively.
+Depreciation
+Other than the freehold land and mining structures and mining rights, property, plant and
+equipment are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. The Group reviews the
+estimated useful lives and residual value of the assets regularly based on the Group's
+historical experience with similar assets and taking into account anticipated technological
+changes. Depreciation for future periods is adjusted if there is a significant change from
+previous estimates. The carrying amount of the property, plant and equipment is disclosed
+in Note 17.
+Deferred tax assets
+As at 31 December 2018, deferred tax assets of RMB3,083 million (2017: RMB3,798
+million) have been recognised in the Group's consolidated statement of financial position.
+No deferred tax asset has been recognised on the tax losses of RMB7,532 million (2017:
+RMB7,268 million) and deductible temporary differences of RMB6,685 million (2017:
+RMB6,555 million) due to the unpredictability of future profit streams. The realisation of the
+deferred tax assets mainly depends on whether sufficient future profits or taxable temporary
+differences will be available in the future. In cases where the actual future profits generated
+are less or more than expected, a material reversal or further provision of deferred tax assets
+may arise, which will be recognised in profit or loss in the period in which such a reversal or
+further provision takes place.
+Fair value measurement of financial instruments
+Certain of the Group's financial assets, unquoted equity instruments amounting to RMB811
+million as at 31 December 2018 (RMB749 million as at 1 January 2018) are measured at
+fair values with fair values being determined based on unobservable inputs using valuation
+techniques as set out in Note 40.3. Changes in assumptions relating to any key inputs may
+have a material impact on the reported fair values of these instruments.
+230 China Shenhua Energy Company Limited
+4.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty (Continued)
+Provision of ECL for accounts and bills receivables
+The provision of ECL is sensitive to changes in estimates. The information about the
+ECL and the Group's accounts and bills receivables are disclosed in Note 27 and 40.2,
+respectively.
+Obligations for land reclamation
+The estimation of the liabilities for final reclamation and mine closure involves the estimates
+of the amount and timing for the future cash spending as well as the discount rate used
+for reflecting current market assessments of the time value of money and the risks
+specific to the liability. The Group considers the factors including development plan of the
+mines, the geological structure of the mining regions and reserve volume to determine
+the scope, amount and timing of reclamation and mine closure works to be performed.
+Determination of the effect of these factors involves judgements from the Group and the
+estimated liabilities may turn out to be different from the actual expenditure to be incurred.
+The discount rate used by the Group may also be altered to reflect the changes in the
+market assessments of the time value of money and the risks specific to the liability, such
+as change of the borrowing rate and inflation rate in the market. As changes in estimates
+occur (such as mine plan revisions, changes in estimated costs, or changes in timing of the
+performance of reclamation activities), the revisions to the obligation will be recognised at
+the appropriate discount rate. The carrying amounts of the obligations are disclosed in Note
+37.
+The Group's derivative financial instruments represent cross-currency exchange rate swaps, and
+are initially recognised at fair value at the date when the derivative contracts are entered into, and
+remeasured at fair value at the end of the reporting period, with any gains or losses recognised in
+profit or loss.
+2018 Annual Report 231
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 229
+The Group uses provision matrix to calculate ECL for accounts and bills receivables. The
+provision rates are based on the aging of accounts and bills receivables as groupings of
+receivables that have similar loss patterns. The provision matrix is based on the Group's
+historical default rates taking into consideration forward-looking information that is available
+without undue costs or effort. At every reporting date, the historical observed default rates
+are reassessed and changes in the forward-looking information are considered. In addition,
+accounts and bills receivables with significant balances and credit impaired are assessed for
+ECL individually.
+In considering the impairment losses that may be required for certain of the Group's assets
+which mainly include property, plant and equipment, construction in progress and interests
+in associates, the recoverable amount of the asset need to be determined. The recoverable
+amount is the higher of its fair value less cost of disposal and value in use. It is difficult
+to precisely estimate fair value because quoted market prices for these assets may not
+be readily available. In determining the value in use, the Group uses all readily available
+information in determining expected cash flows generated by the cash-generating unit to
+which the asset belongs and they are discounted to their present value, which requires
+significant judgement relating to cash flow items such as level of sale volume, selling price,
+amount of operating costs and future returns.
+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.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+In the application of the Group's accounting policies, which are described in Note 3, the Directors
+are required to make judgements, estimates and assumptions about the carrying amounts of
+assets and liabilities that are not readily apparent from other sources. The estimates and associated
+assumptions are based on historical experience and other factors that are considered to be
+relevant. Actual results may differ from these estimates.
+The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to
+accounting estimates are recognised in the period in which the estimate is revised if the revision
+affects only that period or in the period of the revision and future periods if the revision affects
+both current and future periods.
+4.1
+Critical judgements in applying accounting policies
+The following are critical judgements, apart from those involving estimation (see Note 4.2
+below), that the Directors have made in the process of applying the Group's accounting
+policies and that have the most significant effect on the amounts recognised in the
+consolidated financial statements.
+Control over Hebei Guohua Dingzhou Power Co., Ltd. ("Dingzhou Power")
+Note 46 describes that Dingzhou Power is a subsidiary of the Company although the
+Company has only 41% ownership interest and voting rights in Dingzhou Power. The
+remaining 59% of ownership interest and voting rights are owned by two shareholders that
+are unrelated to the Group as to 19% and 40%, respectively. Details of Dingzhou Power are
+set out in Note 46.
+4.
+China Shenhua Energy Company Limited
+Impairment losses
+In making their judgement, the Directors considered that the other shareholders of Dingzhou
+Power offered the Company, for the right on appointment of the majority members of the
+board of directors which is the governing body of most of the relevant activities of Dingzhou
+Power. The Directors considered that the Company has the practical ability to direct the
+relevant activities that most significantly affect Dingzhou Power's returns unilaterally. After
+assessment, the Directors concluded that the Company has sufficiently dominant power
+over the board of directors of Dingzhou Power and therefore the Company has control over
+Dingzhou Power.
+Despite the inherent imprecision in these engineering estimates, these estimates are
+used in determining depreciation expenses and impairment loss. Depreciation rates
+are determined based on estimated proved and probable coal reserve quantity (the
+denominator) and capitalised costs of mining structures and mining rights (the numerator).
+The capitalised cost of mining structures and mining rights are amortised based on the units
+of coal produced.
+Engineering estimates of the Group's coal reserves are inherently imprecise and represent
+only approximate amounts because of the subjective judgements involved in developing
+such information. There are authoritative guidelines regarding the engineering criteria
+that have to be met before estimated coal reserves can be designated as "proved" and
+"probable". Proved and probable coal reserve estimates are updated at regular basis and
+have taken into account recent production and technical information of each mine. In
+addition, as prices and cost levels change from year to year, the estimate of proved and
+probable coal reserves also changes. This change is considered as a change in estimate for
+accounting purposes and is reflected on a prospective basis in related depreciation rates.
+Coal reserves
+228
+4.2 Key sources of estimation uncertainty
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+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.
+Coal purchased
+Inventories
+Current assets
+75,557
+313
+2,303
+2,351
+2
+101
+1,062
+67,319
+2,106
+Lease prepayments
+Other non-current assets
+Equity instruments at FVTOCI
+Intangible assets (Note 20)
+Construction in progress (Note 18)
+Property, plant and equipment (Note 17)
+Non-current assets
+1,539
+RMB million
+Deferred tax assets
+Interests in associates
+11. DISPOSAL GROUP HELD FOR SALE (CONTINUED)
+5,005
+56,321 49,950
+2018
+Cost of coal production
+42,934 40,305
+56,321 49,950
+(11,114) (7,352) 31,820 32,953
+Current portion of long-term liabilities
+Accrued expenses and other payables
+Accounts and bills payables
+Borrowings
+Current liabilities
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+83,367
+Total assets classified as held for sale
+7,810
+535
+731
+Prepaid expenses and other current assets
+Cash and cash equivalents
+Accounts and bills receivables
+31 December
+(175)
+11. DISPOSAL GROUP HELD FOR SALE
+1,158
+- income not taxable
+- non-deductible expenses
+(4,802)
+(4,194)
+- different tax rates of branches and subsidiaries
+18,323
+17,535
+Tax at the PRC income tax rate of 25% (2017: 25%)
+Tax effects of:
+572
+73,293
+Profit before income tax
+2017
+RMB million
+Year ended 31 December
+2018
+RMB million
+The tax charge for the year can be reconciled to the profit before income tax per consolidated
+statement of profit or loss and other comprehensive income as follows:
+16,155
+15,977
+14,172
+1,981
+million million
+1,769
+391
+70,141
+On 1 March 2018, the Company and GD Power Development Co., Ltd. (the "GD Power") entered
+into a joint venture agreement. Pursuant to the agreement, GD Power and the Company proposed
+to contribute the assets and liabilities of certain coal-fired power generation entities into the joint
+venture. Based on the agreement, GD Power will hold 57.47% of equity interests in the joint
+venture, and the Company will hold 42.53% of equity interests in the joint venture. The assets
+and liabilities attributable to the certain coal-fired power generation companies, which is expected
+to be contributed within twelve months, have been classified as a disposal group held for sale
+and are presented separately in the consolidated statement of financial position (see below). The
+relevant coal-fired power generation entities are included in the Group's power segment as set out
+in Note 6. The share of equity in the joint venture is expected to exceed the net carrying amount
+of the relevant assets and liabilities and accordingly, no impairment loss has been recognised.
+The major classes of assets and liabilities classified as held for sale are as follows:
+(382)
+(112)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+240
+2018 Annual Report 239
+Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation
+Regulation of the EIT Law, the tax rate applicable for the PRC group entities is 25% (2017: 25%)
+except for subsidiaries and branches operating in the western developing region of the PRC which
+are entitled to a preferential tax rate of 15% from 2011 to 2020.
+16,155
+15,977
+Income tax expense
+(3)
+– share of results of associates
+(1)
+1,769
+- additional tax in respect of prior years
+- others
+905
+508
+tax losses and deductible temporary difference not
+recognised
+(518)
+(304)
+- utilisation of tax losses and deductible temporary
+difference previously not recognised
+(128)
+1,981
+million million
+Year ended
+31 December
+2018
+RMB million
+million
+Impairment losses
+1,258
+2,741
+(64)
+(22)
+1,194
+2,719
+2018 Annual Report
+235
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+6.
+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, interests
+in associates, other non-current assets and lease prepayments ("specified non-current
+assets"). The geographical location of customers is based on the location at which the
+services were provided or the goods delivered. The geographical location of the specified
+non-current assets is based on the physical location of the asset, in the case of property,
+plant and equipment, construction in progress and lease prepayments, and the location
+of operations, in the case of exploration and evaluation assets, intangible assets, other
+non-current assets and interests in associates.
+Revenue from external
+customers
+Specified non-current assets
+13,817
+534
+448
+38
+5
+73,293
+Interest expenses
+5,571
+5,340
+1,016
+1,660
+(1,684)
+(2,090)
+4,903
+Year ended
+31 December
+2017
+RMB million
+4,910
+23,462
+25,092
+266
+248
+23,728
+25,340
+Share of results of associates
+443
+496
+Depreciation and amortisation
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+Coal chemical
+Unallocated items
+Eliminations
+Total
+2018
+2017
+2018
+2017
+2018
+Shipping
+2017 2018 2017
+RMB RMB RMB
+million million million
+2017
+2017
+RMB RMB
+RMB
+RMB
+RMB
+RMB
+RMB RMB
+million
+million
+2018
+million
+2018 2017 2018 2017 2018 2017 2018
+RMB RMB RMB RMB
+RMB RMB RMB
+million million million million million million million
+Railway
+Domestic markets
+Overseas markets
+261,330
+2,771
+245,230
+3,516
+323,951
+21,033
+406,565
+17,204
+264,101
+248,746
+344,984
+Port
+423,769
+Revenue from any individual customer of the Group does not exceed 10% of the Group's
+revenue. Certain of the Group's customers are entities, which controlled, jointly controlled
+or significantly influenced by the PRC government ("government-related entities") and
+collectively considered as the Group's major customer. Revenue from major customer of the
+Group's coal and power segments amounted to RMB181,839 million (2017: RMB174,515
+million).
+236 China Shenhua Energy Company Limited
+6.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+6.5 Other information
+Certain other information of the Group's segments for the years ended 31 December 2018
+and 2017 is set out below:
+Coal
+Power
+6.4 Major customers
+RMB million
+Cost of coal transportation
+2017
+106
+73
+8
+11
+722
+5,384 1,126
+5,126 4,566 12,922 15,226 3,740
+228,641 225,672 222,941 215,910 129,353 129,829
+(109,845) (114,713) (158,033) (152,157) (56,341) (65,772) (10,094)
+Total liabilities (Note (iii)
+Total assets (Note ()
+1,536 (1,037) (912) 78,197 75,499
+1,758
+560
+751
+661
+723
+2,529
+2,325
+17,675
+17,695
+23,735 24,211
+(10,607)
+7,058
+(636)
+7,865 9,821
+(1,527) (1,816)
+2018
+Year ended 31 December
+Other operating costs
+Taxes and surcharges
+Transportation charges
+Repairs and maintenance
+Depreciation and amortisation
+Personnel expenses
+Materials, fuel and power
+7,399
+Coal purchased
+7.
+Unallocated items of total assets include deferred tax assets and other unallocated corporate assets.
+Unallocated items of total liabilities include deferred tax liabilities and other unallocated corporate liabilities.
+(iii)
+Non-current assets exclude interests in associates, financial instruments and deferred tax assets.
+(ii)
+Profit from operations is calculated as revenue minus cost of sales, selling expenses, general and
+administrative expenses and impairment losses.
+(i)
+Notes:
+207 188
+23,205 26,200
+10,982 416,213 381,056 (446,136) (423,923) 591,626 571,602
+(3,619) (191,617) (169,782) 345,593 325,680 (182,789) (192,497)
+COST OF SALES
+12,720
+46,051
+43,262
+345
+4,376
+ཚི།
+3,479
+632 3,565
+569
+4,007 3,480
+Others
+4,341
+315
+Cost of coal chemical
+production
+71,839 67,756
+Power cost
+1,130
+2,565 1,270
+3,166
+15,153
+16,350
+52,881 49,726
+70,141
+(41,915) (39,449) 31,752 29,125
+(32,097) (32,245) 39,742 35,511
+RMB million
+1,962
+560
+Profit from operations
+(Note (i))
+Additions to non-current
+assets (Note (i))
+(86,463) (80,390) 173,677 160,460
+49
+49
+30
+30
+4,968
+4,901
+2,472
+1,342
+3,232
+3,511
+18,632
+19,915
+156,143 143,461 72,408 68,388
+Total cost of sales
+(1,337) (1,344) 3,004 3,032
+11,038 9,889
+49
+30
+592
+2,880
+RMB million
+2017
+RMB million
+49,950
+(792)
+Less: amount capitalised
+5,529
+5,526
+Total finance costs on financial liabilities not at FVTPL
+311
+244
+- bonds
+954
+236
+- medium-term notes
+4,264
+5,046
+- borrowings
+Interest on:
+1,205
+1,479
+246
+126
+(799)
+4,734
+4,730
+Unwinding of discount
+Year ended 31 December
+2018
+Under provision in respect of prior years
+Deferred tax
+Current tax
+10. INCOME TAX EXPENSE
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+238
+3,211
+959
+3,942
+5,421
+Borrowing costs capitalised during the year arose on the general borrowing pools and were
+calculated by applying a capitalisation rate from 2.57% to 4.69% (2017: from 2.48% to 4.81%) per
+annum to expenditure on qualifying assets.
+Net finance costs
+Total finance costs
+(494)
+518
+Exchange loss (gain), net
+180
+169
+4,416
+1,353
+RMB million
+2017
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+237
+2018 Annual Report
+160,460
+173,677
+21,665
+21,394
+9,640
+8. OTHER INCOME
+10,053
+16,635
+9,938
+10,025
+21,576
+20,243
+13,842
+15,888
+19,523
+23,118
+14,326
+56,321
+Government grants
+Claim income
+9.
+RMB million
+2018
+Year ended 31 December
+894
+744
+200
+240
+34
+63
+Other
+660
+RMB million
+RMB million
+2017
+Year ended 31 December
+2018
+Total interest income
+- other loans and receivables
+- bank deposits
+Interest income from:
+INTEREST INCOME/FINANCE COSTS
+441
+22
+4.16
+1,463
+Huang Ming (Note (ii))
+0.26
+Peng Suping (Note (ii))
+0.45
+(Note (ii))
+Zhong Yingjie, Christina
+0.45
+Jiang Bo (Note (ii))
+0.45
+Tam Wai Chu, Maria
+directors
+Independent non-executive
+Sub-total
+Zhao Jibin (Note (i))
+Non-executive directors
+Sub-total
+and Note (iii))
+Han Jianguo (Note (i)
+and Note (ii))
+0.26
+Sub-total
+1.87
+Supervisors
+0.23
+0.33
+0.41
+0.04
+0.25
+0.12
+1.87
+0.26
+0.26
+Mi Shuhua (Note (i)
+0.45
+III
+III
+III
+|||
+Total
+Sub-total
+Shen Lin (Note (iv))
+Zhou Dayu (Note (iv))
+Zhai Richeng (Note (iv))
+0.45
+0.45
+0.04
+Gao Song (Note (i) and
+Note (ii))
+Executive directors
+China Shenhua Energy Company Limited
+30
+39
+- audit service
+345
+361
+Operating lease in respect of properties and equipment
+Auditors' remuneration
+116,464
+132,874
+Carrying amount of inventories sold
+1,880
+2,844
+106
+282
+(22)
+847
+N/A
+(8)
+N/A
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+13. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+Directors' and chief executive's remuneration for the year, disclosed pursuant to the applicable
+Listing Rules and CO, is as follows:
+Year ended 31 December 2018
+Sub-total
+Note (ii))
+Ling Wen (Note (i) and
+Chairman
+RMB million RMB million
+Total
+contributions
+scheme
+Retirement
+Li Dong (Note (i))
+RMB million
+Discretionary
+RMB million
+RMB million
+in kind
+Fees
+other allowance
+and benefits
+housing and
+Basic salaries,
+bonuses
+0.60
+0.34
+0.22
+RMB million
+Total
+RMB million
+scheme
+contributions
+Discretionary
+bonuses
+RMB million
+Retirement
+China Shenhua Energy Company Limited
+244
+Total
+Sub-total
+Shen Lin
+Zhou Dayu
+Zhai Richeng
+Supervisors
+1.35
+Sub-total
+0.19
+(Note (ii))
+Zhong Yingjie, Christina
+II
+II
+0.26
+0.26
+0.26
+2.81
+0.24
+1.15
+1.42
+0.93
+0.08
+0.37
+0.48
+0.94
+0.19
+0.08
+0.48
+0.94
+0.08
+0.40
+0.46
+1.35
+0.19
+0.19
+0.19
+0.38
+Jiang Bo (Note (ii))
+0.19
+(Note (ii))
+Chairman
+RMB million
+RMB million
+in kind
+Fees
+and benefits
+other allowance
+housing and
+Basic salaries,
+Zhang Yuzhuo (Note (i) and
+Year ended 31 December 2017
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2018 Annual Report 243
+3.48
+1.61
+0.12
+0.70
+0.79
+0.60
+0.04
+13. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+(CONTINUED)
+write down of inventories
+Note (iii))
+Executive directors
+Tam Wai Chu, Maria
+0.26
+Guo Peizhang (Note (iii))
+0.26
+Gong Huazhang (Note (iii))
+0.26
+Fan Hsulaitai (Note (iii))
+directors
+Independent non-executive
+Sub-total
+Sub-total
+and Note (iii))
+Chen Hongsheng (Note (i)
+Non-executive directors
+Sub-total
+Li Dong (Note (i))
+Note (iii))
+Han Jianguo (Note (i) and
+Note (ii))
+Ling Wen (Note (i) and
+Zhao Jibin (Note (i))
+- reversal of allowance for prepaid expenses
+- allowance for doubtful debts
+- reversal of impairment on loan receivables
+6,124
+5,717
+4,089
+3,247 5,840
+5,681 348,845 327,660
+Reportable segment profit
+39,872 46,062 9,968 5,585 16,073 16,480
+2,073
+2,580
+706
+[0
+620
+709
+481
+69,401 71,808
+Including:
+Interest expenses
+Depreciation and amortisation
+Share of results of associates
+Impairment loss
+1,348 1,452 2,871 2,284 922
+7,440 7,703 8,602 10,059 4,870 4,858
+120 266 307 213
+458 1,540 520 1,141
+1,028
+205,191 195,918 88,452 79,511 39,149 37,586
+Reportable segment revenue
+5,681 262,308 247,398
+86,537 80,262
+2,549
+Port
+Coal chemical
+Segment total
+2018 2017 2018 2017
+RMB RMB RMB RMB RMB
+million million million million million
+Revenue from external
+customers
+Inter-segment revenue
+44,346 40,548
+160,845 155,370 88,176 79,246
+276 265
+5,877
+344
+5,615
+788
+837
+698
+5,840
+33,272
+31,971
+5,391
+4,929
+3,252
+733
+397
+19
+67
+2018
+2017
+Elimination of
+inter-segment amounts
+2018
+2017
+Consolidated
+2018
+2017
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+Revenue
+2017
+Profit before income tax
+327,660
+2,763
+2,388
+(87,507)
+(81,302)
+264,101
+248,746
+71,808
+856
+348,845
+69,401
+Railway
+2018
+amounts
+120
+5,571 5,340
+1,364
+1,266
+294
+293
+892
+913 23,462 25,092
+16
+Unallocated head office
+and corporate items
+443 496
+27
+21
+9
+49
+24 1,258
+2,741
+6.2
+Reconciliations of reportable segment revenue, segment profit and other items
+of profit or loss for the years ended 31 December 2018 and 2017 are set out
+below:
+Reportable segment
+210
+(116)
+Shipping
+2018 2017 2018 2017 2018 2017 2018 2017 2018 2017
+RMB RMB RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million million million
+Coal
+(317)
+(6)
+2017
+RMB million
+Year ended 31 December
+2018
+RMB million
+- losses on derecognition of assets without considerations
+- losses on disposal of subsidiaries
+- gains on disposal of property, plant and equipment,
+exploration and evaluation assets, intangible assets and
+non-current assets
+Other gains and losses, represent
+12. PROFIT FOR THE YEAR (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+242
+2018 Annual Report 241
+152
+N/A
+126
+N/A
+26
+- allowance for doubtful debts
+- impairment of loan receivables
+1,831
+- gains on disposal of AFS investments
+(535)
+- gains on disposal of wealth management products at
+FVTPL
+22
+- impairment in respect of lease prepayments
+175
+91
+- impairment in respect of construction in progress
+1,511
+691
+- impairment in respect of property, plant and equipment
+1
+Impairment losses, net of reversal, represent
+- impairment in respect of interest in an associate
+19
+(22)
+- impairment of an AFS investment
+financial instruments
+- (gains) losses on changes in fair value of derivative
+(7)
+60
+- losses (gains) on disposal of derivative financial
+instruments
+(8)
+65
+25,340
+23,728
+Depreciation and amortisation
+3,988
+5,349
+RMB million
+31 December
+2018
+- contributions to defined contribution plans of
+RMB3,469 million (2017: RMB2,886 million)
+Personnel expenses, including
+Profit for the year has been arrived at after charging (crediting):
+12. PROFIT FOR THE YEAR
+Total liabilities classified as held for sale
+1,603
+Deferred tax liabilities
+Borrowings
+Non-current liabilities
+Income tax payable
+6.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+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"). 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.
+Information regarding the Group's reportable segments as provided to the Group's CODM
+for the purposes of resource allocation and assessment of segment performance for the
+years ended 31 December 2018 and 2017 is set out below:
+Long-term liabilities
+Power
+12
+99
+872
+924
+498
+768
+449
+417
+Amortisation of intangible assets, included in cost of sales
+Amortisation of lease prepayments, included in cost of sales
+Amortisation of other non-current assets
+23,521
+21,619
+190
+Depreciation of property, plant and equipment
+29,022
+2017
+RMB million
+Year ended 31 December
+2018
+RMB million
+29,914
+18,673
+201
+286
+18,186
+11,241
+25,693
+(Note (ii))
+Contract liabilities
+13. DIRECTORS', SUPERVISORS' AND CHIEF EXECUTIVE'S EMOLUMENTS
+(CONTINUED)
+(100)
+(1,405)
+(3,175)
+(400)
+(5,086)
+Exchange adjustment
+(7)
+(18)
+(25)
+At 31 December 2017
+21,707
+12,220
+43,120
+68,846
+39,520
+757
+5,403
+(21)
+Adjustment
+21,619
+386
+741
+450
+Disposals or write-off
+4,800
+4,193
+1,059
+1,883
+Charge for the year
+203,646
+12,073
+8,107
+(7)
+1,511
+21
+61,977
+35,046
+455
+4,643
+10,979
+183,312
+Charge for the year
+1,892
+1,294
+4,373
+8,954
+4,860
+302
+752
+1,094
+23,521
+Adjustment
+6
+746
+118
+34
+584
+Impairment losses (Note (i))
+2
+413
+(11)
+8
+362
+(58)
+22
+88
+2
+40,092
+168
+Impairment losses (Note (i))
+12,351
+166,039
+CARRYING VALUES
+At 31 December 2018
+47,429
+23,577
+19,978
+63,495
+84,209
+6,282
+7,040
+5,339
+257,349
+At 31 December 2017
+64,237
+24,020 23,225 110,997
+87,830
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+17.
+China Shenhua Energy Company Limited
+248
+After assessment, no impairment loss was recognised in both years presented.
+In 2018, owing to the unsatisfactory performance, the management identified certain non-current assets relating
+to coal mines having impairment indications. The Group assessed the impairment, each mine is a separate
+cash-generating unit, by measuring their recoverable amount which is determined based on discounted cash flow
+analysis covering the shorter of their economic or legal useful life, and pre-tax discount rate ranging from 8.12% to
+11.87%.
+6,155
+Impairment loss for cash-generating units
+(i)
+Notes:
+329,970
+5,747
+7,774
+6,140
+Impairment loss
+(57)
+1,207
+45,261 32,729
+252
+109
+32
+264
+22
+12
+12
+74
+691
+Disposals or write-off
+(630)
+(31)
+(2,252)
+(959)
+(303)
+(1)
+(106)
+13,349
+11,040
+At 31 December 2018
+(55,744)
+(35)
+(43,548)
+43,947
+(1)
+sale
+Classified as assets held for
+35
+28
+Exchange adjustment
+(4,282)
+(12,158)
+10,870
+19,250
+At 1 January 2017
+(502)
+(5,688)
+Exchange adjustment
+(7)
+(31)
+I
+(38)
+At 31 December 2017
+85,944
+36,240
+66,345
+179,843
+127,350
+6,897
+13,177
+17,820
+533,616
+10
+543
+10,789
+362
+80
+5,059
+(3,377)
+construction in progress
+991
+454
+1,129
+642
+59
+Additions
+Transferred from
+Adjustment
+(1,496)
+(237)
+17,765
+Additions
+210
+1,173
+157
+436
+2,450
+11
+4
+13
+4,454
+Transferred from construction
+in progress
+4,195
+268
+1,256
+5,972
+Disposals or write-off
+(28)
+2
+(58)
+(343)
+(590)
+(70)
+1,245
+Adjustment
+13,819
+44
+15
+6
+2,063
+(326)
+(383)
+8
+169
+13,195
+17,690
+423,388
+2018 Annual Report 247
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+17. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+Mining Generators,
+related related
+structures machinery machinery
+Mining
+Land and and mining
+buildings
+rights
+and
+and
+equipment equipment
+Railway
+and port
+Coal
+Furniture,
+chemical
+IMPAIRMENT
+DEPRECIATION AND
+RMB million RMB million RMB million
+RMB million RMB million RMB million RMB million RMB million RMB million
+Total
+equipment equipment
+7,489
+Vessels
+and
+vehicles
+motor
+machinery
+related
+fixtures,
+and other
+128,156
+96,224
+65,239
+༦ '8'
+77
+6
+(32)
+Exchange adjustment
+(461)
+10
+(1,127)
+(2,128)
+Disposals or write-off
+(49)
+582
+(204)
+(865)
+(47) (2,766)
+PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+99
+3,350
+36,926
+58,469
+At 31 December 2018
+(123,063)
+(63)
+(92,947)
+65
+(30,050)
+Classified as assets
+51
+(742)
+(6,768)
+(236)
+16,944
+41
+held for sale
+13,218
+Notes: (continued)
+Impairment loss (continued)
+The above unlisted equity investments represent investments in unlisted equity securities issued
+by private entities incorporated in the PRC. They are measured at cost less impairment because
+the range of reasonable fair value estimates is so significant that the Directors are of the opinion
+that their fair values cannot be measured reliably.
+24. OTHER NON-CURRENT ASSETS
+Prepayments in connection with construction work,
+31 December
+2018
+31 December
+2017
+RMB million
+RMB million
+equipment purchases and others (Note (i))
+6,748
+8,189
+Prepayment for mining projects
+8,000
+8,000
+Deductible VAT and other tax
+1,314
+1,834
+4,117
+3,764
+Others
+889
+278
+Goodwill
+854
+420
+Long-term entrusted loans (Note (iii))
+9,699
+8,932
+Loans to China Energy Group and fellow subsidiaries
+(Note (ii))
+318
+Long-term receivable
+420
+29,456
+854
+749
+Tianjin Yuanhua Shipping Co., Ltd.
+44
+44
+Provision of transportation
+service
+Inner Mongolia Yili Chemical
+25
+25
+25
+Industry Co., Ltd.
+Production and sale of
+chemicals
+Note:
+-
+The Group is able to exercise significant influence over Mengxi – Huazhong Railway Co., Ltd. because it has the power to
+appoint one out of eleven directors of that company under the Articles of Association of that company.
+22. EQUITY INSTRUMENTS AT FVTOCI
+31 December
+2018
+RMB million
+RMB million
+31 December
+2017
+Analysed for reporting purposes as:
+Non-current assets
+Total
+- investments in wealth management products
+- equity securities
+105
+Unlisted investments:
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+252
+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.
+811
+Unlisted investments:
+Equity securities
+23. AVAILABLE-FOR-SALE INVESTMENTS
+Generation and sale of
+electricity
+33,466
+(i)
+Less: allowance for credit losses
+31 December
+2018
+31 December
+2017
+RMB million
+RMB million
+2,447
+218
+2,377
+179
+6,951
+11,802
+9,616
+14,358
+(1,128)
+(1,039)
+8,488
+13,319
+Bills receivable
+- China Energy Group and fellow subsidiaries
+China Shenhua Energy Company Limited
+254
+19,455
+13,055
+6,136
+4,567
+- Third parties
+6,025
+- Third parties
+54
+70
+- Associates
+57
+120
+4,377
+Notes:
+- Associates
+Accounts receivable
+At 31 December 2018, the Group had prepayments to fellow subsidiaries amounting to RMB42 million (2017:
+RMB20 million).
+(ii)
+The loans to China Energy Group and fellow subsidiaries bear interest at rates ranging from 4.28% to 4.41% per
+annum (2017: 4.28% to 4.41% per annum) and are receivables within two to eight years.
+(iii)
+The Group has long-term entrusted loan of RMB420 million to an associate through a PRC state-owned bank,
+bearing interest at rate of 4.75% per annum and variable by reference to the interest rate promulgated by the
+People's Bank of China (the "PBOC").
+2018 Annual Report
+253
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+25. 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 RMB1,984 million as at 31 December 2018 (2017: RMB2,097
+million). The Directors are of the opinion that the Group is entitled to lawfully and validly occupy or
+use the above mentioned lands.
+As at 31 December 2018, the Group has bank loans secured by the Group's lease prepayments
+with carrying amount of RMB866 million (31 December 2017: RMB892 million).
+26. INVENTORIES
+Coal
+Materials and supplies
+Others (Note)
+31 December
+2018
+31 December
+27. ACCOUNTS AND BILLS RECEIVABLES
+Others mainly represent properties held for sale and properties under development.
+Note:
+11,647
+9,967
+1,186
+- China Energy Group and fellow subsidiaries
+1,119
+5,302
+4,579
+3,546
+RMB million
+RMB million
+2017
+5,882
+Co., Ltd.
+25
+25
+(16,944)
+(13,819)
+(57)
+(49)
+(124)
+(596)
+(281)
+(356)
+(73)
+(163)
+(91)
+(175)
+(2,106)
+36,585
+39,054
+As at 31 December 2018, the Group is in the process of obtaining requisite permits of certain of its construction in
+progress from the relevant government authorities. The Directors are of the opinion that the Group will be able to obtain
+the requisite permits in due course.
+19. EXPLORATION AND EVALUATION ASSETS
+998
+951
+2,344
+32
+(1,378)
+(55)
+8
+998
+19,273
+2017
+RMB million
+Year ended 31 December
+250 China Shenhua Energy Company Limited
+At the end of the year
+Disposals
+At the beginning of the year
+Exchange adjustments
+The movements of the exploration and evaluation assets are as follows:
+2018
+RMB million
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+16,926
+39,054
+Impairment loss for individual assets
+(ii)
+(iii)
+(iv)
+The Group has been upgrading its power plants for energy conservation and environment protection which
+rendered certain non-current assets obsolete. The Group assessed the recoverable amounts of those non-
+current assets in power segment, including machineries and generators, and as a result the carrying amount of
+the machineries and the generators was written down by RMB252 million to their recoverable amount as at 31
+December 2018 (2017: RMB164 million).
+The estimated recoverable amounts of the determined above assets were determined using market comparison
+approach by reference to either the recent transaction price of similar assets, after taking into account of its
+remaining useful lives, or the recent transaction price of similar material, after taking into account of its weight and
+geographical location. The fair value is categorised as a Level 3 measurement.
+In 2018, the Group has upgraded its railway capacity which rendered certain non-current assets obsolete. The
+Group assessed the recoverable amounts of those non-current assets in railway segment, including structures and
+equipment, and as a result the carrying amount of the structures and equipment was written down by RMB207
+million to their recoverable amount as at 31 December 2018.
+The estimated recoverable amount of the determined above assets were determined using the recent transaction
+price of similar materials in the second-hand market, after taking into account of its weight and geographical
+location. The fair value is categorised as a Level 3 measurement.
+Influenced by the policy of coal production capacity withdrawal, Tanggonggou Coal Mine, a coal mine of the Group
+had been closed down and the related fixed assets had been impaired. In 2018, the management expected that the
+value of the mining right was unrecoverable, the Group assessed the impairment of the mining rights and estimated
+the recoverable amount according to the fair value of the assets less the disposal expenses, and an impairment of
+RMB98 million was recognised.
+The Group's freehold lands with a carrying amount of RMB970 million (2017: RMB950 million) are located in
+Australia.
+The Group was in the process of applying for the title certificates of certain of its properties with an aggregate
+carrying amount of RMB9,314 million as at 31 December 2018 (2017: RMB8,771 million). The Directors are of the
+opinion that the Group is entitled to lawfully and validly occupy or use the above mentioned properties.
+As at 31 December 2018, the property, plant and equipment with carrying amount of RMB1,058 million (2017:
+RMB644 million) have been pledged to the banks to secure the banking facilities granted to the Group.
+2018 Annual Report 249
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+18. CONSTRUCTION IN PROGRESS
+At the beginning of the year
+RMB million
+RMB million
+2017
+Year ended 31 December
+2018
+At the end of the year
+Classified as assets held for sale (Note 11)
+35,220
+Impairment losses
+Net income from mine trial run
+Transferred to other non-current assets
+Transferred to lease prepayments
+Transferred to intangible assets
+Transferred to property, plant and equipment
+Additions
+Disposal
+20. INTANGIBLE ASSETS
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+Year ended 31 December
+2018
+9,513
+2018 Annual Report 251
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+The Group's interests in associates are individually and in aggregate not material to the Group's
+financial position or results of operations for both years presented. The Group's associates are
+unlisted and established in the PRC. The following list contains only the particulars of associates,
+which principally affect the results or assets of the Group:
+Name of associate
+Proportion of ownership
+interest and voting power
+held by the Group
+Principal activities
+31 December 31 December
+2018
+%
+2017
+%
+Mengxi - Huazhong Railway
+10
+10
+Co., Ltd. (Note)
+Guohua (Hebei) Renewables
+Generation and sale of
+electricity
+20
+20
+Sichuan Guangan Power Co., Ltd.
+Generation and sale of
+electricity
+10,047
+20
+Zhejiang Zheneng Jiahua Power
+Co., Ltd.
+Coal production and sale
+20
+20
+Shendong Tianlong Group Co., Ltd.
+Provision of transportation
+service
+20
+1,956
+1,877
+7,557
+49
+57
+915
+678
+(3)
+4
+(417)
+3,018
+Transferred from construction in progress
+Amortisation
+Additions
+Exchange adjustment
+At the beginning of the year
+2017
+RMB million
+RMB million
+3,447
+(i)
+(449)
+(45)
+8,170
+31 December
+2017
+RMB million
+RMB million
+31 December
+2018
+income, net of dividend received
+Share of post-acquisition profits and other comprehensive
+Disposal
+Unlisted shares, at cost
+At the end of the year
+3,447
+3,623
+(101)
+Classified as assets held for sale (Note 11)
+(83)
+21. INTERESTS IN ASSOCIATES
+6,880
+521,097
+177,186
+15. DIVIDENDS
+HKD500,001 to HKD1,000,000
+HKD1,000,001 to HKD1,500,000
+2017
+2018
+Year ended 31 December
+Their emoluments were within the following band:
+4.84
+5.10
+0.41
+-
+0.50
+2.38
+2.31
+2.22
+RMB million
+RMB million
+2017
+Year ended 31 December
+2018
+Retirement scheme contributions
+Basic salaries, housing and other allowances and benefits in kind
+Discretionary bonuses
+2.12
+Out of the five individuals with the highest emoluments within the Group, Nil (2017: nil) was
+director of the Company. The emoluments of the five (2017: five) highest paid individuals were as
+follows:
+2017 final RMB0.91 (2017: 2016 final of RMB0.46) per
+ordinary share
+1
+123,297
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+No diluted earnings per share for both 2018 and 2017 were presented as there were no potential
+ordinary shares in existence during both years.
+The calculation of basic earnings per share is based on the profit attributable to ordinary equity
+holders of the Company of RMB44,137 million (2017: RMB47,795 million) and the number of
+shares in issue during the year of 19,890 million shares (2017: 19,890 million shares).
+16. EARNINGS PER SHARE
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+246
+Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31
+December 2018 of RMB0.88 (in respect of the year ended 31 December 2017: final dividend
+RMB0.91) per ordinary share has been proposed by the Directors and is subject to approval by the
+shareholders in the following general meeting.
+2016 special - RMB2.51 per ordinary share
+59,072
+9,149
+49,923
+18,100
+2017
+RMB million
+RMB million
+Year ended 31 December
+2018
+5
+5
+4
+0
+18,100
+14. EMPLOYEES' EMOLUMENTS
+Dividend approved and paid during the year:
+Notes to the Consolidated Financial Statements (Continued)
+Land and and mining
+Mining Generators,
+related related
+machinery machinery
+and
+and
+Railway
+and port
+buildings rights equipment equipment
+Coal Furniture,
+chemical fixtures,
+related
+motor
+Mining
+structures
+machinery
+and and other
+equipment equipment
+Total
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+COST
+At 1 January 2017
+82,109
+33,624
+For the year ended 31 December 2018
+67,018
+vehicles
+17. PROPERTY, PLANT AND EQUIPMENT
+Vessels
+The independent non-executive directors' emoluments shown above were mainly for their
+services as directors of the Company.
+245
+2018 Annual Report
+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 emoluments of these supervisors were borne by China Energy Group from July to December 2018.
+Dr. Han Jianguo resigned as an executive director on 15 May 2018.
+(iv)
+Ms. Fan Hsulaitai, Mr. Gong Huazhang, and Mr. Guo Peizhang resigned as independent non-executive directors on
+23 June 2017.
+Mr. Chen Hongsheng resigned as non-executive director on 23 June 2017.
+Dr. Peng Suping and Dr. Huang Ming were appointed as independent non-executive directors on 27 April 2018.
+Mr. Gao Song and Mr. Mi Shuhua were appointed as executive directors on 27 April 2018.
+Mr. Zhang Yuzhuo resigned as the Chairman on 27 March 2017.
+Discretionary bonuses were determined by the remuneration committee in accordance with the
+relevant human resources policies.
+(iii)
+Ms. Tam Wai Chu, Maria, Ms. Jiang Bo and Ms. Zhong, Yingjie, Christina were appointed as independent
+non-executive directors on 23 June 2017.
+The emoluments of these directors were borne by China Energy Group during the years ended 31 December 2018
+and 2017.
+(ii)
+(i)
+Notes:
+Dr. Ling Wen was elected and appointed as the Chairman of the Board on 2 January 2018, and he would no longer
+serve as the Vice Chairman of the Board and the president of the Company from 2 January 2018.
+China Energy Group and fellow subsidiaries
+1,912
+269
+- Associates
+- Third parties
+RMB million
+Bills payable
+31 December
+2018
+- China Energy Group, an associate of
+31 December
+2017
+RMB million
+Accounts payable
+For the year ended 31 December 2018
+The net proceeds of the Dollar bonds issued were mainly used for the repayment of loans of
+subsidiaries.
+annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of USD500
+million, approximately RMB3,061 million and are payable on 19 January 2025. The bonds bear
+interest rate of 3.88% per annum, repayable semi-annually. Its effective interest rate is 4.10% per
+annum.
+On 20 January 2015, Shenhua Overseas Capital issued Dollar bonds with proceeds of USD500
+million, approximately RMB3,061 million and are payable on 19 January 2020. The bonds bear
+interest rate of 3.13% per annum, repayable semi-annually. Its effective interest rate is 3.35% per
+On 20 January 2015, China Shenhua Overseas Capital Company Limited ("Shenhua Overseas
+Capital") issued Dollar bonds with proceeds of USD500 million, approximately RMB3,061 million
+and were repaid on 19 January 2018. The bonds bear interest rate of 2.50% per annum, repayable
+semi-annually. Its effective interest rate is 2.84% per annum.
+Notes to the Consolidated Financial Statements (Continued)
+1,874
+On 7 November 2013, the Company issued medium-term notes with proceeds of approximately
+RMB5,000 million and were paid on 11 November 2018. The notes bear interest rate of 5.49% per
+annum, repayable annually. The effective interest rate is 5.69% per annum.
+33. MEDIUM-TERM NOTES AND BONDS
+34. ACCOUNTS AND BILLS PAYABLES
+283
+31 December
+2017
+RMB million
+29,431
+262
+17,689
+25,241
+5,367
+2,576
+RMB million
+31 December
+2018
+More than three years
+Two to three years
+One to two years
+23,398
+Less than one year
+34. ACCOUNTS AND BILLS PAYABLES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+As at 31 December 2018 and 2017, certain bills payable were secured by bills receivable held by
+the Group (see Note 27).
+33,914
+26,884
+2,326
+1,305
+31,588
+25,579
+The following is an aging analysis of accounts and bills payables, presented based on invoice date.
+2018 Annual Report 261
+More than one year, but not exceeding two years
+More than two years, but not exceeding five years
+More than five years
+As at 31 December 2018, included in the above outstanding borrowings, were entrusted loans
+from China Energy Group and fellow subsidiaries amounting to RMB874 million (2017: RMB1,374
+million).
+31 December
+2017
+RMB million
+31 December
+2018
+RMB million
+The Group's long-term borrowings comprise:
+For the year ended 31 December 2018
+32. BORROWINGS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+70,613
+50,537
+41,091
+32,128
+17,089
+9,414
+6,141
+5,223
+881
+6,292
+3,772
+Within one year
+RMB million
+2017
+Loans from banks and other institutions
+RMB denominated
+Interest rates ranging from 1.08%
+to 6.55% per annum with maturities.
+through 22 January 2036
+43,471
+64,321
+46,765
+6,292
+3,772
+5,772
+70,613
+50,537
+Less: current portion of long-term borrowings
+26
+12
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount
+of RMB1,058 million (2017: RMB644 million) (see Note 17), certain lease prepayments with
+carrying amounts of RMB866 million (2017: RMB892 million) (see Note 25), certain future power
+revenue to be generated by the Group, the investment in a subsidiary of the Company and a
+guarantee by a non-controlling shareholder of a subsidiary.
+Interest rate at 2.85% per annum with
+maturities through 22 June 2022
+to 2.60% per annum with maturities
+through 20 March 2031
+2,119
+1,993
+Interest rates ranging from 1.80%
+Japanese Yen ("JPY")
+denominated
+2,111
+5,061
+Interest rates ranging from Libor+0.7%
+to Libor+2.85% per annum with
+maturities through 26 December 2034
+USD denominated
+66,357
+Euro denominated
+2,431
+11,072
+3,666
+31 December
+Notes:
+Non-current liabilities
+Current liabilities
+Analysed for reporting purpose as:
+Others
+Defined benefit plans
+Payables for acquisition of mining rights (Note (i))
+Deferred income (Note (ii))
+36. LONG-TERM LIABILITIES
+The above balances are unsecured, interest-free and payable on demand.
+1,266
+1,114
+1,238
+28
+1,095
+19
+31 December
+2017
+RMB million
+RMB million
+31 December
+2018
+Amounts due to China Energy Group and fellow subsidiaries
+Amounts due to associates
+Other accrued expenses and payables of the Group included:
+(ii)
+As at 31 December 2018, deposits from China Energy Group and fellow subsidiaries bear interest at 0.42% to
+1.62% per annum (2017: 0.42% to 1.62% per annum).
+2018
+RMB million
+31 December
+2017
+RMB million
+773
+More than three years
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+China Shenhua Energy Company Limited
+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.
+(ii)
+(i)
+2,637
+(i)
+2,549
+457
+2,092
+2,637
+2,549
+290
+532
+128
+9
+1,367
+1,235
+852
+345
+2,292
+Notes:
+35. ACCRUED EXPENSES AND OTHER PAYABLES (CONTINUED)
+For the year ended 31 December 2018
+Accrued staff wages and welfare benefits
+RMB million
+31 December
+2017
+2018
+RMB million
+31 December
+1,407
+1,393
+2
+1,398
+84
+3,947
+228
+456
+31 December
+2017
+RMB million
+31 December
+2018
+RMB million
+35. ACCRUED EXPENSES AND OTHER PAYABLES
+JPY
+Others
+Euro
+USD
+Included in accounts and bills payables, the following amounts are denominated in foreign
+currencies:
+33,914
+26,884
+625
+2,947
+Accrued interest payable
+4,042
+472
+Notes to the Consolidated Financial Statements (Continued)
+264
+2018 Annual Report 263
+51,995
+52,737
+10,307
+RMB million
+Other accrued expenses and payables (Note (ii))
+20,075
+30,143
+419
+(Note (i))
+5,530
+Receipts in advances
+12
+Cross-currency exchange rate swaps
+4,149
+1,501
+Dividends payable
+7,408
+5,655
+Taxes payable other than income tax
+Deposits from China Energy Group and fellow subsidiaries
+2018
+Secured
+The exposure of the long-term borrowings and the
+contractual maturity dates:
+As at 31 December 2018, the Group invested RMB21,000 million in principal-guaranteed floating income wealth
+management products with terms ranging from 182 days to 273 days and expected annual rates of return ranging
+from 3.10% to 3.90%. The Group invested RMB9,000 million in a principal and income-guaranteed wealth
+management products with a term of 181 days and the annual rate of return is higher than 3.40%. The Group
+invested RMB2,447 million in negotiable certificate of deposit with terms ranging from 92 days to 365 days and
+annual rates of return ranging from 2.75% to 4.35%. The fair values were determined using discounting cash flow
+approach, the detailed fair value measurements are disclosed in Note 40.3.
+(iii)
+(ii)
+(i)
+Notes:
+20,452
+54,702
+3,357
+2,877
+Other receivables
+3,075
+3,033
+Deductible VAT and other tax
+535
+As at 31 December 2018, the Group had loans to China Energy Group and fellow subsidiaries amounting to
+RMB5,655 million (2017: RMB5,059 million), which bear interest at rates ranging from 3.92% to 4.93% per annum
+(2017: 3.92% to 4.28% per annum). The remaining balances are unsecured, interest-free and have no fixed terms
+of repayment.
+361
+2,992
+Loans to third parties (Note (iii))
+5,262
+5,877
+Group and fellow subsidiaries (Note (ii))
+Loans and advances to China Energy
+8,115
+7,110
+Prepaid expenses and deposits
+108
+32,452
+32,447
+- Wealth management products (Note (i))
+52
+Amounts due from associates
+56
+As at 31 December 2018, the Group had interbank loans to China Huaneng Finance Co., Ltd amounting to
+RMB2,955 million, which bear interest rate at 4.93% per annum. As at 31 December 2018, the Group had
+entrusted loan of RMB37 million to a third party through a PRC state-owned bank, bearing interest at rate of 6.00%
+per annum.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+3,798
+3,083
+31 December
+2017
+RMB million
+RMB million
+31 December
+2018
+China Shenhua Energy Company Limited
+258
+Deferred tax assets
+Deferred tax liabilities
+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.
+31. DEFERRED TAXATION
+Details of impairment assessment of bank deposits are set out in Note 40.2.
+As at 31 December 2018, the Group performed impairment assessment on bank balances
+and concluded that the probability of defaults of the counterparty banks are insignificant and
+accordingly, no allowance for credit losses is provided.
+818
+810
+2018 Annual Report 257
+40
+1
+776
+809
+31 December
+2017
+RMB million
+31 December
+2018
+RMB million
+HKD
+Euro
+USD
+Included in cash and cash equivalents, the following amounts are denominated in foreign
+currencies:
+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.
+30. CASH AND CASH EQUIVALENTS
+Details of impairment assessment of pledged bank deposits are set out in Note 40.2.
+The Group performed impairment assessment on restricted bank deposits and concluded that the
+probability of defaults of the counterparty banks are insignificant and accordingly, no allowance for
+credit losses is provided.
+Restricted bank deposits represent statutory deposit reserves at the PBOC, collaterals for bills
+payable and collaterals related to the operating of mines and ports.
+29. RESTRICTED BANK DEPOSITS
+2
+85
+5
+- Tradable wealth management products
+The aging analysis of accounts receivable that are past due but not impaired are as follows:
+27. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 255
+1,039
+(1)
+(140)
+760
+420
+RMB million
+Year ended
+31 December
+2017
+At the end of the year
+Written off
+31 December
+- amounts recovered
+Impairment loss
+At the beginning of the year
+The movements of allowance for doubtful debts were as follows:
+As at 31 December 2018, included in the Group's accounts receivables are debtors with aggregate
+carrying amount of RMB4,793 million which are past due as at the reporting date. The past due
+balances are not considered as in default because the debtors are not in significant financial
+difficulty and the management expects that the debtor is able and likely to pay for the debts. The
+Group does not hold any collateral over these balances.
+13,319
+8,488
+233
+544
+1,027
+1,326
+1,648
+846
+10,411
+Two to three years
+- recognised
+Less than one year
+One to two years
+Two to three years
+More than three years
+At the end of the year
+2017
+RMB million
+- Derivative financial instruments
+Financial assets at FVTPL
+RMB million
+31 December
+2017
+RMB million
+2018
+31 December
+28. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+256 China Shenhua Energy Company Limited
+As at 31 December 2018, the Group endorsed bills receivable amounting to RMB1,967 million
+(2017: RMB1,859 million) to suppliers to settle the accounts payable of same amounts and
+discounted bills receivable amounting to RMB455 million (2017: RMB137 million) to banks. In
+accordance to the relevant laws in the PRC, the holders of the bills receivable have a right of
+recourse against the Group if the issuing banks default payment (the "Continuing Involvement").
+In the opinion of the Directors, the fair values of the Continuing Involvement are insignificant, and
+the Group has transferred substantially all the risks and rewards of ownership relating to these
+bills receivable, and accordingly derecognised the full carrying amounts of the bills receivable, in
+case of bills receivable endorsed to suppliers, derecognised the associated accounts payable.
+Transfers of financial assets
+105
+169
+105
+24
+145
+1,335
+1,399
+377
+38
+3,149
+As at 31 December 2017, receivables that were not overdue or unimpaired relate to a wide range
+of customers for whom there was no recent history of default.
+(537)
+As at 31 December 2017, receivables that were past due but not impaired relate to a number of
+independent customers that have a good track record with the Group, which the Group does not
+hold any collateral over these balances. Based on past experience, the management believes
+that no impairment is necessary in respect of these balances as there has not been a significant
+change in credit quality and the balances are still considered fully recoverable.
+Included in accounts receivable, the following amounts are denominated in foreign currencies:
+United States Dollars ("USD")
+Indonesian Rupiah ("IDR")
+31 December
+2018
+31 December
+2017
+RMB million
+RMB million
+Details of impairment assessment of accounts and bills receivables for the year ended 31
+December 2018 are set out in note 40.2.
+31 December
+(749)
+3,049
+3,049
+3,052
+Net deferred tax assets
+290
+210
+1,103
+(84)
+1
+324
+(167)
+762
+526
+MENINO
+112
+At the end of the reporting period, the Group has unused tax losses of RMB7,853 million (31
+December 2017: RMB8,564 million) and unrecognised deductible temporary differences of
+RMB6,685 million (2017: RMB6,555 million) available for offset against future profits. A deferred
+tax asset has been recognised in respect of RMB321 million (31 December 2017: RMB1,296
+million) of such losses. No deferred tax asset has been recognised in respect of the remaining
+RMB7,532 million (31 December 2017: RMB7,268 million) losses due to the unpredictability
+of future profit streams. Included in unrecognised tax losses are losses of RMB849 million (31
+December 2017: RMB683 million) that will expire in 2019.
+188
+Unrealised profits from sales within the Group
+Accrued salaries and other expenses not yet paid
+Others
+1
+Tax allowable expenses not yet incurred
+(137)
+461
+Tax losses utilised
+(169)
+Lease prepayments
+769
+503
+Property, plant and equipment
+inventories
+Allowances, primarily for receivables and
+At 31 December
+2017
+RMB million
+1,187
+income
+RMB million
+2018 Annual Report 259
+Notes to the Consolidated Financial Statements (Continued)
+The Group's short-term borrowings are unsecured and bear interest at rates ranging from 3.85%
+to 4.85% per annum (2017: 3.85% to 4.79% per annum), and long-term borrowings bear interest
+at rates ranging from 1.08% to 6.55% per annum (2017: 1.08% to 6.55% per annum).
+80,106
+52,537
+70,725
+47,064
+9,381
+5,473
+Unsecured
+80,106
+52,537
+64,321
+46,765
+Long-term borrowings, less current portion
+Non-current borrowings:
+260
+15,785
+6,292
+3,772
+9,493
+2,000
+RMB million
+RMB million
+31 December
+2017
+31 December
+2018
+Current portion of long-term borrowings
+Short-term bank and other borrowings
+Current borrowings:
+An analysis of the Group's borrowings is as follows:
+32. BORROWINGS
+For the year ended 31 December 2018
+5,772
+comprehensive
+(charged) in
+profit or
+loss/other
+RMB million
+Lease prepayments
+788
+(31)
+57
+762
+Property, plant and equipment
+569
+(27)
+70
+526
+receivables and inventories
+Allowances, primarily for
+RMB million
+2018
+(167)
+RMB million
+RMB million
+for sale
+income
+2018
+liabilities held At 31 December
+comprehensive
+At 1 January
+as assets/
+Classified
+profit or
+loss/other
+Credited
+(charged) in
+The following are the major deferred tax assets and liabilities recognised and movements thereon
+during the current and prior year:
+31. DEFERRED TAXATION (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+RMB million
+16
+101
+(50)
+2017
+At 1 January
+Credited
+2,546
+(112)
+(391)
+3,049
+Net deferred tax assets
+(28)
+(120)
+(198)
+290
+Others
+218
+(17)
+25
+210
+Tax losses utilised
+324
+(244)
+(18)
+62
+Tax allowable expenses not yet
+2,546
+incurred
+within the Group
+1,103
+(117)
+986
+Accrued salaries and other
+expenses not yet paid
+Unrealised profits from sales
+One to two years
+31 December
+The following is an analysis of accounts receivable by age, net of allowance for credit losses/
+doubtful debts, presented based on the date of delivery of goods or services which approximated
+the revenue recognition date:
+Bills receivable were mainly issued by PRC banks and were expiring within one year. As at 31
+December 2018, the bills receivable with carrying amount of RMB100 million (2017: RMB388
+million) were pledged to secure bills payable.
+As at 31 December 2018 and 1 January 2018, accounts and bills receivables from contracts with
+customers amounted to RMB14,183 million and RMB20,494 million, respectively.
+27. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Less than one year
+and bills
+receivables
+RMB million
+Accounts
+Average
+loss rate
+Gross carrying amount
+As part of the Group's credit risk management, the Group uses debtors' aging to assess
+the impairment for its receivables from customers in relation to its sales of coal, power,
+coal chemical products and transportation services because these customers consist of a
+large number of customers with common risk characteristics that are representative of the
+customers' abilities to pay all amounts due in accordance with the contractual terms. The
+following table provides information about the exposure to credit risk for accounts and bills
+receivables which are assessed based on provision matrix as at 31 December 2018 within
+lifetime ECL (not credit-impaired). Debtors with credit-impaired with gross carrying amounts
+of RMB2,975 million as at 31 December 2018 were assessed individually.
+Provision matrix - debtors' aging
+For financial guarantee contracts, the gross carrying amount represents the maximum amount the Group
+has guaranteed under the respective contracts.
+For accounts and bills receivables, the Group has applied the simplified approach in IFRS 9 to measure the
+loss allowance at lifetime ECL. Except for debtors with credit-impaired, the Group determines the ECL on
+these items by using a provision matrix, grouped by debtors' aging.
+Notes:
+(i)
+Current (not past due)
+Financial guarantee contracts (Continued)
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+190
+(ii)
+Less than one year past due
+1%
+9,390
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 271
+11,208
+32
+0%
+20%
+795
+10%
+Two to three years past due
+656
+5%
+One to two years past due
+335
+China Shenhua Energy Company Limited
+More than three years past due
+270
+12m ECL
+190
+Other receivables
+63,598
+63,598
+12m ECL
+AAA
+Bank deposits
+8,607
+8,607
+12m ECL
+N/A
+29
+29
+Restricted bank deposits
+18,418
+18,418
+12m ECL
+24, 28 N/A
+28
+N/A
+12m ECL
+568
+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.
+N/A
+Financial guarantee contracts (Note (ii))
+Other items
+14,183
+2,975
+Credit-impaired
+(provision matrix)
+90
+11,208
+N/A
+NA
+goods and services (Note (i))
+27
+Accounts and bills receivables -
+3,317
+2,749
+Credit-impaired
+Lifetime ECL
+During the year ended 31 December 2018, the Group provided RMB114 million impairment
+allowance for accounts and bills receivables, based on the provision matrix. Reversal of
+impairment allowance of RMB25 million were made on debtors with credit impaired.
+Lifetime
+ECL
+Loans receivables
+impaired)
+RMB million
+12m ECL
+(not credit-
+- Impairment losses recognised
+Changes due to financial instruments
+recognised as at 1 January:
+As at 1 January 2018
+The following tables show reconciliation of loss allowances that has been recognised for
+other receivables.
+419
+419
+As at 31 December 2018
+125
+125
+New financial assets originated or purchased
+(99)
+(99)
+- Impairment losses reversed
+1 January:
+Changes due to financial instruments recognised as at
+Lifetime
+ECL (credit-
+impaired)
+RMB million
+Total
+RMB million
+417
+417
+274
+2018 Annual Report 273
+440
+307
+133
+As at 31 December 2018
+13
+13
+As at 1 January 2018
+purchased
+- Classified as assets held for sale
+New financial assets originated or
+(5)
+- Write-offs
+(96)
+(96)
+- Impairment losses reversed
+120
+120
+(9)
+393
+393
+Total
+RMB million
+(25)
+(25)
+- Impairment losses reversed
+New financial assets originated or
+purchased
+111
+111
+1,039
+1,039
+Total
+RMB million
+3
+RMB million
+(credit-
+(not credit-
+impaired)
+RMB million
+ECL
+Lifetime
+- Impairment losses recognised
+recognised as at 1 January:
+Changes due to financial instruments
+As at 1 January 2018
+impaired)
+The following table shows the movement in lifetime ECL that has been recognised for
+accounts and bills receivables under the simplified approach.
+As at 31 December 2018
+1,014
+RMB million
+12m ECL
+The following tables show reconciliation of loss allowances that has been recognised for
+loan receivables.
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+272 China Shenhua Energy Company Limited
+114
+(25)
+RMB million
+RMB million
+impaired Credit-impaired
+Not credit-
+Increase/(decrease) in lifetime ECL
+31 December 2018
+Changes in the loss allowance for accounts and bills receivables are mainly due to:
+1,128
+Settlement in full of trade debtors with a gross carrying
+amount of RMB64 million
+RMB million
+External Credit 12-month or
+rating
+lifetime ECL
+Notes
+(i)
+Currency risk
+The functional currency of most of the group entities is RMB in which most of the
+transactions are denominated. However, certain of the Group's receivables, bank
+balances, borrowings and payables are denominated in foreign currencies. The Group
+entered into cross-currency exchange rate swaps with in respect of its certain interest
+payments of borrowings denominated in USD in order to mitigate the risk from the
+fluctuation of USD against RMB. The carrying amounts of the Group's receivables,
+bank balances, borrowings and payables denominated in foreign currencies are set
+out in Note 27, 30, 32 and 34, respectively.
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Market risk (Continued)
+(i) Currency risk (Continued)
+The carrying amounts of the Group's foreign currency denominated monetary assets
+and monetary liabilities at the end of the reporting period are as follows:
+USD
+JPY
+Other currencies
+Liabilities
+31 December
+2018
+2017
+RMB million
+Market risk
+The Group's major financial instruments include accounts and bills receivables, loans and
+advances to/deposits from/amounts due to China Energy Group and fellow subsidiaries,
+amounts due from/to associates, other receivables, accounts and bills payables, borrowings,
+other payables, long-term liabilities, medium-term notes and bonds. Details of the financial
+instruments are disclosed in the respective notes. The risks associated with these financial
+instruments include market risk (interest rate and currency risks), credit risk and liquidity
+risk. The policies on how to mitigate these risks are set out below. The management
+manages and monitors these exposures to ensure appropriate measures are implemented
+on a timely and effective manner.
+164,633
+130,152
+Financial assets
+Steam coal futures
+Cross-currency exchange rate swaps
+56
+5
+Financial assets at amortised cost
+Equity instruments at FVTOCI
+111,433
+811
+RMB million RMB million
+Tradable wealth management products
+Wealth management products
+32,447
+Loans and receivables (including cash and
+cash equivalents)
+AFS investments
+125,517
+854
+Financial liabilities
+Amortised cost
+40.2 Financial risk management objectives and policies
+52
+31 December
+2017
+RMB million
+Assets
+31 December
+2018
+5,517
+2,221
+721
+(167)
+(159)
+1569
+-if RMB strengthens against
+foreign currencies
+342
+198
+167
+167
+159
+669
+(52)
+62
+52
+2018 Annual Report 267
+268
+Notes to the Consolidated Financial Statements (Continued)
+(198)
+(342)
+currencies
+Other currencies
+Year ended 31 December
+2018
+2017
+RMB million RMB million
+3,286
+2,119
+954
+870
+-
+35
+25
+42
+Sensitivity analysis
+2017
+RMB million
+The following table details the Group's sensitivity to a 10% increase or decrease in
+exchange rate of each foreign currency against RMB, while all other variables are
+held constant. The sensitivity analysis includes only outstanding foreign currency
+denominated monetary items at the end of the reporting period.
+for the year:
+- if RMB weakens against foreign
+USD
+JPY
+Year ended 31 December
+2018
+RMB million
+Year ended 31 December
+2017
+RMB million
+2018
+2017
+RMB million RMB million
+(Decrease) increase in profit after tax
+RMB million
+2018
+31 December
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+As at 31 December 2018, other than those financial assets whose carrying amounts best
+represent the maximum exposure to credit risk, the Group's maximum exposure to credit
+risk which will cause a financial loss to the Group arising from the amount of financial
+guarantees provided by the Group is disclosed in Note 42.3. The Group does not hold any
+collateral or other credit enhancements to cover its credit risks associated with its financial
+assets and financial guarantee contracts.
+Credit risk and impairment assessment
+If interest rates had been 100 basis points (2017: 100 basis points) higher/lower
+and all other variables were held constant, the Group's profit for the year ended
+31 December 2018 would decrease/increase by RMB140 million (2017: decrease/
+increase by RMB324 million).
+The analysis is prepared assuming variable-rate borrowings and variable-rate loans and
+receivables outstanding at the end of the reporting period were outstanding for the
+whole year.
+The sensitivity analysis below has been determined based on the exposure to interest
+rates for variable-rate borrowings and variable-rate loans and receivables at the end
+of the reporting period. No sensitivity analysis has been presented for the exposure
+to interest rates for bank balances as the management of the Group considers that,
+taking into account that the fluctuation in interest rates on bank balances is minimal,
+the impact of profit or loss for the year is insignificant.
+Sensitivity analysis
+The Group's exposures to interest rates on financial liabilities are detailed in the
+liquidity risk management section of this note.
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate
+borrowings and variable-rate loans and receivables (see Notes 32 and 28). Other
+than the concentration of interest rate risk related to the movements in London
+Interbank Offered Rate and the loan interest published by the PBOC, the Group has
+no significant concentration of interest rate risk.
+The Group is exposed to fair value interest rate risk in relation to fixed-rate loan and
+receivables, borrowings, medium-term notes and bonds (see Notes 28, 32 and 33).
+(ii) Interest rate risk
+Market risk (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+40.2 Financial risk management objectives and policies (Continued)
+Credit risk and impairment assessment (Continued)
+Accounts and bills receivables arising from contracts with customers
+In order to minimise the credit risk, the management of the Group has delegated a team
+responsible for determination of credit limits and credit approvals. Before accepting any
+new customer, the Group uses an internal credit scoring system to assess the potential
+customer's credit quality and defines credit limits by customer. Limits and scoring attributed
+to customers are reviewed once a year. Other monitoring procedures are in place to ensure
+that follow-up action is taken to recover overdue debts. In this regard, the Directors consider
+that the Group's credit risk is significantly reduced.
+Financial assets at amortised costs
+2018
+The tables below detail the credit risk exposures of the Group's financial assets and financial
+guarantee contracts, which are subject to ECL assessment:
+The Group does not have any significant concentration of credit risk. Accounts and bills
+receivables consist of a large number of customers, spread across diverse industries and
+geographical areas.
+The credit risks on financial guarantee contracts are limited because the counterparties are
+state owned entities with good financial position.
+Financial guarantee contracts
+Credit risk and impairment assessment (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+37. ACCRUED RECLAMATION OBLIGATIONS
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 269
+Other receivables represent pledge and guarantee deposit, dividend receivables and interest
+receivables. The pledge and guarantee deposit is paid for regular businesses. The dividend
+receivables relate to the investments of the Company and the interest receivables mainly
+relate to related parties and stated owned entities. Thus, the credit risk on other receivables
+are limited.
+Other receivables
+The credit risks on bank balances are limited because the counterparties are banks with high
+credit ratings assigned by credit-rating agencies, such as China Construction Bank, Industrial
+and Commercial Bank of China, Bank of China and Agricultural Bank of China.
+Bank balances
+The credit risks on loan receivables are limited because the counterparties are related
+parties and other state owned entities with good financial position.
+Loan receivables
+For the year ended 31 December 2018
+At the beginning of the year
+Addition for the year
+Accretion expense
+RMB million
+16,491
+16,491
+3,399
+3,399
+19,890
+19,890
+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.
+31 December
+2017
+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.
+There were no changes in the Group's approach to capital management compared with previous
+years.
+2018 Annual Report 265
+266
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+40. FINANCIAL INSTRUMENTS
+40.1 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:
+The Group monitors capital using a gearing ratio which is total liabilities divided by total assets.
+The Group aims to maintain the gearing ratio at a reasonable level. The Group's gearing ratio as at
+31 December 2018 was 31% (2017: 34%).
+Gross carrying amount
+RMB million
+RMB million
+2,745
+At the end of the year
+38. SHARE CAPITAL
+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
+All A shares and H shares rank pari passu in all material aspects.
+39. CAPITAL RISK MANAGEMENT
+Year ended 31 December
+2018
+31 December
+2018
+RMB million
+RMB million
+2,745
+2,549
+294
+58
+152
+138
+3,191
+2017
+For the year ended 31 December 2018
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+payables, other
+39,390
+13,276
+6,676
+7,650
+interest rate
+Borrowings variable
+70,792
+70,965
+421
+223
+66,992
+97
+term liabilities
+payables and long-
+rate
+% RMB million RMB million RMB million RMB million RMB million RMB million
+amount
+Total
+carrying
+More than undiscounted
+5 years
+cash flows
+2-5 years
+Total
+1-2 years
+1 year
+70,224
+average On demand
+interest or less than
+48,442
+interest rate
+China Shenhua Energy Company Limited
+130,152
+150,208
+45,454
+15,611
+8,366
+80,777
+6,823
+7,273
+3,572
+Borrowings fixed
+399
+2,402
+3.58
+Bonds
+4,095
+4,978
+2,071
+1,713
+693
+501
+3.53
+900
+Weighted
+4.61
+31 December 2018
+Financial liabilities:
+Accounts and bills
+Notes to the Consolidated Financial Statements (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+For the year ended 31 December 2018
+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.
+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
+Note 33
+RMB million
+Note 33
+Note 32
+Total
+RMB million
+RMB million
+RMB million
+payable
+Purchase of equipment and construction
+term notes
+Borrowings
+RMB million
+Accrued
+interest
+Note 35
+11
+7
+(xiii)
+Coal export agency expense
+Bonds
+At 1 January 2018
+Financing cash flows
+(4,182)
+4,995
+5,526
+-
+Interest expenses
+16
+11
+5
+notes and bonds
+Amortisation of discount on
+80,106
+416
+148
+Foreign exchange
+95,325
+(17,931)
+472
+(5,541)
+(3,208)
+(5,000)
+47
+9,752
+268
+Within one year
+20,012
+72,998
+2-5 years
+1-2 years
+1 year
+rate
+or less than
+5,526
+On demand
+average
+interest
+% RMB million
+Weighted
+Accounts and bills
+Financial liabilities:
+Liquidity risk (Continued)
+40.2 Financial risk management objectives and policies (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+17,854
+Operating lease commitments mainly represent business premises, mining related
+machineries and equipments leased through non-cancellable operating leases. These
+operating leases do not contain provisions for contingent lease rentals. As at 31 December,
+future minimum lease payments under non-cancellable operating leases on business
+premises, mining related machineries and equipments having initial or remaining lease
+terms of more than one year are payable as follows:
+31 December 2017
+Borrowings fixed
+RMB million RMB million
+Total
+undiscounted
+cash flows
+RMB million
+97,605
+49,278
+9,530
+18,785
+4.54
+interest rate
+Borrowings variable
+69,780
+More than
+5 years
+RMB million
+70,009
+236
+120
+69,148
+term liabilities
+payables and long-
+payables, other
+amount
+RMB million
+Total
+carrying
+505
+Classified as held for sale
+assets and liabilities
+(23,535)
+Steam coal futures
+Financial assets:
+RMB million
+Valuation technique(s) and key
+input(s)
+December Fair value
+2017 hierarchy
+At 31
+56 Level 1
+RMB million
+Fair value of the Group's financial assets and financial liabilities that are measured at fair
+value on a recurring basis
+40.3 Fair value measurements
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 275
+At 31
+December
+2018
+Quoted price in an active market.
+Cross-currency
+exchange rate
+- Level 3
+811
+Equity instruments
+105 Level 2
+32,447
+management
+products
+Wealth
+52 Level 2
+products
+management
+Tradable wealth
+Quoted market prices or dealer prices
+for similar instruments.
+- Level 2
+5
+swaps
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 42.3.
+Financial liabilities:
+Saved as discussed above, the Group also makes use of banks and financial institutions
+facilities as one of the effective sources of liquidity.
+191,974
+42.1 Capital commitments
+42.2 Operating lease 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
+42. COMMITMENTS AND CONTINGENT LIABILITIES
+31 December
+2018
+RMB million
+33,910
+32,707
+14,425
+14,853
+19,485
+31 December
+2017
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 277
+55,564
+27,646
+11,022
+97,742
+14,747
+16,144
+3,527
+5,529
+5,529
+At 31 December 2017
+80,106
+4,995
+9,752
+472
+95,325
+164,633
+Cross-currency
+exchange rate
+swaps
+(328)
+(599)
+(927)
+Amortisation of discount on
+notes and bonds
+21
+Foreign exchange
+20
+Interest expenses
+Medium-
+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.
+41. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES
+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.
+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.
+41
+(15,601)
+(5,762)
+(20,000)
+(38)
+(23,573)
+At 31 December 2018
+52,537
+6,823
+419
+59,779
+At 1 January 2017
+70,273
+24,974
+10,331
+705
+106,283
+Financing cash flows
+10,161
+Fair value of the Group's financial assets and financial liabilities that are not measured at
+fair value on a recurring basis (Continued)
+40.3 Fair value measurements (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+amount
+At 31 December 2017
+Carrying
+Fair
+value
+amount
+Carrying
+At 31 December 2018
+Except as detailed in the following table, the Directors consider that the carrying amounts
+of financial assets and financial liabilities recorded at amortised cost in the consolidated
+financial statements approximate their fair values:
+Fair value of financial assets and financial liabilities that are not measured at fair value
+on a recurring basis
+There were no transfer between Level 1, Level 2 and Level 3 during the year ended 31
+December 2018 and 2017.
+Quoted market prices or dealer prices
+for similar instruments.
+12 Level 2
+Market comparison approach. Fair
+value is estimated based on value
+of comparable listed companies,
+multiples and discount for lack of
+liquidity.
+Discounted cash flow. Future cash
+flows are estimated and discounted
+based on expected rate of return of
+comparable products.
+flows are estimated and discounted
+based on expected rate of return of
+comparable products.
+Discounted cash flow. Future cash
+Fair
+value
+interest rate
+RMB million RMB million
+RMB million
+China Shenhua Energy Company Limited
+276
+9,903
+9,752
+6,818
+6,823
+5,009
+4,995
+Fixed rate medium-term notes
+Fixed rate bonds
+6,670
+6,658
+3,864
+3,795
+Fixed rate bank borrowings
+Financial liabilities:
+RMB million
+3.17
+After one year but within five years
+1,143
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(i) Interest income represents interest earned from loans to China Energy Group and fellow subsidiaries. The
+applicable interest rate is determined in accordance with the prevailing interest rates published by the
+PBOC.
+(ii)
+(iii)
+(iv)
+Income from entrusted loans represents interest earned from entrusted loans to an associate of the Group.
+The applicable interest rate is determined in accordance with the prevailing interest rates published by the
+PBOC.
+Interest expense represents interest incurred from deposits placed and loans from China Energy Group
+and fellow subsidiaries. The applicable interest rate is determined in accordance with the prevailing interest
+rates published by the PBOC.
+Purchases of ancillary materials and spare parts represent purchase of materials and utility supplies related
+to the Group's operations from fellow subsidiaries and an associate of China Energy Group.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+(v)
+(vi)
+(vii)
+(viii)
+Ancillary and social services represent expenditures for social welfare and support services such as
+property management, water and electricity supply, and canteen expense paid to China Energy Group,
+fellow subsidiaries and an associate of China Energy Group.
+Transportation service income represents income earned from fellow subsidiaries in respect of coal
+transportation services.
+Transportation service expense represents expense related to coal transportation service to fellow
+subsidiaries.
+(ix)
+(x)
+(xi)
+Mining service income represents income earned from coal mining services to a fellow subsidiary.
+(xii)
+China Shenhua Energy Company Limited
+3,450
+(xviii)
+6,692
+3,067
+Granting of entrusted loan
+(xix)
+420
+Repayment of entrusted loan
+(xx)
+627
+280
+Net deposits received (paid) by Shenhua
+(xxi)
+10,068
+6,583
+Loans from China Energy Group
+(xxii)
+Repayment of loans from China Energy
+Group
+(xxiii)
+500
+Finance
+Repayment of loans from Shenhua Finance
+(xiii)
+Sale of coal represents income from sale of coal to fellow subsidiaries.
+The Directors are of the opinion that the above transactions with related parties were
+conducted in the ordinary course of business and in accordance with the agreements
+governing such transactions.
+The Group entered into a number of agreements with China Energy Group, an associate
+of China Energy Group, fellow subsidiaries, and associates of the Group. The terms of the
+principal agreements are summarised as follows:
+(i)
+The Group has entered into a mutual supply agreement for the mutual provision of
+production supplies and ancillary services with an associate of China Energy Group
+and fellow subsidiaries. Pursuant to the agreement, an associate of China Energy
+Group and fellow subsidiaries provide the Group with the production supplies
+and services, ancillary production services including the use of the information
+network system and ancillary administrative services. On the other hand, the Group
+provides fellow subsidiaries with water supplies, rolling stock management, railway
+management, railway transportation and other related or similar production supplies
+or services and use of the information network system.
+The products and services provided under the agreement, other than the sharing of use
+of the information network system which is free of charge, are provided in accordance
+with the following pricing policy:
+price prescribed by the state (including any price prescribed by any relevant
+local government), if applicable;
+where there is no state-prescribed price but where there is a state-guidance
+price, then the state-guidance price;
+282 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+(xxiii) Repayment of loans from a fellow subsidiary by the Group.
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+(i) (Continued)
+(ii)
+(iii)
+(iv)
+(v)
+(vi)
+where there is neither a state-prescribed price nor a state-guidance price, the
+market price; or
+where none of the above is applicable or where it is not practical to apply the
+above pricing policies in reality, the price to be agreed between the relevant
+parties shall be based on reasonable costs incurred in providing the goods or
+services plus a profit margin of 5% of such costs.
+The Group has entered into coal supply agreements with an associate of China Energy
+Group, fellow subsidiaries and associates of the Group. The coal supplied is charged
+at the prevailing market price.
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(xiv)
+Loans obtained by the Group.
+(xxii)
+Purchase of coal represents coal purchased from an associate of the Group, an associate of China Energy
+Group and fellow subsidiaries.
+Property leasing represents rental paid or payable in respect of properties leased from fellow subsidiaries.
+Repairs and maintenance services expense represents expense related to machinery repairs and
+maintenance services provided by an associate of the Group and fellow subsidiaries.
+Coal export agency expense represents expense related to coal export agency services provided by a
+fellow subsidiary.
+Purchase of equipment and construction work represents expenditure related to equipment and
+construction service provided by fellow subsidiaries.
+(xv)
+(xvi)
+Sale of coal chemical product represents income from sale of coal chemical product to a fellow subsidiary.
+Other income includes agency income, repairs and maintenance service income, sales of ancillary materials
+and spare parts, management fee income, sales of water and electricity, financial service income, etc.
+earned from China Energy Group, an associate of China Energy Group and fellow subsidiaries.
+Receipt of deposits by Shenhua Finance represents net deposits received by Shenhua Finance from China
+Energy Group and fellow subsidiaries.
+2018 Annual Report 281
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(xvii) Granting of loans from Shenhua Finance represents loans granted by Shenhua Finance to China Energy
+Group and fellow subsidiaries.
+(xviii) Repayment of loans from Shenhua Finance represents loans repaid by China Energy Group and fellow
+subsidiaries to Shenhua Finance.
+(xix)
+Granting of entrusted loan represents an entrusted loan granted.
+(xx)
+Repayment of entrusted loan represents an entrusted loan repaid.
+(xxi)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2,281
+6,502
+(xvii)
+2018 Annual Report 279
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+44. RELATED PARTY TRANSACTIONS
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group
+The Group is controlled by China Energy Group and has significant transactions and
+relationships with China Energy Group, an associate of China Energy Group and subsidiaries
+of China Energy Group ("fellow subsidiaries"). Related parties refer to enterprises over
+which China Energy Group is able to exercise significant influence or control. The Group
+also has entered into transactions with its associates, over which the Group can exercise
+significant influence.
+The Group had the following transactions with China Energy Group, an associate of China
+Energy Group, fellow subsidiaries, and associates of the Group that were carried out in the
+normal course of business during both years:
+2018
+RMB million
+2017
+RMB million
+In addition to a minimal defined benefit plan operated by its subsidiary, the Group participates,
+in line with the regulations of the PRC, mainly in various defined contribution retirement plans
+organised by municipal and provincial governments for its employees. The Group is required to
+make contributions to the retirement plans at 20% of the salaries, bonuses and certain allowances
+of the employees. In addition, as approved by the government, the Group makes contribution to
+a supplemental defined contribution pension plan for its employees. The fund is managed by a
+qualified fund manager. The Group has no other material obligation for the payment of pension
+benefits associated with these plans beyond the annual contributions described above. The
+Group's contributions for the year ended 31 December 2018 were RMB3,469 million (2017:
+RMB2,886 million).
+Interest income
+621
+652
+Income from entrusted loans
+(ii)
+19
+31
+Interest expense
+(iii)
+328
+(i)
+248
+43. EMPLOYEE BENEFITS PLAN
+42.5 Environmental contingencies
+After five years
+42.3 Financial guarantees issued
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+591
+373
+1,917
+1,144
+1,284
+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.
+606
+2,123
+As at 31 December 2018, the Group had issued certain guarantees in respect of certain
+banking facilities granted to an entity which the Group held less than 20% equity interest.
+The maximum amount guaranteed is RMB171 million (2017: RMB182 million).
+As at 31 December 2018, the Group had issued certain guarantees in respect of certain
+banking facilities granted to an associate of the Group. The maximum amount guaranteed is
+RMB19 million (31 December 2017: RMB40 million).
+278
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+42. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
+42.4 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.
+3,792
+Purchases of ancillary materials and spare
+parts
+(iv)
+Property leasing
+(xi)
+69
+88
+Repairs and maintenance services expense
+(xii)
+17
+work
+(xiv)
+9,139
+1,092
+Sale of coal chemical product
+(xv)
+4,535
+4,382
+Other income
+(xvi)
+2,014
+2,084
+Granting of loans from Shenhua Finance
+1,119
+9,750
+(x)
+Purchase of coal
+1,295
+776
+Mining service income
+(v)
+18
+90
+Ancillary and social services
+(vi)
+1,082
+385
+Transportation service income
+(vii)
+303
+193
+Transportation service expense
+(viii)
+93
+Sale of coal
+(ix)
+16,980
+6,257
+The Group, through Shenhua Finance, has entered into a financial services agreement
+with China Energy Group and fellow subsidiaries. Pursuant to the agreement, Shenhua
+Finance provides financial services to China Energy Group and fellow subsidiaries.
+The interest rate for the deposits with Shenhua Finance from China Energy Group and
+fellow subsidiaries should not be lower than the lowest limit published by the PBOC
+for the same type of deposit. The interest rate for loans made by Shenhua Finance
+to China Energy Group and fellow subsidiaries should not be higher than the highest
+limit published by the PBOC for the same type of loan. The above interest rates
+should be determined by reference to the rate charged by normal commercial banks
+in the PRC for comparable deposits and loans on normal commercial terms. The
+fees charged by Shenhua Finance for the provision of other financial services shall
+be determined according to the rates chargeable by the PBOC or the China Banking
+Regulatory Commission.
+1,073
+RMB million
+2,466
+874
+1,374
+34
+Prepaid expenses and other current
+285
+2,181
+2,157
+35
+31,263
+874
+2,594
+1
+2,768
+27
+Accounts and bills receivables
+RMB million
+RMB million
+RMB million
+RMB million
+Notes
+2,767
+31 December
+2017
+32
+Accrued expenses and other payables
+82
+28
+6,250
+12
+6,238
+5,797
+24
+9,394
+9,394
+333
+10,139
+Group, an associate of China
+Energy Group, fellow subsidiaries
+and associates of the Group
+18,412
+13
+18,399
+18,530
+Borrowings
+Accounts payable
+Total amounts due from China Energy
+31 December
+2018
+(After
+reclassification)
+held for sale
+reclassification)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+Other non-current assets
+2018 Annual Report 283
+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.
+3,652
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+229
+4.45
+and bonds
+Medium-term notes
+7,108
+8,216
+2,254
+3,746
+8,736
+China Shenhua Energy Company Limited
+284
+24,872
+Classified as
+assets/liabilities
+31 December
+2018
+(Before
+(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.
+44.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+31,257
+21,341
+Contract liabilities
+862
+862
+Other than those disclosed in Notes 24, 28, 32 and 35, amounts due from/to China Energy
+Group, an associate of China Energy Group, fellow subsidiaries, and associates of the Group
+bear no interest, are unsecured and are repayable in accordance with normal commercial
+terms.
+assets
+Total amounts due to China
+Energy Group, an associate of
+China Energy Group and fellow
+subsidiaries, and associates of the
+Group
+35,465
+291
+35,174
+Net cash inflow from operating
+137
+36
+activities
+1,679
+1,947
+372
+268
+1,301
+294 China Shenhua Energy Company Limited
+2,375
+1,968
+1,523
+2,390
+2,474
+1,736
+Net cash (outflow) inflow from
+investing activities
+(48)
+(124)
+(421)
+156
+77
+(523)
+(75)
+(642)
+88
+Net cash outflow from financing
+(1,633)
+(2)
+(354)
+51
+113
+(215)
+1
+(2)
+Net cash (outflow) inflow
+(1,096)
+(2,399)
+(2,221)
+(1,549)
+(2,011)
+(2,169)
+(1,822)
+activities
+288
+357
+22
+RMB million
+2018
+2017
+2,830
+Power Co., Ltd.
+Power Generation Co., Ltd.
+31 December 31 December 31 December 31 December 31 December 31 December
+31 December 31 December
+2018
+RMB million
+Administration Co., Ltd.
+Taishan Power Co., Ltd.
+Guangdong Guohua Yuedian Shenhua Huanghua Harbour Shenhua Guohua International Zhejiang Guohua Zheneng
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+46. SUBSIDIARIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+RMB million
+293
+(31)
+230
+228
+(385)
+(483)
+(62)
+Net cash (outflow) inflow
+3,361
+(757)
+(1,320)
+(4,588)
+(5,343)
+431
+497
+2018 Annual Report
+(831)
+2017
+RMB million RMB million
+2017
+905
+Non-current liabilities
+3,223
+2,164
+5,647
+4,454
+2,621
+2,720
+2,889
+2,373
+Current liabilities
+9,687
+8,932
+15,909
+2018
+15,015
+12,974
+10,972
+10,177
+Non-current assets
+1,826
+1,316
+2,545
+2,468
+2,013
+2,462
+936
+999
+Current assets
+RMB million
+13,722
+2,454
+(1,333)
+Net cash (outflow) inflow from
+8,172
+6,849
+4,753
+4,519
+11,054
+10,758
+7,604
+7,310
+7,107
+6,068
+3,099
+2,604
+10,627
+10,566
+Revenue
+Expenses
+6,386
+Profit and total comprehensive
+income for the year
+787
+571
+1,215
+1,685
+22
+222
+84
+909
+746
+16
+Dividend paid to non-controlling
+interests
+122
+6,292
+financing activities
+2017
+2017
+(26)
+20
+(22)
+(2,665)
+(2,846)
+(658)
+(144)
+65
+65
+(47)
+2,844
+2,502
+2,945
+Total equity
+2018
+7,898
+10,262
+10,284
+9,668
+9,963
+5,582
+5,345
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2018
+2017
+RMB million RMB million
+2017
+2018
+2018
+RMB million RMB million RMB million RMB million RMB million RMB million
+7,718
+2017
+2018
+RMB million RMB million
+7,075
+PRC
+RMB million
+2017
+31 December 31 December 31 December 31 December
+2017
+2018
+2017
+2018
+RMB million RMB million RMB million RMB million
+2017
+2018
+2018
+RMB million RMB million RMB million
+31 December 31 December 31 December 31 December
+Shenhua Zhonghai
+Shipping Co., Ltd.
+Shuohuang Railway
+Development Co., Ltd.
+Shenhua Sichuan
+Energy Co., Ltd.
+Dingzhou Power
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+46. SUBSIDIARIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+292 China Shenhua Energy Company Limited
+1,312
+838
+156
+Current assets
+(228)
+1,079
+1,500
+2,503
+1,735
+Current liabilities
+6,634
+6,185
+30,819
+32,182
+6,111
+6,054
+5,048
+4,716
+Non-current assets
+1,288
+928
+10,283
+10,602
+774
+1,240
+2,810
+(6)
+Net cash inflow (outflow)
+1,324
+1,939
+1,852
+3,008
+2,135
+517
+1,131
+activities
+Net cash inflow from operating
+296
+158
+42
+142
+340
+15
+105
+508
+901
+105
+Net cash (outflow) inflow from
+(2,040)
+(1,098)
+(1,302)
+(532)
+(1,002)
+(20)
+(3)
+436
+1,014
+financing activities
+Net cash inflow (outflow) from
+197
+(22)
+(95)
+(12)
+(2,832)
+(2,360)
+(959)
+investing activities
+1,827
+4,688
+7,439
+311
+Dividend paid to non-controlling
+interests
+463
+463
+29
+529
+7,587
+7,479
+(255)
+(173)
+557
+557
+727
+the year
+comprehensive income for
+Profit (loss) and total
+2,641
+465
+3,381
+65
+2,759
+investing activities
+Net cash (outflow) inflow from
+52
+752
+1,572
+7,481
+7,804
+(256)
+419
+(415)
+66
+766
+1,380
+operating activities
+Net cash inflow (outflow) from
+62
+202
+1,527
+8,940
+9,667
+1,281
+36,058
+2,907
+2,726
+3,016
+3,219
+Total equity
+48
+46
+1,892
+2,038
+2,151
+2,018
+769
+841
+Non-current liabilities
+1,538
+615
+31,771
+6,452
+6,336
+Year ended 31 December
+1,578
+3,352
+3,266
+3,247
+4,089
+19,070
+19,748
+1,055
+interests
+4,104
+Revenue
+Expenses
+2018
+2017
+2018
+2017
+RMB million RMB million RMB million RMB million
+2018
+2017
+RMB million RMB million
+2017
+2018
+RMB million RMB million
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+4,231
+Shenhua Sichuan Energy Co., Ltd.
+Dividend paid to non-controlling
+23
+Individually immaterial subsidiaries
+Zhejiang Guohua Zheneng Power
+Generation Co., Ltd.
+2,989
+2,900
+302
+67
+30
+30
+6
+30
+PRC
+Power Co., Ltd.
+Shenhua Guohua International
+3,085
+3,079
+506
+365
+with non-controlling interests
+30
+PRC
+40
+Hebei Guohua Cangdong
+Power Co., Ltd.
+Shenhua Baorixile Energy
+Industrial Co., Ltd.
+Shenhua Zhunge'er
+Energy Co., Ltd.
+Shenwan Energy
+Co., Ltd.
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+(Continued)
+46. SUBSIDIARIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+2018 Annual Report 291
+73,564
+77,144
+22,753
+22,586
+2,138
+2,233
+298
+364
+40
+31 December 31 December 31 December 31 December 31 December 31 December 31 December 31 December
+50
+30
+49
+PRC
+Shenhua Zhonghai Shipping Co., Ltd.
+15,021
+17,048
+3,587
+3,536
+47
+47
+PRC
+Co., Ltd.
+Shuohuang Railway Development
+1,336
+(125)
+(85)
+49
+49
+49
+30
+49
+259
+PRC
+Administration Co., Ltd.
+Shenhua Huanghua Harbour
+1,544
+1,580
+114
+1557
+157
+20
+20
+20
+20
+PRC
+Guangdong Guohua Yuedian Taishan
+Power Co., Ltd.
+3,105
+3,161
+227
+20
+2018
+2017
+RMB million RMB million RMB million
+2018
+2017
+2018
+RMB million RMB million
+14,316
+15,062
+6,894
+7,547
+Revenue
+Expenses
+2017
+Year ended 31 December
+2018
+2017
+2018
+RMB million RMB million RMB million RMB million
+2018
+2017
+2018
+2017
+RMB million RMB million RMB million RMB million
+Year ended 31 December
+Year ended 31 December
+Year ended 31 December
+2,711
+2,813
+5,142
+5,362
+28,586
+4,806
+31,354
+3,567
+4,146
+423
+1,054
+1,427
+3,349
+3,156
+4.9
+419
+573
+Profit and total comprehensive
+income for the year
+3,679
+3,499
+2,227
+3,064
+10,585
+11,146
+6,339
+6,724
+4,070
+8,319
+8,892
+Total equity
+17,595
+12,492
+14,633
+Non-current assets
+1,029
+691
+2,774
+3,293
+18,119
+21,269
+1,302
+1,547
+Current assets
+RMB million
+2017
+2018
+2017
+RMB million RMB million
+18,012
+4,893
+5,125
+5,215
+1,089
+942
+168
+176
+470
+560
+2,425
+4,837
+358
+Non-current liabilities
+2,151
+2,589
+2,648
+6,950
+3,050
+2,451
+Current liabilities
+5,557
+2,786
+1,391
+1,424
+Coal chemical
+services
+288
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+46. SUBSIDIARIES (CONTINUED)
+Details of the Company's material subsidiaries (Continued)
+Place of
+Railway Co., Ltd.
+Name of the
+subsidiary
+Particulars
+of registered
+capital
+Proportion of ownership
+interest and voting rights
+held by the Group
+Principal
+activities
+31 December 31 December
+2018
+2017
+incorporation Type of
+and operation legal entity
+%
+85 Provision of transportation
+85
+100
+100
+Generation and sale of electricity
+Shuohuang Railway
+PC
+PRC
+Limited company
+Provision of transportation
+services
+RMB5,880 million
+53
+53
+Development Co., Ltd.
+Shenhua Zhunchi
+PRC
+Limited company
+RMB4,710 million
+53
+RMB2,551 million
+%
+51
+Shenhua Railway
+PRC
+Limited company
+RMB4,803 million
+100
+10
+Transportation Co., Ltd.
+Chemical Co., Ltd.
+Shenhua Finance
+Limited company
+RMB5,000 million
+China Shenhua Overseas Hong Kong
+Limited company
+HKD5,252 million
+ㅎㅎ
+Development &
+PRC
+70 Provision of harbour and port
+00
+RMB5,132 million
+51
+Shenhua Huanghua
+PRC
+Limited company
+RMB6,790 million
+70
+Harbour Administration
+100
+Co., Ltd.
+PRC
+Limited company
+RMB5,180 million
+557
+Shipping Co., Ltd.
+Shenhua Baotou Coal
+Limited company
+Shenhua Zhonghai
+Limited company
+PRC
+Shenhua Fujian Energy
+Co., Ltd.
+Guangdong Guohua
+PRC
+Limited company
+RMB4,670 million
+60
+80
+80
+Power Co., Ltd.
+Generation and sale of electricity
+Power Co., Ltd.
+Zhejiang Guohua
+PRC
+Limited company
+RMB3,255 million
+60
+60
+Yuedian Taishan
+60
+Generation and sale of electricity
+100
+70
+70 Generation and sale of
+electricity; coal mining and
+development
+Shenhua Guohua
+PRC
+Limited company
+RMB4,010 million
+100
+70
+Generation and sale of electricity
+International Power
+Co., Ltd.
+Shenhua Shendong
+PRC
+Limited company
+RMB3,024 million
+70
+Generation and sale of electricity
+Zheneng Power
+Generation Co., Ltd.
+Guohua Taicang Power
+PRC
+Limited company
+RMB2,000 million
+50
+50
+50 Generation and sale of electricity
+Generation and sale of electricity
+Co., Ltd. (Note (iii)
+PRC
+ROC
+Limited company
+RMB2,152 million
+51
+Energy Co., Ltd.
+51 Generation and sale of
+electricity; trading of coal
+Shenhua Sichuan
+41
+41
+RMB1,561 million
+Suizhong Power
+PRC
+Limited company
+RMB4,029 million
+சு
+65
+Generation and sale of electricity
+Co., Ltd. (Note (i))
+Hebei Guohua Cangdong PRC
+Power Co., Ltd.
+Limited company
+RMB1,834 million
+55555
+51
+51
+Generation and sale of electricity
+Dingzhou Power (Note (ii) PRC
+Limited company
+Investment Co., Ltd.
+RMB2,278 million
+Shenhua Australia
+Limited company
+services
+Provision of transportation
+100
+70 Coal mining and development;
+generation and sale of
+electricity
+generation and sale of
+electricity
+Coal mining and development;
+generation and sale of
+electricity
+100 Provision of financial lease
+Coal mining and development;
+100
+100
+10
+10
+10
+70
+70
+100
+10
+services
+100 Generation and sale of electricity
+Notes:
+None of the subsidiaries had issued any debt securities at the end of the year except for Shenhua
+Overseas Capital which has issued USD1,000 million of bonds, which are set out in Note 33, in
+which the Group has no interest.
+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.
+Details of the Company's material subsidiaries (Continued)
+46. SUBSIDIARIES (CONTINUED)
+For the year ended 31 December 2018
+Notes to the Consolidated Financial Statements (Continued)
+100 Comprehensive utilisation of
+inferior coal resources
+290
+Generation and sale of electricity
+51
+51
+RMB804 million
+Limited company
+PRC
+Zhoushan Power
+2018 Annual Report 289
+(i)
+100
+Limited company
+Indonesia
+PT GH EMM Indonesia
+100
+AUD350 million
+Limited company
+Australia
+Shenhua Watermark
+Coal Pty Ltd.
+Limited company
+Investment holding
+100
+Provision of financial services
+100
+100
+100 Provision of transportation
+Provision of Transportation
+services
+services
+100
+RMB1,790 million
+USD63 million
+Limited company
+PRC
+Xuzhou Power
+& Utilisation Co., Ltd.
+Resources Development
+100
+RMB1,200 million
+Limited company
+Shenhua Baoshen Railway PRC
+Group Co., Ltd.
+PRC
+100
+RMB1,765 million
+Limited company
+PRC
+(Tianjin) Finance Lease
+Co., Ltd.
+100
+RMB10,000 million
+Shenhua Zhunneng
+In addition to 15% equity interest held by the Company, the Company's subsidiary owned 50% equity interest in
+Suizhong Power Co., Ltd.
+(ii)
+The Company obtained the control over Dingzhou Power through its right to appoint majority members of the board
+of directors, details of which are set out in Note 4.1.
+Co., Ltd.
+Hebei Guohua Cangdong Power
+2,231
+2,327
+457
+457
+619
+PRC
+43
+43
+PRC
+Co., Ltd.
+Shenhua Baorixile Energy Industrial
+12,075
+13,244
+1,415
+43
+1,333
+49
+207
+AUD400 million
+100
+10
+Holding Pty Ltd.
+100
+1,795
+1,915
+49
+331
+59
+59
+PRC
+Dingzhou Power
+1,328
+1,378
+175
+433
+42
+42
+PRC
+Profit allocated to non-
+controlling interests
+Year ended 31 December
+2018
+2017
+2018
+31 December
+31 December
+controlling interests
+Proportion of ownership interest
+and voting rights held by non-
+Accumulated
+non-controlling interests
+Place of
+incorporation
+and operation
+Summarised financial information in respect of each of the Group's subsidiaries that has material
+non-controlling interests is set out below. The summarised financial information below represents
+amounts before intragroup eliminations.
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+46. SUBSIDIARIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+China Shenhua Energy Company Limited
+The Company has the control over Guohua Taicang Power Co. through its voting rights over 50%.
+(iii)
+Name of
+the subsidiary
+31 December
+31 December
+2017
+Shenhua Zhunge'er Energy Co., Ltd.
+4,076
+4,357
+205
+281
+49
+49
+PRC
+Shenwan Energy Co., Ltd.
+RMB million
+RMB million
+RMB million
+RMB million
+%
+%
+2017
+2018
+Australia
+Limited company
+PRC
+Shaanxi Guohua Jinjie
+Energy Co., Ltd.
+683
+3,615
+56
+3,671
+Prepaid expenses and other current assets
+7,954
+5,671
+3,070
+8,741
+Accounts and bills receivables
+31 December
+2017
+RMB million
+RMB million
+RMB million
+RMB million
+31 December
+2018
+(After
+reclassification)
+Classified as
+assets/liabilities
+held for sale
+2018
+(Before
+reclassification)
+31 December
+Balances with other government-related entities, including state-controlled banks in the PRC
+5,461
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+Cash and time deposits at banks
+64,118
+535
+63,583
+For the joint venture to be established pursuant to the agreement between the Company and
+the GD Power, as disclosed in Note 11, the date of commercial and industrial registration of the
+joint venture company was 3 January 2019, and the contribution was completed on 31 January
+2019 (the" Completion Date"). From the Completion Date, the joint venture company assumes
+the corresponding rights and the obligations of the relevant coal-fired power generation entities
+contributed by the Company and GD Power to the joint venture company.
+45. EVENTS AFTER THE REPORTING PERIOD
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+286 China Shenhua Energy Company Limited
+790
+790
+Contract liabilities
+2,915
+1,887
+112
+4,950
+1,999
+78,326
+51,274
+23,535
+74,809
+Borrowings
+7,348
+8,607
+8,607
+Restricted bank deposits
+73,728
+Accrued expenses and other payables
+959
+1,335
+11,501
+Sales and purchases of coal;
+Power sales;
+Other than those transactions with China Energy Group, an associate of China Energy
+Group, fellow subsidiaries and associates of the Group as disclosed above, the Group
+conducts business with other government-related entities which include but are not limited
+to the following:
+PRC
+The Company is ultimately controlled by the PRC government and the Group operates in an
+economic environment currently predominated by government-related entities.
+44.4 Transactions with other government-related entities in the PRC
+The Group participates in various defined contribution post-employment benefit plans
+organised by municipal and provincial governments and a supplemental defined contribution
+pension plan approved by the government for its employees. Further details of the Group's
+post-employment benefit plans are disclosed in Note 43.
+44.3 Contributions to post-employment benefit plans
+Total remuneration is included in "personnel expenses" as disclosed in Note 12.
+11
+Transportation services;
+1
+9
+1
+8
+2017
+RMB million
+RMB million
+2018
+Short-term employee benefits
+Post-employment benefits
+Key management personnel compensation of the Group is summarised as follows:
+Key management personnel receive compensation in the form of fees, basic salaries,
+housing and other allowances, benefits in kind, discretionary bonuses and retirement
+scheme contributions.
+44.2 Key management personnel emoluments
+10
+On 30 January 2019, China Energy Group, the controlling shareholder of the Company, has
+completed the transfer of 358,932,628 A shares (approximately 1.805% of the share capital of
+the Company) to Beijing Chengtong Financial Investment Co., Ltd. and 358,932,628 A shares
+(approximately 1.805% of the share capital of the Company) to Guoxin Investment Co., Ltd. for nil
+consideration. These equity transfers do not have any change in the controlling shareholder of the
+Company.
+Construction work;
+Ancillary and social services; and
+12,767
+77,303
+85,270
+97,212
+96,569
+RMB million
+RMB million
+2017
+2018
+Interest income
+Purchases of ancillary materials and spare parts;
+Transportation costs
+Coal revenue
+Transactions with other government-related entities, including state-controlled banks in the
+PRC
+Having considered the potential for transactions to be impacted by related party.
+relationships, the Group's buying, pricing strategy and approval processes, and what
+information would be necessary for an understanding of the potential effect of the
+relationship on the financial statements, the Directors are of the opinion that the following
+transactions with other government-related entities require disclosure:
+not.
+These transactions are conducted in the ordinary course of the Group's business on terms
+comparable to those with other entities that are not government-related. The Group has
+established its pricing policies in respect of sale of goods and provision of services, and
+approval process for purchases of products and services. Such policies and approval process
+apply to all counterparties regardless of whether the counterparty is government-related or
+44.4 Transactions with other government-related entities in the PRC (Continued)
+44. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2018 Annual Report 285
+Financial services arrangements.
+Power revenue
+On 22 March 2019, the Directors proposed a final dividend of RMB0.88 per ordinary share totaling
+RMB17,503 million to the equity holders of the Company. Further details are disclosed in Note 15.
+Interest expenses (including amount capitalised)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+PRC
+Limited company
+RMB4,989 million
+100
+10
+Coal Group Co., Ltd.
+Shenhua Zhunge'er
+PRC
+POC
+Limited company
+Shenhua Shendong
+RMB7,102 million
+Energy Co., Ltd.
+Shenhua Baorixile Energy PRC
+Industrial Co., Ltd.
+Limited company
+RMB1,169 million
+57
+57
+Shenhua Beidian Shengli PRC
+Energy Co., Ltd.
+Limited company
+RMB2,720 million
+63
+50
+57 Coal mining; provision of loading
+and transportation services
+51 Trading of coal
+51
+46. SUBSIDIARIES
+Details of the Company's material subsidiaries
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the
+end of the reporting period are set out below:
+Name of the
+subsidiary
+Place of
+incorporation Type of
+and operation legal entity
+Particulars
+of registered
+capital
+Proportion of ownership
+interest and voting rights
+held by the Group
+31 December
+Principal
+activities
+31 December
+2018
+2017
+%
+Shenhua Sales Group
+Co., Ltd.
+PRC
+Limited company
+RMB1,889 million
+100
+00
+100 Trading of coal
+Shenwan Energy Co., Ltd. PRC
+Limited company
+RMB5,732 million
+58
+58 Coal mining and development;
+generation and sale of
+electricity
+100 Trading of coal; provision of
+integrated services
+Proportion of ownership
+Place of
+Name of the
+subsidiary
+incorporation Type of
+and operation legal entity
+Particulars
+of registered
+capital
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+interest and voting rights
+held by the Group
+2018 Annual Report 287
+Principal
+activities
+Details of the Company's material subsidiaries (Continued)
+31 December 31 December
+2017
+%
+%
+63 Coal mining; provision of loading
+and transportation services
+2018
+46. SUBSIDIARIES (CONTINUED)
+Huanghua Port
+0.5
+4.6
+173.7
+426
+436.4
+38.1
+170.5
+1.9
+Power segment
+Fujian Energy
+Jinjie Energy
+East China Power Grid
+98.3
+436.4
+428
+99.0
+4.6
+Coal segment
+60.7
+51.3
+By regions Northern China
+456.4
+Fujian
+Domestic sales
+4,672
+164.9
+175.7
+Liaoning
+Northeast Power Grid
+Suizhong Power
+4,651
+88.4
+93.0
+456.4
+Domestic sales
+L
+Self-owned ports
+%
+%
+100.0
+RMB/tonne
+million tonnes
+RMB100 million
+Xuzhou Power
+(16)
+East China Power Grid
+Jiangsu
+%
+155.5
+Shenmu Power
+5.241
+3.480
+4,007
+8,023
+156,143
+Total cost of sales
+512
+1.330
+1,330
+Taxes and surcharges
+1.285
+2,520
+2,520
+315
+300
+8888888 88
+5,202
+64.8
+68.7
+Ningxia
+Zhejiang Power Grid
+Guchua Ningdong
+17.3 (100.0)
+-
+7,815
+Other operating costs
+Taxes and surcharges
+143,461
+Total cost of sales
+4,520
+660
+660
+16
+4.072
+5,090
+60
+'⌘'8 'ཊྛཱ
+4,600
+4,490
+Others
+660
+1.021
+2,520
+2.520
+307
+1,052
+68,388
+632
+(13.5
+8.9
+2,183 2,462.5
+7.7
+2,069 2,675.9
+569
+1,187
+72,408
+5,030
+5,705
+109.9
+115.2
+Transportation segment
+9.4
+103.2
+24.7
+112.9
+Central China and
+105.4 17.6
+27.1
+123.9
+Eastern China
+107.8
+0.6
+Shaanxi
+Northwest Power Grid
+Table 13 Coal Resources Reserve
+129.2
+91.2
+6,892
+152.0
+165.4
+Shaanxi
+North China Power Grid
+0.7
+148.9
+48.8
+Sichuan Power Grid
+North China Power Grid Shandong
+Shouguang Power
+11.3
+11.4
+Port
+40.0 14.8
+10.1
+45.9
+Northeast China
+4.197
+Shenhua Sichuan Energy
+(coal-fired power]
+47.5
+Central China Power Grid Henan
+Mengin Power
+37.4
+95.5
+Including: Railway
+Southern China
+2,659
+30.4
+33.5
+Sichuan
+50.4
+Shenhua Tianjin Coal Dock
+325
+Self-produced coal and
+Dazhun Railway
+270.0
+258.2
+4.6
+Baoshen Railway
+Ganquan Railway
+Bazhun Railway
+Zhunchi Railway
+(111)
+Sales of imported coal
+4.0
+0.9
+457
+0.7
+591
+471.4
+(22.7)
+4.3
+30.4
+31.7
+Shuchuang-Huangwan Railway
+tonnes
+%
+2018
+2017
+Change
+million tonnes
+million tonnes
+238.3
+Export sales
+227.8
+Self-owned railways
+193.2
+184.1
+4.9
+Shenshuo Railway
+45.1
+43.7
+3.2
+4.6
+542
+1.7
+0.4
+31.2
+31.7
+(1.6)
+20.7
+21.2
+2018
+2017
+III. Overseas sales
+(1.5)
+Total sales volume/average price
+06
+0.6
+506
+506
+5.2
+52
+382
+(46.2)
+28
+tonnes
+39.6
+Zhunge'er Mines
+543
+2.2
+22
+447
+(22.7)
+21.5
+Shendong Mines
+160.3
+39.0
+162.3
+92.3
+93.8
+(1.6)
+47.8
+49.7
+(3.8)
+Table 16 Shipping Volume
+Tahan Railway
+(1.2)
+State-owned railways
+32.5
+460.9
+Change December 2018 December 2017
+Change
+Third-party ports
+Total seaborne coal sales
+Change
+2. Seaborne
+268.3
+58.2
+Recoverable reserve (under PRC standard)
+As at 31
+As at 31
+499
+57.7
+498
+4.8
+0.2
+100 million
+100 million
+100 million
+100 million
+256.0
+100 million
+December 2018 December 2017
+Coal resources (under PRC standard)
+As at 31 As at 31
+435.9
+94.6
+428
+416.3
+93.8
+426
+4.7
+0.5
+Mines
+purchased coal
+167.6
+36.4
+316
+160.3
+36.1
+310
+4.6
+1.9
+1. Direct arrival
+00
+100 million
+(1.7)
+(8.7)
+23
+2.1
+(1.4)
+140
+13.8
+(0.5)
+20.4
+million tonnes
+20.3
+Shengli Mines
+0.9
+3.9
+425
+100.0
+443.8
+429
+100.0
+Baorixile Mines
+Sales of domestic trading coal
+million tonnes
+Total railway turnover
+12.0
+11.8
+12.1
+14.2
+16.5
+3.5
+419
+19.4
+%
+427
+(1.9)
+tonnes
+tonnes
+%
+tonnes
+tonnes
+%
+13.9
+(14.9
+Marketable reserve (under JORC standard)
+As at 31
+As at 31
+Change December 2018 December 2017
+179
+Zhuhai Wind Energy
+188
+-
+863
+882
+(2.2)
+1.320
+1,320
+188
+749
+889
+715
+24.3
+1
+Shipping
+Port
+Railway
+External transportation charges
+(6.0)
+840
+790
+271
+255
+6.3
+50
+34
+47.1
+327
+267
+22.5
+2,000
+20
+2,020
+1,212
+Depreciation and amortization
+3,782
+3,703
+2.1
+Coal
+(1.1)
+Transportation and Coal
+Chemical Segments
+1,260
+Ningxia
+27.8
+24.6
+4.207
+660
+660
+660
+Northwest Power Grid
+Others
+31.3
+1,093
+631
+73.2
+236
+223
+5.8
+1,644 1,252
+Ningdong Power
+1.0
+370.5
+1,260
+3,019
+5.920
+464
+910
+Table 11 Cost of Sales of
+2,712
+12.0
+1,745
+1,217
+43.4
+By usage Thermal coal
+374.3
+Shipping
+0.9
+0.1
+82.0
+630
+3,482 3.519
+Repairs and Maintenance
+612
+RMB
+RMB
+RMB
+RMB RMB
+RMB
+RMB
+2,700
+RMB
+100
+1,375
+million million
+% million million
+% million million
+% million million
+%
+2,400
+2,800
+1,880
+3,760
+-
+Chemical
+1.320
+1.320
+726
+2,000
+2,000
+2,000
+2018
+2017
+Change
+2018
+2017
+Change
+2018
+2017
+Change 2018 2017 Change
+3,760
+'
+2,400
+1,680
+Cost of internal transportation business
+2,622
+(2.4)
+Personnel expenses
+3,565 3,095
+15.2
+310
+289
+7.3
+6
+4
+50.0
+323
+290
+11.4
+1200
+-
+1,200
+24.3 2,560
+89
+305
+14.7
+15,907
+14,724
+8.0 2,847 2,349
+21.2
+2,604 1,971
+32.1
+220
+(220)
+1,260
+1,260
+604
+Materials, fuel and power
+2,545
+2,440
+4.3
+383
+334
+379
+South China Power Grid Guangdong
+133 (33.1)
+24.0
+4.010
+59,994
+39.934
+Total cost of sales
+19,915 18,632
+6.9
+3,511 2,880
+55,984
+21.9 3,232 2,472
+Other power plants
+Table 12 Coal Sales Price
+Beijing Gas-fired Power
+Yuyao Power
+North China Power Grid
+Beijing
+39.2
+38.3
+30.7 4,901 4,968 (1.3)
+313
+308
+4,877
+5,302
+300
+300
+210
+Taxes and surcharges
+443
+429
+3.3
+187
+110
+70.0
+3
+3
+-
+182 (1.6)
+2,787.8
+2,612.0
+4,131
+13.9
+200
+Zhejiang
+6.9
+6.8
+5,517
+222
+125
+125
+48
+Sichuan Provincial Local Sichuan
+Power Grid
+million tonnes
+%
+Price
+RMB/tonne
+Sales volume total sales volume
+Price
+Sales volume
+Price
+Sales volume total sales volume
+Shenhua Sichuan Energy
+(hydropower)
+Percentage to
+Percentage to
+19.3
+188
+2,474
+88
+589
+950
+950
+950
+503
+780
+780
+624
+Table 14 Seaborne Coal at Ports
+Table 15 Railway Cargo Transportation Turnover
+2018
+2017
+Change
+East China Power Grid
+15.9
+Indonesia
+PLN
+315
+9.5
+625
+498
+25.5
+55.2
+12.1
+345
+40.8
+Guangxi
+19.8
+18.6
+2,832
+700
+700
+490
+35.3
+6.2
+2,677
+2,843
+5.3
+23.6
+1.7
+Coal chemical business
+11.6
+0.7
+Panshan Power
+Chemical (including
+Liuzhou Power
+North China Power Grid Tianjin
+Guangxi Power Grid
+51.0
+47.7
+4,807
+1.060
+1,060
+482
+Cost of external transportation business
+Sub-total cost of prime business
+18,750
+17.401
+7.8
+802
+(10.0
+132
+106 24.5
+560
+592
+(5.4)
+Others
+2.9
+0.6
+1.5
+93.3
+Total
+271.3
+232.1
+EMM Indonesia
+Total of coal-fired power plants/weighted average
+722
+Metallurgy
+Other operating costs
+2,000
+3,192
+2,664
+19.8
+3,229
+2,469
+30.8 4,162 4,194
+(0.8)
+Others
+-
+2.1
+Jiujiang Power
+coal slurry)
+Central China Power Grid Jiangxi
+57.1
+54.5
+2,857
+2,000
+2,000
+12.3
+95,152
+353.6
+陝西省
+Suning North
+盡事业
+Dingzhou West
+Huanghua
+定州西
+黃驊
+Shenmu North
+神木北站
+Shenchi South
+神池南
+Shenchi
+神池
+Shuozhou West
+HEBE
+朔州西
+河北省
+天津市
+MOTIANJIN
+Datong East '
+SHAANXI
+山西省
+SHANXI
+「曹妃甸港
+80.00%-
+-100.00% Shenhua Shendong Coal Group Co., Ltd.
+Hebei Guohua Dingzhou Power Generation Co., Ltd.
+40.50%-
+Hebei Guohua Cangdong Power Co., Ltd.
+51.00%-
+Zhejiang Guohua Yuyao Gas-fired Power Co., Ltd.
+80.00%-
+Zhejiang Guohua Zheneng Power Generation Co., Ltd.
+89
+Equity structure diagram
+Dajiawa
+大家注
+⑤
+Dongying
+東愛
+Caofeidian Port
+Qinhuangdao Port
+秦皇島港。
+Shenhua Zhonghai Shipping Company
+60.00%-
+Guangdong Guohua Yudean Taishan Power Co., Ltd.
+大秦絕路
+Note: This map as at 31 December 2018 is for illustrative purpose only.
+內蒙古自治區
+Tahan Railway
+10. 塔韓鐵路
+Huangda Railway (under construction)
+C9. 黃大鐵路(在建)
+Zhunchi Railway
+C8. 准池鐵路
+Zhuhai Coal Dock
+D3. 珠海煤碼頭
+Shenhua Tianjin Coal Dock
+D2.神華天津煤碼頭
+Huanghua Port
+D1.黃驊港
+港口 PORT
+Ganquan Railway
+C7. 甘泉鐵路
+Bazhun Railway
+C6.巴准鐵路
+Baoshen Railway
+INNER MONGOLIA AUTONOMOUS REGION
+包頭
+Baotou
+點岱湾
+註: 於2018年12月31日之分佈圖,僅做示意。
+神華中海航運
+E1.
+航運 SHIPPING
+Baotou Coal Chemical
+F1. 包頭煤化工
+煤化工 COAL CHEMICAL
+Waixigou
+外西溝
+北京
+BEIJING
+Shendong
+A7 A
+Batuta
+Zhunge'er
+巴圖塔
+Dongsheng
+東勝
+Hanjiacun
+韓家村
+Diandaigou
+神東站
+H Share
+Coal Production
+Major Controlling Companies
+70.00% Shenhua Huanghua Harbour Administration Co., Ltd.
+Shenhua Tianjin Coal Dock Co., Ltd.
+55.00%
+Port
+Shenhua Guohua (Zhoushan) Power Generation Co., Ltd.
+Shenhua Guohua Qingyuan Power Generation Co., Ltd.
+51.00%-
+Railway Track Mechanical Maintenance Branch
+Major Branches
+51.00%-
+Ningxia Guohua Ningdong Power Generation Co., Ltd.
+-100.00%-
+Shenhua Guohua Guangtou (Liuzhou) Power Generation Co., Ltd.
+Guohua Xuzhou Power Generation Co., Ltd.
+-100.00%-
+-52.20%-
+Shenhua Guohua Yongzhou Power Co., Ltd.
+-100.00%-
+Shenhua Guohua Jiujiang Power Co., Ltd.
+-100.00%-
+Guohua Taicang Power Co., Ltd.
+-50.00%-
+75.00%-
+PT. Shenhua Guohua Lion Power Indonesia
+70.00%-
+Shipping
+Shenhua Guohua Jiansu Power Sales Co., Ltd.
+65.00%-
+Shenhua Guohua Ningdong Power Generation Co., Ltd.
+- 56.77%-
+100.00% Shenhua Logistics Group Corporation Limited
+indirectly controlled
+(Directly and
+-100.00% Shenhua Finance Co., Ltd.
+as at 31 December 2018 is for illustrative purpose only.
+Shenhua Guohua (Beijing) Gas Thermal Power Co., Ltd.
+Note: The equity structure diagram of China Shenhua (including major branches/subsidiaries)
+Others
+Chemical Co., Ltd.
+100.00%
+Coal Chemical
+Shenhua Baotou Coal
+Shenhua Guohua (Indonesia) Jawa Power Generation Co., Ltd.
+Shenhua Guohua Guangdong Electricity Sales Co., Ltd.
+Shenhua Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+-100.00%-
+-100.00%-
+40.00% Shenhua Yudean Zhuhai Port Coal Dock Co., Ltd.
+51.00% Shenhua Zhonghai Shipping Co., Ltd.
+Major Controlling Companies
+-100.00%-
+Shenhua Baoshen Railway Group Co., Ltd.
+88.16% Shenhua Baoshen Railway Co., Ltd.
+88.46% Shenhua Ganquan Railway Co., Ltd.
+90.00% Shenhua Xinzhun Railway Co., Ltd.
+52.72% Shuohuang Railway Development Co., Ltd.
+85.00% Shenhua Zhunchi Railway Company Limited
+-100.00% Shenhua Railway Transportation Co., Ltd.
+Shenshuo Railway Branch
+Railway
+Shenhua Guohua Shouguang Power Generation Company Limited
+Shenhua Shendong Power Co., Ltd.
+-100.00%-
+Shenhua Australia Holdings Pty Limited
+Shendong Coal Branch
+Ha'erwusu Coal Branch
+Major Branches
+60.00%-
+Shenhua Guohua Beijing Electric Power Research Institute Co., Ltd.
+92.00%-
+Major
+Controlling
+Companies
+PT GH EMM Indonesia
+-100.00%-
+70.00%-
+55.00%-
+Tianjin Guohua Jinneng Power Co., Ltd.
+65.00%-
+Shenhua Guohua International Power Co., Ltd.
+Shaanxi Guohua Jinjie Energy Co., Ltd.
+70.00%-
+70.00%-
+57.76 % Shenhua Zhunge'er Energy Co., Ltd.
+62.82% Shenhua Beidian Shengli Energy Co., Ltd.
+60.00% Shenhua Xinjie Energy Co., Ltd.
+-100.00% Shenhua Baotou Energy Co., Ltd.
+56.61% Shenhua Baorixile Energy Co., Ltd.
+50.10% Yulin Shenhua Energy Co., Ltd.
+60.00% Shenhua Bayannur Energy Co., Ltd.
+Shareholders
+17.09%
+Jiangsu Guohua Chenjiagang Power Co., Ltd.
+CS. 包神鐵路
+Shenhua Fujian Energy Co., Ltd.
+Corporation
+Major Controlling Companies
+-100.00%
+52.00%-
+Shenhua Guohua Guangtou (Beihai) Power Generation Co., Ltd.
+Shenhua Sichuan Energy Co., Ltd.
+Inner Mongolia Guohua Hulunbei'er Power Generation Co., Ltd.
+51.00%-
+80.00%-
+100.00% Shenhua Sales Group Co., Ltd.
+China Energy
+Investment
+China Shenhua
+Energy Company Limited
+9.85%
+Other A Share
+Shareholders
+Coal Sales
+Shenhua Guohua Mengjin Power Generation Co., Ltd.
+-51.00%-
+73.06%
+Shenwan Energy Co., Ltd.
+51.00%-
+Limited
+Power Generation
+Dazhun Railway
+C4.大准鐵路
+Huangwan Railway
+109.4
+12.2
+142.8
+160.2
+Million tonnes
+285.5
+(0.1)
+301.0
+300.7
+Million tonnes
+Self-produced coal
+Purchased coal
+Of which:
+394.9
+3.9
+289.8
+0.4
+3305
+443.8
+460.9
+(II) Transportation
+1. Turnover of self-owned railway
+Billion tonne km
+283.9
+3.2
+43.7
+45.1
+Million tonnes
+Via Shenhua Tianjin
+Coal Dock
+158.6
+4.9
+184.1
+193.2
+Million tonnes
+Million tonnes
+226.4
+4.6
+258.2
+270.0
+Million tonnes
+2. Sales of seaborne coal
+244.6
+4.0
+273.0
+Of which: Via Huanghua Port
+2. Coal sales
+295.4
+296.6
+(42.4)
+(77,621)
+(44,715)
+Net cash used in financing activities
+(497.0)
+13,363
+(53,056)
+Net cash (used in) generated from investing
+activities
+(11.8)
+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.
+87,931
+Company
+excluding the effect of Shenhua Finance
+Net cash generated from operating activities
+47.6
+7,221
+10,660
+operating activities of Shenhua
+Finance Company Note
+Of which: Net cash generated from
+(7.3)
+77,588
+39.5
+2018 Annual Report 33
+1.
+Million tonnes
+1. Commercial coal production
+(1) Coal
+%
+2016
+for 2017
+2017
+2018
+Unit
+Section V Directors' Report (Continued)
+Major operating indicators
+compared
+Change
+for 2018
+As the coal business served as the driver for the growth in the business
+volume of self-owned railways, ports and shipping, revenue from
+transportation business of the Group before consolidated eliminations
+recorded a year-on-year increase of 6.0%.
+In 2018, total domestic coal consumption continued to maintain a
+momentum of growth. In response to the market demand, the Group
+strengthened the sales of purchased coal, with the sales volume of coal
+throughout the year reaching 460.9 million tonnes (2017: 443.8 million
+tonnes), representing a year-on-year increase of 3.9%.
+Benefited from the growth of total power consumption of the society and
+the Group's strengthened marketing efforts, the power output dispatch of
+the Group in 2018 reached 267.59 billion kWh (2017: 246.25 billion kWh),
+representing a year-on-year increase of 8.7%;
+2
+The revenue of the Group in 2018 recorded a year-on-year increase of 6.2%.
+The main reasons for such change are:
+(1) Factors affecting the revenue
+Revenue and costs
+with that
+-100.00% Shenhua Information Technology Co., Ltd.
+3. Shipping volume
+103.6
+Suizhong Power
+B11. 浙能電力
+B12. 舟山電力
+Guohua Hulunbeier Power
+Shendong Power
+Zhungeler Power
+Panshan Power
+Dingzhou Power
+B8.國華呼電
+Xinjie Taigemiao Exploration Area (preliminary work in progress)
+Guohua Zhunge'er
+B7. 國華准格爾
+Watermark Coal Project in Australia (preliminary work in progress)
+B6.神東電力
+Jinjie Energy
+B13. 锦界能源
+B5. 准能電力
+B4.盤山電力
+Beijing Gas Power
+A1. 神束礦區
+Shendong Mines
+Zheneng Power
+Zhoushan Power
+B14. 富平熱電
+Fuping Thermal
+B15. 台山電力
+Taishan Power
+B16. 惠州熱電
+C3. 黃萬鐵路
+Shuchuang Railway
+Shenshuo Railway
+C2.朔黃鐵路
+C1. 神朔鐵路
+鐵路 RAILWAY
+Guohua Ningdong
+B30.國華寧東
+Yuyao Power
+B28. 壽光電力
+Shouguang Power
+B29.柳州電力
+Liuzhou Power
+A2.准格爾礦區
+Jiujiang Power
+EMM Indonesia
+B25.南蘇EMM
+Ningdong Power
+B24.電力
+B21. 神皖能源
+Shenwan Energy
+B22.神華四川能源
+Shenhua Sichuan Energy
+B23. 神華福建能源
+Shenhua Fujian Energy
+Xuzhou Power
+Mengjin Power
+B18.太倉電力
+Taicang Power
+B19.陳家港電力
+Chenjiagang Power
+B20.徐州電力
+B17. 孟津電力
+Huizhou Thermal
+B26. 九江電力
+B27. 余姚電力
+Zhunge'er Mines
+A3.勝利礦區
+Shengli Mines
+A4.寶日希勒礦區
+Baoriile Mines
+A5. 包頭礦區
+Baotou Mines
+1. Sales of polyethylene
+(IV) Coal chemical
+57
+oo oo
+267.59 246.25
+262.87
+285.32
+Billion kWh
+Billion kWh
+2. Total power output dispatch
+2. Sales of polypropylene
+1. Gross power generation
+63.0
+11.8
+80.4
+89.9
+Billion tonne
+nautical miles
+4. Shipment turnover
+79.2
+11.4
+93.0
+(III) Power generation
+Million tonnes
+Thousand tonnes
+Thousand tonnes
+324.6
+A6、澳大利亞沃特馬克煤礦項目(前期工作階段)
+A7. 新街台格廟勘查區(前期工作階段)
+B2. 三河電力
+B10. 綏中電力
+Sanhe Power
+B3. 定州電力
+5,187
+China Shenhua Energy Company Limited
+34
+315.4
+297.7
+282.1
+292.6
+(2.8)
+220.57
+8.7
+236.04
+8.5
+86
+23
+308.8
+(3.6)
+Including: Sales to external customers
+90.00%-
+Shenhua Shandong Power Sales Co., Ltd.
+Self-owned mines
+雲南
+Yunnan
+29J11 822
+Sichuan
+呼倫貝爾
+Hulunbeler
+塔本陶勒盖
+內蒙古自治區
+Inner Mongolia Autonomous Region
+Tavan Tolgoi
+甘肅
+(B14
+Gansu
+陕西
+Shaanxi
+貴州
+Guizhou
+山西
+自有礦區
+Self-owned Railway (under construction)
+自有在建鐵路
+Self-owned Railway (in operation)
+114
+Huangda Railway
+210.2 km 40 million tonnes
+year completion year
+2015
+2020
+圖例 Legend
+省界線
+Provincial Boundary
+國有或地方鐵路線
+Shanxi
+----
+State-owned or Local Railway
+自有運營鐵路
+西藏
+Tibet
+新疆
+Xinjiang
+Ningxia
+青海
+Qinghai
+中國 CHINA
+93.0
+河南
+湖北
+Zhejiang
+黑龍江
+齊齊哈爾
+Heilongjiang
+Qiqihar
+遼寧
+Liaoning
+吉林
+Jilin
+甘其毛都
+Ganqimaodu
+釣魚島
+Diaoyu Islands
+塔然高勒
+「福建
+Tarangaole
+a
+Fujian
+台灣
+浙江
+Jiangsu
+江蘇
+Anhui
+Hubei
+河北
+Hebei
+湖南
+江西
+Hunan
+Jiangxi
+廣東
+廣西
+Henan
+Guangdong
+海南:
+Hainan
+澳門
+Macau
+香港
+Hongkong
+山東
+Shandong
+安徽
+Guangxi
+103.6
+Estimated
+transportation Commencement
+capacity
+64.2
+The Group's internal customers
+79.9
+70.1
+14.0
+Self-owned railways under
+དྷཎྜམྦྷ བྷ ཡོངྒེ་ྟབཋ ། ཟ ཟི སྤྱི
+2017
+Change
+billion
+billion
+tonne km
+tonne km
+%
+273.0
+4.0
+52.6
+-
+171.1
+Xinjie Mines
+0.8
+9.0
+390
+76.7
+441
+344.7
+77.7
+436
+2.6
+1.1
+Baotou Mines
+0.5
+3.0
+0.5
+0.4
+Shenhua Zhonghai Shipping Company
+Planned annual
+Sales to internal power segment
+103.2
+22.4
+393
+94.7
+21.3
+0.4
+28.4
+6.0
+8.9
+-
+-
+Total of China Shenhua
+303.0
+237.0
+27.8
+149.5
+151.9
+(1.6)
+-
+82.6
+(3 4
+segment
+External customers
+Total of shipping volume
+23.7
+22.9
+3.5
+construction
+Length
+85.5
+Taiwan
+4.8
+0.3
+11.2
+1.4
+14.3
+2.1
+71.4
+8.5
+20.0
+N/A
+30.6
+Others
+29.4
+6.6
+Sales to internal coal chemical
+4.1
+0.9
+360
+4.4
+1.0
+359
+(6.8
+303.6
+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
+108.5
+138
+149.75
+RMB100 million
+1,604.60
+103.1
+1,684
+1,736.77
+RMB100 million
+Selling, general and
+Cost of sales
+2,487.46
+105.9
+2,493
+2,641.01
+RMB100 million
+Revenue
+246.25
+107.6
+132.79
+6.2
+8.2
+12.8
+EBITDA
+the end of the period
+%
+Return on net assets as at
+%
+Return on total assets as at
+the end of the period
+Major financial indicators of the Group for 2018 are as follows:
+decrease of
+1.6%
+Year-on-year
+248.6
+Year-on-year
+increase of
+approximately
+8%
+costs of self-produced coal
+Changes in unit production
+development costs), net
+finance costs
+(including research and
+administrative expenses
+8.7
+3.9
+3868 2
+27228
+Year-on-year
+increase of
+7.6%
+267.59
+Billion kWh
+Total power output dispatch
+DISCUSSION AND ANALYSIS ON OPERATION RESULTS
+I.
+Section V Directors' Report
+Shenhua Funeng Power Generation Co., Ltd.
+51.00%-
+Guohua Huizhou Thermal Power Branch
+Shengli Energy Branch
+Inner Mongolia Guohua Zhunge'er Power Generation Co., Ltd.
+Guohua Power Branch
+65.00%-
+In 2018, the Group continued to push forward the integration mode by seizing the favorable
+opportunity of demand growth in the coal and power markets and striving to overcome the impact
+brought by the output reduction of certain coal mines and adverse weather, and made use of its
+own transportation and sales network to achieve operating profits at every stage of the industrial
+chain, hence contributing to enhancing competitiveness and maintaining stable operating results.
+50.00% Suizhong Power Co., Ltd.
+-65.00% Tianjin Guohua Panshan Power Generation Co., Ltd.
+Sanhe Power Co., Ltd.
+Major
+Branches
+51.00% Shenhua (Tianjin) Financial Leasing Co., Ltd.
+-100.00% Shenhua Zhunneng Group Co., Ltd.
+-100.00% Shenhua Hong Kong Limited
+100.00%
+Shenhua Yueyang Power Generation Co., Ltd.
+80.00%-
+-100.00% China Shenhua Overseas Development and Investment Co., Ltd.
+55.00%-
+RMB million
+The Group recorded a profit for the year of RMB54,164 million (2017: RMB57,138 million)
+representing a year-on-year decrease of 5.2%; a profit for the year attributable to equity holders
+of the Company of RMB44,137 million (2017: RMB47,795 million); and basic earnings per share of
+RMB2.219/share (2017: RMB2.403/share), representing a year-on-year decrease of 7.7%.
+Target for
+4.438
+107.2
+4.3
+4.609
+100 million tonnes
+0.4
+2.954
+102.3
+2.9
+Actual
+amount
+2.966
+Commercial coal production
+Coal sales
+%
+%
+change
+Year-on-year
+Actual
+amount for
+2017
+Proportion of
+Completion
+2018
+for 2018
+100 million tonnes
+-100.00% Shenhua Geological Exploration Co., Ltd.
+Net asset per share
+Gearing ratio
+%
+Impairment losses, net of reversal
+(16.8)
+894
+744
+Other income
+51.3
+(1,880)
+(2,844)
+Other gains and losses
+18.5
+(612)
+(725)
+Selling expenses
+8.2
+(160,460)
+(173,677)
+Cost of sales
+6.2
+248,746
+(152)
+N/A
+N/A
+Other expenses
+2019
+1 煤礦 COAL MINE
+鳳山電廠 POWER
+B1. 滄東電力
+B9. 北京燃氣
+Cangdong Power
+88,248
+Net cash generated from operating activities
+448
+264,101
+Share of results of associates
+(4,416)
+22.7
+1,205
+1,479
+(5,421)
+Finance costs
+Interest income
+177.7
+(1,262)
+(3,504)
+22.8
+Revenue
+%
+Change
+31 December
+As at
+As at
+-3.9%
+101,310
+97,363
+percentage points
+Decreased by 2.3
+15.6
+31 December
+13.3
+Decreased by 0.8
+10.0
+9.2
+Change
+2017
+2018
+and total equity ratio
+%
+Total debt to total debt
+percentage point
+RMB/share
+2018
+Change
+2017
+2018
+Unit: RMB million
+Items
+Changes in the Major Items in the Consolidated Statement of Profit or Loss and
+Consolidated Statement of Cash Flows
+(1) Analysis on principal business
+MAJOR OPERATION RESULTS DURING THE REPORTING PERIOD
+Section V Directors' Report (Continued)
+II.
+2017
+China Shenhua Energy Company Limited
+Note: Please refer to the section headed "Definitions" of this report for the calculations of the above indicators.
+percentage points
+Decreased by 7.5
+20.4
+12.9
+8.6%
+Decreased by 2.8
+percentage points
+33.7
+15.36
+16.68
+30.9
+32
+65.5
+534
+Jiangsu
+Segment profit/loss) from
+operations
+43,262
+46,051
+12,720
+7,399
+17,695
+17,675
+2,325
+2,529
+723
+661
+751
+560
+1,758
+1,536
+(1,037)
+(912)
+2.219
+RMB/share
+Basic earnings per share
+(9.8)
+million
+holders of the Company
+(7.7)
+1,736.77 (17.0)
+149.75
+Selling, general and administrative RMB100 million
+1,441
+RMB100 million
+Cost of sales
+75,499
+78,197
+135
+2.403
+47,795
+RMB
+Power output dispatch
+billion kWh
+143.1
+267.59
+(46.5)
+Segment cost of sales
+(156,143)
+(143,461)
+(72,408)
+(68,388)
+(19,915)
+(18,632)
+(3,511)
+(2,880)
+(3,232)
+(2,472)
+(4,901)
+Profit for the year attributable to equity
+(16.2)
+2,641.01
+2,212
+RMB100 million
+Revenue
+44,137
+million
+(173,677)
+80,390
+86,463
+(49)
+(30)
+(4,968)
+(160,460)
+248,746
+(7.7)
+As at
+self-produced coal
+increase of no
+more than 5%
+Year-on-year
+increase of
+7.6%
+Net cash generated from operating
+activities excluding Shenhua Finance
+Company
+RMB
+million
+77,588
+87,931
+(11.8
+Segment total liabilities
+(109,845)
+(114,713
+(158,033)
+(152,157)
+(56,341)
+65,772)
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+31 December 2018 31 December 2017 31 December 2018 31 December 2017 31 December 2018 31 December 2017 31 December 2018 31 December 2017 31 December 2018 31 December 2017
+RMB million
+RMB million
+RMB million
+10,982
+(3,619)
+RMB million
+9,821
+(1,816)
+year-on-year
+RMB million
+RMB million
+(636)
+7,058
+RMB million
+24,211
+(10,607)
+(10,094)
+7,865
+(1,527)
+As at
+Change in unit production costs of
+129,829
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+expenses (including R&D) and net
+Net cash generated from operating
+RMB
+88,248
+95,152
+(7.3
+31 December 2018
+RMB million
+31 December 2017 31 December 2018
+RMB million
+31 December 2017
+RMB million
+31 December 2018 31 December 2017 31 December 2018 31 December 2017
+RMB million
+RMB million
+RMB million
+129,353
+215,910
+222,941
+23,735
+225,672
+Segment total assets
+million
+activities
+finance costs
+RMB million
+RMB million
+228,641
+As at
+264,101
+(87,507)
+Shipping
+2018
+2017
+Coal chemical
+2018
+2017
+Unallocated items
+2018
+Eliminations
+Total
+2017
+2018
+2017
+2018
+2017
+Commercial coal production
+100 million
+2.9
+2.966
+(2.2)
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2017
+RMB million
+RMB million
+RMB million
+6.2
+264,101 248,746
+RMB
+million
+Revenue
+RMB million
+RMB million
+2018
+2018
+22 March 2019
+2018 Annual Report 21
+94000
+٣٣٥٥٢٥
+OHOC
+10
+60
+00
+Section V Directors' Report
+610
+104
+E
+Overview of China Shenhua's Operating Results for the Year of 2018
+Table 1
+Business Targets for 2019
+Table 2 Financial Indicators
+(16.1)
+2017
+2018
+2017
+Port
+Railway
+Power
+2017
+Coal
+2018
+Change %
+2017
+2018
+2019 amount in 2018 Change %
+Actual
+Target for
+Table 3 Results of Each Segment
+(81,302)
+RMB million
+RMB million
+265
+33,272
+31,971
+5.391
+4,929
+3.252
+2,549
+970
+1,040
+(87,507)
+(81,302)
+tonnes
+EBITDA
+RMB 97.363
+101,310
+(3.9
+Sub-total of segment revenue
+2388
+2,763
+5,681
+5.840
+3.247
+4.089
+276
+5,717
+37,586
+39,149
+79.511
+88,452
+195,918
+205,191
+6,124
+RMB million
+40,548
+Inter-segment revenue
+RMB million
+RMB million
+Revenue from external
+160,845
+155.370
+88,176
+79.246
+5,877
+5.615
+733
+788
+837
+698
+5,840
+5,681
+1,793
+1,348
+customers
+(5.2)
+57,138
+RMB 54,164
+million
+(7.4)
+4.609
+44,346
+4.27
+Coal sales
+Profit for the year
+tonnes
+248,746
+RMB million
+RMB million
+264,101
+100 million
+As at
+381,056
+(169,782)
+93.0
+11.4
+Others
+1.8
+(100.0
+Shendong Power
+Northwest/North China
+Inner
+334.5
+306.8
+3.723
+337
+255
+8,284
+700
+8,984
+8,726
+RMB million RMB/ RMB million
+million kWh mWh million kWh mWh
+05
+100
+100
+%
+ནྡྷ།ཎྜ ཟླ@ཕ
+103.6
+44.6 12,906 301.0 42.8
+8.9
+2,668 301.0
+5.863 301.0
+6,389 300.7 21.2 5,673 301.0 18.8 12.8
+2,661
+300.7 8.8
+300.7 18.5
+300.7
+13,366
+Others
+19.5
+RMB/
+million tonnes
+Mongolia
+Shengli Mines
+18.7
+19.2
+(2.6
+Mongolia
+Personnel expenses
+Baorixile Mines
+29.2
+25.3
+15.4
+Guohua Hulunbeler Power Northeast Power Grid
+Inner
+60.2
+54.3
+5,019
+321
+236
+50.0
+0.4
+0.6
+Baotou Mines
+4.6
+258.2
+Shipping volume
+270.0
+Seaborne coal sales
+Depreciation and amortization 5,573
+Repairs and Maintenance
+960
+1,200
+1,200
+million tonnes
+4.0
+%
+Cost of power output dispatch 70,652 2,675.9
+Local Power Grid
+Other operating costs
+billion kWh
+285.32
+262.87
+8.5
+Inner Mongolia
+196.9
+190.6
+3.3
+Cangdong Power
+North China Power Grid
+Hebei
+132.1
+126.0
+5,244
+Total power output dispatch
+5.119
+63.5
+68.1
+Hebei
+North China Power Grid
+Sanhe Power
+By regions
+(2.9)
+95.7
+Shaanxi
+8.7
+246.25
+267.59
+billion kWh
+98.6
+7.6
+11.8
+49,726
+264.0 66,704 2,462.5
+Materials, fuel and power
+53,192 2,675.9
+198.8 48,355 2.462.5
+270.9
+196.4
+12.5
+12
+Personnel expenses
+4,522 2,675.9
+16.9
+4,000 2,462.5
+16.2 4.3
+(1.1)
+Repairs and Maintenance
+2,730 2,675.9
+(5.1)
+4.2
+Depreciation and
+amortization
+Cost of coal transportation 52,881
+Mongolia
+80.4
+89.9
+billion tonne nm
+Shaanxi Provincial
+Others
+Gross power generation
+9.352 2.462.5 38.0 (20.0
+(10.5
+11.4
+2,814 2.462.5
+10.2
+30.4
+8,139 2,675.9
+Shipment turnover
+273.0
+283.9
+billion tonne km
+2017
+million tonnes
+Change
+Gross
+power
+Average
+for power
+capacity as at
+in installed
+capacity as at
+capacity as at
+Cost Volume cost Cost Volume Unit cost unit cost
+RMB million RMB/ RMB million RMB/
+output Unit
+output Unit Change in
+Cost dispatch
+cost Cost dispatch
+cost unit cost
+%
+Total production
+0.4
+295.4
+296.6
+million tonnes
+Commercial coal production
+million tonnes
+31 December
+capacity
+31 December
+outpour
+utilization
+output
+power
+31 December
+296.6
+%
+2018
+RMB million
+(446,136)
+345,593
+RMB million
+(423,923)
+325,680
+591,626
+(182,789)
+RMB million
+571,602
+(192,497)
+416,213
+(191,617)
+Table 6 Power Business
+Table 7 Cost of Sales of Coal Segment
+Table 8 Cost of Sales of Power Segment
+Standard
+2018
+2017
+2018
+Table 4 Operation Data
+Table 5 Commercial coal production Volume
+2018
+Change
+Installed
+2017
+Power
+Power
+Change in
+2017
+Unit
+(decrease) Total installed
+Increase/
+Total installed
+consumption
+Total
+coal
+Equity
+295.4
+0.4
+Power plants
+29.2
+3,392
+367
+213
+960
+960
+554
+Mongolia
+million tonnes
+160.2
+142.8
+12.2
+Zhunge'er Mines
+52.3
+55.4
+(5.6)
+Guohua Zhunge'er
+349.8
+6.922 300.7 23.0 5,380 301.0 17.9 28.5
+million tonnes tonne million tonnes tonne
+56,321 160.2
+142.8
+351.6 49,950
+34,911 300.7 116.1 32,490 301.0 107.9
+Materials, fuel and power
+Cost of coal purchased
+Production cost of self-
+produced coal
+639
+32.6
+1.320
+236
+310
+5,411
+64.5
+714
+North China Power Grid Inner
+1,320
+North China Power Grid Inner
+Zhunge'er Power
+1.3
+RMB/mWh
+g/kWh
+hours
+100 million kWh 100 million kWh
+2018
+2018
+MW
+for 2018
+dispatch Power tariff
+hours
+dispatch
+generation
+Location
+Power grid
+2017
+Chairman
+MW
+MW
+193.3
+195.8
+Shendong Mines
+(0.1)
+301.0
+300.7
+MW
+million tonnes
+By mines
+3.9
+443.8
+460.9
+million tonnes
+Coal sales
+Including: Self-produced coal
+Purchased coal
+Transportation turnover of self-
+owned railway
+Ling Wen
+凌文
+2019 is the 70th anniversary of the founding of the People's Republic of China and will be a crucial year
+for the country to build a moderately prosperous society in all respects. China Shenhua will remain true
+to our original aspiration and keep our mission firmly in mind, pursue progress, work hard, promote a
+safe, efficient and sustainable development in all business of the Company and create greater value to
+investors.
+Hebei
+139.2
+1288
+5,522
+South China Power Grid
+Guangdong
+North China Power Grid
+238.9
+4,694
+Huizhou Thermal
+South China Power Grid
+Guangdong
+34.2
+31.0
+225.5
+5,187
+Dingzhou Power
+Taishan Power
+1.8
+thousand tonnes
+315.4
+324.6
+(2.8)
+Shanxi
+4.0
+(100.0
+4.4
+Polypropylene sales
+thousand tonnes
+297.7
+308.8
+(3.6)
+Overseas
+(9.1)
+Polyethylene sales
+Zheneng Power
+Zhejiang
+East China Power Grid
+Jiangsu
+70.7
+67.6
+5,608
+Proportion
+Taicang Power
+2018 of domestic sales
+million tonnes
+% million tonnes
+སྐྱུ
+Plan for 2019 Completion in 2018
+RMB100 million
+Chenjiagang Power
+East China Power Grid
+2017 Change
+East China Power Grid
+5,066
+236.6
+223.5
+2123
+4,944
+Zhoushan Power
+East China Power Grid
+Zhejiang
+226.0
+47.6
+5,236
+Table 9 Domestic Coal Sales Volume
+Table 10 Capital Expenditure Plan for 2019
+Shenwan Energy
+East China Power Grid
+Anhui
+44.3
+291
+68.5
+2019: CONCENTRATING EFFORTS ON "CONSOLIDATION, ENHANCEMENT,
+IMPROVEMENT, TRANSPARENCY", BUILDING ITSELF INTO THE WORLD'S FIRST-
+CLASS COMPREHENSIVE ENERGY COMPANY
+20
+Section IV Chairman's Statement (Continued)
+In terms of pollution prevention and treatment, the Company continued to carry out ecological
+restoration and environmental governance in the coal segment, making fruitful achievements in building
+energy conservation and environmental protection capability. As for the power segment, the "ultra-low
+emission" renovation of coal-fired generators with total capacity of 7,810MW was completed, and all
+new coal-fired power projects were in line with ultra-low emission indicators, resulting in the installed
+capacity of "ultra-low emission" coal-fired generators accounting for 89.9% of the total installed
+capacity of coal-fired power generators of the Company. In 2018, the total emissions of sulfur dioxide,
+nitrogen oxide and chemical oxygen demand recorded year-on-year decrease, which continued to secure
+a leading position in the country. As for the transportation segment, the environmental protection
+renovation project of the open-air platforms of main railways was carried forward in an orderly manner;
+Huanghua Harbour successfully dealt with the long-existing problems in the coal port industry, such as
+dust pollution and coal-containing sewage treatment, becoming a benchmarking enterprise for green
+development of coal ports nationwide.
+In 2019, economic situations will remain stable amid changes and downside. The Chinese government
+will continue to uphold the underlying principle of pursuing progress while ensuring stability and strive
+to promote high-quality development, keeping the economy running within a reasonable range.
+The Company sets business targets for the whole year based on the prudent analysis of market
+environment and operation conditions as follow: commercial coal production will be 290 million tonnes,
+the coal sales will be 427 million tonnes, the power output dispatch will be 143.1 billion kWh, the
+revenue will be RMB221.2 billion and the cost of sales will be RMB144.1 billion, selling, general and
+administrative expenses and net finance costs will be RMB13.5 billion.
+Priorities will include the following:
+Setting High Standard and High Starting Point, Planning the Path for the Company's
+Development
+With the general objective of "building the flagship company of China Energy Group and the world-
+class energy enterprise with global competitiveness", we will further deeply study new strategic
+positioning of the Company, improve the strategic management system, focus on the main business of
+the Company at a horizontal level, vertically extend the operation of the integrated industry chain, and
+explore the path for optimising industrial structure and strengthening industrial synergy and integration,
+building the "century-vintage store" in the energy industry.
+Adhering to and Strengthening the Overall Leadership of the Communist Party of China
+The Company will carry out in-depth implementation of the Thought on Socialism with Chinese
+Characteristics for a New Era proposed by Xi Jinping and the main idea of the important speech made
+by General Secretary Xi Jinping at the Work Conference of the Party Construction of State Enterprises
+Nationwide to ensure the Party building being institutionalised, normalised and a regular practice,
+I give full play to the roles of Party organisations and Party members at all levels, promote the in-depth
+integration of Party building and production and operation, and always maintain the right direction for
+reform and development.
+Section IV Chairman's Statement (Continued)
+Optimising the Production, Transportation and Marketing Organisation to Improve the
+Quality of the Company's Development
+In terms of the coal segment, emphasis will be put on improving quality, increasing coal variety and
+building brand, promoting clean and efficient production of coal, constructing intelligent and green
+mines, ensuring the acquisition and perpetuation of resources in core areas, increasing output of open-
+pit mines, putting more efforts on marketing and stabilising energy supply. In terms of the power
+segment, the Company will adhere to steady development, promote the coal-power cooperation and
+enhance the quality of power generation, so as to strengthen market competitiveness and ensure that
+the average utilisation hours of the generating units continue to secure a leading position in the industry.
+In terms of the transportation segment, the Company will optimise the network layout, strengthen the
+centralised transportation capability of railways, promote the dispersed transportation capability of ports
+and construct safe, intelligent, efficient and environmental-friendly transportation channels. In terms of
+the coal chemical segment, efforts will be concentrated on technology research and development and
+process integration to ensure safe operation.
+Safe and Healthy Operation, Fulfilling Social Responsibility
+With focus on management of key fields, main sections and weak spots, safe production will continue
+to maintain a leading position worldwide. The Company will continue to strengthen the safety control
+of capital chain, put more efforts on controlling the growth of unit production cost of self-produced
+coal, and reduce the controllable costs of power generation and transportation businesses; strictly
+control investment projects to advance the construction of projects such as Huangda Railway and Jawa-
+7 Coal-fired Power; enhance the implementation of targeted poverty alleviation projects and actively
+explore new work methods such as poverty alleviation through science and technology; adhere to green
+and low-carbon development, safeguarding the bottom line of ecological protection; and establish an
+information system for monitoring occupational health to ensure full coverage of occupational health
+examination.
+Promoting Innovation-driven Development Strategy, Strengthening Independent
+Innovation Capability
+The Company will improve the technological innovation system, strengthen the construction of
+scientific research facilities, and cultivate and introduce higher level of creative talents; put more efforts
+to cultivate technological innovation culture, and promote the creation, protection and application
+of intellectual property rights; strengthen the cooperation among "production, study, research and
+practice", carry out scientific research on the green development of the coal industry, intelligent power
+generation, green and smart railways and ports, and high-end coal chemical products to keep abreast
+of the core, critical and cutting-edge technologies, so as to demonstrate the leading of a number of key
+projects, and promote innovation and development of the Company.
+China Shenhua Energy Company Limited
+attributable to:
+57,138
+54,164
+Profit for the year
+Equity holders of
+Cash and cash equivalents
+39,301
+17,649
+24,910
+47,795
+31,970
+the Company
+24,959
+41,253
+Profit for the year
+70,141
+(15,977)
+73,293
+(16,155)
+(9,283)
+(9,561)
+(12,784)
+Income tax
+44,137
+34,520
+61,847
+Profit before income tax
+49,063
+Non-controlling interests
+0.887
+7,310
+431,226
+Total non-current assets
+RMB Million RMB Million
+2018
+2017
+2016
+RMB Million
+RMB Million
+RMB Million
+2015
+2014
+As at 31 December
+9,762
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+2018 Annual Report 301
+2.219
+2.403
+1.252
+448
+1.976
+- Basic
+Earnings per share (RMB)
+10,027
+9,343
+7,060
+Section XVI Summary of Major Financial Information for the
+Recent Five Years (Continued)
+534
+(5,123)
+428
+(341)
+(1,880)
+(3,078)
+(5,856)
+(770)
+Other gains and losses
+(400)
+(496)
+(375)
+costs
+Research and development
+(9,854)
+(454)
+(2,844)
+(9,115)
+(9,218)
+(8,460)
+expenses
+General and administrative
+(725)
+(612)
+(610)
+(584)
+(794)
+Selling expenses
+90,424
+(8,023)
+Other income
+939
+1,659
+410
+associates
+Share of results of
+(5,421)
+1,479
+1,205
+(4,416)
+723
+(5,748)
+438,755
+(4,459)
+Finance costs
+608
+803
+Interest income
+(3,504)
+(1,262)
+(1,511)
+(626)
+(419)
+Other expenses
+reversal
+(152)
+Impairment losses, net of
+744
+894
+1,379
+237
+443,266
+550,872
+358,330
+33,829
+3,161
+3,074
+352
+240
+213,567
+234,485
+Current assets
+Inventories
+3,379
+3,167
+32,325
+Accounts and bills receivables
+11,977
+Prepaid expenses and other current assets
+67,055
+44,481
+Restricted bank deposits
+793
+938
+Time deposits with original maturity over
+three months
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+12,662
+646
+Total non-current assets
+Deferred tax assets
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+47. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY
+Non-current assets
+Property, plant and equipment
+Construction in progress
+Intangible assets
+Investments in subsidiaries
+Investments in associates
+AFS investments
+NOTE
+31 December
+2018
+RMB million
+31 December
+2017
+RMB million
+44,724
+48,713
+3,521
+3,067
+854
+572
+120,344
+7,640
+-
+139,138
+5,283
+569
+Equity investments at FVTOCI
+Other non-current assets
+Lease prepayments
+China Shenhua Energy Company Limited
+438,958
+302
+379,105
+59,408
+76,592
+79,575
+94,383
+74,524
+Total non-current liabilities
+123,381
+115,905
+112,185
+101,487
+110,778
+Total liabilities
+Total current liabilities
+571,602
+576,729
+559,791
+88,286
+Total assets
+233,296
+132,644
+133,463
+121,036
+119,646
+Total current assets
+591,626
+185,302
+195,870
+191,760
+384,969
+363,921
+365,570
+Total equity
+77,144
+73,564
+67,994
+65,853
+64,872
+Non-controlling interests
+331,693
+305,541
+316,975
+298,068
+300,698
+holders of the Company
+Equity attributable to equity
+408,837
+379,105
+384,969
+363,921
+365,570
+Net assets
+182,789
+192,497
+408,837
+4,650
+58,284
+74,972
+Total
+RMB million
+Retained
+earnings
+RMB million
+RMB million
+Capital and
+other reserves
+income
+RMB million
+RMB million
+reserves
+Statutory comprehensive
+Share
+premium
+RMB million
+Other
+Profit for the year
+At 1 January 2017
+85,001
+47. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+256,515
+263,739
+19,890
+236,625
+19,890
+243,849
+38
+China Shenhua Energy Company Limited
+296
+Total equity
+Share capital
+Reserves
+Equity
+256,515
+263,739
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+18,288
+30
+1,681
+1,681
+5
+20,996
+85,001
+1,183
+(1,183)
+(3,891)
+3,891
+(59,072)
+- (59,072)
+31,941
+31,966
+(25)
+At 31 December 2017
+production funds
+Utilisation of maintenance and
+production funds
+Appropriation of maintenance and
+Dividend declared (Note 15)
+Total comprehensive (expense)
+income for the year
+Other comprehensive expense
+P. - 31,966 :
+(25)
+(25)
+31,966
+263,756
+158,756
+6,749
+128,942
+6,363
+1,498
+7,716
+88,998
+7,271
+11,120
+Contract liabilities
+Income tax payable
+Current portion of long-term liabilities
+Accrued expenses and other payables
+Accounts and bills payables.
+Borrowings
+RMB million
+31 December
+2017
+31 December
+2018
+RMB million
+6,476
+NOTE
+47. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2018
+2018 Annual Report 295
+124,367
+166,230
+23,859
+Total current assets
+Assets classified as held for sale
+124,367
+142,371
+59,154
+49,282
+Current liabilities
+73,778
+154
+5,196
+720
+1,248
+4,744
+3,617
+Net assets
+Total non-current liabilities
+Accrued reclamation obligations
+Long-term liabilities
+Borrowings
+Non-current liabilities
+263,264
+270,102
+Total assets less current liabilities
+28,779
+56,535
+Net current assets
+95,588
+109,695
+Total current liabilities
+378
+as held for sale
+Liabilities associated with assets classified
+95,588
+109,317
+73
+2,867
+1,256
+1,285
+236,625
+Adjustments arising from initial
+application of IFRS 9 and IFRS 15
+(Zhang Jiming)
+m
+9,200
+弦明
+(Zhou Dayu)
+申林
+周大产
+Senior Management
+(Zhai Richeng)
+。
+Supervisors
+Section XV Signing Page for Opinions (Continued)
+(Xu Mingjun)
+2018 Annual Report 299
+Athana
+(Jiang Bo)
+姜波
+(Tam Wai Chu, Maria)
+譚惠珠
+(Zhao Jibin)
+去
+(Gao Song)
+(Li Dong)
+高嵩
+(Huang Ming)
+Te
+(Zhong Yingjie, Christina)
+(Shen Lin)
+贾晋中
+(Jia Jinzhong)
+Gross profit
+264,101
+(173,677)
+248,746
+(160,460)
+(124,843)
+(123,341)
+(178,109)
+183,127
+177,069
+253,081
+Cost of sales
+Revenue
+RMB Million RMB Million
+2018
+2017
+2016
+RMB Million
+For the year ended 31 December
+2015
+RMB Million
+RMB Million
+2014
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+The finance information below is from the financial statement prepared by the Group in accordance with
+International Financial Reporting Standards:
+Section XVI Summary of Major Financial Information
+for the Recent Five Years
+China Shenhua Energy Company Limited
+22 March 2019
+300 China Shenhua Energy Company Limited
+(Xu Shancheng)
+(Zhang Guangde)
+(Huang Qing)
+张立法 许山成
+树
+(Peng Suping)
+(Mi Shuhua)
+(Ling Wen)
+25,242
+-
+78
+82
+82
+25,242
+25,242
+236,625
+129,497
+1,126
+555
+(555)
+82
+production funds
+Utilisation of maintenance and
+production funds
+Appropriation of maintenance and
+Dividend declared (Note 15)
+for the year
+Total comprehensive income
+Other comprehensive income
+Profit for the year
+от
+5
+20,996
+85,001
+At 1 January 2018
+25,324
+53,728
+(18,100)
+3,740
+凌文
+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 2017) of
+the CSRC, having fully understood and reviewed the 2018 Annual Report of the Company, all directors,
+supervisors and senior management are of the opinion that information disclosed in the 2018 Annual
+Report of the Company is true, accurate and complete. We hereby guarantee that the information stated
+in this report does not contain any false representation, misleading statement or material omission, and
+jointly and severally accept full responsibility for the truthfulness, accuracy and completeness of the
+content thereof.
+Section XV Signing Page for Opinions
+298 China Shenhua Energy Company Limited
+Approval date of the board of directors for submission: 22 March 2019
+Ling Wen, Chairman
+The annual report for the year 2018 published on the Shanghai Stock Exchange
+and the Hong Kong Stock Exchange
+The original copies of all documents and announcements of the Company
+publicly disclosed in the newspapers designated by the CSRC during the
+reporting period
+The original copy of the audit report sealed by the accounting firm and signed
+and sealed by the certified public accountants
+The financial statements signed and sealed by the Chairman, the Chief Financial
+Officer, and the Accountant in Charge
+The annual report for the year 2018 signed by the Chairman
+Documents available
+for inspection
+Section XIV Documents Available for Inspection
+2018 Annual Report 297
+At 31 December 2018, the aggregate amount of retained earnings determined in accordance with
+the China Accounting Standards available for distribution to equity holders of the Company was
+RMB132,711 million (2017: RMB124,576 million).
+According to the Company's Articles of Association, the amount of retained earnings available
+for distribution to equity holders of the Company is the lower of the amount determined in
+accordance with the China Accounting Standards and the amount determined in accordance with
+IFRSS after the appropriation to reserves as detailed in Note (iii) to the consolidated statement of
+changes in equity.
+At 31 December 2018
+243,849
+135,242
+1,126
+87
+22,393
+85,001
+2,343
+(2,343)
+(3,740)
+(18,100)
+许
+the year
+2.8
+2018 Annual Report 37
+38
+Section V Directors' Report (Continued)
+(4) Analysis of the production and sales volume
+Increase/
+decrease in
+Year-on-year Year-on-year
+inventory as
+Major
+products
+Production
+Sales
+volume
+Inventory
+at the end
+of the year
+increase/
+decrease in
+increase/
+compared
+percentage points
+decrease in
+Increased by 3.5
+2.8
+21.9
+Decreased by 6.9
+percentage points
+Shipping
+4,089
+3,232
+21.0
+25.9
+30.7
+Decreased by 2.9
+percentage points
+Coal chemical
+5,840
+4,901
+16.1
+(1.3)
+7.1
+production
+with the
+beginning of
+In 2018, the total revenue from the top five customers of the Group amounted
+to RMB72,626 million, accounting for 27.5% of the revenue of the Company
+(less than 30%), including the revenue from China Energy, the controlling
+shareholder of the Company, and its subsidiaries. The Group has maintained
+long-term cooperative relationship with the above customers. The Company
+is of the view that the long-term cooperative relationship would not result in
+material risk to the business of the Group.
+Major suppliers
+In 2018, the total procurement from the top five suppliers of the Group
+amounted to RMB32,951 million, accounting for 24.2% (less than 30%) of
+the total procurement for the year, among which, the procurement from the
+largest supplier amounted to RMB9,934 million, representing 7.3% of the total
+procurement for the year.
+China Shenhua Energy Company Limited
+2.
+Section V Directors' Report (Continued)
+Other items of consolidated statement of profit or loss
+(1)
+(2)
+(3)
+(4)
+(5)
+(6)
+(7)
+(8)
+(6)
+sales
+Major customers
+8.7
+volume
+volume
+the year
+%
+%
+%
+Coal
+Power
+296.6 million 460.9 million
+tonnes
+tonnes
+285.32 billion 267.59 billion
+kWh
+kWh
+23.7 million
+0.4
+3.9
+(4.0)
+tonnes
+8.5
+(5)
+42.7
+3,511
+6,124
+depreciation and amortisation, other
+expenses, other operating costs, and taxes
+and surcharges
+36
+China Shenhua Energy Company Limited
+(3)
+Section V Directors' Report (Continued)
+Major business segments
+The major business model of the Group is the integrated coal industry chain: i.e.
+coal production → coal transportation (railway, port and shipping) → conversion
+of coal (power and coal chemical), and there are business intercourses between
+each segment. The percentages of the profit from operations attributable to the
+coal, power, transportation and coal chemical segments of the Group before
+elimination on consolidation changed from 61%, 10%, 28% and 1% in 2017 to
+56%, 16%, 27% and 1% in 2018, respectively.
+The revenue and cost of sales of the following business segments are the data
+before eliminations on consolidation of each segment.
+Major business segments in 2018 (before eliminations on consolidation)
+Increase/
+decrease in
+Increase/
+decrease in
+revenue as cost of sales
+compared as compared
+with
+expenses, repairs and maintenance,
+Increase/decrease in
+Chemical
+4,968
+21.9
+Shipping
+Cost of internal transportation business
+3,232
+2,472
+30.7
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, external
+transportation charges, and other expenses),
+external transportation charges, and taxes and
+surcharges
+Coal
+Raw materials, fuel and power, personnel
+4,901
+(1.3)
+with
+gross profit margin
+Business
+segment
+72,408
+18.1
+11.2
+5.9
+Increased by 4.1
+percentage points
+Railway
+39,149
+19,915
+49.1
+4.2
+6.9
+Decreased by 1.3
+percentage points
+Port
+88,452
+Power
+percentage points
+Decreased by 2.9
+Revenue
+Cost of Gross profit
+sales
+previous
+previous
+margin
+year
+year
+Selling expenses: representing a year-on-year increase of 18.5% in 2018, which
+I was mainly attributable to the increase in expenses of coal sales institutions as
+a result of the increase in purchased coal and newly added switch stations.
+as compared with
+previous year
+%
+Coal
+205,191
+156,143
+23.9
+4.7
+8.8
+RMB million RMB million
+2,880
+Other gains and losses: representing a year-on-year increase of 51.3% in other
+losses in 2018, which was mainly attributable to the losses and expenses
+arising from disposal of assets in relation to the separation and transfer of
+"water/power/gas supply and property management" in 2018.
+Impairment losses, net of reversal: amounted to RMB152 million in 2018, which
+was mainly attributable to the provision for impairment of bills receivables and
+accounts receivables, and the impairment provision made by Shenhua Finance
+Company in accordance with relevant regulations.
+296.6
+Total
+2
+53,666
+143,495
+618
+197,161
+620
+460.5
+0.4
+1
+Others
+296.6
+Thermal coal
+million
+RMB
+RMB
+million
+million
+460.9
+tonnes
+197,781
+53,668
+Short-term
+5,772
+1.0
+44 China Shenhua Energy Company Limited
+The Group implemented three unified pricing mechanisms, namely, the pricing
+mechanisms for annual long-term contracts, monthly long-term contracts and
+spot commodity, for all internal and external customers. In 2018, the average
+coal sales price of the Group was RMB429 per tonne (tax exclusive) (2017:
+RMB425 per tonne), representing a year-on-year growth of 0.9%. As of the end
+of 2018, the Group has entered into annual long-term thermal coal purchase
+contracts with 15 domestic quality customers with good reputation for three
+years (2019-2021), which will adopt the pricing mechanism of "benchmark
+price (RMB535/tonne for 5,500 kcal thermal coal (tax-inclusive spot FOB)) +
+float price". Long-term stable internal and external coal customers are favorable
+for the Group to arrange production and transportation plans on a reasonable
+basis, and maintain integrated stable operation at a high level as well as a high
+production efficiency, transportation efficiency and capital turnover ratio.
+The Group expanded procurement and sales channels for coal and improved
+sales efficiency through Shenhua Coal Trading Network (https://www.
+e-shenhua.com) developed by itself. In 2018, the coal sales volume of the
+Group through Shenhua Coal Trading Network reached approximately 200
+million tonnes.
+In 2018, the Group conducted scientific research and study of market to
+formulate flexible marketing strategies, and continued to optimize coal source
+organization and transportation deployment to satisfy customer needs to the
+maximum, thus achieving stable integration operation at a high level. The profit
+from coal sales was increased through various measures, such as maximizing
+the supply of self-produced coal, strengthening the sales of purchased coal,
+making reasonable adjustment to product structure and holding electronic
+auctions. During the year, sales volume of coal reached 460.9 million tonnes
+(2017: 443.8 million tonnes), representing a year-on-year increase of 3.9%,
+among which, Sales volume of coal in the domestic market was 456.4 million
+tonnes. The seaborne coal business achieved quality development through
+efficient coordination of port and shipping resources to increase the "quasi-liner
+shipping" volume. The seaborne coal sales for the year reached 270.0 million
+tonnes (2017: 258.2 million tonnes), representing a year-on-year increase of
+4.6%. The seaborne coal sales at Huanghua Port and Shenhua Tianjing Coal
+Dock in aggregate accounted for 88.3% of the total seaborne coal sales of the
+Group (2017: 88.2%), representing a year-on-year increase of 0.1 percentage
+point.
+Section V Directors' Report (Continued)
+2018 Annual Report 43
+The coal sold by the Group is mainly self-produced coal. In order to fulfill the
+needs of customers and adequately make use of railway transportation, the
+Group also purchased coal from third parties in the surrounding areas of the
+self-owned mines and railways, and produced different kinds and levels of
+coal products and sold them to external customers. The Group implemented
+specialised division management. Production enterprises are responsible for
+production of coal, and Shenhua Trading Group is mainly responsible for sales of
+coal. Customers have different industry background, such as power, metallurgy,
+chemical and construction materials.
+Sales of coal
+The Group has independently operated railway collection and distribution
+channels. These channels are centralised and distributed in the rim of
+self-owned core mines, and can transport coal in the core mines. For details
+of operation of the self-owned railways, please refer to the section headed
+"Railway Segment" herein.
+In 2018, the Company's coal exploration expenses (which were incurred before
+the conclusion of feasibility study and represented the expenses related to
+exploration and evaluation of coal resources) amounted to approximately
+RMB18 million (2017: RMB48 million), which was mainly attributable to the
+relevant expenses of Watermark Coal Project in Australia. The Company's
+relevant capital expenditure of mining development and exploration amounted
+to approximately RMB4,141 million (2017: RMB3,332 million), which was
+mainly attributable to the expenditure on the preliminary development of
+Taigemiao District of Xinjie Mining Area, the expenditure related to coal mining
+for Shendong Mines, Zhunge'er Mines and Baorixile Mines, and consideration
+payment for mining rights and acquisition of fixed assets.
+As coal products were in great variety with a large sales volume, and some of
+self-produced coal products were transported and sold together with purchased
+coal, the Group cannot present the revenue, cost of sales and gross profit by
+source of coal (self-produced coal and purchased coal).
+(2)
+144,113
+12.6
+tonnes
+Million
+The Group has no major assets sequestered or distrained. As of the end of the
+reporting period, the balance of restricted assets of the Group amounted to
+RMB10,631 million, which mainly consists of statutory deposit reserves balance of
+Shenhua Finance Company placed at the central bank amounting to RMB6,254 million.
+Other restricted assets were mainly intangible assets, fixed assets and various types
+of deposits as collaterals for bank borrowings.
+Restriction on the major assets
+2.
+Section V Directors' Report (Continued)
+2018 Annual Report 41
+Provision for coal mine
+environmental restoration
+fund to replace the original
+coal mine environmental
+restoration deposit since
+2018 in accordance with the
+regulatory requirements
+(24.8) Decrease in taxable income
+right fee payable
+reclamation fee and mining
+reclamation fee
+16.2
+0.5
+2,745
+borrowings
+15,785
+(IV) Operation results by business segment
+RMB
+1.
+(1)
+Million
+sales Gross profit
+Revenue
+volume
+volume
+Types of coal
+Cost of
+Sales
+Production
+Production and sales volumes of all coals in 2018 of the Group are as below:
+Section V Directors' Report (Continued)
+42 China Shenhua Energy Company Limited
+The Group proactively pushed forward the application for coal mining lands
+and acquisition of resources. The procedures for obtaining the grassland
+occupancy permit and the renewal procedures for the use of mining land in
+the Ha'erwusu Open-pit Mine have been completed; the renewal procedures
+for the use of land in the excavating yard of the Baorixile Open-pit Mine have
+been preliminarily approved; Beidian Shengli obtained an additional production
+capacity of 8 million tonnes/year for its open-pit mine through the purchase of
+production capacity replacement quota; the renewal of exploration permit of
+Taigemiao North District of Xinjie Mining Area was completed in July 2018 with
+a new comprehensive exploration permit certificate, while Taigemiao South
+District is actively applying for its exploration permit.
+The majority of the coal products produced and sold by the Group were thermal
+coal. The year of 2018 witnessed a relatively strong domestic coal demand,
+with sharp increase in coal consumption in the power and chemical industries,
+and steady increase in coal consumption in the iron and steel and construction
+material industries. By seizing such favorable opportunity, the Group insisted on
+safe, green, balanced and efficient production to effectively guarantee market
+supply. In view of the climate features of the northeast regions, the Group
+made rational arrangements of coal mining to fully support for the coal demand
+in winter in the northeast region. In addition, the Group carried out in-depth
+promotion of quality and efficiency to produce clean coal; continued to optimize
+the structure of coal products to increase the output of high value-added
+products; increased investment in technological innovation; and strengthened
+the management of and control over production organization, coal quality,
+and disaster detection and early-warning. The Group's output of commercial
+coal reached 296.6 million tonnes in the year (2017: 295.4 million tonnes),
+representing a year-on-year growth of 0.4%, which was mainly attributable
+to the stable and increased output of Shendong Mines and Shenbao Mines.
+The total footage of advancing tunnels was 373 thousand meters (2017: 335
+thousand meters), representing a year-on-year increase of 11.3%.
+Production, operation and construction
+Coal segment
+71,872
+10.5
+61,863
+The ratio of research and development personnel to the total number
+of persons in the Company (%)
+In 2018, investment in research and development amounted to RMB860 million (2017:
+RMB863 million), which is mainly utilised in research and demonstration engineering
+of a set of 8.8-meter height fully-mechanised smart mining equipment at Shendong
+Mines, demonstration project of the industrialization of aluminium oxide, high-
+aluminium pulverized fuel ash integrated use and technological research on safety
+monitoring and protection, etc..
+Cash flow
+The Group formulated capital management policies that aimed to achieve maximized
+interests for the shareholders and maintained a sound capital structure as well as
+reduced the costs of capital under the premise of safeguarding the operation on an
+on-going basis, and the capital was invested in accordance with the policy of the
+Company.
+(1)
+(2)
+(3)
+Net cash generated from operating activities: RMB88,248 million of net cash
+generated from operating activities in 2018, representing a year-on-year
+decrease of 7.3%, of which, net cash generated from operating activities
+of Shenhua Finance Company was RMB10,660 million (2017: RMB7,221
+million generated from operating activities), representing a year-on-year
+increase of 47.6%, which was mainly attributable to the increase in deposits
+placed with Shenhua Finance Company. Excluding the effects of Shenhua
+Finance Company, net cash generated from operating activities of the Group
+represented a year-on-year decrease of 11.8%, which was mainly attributable
+to the increase in cash outflows as a result of the increase in production cost
+of self-produced coal, percentage of sales of purchased coal and external
+transportation charges, and the increase in taxes and expenses as compared to
+the corresponding period of previous year.
+Net cash (used in) generated from investing activities: RMB53,056 million of net
+cash used in investing activities in 2018 (2017: RMB13,363 million generated
+from investing activities), representing a year-on-year change of 497.0%, which
+I was mainly attributable to the maturity of wealth management products for the
+corresponding period of previous year and the additional investments in wealth
+management products for the current year.
+Net cash used in financing activities: RMB44,715 million of net cash used in
+financing activities in 2018, representing a year-on-year decrease of 42.4%,
+which was mainly attributable to the distribution of special dividends by the
+Company for the corresponding period of previous year and the increase in bank
+borrowings for the power segment during the reporting period.
+40
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+(II)
+Explanation on the material changes in profit incurred from non-principal
+business
+Number of research and development personnel in the Company
+(number of person)
+Applicable ✓ Not applicable
+4.
+2,603
+Other expenses: representing a year-on-year increase of 177.7% in 2018, which
+was mainly attributable to the occurrence of expenditures in relation to the
+separation and transfer of "water/power/gas supply and property management"
+in 2018 and the increase in donations to third parties.
+Interest income: representing a year-on-year increase of 22.7% in 2018, which
+was mainly attributable to the increase in average bank deposit balance.
+Finance costs: representing a year-on-year increase of 22.8% in 2018, which
+was mainly attributable to the increase in exchange losses on foreign currency
+liabilities.
+Share of results of associates: representing a year-on-year decrease in revenue
+of 16.1% in 2018, which was mainly attributable to the decrease in operating
+profits of associates.
+2018 Annual Report 39
+Section V Directors' Report (Continued)
+3.
+Investment in research and development
+Expensed research and development expenditure in the period
+(RMB million)
+454
+406
+Total research and development expenditure (RMB million)
+Ratio of capitalised research and development expenditure (%)
+Percentage of total research and development expenditure to
+revenue (%)
+860
+47.2
+0.3
+3.0
+(III) Analysis on Assets and Liabilities
+1. Assets and Liabilities
+Unit: RMB million
+54,702
+9.2
+20,452
+3.6
+167.5
+Purchase of bank wealth
+and other
+current assets
+Restricted bank
+deposits
+8,607
+1.5
+7,348
+1.3
+17.1
+Cash and cash
+equivalents
+Prepaid expenses
+%
+%
+%
+Percentage of
+Amount at
+Amount at
+total assets
+the end of
+Percentage
+of total
+assets at
+the end of
+the end of
+Other income: representing a year-on-year decrease of 16.8% in 2018, which
+was mainly attributable to the decrease in government subsidy received by gas-
+fired power plants.
+at the end
+the previous
+Items
+of the year
+year
+year
+Change of
+the amount
+Main reasons for changes
+the previous
+3,511
+Capitalised research and development expenditure in the period
+(RMB million)
+18,632
+the previous
+sales for the
+the previous
+sales for
+Amount for
+to cost of
+Breakdown of cost items
+over that of
+to cost of
+Percentage
+Unit: RMB million
+Amount for
+Percentage
+Section V Directors' Report (Continued)
+Change in
+amount for
+the year
+(2) Analysis of costs
+the year
+year
+19,523
+13.3
+23,118
+Raw materials, fuel and power
+12.8
+31.1
+the year
+49,950
+56,321
+Cost of coal purchased
+%
+%
+%
+year
+32.4
+12.2
+0.5
+Accrued land
+borrowings due
+and long-term
+(63.4) Repayment of bank loans by
+power plants
+Dollar and loans
+and repayment of matured
+bonds denominated in US
+management products
+within 1 year
+(13.9) Purchase of bank wealth
+reserves balance and
+increase in statutory deposit
+Mainly attributable to the
+Finance Company
+management products and
+6.9
+deposits of various kinds
+3,191
+Long-term
+granting of loans by Shenhua
+payable
+1.0
+5,604
+10
+0.7
+4,213
+457
+Income tax
+payables due
+32.5 Increase in expected
+0.1
+345
+0.1
+90
+within 1 year
+18.4
+previous year
+15,888
+Total cost of sales
+(1.3)
+Railway
+Cost of internal transportation business
+Port
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, external
+transportation charges, and other expenses),
+external transportation charges, other
+operating costs, and taxes and surcharges
+Cost of internal transportation business
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, and other
+expenses), external transportation charges,
+other operating costs, and taxes and
+surcharges
+173,677
+2018
+2017 Change
+%
+156,143
+143,461
+8.8
+72,408
+68,388
+Personnel expenses
+Power
+100.0
+100.0
+Coal
+Items of costs
+Business
+segment
+Cost of sales by business segment (before eliminations on consolidation)
+Unit: RMB million
+Section V Directors' Report (Continued)
+160,460
+2018 Annual Report 35
+Personnel expenses represented a year-on-year increase of 14.8%,
+which was mainly attributable to the raise of salary standard by certain
+production units based on the operating performance;
+Costs of raw materials, fuel and power represented a year-on-year
+increase of 18.4%, which was mainly attributable to the increase in
+coal cost in the power segment as a result of the increase in power
+generation, and the increase in consumption of materials for coal mine
+stripping and excavation;
+The cost of coal purchased represented a year-on-year increase of 12.8%,
+which was mainly attributable to the expansion of the sales volume of
+purchased coal by the Group according to market supply and demand;
+(3)
+The cost of sales of the Group in 2018 represented a year-on-year increase of
+8.2%, of which:
+8.2
+Transportation charges represented the costs of the Group incurred
+through external railway, expressway, shipping transportation, the use
+of external port and so forth. Such charges represented a year-on-year
+increase of 16.1% in 2018, which was mainly attributable to the increase
+in volume of coal transported through national railways and the increase
+in chartering costs;
+5.9
+Cost of coal purchased, production cost of self-
+produced coal (raw materials, fuel and power,
+personnel expenses, repairs and maintenance,
+depreciation and amortisation, and other
+expenses), transportation charges, other
+operating costs, and taxes and surcharges
+Raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, other costs,
+other operating costs, and taxes and
+surcharges
+9.6
+(6.2)
+Repairs and maintenance
+10,025
+5.8
+9,938
+21,576
+6.2
+0.9
+Transportation charges
+16,635
+13.5
+14,326
+8.9
+16.1
+Taxes and surcharges
+10,053
+5.8
+9.1
+21,665
+12.3
+13,842
+8.6
+14.8
+19,915
+Depreciation and amortisation
+11.7
+21,394
+Others
+4.3
+6.0
+9,640
+20,243
+13.5
+capacity
+Price
+Change in
+2017
+2018
+By internal and external customers
+Coal sales of the Group in 2018 are set out as follows:
+Location of
+Installed
+Section V Directors' Report (Continued)
+price
+(exclusive
+Sales
+customers
+Company
+Sales to external
+%
+tonne
+%
+tonnes
+tonne
+tonnes
+RMB/
+Million
+RMB/
+Million
+of tax)
+of tax)
+volume Percentage
+of tax)
+volume Percentage
+(exclusive
+Sales
+(exclusive
+Price
+The changes in the installed capacity of generating units of the Group in 2018
+are as follows:
+477
+Section V Directors' Report (Continued)
+52
+1.9
+312
+88
+318
+8.7
+8.5 267.59 246.25
+262.87
+285.32
+Total/weighted
+average
+222
+6.9
+6.9
+66
+China Shenhua Energy Company Limited
+353.6
+6.9
+477
+0.00 N/A
+65566≤
+N/A
+0.0
+0.0
+345
+318
+20.5
+20.5
+226
+318
+4.6
+477
+Section V Directors' Report (Continued)
+(3) Installed capacity
+At the end of the reporting period, the total installed capacity of power
+generation of the Group reached 61,849MW, which represented an increase of
+6.9% as compared with the end of last year, among which, the total installed
+capacity of the coal-fired power generators was 59,994MW, accounting for 5.9%
+of the total installed capacity of coal-fired power generators of the society (being
+1.01 billion kW¹).
+2018 Annual Report 53
+Data source: China Electricity Council
+1
+16
+61,849
+3,994
+57,855
+(16)
+1,730
+59,994
+125
+4,010
+125
+1,730
+55,984
+བྷཱཝཱ
+2018
+Power type
+Coal-fired power
+Gas-fired power
+Hydro power
+Wind power
+Total
+Gross installed
+capacity as at
+31 December
+2017
+(4)
+Installed
+Unit: MW
+Gross
+installed
+during the capacity as at
+reporting
+period
+31 December
+capacity
+increased/
+(decreased)
+76.7
+Million
+344.7
+4.8
+1.9
+4.6
+0.5
+4.7
+4489
+498
+57.7
+256.0
+499
+58.2
+268.3
+2. Seaborne
+310
+36.1
+160.3
+316
+10
+0.5
+16
+and purchased
+coal
+435.9
+0.2
+94.6
+416.3
+93.8
+426
+1. Direct arrival
+167.6
+36.4
+428
+46
+522
+trading coal
+471.4 (22.7)
+591
+0.1
+152
+5.2
+2.2
+0.7
+222
+506
+0.6
+543
+0.4
+457
+2289
+2.8
+III. Overseas sales
+1.7
+16.5
+35
+3.5
+419
+419
+19.4
+(II) Sales of domestic
+4.4
+(14.9) (1.9)
+(III) Sales of imported
+coal
+4.0
+0.9
+II. Export Sales
+427
+441
+4.6
+98.3
+Note: Sales prices of coal of the Group in this report are all exclusive of tax.
+0.9
+425
+100.0
+443.8
+429
+100.0
+460.9
+average price
+(exclusive of tax)
+Total sales volume/
+0.3
+359
+1.0
+4.4
+360
+0.9
+4.1
+77.7
+436
+1.1
+Sales to internal power
+segment
+103.2
+In 2018, the sales volume of the Company to the top five domestic
+customers of coal was 99.3 million tonnes, which accounted for 21.8%
+of the domestic sales volume. The top five domestic customers of coal
+were primarily power and coal trading companies.
+22.4
+94.7
+21.3
+390
+0.8
+Sales to internal coal
+chemical segment
+393
+426
+(2)
+2018
+Proportion
+436.4
+428
+99.0
+90
+456.4
+I. Domestic sales
+de
+tonne
+tonnes
+tonne
+tonnes
+RMB/
+Million
+RMB/
+4.6
+volume of tax)
+of tax)
+Price
+Sales
+of total (exclusive
+Sales
+2017
+Proportion
+of total
+Change
+By sales regions
+Price
+(exclusive
+Sales (exclusive
+volume
+sales
+of tax)
+volume
+sales
+Price
+0.0
+339
+1.3
+2017 year
+2018 2017 year
+%
+Sichuan
+4.04
+3.12
+29.5
+3.72 2.87
+29.6
+356
+348
+coal-fired power
+3.35
+2.42
+38.4
+3.04
+2.18
+39.4
+386
+hydropower
+0.69
+0.70
+(1.4)
+0.68
+0.69
+(1.4)
+222
+2018
+214
+2017 year
+power
+(0.8) 355 360
+coal-fired power 5.10 5.15
+Henan
+coal-fired power 5.04
+5.04 5.94
+5.94
+(1.0) 4.77 4.81 (0.8) 355
+(15.2) 4.75 5.62 (15.5) 300
+(15.2) 4.75 5.62
+(15.5)
+360
+305
+300
+305 (1.6)
+466===
+4.0
+(6.7)
+(6.7)
+(1.4)
+(1.4)
+(1.6)
+2018 Annual Report 51
+Section V Directors' Report (Continued)
+Gross power generation
+(billion kWh)
+Total power output dispatch
+(billion kWh)
+Power tariff
+(RMB/mWh)
+Location/Type of
+Year-on-
+Year-on-
+Year-on-
+2018
+4.81
+Ningxia
+9.64
+348
+348
+Beijing
+3.92
+3.58
+9.5
+3.83
+3.48 10.1
+589
+563
+gas-fired power
+3.92
+3.58
+9.5
+3.83
+3.48
+10.1
+589
+563
+Shanxi
+3.39
+4.55
+(25.5)
+3.18
+4.25
+(25.2)
+276
+31.1
+coal-fired power
+4.70
+31.2
+0.5
+4.68
+106.0
+8.94
+4.21
+112.4
+229
+coal-fired power
+9.64
+4.68
+106.0
+8.94
+4.21
+112.4
+229
+Chongqing
+6.44
+4.91
+31.2
+6.16
+4.70
+31.1
+348
+348
+coal-fired power
+6.44
+4.91
+6.16
+4.77
+(1.0)
+5.10 5.15
+1.58
+1.59
+weighted average
+Overseas in total/
+0.00
+N/A 5.45
+5.45 0.00
+N/A
+880
+5.71 0.00
+coal-fired power
+0.00
+5.71
+Jiangxi
+1.75
+1.86
+6.5
+1.86
+1.98
+coal-fired power
+345
+6.3
+1.75
+1.86
+6.5
+1.86
+1.98
+Indonesia
+Guangxi
+1.59
+coal-fired power
+1.3
+3.7
+2.3
+20223
+390 (1.0)
+222228622202288 F&&&
+0.7 510
+510
+0.7
+510
+0.7
+333
+N/A 354
+N/A 354 0.00
+주름
+345
+345
+6.3
+288 333
+0.6 1.39 1.38
+1.39 1.38
+1.39 1.38
+666
+0.6
+0.6
+BBB
+1.59 1.58
+1.58
+339
+7.1
+10.26
+3.3
+Fujian
+15.55 13.40
+16.0
+14.89 12.80 16.3
+341
+328
+4.0
+coal-fired power 15.55 13.40
+16.0
+14.89 12.80 16.3 341
+328
+Xinjiang
+5.64 4.79
+17.7
+5.19
+4.39
+18.2
+181
+194
+coal-fired power 5.64 4.79
+17.7
+5.19
+4.39 18.2
+181
+194
+Tianjin
+299
+17.03 (3.2) 309
+(3.1) 16.49
+coal-fired power 17.57 18.13
+10.99
+6.9
+10.78
+11.52
+coal-fired power
+7.1
+10.26
+10.99
+6.9
+10.78
+11.52
+Shandong
+276
+0.0
+(25.2)
+3.18
+(25.5)
+4.55
+3.39
+5.6
+༠༠༠༠ །།
+Liaoning
+17.57 18.13
+(3.1)
+16.49
+17.03 (3.2) 309
+299
+3.3
+4.25
+447
+(I) Self-produced coal
+1.2
+26.60 25.40
+26.60 25.40
+4.7 24.36 23.18
+5.1
+267
+260
+2.7
+4.7
+24.36 23.18
+5.1
+267
+260
+2.7
+Anhui
+23.66
+22.79
+3.8
+22.60
+21.78
+3.8
+322
+305
+5.6
+coal-fired power 23.66
+22.79
+3.8
+22.60
+21.78
+3.8
+322
+coal-fired power
+305
+Shaanxi
+0.00 0.02 (100.0) 0.00 0.02 (100.0)
+24.41
+21.34
+14.4
+21.83
+19.20
+13.7
+223
+212
+5.2
+Guangdong
+27.32
+23.79
+14.8
+25.65
+22.21
+15.5
+355
+363 (2.2)
+coal-fired power
+27.32
+23.77
+14.9
+25.65
+22.19
+15.6
+355
+363 (2.2)
+2222
+wind power
+0 599 (100.0)
+coal-fired power
+54 China Shenhua Energy Company Limited
+The average utilisation hours of coal-fired generators of the Group reached
+4,877 hours for the year of 2018, representing a year-on-year increase of 194
+hours and 516 hours above the national average utilisation hours (being 4,361
+hours) of thermal power equipment with capacity of 6,000kW and above.
+The efficiency of power generation improved constantly, and the power
+consumption rate of the power plant decreased by 0.11 percentage point
+as compared with the same period last year. As at the end of the reporting
+period, the installed capacity of circulating fluidised bed generating units of the
+Group reached 6,484MW, accounting for 10.8% of the installed capacity of the
+coal-fired generating units of the Group.
+%
+2017 Change
+2018
+2017 Change
+2018
+(RMB/mWh)
+(billion kWh)
+(billion kWh)
+2017 Change
+2018
+Power type
+Power tariff
+Gross power generation Total power output dispatch
+Classified by power type
+(2) Power consumption and power tariffs
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+50
+1 Data source: China Electricity Council
+In 2018, given the favorable opportunity of the rapid growth of total power
+consumption of the society, the Group made greater marketing efforts in the
+power segment, and therefore realised 285.32 billion kWh (2017: 262.87 billion
+kWh) of power generation, representing a year-on-year increase of 8.5%. The
+total power output dispatch reached 267.59 billion kWh (2017: 246.25 billion
+kWh), representing a year-on-year increase of 8.7% and accounting for 3.9% of
+the total power consumption of the society at the same period (being 6,844.9
+billion kWh¹). In active response to the power system reform, the Group
+Igave full play to the advantages of industrial chain integration, large capacity
+generating units and power distribution to optimize the allocation of power
+resource for market-based transactions. During the year, the market-based
+power transaction of the Group was approximately 80.27 billion kWh,
+accounting for approximately 30.0% of the total power output dispatch.
+(1) Production and operations
+Power segment
+2.
+In 2018, sales volume of coal purchased by the Group from third parties
+I was 160.2 million tonnes (2017: 142.8 million tonnes), representing a
+year-on-year increase of 12.2%, and its proportion of the Company's
+total sales volume of coal increased to 34.8% from 32.2% in 2017. The
+costs of coal purchased from third parties for the year was RMB56,321
+million (2017: RMB49,950 million), representing a year-on-year increase
+of 12.8%. The increase was mainly due to the increase of sales volume
+of coal purchased by the Company from third parties according to the
+demand and supply in the coal market.
+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
+Section V Directors' Report (Continued)
+2018 Annual Report 49
+Other costs consist of the following three components: (1) expenses
+directly related to production, including coal washing, selecting and
+processing expenses, and mining engineering expenses, etc., accounting
+for 60%; (2) auxiliary production expenses, accounting for 21%; (3)
+land requisition and surface subsidence compensation, environmental
+protection expenses and tax, accounting for 19%.
+increased/
+1 Data source: China Electricity Council
+generating unit
+Jiujiang Electric Power
+Utilisation rate of power generation equipment
+3,994
+Total
+Shut down
+(16)
+Guangdong
+Zhuhai Wind Energy
+Shut down
+(220)
+Shaanxi
+Shenmu Power
+Increase upon audit
+20
+Shandong
+Shouguang Power
+60 Capacity expansion
+and upgrading
+100 Capacity expansion
+and upgrading
+30 Capacity expansion
+and upgrading
+2,000 Operation of new
+generating units
+700 Operation of new
+generating units
+1,320 Operation of new
+generating units
+Guangdong
+Taishan Power
+Zhejiang
+Zheneng Power
+Fujian
+Fujian Energy
+Anhui
+Shenwan Energy
+Shaanxi
+Fuping Thermal Power
+Jiangxi
+(decreased) Remark
+MW
+selecting and processing
+expenses and professional
+service fee
+5.2
+223
+8.5 267.59 246.25
+8.7
+318
+312
+1.9
+2
+Classified by location
+Gross power generation
+(billion kWh)
+Total power output dispatch
+(billion kWh)
+Power tariff
+(RMB/mWh)
+Location/Type of
+power
+2018
+Year-on-
+2017 year
+%
+Year-on-
+Year-on-
+2018
+2017 year
+2018
+2017
+year
+%
+%
+Domestic in total/
+weighted average 283.73 261.29
+Hebei
+8.6
+33.95 34.83 (2.5)
+65
+266.20 244.87
+8.7
+285.32 262.87
+313
+Total
+599
+%
+Coal-fired power 278.78 256.86
+8.5 261.20
+240.39
+8.7
+313
+306
+2.3
+Gas-fired power 5.85
+5.29
+10.6 5.71
+5.15
+10.9
+561
+571 (1.8)
+Hydro power
+Wind power
+0.69
+0.00 0.02
+0.70
+(1.4) 0.68
+0.69
+(1.4)
+222
+214
+3.7
+(100.0) 0.00
+0.02
+(100.0)
+0
+(100.0)
+212
+311
+(2.5)
+24.93
+2.9
+354
+352
+62266006
+033
+0.6
+3.2
+3.2
+1.6
+1.6
+(0.8)
+0.6
+gas-fired power
+1.93
+1.71
+12.9
+1.88
+1.67
+12.6
+503
+587
+(14.3)
+Inner Mongolia
+24.41 21.34
+14.4
+21.83
+19.20
+13.7
+2.8 25.66
+31.84 32.67
+26.37
+367
+319
+309
+coal-fired power
+33.95 34.83
+(2.5) 31.84 32.67
+(2.5) 319
+309
+Jiangsu
+23.21
+24.17
+(4.0)
+22.16 23.06
+(3.9) 324
+319
+coal-fired power
+23.21
+24.17
+(4.0)
+22.16 23.06
+(3.9)
+324
+319
+Zhejiang
+29.04
+28.08
+3.4
+27.54 26.60
+3.5
+364
+coal-fired power 27.11
+(22.7) 21.5
+expenses, coal washing,
+The raise of salary by certain
+production units
+Total
+4.8
+Others
+64.2
+Xinjie Mine
+0.4
+0.5
+Baotou Mines
+12.0
+11.8
+13.9
+Baorixile Mines
+2.1
+13.8
+20.3
+Shengli Mines
+20.7
+31.2
+39.0
+Zhunge'er Mines
+47.8
+92.3
+160.3
+Standard)
+Standard)
+Standard)
+Shendong Mines
+Mines
+(under the PRC (under the JORC
+303.0
+Marketable
+coal reserve
+149.5
+Notes:
+4,300-4,900
+Long flame coal
+Zhunge'er Mines
+2
+non-caking coal
+5-15
+0.2-0.8
+4,800-5,800
+Shendong Mines Long flame coal/
+1
+average, %
+%
+kcal/kg
+Ash content
+content
+coal products
+Major types of coal
+Mines
+No.
+Sulphur
+Calorific value of
+major commercial
+Characteristics of the commercial coal produced in the Company's major mines
+are as follows:
+(6)
+Section V Directors' Report (Continued)
+2018 Annual Report 47
+In November 2018, the Ministry of Natural Resources of the People's Republic of China
+issued opinions upon review of the comprehensive coal exploration report (mineral resource
+reserves) on Taigemiao North Exploration Area of Xinjie Mining Area.
+As at 31 December 2018, the marketable coal reserve of Baotou Mines under the JORC
+Standard was 4,381 thousand tonnes.
+2.
+1.
+82.6
+coal reserve
+Coal reserve
+(under the PRC
+Recoverable
+381
+47.8
+220.5
+I. Annual long-term contracts
+RMB/tonne
+%
+Price
+total sales
+of
+Sales
+volume
+Million tonnes
+Proportion
+By contract pricing mechanisms
+(3)
+Section V Directors' Report (Continued)
+2018 Annual Report 45
+0.9
+3.9
+25
+425
+100.0
+443.8
+29
+429
+100.0
+460.9
+price (exclusive of tax)
+Total sales volume/average
+(46.2) 32.5
+382
+II. Monthly long-term contracts
+III. Spot commodity
+158.9
+34.5
+511
+Unit:'00 million tonnes
+As at 31 December 2018, under the PRC Standard, the Group had coal reserves
+amounting to 30.30 billion tonnes, representing an increase of 27.8% as
+compared with that of the end of 2017, which was mainly attributable to the
+completion of mineral resource reserves (under exploration rights permit)
+assessment in Taigemiao North Exploration Area of Xinjie Mining Area; and
+recoverable coal reserve amounting to 14.95 billion tonnes, representing a
+decrease of 1.6% as compared with that of the end of 2017. The Group's
+marketable coal reserve amounted to 8.26 billion tonnes under the JORC
+Standard, representing a decrease of 3.4% as compared with that of the end of
+2017.
+Coal resources
+(5)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+46
+Measures which are taken by the coal segment of the Company for
+environmental protection are detailed in the 2018 ESG Report of the Group.
+At the end of 2018, balance of the "accrued reclamation obligations" amounted
+to RMB3,191 million, serving as strong financial guarantee for ecological
+construction.
+In 2018, with continuous promotion of green and efficient coal mining, the
+environmental safety level of the Group's mining areas has been continually
+advanced. Remarkable achievements were made in land reclamation and
+greening of open-pit mines, treatment and utilisation of mine water, and
+resource utilisation of gangue, with the utilisation rate of mine water being
+83.2% and the comprehensive utilisation of gangue amounting to 11.63 million
+tonnes. There were no major or more serious environmental safety incidents
+during the year.
+Environmental protection
+Efforts in ensuring safe coal production are detailed in the 2018 ESG Report of
+the Group.
+In 2018, the fatality rate per million tonne of raw coal output in the coal mines
+of the Group was 0.0126, enabling the Group to maintain its internationally
+leading position.
+In 2018, the Group took various measures to ensure coal mine production
+safety, such as promoting the construction of the major disaster and hidden
+danger management and emergency rescue system to continuously improve
+the standardization of coal mine safety production, carrying out comprehensive
+or special inspections and supervision on an on-going basis to identify hidden
+dangers and eliminate major risks, and ensuring safety with the help of science
+and technology, i.e. conducting upgrading and renovation of the mine safety
+monitoring system.
+0.3-0.8
+Production safety
+The above is the summary of the sales of coal products with different calorific
+values;
+2.
+1.
+Note:
+(4)
+(3)
+429
+100.0
+460.9
+price (exclusive of tax)
+Total sales volume/average
+401
+17.7
+81.5
+In spot sale, direct sales volume with a low sales price accounted for a large
+proportion.
+18-26
+3
+Shengli Mines
+Unit: RMB/tonne
+Unit production cost of self-produced coal
+(3)
+30.0
+27.1 188,843 132,166 56,677
+197,781 144,113 53,668
+Total
+15.3
+458
+2,539
+2,997
+20.5
+470
+2,298 1,828
+overseas
+Export and
+30.3
+27.2 185,846 129,627 56,219
+195,483 142,285 53,198
+Domestic
+%
+RMB RMB
+million million
+RMB
+million
+RMB
+million million
+million
+RMB
+Costs profit margin
+profit margin Revenue
+Costs
+2018
+2017
+Change
+Main reasons for changes
+due to the tripping works in
+open-pit mines such as the
+Ha'erwusu Open-pit Mine,
+and the increase in tunnelling
+footage
+4.2
+42.8
+44.6
+Other costs
+amortisation
+19.5
+18.5
+Depreciation and
+maintenance
+(1.1)
+8.9
+8.8
+Repairs and
+Revenue
+12.8
+21.2
+Personnel expenses
+and power
+Increase in material consumption
+28.5
+17.9
+23.0
+Raw materials fuel
+self-produced coal
+7.6
+107.9
+116.1
+Unit production cost of
+%
+18.8
+(5.1) During the reporting period,
+the sufficient provision for
+depreciation of certain assets
+Increase in mining engineering
+profit
+8.8 Increase in the
+156,143
+RMB million
+Cost of sales
+195,918
+205,191
+RMB million
+Revenue
+Change Main reasons for changes
+%
+2017
+2018
+The operating results of the coal segment of the Group before elimination
+on consolidation
+Operating results
+Note: The above calorific value, sulphur content and ash content of major commercial coal
+products produced by each mine may be inconsistent with the characteristics of the
+commercial coal products produced by individual mine and those of the commercial coal
+products sold by the Company due to geological conditions and production process.
+12-18
+0.3-0.8
+4,200-4,800
+Non-caking coal
+Baotou Mines
+5
+13-16
+0.2-0.3
+3,300-3,600
+Lignite
+Baorixile Mines
+4
+18-22
+0.4-0.7
+3,100-3,400
+Lignite
+143,461
+4.7 Increase in sales volume
+of coal
+RMB
+procurement cost of
+purchased coal due to
+the increase in sales
+volume of purchased
+coal; Increase in related
+transportation costs
+resulting from increased
+profit
+Gross
+Gross
+Gross
+2017
+2018
+The sales gross profit of the coal of the Group before elimination on
+consolidation
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+48
+points
+by 2.4
+percentage
+from
+operations
+Gross
+23.5 Decreased
+%
+coal sales volume
+Gross profit
+margin
+%
+23.9
+26.8 Decreased
+21.1
+by 2.9
+percentage
+RMB million
+43,262
+46,051
+points
+(6.1)
+operations
+Profit margin
+Profit from
+from
+17.7
+Environmental protection
+(5)
+(3.3)
+Depreciation and
+amortisation
+7,848
+11.6
+9,066
+Others
+1,959
+2.9
+2,094
++3
+14.2
+(13.4)
+3.3
+4.2
+(6.4)
+power of coal-fired
+power plant
+67,389
+100.0
+63,813
+100.0
+5.6
+58
+China Shenhua Energy Company Limited
+3.
+Section V Directors' Report (Continued)
+Railway segment
+(1) Overview of production and operations
+(2)
+Total cost of sale of
+In 2018, the railway segment of the Group continued to optimise transportation
+organisation to improve operation efficiency. The trail run of the long-route
+train from Haile Sihao South Station to Suning North Station was successful,
+resulting in the average running time of the train shortened by approximately
+three to four hours. The Group also re-arranged the operation of heavy-load
+trains by increasing the shifts of the 3+0 10,000-tonne trains and 20,000-tonne
+trains. In addition, the Group accelerated the development of railway special lines
+and station passage capability, with continuous improvement of the railway
+transportation capability. During the year, the turnover volume of self-owned
+railways of the Group reached 283.9 billion tonne km (2017: 273.0 billion tonne
+km), up by 4.0% year on year, reaching a historical high.
+2,706
+2,618
+100.0
+66,704
+100.0
+5.9
+3
+The Group's cost of sale of power is mainly comprised of such costs
+as raw materials, fuel and power, personnel expenses, repairs and
+maintenance, depreciation and amortisation and other costs. The unit
+cost of power output dispatch of the Group in 2018 was RMB264.0/mWh
+(2017: RMB270.9/mWh), representing a year-on-year decrease of 2.5%.
+The decrease was mainly due to the year-on-year increase in power
+generation, resulting in the dilution of fixed cost.
+The power segment consumed a total of 101.1 million tonnes of the
+China Shenhua's coal, accounting for 82.5% of the total thermal coal
+consumption (being 122.6 million tonnes).
+Cost of sale of power of coal-fired power plant of the Group before
+elimination on consolidation
+2018
+Costs Percentage
+2017
+Costs Percentage
+RMB million
+% RMB million
+%
+3.9
+Change in
+costs
+%
+and power
+50,511
+75.0
+46,008
+72.1
+9.8
+Personnel expenses
+4,453
+6.6
+3,939
+6.2
+13.0
+Repairs and
+maintenance
+Raw materials, fuel
+70,652
+The Group took the initiative in conducting macro logistics business. Under the
+premise of ensuring coal transportation, the Group promoted the development
+of coal chemical transportation and two-way "quasi-liner shipping", therefore
+making new progress in the planning of the railway-water transportation
+channel and its trial run. In 2018, the transportation volume of non-self-owned
+coal in the railway segment was 100.1 million tonnes, reverse transportation
+volume was 6.67 million tonnes, and transportation volume of non-coal cargo
+was 15.48 million tonnes. The turnover of cargo transportation offered to
+external customers in the railway segment throughout the year was 30.7 billion
+tonne km (2017: 29.4 billion tonne km), representing a year-on-year increase
+of 4.4%. The revenue generated from transportation services offered to
+external customers amounted to RMB5,877 million (2017: RMB5,615 million),
+representing a year-on-year increase of 4.7% and accounting for 15.0% of total
+revenue of the railway segment (2017: 14.9%).
+In 2018, the Group further expanded its railway transportation coverage. As at
+the end of the reporting period, the route in Hebei Province has been confirmed,
+laying the foundation for the construction and completion of the whole line; the
+special line of Zhugaita Coal Transportation Station (transportation capacity of
+10 million tonnes/year) of Shenshuo Railway has been put into operation; the
+construction of the special railway line of Guojiawan Coal Mine has started; and
+the connection with self-owned railways of the logistic park and coal loading
+station was advancing steadily.
+17,675
+points
+0.1
+operations
+million
+Profit margin
+%
+45.2
+47.0
+from
+operations
+Decreased by
+1.8 percentage
+points
+The unit transportation cost in the railway segment was RMB0.066/tonne km in
+2018 (2017: RMB0.064/tonne km), representing a year-on-year increase of 3.1%,
+mainly due to increase in intermodal transportation cost as a result of increase
+in on-line rate of external intermodal motor cars; the increase in cost of fuel of
+certain furnaces along of railways after environmental friendly modification; as
+well as the increase in personnel expenses.
+Port Segment
+4.
+17,695
+(1)
+In 2018, the Group made every effort to improve the production and operation
+efficiency in the port segment to ensure the performance of integrated
+operation. During the year, the Group achieved the sales of 270.0 million
+tonnes of seaborn coal (2017: 258.2 million tonnes), representing a year-on-year
+increase of 4.6%, among which, the sales of seaborn coal through self-owned
+ports amounted to 238.3 million tonnes (2017: 227.8 million tonnes),
+representing a year-on-year increase of 4.6%. Though affected by such factors
+as adverse weather and equipment maintenance and renovation, Huanghua
+Harbour and Shenhua Tianjin Coal Dock closely connected with the railway,
+shipping and sales ends, and recorded a historical high in terms of unloading
+and loading volume. Shenhua Zhuhai Coal Dock gave play to its role as an
+interchange base, with the inward volume exceeding 20 million tonnes.
+By adhering to the concept of green development of the port segment,
+Huanghua Harbour of the Group successfully dealt with the long-existing
+industrial problems in the coal port dust pollution and coal-containing sewage
+treatment, which was fully recognised by the industry and regulatory
+authorities.
+China Shenhua Energy Company Limited
+(2)
+Section V Directors' Report (Continued)
+Operating results
+The operating results of the port segment of the Group before eliminations on
+consolidation are as follows:
+2018
+2017
+Change Main reasons for changes
+%
+Revenue
+RMB
+6,124
+5,717
+Overview of production and operations
+Progress of projects
+RMB
+1.3 percentage
+2018 Annual Report 59
+60
+Section V Directors' Report (Continued)
+(3)
+Operating results
+The operation results of the railway segment of the Group before elimination on
+consolidation are as follows:
+2018
+2017
+Change Main reasons for changes
+%
+Revenue
+RMB
+39,149
+37,586
+million
+Profit from
+Cost of sales
+19,915
+18,632
+million
+4.2 Growth in transportation
+volume of railways
+brought by the increase
+in coal sales volume of
+the Group
+6.9 Increase in transportation
+turnover of railways,
+and increase in
+personnel expenses and
+external transportation
+costs
+Gross profit
+margin
+%
+49.1
+50.4
+Decreased by
+RMB
+7.1 Increase in seaborne
+11.0
+87,149
+The operation results of the power segment of the Group before
+elimination on consolidation:
+2018
+2017
+Change Main reasons for changes
+%
+Revenue
+RMB million 88,452
+79,511
+11.2 Year-on-year increase in
+power output dispatch and
+Cost of sales
+RMB million
+72,408
+68,388
+Gross profit
+margin
+%
+(9) Operating results
+18.1
+Increased by
+4.1 percentage
+slight increase in average
+power tariffs
+5.9 Increase in coal cost due
+to the growth of power
+points
+71.9
+Increased by
+generation
+The power plant to be
+invested by the Company
+to establish a joint venture
+with GD Power was
+classified as held-for-sale
+assets in September 2019,
+and therefore it ceased
+to be depreciated and
+amortised
+Profit from
+RMB million
+12,720
+7,399
+14.0
+operations
+Section V Directors' Report (Continued)
+56
+In line with the requirements of the state with respect of prevention and control
+of pollution, the Group continued to push forward the "ultra-low emission",
+energy saving and consumption reduction of coal-fired generating units. As at
+the end of the reporting period, the Group completed the desulfurisation and
+denitrification renovation for all of its domestic coal-fired power generators.
+93 "ultra-low emission" coal-fired generators with total capacity of 53,960MW
+were either built or renovated, accounting for 89.9% of the total installed
+capacity of coal-fired power generator of the Group. The average standard coal
+consumption for power sold of coal-fired power generators of the Group for the
+year was 308 g/kWh, representing a decrease of 3 g/kWh as compared with
+311 g/kWh the same period last year. Both the unit emission and total emission
+of CO2, nitrogen oxide and soot generated from coal-fired generators recorded
+year-on-year decrease.
+For detailed information on environmental protection in the power segment,
+please refer to the 2018 ESG report of the Group.
+(6)
+Capitalised Expenses
+In 2018, the capitalised expenses of the power segment of the Group were
+RMB12.92 billion, primarily used in projects including the Jawa-7 Coal-fired
+Power Project (2 × 1,050MW) in Indonesia, Jiangxi Jiujiang New Coal Reserve
+(Transit) and Power Generation Integration Project (2 × 1,000 MW), Shenhua
+Shendong Power Company Xinjiang Wucaiwan Power Plant Phase II Project
+(2 × 660 MW), Shenwan Energy Company Lujiang Power Plant Newly
+Constructed Project (2 × 660 MW), and reformation of environmental protection
+technologies at power plants.
+2018 Annual Report 55
+Section V Directors' Report (Continued)
+(7) Market Transaction of Power
+2018
+2017
+Change
+%
+Total volume of power in market-based
+transactions (billion kWh)
+80.27
+China Shenhua Energy Company Limited
+69.10
+Total volume of on-grid power (billion
+267.59
+246.25
+8.7
+kWh)
+Percentage of the power in market-
+30.0
+28.1
+based transactions (%)
+Increased by 1.9
+percentage points
+(8)
+Operation results of the power sales business
+The Group currently owns three power sales companies located in Shandong,
+Jiangsu and Guangdong, respectively, which are principally engaged in agent
+procurement of power demanded by customers and the provision of the
+incremental distribution grid business and comprehensive energy services.
+In 2018, the power output dispatch from non-self-owned power plants of the
+Group was 0.44 billion kWh, achieving revenue of RMB1.4 million.
+16.2
+78,482
+Profit margin from
+9.3
+95.7
+5.6
+Gas-fired power
+3,201
+2,941
+8.8
+3,179
+4.5
+2,810
+4.2
+13.1
+Hydro power
+150
+147
+63,813
+2.0
+0.1
+73
+0.1
+6.8
+Wind power
+0
+11
+(100.0)
+6
+0.0
+8
+0.0
+(25.0)
+Total
+78
+14.4
+95.4
+11.2
+operations
+5.1 percentage
+points
+2018 Annual Report
+57
+Section V Directors' Report (Continued)
+Revenue and cost from the sale of power of the Group before elimination
+on consolidation
+Unit: RMB million
+Revenue from sale of power
+Cost of sale of power
+Percentage
+Percentage
+to total
+to total Change in
+67,389
+costs of
+Power type
+2018
+2017
+Change
+2018
+2018
+2017
+2017
+2017
+%
+%
+Coal-fired power
+83,798
+75,383
+costs of 2018 over
+percentage point
+million
+RMB
+operations
+6.2 percentage
+points
+The unit transportation cost in the port segment was RMB11.9/tonne in 2018
+(2017: RMB10.5/tonne), representing a year-on-year increase of 13.3%, mainly
+due to increase in dredging fees affected by bad weather.
+Decreased by 0.11
+Shipping Segment
+(1) Overview of production and operation
+In 2018, though affected by such adverse factors as high frequency of extreme
+weather and fluctuation of transportation volume, the Group continued to
+strengthen dispatching management and improve shipment turnover efficiency
+to proactively implement the "quasi-liner shipping" system, and maximised
+transportation capacity by making full use of ship-shore connection and
+chartered vessels. During the year, the number of "quasi-liner shipping"
+vessels increased to 51, through which the coal supply for key customers was
+effectively guaranteed. The Group took proactive approach to develop external
+quality customers, with the purposes of improving operating results and
+enhancing the capability to resist shipping market risks. The shipping volume
+for transportation service offered to external customers throughout the year
+accounted for approximately 22.9% of the total shipping volume.
+Shipping volume of the shipping segment amounted to 103.6 million tonnes
+(2017: 93.0 million tonnes), up 11.4% year-on-year; shipment turnover
+amounted to 89.9 billion tonne nautical miles (2017: 80.4 billion tonne nautical
+miles), representing a year-on-year increase of 11.8%.
+2018 Annual Report 61
+62
+Section V Directors' Report (Continued)
+6.
+(2)
+Operating results
+from
+The operating results of the shipping segment of the Group before eliminations
+on consolidation are as follows:
+2017
+Change Main reasons for changes
+%
+Revenue
+RMB
+4,089
+3,247
+million
+Cost of sales
+RMB
+3,232
+2,472
+million
+25.9 Rise in shipping price and
+increase in shipment
+turnover
+2018
+30.7 Increase in shipping
+Decreased by
+38.0
+(3.1)
+0.8
+300.3
+5,759
+309.7
+5,641
+(3.0)
+2.1
+Revenue from external transactions in domestic markets
+Revenue from external transactions in overseas markets
+Total
+Unit: RMB million
+2018
+2017
+261,330
+2,771
+44.2
+245,230
+3,516
+248,746
+Note: Revenue from external transactions was classified based on the locations of the recipients of services or
+products.
+The Group is mainly engaged in the production and sales of coal and power, railway,
+port and shipping transportation as well as coal-to-olefins businesses in PRC. In 2018,
+the revenue from external transactions in domestic markets was RMB261,330 million,
+accounting for 99.0% of the Group's operating revenue, representing a year-on-year
+increase of 6.6%, which was mainly attributable to the year-on-year increase in domestic
+sales of coal and power. Revenue from external transactions in overseas markets decreased
+by 21.2% year on year, which was mainly due to the sharp decrease in coal re-export trade
+volume.
+In 2018, in active response to the Belt and Road Initiative of the state, the Company
+accelerated the pace of internationalisation. The Guohua Sumsel EMM Coal-fired Power
+Project (Phase I) (2 x 150MW) in Indonesia has been under safe and stable operation
+for six consecutive years without unplanned operation suspension, breaking the record for
+the longest continuous operation of double generators in Indonesia. In 2018, the project
+obtained a number of awards, including the "Best Power Enterprise of the Year (with the
+capacity above 200MW)" of Indonesian power generation industry; the Jawa-7 Coal-fired
+Power Project (2 × 1,050MW) was in steady progress, and has obtained an official approval
+issued by the Ministry of Finance of Indonesia for income tax concession and exemption;
+all 29 gas wells of the shale gas project in Pennsylvania, the United States were put into
+operation, and produced a total of 10.863 billion cubic feet (equivalent to 308 million m³) of
+China Shenhua's equity gas during the year, showing satisfactory operating performance;
+and the Watermark Open-pit Coal Mine Project in Australia has completed preliminary
+design and renewal of exploration right. Other external projects are in progress under the
+principle of stability and prudence.
+China Shenhua Energy Company Limited
+points
+Profit from
+RMB
+2,325
+2,529
+(8.1)
+operations
+million
+Profit margin
+264,101
+5,861
+volume; rise in
+Gross profit
+5,618
+5,517
+Hydro power
+percentage point
+Decreased by 0.18
+2.08
+1.90
+10.6
+3,059
+3,384
+Gas-fired power
+percentage point
+Decreased by 0.10
+5.72
+(1.8)
+5.62
+4,683
+4,877
+Coal-fired power
+%
+Change
+2017
+2018
+2017 Change
+2018
+Power type
+(%)
+Power consumption ratio of power plant
+Average utilisation hours
+(Hour)
+Section V Directors' Report (Continued)
+4.1
+chartering costs as a
+result of the increase
+in chartering freight
+volume; and rise in fuel
+prices
+0.28
+Increased by 0.03
+%
+21.0
+23.9
+Decreased by
+margin
+2.9 percentage
+points
+Profit from
+RMB
+723
+661
+9.4
+operations
+million
+0.25
+Profit margin
+5.64
+5.53
+4.3
+4,634
+4,834
+Weighted average
+N/A
+0.90
+N/A
+(100.0)
+1,160
+0
+Wind power
+percentage point
+%
+Cost of sales
+327.1
+317.1
+volume
+Price
+volume
+Price
+Thousand
+RMB/
+Thousand
+RMB/
+tonnes
+tonne
+tonnes
+tonne
+%
+315.4
+Price
+7,442
+7,373
+(2.8)
+0.9
+297.7
+7,327
+308.8
+6,429
+(3.6)
+14.0
+In 2018, Baotou Coal Chemical Company's environmental protection investment
+was about RMB111 million, mainly for the operations of boiler denitrification,
+desulfurisation and dust removal facilities and wastewater treatment facilities.
+Upon the completion of the renovation project of wastewater treatment,
+the expenses used in disposal of hazardous wastes in the mud-containing
+biochemical wastewater were significantly reduced. During the reporting
+period, the coal-to-olefin project met emission standards and there was no
+major environmental pollution accidents.
+The preliminary environmental protection related works of the Baotou-based
+coal-to-olefins upgrading and demonstration project (the phase II project, being
+the 750,000 tonnes of coal-to-olefins equipment) was under steady progress.
+(2) Analysis of operating results
+The operating results of the coal chemical segment of the Group before
+eliminations on consolidation are as follows:
+2018
+324.6
+2017
+volume
+Sales
+3,511
+2,880
+million
+coal sales through self-
+owned ports
+21.9 Increase in loading
+volume of ports;
+increase in dredging
+expenses due to
+adverse weather
+Gross profit
+42.7
+49.6
+Decreased by
+margin
+6.9 percentage
+2.7 percentage
+Sales
+operations
+In 2018, the unit transportation cost of the shipping segment was RMB0.036/
+tonne nautical mile (2017: RMB0.031/tonne nautical mile), representing a
+year-on-year growth of 16.1%, caused by the increase of chartering costs and
+fuel prices.
+Coal Chemical Segment
+(1)
+Overview of production and operations
+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.
+In 2018, the production equipment of the coal-to-olefins project had maintained
+safe, stable and high-capacity operation for 8,164 hours, with the average
+production capacity reaching 100%, and produced 617,400 tonnes of olefins
+products in aggregate. The project continued to improve production process to
+reduce the unit consumption of catalysts, and therefore achieved cost reduction
+and efficiency improvement.
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+In 2018, the coal chemical segment consumed 4.1 million tonnes of coal, down
+by 6.8% from 4.4 million tonnes in the previous year. Fuel coal and feed coal
+used in the production of the Baotou coal-to-olefins project are all supplied by
+the Group. Both coal and products transportation use special railway lines to
+ensure the supply of raw materials and the delivery of products.
+The sales of polyethylene and polypropylene products of the Group in 2018 is as
+follows:
+Polyethylene
+Polypropylene
+2018
+Sales
+2017
+Change
+points
+5,905
+Change Main reasons for changes
+%
+of olefins products
+points
+2018 Annual Report 63
+64
+Section V Directors' Report (Continued)
+(3) Unit production cost of main products
+Polyethylene
+Polypropylene
+2018
+2017
+Change
+Unit
+Unit
+Unit
+Production production Production
+operations
+volume
+Thousand
+RMB/
+volume
+Thousand
+production
+cost
+Production
+volume
+production
+cost
+RMB/
+tonnes
+tonne
+tonnes
+tonne
+%
+(V) Regional operation analysis
+cost
+2.8 Increase in the sales price
+3.0 percentage
+Increased by
+(1.3) Decrease in the
+production of olefin
+products
+Revenue
+RMB
+5,840
+5,681
+million
+Cost of sales
+RMB
+4,901
+4,968
+million
+Gross profit
+margin
+from
+%
+12.6
+Increased by
+3.5 percentage
+Profit from
+RMB
+751
+560
+points
+34.1
+operations
+million
+Profit margin
+%
+12.9
+9.9
+16.1
+5.
+Decreased by
+20.4
+China Energy Investment Corporation Limited
+8,944
+0
+0
+Amount of rejected loans
+Note: The amount of granted loans refers to the balance as at 31 December 2018 of the
+loans granted in the current year in connection with the loans contracts signed in
+2018.
+(IX) Structured Vehicle Controlled by the Company
+Applicable ✓ Not applicable
+(X) Environmental Policies and Performance
+The Group is committed to the long-term sustainability of the environment and communities
+in which it operates. Acting in an environmentally responsible manner, the Group endeavors
+to comply with laws and regulations regarding environmental protection and adopt effective
+measures to achieve efficient use of resources, energy saving and waste reduction. Please
+refer to the 2018 ESG Report of the Group for information in respect of environmental
+protection of the Company.
+11,066
+The Group attaches great importance to tackling climate change. In 2018, the Group made
+great efforts to address climate change, mainly including improving the assessment system
+of annual operating performance for carbon emission and compiling the Carbon Emission
+Regulations and other model regulations for power plants. With actively participation in the
+establishment of the national carbon market, the Company specified the administration
+principles, namely "unified management, unified auditing, unified development, unified
+transaction", for carbon trading and carried out practical trainings for coal-fired power
+enterprises, resulting in the performance of duties in due course by all nine power plants
+in the carbon trading pilot market. The "100,000t level whole-flow demonstration project
+of capture and storage of carbon dioxide" operated by Jinjie Energy Plant achieved stage
+progress.
+Section V Directors' Report (Continued)
+(XI) Compliance with Relevant Laws and Regulations
+So far as the Board and management are aware, the Group has complied in all material
+aspects with the relevant laws and regulations that are related to the business and
+operation of the Group in 2018. There was no material breach of or non-compliance with the
+applicable laws and regulations by the Group.
+(XII) Relationship with Stakeholders
+For details of remuneration and training of the Group's employees, please refer to the
+section headed "Directors, Supervisors, Senior Management and Employees".
+The Group attaches great emphasis on good relationships with customers, suppliers and
+other business partners to achieve its long-term goals. Accordingly, our senior management
+have kept good communication, promptly exchanged ideas and shared business updates
+with them when appropriate.
+In 2018, there was no material and significant dispute between the Group and its
+customers, suppliers and other business partners.
+(XIII) Subsequent Events
+1.
+2.
+China Shenhua Energy Company Limited
+amount of guaranteed loans (including
+discounted assets) Note
+Of which:
+Amount of granted loans (including discounted assets) Note
+Shenhua Yili Energy Co., Ltd.
+2,127
+1,974
+Shenhua Ganquan Railway Co., Ltd.
+1,854
+Shenhua Guoneng Jiaozuo Power Plant
+Company Limited
+1,390
+10
+In 2018, the domestic coal market generally showed the characteristics of
+neither slack in weak season nor booming in peak season. As of 31 December
+2018, the Bohai Bay Thermal Coal Price Index (5,500 kcal) was RMB569/tonne,
+and the annual average price was RMB571/tonne, down 2.4% over the same
+period of last year. Affected by policies, expectation, seasonality and other
+factors, the spot price fluctuated widely within the interval of RMB570-770/
+tonne.
+Inner Mongolia Guohua Hulunbei'er Power
+Generation Co., Ltd.
+1,033
+2018 Annual Report 71
+72
+Section V Directors' Report (Continued)
+C.
+Approval of loans during the reporting period
+Unit: RMB million
+Item
+2018
+Amount of contracted loans
+As approved at the ninth meeting of the fourth session of the Board and the first
+extraordinary general meeting of 2018, a joint venture company was established
+with the equities and assets (the "Subject Assets") of the relevant coal-fired
+power generation companies separately contributed by the Company and GD
+Power (the "Transaction"). On 3 January 2019, the joint venture company has
+completed registration at Xicheng Bureau of Beijing Administration for Industry and
+Commerce and has obtained business license. For details, please refer to the H share
+announcement of the Company dated 4 January 2019 and the A share announcement
+of the Company dated 5 January 2019.
+Pursuant to the Agreement on Establishment of the Joint Venture Company by way
+of Assets Reorganizations entered into between China Shenhua Energy Company
+Limited and GD Power Development Co., Ltd., the Completion Date is the last day
+of the month in which the completion date of commercial and industrial registration
+of the joint venture company falls, i.e. 31 January 2019. From the Completion Date,
+the joint venture company assumes the corresponding rights and the liabilities of
+the Subject Assets. For details, please refer to the H share announcement of the
+Company dated 31 January 2019 and the A share announcement of the Company
+dated 1 February 2019, as well as "45. Events after the Reporting Period" to the
+Notes to the Financial Statements of this report.
+On 30 January 2019, the Company received a confirmation document on the share
+transfer registration from China Securities Depository and Clearing Corporation
+Limited forwarded on by China Energy confirming that the transfer registration of
+the state-owned shares has been completed. After this transfer for nil consideration,
+China Energy holds 13,812,709,196 A shares, representing approximately 69.45%
+of the share capital of the Company; Beijing Chengtong Financial Control Investment
+Co., Ltd. holds 358,932,628 A shares, representing approximately 1.805% of the
+share capital of the Company; Guoxin Investment Co., Ltd. holds 358,932,628 A
+shares, representing approximately 1.805% of the share capital of the Company. For
+details, please refer to the H share announcement of the Company dated 30 January
+2019 and the A share announcement of the Company dated 31 January 2019.
+2018 Annual Report 73
+margin of purchased
+and gross profit
+Group
+Increase in the sales
+60.8
+9
+2,054
+China Energy Group Coke Company Limited
+8
+2,125
+Chemical Company Limited
+China Shenhua Coal Liquefaction and
+7
+2,303
+Beijing Guohua Power Company Limited
+2,375
+Shenhua Wuhai Energy Co., Ltd.
+3,115
+Shenhua Guoneng Group Co., Ltd.
+3,411
+34569
+coal
+6
+Shenbao Energy
+1,169
+74
+Section V Directors' Report (Continued)
+III.
+DISCUSSION AND ANALYSIS ON FUTURE DEVELOPMENT OF THE
+COMPANY1
+(I)
+Competition and Development Trend in the Industry
+1.
+Macro economy
+In 2018, China faced a complicated and challenging domestic and international
+situation in development which was rarely seen in many years, and there were new
+economic downward pressure. The Chinese people of all ethnic groups, guided by
+Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, forged
+ahead and overcame difficulties, having accomplished main targets for economic and
+social development of the year. The operation of domestic economy was kept within
+a reasonable interval and economic structure was further improved. In 2018, the GDP
+increased by 6.6% year on year, the CPI increased by 2.1% year on year, and the PPI
+increased by 3.5% year on year.
+In 2019, despite a more complex and severe development environment, China is still
+at the period for strategic opportunities with sufficient perseverance, great potential
+and continuous innovation. The long-term upward trend of the Chinese economy
+is expected to remain unchanged. Adhering to the general work tone of "seeking
+progress while maintaining stability", focusing on new concepts for development
+and sticking to the promotion of high-quality development, Chinese government
+will comprehensively push forward various works and keep the operation of China
+economy within a reasonable interval. The GDP growth will be around 6%-6.5%, and
+the rise in the CPI will be controlled at approximately 3%.
+Shenhua Bayannur Energy Co., Ltd.
+Market environment of the coal industry
+(1)
+Thermal coal market in the PRC
+Review of 2018
+7
+price
+Company
+Increase in coal sales
+36.1
+936
+7,608 4,784 1,274
+2.
+5,712
+6189
+State Grid Energy Hami Coal and Electricity
+Co., Ltd.
+10.4
+Note: (1)
+(2)
+The financial information of the major subsidiaries disclosed in the above table (without
+assessment and adjustment before consolidation) was prepared in accordance with
+the Accounting Standards for Business Enterprises. The data have not been audited or
+reviewed.
+Shendong Coal Group recorded a revenue of RMB59,714 million and a profit from operations
+of RMB18,277 million in 2018.
+(3)
+Shuohuang Railway Company recorded a revenue of RMB19,748 million and a profit from
+operations of RMB10,095 million in 2018.
+66
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+2.
+Shenhua Finance Company
+As of the end of the reporting period, the Company directly and indirectly held 100%
+equity interest in Shenhua Finance Company.
+No.
+Name of shareholder
+1
+2
+3
+4
+China Shenhua Energy Company Limited
+Shuohuang Railway Development Co., Ltd.
+Shenhua Zhunge'er Energy Co., Ltd.
+Shenhua Baoshen Railway Co., Ltd.
+Total
+858
+947
+9,032
+5,000 95,823
+Huanghua Harbour
+6,790 15,136
+9,962
+1,213 1,513
+(19.8)
+Administration
+Company
+8
+Baotou Energy
+2,633 6,088
+Percentage of
+equity interest
+held
+5,052
+742
+Company
+57.0 Increase in coal sales
+volume
+9 Railway Transportation
+Company
+4,803 21,993
+7,390
+965
+1,079
+(10.6)
+10 Shenhua Finance
+Company
+1,165
+2,340
+%
+7.14
+Shenhua Renewables Co., Ltd.
+1,573
+Note: Data of all companies were consolidated except those of China Energy
+Investment Corporation Limited, which were based on the headquarters of
+the Company.
+(b)
+Balance of loans of the top ten customers
+Unit: RMB million
+As at
+31 December
+2018
+No. Name of customer
+123
+Shenhua Zhunchi Railway Company Limited
+Shenhua Xinzhun Railway Co., Ltd.
+6,680
+3,470
+Shenhua Ningxia Coal Industry Group
+Co., Ltd.
+3,000
+4
+China Energy Investment Corporation Limited
+3,000
+5
+10
+1,779
+Company Limited
+China Shenhua International Construction
+7.14
+4.29
+100.00
+During the reporting period, Shenhua Finance Company strictly implemented the
+following resolutions passed at the 12th meeting of the second session of the
+Board of China Shenhua held on 25 March 2011: (1) China Shenhua currently had no
+intention or plan to change the existing operation policies and strategies of Shenhua
+Finance Company; (2) the deposits placed by China Shenhua and its subsidiaries
+and branches with Shenhua Finance Company would solely be used for the credit
+business of China Shenhua and its subsidiaries and branches, and deposited in the
+People's Bank of China and the five major commercial banks (namely, Industrial
+and Commercial Bank of China, Agricultural Bank of China, Bank of China, China
+Construction Bank and Bank of Communications), and would not be invested in the
+public market/private equity market and real estate, etc.
+(1)
+Governance of Shenhua Finance Company
+A. Board of directors
+China Shenhua Energy Company Limited
+This section is for reference only and does not constitute any investment advice. The Company has used its best endeavors
+to ensure the accuracy and reliability of information in this section, but does not assume any liability or provide any form of
+guarantee for the accuracy, completeness or validity of all or part of its content. If there is any error or omission, the Company
+does not assume any liability. The content in this section may contain certain forward-looking statements based on subjective
+assumptions and judgments of future political and economic developments; therefore there may exist uncertainties in these
+statements. The Company does not undertake any responsibility for updating the information or correcting any subsequent
+error that may appear. The opinions, estimates and other data set out herein can be amended or withdrawn without further
+notice. The data contained in this section are mainly derived form sources such as the National Bureau of statistics, China Coal
+Market Network, China Coal Resources Network, China Electricity Council, and China Coal Transportation & Sales Society etc.
+Source of data: Statistical Communiqué on the 2018 National Economic and Social Development by the National Bureau of
+Statistics of China.
+2
+81.43
+1
+23.8
+Coal transportation by railway (million tonnes)
+3.9
+281.2
+Coal import (million tonnes)
+4.5
+3,680
+Raw coal output (million tonnes)²
+Year-on-year
+change
+%
+2018
+10.4
+55,986
+Ltd.
+1,772
+86,129
+Balance of deposits
+Change
+%
+2017
+2018
+31 December
+31 December
+As at
+As at
+Unit: RMB million
+A. Total deposits and loans at the end of the reporting period
+Deposits and Loans of Shenhua Finance Company during the reporting
+period
+In 2018, Shenhua Finance Company continued to optimise its internal
+control system by conducting an independent and comprehensive
+assessment of the soundness, rationality and effectiveness of the
+internal control system as a whole, which was conducive for the
+company to achieve such internal control objectives as legal compliance
+of its operation and management, asset security, truthfulness and
+completeness of financial reports and relevant information, improvement
+of operational efficiency and operating results, and implementation of
+corporate development strategies. The company also analysed objectively
+the current status of the internal control system and made timely
+improvement to meet the demands for corporate development.
+Internal Control
+In 2018, Shenhua Finance Company carried out risk management
+related works in a smooth and orderly manner, with no occurrence of
+material risk events. The company mainly accomplished the following
+risk management related works: ① comprehensive risk investigation;
+② rectification according to regulatory opinions, further improvement
+of corporate governance mechanism and continuous promotion of the
+level of risk management refinement; ③ legal compliance on an on-going
+basis; quarterly risk monitoring to ensure that the relevant risks can be
+prevented or controllable; ⑤ improvement of risk management system;
+⑥performance of duties of the risk management committee with
+continuous improvement of its risk management capability.
+B.
+(3)
+Risk Management
+A.
+Risk Management and Internal Control
+(2)
+68,903
+25.0
+Balance of loans
+34,945
+(VI) Analysis on Investments
+Section V Directors' Report (Continued)
+2
+1
+No. Name of customer
+2018
+31 December
+As at
+Unit: RMB million
+Balance of deposits of the top ten customers
+Section V Directors' Report (Continued)
+(a)
+B.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+70
+0
+0
+guaranteed loans
+Of which: balance of
+14.9
+30,403
+Balance of deposits and borrowings of the top ten customers
+2018 Annual Report 69
+In 2018, the Audit Committee held two meetings.
+On 10 November 2016, the board of directors of Shenhua Finance
+Company set up the audit committee of the board of directors,
+which is responsible for advising the internal audit of the company
+and providing advice and consultation for board decision-making.
+Due to retirement, Ms. Zhang Kehui, the Chairman and Mr. Han Weiping, the
+executive director are currently undergoing the legal procedures for their resignation.
+Employee director
+No.
+123456
+6
+7
+Note:
+Members of the board at
+the end of the reporting period Position
+Zhang Kehui
+2018 Annual Report 67
+Han Weiping
+Zhang Ying
+Xu Shancheng
+Du Shengli
+Zhang Donghui
+Chairman
+Executive director
+Vice chairman
+Executive director
+Non-executive director
+Independent director
+Mei Xueyan
+The equity investments of the Company in 2018 amounted to RMB2.049 billion (2017:
+RMB9.780 billion), representing a year-on-year decrease of 79.0%. Equity investments
+are mainly used for capital increase in Mengxi-Huazhong Railway Company Limited, Jawa
+Company and Liuzhou Power.
+Section V Directors' Report (Continued)
+Mr. Zhang Ying, executive director, joined Shenhua Finance Company in
+2000 and has served as a deputy general manager of Shenhua Finance
+Company since November 2011. Working at Shenhua Finance Company
+for many years, Mr. Zhang Ying is familiar with the business Shenhua
+Finance Company and possesses extensive management experience.
+Audit Committee
+In 2018, the Risk Management Committee held two meetings.
+On 15 January 2012, the board of directors of Shenhua Finance
+Company set up the Risk Management Committee, which is
+responsible for assisting the board of Shenhua Finance Company
+to review the company's overall target of risk management, risk
+management policies, risk management procedures and internal
+control processes, and monitor and assess the risk management
+endeavors of relevant senior management members and the risk
+management function.
+Risk Management Committee
+In 2018, the Related Party Control Transaction Committee held
+three meetings.
+transactions.
+On 15 January 2012, the board of directors of Shenhua
+Finance Company set up the Related Party Transaction Control
+Committee, which is responsible for administration over the
+related party/connected transactions of the company, including
+identification, statistics, forecasts, reporting, limit management
+and recommendations in respect of the related party/connected
+Related Party Transaction Control Committee
+(C)
+(B)
+Ms. Mei Xueyan, vice chairman, has served as a director of Shenhua
+Finance Company since January 2005, the general manager of Shenhua
+Finance Company since July 2006, the secretary to the Party Committee
+of Shenhua Finance Company since August 2014 and the deputy
+secretary to the Party Committee (general manager level) of Shenhua
+Finance Company since January 2017, the vice chairman and deputy
+secretary to the Party Committee (general manager level) of Shenhua
+Finance Company since February 2018, and the vice chairman and
+secretary to the Party Committee of Shenhua Finance Company since
+October 2018. Ms. Mei Xueyan had worked on capital planning, finance
+investment and internal control at the headquarters of China Construction
+Bank for eight years.
+(A)
+Board Committees
+Section V Directors' Report (Continued)
+B.
+China Shenhua Energy Company Limited
+68
+In 2018, the board of Shenhua Finance Company held two meetings.
+The board of Shenhua Finance Company Limited operates in accordance
+with the Articles of Association of Shenhua Finance Company Limited.
+Any resolution passed at the board meetings of Shenhua Finance
+Company will only be valid if consent is obtained from two-thirds or more
+of directors present at the meeting, at which more than one-half of all
+directors shall be present.
+Ms. Zhang Donghui, employee director, participates in the
+decision-making of Shenhua Finance Company through meetings of the
+board of directors.
+Mr. Du Shengli, independent director, is an associate professor of
+Tsinghua University School of Economics and Management. He has
+multiple years of experience in capital operation management and
+corporate financial operation, group management control and performance
+evaluation, corporate governance and financial company management,
+state-owned assets supervision and state-owned enterprise operation,
+and multiple years of experience as independent director.
+Mr. Xu Shancheng, non-executive director, serves concurrently as the
+chief financial officer of the Company. Please refer to the section headed
+"Directors, Supervisors, Senior Management and Employees" of this
+report for his biographical details.
+The board of Shenhua Finance Company currently has three board
+committees, namely the Related Party Transaction Control Committee,
+Risk Management Committee and Audit Committee.
+China Shenhua Energy Company Limited
+Shenhua Ningxia Coal Industry Group Co.,
+For information on the principal business of major subsidiaries of the Company and the
+percentages of equity interest held by the Company, please refer to "46. Investment in
+Subsidiaries" to the Notes to the Financial Statements of this report.
+2.
+15,587
+15,397
+37,516 24,945
+4,989
+Shendong Coal Group
+1
+%
+changes
+2017 Change
+2018
+As at 31 December 2018
+No. Company
+Main reasons for
+Net profit attributable to
+the equity holders of the parent company
+Net
+Total
+capital assets assets
+Registered
+Unit: RMB million
+Major subsidiaries
+1.
+(VIII) Analysis on major holding and associated companies
+(1.2)
+2
+Shuohuang Railway
+5,880
+2,850
+18,852 9,288
+1,889
+Shenhua Trading
+5
+Company
+(4.2)
+3,283
+7.5
+10,402 8,624 3,241 3,014
+38,451
+1.
+30,942 3,146
+Zhunge'er Energy
+4
+2,278
+Jinjie Energy
+3
+Company
+(1.4)
+7,596
+7,492
+42,270 35,544
+7,102
+(VII) Disposal of material assets and equity interest
+Applicable ✓ Not applicable
+65
+Change of
+Profit for the
+current period
+Change for the
+current period
+the end
+of the period
+Opening balance Closing balance at
+at the beginning
+of the period
+Unit: RMB million
+Brokers' wealth management products
+Entrusted wealth management products
+Other investments in equity instruments
+Interbank certificates of deposit
+Derivative financial (liabilities) assets
+Derivative financial assets note
+Banks' wealth management products
+Name of items
+Details regarding the amounts of and changes in the financial assets/liabilities at fair
+value of the Group in 2018 are as follows:
+As at the end of the reporting period, the financial assets at fair value through other
+comprehensive income of the Group were the non-tradable equity investments
+amounting to RMB811 million held by the Group that have no significant impact
+on the investee. In 2018, the changes in fair value of other investments in equity
+instruments before income tax amounted to RMB66 million.
+As at the end of the reporting period, the financial assets at fair value through profit or
+loss of the Group were banks' wealth management products due within one year of
+the Company, interbank certificates of deposit of Shenhua Finance Company, and the
+derivative financial instruments of Shenhua Finance Lease Company to hedge against
+the U.S. dollar-denominated liabilities. By the end of 2018, the fair value of derivative
+financial instruments amounted to RMB5 million.
+Financial assets/liabilities at fair value
+3.
+✓ Not applicable
+Applicable
+Material investment in non-equity interest
+A joint venture company was established with the equities and assets of the relevant
+coal-fired power generation companies separately contributed by the Company and
+GD Power. For transaction details of which, please refer to the paragraph headed
+"Subsequent Event" in this section.
+Material investment in equity interest
+Section V Directors' Report (Continued)
+30,000
+2,447
+0
+21
+2018 Annual Report
+Note: It represents the thermal coal futures completed by the Group in January 2018.
+(2)
+2272006
+(52)
+(56)
+17
+ទិនខ្លះ-
+(105)
+30,000
+105
+0
+52
+811
+749
+0
+56
+5
+(12)
+ក្បួនស្ល
+12
+2,447
+0
+OTHERS
+2018 Annual Report 83
+Please see the section headed "Significant Events" for donations, dividends and management
+contracts; please see the section headed "Directors, Supervisors, Senior Management and
+Employees" for permitted indemnity provision, interests of directors and supervisors in significant
+transactions, arrangements or contracts.
+Section VI Significant Events
+Revenue
+0
+00
+Please refer to the section headed "Corporate Governance and Corporate Governance Report" of
+this report.
+90001
+PERFORMANCE OF THE BOARD AND ITS SPECIAL COMMITTEES
+1,431
+VI.
+RMB100 million
+(16.2)
+2,641.01
+2,212
+RMB100 million
+(46.5)
+2,675.9
+100 million kWh
+1,441
+Power output dispatch
+4.609
+4.27
+100 million tonnes
+Coal sales
+(2.2)
+2.966
+2.9
+100 million tonnes
+(7.4)
+Commercial coal production
+1,736.77
+RMB100 million
+The explanation of conditions under which the Company's profit attributable to equity
+holders of the Company in the first quarter of 2019 is expected to reach a year-on-year
+change of 50% or above:
+The 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.
+The transaction of establishing a joint venture company with the equities and assets
+(the "Subject Assets") of the relevant coal-fired power generation companies separately
+contributed by the Company and GD Power had been completed on 31 January 2019. Since
+the Completion Date, the Subject Assets contributed by the Company has ceased to be
+included in the consolidated financial statement of the Company. Therefore, the relevant
+data on such assets will not be included in the business objectives of the Group for 2019.
+increase of no increase of 7.6%
+more than 5%
+Year-on-year
+Year-on-year
+self-produced coal
+production cost of the
+(17.0)
+Percentage change of unit
+development costs), net
+(including research and
+administrative expenses
+Selling, general and
+Cost of sales
+(9.8)
+149.75
+135
+finance costs
+Applicable
+%
+Actual amount
+in 2018
+In 2019, affected by various factors such as changes in the world economic
+structure, trade friction, and global response to climate change, the downward
+pressure on the world coal market will increase. In particular, the coal
+production and sales are expected to further shrink in Europe and the United
+States. At the same time, developing countries in Asia will continue to be
+the mainstay of new coal demand due to their economic and technological
+conditions, providing support for global coal demand and prices.
+Prospects for 2019
+The international coal price featured a seasonal change with supply and demand
+relations, and was higher than that of last year. As of 31 December, the spot
+price of Newcastle NEWC steam coal decrease from USD104.94/tonne early
+the year to USD101.38/tonne, with the annual average price increasing by
+21.3% year on year.
+In 2018, coal imports of Japan, South Korea and Taiwan in East Asia
+remained basically stable, while the coal consumption along the "Belt and
+Road" countries, especially in Southeast Asia and South Asia, has increased
+significantly. Coal imports volume of India, Thailand, Vietnam and other
+countries have grown by more than two digits. In 2018, the global coal supply
+saw an increase, and exporting countries continued to be focused on Indonesia,
+Australia, and Russia. Among them, Indonesia exported 540 million tonnes of
+coal, up 10.5% year on year, the coal export of Russia increased by 3.4%, and
+the coal export of Australia increased by 2.6%.
+The global energy structure adjustment continued to be pushed ahead, and
+non-fossil energy maintained a rapid growth. Coal production and consumption
+in Western Europe and the United States continued to decline, and the focus of
+coal trade continued to tilt towards the Asia-Pacific region.
+Review of 2018
+Thermal coal market in the Asia Pacific region
+(2)
+In 2019, due to the reduction of low-cost resources of Indonesian coal and the
+increase in domestic consumption, the export volume will decline slightly. The
+export volume of Russia, Mongolia and other countries will increase, and the
+supply of Australia will remain stable. In 2019, it is expected that the global
+coal market will show a balance in supply and demand. Thermal coal price will
+fluctuate with seasonal changes.
+Section V Directors' Report (Continued)
+Overall, the supply and demand of coal are expected to be balanced in
+2019. However, subject to uncertainties, including resource conditions and
+transportation constraints, there may be structural tight or loose supply in some
+periods and regions.
+The import volume of coal will be basically stable in 2019 over the previous
+year.
+In 2019, despite a more complex and severe economic development
+environment in China, it is expected that the economy in China will continue to
+operate within a reasonable interval, providing energy consumption with certain
+support. The energy consumption of non-fossil energy in the overall society
+is growing rapidly. The coal consumption is expected to be basically stable. In
+2019, the coal production capacity will continue to be released, while affected
+by the increasingly stringent safety and environmental protection inspections,
+the coal production growth is expected to be limited in 2019.
+Prospects for 2019
+In respect of the demand side, total consumption of coal increased by 1%,
+continuing the positive growth since 2017, and was concentrated in the power
+and chemical industries, showing a trend of stable quantity and structural
+optimization. The coal consumption in the power and chemical industries
+recorded significant increase, the coal consumption in the steel and building
+materials industries recorded steady increase, and the coal consumption
+in other industries and residents has continued to decrease. The coastal
+coal supply channel was smoother, the Daqin line and the Shuohuang line
+were operating at a high level, and the capacity of Mengji line continued to
+be released. The coal transportation volume through railways in China was
+2,380 million tonnes, representing a year on year increase of 10.4%. The
+volume of coal shipment through major ports in China was 748 million tonnes,
+representing a year-on-year increase of 3.0%. Mid-stream and downstream
+were eager to hold inventory, while the annual inventory of northern ports,
+southern ports and key power plants has increased significantly.
+The import volume of coal continued to grow, and the total import volume
+of coal throughout the year amounted to 280 million tonnes, representing a
+year-on-year increase of 3.9%, demonstrating a slight decline over 2017.
+In respect of the supply side, with the continuous improvement of policies such
+as the replacement of coal production capacity, the high-quality production
+capacity has been continuously released, and the production of raw coal
+has gradually recovered. The raw coal production in 2018 was 3.68 billion
+tonnes, representing a year-on-year increase of 4.5%, among which, the
+raw coal production of Inner Mongolia was 930 million tonnes, representing
+a year-on-year increase of 8.7%; the raw coal production of Shanxi was 890
+million tonnes, representing a year-on-year increase of 3.7%; and the raw coal
+production of Shaanxi was 620 million tonnes, representing a year-on-year
+increase of 13.4%.
+Section V Directors' Report (Continued)
+2018 Annual Report 75
+Increase/
+(decrease)
+76
+Section V Directors' Report (Continued)
+Target of
+2019 note
+Unit
+Item
+(III) Business Targets for 2019
+The Company considers "Establishing the flagship company of China Energy Group
+and building a first-class comprehensive and competitive energy group in the world" as
+its strategic objective, it will continue to adhere to its advantages of unified operation,
+continuously improve the efficiency of integrated operations, achieve innovative
+development and high-quality development, and strive to achieve world-class scale,
+world-class benefits, world-class innovation, world-class management, world-class culture,
+and world-class Party construction.
+Development Strategy of China Shenhua
+(II)
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+78
+Taking such factors as the macroeconomic situation, electricity consumption and
+the replacement of electric energy in service industries and urban residents into
+consideration, it is expected that the power consumption in the PRC will increase
+slightly in 2019, but alternative energy sources such as natural gas, nuclear power,
+photovoltaics and wind power will continue to maintain rapid growth, affecting the
+growth space for thermal power generation. With the continuous deepening of reform
+of the power system, opening up of market, and the innovation and diversification
+of trading methods, the total trading volume of power continues to grow, and the
+downward pressure on electricity prices still exists.
+Prospects for 2019
+The power supply in the PRC is sufficient. The installed capacity of thermal power
+generation decreased in market share, while the installed capacity of non-fossil-fuel
+power generation increased rapidly. By the end of 2018, the installed capacity of
+power plants was 1.90 billion kW in China, increasing by 6.5% as compared to that at
+the beginning of the period. The installed capacity of thermal power was 1.14 billion
+kW (including 1.01 billion kW of coal-fired, 83.3 million kW of gas-fired), accounting
+for 60.2% of the total installed capacity, and decreasing by 2 percentage points from
+the end of 2017. In 2018, the newly added installed capacity was 124.39 million kW,
+including 8.54 million kW of hydropower, 41.19 million kW of thermal power, 8.84
+million kW of nuclear power, 21 million kW of on-grid wind power, and 44.73 million
+kW of on-grid solar power.
+In 2018, the average utilization hours of power generation equipment of power plants
+with capacity of 6,000 kW and above in the PRC was 3,862 hours, increasing by
+73 hours year on year. Among them, the average utilization time of thermal power
+equipment was 4,361 hours, increasing by 143 hours year on year. The average
+utilization time of hydropower equipment was 3,613 hours, increasing by 16 hours
+year on year.
+The power generation in the PRC maintained at a relatively high level, representing
+a year on year increase of 8.4%, and increasing by 1.8 percentage points. Thermal
+power generated 4,923.1 billion kWh, representing a year on year increase of 7.3%
+and accounting for 70.4% of the power generation in the PRC. Power generation
+of hydropower increased by 3.2% year on year, accounting for 17.6% of the power
+generation in the PRC. Power generation of nuclear power, on-grid wind power and
+on-grid solar power increased by 18.6%, 20.2% and 50.8% year on year, respectively,
+and continued to maintain rapid growth.
+In 2018, the power industry in the PRC featured a sufficient supply and demand. The
+total electricity consumption was 6,844.9 billion kWh, representing a year-on-year
+increase of 8.5%, and increasing by 1.9 percentage points as compared with that of
+last year. Among them, the electricity consumption in the first industry, secondary
+industry and third industry increased by 9.8%, 7.2% and 12.7% year on year,
+respectively, and the electricity consumption in urban and rural residents increased by
+10.4% year on year.
+Review of 2018
+3. Market environment of the power industry
+2018 Annual Report 77
+Applicable ✓ Not applicable
+China Shenhua Energy Company Limited
+Section V Directors' Report (Continued)
+Section V Directors' Report (Continued)
+82
+2018 Annual Report 81
+The Group focuses on the development strategy of clean energy. With the efficient
+development, use and conversion of clean coal as the core, it spares no effort in
+constructing ecological civilisation. The Company insists on strengthening its soft
+power of environmental protection and upgrading relevant facilities, as well as
+ensure capital investment to actively carry out the prevention and control of air
+and water pollution and upgrading of energy-saving and environmental protection
+in the Beijing-Tianjin-Hebei region and its surrounding areas. The Company is also
+building the brand image of ultra-low emissions in coal power on an on-going
+basis. It continues to identify environmental hidden dangers, further improves the
+environmental risk pre-control management system and strengthens the identification,
+remediation of potential issues and environmental emergency management in order
+to achieve energy-saving and emission reduction targets as well as to prevent severe
+environmental pollution incidents.
+Given the facts that national policies on energy-saving and environmental protection
+I have been further tightened, local standards on ultra-low emissions are even stricter
+than national standards, operating costs of enterprises are increased due to the
+levy of environmental tax, and the demand for better ecological environment puts
+more stringent requirements on the development and operation of enterprises, the
+constraints on energy-saving, carbon reduction and environmental protection are
+further imposed on the Group.
+Risk of environmental protection
+To cope with the risk of rising costs, the Group will establish the value-creation
+concept and strengthen the strategic cost control; optimise the cost accountability
+system; promote the normalisation of cost benchmarking work and carry out in-depth
+cost reduction and efficiency promotion, so as to consolidate the Group's advantage
+on cost.
+As the mining process proceeds further and production conditions become
+increasingly complicated, the Group's corporate mining cost may increase gradually.
+Furthermore, there is a trend of continuous rise in material and labour costs, and the
+increasingly stringent regulations are imposed by the state on resource acquisition
+and environmental protection, which may lead to an increase in the Group's costs.
+6.
+To cope with the risk of changes in industry policies, the Group will strengthen its
+research on the latest industry policies and regulations in the PRC and promote
+industrial upgrading and structural adjustment through a rational investment portfolio
+across the business segments, further regulating on the construction order of coal
+and power projects and increasing the investment in environmental protection.
+Risk of rising costs
+Risk of changes in industry policies
+5.
+4.
+3.
+Section V Directors' Report (Continued)
+China Shenhua Energy Company Limited
+In response to the risks of market competition, the Group will improve the accuracy
+of the pre-judgment to coal market, strictly implement long-term contracts, enhance
+quality control, develop brand advantage, and strengthen the development of new
+markets, maintenance of existing markets and construction of interchange bases to
+arrange transportation and sales in a balanced manner. It will also further conduct
+quality improvement and efficiency enhancement in the power industry and conduct
+risk pre-control, production safety and trading in the power market in accordance with
+laws and regulations; the Company actively participated in investment in coal flowing
+channels of national railways, increased the collection and distribution capacity of
+railways owned by the Company and kept improving the core competitiveness of
+transportation of the Company.
+In 2018, the domestic coal market featured with stable supply and demand, steady
+increase in utilisation rate of coal production capacity, and the increase in effective
+production capacity of coal. In 2019, the coal market is expected to maintain a
+generally balanced supply and demand. The total power consumption in 2018 was
+6.8 trillion kWh, representing a year-on-year increase of 8.5%. It is estimated that
+the future power market will feature with overall supply-demand balance, and the
+proportion of planned power generation will decrease year by year, which indicate
+that market competition will intensify. The state has increased the construction of
+cross-provincial coal transportation railway channels, and local coal transportation
+railways have been putting into operation or under expansion. The coal transportation
+capacity will be gradually released, and the transportation formats tends to be
+diversified.
+The Group's business activities are subject to the industrial regulatory policies
+in China. The supply-side structural reform of the coal industry has been pushed
+forward into a more difficult phase with increasing difficulty in resolving issues such
+as personnel settlement and liability disposal. In addition, speeding up the release
+of premium production capacity, optimising the transportation layout in the coal
+industry and ensuring coal supply have become the focuses of policy formulation in
+recent years. The above policies may objectively affect the approval and operation
+of newly-built expansion projects and the reform of the management model of the
+Company.
+Risk of market competition
+7.
+The management of the Group is of the view that other than those accounted for in
+the financial statements, there are currently no environmental liability that may have
+material adverse effect on the Group's financial position.
+V.
+IV. REASONS AND CASES OF FAILURE TO DISCLOSE PURSUANT TO GUIDELINES
+BY THE COMPANY DUE TO NON-APPLICATION OF GUIDELINES OR SPECIAL
+REASONS
+The Group carries out centralised management of commercial property insurance with
+ongoing review and assessment of risks and risk portfolio. Necessary and appropriate
+adjustments which are in line with our needs and practices of the insurance industry
+in China have been made to the insurance strategies and actions as safeguard against
+losses arising from various exposures.
+In order to cope with the risks arising from natural disasters, the Group will further
+strengthen early warnings of major natural disasters, formulate emergency plans,
+improve major disaster prevention and control technologies and rescue system,
+allocate necessary resources and perform relevant emergency drills to ensure that the
+impacts of natural disasters can be minimised.
+The production and operation activities of the Group may suffer some losses affected
+by factors including natural disasters or bad weather.
+Risk of natural disasters
+9.
+Section V Directors' Report (Continued)
+8.
+China Shenhua Energy Company Limited
+Affected by multiple factors including the complex international political, economic,
+social and religious environments, diverse legal systems among different countries,
+fluctuations in exchange rates, stricter environmental protection requirements, and
+intensified trade conflicts among certain countries, there may be ups and downs
+as well as fluctuations in the future international trades and economic situations.
+Together with the highly competitive energy market worldwide, the uncertainties in
+the Group's international operations may have an impact on its overseas business.
+Risk of international operations
+To cope with the risk of integrated operations, the Group will take an array of
+measures based on production safety, including, scientific scheduling and plan
+management, improve railway collection and distribution system, strengthen the
+coordination of power grid, and strengthen the operation management of production
+equipment, with an aim at balanced production and uninterrupted integrated
+operations to maximise its competitiveness.
+The Group's advantages in integrated coal mines, power, transportation and
+coal chemical operations come along with the risks arising from the interruption
+of individual parts of the entire integrated chain. In case of poor organisation or
+coordination or a discontinuation of any part, the balance and high efficiency of
+integrated organisation and operations will be affected and the impact may adversely
+affect the Group's business results.
+Risk of integrated operations
+To cope with the risks of production safety for coal mines, the Group will strengthen
+various areas in respect of the implementation of its safety risk prevention and
+control management system, inspections and treatments and assessment of
+significant risks, reinforcement of safety production training and emergency rescue
+management, innovative mechanism of safety supervision, all-round promotion of
+safety management ability, and consolidation of production safety fundamentals.
+The Group has established the production safety targets of "preventing serious
+work-related accidents and general accidents, striving to reduce cases of minor and
+serious injuries, creating long-term mechanism for production and work safety".
+Although the Group has been sustaining stable performance in safe production for its
+coal mines, there are uncertainties in the course of safe production.
+Risks of production safety for coal mines
+To cope with the risk of international operations, the Group will further carry out
+overseas resource evaluation, operation performance evaluation and technology
+assessment based on sound information collection, analysis and research prior to
+making any decision on overseas project investment so as to ensure economic and
+technological feasibility. Furthermore, the Company will strengthen the cultivation
+and introduction of interdisciplinary talents to lay a solid cornerstone for its "Going
+Overseas" strategy.
+To cope with the risk of macroeconomic fluctuations, the Group will further
+strengthen the studies on macro-control policy and relevant industrial trends, take
+the initiative to make pre-adjustment, promote high-quality development by taking
+the supply-side structural reforms as paramount, make great efforts to push scientific
+innovation and progress, and continue to implement strategies of green energy.
+The industry in which the Group operates is closely correlated to the prosperity of
+the macro economy. Currently, with complex and severe external environment,
+there have been economic downward pressure and increased pressure on economic
+structure adjustment. The state will further push forward the supply-side reform of
+the coal industry, and proactively phase out backward production capacity in the coal
+industry with premium production capacity, so as to achieve the replacement of old
+drivers of growth with new ones. The reform and innovation in the energy sector will
+have a significant impact on the Group's development strategy.
+2.
+48.8
+107.8
+129.2
+91.2
+51.3
+60.7
+Target of 2019
+Actual amount
+in 2018
+95.5
+Unit: RMB100 million
+5. Others
+4. Coal chemical segment
+Port
+Shipping
+Of which: Railway
+3. Transportation segments
+2. Power segment
+1. Coal segment
+(IV) Capital expenditure plan for 2019
+Total
+37.4
+11.4
+11.3
+Risk of macroeconomic fluctuations
+1.
+Investors should be aware that although the Company has reviewed and listed the major
+risks, and adopted relevant countermeasures, there is no absolute guarantee that all adverse
+impact could be eliminated due to the limitation of various factors.
+(V) Major risks faced and countermeasures
+Section V Directors' Report (Continued)
+80
+2018 Annual Report 79
+The capital expenditure plans of the Group in 2019 are subject to the development of
+business plans (including potential acquisitions), progress of capital projects, market
+conditions, outlook for future operation environment and the obtaining of the requisite
+permissions and approval documents. Unless required by laws, the Company shall not
+assume any responsibilities for updating the data of its capital expenditure plans. The
+Company intends to finance its capital expenditures by cash generated from operating
+activities, short-term and long-term borrowings, and other debt and equity financing.
+Total capital expenditure of 2018 amounted to RMB23.21 billion, which were mainly used
+for coal-fired power plants, Huangda Railway construction and mining equipment purchase.
+Based on the principles of strict control of investment and focusing on quality and
+efficiency, the Board of the Company approved a total planned capital expenditure of 2019
+of RMB27.13 billion (excluding equity acquisition). In terms of the capital expenditure on
+the coal segment, approximately RMB2.45 billion will be used for infrastructure, such as
+coal mine projects, construction of concentrated transportation stations and equipment
+purchase, and approximately RMB3.28 billion will be used for technological transformation.
+In terms of the capital expenditure on the railway segment, approximately RMB6.76
+billion will be used for infrastructure, such as the construction of Huangda Railway, 300
+million-tonne production capacity expansion project of Shenshuo Railway and equipment
+purchase, and approximately RMB2.64 billion will be used for technological transformation.
+In terms of the capital expenditure on the power segment, approximately RMB7.43 billion
+will be used for infrastructure, such as project construction, and approximately RMB1.64
+billion will be used for technological transformation.
+Note: The relevant data on the power plants of the Company to establish a joint venture company with GD Power
+is not included in the capital expenditures plans for 2019.
+232.1
+271.3
+2.1
+0
+0.7
+11.6
+0.1
+0.9
+Not applicable
+The specified guidelines issued by NDRC setting out the coal purchase
+prices (if any);
+(3)
+Commitment
+China Shenhua Energy Company Limited
+(2)
+The current transacted coal prices of the local coal exchange or market in
+the PRC, i.e., the coal price with same quality that is offered to or offered
+by independent third parties under normal market conditions and normal
+commercial terms in the same or nearby regions. For local spot coal price,
+reference is generally made to (i) the spot price index of the local coal
+exchange or market in Bohai-rim region or nearby provinces as published
+on China Coal Market Website (www.cctd.com.cn) organised by China
+Coal Transportation & Sale Society in the PRC; (ii) the sale price of local
+large-scale coal enterprises as published by each coal industry website
+(if any); and/or (iii) price quotation of a few enterprises with comparable
+quality, quantity and location (if any). If any price quotation(s) of one or
+more other enterprises are obtained, the Company will adopt the most
+favourable price obtained; For certain types of coal, the Company might
+not be able to receive any quotation(s) of enterprises with comparable
+quality, quantity and location. In case the Company is able to obtain a
+relevant quotation with comparable quality, quantity and location, then
+the Company would be able to obtain a comparable quotation and adopt
+the best price available;
+The national industrial policy as well as industry and market conditions in
+the PRC;
+is not fulfilled
+The supply price under the Mutual Coal Supply Agreement is the product of the
+unit price RMB/tonne multiplied by the actual weight. The unit price of coal shall
+be determined by both parties after arm's length negotiations with reference
+to the then market price and conditions and the following factors, provided
+that the transaction terms shall not be less favourable than those provided by
+independent third parties:
+40.2
+Distribution for Special
+dividend in the year 2017
+Final dividend for year 2016
+25.1
+49,923
+N/A
+4.6
+9,149
+22,712
+40.3
+흐름
+N/A
+86
+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 2018 under
+the Accounting Standards for Business Enterprises amounted to RMB43,867 million,
+with basic earnings per share of RMB2.205/share; profit for the year attributable to
+equity holders of the Company under the International Financial Reporting Standards
+amounted to RMB44,137 million, with basic earnings per share of RMB2.219/share. As
+at 31 December 2018, the retained earnings available for distribution to shareholders
+of the Company under the Accounting Standards for Business Enterprises amounted
+to RMB132,711 million.
+The Board of the Company recommends the payment of a final dividend for year
+2018 in cash of RMB0.88 per share (inclusive of tax) on the basis of the total share
+capital of 19,889,620,455 shares of the Company as at 31 December 2018, totaling
+RMB17,503 million (inclusive of tax), which represents 39.9% of the net profit for the
+year attributable to equity holders of the Company under the Accounting Standards
+for Business Enterprises and 39.7% of the profit for the year attributable to equity
+holders of the Company under the International Financial Reporting Standards.
+The above final dividend plan for year 2018 is in compliance with the requirement of
+the Articles of Association and endorsed by the independent directors and approved
+by the Board. When recommending the plan for year 2018, the Board has attended
+to and considered the opinions and concerns of the shareholders of the Company.
+The Company will hold the 2018 annual general meeting on Friday, 21 June 2019 to
+consider the relevant resolutions, including the above dividend plans as proposed by
+the Board.
+The final dividend for year 2018, which is denominated and declared in RMB, will
+be paid in RMB to holders of the Company's A shares, including holders of the
+Company's A shares through the Northbound Trading Link of the Shanghai-Hong
+Kong Stock Connect (hereinafter referred to as the "Northbound Shareholders") and
+holders of the Company's H shares through the Southbound Trading Link (including
+Shanghai and Shenzhen markets, hereinafter referred to as the "Southbound
+Shareholders"). Dividends to holders of the Company's H shares, except the
+Southbound Shareholders, are paid in HKD. The dividend paid in HKD is calculated
+according to the exchange rate based on the average benchmark rate of RMB against
+HKD, as published by the Bank of China five business days preceding the date of
+declaration of such dividend.
+In accordance with the preliminary arrangement of profit distribution plan for year
+2018 and annual general meeting of the Company, the final dividend for year 2018 for
+the Company's H shareholders are estimated to be distributed on or about 9 August
+2019. H shareholders are advised to claim the dividends distributed by the Company
+in time.
+2018 Annual Report 87
+45,037
+18,100
+9.1
+Final dividend for year 2017
+Profit distribution plan for the recent three years (including the reporting period)
+Dividend
+per 10 shares
+(inclusive of tax)
+RMB
+Amount of
+cash dividend
+(inclusive of tax)
+RMB million
+Net profit
+attributable
+to equity
+holders of the
+Company in the
+consolidated
+financial
+statements
+of the respective
+dividend year
+Commitment Covenantor Commitment
+in accordance
+with Accounting
+Section VI Significant Events (Continued)
+Percentage to
+the net profit
+attributable
+consolidated
+financial
+Standards
+for Business
+Enterprises
+RMB million
+statements
+%
+Final dividend for year 2018
+(Proposed)
+8.8
+17,503
+43,867
+39.9
+to equity
+holders of the
+Company in the
+1.
+4.
+6.
+Kong Investor Services
+Limited
+In accordance with the Enterprise Income Tax Law of the PRC and its implementation
+regulations which came into effect on 1 January 2008, the Company is required to
+withhold and pay enterprise income tax at the rate of 10% on behalf of the non-
+resident enterprise shareholders whose names appear on the register of members
+for H shares of the Company when distributing final dividends. The Company shall
+withhold and pay enterprise income tax in respect of the final dividend for year 2018
+of the Company for the non-resident enterprise shareholders whose name would
+appear on the register of members for H shares of the Company on 5 July 2019.
+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).
+88
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+8.
+9.
+(1)
+The Company shall use the registered address (hereinafter referred to as "registered
+address") as recorded in the register of members of H shares on 5 July 2019
+as the criterion in determining the residence of the individual shareholders of H
+shares who are entitled to receive the final dividend for year 2018 of the Company,
+and withhold and pay individual income tax accordingly. If the residence of the
+individual shareholders of H shares is inconsistent with the registered address, such
+shareholders shall notify the Company's share registrar for H shares at or before
+4:30 p.m. on 28 June 2019 with the relevant evidence at Computershare Hong Kong
+Investor Services Limited of 17M Floor, Hopewell Centre, 183 Queen's Road East,
+Wan Chai, Hong Kong.
+With respect to the Southbound Shareholders, according to the relevant requirements
+of China Securities Depository and Clearing Corporation Limited, China Securities
+Depository and Clearing Corporation Limited Shanghai Branch and Shenzhen Branch
+shall receive cash dividends distributed by the Company as the nominee of the
+Southbound Shareholders for Shanghai market and Shenzhen market, respectively
+and distribute such cash dividends to the relevant Southbound Shareholders through
+its depository and clearing system.
+According to the relevant provisions under the "Notice on Tax Policies for Shanghai-
+Hong Kong Stock Connect Pilot Programme" (Cai Shui 2014 No. 81) and the "Notice
+on Tax Policies for Shenzhen-Hong Kong Stock Connect Pilot Programme" (Cai Shui
+2016 No. 127), the Company shall withhold individual income tax at the rate of 20%
+with respect to dividends received by Mainland individual investors for investing
+in H-shares listed in Hong Kong Stock Exchange through Shanghai-Hong Kong
+Stock Connect and Shenzhen-Hong Kong Stock Connect. For Mainland securities
+investment funds investing in shares listed on Hong Kong Stock Exchange through
+Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, the
+above rules also apply and individual income tax shall be levied on dividends derived
+therefrom. The Company is not required to withhold income tax on dividends derived
+by Mainland enterprise investors, and such enterprises shall report the income and
+make tax payment by themselves. The record date and the relevant arrangements
+of dividend distribution for Southbound Shareholders are the same as that of the
+Company's shareholders of H shares.
+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.
+2018 Annual Report 89
+Section VI Significant Events (Continued)
+II. PERFORMANCE OF COMMITMENT
+Timely
+Detailed
+Further steps
+reasons shall shall be
+be specified if specified if
+commitment commitment
+Date and
+and Strict
+Background of Type of
+Kong Investor Services
+Limited
+Computershare Hong
+Computershare Hong
+4:30 p.m.
+28 June 2019
+(Friday)
+4:30 p.m.
+21 May 2019
+(Tuesday)
+7.
+Pursuant to the Articles of Association:
+(1)
+(2)
+After the Shanghai Stock Exchange is closed in the afternoon on Wednesday,
+22 May 2019, the shareholders of A shares of the Company (including the
+Northbound Shareholders) and the proxies of shareholders as registered in the
+China Securities Depository and Clearing Corporation Limited Shanghai Branch
+are entitled to attend and vote at the 2018 annual general meeting of the
+Company;
+According to the relevant regulations of China Securities Depository and
+Clearing Corporation Limited Shanghai Branch and market practice adopted for
+final dividend distribution for A shares, the Company will publish a separate
+announcement in respect of the distribution of final dividend for year 2018 to
+holders of A shares (including the Northbound Shareholders) after the 2018
+annual general meeting to determine the record date, ex-rights date and
+dividend distribution date for the distribution of final dividend for year 2018 to
+holders of A shares.
+The arrangement of temporary closure of the register of members of H shares of
+the Company:
+Temporary closure of the register of members
+Last Day
+(inclusive)
+No. Corresponding Rights
+First Day
+(inclusive)
+5.
+1
+22 May 2019
+the 2018 annual general
+(Wednesday)
+21 June 2019
+(Friday)
+meeting
+2
+Entitled to the final
+dividend for year 2018
+29 June 2019
+(Saturday)
+5 July 2019
+(Friday)
+The last day for The Company's share
+registering members registrar for H shares
+Attending and voting at
+(II) Profit distribution scheme/plan
+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%.
+In accordance with the requirements of the relevant laws and regulations and the Articles
+of Association, the profit distribution policy of the Company shall maintain continuity and
+stability and emphasize on achieving reasonable returns for investors. The Company shall
+give priority to profit distribution in cash dividends. The profit distribution policy of the
+Company complies with the Guideline on Encouragement of Cash Dividend Distribution of
+Listed Companies announced by the CSRC.
+Applicable ✓ Not applicable
+VII. MATERIAL LITIGATION AND ARBITRATION
+Applicable ✓ Not applicable
+VI. INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+In 2018, the above two auditors did not serve as the external auditors of several subsidiaries
+of the Company and did not provide non-audit services to the Company and its controlled
+subsidiaries.
+RMB1.59
+million
+Deloitte Touche Tohmatsu Certified Public
+Accountants LLP
+Internal Control Auditors
+Remuneration
+Name
+On 22 June 2018, Deloitte Touche Tohmatsu Certified Public Accountants LLP and Deloitte
+Touche Tohmatsu were appointed as the domestic and international auditors of the Company
+respectively for year 2018 at the Company's 2017 annual general meeting. The Company did not
+change its accounting firms during each of the past three years.
+6
+Deloitte Touche Tohmatsu
+1.5
+Deloitte Touche Tohmatsu Certified
+Public Accountants LLP
+9.0
+Term of Auditing of International Auditors of the Company
+(year)
+(RMB million)
+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
+APPOINTMENT AND REMOVAL OF AUDITORS
+V.
+As at the end of the reporting period, the Group was not involved in any material litigation or
+arbitration. As far as the Group was aware, the Group did not have any material litigation or claim
+which was pending or threatened against the Group.
+As at 31 December 2018, the Group was the plaintiff, defendant or the party of certain non-
+material litigations and arbitration. The management of the Company believes that any possible
+legal liability which may be incurred from the aforesaid cases will not have any material impact on
+the financial position of the Group.
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+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.
+On 24 March 2016, the Company entered into the Mutual Coal Supply
+Agreement with China Energy. The Mutual Coal Supply Agreement is effective
+from 1 January 2017 and will expire on 31 December 2019. Pursuant to the
+Mutual Coal Supply Agreement, the Group and China Energy Group mutually
+sells and supplies various types of coal.
+Mutual Coal Supply Agreement
+A.
+The related/connected transactions are beneficial for the Company to obtain a
+reliable and quality-assured provision of materials and services, lower operation risks
+and costs; and Shenhua Finance Company, over which the Company has controls,
+provides financial services to the Group, China Energy and its subsidiaries so that
+it can fully leverage on its functions as an internal financing platform and capital
+management platform, and to further control risks and increase income.
+Non-exempt continuing related/connected transactions between the Group and
+China Energy Group
+1.
+As of the end of the reporting period, continuing related/connected transaction agreements
+entered into by the Company include:
+94
+2018 Annual Report 93
+In August 2018, the merger of China Guodian by way of absorption by China Energy, the
+controlling shareholder of the Group, has completed. As a result, the former China Guodian
+and its subsidiaries constitute related parties/connected persons of the Company as defined
+under the Shanghai Listing Rules and the Hong Kong Listing Rules.
+Section VI Significant Events (Continued)
+As approved at the 2018 first EGM, the Group and China Energy Group have entered into
+a Mutual Coal Supply Agreement and a Mutual Supplies and Services Agreement with
+a revision of annual caps for mutual agreement for the year of 2018 and 2019 in light of
+the merger of China Guodian by China Energy by the way of absorption, as well as the
+satisfaction of the needs of additional daily related/connected transaction arising from the
+Joint Venture Company consisting of equities and assets of the relevant coal-fired power
+generation companies held by the Group and GD Power. For details, please refer to the H
+share announcement of the Company dated 27 April 2018 and the A shares announcement
+of the Company dated 28 April 2018.
+Related/Connected transactions during the daily operation
+(1)
+MATERIAL RELATED/CONNECTED TRANSACTIONS
+Applicable ✓ Not applicable
+THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY
+AND THEIR IMPACTS
+Applicable ✓ Not applicable
+XI.
+X.
+IX. EXPLANATION FOR CREDIT OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDERS AND DE FACTO CONTROLLER
+Applicable ✓ Not applicable
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY AND
+ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDERS, DE FACTO CONTROLLER AND OFFEROR
+Pursuant to the requirements under the "Guidelines of Shanghai Stock Exchange on
+Connected Transactions of Listed Companies", the Audit Committee of the Board of the
+Company shall perform the duties of control and daily management of related/connected
+transactions of the Company. The Company has a related/connected transaction team
+under the direct supervision of the Chief Financial Officer, which is responsible for the
+management of related/connected transactions; and has established a business process,
+which properly delineates the responsibilities of the Company, its subsidiaries and branches
+in the management of related/connected transactions. The team has also established
+routine examinations, reporting systems and accountability systems in the subsidiaries
+and branches of the Company, as to ensure the related/connected transactions conduct in
+accordance with the terms of framework agreement.
+92
+Section VI Significant Events (Continued)
+Applicable ✓ Not applicable
+Yes, in progress N/A
+24 May 2005, Yes
+long-term
+"Non-competition Agreement"
+(originally
+competition
+in relation to
+The two parties entered into a
+China Energy
+Non-
+Commitment
+in time
+in time
+is not fulfilled
+Performance of
+Commitment
+Duration of Any Time Limit for
+Commitment Commitment
+00
+to
+10
+Section VI Significant Events
+I. PROFIT DISTRIBUTION PLAN
+(1)
+2018 Annual Report 91
+Formulation, implementation or adjustment of cash dividend policy
+N/A
+initial public
+00
+Shenhua
+undertaking
+The Company's analysis and explanation about the reasons for and impact of
+changes in accounting policies, accounting estimates or accounting method
+Applicable ✓ Not applicable
+(III) The Company's analysis and explanation about the reasons for and impact of
+correction to material previous errors
+(II)
+(1)
+IV. AUDIT OPINIONS AND OTHER EXPLANATIONS
+Applicable ✓ Not applicable
+APPROPRIATION OF FUNDS AND PROGRESS OF THE COLLECTION DURING
+THE REPORTING PERIOD
+Pursuant to the Supplemental Agreement to the Existing Non-competition Agreement, within
+five years after the completion of China Energy merging with China Guodian by way of merger by
+absorption, the Company will discretionally exercise the Options and the Pre-emptive Rights to
+acquire the assets within the retained businesses, and will no longer commence the acquisition
+before 30 June 2019 as stated in the 2014 Non-Competition Undertakings. The retained business
+refer to (1) original committed assets (excluding the completed acquisition of three equity assets
+by the Company in 2015) other than the assets of Conventional Power Generation Business and
+(2) the unlisted businesses held by China Guodian which directly or indirectly compete with the
+core businesses of the Company (excluding the relevant assets that China Guodian undertook
+to inject into its subsidiary Inner Mongolia Pingzhuang Energy Co., Ltd., in 2007). For details,
+please refer to the H share announcement of the Company dated 1 March 2018 and the A shares
+announcement of the Company dated 2 March 2018.
+Being the parent company subsequent to the restructuring, China Energy merged with China
+Guodian by the way of absorption. As approved in the ninth board meeting of the fourth session of
+the Board and the 2018 first EGM of the Company, the Company entered into the Supplemental
+Agreement to the Existing Non-Competition Agreement with China Energy. It is agreed by
+both parties that other than the amendments in the Supplemental Agreement to the Existing
+Non-Competition Agreement, the clauses of the Existing Non-competition Agreement will not be
+changed.
+Explanation from the board and the supervisory committee for the "non-standard
+audit report" issued by the auditors
+For the new and revised International Financial Reporting Standards initially applied by the
+Group in 2018 and their respective impact, please refer to Note 2 to financial statements of
+this report.
+III.
+offering
+Corporation)
+"Supplemental Agreement to
+the Existing Non-Competition
+Agreement" on 1 March 2018.
+As an integrated platform
+which was responsible for the
+coal business and affiliated to
+China Energy, China Energy
+has committed not to compete
+with the Company in respect
+of the Company's principal
+businesses (coal exploration,
+mining, processing, sales;
+production and sales of
+comprehensive utilization of
+coal products; development and
+management of coal products;
+railway transportation; port
+transportation; the industry and
+systematic service related to
+the business aforementioned)
+whether inside or outside of the
+PRC, and granted the Company
+options and pre-emptive rights
+to acquire and be transferred
+from China Energy any business
+opportunities and assets which
+may pose potential competition.
+Group
+90
+China Shenhua Energy Company Limited
+Section VI Significant Events (Continued)
+To further formulate the performance of the Non-competition Agreement, the Resolution on the
+Performance of Non-competition Undertaking was approved at the 45th meeting of the second
+session of the Board on 27 June 2014 and the Announcement in relation to the Performance
+of Non-competition Undertaking was disclosed to public. The Company disclosed that it will
+commence the acquisition of 14 assets of Shenhua Group and its subsidiaries ("Original
+Undertaking Assets") before 30 June 2019 (submitting the asset acquisition proposal to the
+internal competent authorities of China Shenhua for approval procedure). For details, please
+refer to the H shares announcement dated 27 June 2014 and the A shares announcement of the
+Company dated 28 June 2014. The Company completed acquisitions of 100% equity of Ningdong
+Power, 100% equity of Xuzhou Power and 51% equity of Zhoushan Power in 2015. The Company
+did not make any acquisitions of assets in 2018.
+on 24 May 2005 and a
+Signing Auditors
+Office Address
+Auditor engaged by the
+Name
+Auditor engaged by the
+Company (Hong Kong)
+Signing Auditors
+Office Address
+Name
+Company (China's mainland)
+BASIC INFORMATION ON SHARES
+601088
+01088
+China Shenhua
+China Shenhua
+SSE
+HKEX
+Stock Code
+Abbreviation
+Stock Exchange
+A Share
+Share Registrar and Transfer
+Office of the Company (A
+Share)
+Type
+VI. OTHER RELEVANT INFORMATION
+H Share
+registered in accordance with the Financial
+Reporting Council Ordinance)
+Office Address
+Change
+2020
+V.
+2021
+VII. MAJOR ACCOUNTING DATA AND FINANCE INDEX
+Section II Company Profile and
+Major Financial Indicators (Continued)
+Rooms 1712-1716, 17th Floor, Hopewell
+Centre, 183 Queen's Road East, Wanchai,
+Hong Kong
+Computershare Hong Kong Investor Services
+Limited
+188 Yanggao South Road, Pudong New Area,
+Shanghai
+Name
+China Securities Depository and Clearing
+Corporation Limited Shanghai Branch
+8th Floor, Prince's Building, 10 Chater Road,
+Central, Hong Kong
+KPMG (Public Interest Entity Auditor
+Zhang Nan, Wang Xia
+8th, Tower E2, Oriental Plaza, 1 East Chang
+An Avenue, Beijing
+KPMG Huazhen LLP
+Office Address
+Name
+8 China Shenhua Energy Company Limited
+Share Registrar and Transfer
+Office of the Company (H
+Share)
+Guen Kin Shing
+SSE, Office of the Board of the Company and Hong
+Kong Office of the Company
+中國神華能源股份有限公司
+of annual report of the Company
+Annual report is available at
+Registered Address of the Company
+Postal Code of Registered Address of
+the Company
+PARTICULARS
+(8610) 5813 1088/3399/3355
+(8610) 5813 1804/1814
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing (Postal
+Code: 100011)
+Office of the Board of the Company
+(8610) 5813 1804/1814
+1088@csec.com
+(8610) 5813 3399
+22 Andingmen Xibinhe Road,
+Dongcheng District, Beijing (Postal
+Code: 100011)
+Huang Qing
+Change of Registered Address of the
+Company
+Secretary to the Board
+Tel
+Address
+E-mail
+Tel
+Fax
+Name
+Address
+CONTACTS AND CONTACT DETAILS
+Authorised Representatives of the Company under
+the Hong Kong Listing Rules
+%
+Legal Representative of the Company
+Fax
+China Securities Journal, Shanghai Securities News,
+Securities Times and Securities Daily
+www.sse.com.cn and www.hkexnews.hk
+Office Address of the Company
+Postal Code of Office Address of
+the Company
+Company Website
+E-mail
+CSEC/China Shenhua
+Stock exchange websites for disclosure
+Media for disclosure of annual report of
+the Company
+IV. INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+Major Financial Indicators (Continued)
+Section II Company Profile and
+2021 Annual Report 7
+www.csec.com or www.shenhuachina.com
+ir@csec.com
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+N/A
+China Shenhua Energy Company Limited
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+Room B, 54th Floor, Bank of China Tower,
+1 Garden Road, Central, Hong Kong
+Hong Kong Office of the Company
+(8610) 5813 1804/1814
+ir@csec.com
+(8610) 5813 3355
+22 Andingmen Xibinhe Road, Dongcheng
+District, Beijing (Postal Code: 100011)
+Sun Xiaoling
+Representative of Securities Affairs
+Wang Xiangxi, Huang Qing
+Wang Xiangxi
+(852) 2578 1635
+(852) 2915 0638
+Revenue
+562,904
+335,216
+4.3
+364,203
+380,038
+RMB million
+the Company
+Equity attributable to equity holders of
+4.6
+429,587
+449,221
+Total share capital at the end of the
+RMB million
+21.0
+133,317
+161,376
+RMB million
+Total liabilities
+8.5
+610,597
+RMB million
+Total assets
+Total equity
+%
+period
+19,869
+Abbreviation/Short Name of English Name of the
+Company
+2021 Annual Report 9
+percentage point
+13.4
+12.4
+Decreased by 1.0
+Total debt to total equity ratio
+23.7 percentage points
+26.4
+RMB million
+%
+Gearing ratio
+4.4
+18.33
+19.13
+RMB/share
+share
+Equity attributable to equity holders per
+(0.1)
+19,890
+Increased by 2.7
+RMB million
+Change
+28.7
+RMB million
+Net cash generated from operating
+activities
+44.0
+1.803
+2.597
+RMB/share
+Basic earnings per share
+44.0
+35,849
+94,575
+51,607
+holders of the Company
+Profit for the year attributable to equity
+38.7
+43,984
+61,009
+RMB million
+Profit for the year
+43.7
+233,263
+RMB million
+At the end of 2021 At the end of 2020
+81,289
+Net cash generated from operating
+Increased by 3.8
+percentage points
+9.8
+79,018
+13.6
+101,680
+RMB million
+EBITDA
+%
+of the period
+Return on net assets as at the end
+7.8 percentage points
+16.3
+10.0
+the period
+Increased by 2.2
+Return on total assets as at the end of
+50.9
+62,690
+94,575
+RMB million
+Finance Company
+activities excluding the effect from
+%
+English Name of the Company
+中國神華
+Chinese Name of the Company
+The Group
+China Shenhua/the Company
+Unless the context otherwise requires, the following terms used in this report have the following
+meanings:
+Section | Definitions.
+I
+309
+Summary of Major Financial Information for the Recent Five Years
+Section XII
+308
+Documents Available for Inspection
+Section XI
+China Energy
+183
+Section X
+179
+Investor Relations
+Section IX
+171
+Changes in Share Capital and Shareholders
+Section VIII
+146
+Significant Events
+Section VII
+Independent Auditors' Report and Financial Statements
+China Energy Group
+China Guodian
+Guodian Group
+China Guodian Group Co., Ltd. (+IIT£¥Á®^J)
+China Energy and its subsidiaries (excluding the Group)
+China Energy Investment Corporation Limited (£*œF£¤¶¶Ð
+限責任公司)
+The Company and its subsidiaries
+China Shenhua Energy Company Limited
+Fujian Energy
+Sichuan Energy
+Baotou Coal Chemical
+Yulin Energy
+Baotou Energy
+Baoshen Railway
+Shipping Corporation
+Zhuhai Harbour Administration
+Huanghua Harbour Administration
+Tianjin Harbour Administration
+Trading Group
+Railway Equipment
+Shuohuang Railway
+Beidian Shengli
+Baorixile Energy
+Zhunge'er Energy
+Shendong Power
+Shendong Coal
+GD Power
+Environmental and Social Responsibility
+China Guodian and its subsidiaries
+Section VI
+3728
+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
+VII.
+120km h
+、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
+中国神华能源股份有限公司
+Short Name of Chinese Name of the Company
+CHN ENERGY
+The Board, Supervisory Committee and all Directors, Supervisors and senior management of the
+Company warrant that this report does not contain any misrepresentations, misleading statements
+or material omissions, and are jointly and severally liable for the authenticity, accuracy and
+completeness of the information contained in this report.
+This report was approved at the twelfth meeting of the fifth session of the Board of the Company.
+8 out of 8 Directors attended the meeting in person.
+KPMG has issued a standard unqualified independent auditor's report in accordance with the Hong
+Kong Standards on Auditing on the Company's financial statements for the year 2021 prepared
+under the International Financial Reporting Standards.
+80
+Corporate Governance and Corporate Governance Report
+Section V
+Directors' Report
+Section IV
+12
+Chairman's Statement
+Section III
+Company Profile and Major Financial Indicators
+Section II
+Definitions
+Section I
+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
+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.
+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.
+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.
+14
+GD Power Development Co., Ltd.
+133
+Shenhua Shendong Power Co., Ltd.
+Shanghai Listing Rules
+Section Definitions (Continued)
+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
+China Energy Finance Co., Ltd.
+Beijing GD Power Co., Ltd
+China Accounting Standards for
+Business Enterprises
+Shenhua (Tianjin) Finance Lease Co., Ltd.
+China Energy Jiangsu New Energy Technology Development Co.,
+Ltd. (formly Shenhua Guohua Jiangsu Power Sales Co., Ltd.)
+HKEx
+SSE
+JORC
+Equity Transfer of Fuping Thermal
+Power
+The deconsolidation of Finance
+Company's financial statements
+Finance Company
+Beijing GD Power
+Shenhua Lease Company
+Shandong Power Sales Company
+Shenhua Shandong Power Sales Co., Ltd.
+International Financial Reporting
+Standards
+Articles of Association
+EBITDA
+INFORMATION OF THE COMPANY
+China Energy Shendong Coal Group Co., Ltd.
+III.
+II.
+I.
+Major Financial Indicators
+Section II Company Profile and
+6 China Shenhua Energy Company Limited
+Renminbi unless otherwise specified
+A mutual access and connect mechanism for transactions in stock
+markets between Shenzhen Stock Exchange and HKEX
+RMB
+Stock Connect
+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
+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 Securities on the HKEX
+Rules Governing the Listing of Stocks on SSE
+Total debt to total equity ratio
+Gearing ratio
+Jiangsu Power Sales Company
+Section | Definitions (Continued)
+Hong Kong Listing Rules
+China Energy Baorixile Energy Co., Ltd.
+Energy
+Power-generating division controlled and operated by Zhunge'er
+PT.GH EMM INDONESIA
+Taishan Power
+Shenmu Power
+Zhunge'er Power
+EMM Indonesia
+2021 Annual Report 3
+Shenhua (Fujian) Energy Co., Ltd.
+China Energy Sichuan Energy Co., Ltd.
+China Energy Shaanxi Shenmu Power Co., Ltd.
+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 Shuohuang Railway Development Co., Ltd.
+Shenhua Beidian Shengli Energy Co., Ltd.
+4 China Shenhua Energy Company Limited
+Shenhua Zhunge'er Energy Co., Ltd.
+China Energy Yunlin Energy Co., Ltd.
+China Energy Yudean Taishan Power Co., Ltd.
+Section Definitions (Continued)
+China Energy Hebei Cangdong Power Co., Ltd.
+Guangdong Power Sales Company China Energy (Guangdong) Power Sales Co., Ltd.
+Shengli Energy Branch of the Company
+Cangdong Power
+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.
+Shengli Energy
+Yongzhou Power
+Pembangkitan Jawa
+China Energy Group Yongzhou Power Co., Ltd.
+Shouguang Power
+Beijing Gas-fired Power
+Huizhou Thermal
+Jiujiang Power
+Mengjin Power
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+China Energy Jinjie Energy Co., Ltd.
+Dingzhou Power
+Jinjie Energy
+Liuzhou Power
+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
+2021 Annual Report 97
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Mr. Zhang has been serving as the chairman (legal
+representative) and secretary to the Party Committee
+of China Energy Fujian Energy Co., Ltd. and Shenhua
+Fujian Energy Co., Ltd. from December 2020 to February
+2022, the Employees' Representative Supervisor of
+the fourth session of the Supervisory Committee from
+December 2019 to May 2020, the deputy secretary to
+the Party Committee of the Company from August 2019
+to December 2020 and General Legal Adviser of the
+Company from December 2019 to January 2021. From
+May 2018 to August 2019, he served as the secretary
+and a deputy director of the coal industry operation and
+management center of China Energy. From January
+2012 to May 2018, he served as the director of the coal
+and chemical management department of the former
+China Guodian.
+Prior to the foregoing, Mr. 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.
+Zhang Changyan
+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..
+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:
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(3)
+Senior management in office as at the end of the reporting period
+Name
+Lv Zhiren
+Chief Executive
+Officer, Deputy
+Secretary
+of the Party
+Committee
+Biographical details
+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.
+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.
+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.
+98 China Shenhua Energy Company Limited
+Mr. Zhou has served as the Supervisor of the fifth
+session of the Supervisory Committee of the Company
+since May 2020, and a director of the Materials and
+Procurement Supervision Department of the China
+Energy since March 2020.
+Wang Xingzhong
+Biographical details
+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.
+Employee Director,
+Executive Vice
+President and
+Member of the
+Party Committee
+Biographical details
+Born in April 1968, male, Chinese, a member of the
+Communist Party and a professor-level senior engineer.
+Mr. Wang has 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.
+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.
+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..
+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.
+2021 Annual Report 95
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(2) Existing supervisors as at the end of the reporting period
+Name
+Luo Meijian
+Chairman of
+Supervisory
+Committee
+Biographical details
+Born in May 1964, male, Chinese, a member of the
+Communist Party, and Ph. D in Management, senior
+economist.
+Mr. Luo has served as the Chairman of Supervisory
+Committee of the Company since May 2020, and since
+November 2021 the secretary of the Party Committee
+of Guodian Power Development Co., Ltd., and since
+December 2021 the deputy general manager and the
+director of Guodian Power Development Co., Ltd..
+Mr. Luo has served as a director of the Organization and
+Personnel Department (Human Resources Department)
+of China Energy from June 2018 to November 2021.
+From March 2017 to June 2018, he served as the
+general manager of Human Resources Department at
+former Shenhua Group Corporation and the Company.
+From March 2015 to March 2017, he served as the
+secretary of the Party Committee and standing deputy
+president of former Shenhua Management College, the
+standing deputy president of former Shenhua Group
+Corporation Communist Party School and the deputy
+general manager of Human Resources Department of
+former Shenhua Group Corporation and the Company.
+From May 2013 to March 2015, he served as director
+of human resources department, deputy president
+of the Party School and deputy secretary of the Party
+Committee of China Commercial Aircraft Corporation
+Limited.
+Prior to the foregoing, Mr. Luo had served as secretary
+of the Party Committee and disciplinary committee
+secretary of Shenhua Science and Technology
+Development Co., Ltd., deputy general manager of
+Human Resources Department of former Shenhua
+Group Corporation and the Company, the deputy
+president and member of the Party Committee of China
+Shenhua Coal Liquefaction and Chemical Company
+Limited, and deputy director, director of Education
+Bureau of the Organisation Department of the Central
+Committee of the Communist Party.
+96 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Zhou Dayu
+Supervisor
+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.
+2021 Annual Report 99
+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.
+Name
+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)
+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.
+Name
+Yang Xiangbin
+Deputy Secretary
+of the Party
+Committee
+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
+Biographical details
+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.
+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.
+China Shenhua Energy Company Limited
+Name
+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.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+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.
+Officer and Member
+of the Party
+Committee
+Huang Qing
+Secretary of the
+Board, Member
+of the Party
+Born in November 1965, male, Chinese, a member
+of the Communist Party and a senior engineer. Mr.
+Huang obtained a board secretary certification from the
+Shanghai Stock Exchange in 2004. Mr. Huang is a fellow
+of the Hong Kong Institute of Chartered Secretaries and
+a senior visiting scholar of the Eisenhower Foundation.
+Mr. Huang received a master's degree from Guangxi
+University in 1991.
+Mr. Huang has served as Secretary of the Board of the
+Company and Company Secretary of the Company since
+November 2004, a member of the Party Committee of
+the Company since June 2018, the General Counsel of
+the Company since January 2021, the Vice Chairman of
+Beijing GD Power Co., Ltd. since March 2019.
+Prior to the foregoing, Mr. Huang had served in various
+Committee and the capacities, including Secretary to the Chairman of former
+General Counsel
+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.
+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.
+2021 Annual Report 101
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Xu Shancheng
+Chief Financial
+Biographical details
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Biographical details
+Directors of China
+Shenhua
+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
+Independent
+at general
+Absent at two
+attendance
+Attendance
+Wang Xiangxi
+5
+54535555
+No
+Wang Xingzhong
+5
+Yes
+Chen Hanwen
+5
+Yes
+Bai Chong-En
+Yes
+Yuen Kwok Keung
+3
+5
+5
+No
+Yang Rongming
+Jia Jinzhong
+No
+Xu Mingjun
+No
+LOLOLO 3 LO LOLOLO
+Required
+attendance at
+1. Directors in office as at the end of the period
+3
+23 April 2021
+The 7th meeting of the
+fifth session of the
+Board
+2
+26 March 2021
+The 6th meeting of the
+fifth session of the
+Board
+1
+Date
+Name
+No.
+In 2021, the Board of the Company held a total of 5 meetings, at which all the proposals
+were considered and approved. Details of the meetings are as follows:
+5005
+Number of meetings held on-site with correspondence
+Number of meetings held by correspondence
+Including: Number of meetings held on-site
+Number of Board meetings held during the year
+Board Meetings
+(I)
+V. BOARD OF DIRECTORS
+The 8th meeting of the
+fifth session of the
+Board
+Attendance at Board meetings
+27 August 2021
+Meeting Resolutions
+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
+Methods
+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.
+0
+1
+During the reporting period, the Independent Directors of the Company strictly
+complied with the requirements of relevant laws and regulations, the Articles
+of Association of the Company, relevant rules of procedure of meetings and the
+Independent Directors system of the Company. They maintained their independence
+as Independent Directors, performed their functions of supervision, participated in
+the formation of various important decisions of the Company and reviewed regular
+reports and financial reports of the Company. Therefore, the Independent Directors of
+the Company played an important role in the regulated operation of the Company and
+protected the legitimate interests of minority shareholders.
+The Company has received written confirmation from each of the Independent Non-
+Executive Directors confirming their independence. The Company is of the view that
+all of the Independent Non-Executive Directors are independent. The number and
+background of the Independent Directors are in compliance with the requirements of
+the listing rules of the places of listing.
+The fifth session of the Board of the Company has three Independent Non-Executive
+Directors: Yuen Kwok Keung, Bai Chong-En and Chen Hanwen, among whom Chen
+Hanwen is an accounting professional.
+Performance of duties of Independent Directors
+3.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+110 China Shenhua Energy Company Limited
+In 2021, the Board of Directors of the Company held 5 meetings and considered 46
+resolutions, and disclosed the voting results of all resolutions in a timely manner. If
+the resolution of the Board meeting has any interest in any director or any associate
+of the director, or the director has an associated/connected relationship with the
+enterprise involved in the resolution of the Board meeting, the associated/connected
+director shall abstain from voting. All directors acted in good faith, prudently and
+diligently in the interest of the Company as a whole in the performance of their duties
+and effectively performed their management, operation and decision-making powers
+over the Company.
+The Company safeguards the conditions for directors to carry out their work and
+actively adopts the suggestions and opinions put forward by the directors. The
+Company's "Procedure Rules for the Board" and "Independent Directors System"
+provide institutional guarantees for directors to perform their duties; the departments
+designated to undertake the affairs of the Board, the affairs of independent directors
+and the work of the Independent Board Committee assist directors in carrying out
+research, attending meetings and expressing opinions.
+4/4
+4/4
+No
+0
+0
+4
+4
+No
+Yang Jiping
+meetings
+Supervisors of China Luo Meijian
+Shenhua
+person or not Attendance
+2021-07
+Chief Economist
+2019-03
+Members' Group
+Yang Jiping
+China Energy
+Director of Operating
+2019-08
+2020-03
+Management Centre of
+Coal Industry
+China Energy
+Director of Operating
+2019-12
+2020-03
+Management Centre of
+Transportation Industry
+Jia Jinzhong
+China Energy
+Senior Business Officer
+2021-07
+2018-05
+1
+by proxy Absence
+meetings in
+0
+0
+3/3
+5/5
+No
+0
+4/5
+No
+0
+4/4
+5/5
+0
+O O O O O O
+0
+1
+0
+5
+0
+0
+0
+at general
+0
+LOLOLOLO
+Attendance in Attendance by Attendance
+Person correspondence
+Independent Board meetings
+Director or not
+this year
+Name of D
+irector
+Attendance
+consecutive
+Absent at two
+Required
+attendance at
+Attendance at Board meetings
+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
+0
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+108 China Shenhua Energy Company Limited
+2018-05
+Senior Counsel
+Member of the International
+Arbitration Centre
+Advisory Committee
+Hong Kong International
+Temple Chambers
+International Commercial Court of
+the Supreme People's Court of
+the People's Republic of China
+Hong Kong Exchange Fund
+Yuen Kwok Keung
+office
+of term of office
+Positions
+Name of other entities
+Name
+Expiry of term of
+Commencement
+3. Positions held in other entities
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+105
+2021 Annual Report
+2016-08
+China Energy Finance Co., Non-Executive Director
+Ltd.
+2018-08
+2019-03
+Commercial Expert Committee
+2018-09
+2019-10
+Society of Public Finance of China Vice President of the Tenth
+2008-08
+University
+Policy Research at Tsinghua
+National Center of Fiscal and Tax Director
+University
+Management of Tsinghua
+2004-07
+Professor
+School of Economics and
+University
+Management of Tsinghua
+2018-08
+Dean
+School of Economics and
+Bai Chong-En
+2018-10
+Council Member
+Member
+Session and a Member of the
+Chairman of the
+supervisory committee
+of China Shenhua
+2018-06
+2021-11
+and Personnel
+Department (Human
+Resources Department)
+Director of the Materials 2020-03
+Zhou Dayu
+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
+Director of Organization
+Xu Shancheng Beijing GD Power
+China Energy
+Director
+2019-03
+Vice Chairman
+Beijing GD Power
+Senior Management Huang Qing
+Committee
+Secretary to the Party
+representative) and
+2020-02
+2020-12
+Chairman (legal
+China Energy Fujian
+Energy Co., Ltd.
+Committee
+Secretary to the Party
+GD Power Development
+Co., Ltd.
+Secretary to the Party
+2021-11
+Committee
+Executive vice president
+2021-12
+2021-12
+Academic Committee of the
+Council
+China Association of Labour
+Executive Vice President Appointed
+Li Zhiming
+Reason for the change
+Particulars
+of changes
+Position
+Name
+(IV) CHANGES OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT OF THE
+COMPANY
+Please refer to "Changes in shareholding and remuneration
+of Directors, Supervisors and senior management" in this
+section
+Please refer to "Changes in shareholding and remuneration
+of Directors, Supervisors and senior management" in this
+section
+The remuneration package of 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.
+The remuneration package of relevant Directors and
+Supervisors was proposed by the Company in accordance
+with international and domestic practices and with
+reference to the remuneration of directors and supervisors
+of large-scale listed companies in China.
+The remuneration package of Directors and Supervisors
+of the Company was submitted to the general meeting
+for approval after consideration and approval by the
+Remuneration Committee of the Board and the Board,
+and the remuneration package of senior management was
+submitted to the Board for approval after consideration
+and approval by the Remuneration Committee of the
+Board.
+Total remuneration actually
+obtained as at the end of the
+reporting period
+remuneration
+Actual payment of
+Basis for determination
+Decision-making procedures
+(III) REMUNERATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Yang Rongming
+106 China Shenhua Energy Company Limited
+Non-Executive Director
+Appointed by the sixth meeting of the
+fifth session of the Board
+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.
+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.
+All the Directors and Supervisors have provided relevant training records to the Company
+and have participated in training programs in accordance with relevant requirements by
+regulatory authorities. The Secretary to the Board of the Company has participated in
+training programs for more than 15 hours in accordance with relevant requirements.
+The securities transactions of the Directors of the Company have been carried out in
+accordance with the "Model Code for Securities Transactions by Directors of Listed Issuers"
+(the "Model Code") set out in Appendix 10 of the Hong Kong Listing Rules. The Model
+Code is also applicable to the Supervisors and senior management of the Company. The
+Directors, Supervisors or senior management have confirmed that they have fully complied
+with the Model Code in 2021 or during their respective terms of office.
+As of 31 December 2021, none of the Directors, Supervisors or chief executives of the
+Company held any shares of the Company, nor did they have any interest or short position
+in the shares or underlying shares of the Company or of any of its associated corporations
+within the meaning of Part XV of the SFO (Chapter 571 of the Laws of Hong Kong) required,
+pursuant to section 352 of the SFO, to be recorded in the register which shall be kept by
+the Company, or to be notified to the Company and the HKEx pursuant to the Model Code
+for Securities Transactions by Directors of Listed Issuers.
+During the reporting period, none of the Directors, Supervisors and senior management of
+the Company held shares of the Company, and none of the change in shareholding of the
+Company shall be disclosed pursuant to the Administrative Rules Concerning the Holding
+and Change of Shares held by Directors, Supervisors and Senior Management of A Listed
+Company promulgated by the CSRC.
+(VI) OTHERS
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 107
+Applicable ✓ Not applicable
+(V) SANCTION FROM SECURITIES REGULATORY AUTHORITIES IN THE LAST THREE
+YEARS
+Yang Xiangbin has served as the Deputy Secretary of the Party Committee of the Company
+since April 2021. Yang Suping resigned as member of the Party Committee and the
+Secretary to the Disciplinary Committee of the Company since August 2021. Cui Weishan
+has served as member of the Party Committee and the Secretary of the Disciplinary
+Committee of the Company since November 2021.
+Appointed by the tenth meeting of the
+fifth session of the Board
+Appointed
+Job change
+Resigned
+Executive Director and
+Chief Executive Officer
+Chief Executive Officer
+Yang Jiping
+Lv Zhiren
+Elected by the 2020 Annual General
+Meeting
+Elected
+2021-01
+2018-01
+Independent Director
+2019-06
+External Supervisor
+Bank of Communications Co.,
+Ltd.
+Co., Ltd.
+2021-05
+Independent Director
+Shenwan Hongyuan Securities
+Professor and Doctoral Supervisor 2021-07
+Nanjing Audit University
+Chen Hanwen
+Committee
+Association
+2021-06
+2014-06
+Member of the Executive
+International Economic
+Economics
+2016-11
+Vice President
+Beijing Tri-Prime Gene
+Pharmaceutical Co., Ltd.
+China Business Executives
+Academy, Dalian
+Independent Director
+of University of International
+Business and Economics
+Xiamen Bank Co., Ltd.
+2021-07
+2018-01
+First-level Professor
+Huiyuan
+2021-07
+2017-05
+Distinguished Professor of
+the Accounting Department
+Chairman and Secretary
+to the Leading Party
+of University of International
+Business and Economics
+University of International
+Business and Economics
+International Business School
+2015-06
+Professor and Doctoral Tutor of
+International Business School
+2005-07
+Executive Director
+China Auditing Society
+2013-01
+Chair Professor
+2018-11
+2021-07
+Wang Xiangxi China Energy
+representative) and
+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.
+Important opinions
+and suggestions
+Meeting content
+Audit Committee
+2.
+27 December 2021
+20 August 2021
+Date
+In 2021, the Strategy Committee of the Board held 2 meetings by way of
+consideration in writing. All proposals at the meetings were approved and all
+members attended the meetings.
+The major duties of the Strategy Committee: to conduct research on the Company's
+development strategies and investment plans; to conduct research and provide
+consideration opinions to the Board of Directors on matters such as adjustment to
+the main business, negative list of investment projects, investment and financing,
+asset restructuring, transfer of property rights, capital operation and reform and
+reorganisation, which require decisions to be made by the Board of Directors; and
+other duties and powers authorised by the Board.
+Strategy Committee
+1.
+To consider the proposal on the formulation Agreed
+of Measures for the Administration of
+Strategic Planning of China Shenhua
+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:
+(II)
+112 China Shenhua Energy Company Limited
+Chen Hanwen (Chairman), Yuen Kwok Keung, Bai Chong-En
+Yuen Kwok Keung (Chairman), Chen Hanwen, Xu Mingjun
+Bai Chong-En (Chairman), Chen Hanwen, Xu Mingjun
+Yang Rongming, Wang Xingzhong
+Wang Xiangxi (Chairman), Jia Jinzhong
+Environment Committee
+Remuneration Committee
+Nomination Committee
+Safety, Health and
+The fifth session of the Board committees
+Audit Committee
+Strategy Committee
+As at the end of the reporting period, the Company has established five committees under
+the Board, and the details are as follows:
+Composition of the committees
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(1)
+Energy Company Limited (Trial)
+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.
+Expiry of term of
+office
+114 China Shenhua Energy Company Limited
+(1)
+21 April 2021
+To listen to the Company's report on the
+independent financial adviser's opinion letter
+on the Financial Services Agreement and
+KPMG's report on the 2020 management
+proposal
+the renewal of the external auditor for 2021,
+the changes in accounting policies, the
+external donation budget for 2021, etc.;
+To consider the proposals on the Company's Agreed
+financial report for the first quarter of 2021,
+Agreed. China Shenhua
+shall maintain the
+principles of fairness and
+full disclosure during
+the implementation of
+the Financial Services
+Agreement; and shall
+consider the future
+sustainable development
+and strategic planning
+of the Company while
+safeguarding the interests
+of minority shareholders
+when formulating profit
+distribution plans.
+To listen to the Company's report on the
+implementation of the continuing connected
+transaction agreement for 2020 and the
+annual audit work by the auditor KPMG;
+To review the internal audit report of the
+Company for 2020;
+To consider the proposals on the Company's
+2020 internal control audit report, 2020
+internal control evaluation report, 2020
+financial report, 2020 ESG report, 2020 profit
+distribution plan, the report of performance of
+duties of the Audit Committee of the Board
+for 2020, the key points of the Company's
+internal audit for 2021, the capital budget and
+debt financing plan for 2021, and the entering
+into the Financial Service Agreement for 2021
+to 2023 between the Company and China
+Energy Finance Co., Ltd.;
+To consider the proposal on the adjustment Agreed
+to the Company's investment plan for the
+year 2021
+(2)
+(2)
+To consider the proposals on the Company's 2020 Agreed
+financial report (draft), 2020 internal control
+evaluation report (draft), etc.
+Important opinions and
+suggestions
+(1)
+23 March 2021
+16 March 2021
+Meeting content
+Convening date
+In 2021, the Audit Committee convened 6 meetings. All proposals at the meetings
+were approved and all members attended all meetings in person.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 113
+(3)
+VI. THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD
+DURING THE REPORTING PERIOD
+The duties and performance of duties of the committees
+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
+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
+Executed
+General Meeting Subject Matter
+(IV) Implementation of resolutions passed at the general meetings by the Board
+Applicable ✓ Not applicable
+(III) Dissenting views of Directors on matters of the Company:
+For the attendance of independent Directors at Board meetings and general meetings,
+please refer to the section of "Performance of duties of the Directors".
+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
+For details of remuneration,
+please see the section headed
+"Significant Events" of this
+report
+Media Center Co., Ltd.
+2020 Annual
+General
+Meeting
+2021 Annual Report 111
+Meeting
+For details, please see the section
+headed "Significant Events" of
+this report
+Executed
+To approve the Company to enter into the Mutual
+2021 First
+Extraordinary
+General
+Class Meeting
+Executed
+To approve the general mandate of the Board to
+repurchase H Shares
+2021 First H
+Class Meeting
+Executed
+To approve the general mandate of the Board to
+repurchase H Shares
+2021 First A
+Shareholders
+Shareholders
+Executed
+General Meeting Subject Matter
+Status
+To approve the election of Yang Rongming as Non-
+executive Directors of the fifth session of the Board
+Executed
+of the Company
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Executed
+of the Company to RMB19,868,519,955 and the
+amendments to the Articles of Association of the
+Company
+To approve the general mandate of the Board to
+repurchase H Shares
+To approve the reduction of the registered capital
+(V) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE MAJOR
+ACQUISITION AND DISPOSAL OF ASSETS OF THE COMPANY
+There were no major acquisition and disposal of assets of the Company.
+(VI) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE SELF-
+ASSESSMENT REPORT ON INTERNAL CONTROL OF THE COMPANY
+The self-assessment report on internal control of the Company has truthfully reflected the
+establishment and implementation of the internal control of the Company and its internal
+control system is sound and effective.
+(VII) INDEPENDENT OPINION OF THE SUPERVISORY COMMITTEE ON THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE MEASURES ON INSIDER
+MANAGEMENT
+The insider management system of the Company is sound and comprehensive, effective in
+its implementation and able to keep all insider information confidential.
+122 China Shenhua Energy Company Limited
+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.
+VIII. EMPLOYEES
+(1)
+Employees as at the end of 2021
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Number of current employees of the headquarter of the Company (number
+of person)
+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.
+(II)
+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
+Quarterly Report of China
+Shenhua Energy Company
+Limited
+Passed
+unanimously
+223
+Proposal of the 2021 Third
+Quarterly Financial Report
+of China Shenhua Energy
+Company Limited
+Proposal of the 2021 Third
+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.
+Number of current employees of the branches/subsidiaries of the Company
+(number of person)
+Poll results
+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)
+Supervisory
+Committee
+584
+8,809
+2,619
+1,537
+12,811
+46,754
+of person
+Number
+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
+Management and administration
+Operation and repair
+Category of Function
+12,640
+77,872
+Function
+77,649
+of the
+Control of China Shenhua
+of the fifth
+All
+On-site
+Beijing
+23 April
+The fifth
+Poll results
+Supervisors Subject matter
+meeting
+Venue
+Date
+Meeting
+Attendance of
+Method of
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Passed
+unanimously
+unanimously
+Passed
+Supervisory Committee's
+Report of China Shenhua
+Energy Company Limited
+Proposal of the 2020
+Energy Company Limited
+4,758
+Assessment Report on Internal
+Energy Company Limited
+Passed
+unanimously
+Passed
+unanimously
+Passed
+unanimously
+Passed
+unanimously
+Proposal of the 2020
+Report of China Shenhua
+meeting
+session
+Proposal of the 2021 First
+Quarterly Financial Report
+unanimously
+meeting
+All
+On-site
+22 October Beijing
+The seventh
+Committee
+Energy Company Limited
+Passed
+unanimously
+Report of China Shenhua
+Supervisory
+of the
+Passed
+unanimously
+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
+of China Shenhua Energy
+Company Limited
+session
+of the fifth
+Passed
+77,872
+23 March 2021
+3,496
+116 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+3.
+Remuneration Committee
+The principal duties of the Remuneration Committee are to make recommendations
+to the Board on formulation of the remuneration plan or proposal for Directors,
+Supervisors, Chief Executive Officer and other senior management, including but not
+limited to the criteria, procedures and the major systems of performance assessment,
+key incentive and punishment plans and systems; to study the assessment standards
+for Directors, supervisors, Chief Executive Officer and other senior management, and
+examine the performance of duties by Directors, supervisors, Chief Executive Officer
+and other senior management of the Company and carry out annual performance
+assessment on them; to supervise the implementation of the remuneration system
+of the Company, review and approve the remuneration determined by performance in
+accordance with the Company's objectives determined by the Board; to exercise the
+following duties as authorized by the Board: to determine the specific remuneration
+of all the Executive Directors, Supervisors, Chief Executive Officer and other senior
+management, including non-monetary benefits, pension rights and compensation;
+to review and approve the payment of compensation to Executive Directors,
+supervisors, Chief Executive Officer and other senior management in relation to
+the loss or termination of their duties or appointment, so as to ensure that such
+compensation is determined in accordance with the related terms of the contract;
+to review and approve the compensation arrangements involved in the dismissal
+or removal of Directors due to their improper conduct, so as to ensure that such
+arrangements are determined in accordance with the related terms of the contract;
+to make recommendations to the Board on the remuneration of the Non-Executive
+Directors; to ensure that none of the Directors or any of their associates determines
+their own remunerations; and to execute other matters as authorized by the Board.
+In 2021, the Remuneration Committee held 1 meeting by way of consideration in
+writing. All proposals at the meeting were approved and all members attended the
+meeting. During the reporting period, the Remuneration Committee reviewed the
+remuneration management system of the Company and the remuneration level
+for Directors, Supervisors and senior management for the relevant period. The
+Remuneration Committee is of the view that the Company has established a relatively
+complete remuneration management system, which embodies the value concept of
+listed companies centered on economic benefits as well as the political, social and
+economic responsibilities of state-owned holding companies. The Remuneration
+Committee agrees to various remuneration management system of the Company.
+Date
+15 March 2021
+Meeting content
+Important opinions
+and suggestions
+To consider proposals on the remuneration Agreed
+of Directors, Supervisors and senior
+management of the Company for the
+year 2020 and the performance of duties
+The Audit Committee discussed separately with the external auditors and no
+inconsistency was found in the briefings by the management.
+of the Remuneration Committee of the
+Board for the year 2020
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+4.
+Nomination Committee
+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.
+In 2021, the Nomination Committee held 3 meetings by way of consideration in
+writing. All proposals at the meetings were approved and all members attended all
+meetings.
+Date
+23 March 2021
+23 August 2021
+27 December 2021
+118 China Shenhua Energy Company Limited
+Meeting content
+To consider the proposals on the
+appointment of Li Zhiming as Deputy
+General Manager of the Company and
+the nomination of Yang Rongming as
+the candidate for Non-executive Director
+of the fifth session of the Board of the
+Company
+Important opinions
+and suggestions
+2021 Annual Report 117
+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.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Convening date
+18 June 2021
+24 August 2021
+(1)
+Meeting content
+To review the Company's interim review work plan
+for the year 2021
+To consider the proposals on the Company's
+semi-annual financial report for 2021, the
+signing of the Mutual Coal Supply Agreement
+for 2021 to 2023 and the Mutual Supplies
+and Services Agreement for 2021 to 2023,
+entered into between the Company and
+China Energy, participating in the investment
+in the establishment of the Guoneng Green
+and Low-Carbon Development Investment
+Fund, and the work plan for internal control
+evaluation for 2021;
+Important opinions and
+suggestions
+Agreed
+Agreed. It is recommended
+that China Shenhua
+establish a management
+system related to
+fund investments to
+effectively prevent risks
+in fund operations.
+(2)
+To review the internal audit report of the
+Company for the first half of 2021;
+(3)
+18 October 2021
+(1)
+(2)
+To listen to KPMG's report on the interim
+review
+To consider the proposals on the Company's
+financial report for the third quarter of 2021
+and the capital increase to China Energy
+Xinshuo Railway Co., Ltd.;
+To listen to 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
+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.
+2021 Annual Report 115
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+The Audit Committee has performed required procedures for the preparation of the
+2021 annual report and internal control report of the Company:
+(1)
+(2)
+(3)
+(4)
+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.
+Agreed
+Number
+of person
+To consider the proposal on the nomination Agreed
+To consider the proposals on the
+meeting
+of the fifth
+session
+of the
+Supervisory
+Committee
+120
+China Shenhua Energy Company Limited
+124 China Shenhua Energy Company Limited
+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.
+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 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.
+Formulation, implementation or adjustment of cash dividend policy
+(I)
+IX. PROFIT DISTRIBUTION POLICY DURING THE REPORTING PERIOD
+All
+107.24 million hours
+RMB4,537 million
+(IV) Outsourced Work in 2021
+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.
+(III) Training program
+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.
+Remuneration policy
+(II)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 123
+77,872
+12,949
+8,707
+20,354
+32,366
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+On-site
+26 March Beijing
+The fourth
+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
+Agreed
+5.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Safety, Health and Environment Committee
+The principal duties of the Safety, Health and Environment Committee are to
+supervise the implementation of safety, health, environmental protection and ESG
+working plans of the Company; to make recommendations to the Board or the Chief
+Executive Officer on material issues in respect of safety, health, environmental
+protection and ESG working of the Company, including but not limited to employee
+development, climate change, biodiversity and water resources management; to
+inquire into the material incidents and responsibilities regarding the Company's
+production, operations, property assets, staff or other facilities, as well as to review
+and supervise the resolution of such incidents; to review the Company's annual ESG
+report; to review the Statement of the Board disclosed in the Company's annual
+ESG report; to supervise and review the identification, evaluation and management
+process of the matters related to the Company's ESG activities and the progress of
+related objectives; and other issues as authorized by the Board.
+In 2021, the Safety, Health and Environment Committee held 2 meetings by way
+of consideration in writing. All proposals at the meetings were approved and all
+members attended all meetings.
+Date
+24 May 2021
+Meeting content
+To consider the proposal on the
+amendments to the Rules of Procedures
+of Meetings of the Safety, Health and
+Environmental Committee of the Board
+of China Shenhua Energy Company
+Limited and the proposal on the 2020
+ESG Report of China Shenhua Energy
+Company Limited
+Important opinions
+and suggestions
+Agreed
+To consider the proposals on ESG work of Agreed
+the Company and key points of work for
+the year 2021
+2021 Annual Report 119
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+VII. SUPERVISORY COMMITTEE'S REPORT
+The Supervisory Committee of the Company had, based on the attitude of being responsible to all
+shareholders, performed their supervisory duties faithfully and carried out their work proactively
+and effectively to protect the lawful interests of the Company and its shareholders in accordance
+with the relevant requirements under the Company Law of the People's Republic of China and the
+Articles of Association.
+(1)
+PERFORMANCE OF DUTIES OF THE SUPERVISORY COMMITTEE
+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.
+In 2021, the Supervisory Committee of the Company held four meetings in total.
+Meeting
+Date
+Venue
+Method of
+meeting
+Attendance of
+Supervisors Subject matter
+of members of the Safety, Health and
+Environment Committee of the fifth
+session of the Board
+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
+418
+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:
+3,675
+22.32
+950
+8¾× 838
+Baotou Coal Chemical
+Ltd.
+Power Generation Co., NOX
+Guoneng Shenfu (Shishi) SO,
+(%)
+1,944
+hours
+(mg/Nm3)
+(tonnes)
+facilities
+emissions
+Discharge method
+prevention
+Excessive
+Operation rate
+of pollution
+Number of
+discharge Distribution of
+ports discharge ports
+(tonne/year)
+45.76
+3,675
+2 Each unit has one
+discharge port.
+45.43
+505
+NOX
+0
+Organised continuous or
+2 The flue gas of the
+2,810.22
+16.54
+239
+100
+3
+309
+4.41
+186
+Soot
+99.91
+0
+discharge
+100
+0
+Organised continuous
+Emissions
+concentration
+Emissions
+Average
+emission Total approved
+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
+100
+1,451.39
+1,596
+4,780
+Total
+Major
+pollutant
+Company
+Section VI Environmental and Social Responsibility (Continued)
+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
+2,840
+NOX
+6 Units 1 and 2 share
+17.12
+Soot
+5.92
+428.75
+100
+0
+Organised continuous
+1 The units share one
+discharge port.
+1,320
+81.91
+381
+2,427
+31.86
+149
+100
+0
+521.86
+1.76
+Soot
+discharge
+100
+0
+Organised continuous
+4 Each unit has one
+discharge port.
+2,591.87
+discharge
+23.04
+11
+Soot
+72.6
+discharge
+97.91
+0
+Organised continuous
+2 Each unit has one
+discharge port.
+1,500
+41.23
+1,000
+20.36
+716
+ផទី៩
+Soot
+1,428
+NOX
+SO,
+100
+0
+383
+9.74
+44
+99.88
+480
+957
+1,814.31
+Power Co., Ltd.
+Guoneng Chongqing
+Wanzhou Electric
+NO
+Power Plant
+Sichuan Energy Jiangyou SO,
+SO,
+Dingzhou Power
+NO
+Cangdong Power
+off gas of the sulfur
+recovery facilities.
+port is set for the
+a separate discharge
+discharge port, and
+100
+100
+100
+888
+0
+0
+intermittent discharge
+thermoelectric boiler
+system shares one
+Huizhou Thermal
+NOX
+Mengjin Power
+Shendong Power
+10.6
+483
+100
+0
+99.92
+0
+100
+0
+O O O
+292.06
+1.68
+Soot
+Organised continuous
+discharge
+4 Each unit has one
+discharge port.
+2,632.36
+22.3
+1,024
+1,842.65
+10.74
+495
+×3× 838 833 832 233 234 235
+Dianta Power Plant of
+3.74
+Soot
+100
+(1)
+Pursuant to the Articles of Association:
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+6.
+5.
+4.
+126 China Shenhua Energy Company Limited
+In accordance with the preliminary arrangement of profit distribution plan for year
+2021 and the 2021 annual general meeting of the Company, the final dividend for
+the year 2021 for the Company's H shareholders is estimated to be distributed on or
+about 24 August 2022.
+The final dividend for the year 2021, which is denominated and declared in RMB,
+will be paid in RMB to holders of the Company's A shares, including holders of the
+Company's A shares through the Northbound Trading Link of the Shanghai-Hong
+Kong Stock Connect, hereinafter referred to as the "Northbound Shareholders", and
+holders of the Company's H shares through the Southbound Trading Link (including
+Shanghai and Shenzhen markets, hereinafter referred to as the "Southbound
+Shareholders"). Dividends to holders of the Company's H shares, except the
+Southbound Shareholders, are paid in HKD. The dividend paid in HKD is calculated
+according to the exchange rate based on the average benchmark rate of RMB against
+HKD, as published by the Bank of China five business days preceding the date of
+declaration of such dividend.
+The above final dividend plan for the year 2021 is in compliance with the requirement
+of the Articles of Association and endorsed by the Independent Directors and
+approved by the Board. When recommending the plan for the year 2021, the Board
+has attended to and considered the opinions and concerns of the shareholders of
+the Company. The Company will hold the 2021 annual general meeting on Friday, 24
+June 2022 to consider the relevant resolutions, including the above dividend plans as
+proposed by the Board.
+3.
+2.
+57.9
+43,250
+25,061
+12.6
+Final dividend for the year 2019
+91.8
+39,170
+35,962
+18.1
+(2)
+Final dividend for the year 2020
+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;
+The arrangement of temporary closure of the register of members of H shares of
+the Company:
+Friday, 1 July
+2022
+for the year 2021
+Entitled to the final dividend
+2
+Limited
+Investor Services
+2022
+Hong Kong
+Computershare
+Monday, 20 June
+4:30 p.m. on
+Tuesday, 21 June Friday, 24 June
+2022
+2022
+Attending and voting at
+the 2021 annual general
+meeting
+1
+The Company's
+share registrar
+for H shares
+The last day
+for registering
+members
+Last Day
+(inclusive)
+First Day
+(inclusive)
+Corresponding Rights
+No.
+Temporary closure of the register of members
+According to the relevant regulations of China Securities Depository and
+Clearing Corporation Limited Shanghai Branch and market practice adopted for
+final dividend distribution for A shares, the Company will publish a separate
+announcement on implementation of equity distribution in respect of the
+distribution of final dividend for the year 2021 to holders of A shares after the
+2021 annual general meeting to determine the record date, ex-rights date and
+dividend distribution date for the distribution of final dividend for the year 2021
+to holders of A shares.
+Friday, 8 July
+2022
+100.4
+50,466
+Profit distribution scheme/plan for the recent three years
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2021 Annual Report 125
+The Board proposed the payment of a final dividend in cash of RMB2.54 per share
+(inclusive of tax) for the year 2021 based on the total share capital registered on the
+equity registration date of implementing equity distribution. According to the total
+share capital of 19,868,519,955 shares of the Company as at 31 December 2021,
+the final dividend totals RMB50,466 million (inclusive of tax), accounting for 97.8%
+of the profit for the year attributable to equity holders of the Company under the
+International Financial Reporting Standards, or 100.4% of the net profit for the year
+attributable to equity holders of the Company under the China Accounting Standards
+for Business Enterprises.
+Net profit attributable to equity holders of the Company for 2021 under the China
+Accounting Standards for Business Enterprises amounted to RMB50,269 million,
+with basic earnings per share of RMB2.530/share; profit attributable to equity holders
+of the Company for 2021 under the International Financial Reporting Standards
+amounted to RMB51,607 million, with basic earnings per share of RMB2.597/share.
+As at 31 December 2021, the profit available for distribution to shareholders of the
+Company under the China Accounting Standards for Business Enterprises amounted
+to RMB179,811 million.
+Yes
+Cash dividend scheme for 2021
+1.
+(III) Cash dividend scheme/plan
+adequate opportunities to express the opinions and
+concerns, and whether their legitimate rights are
+fully protected
+Yes
+Whether Independent Directors have performed their
+duties and responsibilities and played their full role
+Whether small and medium shareholders have
+mechanism are complete
+Yes
+Whether the relevant decision procedures and
+Yes
+Yes
+Whether the criteria and percentage of dividends are
+clear and unambiguous
+Whether it complies with the provisions of the Articles
+of Association or the requirements of the proposals
+of the general meeting
+(II) Special description for cash dividend policy
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(including the reporting period)
+50,269
+Amount of
+attributable
+25.4
+(Proposed)
+Final dividend for the year 2021
+%
+d financial
+statements
+the consolidate
+Percentage to
+the net profit
+attributable
+to equity holders
+of the Company in
+RMB million
+RMB million
+RMB
+Business Enterprises
+(inclusive of tax)
+s (inclusive of tax)
+cash dividend
+per 10 share
+Dividend
+Accounting
+Standards for
+with China
+in accordance
+the consolidated
+financial statements
+of the respective
+dividend year
+to equity holders
+of the Company in
+Net profit
+2.37
+4:30 p.m. on
+Monday, 30 June
+2022
+Excessive
+Operation rate
+of pollution
+Number of
+discharge Distribution of
+ports discharge ports
+Average
+emission Total approved
+concentration Emissions
+Total
+Emissions
+Major
+pollutant
+Company
+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).
+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
+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)
+ENVIRONMENTAL INFORMATION
+Section VI Environmental and Social Responsibility
+I.
+132 China Shenhua Energy Company Limited
+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.
+XV. RECTIFICATION OVER SELF-EXAMINATION PROBLEMS IN TARGETED
+CAMPAIGN ON GOVERNANCE OF LISTED COMPANIES
+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.
+prevention
+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.
+Discharge method
+facilities
+0
+100
+Organised continuous
+discharge
+4 Each unit has one
+discharge port.
+3,200
+97.07
+1,626
+3,200
+34.79
+583
+838 38 838
+SO,
+Taishan Power
+Jinjie Energy (Power Plant) SO,
+NO
+Power Plant of Guoneng SO₂
+Yili Energy Co., Ltd.
+(%)
+hours
+(tonne/year)
+(mg/Nm3)
+(tonnes)
+emissions
+Computershare
+XIV. DESCRIPTION OF SELF-ASSESSMENT REPORT ON INTERNAL CONTROL AND
+AUDIT REPORT ON INTERNAL CONTROL
+Section V Corporate Governance and
+Applicable ✓ Not applicable
+X. THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY
+AND THEIR IMPACTS
+Pursuant to the Articles of Association, the Company is entitled to forfeit the
+dividends which have been declared for more than six years but yet to be claimed,
+subject to compliance with relevant Chinese laws and administrative regulations.
+Shareholders are advised to collect the dividends distributed by the Company in a
+timely manner.
+The Company assumes no responsibility arising from any delayed or inaccurate
+determination of the status of the shareholders or any dispute over the mechanism
+of withholding. Shareholders should consult their tax advisers regarding China's
+mainland. Hong Kong and other tax implications of owning and disposing of the
+Company's H shares.
+According to the relevant provisions under the "Notice of MOF, SAT and CSRC
+on the Tax Policies for Shanghai-Hong Kong Stock Connect Pilot Programme" (Cai
+Shui [2014] No. 81) and the "Notice of MOF, SAT and CSRC on the Tax Policies for
+Shenzhen-Hong Kong Stock Connect Pilot Programme" (Cai Shui [2016] No. 127)
+under the Ministry of Finance, State Administration of Taxation of China and CSRC,
+the Company shall withhold individual income tax at the rate of 20% with respect to
+dividends received by individual investors in China's mainland for investing in H-shares
+listed on the HKEx through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong
+Kong Stock Connect. The dividends and bonuses earned by securities investment
+funds in China's mainland investing in shares listed on the HKEx through Shanghai-
+Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect shall be withheld
+on a individual income tax basis. The Company is not required to withhold income tax
+on dividends derived by enterprise investors in China's mainland, and such enterprises
+shall report the income and make tax payment by themselves. The record date and
+the relevant arrangements of dividend distribution for Southbound Shareholders are
+the same as that of the Company's shareholders of H shares.
+10.
+9.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+128 China Shenhua Energy Company Limited
+With respect to the Southbound Shareholders, according to the relevant requirements
+of China Securities Depository and Clearing Corporation Limited, China Securities
+Depository and Clearing Corporation Limited Shanghai Branch and Shenzhen Branch
+shall receive cash dividends distributed by the Company as the nominee of the
+Southbound Shareholders for Shanghai market and Shenzhen market, respectively
+and distribute such cash dividends to the relevant Southbound Shareholders through
+its depository and clearing system.
+The Company shall use the registered address (hereinafter referred to as "registered
+address") as recorded in the register of members of H shares on 8 July 2022 as
+the criterion in determining the residence of the individual shareholders of H shares
+who are entitled to receive the final dividend for the year 2021 of the Company,
+and withhold and pay individual income tax accordingly. If the residence of the
+individual shareholders of H shares is inconsistent with the registered address, such
+shareholders shall notify the Company's share registrar for H shares at or before
+4:30 p.m. on 30 June 2022 with the relevant evidence at Computershare Hong Kong
+Investor Services Limited of 17M Floor, Hopewell Centre, 183 Queen's Road East,
+Wan Chai, Hong Kong.
+If the individual shareholders of the H shares who are Hong Kong or Macau residents
+or residents of the countries which have an agreed tax rate of 10% with China,
+the Company shall withhold individual income tax at a rate of 10%. If the individual
+shareholders of the H shares are residents of countries which have an agreed tax rate
+of less than 10% with China, the Company shall withhold individual income tax on
+behalf of them in accordance with relevant provisions required by the Announcement
+of the State Taxation Administration in relation to the Administrative Measures on
+Preferential Treatment Entitled by Non-resident Taxpayers under Tax Treaties (No.
+35 Announcement of the State Taxation Administration in 2019). If the individual
+shareholders of the H shares are residents of countries which have an agreed tax rate
+of over 10% but less than 20% with China, the Company shall withhold the individual
+income tax on behalf of them at the agreed actual rate. In case the individual
+shareholders of the H shares are residents of countries which have not entered into
+any tax agreement with China, or the agreed tax rate with China is 20% or otherwise,
+the Company shall withhold the individual income tax at a rate of 20%.
+According to Guo Shui Han [2011] No. 348 issued by the State Taxation Administration,
+the Company shall distribute cash dividends to the individual shareholders whose names
+appear on the register of members for H shares, and has obligations to withhold and
+pay individual income tax for dividend payable. The individual shareholders of H shares
+are entitled to the relevant preferential tax treatment pursuant to the provisions in the
+tax agreements entered into between their countries of residence and China or the tax
+arrangements between China's mainland and Hong Kong (Macau).
+8.
+7.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+127
+2021 Annual Report
+In accordance with the provision of Enterprise Income Tax Law of the PRC and its
+implementation regulations and the State Taxation Administration of the PRC (Guo
+Shui Han [2008] No. 897), the Company is required to withhold and pay enterprise
+income tax at the rate of 10% on behalf of the non-resident enterprise shareholders
+whose names appear on the register of members for H shares of the Company when
+distributing final dividends. The Company shall withhold and pay enterprise income tax
+in respect of the final dividend for the year 2021 of the Company for the non-resident
+enterprise shareholders whose name would appear on the register of members for H
+shares of the Company on 8 July 2022.
+Hong Kong
+Investor Services
+Limited
+XI. Appraisal Mechanism for Senior Management, and the Establishment and
+Implementation of the Incentive Mechanism during the Reporting Period
+Corporate Governance Report (Continued)
+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.
+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 131
+The Company exercises effective control over its subsidiaries in major areas and key areas
+through the establishment of rules and regulations, supervision and evaluation, and information
+technology construction. In terms of management and control structure according to the
+provisions of the Articles of Association of its subsidiaries, the Company reviews resolutions
+involving the appointment and removal and evaluation of personnel, the appointment of Directors,
+Supervisors and senior management and the establishment of organization to be submitted to
+the general meeting, the board of Directors and the Supervisory Committee of the subsidiaries
+for consideration, and exercised nominations rights and voting rights in accordance with the
+provisions of the Articles of Association of the subsidiaries. In terms of finance, the Company
+has established an integrated and efficient financial information system and formulated relevant
+financial accounting systems to standardize the accounting of its subsidiaries and branches and
+promote the improvement of the quality of accounting information. In terms of business, the
+Company fully promotes the digital and intelligent control, realizes integrated business centralized
+control through the production and operation collaborative dispatching information system, and
+strengthens the efficient collaboration among various subsidiaries and business segments. In
+terms of internal control, the Company inspects and evaluates the effectiveness of the internal
+control of its subsidiaries, and supervises and inspects the rectification of internal control
+deficiencies. In terms of related transaction, the Company formulates the management system
+and defines the procedures of management, review and approval, supervision and inspection of
+related transactions of its subsidies. In terms of information disclosure, the Company formulates
+a system in relation to information disclosure, internal report for material Matters and inside
+information management to standardize the information disclosure work standards of the Group,
+and clarifies the organization and duties of information disclosure work, to ensure that information
+disclosure is in compliance with the law.
+XIII. MANAGEMENT CONTROL OVER SUBSIDIARIES
+Not applicable
+Applicable
+Material defects in the internal control during the reporting period:
+Regarding the treatment and publishing of inside information, the Company has formulated
+internal systems such as the Administrative Measures for the Insider Information and Insider
+Registration and the Administrative Measures for Information Disclosure and Internal Report for
+Material Matters, which stipulated, among others, the scope of insider information and insiders,
+reporting process, registration and filing, and prohibited behaviors. The scope of insiders is under
+strict control so as to eliminate the risk of insider information leakage.
+As presented in the 2021 Report on Internal Control Evaluation of the Board, no material defects
+were found in the internal control of financial reporting as at the base date of the Report on
+Internal Control Evaluation, pursuant to the identification of material defects in the internal
+control over the financial reporting of the Company. The Board is of the opinion that the Company
+has maintained effective internal control over its financial reporting in all material aspects in
+accordance with the requirements under the Enterprise Internal Control Normative System and
+relevant regulations and its supplementary guidelines as well as other regulatory requirements
+on internal control. Based on the identification of material defects in the internal control over
+nonfinancial reporting of the Company, no material defects were identified by the Company in the
+internal control over non-financial reporting as at the base date of the Report on Internal Control
+Evaluation. Nothing that would affect the evaluation result of the effectiveness of internal control
+occurred from the base date of the Report on Internal Control Evaluation to the date of issuance
+of the Report on Internal Control Evaluation.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+130 China Shenhua Energy Company Limited
+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 2021 Work Plan for Internal Control Evaluation of the Company was considered and approved by
+the Audit Committee under the Board, and the 2021 Work Report on Internal Control Evaluation was
+considered and approved by the Board. The Board and the Audit Committee of the Company are of the
+view that such inspection and supervision mechanism is able to evaluate the effectiveness of internal
+control and risk management operation of the Company.
+An internal control supervision and inspection mechanism was formed to conduct evaluation on
+internal control on annual basis. Procedures for internal control evaluation include: formulating
+a proposal for internal control evaluation, establishing a working committee of internal control
+inspection, conducting self-evaluation on internal control, conducting evaluation on internal
+control by inspectors, communicating and identifying deficiencies in internal control, rectifying
+deficiencies in internal control and preparing report on internal control. The Company has
+evaluated the effectiveness of internal control for 2021 in accordance with the aforementioned
+procedures.
+The objectives of the internal control of the Company are to provide reasonable assurance on
+lawful operation and management, asset safety and the truthfulness and completeness of
+financial reports and relevant information, to enhance operation efficiency and effectiveness, and
+to facilitate the implementation of development strategies. As there are inherent limitations on
+internal control, assurance can only be provided for the above objectives to a certain reasonable
+extent. In addition, there are certain risks in predicting the effectiveness of future internal control
+based on the results of assessment on internal control given to the inappropriate internal control
+or the loosened level of compliance with policies and procedures on internal control that may be
+resulted by changes in different circumstances.
+It is the responsibility of the Board of the Company to establish a sound internal control system
+effectively implement it and evaluate its effectiveness, and make bona fide disclosure on the
+Self-assessment Report on Internal Control in accordance with the relevant national laws and
+regulations and the Enterprise Internal Control Normative System. The Supervisory Committee is
+responsible for the supervision on the internal control system established and implemented by the
+Board, while the management of the Company is responsible for the organization and guidance of
+the daily operation of internal control within the Company.
+The Company has established a risk-oriented internal control system. The internal control and risk
+management procedures of the Company include risk assessment and reporting at the beginning
+of the year, quarterly major risk monitoring, daily system risk review and specialized supervision
+and inspection on internal control, and annual internal control evaluation, forming an integrated
+closed-loop management system. Also, a hierarchical work organizational structure comprising
+the Board and the Audit Committee, the functional departments of the headquarters and the
+subsidiaries and branches of the Company was established to safeguard the effective operation of
+internal control and risk management. The Board is responsible for risk management and internal
+monitoring and control systems, and is accountable for reviewing the effectiveness of such
+systems. The Board conducts review on risk management and internal monitoring and control
+systems once a year. The Board considers that the risk management and internal monitoring and
+control systems of the Group were effectively operated in 2021.
+XII. ESTABLISHMENT AND IMPLEMENTATION OF INTERNAL CONTROL SYSTEM
+DURING THE REPORTING PERIOD
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+2021 Annual Report 129
+XII. EVALUATION MECHANISM FOR THE SENIOR MANAGEMENT DURING THE
+REPORTING PERIOD, AND THE ESTABLISHMENT AND IMPLEMENTATION OF
+INCENTIVE SCHEME
+200
+100
+100
+294.80
+2.77
+23
+Soot
+99.86
+3
+discharge
+100
+100
+0
+1 The units share one
+discharge port.
+1,474.02
+30.57
+319
+NOX
+1,031.81
+15.22
+156
+Organised continuous
+SO,
+Shouguang Power
+13.4
+0
+China Shenhua Energy Company Limited
+100
+100
+888
+192.50
+1.25
+Soot
+38
+0
+0
+Organised continuous
+2 Each unit has one
+discharge port.
+1,925
+31.2
+966
+NOX
+1,347.50
+discharge
+100
+SO,
+100
+1.3
+22
+100
+0
+discharge
+0
+1 The units share one
+discharge port.
+716.46
+71.65
+38.91
+ន8
+Soot
+NOX
+501.52
+26.9
+454
+100
+SO,
+660
+0
+Organised continuous
+2 Each unit has one
+discharge port.
+308
+888
+0
+discharge
+0
+Organised continuous
+៩៖
+2.65
+1,542
+Soot
+810
+NOX
+1,079
+22.18
+437
+SO,
+100
+100
+40.07
+888
+30 June 2025
+17 September 2026 Reapply
+Change
+18 September
+2021
+27 May 2020
+Section VI Environmental and Social Responsibility (Continued)
+27 June 2020
+Company Name
+2021 Annual Report 137
+name
+26 May 2025
+Change of
+22 June 2025
+23 June 2020
+Change
+31 May 2025
+20 April 2020
+Change
+Drainage Permit Number
+Company
+Issuing Authority
+NO
+Expiry Date
+Renewal
+Liuzhou Power
+SO,
+Guoneng Shenfu (Longyan) SO,
+Power Generation Co., NO
+Ltd.
+Shendong Power Daliuta SO,
+Thermal Power Plant NO
+Shendong Power
+Guojiawan Power Plant NO
+Shenmu Power
+SO,
+Bayan Nur Energy
+NO
+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
+Description
+of License
+Date of
+Acquisition
+12 June 2025
+COD
+Erdos Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Jiangmen Ecological
+Environment Bureau
+Quanzhou Ecological
+Environment Bureau
+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.
+discharge
+0100
+Continuous or
+intermittent
+treatment plant for the
+main shaft
+Outlet of well water
+Section VI Environmental and Social Responsibility (Continued)
+1
+forced outlet
+337
+4.31
+27.26
+100
+Daliuta Coal Mine of
+Shendong Coal
+discharge
+main shaft; Zaoshaogou
+forced outlet; Hezegou
+intermittent
+54.45
+2.
+3.
+Construction and operation of pollution prevention and control facilities
+Description
+of License
+Changes in
+2021
+Expiry Date
+Date of
+Acquisition
+Issuing Authority
+Drainage Permit Number
+Baotou Ecological
+Environment Bureau
+Cangzhou Ecological
+Environment Bureau
+911309117356054492001P
+911502000783949434001P
+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.
+12 June 2020
+0
+Shouguang Power
+5.45
+Change
+22 June 2025
+24 June 2020
+Renewal
+12 June 2025
+13 June 2020
+Renewal
+24 October 2025
+8 July 2020
+4 December 2020 5 years
+Renewal
+Renewal
+26 May 2025
+Change
+16 January 2027
+17 January 2022
+26 May 2020
+Luoyang Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Weifang Ecological
+Environment Bureau
+Jiujiang Ecological
+Environment Bureau
+Erdos Ecological
+Environment Bureau
+Quanzhou Ecological
+Environment Bureau
+Mianyang Ecological
+Environment Bureau
+Power Co., Ltd.
+Guoneng Jiangyou Thermal 91510781749716818XL001P
+Power Co., Ltd.
+7 September 2021 6 September 2026
+Change of
+Company
+name
+182
+172
+43.21
+260
+1 The units share one
+discharge port.
+Organised continuous
+0
+100
+discharge
+0
+99.95
+Soot
+6
+1.75
+0
+100
+122
+21 June 2025
+Administrative Approval 22 June 2020
+914502230790828611001P
+Liuzhou Power
+91350582766182784B001P
+348
+Fujian Jinjiang Thermal
+Zhunge'er Power
+91500101050356427B002Q
+Wanzhou Electric Power
+Co., Ltd.
+91500101050356427B001P
+Guoneng Chongqing
+4 December 2020 5 years
+Renewal
+20 June 2025
+110.4
+2,400
+Huizhou Thermal
+352
+1,200
+2 Each unit has one
+discharge port.
+Organised continuous
+0
+100
+discharge
+19
+99.86
+Soot
+32.41
+91441300669838702N001P
+Chongqing Wanzhou
+District Ecological
+Environment Bureau
+Chongqing Wanzhou
+Ecological
+Environment Bureau
+Huizhou Ecological
+Environment Bureau
+10 March 2020
+91360429573617139E001P
+916108069239349286001P
+91370783695434656X001P
+Jiujiang Power
+treatment plant for the
+Shendong Power
+Dianta Power Plant of
+91410000674137417P001P
+Mengjin Power
+name
+Company
+name
+Change of
+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
+9115000070125242XH001P
+80
+Section VI Environmental and Social Responsibility (Continued)
+0
+2220
+0.55
+8
+Soot
+28.59
+421
+2.88
+42
+SO,
+420
+100
+100
+0
+13.52
+2
+0.2
+20
+discharge
+100
+Organised continuous
+ㅎㅎㅎ
+600
+1 The units share one
+discharge port.
+Organised continuous
+discharge
+2
+Organised continuous
+1 The units share one
+discharge port.
+270
+27.43
+77
+189
+9.06
+274
+Soot
+NOX
+100
+100
+888
+0
+120
+3
+discharge
+100
+0
+1 The units share one
+discharge port.
+3
+67.6
+27
+888
+0
+559
+2.89
+30
+Soot
+0
+discharge
+0
+100
+Organised continuous
+1,863.60
+37.63
+390
+3,727.20
+14.26
+154
+×3× × 38 233 832 233 234 235 835
+Yongzhou Power
+Shengli Energy
+1 The units share one
+discharge port.
+100
+100
+252
+47.32
+10.15
+122
+Soot
+100
+1
+360
+3.11
+30
+Soot
+99.45
+discharge
+100
+2
+Organised continuous
+1 The units share one
+discharge port.
+839
+42.92
+529
+358
+20.41
+22.67
+100
+99.5
+0
+emissions
+Discharge method
+prevention
+Excessive
+Distribution of
+discharge ports
+Number of
+Emissions discharge ports
+concentration
+Major pollutant Emissions
+Company
+facilities
+Operation rate
+of pollution
+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:
+16.6
+2021 Annual Report 135
+100
+110
+1.2
+Total
+approved
+tonnes
+mg/Nm³
+tonne/year
+Continuous or
+Outlet of well water
+3
+54
+6.54
+141.41
+00
+COD
+Jinjie Energy (coal mine)
+10
+100
+0
+One external sewage outlet Continuous discharge
+1
+150
+32.7
+107.36
+COD
+Baotou Coal Chemical
+%
+hours.
+4
+6.66
+Soot
+0
+17.5
+SO,
+99.65
+99.65
+99.65
+730
+17
+Organised continuous
+discharge
+1 There is one discharge
+port at the coke oven
+chimney.
+1,016.4
+6.66
+Soot
+750
+266.68
+303
+75
+18.93
+21
+SO,
+100
+8
+NOX
+217
+1,271
+100
+0
+Organised continuous
+discharge
+2 Each unit has one
+discharge port.
+1080
+35.5
+107
+NOX
+895
+18.53
+SO,
+100
+100
+100
+흐흐흐
+290.4
+2.7
+7
+Soot
+Organised continuous
+discharge
+2 Each unit has one
+discharge port.
+100
+100
+Co., Ltd.
+100
+Longyan Xinluo Ecological Environment 350802-2020-036-L
+Bureau
+Shenmu Branch of Yulin Ecological
+Environment Bureau
+Fugu Branch of Yulin Ecological
+Environment Bureau
+Shenmu Branch of Yulin Ecological
+Environment Bureau
+610821-2021-136-M
+Environmental Protection Bureau
+610822-2018-053-M
+Urad Zhongqi Environmental Protection 150824-2020-07-M
+Bureau
+Shenmu Environmental Protection
+Bureau
+610821-2019-012-L
+2021 Annual Report
+139
+Section VI Environmental and Social Responsibility (Continued)
+5.
+610821-2021-050L
+6.
+Ecological Environment Bureau
+Quanzhou Jinjiang Ecological
+Environment Bureau
+Mianyang Jiangyou Ecological
+Environment Bureau
+Liuzhou Luzhai Ecological and
+510781-2021-15-M
+Daliuta Coal Mine of Shendong Coal
+139001-2019-087-M
+510781-2021-15-M
+500102021070005
+Environment Bureau
+Huizhou Ecological Environment Bureau 441301-2020-036-H
+Mengjin Branch of Luoyang Ecological
+410322-2021-186-M
+Environment Bureau
+Shenmu Branch of Yulin Ecological
+450223-2020-012-M
+610821-2021-066L
+Shouguang Branch of Weifang
+370783-2019-224M
+Ecological Environment Bureau
+Jiujiang Hukou Ecological Environment
+360429-2019-012-M
+Bureau
+Zhunge'er Banner Branch of Erdos
+150622-2021-195-L
+350582-2019-059-M
+Environment Bureau
+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
+)) 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.
+0
+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.
+140 China Shenhua Energy Company Limited
+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
+0
+Date
+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
+Dong Huan Ze Gai Zi [2021]
+No. 2
+10
+Shenshuo Railway Branch
+Penalty No.
+97.95
+5,860.64
+Noise
+Administrative penalties for environmental problems during the reporting period
+China Shenhua Energy Company Limited
+Unit Name
+Date
+Penalty No.
+Fine
+Amount Reason for penalty
+RMB0,000
+7.
+Jinjie Power
+27 August
+2021
+Shan K Shen Mu Huan Fa
+[2021] 139
+1
+Part of the gangue in the
+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
+Bayan Nur Energy
+Shenmu Power
+Shendong Power Guojiawan Power
+Plant
+Shendong Power Daliuta Thermal
+Power Plant
+30 June 2020
+18 June 2025
+Renewal
+21 December 2020 21 December 2025 Change
+2 July 2021
+1 July 2026
+Newly acquired
+28 October 2021
+27 October 2026
+Renewal
+Newly acquired
+20 July 2023
+Change
+12 July 2023
+Change
+29 June 2020
+30 June 2025
+Change of
+Environment Bureau
+Company
+21 July 2020
+23 July 2020
+26 May 2025
+26 May 2020
+Yulin Ecological
+Environment
+Protection Bureau
+Yulin Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Bayan Nur Ecological
+Environment Bureau
+Xilin Gol League
+Ecological
+Environment Bureau
+Yongzhou Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Yulin Ecological
+Environment Bureau
+Renewal
+Bureau of Liuzhou
+Longyan Ecological
+Ltd.
+Shendong Power Daliuta
+Thermal Power Plant
+91610000710924961H001P
+Shendong Power Guojiawan 916108226879560162001P
+Power Plant
+91610806758848611Y001P
+Guoneng Shenfu (Longyan) 91350800665064105M001P
+Power Generation Co.,
+Shenmu Power
+91150824566931138J001P
+Bayan Nur Energy
+Shengli Energy
+91152500664096746A
+Yongzhou Power
+Daliuta Coal Mine of
+Shendong Coal
+91610821770043971N013V
+91610821770043971N014V
+91431100064229496R001R
+name
+9 March 2021 Shaan K Huan Fa [2021] No. 23
+15 June 2020
+Renewal
+Ecological Environment Bureau
+Ecological Environment Bureau
+Cangdong Power
+Dingzhou Power
+Bohai New District Branch of Cangzhou 130962-2022-009-M
+Dingzhou Ecological Environment
+Bureau
+Sichuan Energy Jiangyou Power Plant Mianyang Jiangyou Ecological
+Environment Bureau
+150207-2020-027-H
+Guoneng Chongqing Wanzhou Electric Chongqing Wanzhou Ecological
+Huizhou Thermal
+Mengjin Power
+Dianta Power Plant of Shendong
+Power
+Shouguang Power
+Jiujiang Power
+Zhunge'er Power
+Fujian Jinjiang Thermal Power Co.,
+Ltd.
+Guoneng Jiangyou Thermal Power
+Co., Ltd.
+Liuzhou Power
+Guoneng Shenfu (Longyan) Power
+Generation Co., Ltd.
+Power Co., Ltd.
+Jiuyuan District Branch of Baotou
+350581-2021-054-M
+Fujian Shishi Environmental Protection
+Bureau
+138 China Shenhua Energy Company Limited
+Section VI
+Environmental and Social Responsibility (Continued)
+4.
+Emergency plan for unexpected environmental incidents
+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:
+Company Name
+Power Plant of Guoneng Yili Energy
+Co., Ltd.
+Jinjie Power
+Taishan Power
+Guoneng Shenfu (Shishi) Power
+Generation Co., Ltd.
+Baotou Coal Chemical
+Filing Authority
+Record Number
+Dalate Banner Branch of Erdos
+150621-2022-002-M
+Ecological Environment Bureau
+Shenmu Ecological Environment Bureau 610821-2020-094L
+Jiangmen Ecological Environment
+440781-2021-0019-M
+Bureau
+18 June 2025
+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.
+emission Total approved
+Number of
+discharge Distribution of
+of pollution
+Excessive
+prevention
+Company
+pollutant
+Emissions
+concentration
+Total
+Emissions
+Discharge method
+emissions
+facilities
+(tonnes)
+(mg/Nm3)
+(tonne/year)
+hours
+(%)
+Jiujiang Power
+ports discharge ports
+Major
+Average
+Operation rate
+Environmental protection measures and achievements
+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.
+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.
+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 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.
+2021 Annual Report 143
+144
+Section VI Environmental and Social Responsibility (Continued)
+(IV)
+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.
+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.
+Measures and effects taken to reduce carbon emissions during the Reporting
+period
+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".
+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.
+2.
+3.
+4.
+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.
+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".
+Section VI
+Environmental and Social Responsibility (Continued)
+SO,
+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".
+Zhunge'er Power
+Fujian Jinjiang Thermal SO,
+100
+100
+317
+21.38
+3,840
+2 One discharge port each
+Organised continuous
+0
+544
+100
+38.9
+for Phase I and Phase
+discharge
+0
+Soot
+43
+3.06
+576
+0
+ㅎㅎㅎ
+3,840
+៩៩៩
+0
+1,065
+Power Co., Ltd.
+NO
+Guoneng Jiangyou
+SO,
+Thermal Power NO
+×3× ×35 833 833
+477
+12.8
+2,805
+NOX
+1,049
+29.97
+3,014
+2 Each unit has one
+discharge port.
+Organised continuous
+0
+discharge
+0
+Soot
+28
+0.79
+SO,
+100
+Environmental policy and implementation
+1.
+E Huan Zhun Fa [2021] No. 181
+Shendong Coal Shigetai
+Mine
+Baotou Energy Shenshan
+open pit mine
+7 September
+2021
+Shaan K Shen Mu Huan Fa
+[2021] No. 152
+5 December
+2021
+Shendong Coal Halagou
+Mine
+28 December
+2021
+Shaan K Shen Mu Huan Fa
+[2021] No. 196
+ship was not recorded truthfully
+700 tonnes of raw coal was
+10
+piled up in the open air, and
+no effective dust prevention
+measures such as closed
+enclosures or coverings were
+taken.
+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.
+The waste oil drums in the
+temporary storage of hazardous
+waste were not provided with
+hazardous waste identification
+marks as required.
+E Huan Zhun Fa [2021] No. 80
+31 August
+2021
+Baotou Energy Shenshan
+open pit mine
+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
+The construction project was
+put into operation before
+acceptance.
+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
+During the reporting period, total emission of major pollutants of the Group are as
+follows:
+2.
+Chemical
+Sulfur
+dioxide
+0
+sources were under key
+supervision and control of China
+Shenhua
+Other enterprises
+0.17
+1.35
+0.03
+147
+41
+4,455
+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
+Total
+0.02
+0.06
+90
+Nitrogen
+oxide
+demand
+Soot
+(COD)
+Hazardous
+solid waste
+0,000 tonnes
+0,000 tonnes
+0,000 tonnes
+tonnes
+tonnes
+Enterprises whose pollution
+0.96
+2.01
+0.14
+276
+1,748
+sources were under key
+supervision and control of the
+state
+Enterprises whose pollution
+0.05
+oxygen
+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.
+2021 Annual Report 151
+KPMG Huazhen LLP
+offering
+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.
+NON-OPERATING APPROPRIATION OF FUNDS BY CONTROLLING
+SHAREHOLDER(S) AND OTHER RELATED PARTIES DURING THE REPORTING
+PERIOD
+III.
+GUARANTEES IN VIOLATION OF REGULATIONS
+Applicable ✓ Not applicable
+148 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+IV. AUDIT OPINIONS AND OTHER EXPLANATIONS
+V.
+(1)
+(II)
+Explanation from the Board and the Supervisory Committee for the "non-standard
+audit report" issued by the auditors
+Applicable ✓ Not applicable
+The Company's analysis and explanation about the reasons for and impact of
+changes in accounting policies, accounting estimates or accounting method
+to initial public
+II.
+Commitment in relation Non-competition China Energy
+VA
+specified if
+commitment is
+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
+not fulfilled in
+time
+Timely
+Detailed reasons
+shall be specified
+Date and
+Any Time
+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.
+and Strict
+Duration of
+Commitment
+Limit for
+Commitment
+Performance of
+Commitment
+is not fulfilled in
+time
+24 May 2005, Yes
+long-term
+Yes, in progress N/A
+N/A
+if commitment
+The aforesaid changes in accounting policies have no impact on the Group's financial
+statements prepared in accordance with IFRS.
+(III) The Company's analysis and explanation about the reasons for and impact of
+correction to material previous errors
+Applicable ✓ Not applicable
+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
+VII. MATERIAL LITIGATION AND ARBITRATION
+X.
+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)
+Related party/Connected transactions during the daily operation
+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.
+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:
+1.
+Non-exempt continuing related party/connected transactions between the Group
+and China Energy Group
+Applicable ✓ Not applicable
+Further steps
+shall be
+Applicable ✓ Not applicable
+In 2021, the above two auditors did not serve as the external auditors of subsidiaries of the
+Company.
+APPOINTMENT AND REMOVAL OF AUDITORS
+Name of Domestic Auditors of the Company
+Remuneration of Domestic Auditors of the Company (RMB million)
+Term of Auditing of Domestic Auditors of the Company (year)
+Name of 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
+INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+1.4
+3
+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
+Remuneration
+RMB0.95 million
+2021 Annual Report 149
+Commitment
+Applicable ✓ Not applicable
+Type of
+Commitment
+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.
+C.
+d.
+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.
+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;
+Market price: the price of the same or similar products or services
+provided by an independent third party during its ordinary course
+of business on normal commercial terms. The management shall
+consider at least two comparable deals with independent third
+parties for the same period when determining whether the price
+for any product or service transaction under the Agreement is
+the market price; The Group shall conduct market price research
+through various independent industry information vendors such as
+industry websites, and participate in activities organised by leading
+industry organisation.
+Agreed price: to be determined by adding a reasonable profit
+margin over a reasonable cost. The management shall consider at
+least two comparable deals with independent third parties for the
+same period when determining the reasonable profit of any product
+or service transaction under the Agreement.
+2021 Annual Report 153
+Section VII Significant Events (Continued)
+(2)
+In addition to the above, the parties further agreed on the following
+pricing policies in respect of following products and services:
+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.
+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;
+C.
+B.
+(6)
+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.
+The New Mutual Coal Supply Agreement entered into by the Company and
+China Energy
+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;
+The transportation fees.
+(2)
+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);
+Party
+Making the
+Commitment
+152 China Shenhua Energy Company Limited
+(4)
+Section VII Significant Events (Continued)
+The quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+(5)
+The quantity of coal; and
+(3)
+d.
+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);
+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;
+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.
+Section VI Environmental and Social Responsibility (Continued)
+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
+CHN ENERGY
+4750
+Section VII Significant Events (Continued)
+I. PERFORMANCE OF COMMITMENT
+Background of
+Commitment
+e.
+2021 Annual Report 145
+China Shenhua Energy Company Limited
+国家能源集团 准能黑岱沟露天煤矿
+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%).
+Oil products: government-guided price;
+154
+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);
+Chemical products: market price;
+g.
+h.
+i.
+j.
+f.
+m.
+Social security and pension management services and staff data
+recording services: agreed price (cost plus a profit margin of
+approximately 5%);
+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;
+k.
+Logistics and support services and training services: agreed price
+(cost plus a profit margin of approximately 5%);
+Unit
+2021
+2020
+Change
+%
+2,998
+RMB million
+2,196
+36.5
+1. Main financial indicators of the Finance Company
+RMB million
+2,770
+Revenue
+Total profit
+(V) Financial business between the Company and Finance Company with which the
+Company has relationship
+2021 Annual Report 163
+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)
+Internal decision procedures have been performed in respect of
+the above transfer of related debts and liabilities in accordance
+with relevant regulations.
+(4) The entrusted loans were issued or received by the Group,
+etc..
+(3) Prior to the jointly establishment of Beijing GD by the
+Company with GD Power, the Company provided finance
+lease to Anhui Anqing Wanjiang Power Generation Co.,
+Ltd., its former subsidiary, through Shenhua Lease
+Company. As approved at the general meeting of the
+Company, the financial lease payment will be gradually
+returned in accordance with the original agreement/contract
+arrangement, that is the repayment will be gradually
+completed in 2021. As at the end of the reporting period, the
+financial lease payment has been returned.
+(2) The Group's deposits and loans with Finance Company.
+(1) Long and short-term borrowings were provided by China
+Energy to the Group.
+1,318
+Reasons for debts and liabilities between related parties
+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.
+110.2
+83,136
+RMB million
+22,472
+Section VII Significant Events (Continued)
+China Shenhua Energy Company Limited
+164
+Note: The above financial dates were prepared in accordance with the China Accounting Standards for
+Business Enterprises and have been audited.
+3.7
+22,471
+23,307
+RMB million
+Owner's equity
+44.9
+120,427
+RMB million
+Net profit
+36.1
+143,734
+RMB million
+Total assets
+Total liabilities
+%
+Change
+2020
+2021
+Unit
+31 December
+31 December
+107.2
+1,020
+2,113
+105,607
+7,260 27,526 24,950 (2,478)
+C.
+201
+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.
+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.
+The agreements A to C above are daily related transactions under the
+Shanghai Listing Rules, while the agreements A to D above are continuing
+connected transactions under the Hong Kong Listing Rules.
+Business consulting and technical services: agreed price (cost plus
+a profit margin of approximately 5%).
+Equipment supply: tender and bidding price.
+Overhaul services and railway track maintenance services: price
+prescribed by NDRC or other related government competent
+authorities.
+(iv)
+(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
+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.
+20,266
+The New Financial Services Agreement entered into by the Company and
+Finance Company
+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:
+(1)
+amount
+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:
+during the in the same
+cap
+13,000
+New Mutual Supplies and Services
+13.6
+14,019
+20,000
+38.8
+96,776
+86,000
+New Mutual Coal Supply Agreement
+A B
+%
+type of
+RMB million
+% RMB million
+period transactions
+cap
+reporting
+Prevailing
+transaction
+during the in the same
+Proportion
+amount
+Purchase of products and services from
+related/connected persons by the Group and
+other outflows
+Transaction
+reporting
+type of
+period transactions
+RMB million
+RMB million
+Prevailing
+transaction
+a.
+b.
+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;
+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;
+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;
+(vi)
+(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:
+(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
+2021 Annual Report 157
+Section VII Significant Events (Continued)
+(iii)
+the current transacted coal prices of the local coal exchange or
+market in the PRC, i.e., the coal price with comparable quality that
+is offered to or offered by independent third parties under normal
+market conditions and normal commercial terms in the same or
+nearby regions. For local spot coal price, reference is made to
+(i) the spot price index of the local coal exchange or market in
+Bohai-rim region or nearby provinces as published on the website
+of
+(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 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.
+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.
+2021 Annual Report 155
+Section VII Significant Events (Continued)
+2.
+(2)
+In terms of paid services provided by Finance Company to Members of
+the Group:
+a.
+b.
+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.
+Agreed price: to be determined by adding a reasonable profit
+margin over a reasonable cost. The management shall consider at
+least two comparable deals with independent third parties for the
+same period when determining the reasonable profit of any product
+or service under this Agreement.
+Market price: The price will be determined as same as or similar to
+products or services provided by an independent third party during
+its ordinary course of business on normal commercial terms. The
+management shall consider at least two comparable deals with
+independent third parties for the same period when determining
+whether the price for any product or service transaction under this
+Agreement is the market price; and
+10,502
+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;
+(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)
+the quality of the coal;
+(iv)
+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;
+13,000
+Implementation of and review opinions on the non-exempt continuing related
+party/connected transactions
+Agreement
+Funds offered by related
+Unit: RMB million
+(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)
+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)
+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)
+Index
+Guoneng Fund completed the filing
+procedures with the Asset Management
+Association of China.
+Guoneng Fund completed the industrial and
+commercial registration procedures and
+obtained a business licence.
+Upon the approval of the fifth meeting of
+the fifth session of the Board of Directors,
+as the limited partner, the Company
+contributed RMB4 billion to participate
+in the establishment of the Beijing China
+Energy New Energy Industry Investment
+Fund (Limited Partnership) ("China Energy
+Fund"), and entered into the Partnership
+Agreement of Beijing China Energy New
+Energy Industry Investment Fund (Limited
+Partnership) on 22 January 2021.
+Overview of Event
+Matters that have been disclosed on interim announcements and where there is
+no any further progress and change upon subsequent implementation
+1.
+(III) Material related party transactions regarding joint external investments
+Applicable ✓ Not applicable
+6,595
+Related parties
+Relationship
+Funds provided to related parties
+Opening Amount Closing
+balance incurred balance
+parties to the Group
+201
+400
+(61)
+461
+Total
+Others
+Other related parties
+Co., Ltd.
+the parent company
+Power Generation
+(55)
+55
+Controlled subsidiary of
+Anhui Anqing Wanjiang
+Related party transactions regarding the acquisition and disposal of assets or
+equity
+21,397
+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
+(2,679)
+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.
+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.
+C
+period
+RMB million
+New Financial
+Services
+(1)
+Agreement
+(2)
+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)
+100,000
+24,527
+27,900
+27,439
+(3)
+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
+200
+32
+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.
+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.
+160 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+(II)
+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.
+agreement
+RMB million
+Transaction
+cap during the
+valid period of
+Transaction
+amount during
+the Reporting
+Name of
+agreement
+including: (1) Products
+7,314
+11.8
+2,106
+2.1
+(2) Services
+3,188
+13.4
+4,489
+15.2
+D
+Transaction item
+Continuing Connected Transactions
+1,052
+0.4
+19,800
+8,743
+3.8
+Framework Agreement
+2021 Annual Report 159
+Section VII Significant Events (Continued)
+No.
+7,300
+159,087
+Registered holders of H shares
+161,039
+Including: Holders of A shares (including China Energy)
+reporting period (accounts)
+172 China Shenhua Energy Company Limited
+Total number of shareholders
+(1)
+III.
+SHAREHOLDERS
+1,952
+Total number of shareholders of ordinary shares as at the end of the
+1,936
+Total number of ordinary shareholders at the end of last month prior to the
+date of this annual report (accounts)
+corporation
+N/A State-owned
+Nil
+0
+69.52%
+0 13,812,709,196
+China Energy Investment
+%
+Nature of
+shareholders
+Number
+148,787
+Status
+restrictions
+Percentage
+with selling
+during the of the reporting
+period
+Registered holders of H shares
+reporting period
+Name of shareholders
+Shares subject to pledge, tag
+or lock-up
+of shares
+Decrease held at the end
+Number
+Increase Number of shares
+Shareholdings of top ten shareholders
+Unit: share
+(II) Shareholdings of top ten shareholders and top ten holders of marketable shares
+(or shareholders without selling restrictions) as of the end of the reporting
+period
+Section VIII Changes in Share Capital and Shareholders (Continued)
+Including: Holders of A shares (including China Energy)
+corporation
+HKSCC NOMINEES LIMITED
+-20,842,236
+Ltd.
+N/A State-owned
+Nil
+0.53%
+106,077,400
+-3,949,900
+Central Huijin Asset Management
+Company Limited
+N/A Overseas corporation
+Nil
+0
+1.10%
+218,669,817
+150,723
++118,584,244
+Corporation Limited
+N/A Others
+Nil
+0
+2.99%
+594,718,004
+-45
+China Securities Finance
+N/A Overseas corporation
+Unknown
+0
+16.96%
+3,369,478,486
+Hong Kong Securities Clearing
+Corporation Limited
+Ruifeng Huibang No.3 Privately
+Description of the abovementioned shareholders' N/A
+entrusting of voting rights, entrusted voting
+rights, and waiver of voting rights
+N/A Others
+Limited Life Insurance -
+Guoshou Ruian
+Zhuhai Ruifeng Huibang Asset
+0
+22,233,848
+0.11%
+0
+Nil
+Nil
+N/A Others
+Offered Fund
+E Fund Management Co., Ltd.
++21,768,317
+21,768,317
+0.11%
+0
+N/A Others
+- Social Security Fund 1104
+Portfolio
+Management Co., Ltd. -
+China Merchants Bank Ltd. - SSE
+0
+27,703,519
+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.
+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
+0.14%
+Industrial and Commercial Bank
+27,825,922
+0.14%
+0
+Nil
+N/A Others
+of China-hanghai Index
+50 Trading Open-end Index
+Securities Investment Fund
+China Life Insurance Company
++27,703,519
++3,278,174
+Details regarding the connected relationships
+among the above shareholders or whether they
+are parties acting in concert
++10,946,501
+0.11%
+218,669,817
+Central Huijin Asset Management Ltd.
+Industrial and Commercial Bank of China -
+Shanghai Index 50 Trading Open-end Index
+Securities Investment Fund
+106,077,400 RMB ordinary shares
+106,077,400
+27,825,922
+RMB ordinary shares
+27,825,922
+China Life Insurance Company Limited - Life
+Insurance Guoshou Ruian
+27,703,519 RMB ordinary shares
+218,669,817 RMB ordinary shares
+27,703,519
+22,233,848 RMB ordinary shares
+22,233,848
+Ltd. Ruifeng Huibang No.3 Privately Offered
+Fund
+E Fund Management Co., Ltd. - Social Security
+Fund 1104 Portfolio
+21,768,317 RMB ordinary shares
+21,768,317
+China Merchants Bank Ltd. - SSE
+Dividend ETF
+Description of the special account for repurchase N/A
+of the top ten shareholders
+Zhuhai Ruifeng Huibang Asset Management Co.,
+21,505,083
+Hong Kong Securities Clearing Company Limited
+594,718,004 RMB ordinary shares
+0
+Nil
+N/A Others
+Dividend ETF
+2021 Annual Report 173
+Section VIII Changes in Share Capital and Shareholders (Continued)
+Shareholdings of top ten shareholders without selling restrictions
+Number of shares
+without selling
+restrictions
+Unit: share
+594,718,004
+Name of shareholders
+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
+3,369,478,486
+China Securities Finance Corporation Limited
+Type and number of shares
+(II) Pre-emptive rights
+16,491,037,955
+Applicable
+or not
+Compliant with
+regulatory
+requirements
+December 2021
+Control indicators
+No.
+As at 31
+Main risk indicators of the Finance Company
+2.
+Related parties
+Relationship
+Business Type
+Quota
+the period
+Finance Company Subsidiary of controlling
+Bill discount
+100,000
+3,913
+1
+2
+3
+4
+Loan loss coverage ratio not lower than
+100%
+5
+LO
+suspicious loss
+noted sub-prime
+Yes
++∞ (none
+Capital loss coverage ratio not lower than
+100%
+shareholder
+Yes
+Yes
+0%
+Yes
+15.65%
+5%
+Non-performing loan rate not higher than
+4%
+Capital adequacy rate not lower than 10%
+Non-performing asset rate not higher than
+0%
+assets)
++∞ (none
+Finance Company Subsidiary of controlling
+100,000
+guarantee
+Guarantor
+Amount date of date of
+company Guaranteed guaranteed agreement guarantee
+Relationship
+between the
+guarantor
+and the listed
+1. Guarantee provided by the Company to external parties
+(excluding guarantee granted to its subsidiaries)
+Date of
+Whether
+performance Whether
+Whether
+Whether
+guarantee is
+Amount of counter for the benefit
+Expiry date of Type of
+has been guarantee is
+guarantee guarantee is of related
+guarantee guarantee
+completed overdue
+overdue provided parties
+Relationship
+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.
+1,061
+shareholder
+Finance Company Subsidiary of controlling
+Intermediary business
+200
+32
+shareholder
+Note: (1) Maximum daily balance of the comprehensive credit facilities (including loans, bill acceptance
+and discount, etc.), including accrued interest, provided by Finance Company to the Group as
+approved by the general meeting of the Company refers to RMB100,000 million.
+Issue of acceptance bill
+(2) The amount for the period of bill discount and issue of acceptance bill business refers to total
+amount of relevant services provided by Finance Company to the Group during the reporting
+period.
+166 China Shenhua Energy Company Limited
+XI.
+Section VII Significant Events (Continued)
+MATERIAL CONTRACTS AND THEIR PERFORMANCE
+(1)
+Trust, contracting and leasing
+Applicable
+✓ Not applicable
+(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.
+Baorixile Energy
+Yes
+suspicious loss
+parties Relationship
+Closing
+of loan for of repayment
+Opening
+Loan interest
+Related
+Total amount Total amount
+Amount for the period
+Unit: RMB million
+Loan business
+4.
+Section VII Significant Events (Continued)
+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
+Loan limit rate range
+balance
+the period for the period
+balance
+Amount for
+Unit: RMB million
+Credit facilities or other financial business
+5.
+"Loan limit" refers to the maximum daily balance (including accrued interest incurred) of loans
+provided by Finance Company to the Group.
+Note:
+21,397
+12,191
+19,750
+9,512
+Total
+21,397
+12,191
+9,512
+24,076
+100,000 3.15%-4.90%
+Subsidiary of controlling
+shareholder
+Finance
+Company
+24,076
+noted sub-prime
+Total
+138,644
+10
+Yes
+0%
+Yes
+50.01%
+Inter-bank borrowing ratio not higher than
+100%
+Ratio of investment (against total capital)
+not higher than 70%
+9
+8
+Yes
+0.07%
+Ratio of self-owned fixed assets not higher
+than 20%
+Yes
+37.36%
+Liquidity ratio not lower than 25%
+19
+assets)
+Guarantee ratio not higher than 100%
+28.54%
+Yes
+3.
+146,020
+19,750
+27,900 0.455%-3.3%
+shareholder
+Company
+Finance Subsidiary of controlling
+balance
+Closing
+27,126
+Opening deposited withdrawn
+balance for the period for the period
+Deposit
+interest
+rate range
+Maximum
+daily deposit
+limit
+Relationship
+Related
+parties
+Not applicable
+Amount for the period
+Unit: RMB million
+Deposit business
+Total amount Total amount
+Controlled Hulunbeer 72.44 2008.08.30 2008.08.30 2029.08.29 Joint and
+subsidiary Liangyi
+(execution Beginning
+0 No
+Change in number of shares
+Unit: shares
+As at 31 December 2020
+Change
+As at 31 December 2021
+Number Percentage
+Repurchase and
+cancellation
+Subtotal
+Number
+Percentage
+I.
+Shares with selling
+restrictions
+0
+0.00
+0
+0
+1.
+(1) Change in the number of ordinary shares
+CHANGE IN ORDINARY SHARE CAPITAL
+I.
+rate
+2021
+for 2021
+procedures
+Yili Chemical associate of a Bank of China 400.0
+2020/12/24 2023/12/24
+3 years
+subsidiary
+0
+Own fund Replacement of Interest to be paid
+loans
+quarterly
+19.1
+0
+Yes
+As of 31 December 2021, the Group did not grant entrusted loans with an amount
+exceeding 5% of the Group's latest audited net assets attributable to equity holders
+of the Company to any individual party. The Company did not utilise the proceeds
+raised to grant entrusted loans, and there was no entrusted loan that was involved in
+litigations. No provision for impairment for the above entrusted loans has been made
+by the Group. Under centralised capital management of the Group, the entrusted
+loans among the Company and its subsidiaries were used for meeting operating and
+development needs. Such entrusted loans have been eliminated in the consolidated
+financial statements of the Group.
+The entrusted loan of RMB37.40 million granted by the Company to Inner Mongolia
+Sanxin Railway Co., Ltd. ("Sanxin Railway Company") in February 2014 has expired
+in February 2015. In view of the actual operation of Sanxin Railway Company and
+through consultation, Sanxin Railway Company paid the Company the interest of
+RMB2.27 million during the entrusted loan, and the Company converted the principal
+of RMB37.40 million of entrusted loan into equity investment in Sanxin Railway
+Company. By the end of the reporting period, the Company had received the above
+loan interest and confirmed the relevant equity investment. This matter has no impact
+on the scope of the Company's consolidated financial statements.
+170
+No
+Section VIII Changes in Share Capital and Shareholders
+4.75%
+0.00
+II.
+Shares without selling
+-21,100,500 3,377,482,000
+-21,100,500 19,868,519,955
+17.00
+100.00
+2.
+Explanation on changes in shares
+On 8 March 2021, the Company cancelled all H shares repurchased up to that date,
+totaling 21,100,500 shares, accounting for 0.6209% of the total number of H shares
+issued by the Company as at the date when the General Mandate was approved by
+the 2020 first extraordinary general meeting and 0.1061% of the total number of
+shares of the Company. After the cancellation, the total number of issued shares of
+the Company was reduced to 19,868,519,955 shares, including 16,491,037,955 A
+shares and 3,377,482,000 H shares. The Company has not issued preferred shares.
+In 2021, the Group did not repurchase, sell or redeem any securities of the Company
+under the Hong Kong Listing Rules.
+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.
+-21,100,500
+-21,100,500
+(II) Changes of shares with selling restrictions
+✓ Not applicable
+2021 Annual Report 171
+Section VIII Changes in Share Capital and Shareholders (Continued)
+II.
+ISSUANCE AND LISTING OF SECURITIES
+The Company did not issue any ordinary share, convertible corporate bond, warrant bond,
+corporate bond or other derivative securities, nor did it enter into any equity-linked agreement
+during the reporting period.
+(1)
+Changes in total number of ordinary shares, shareholding structure and assets
+and liabilities structure of the Company
+Applicable
+legal
+100.00
+III. Total number of shares
+restrictions
+19,889,620,455
+100.00
+-21,100,500
+-21,100,500 19,868,519,955
+100.00
+1.
+RMB ordinary
+19,889,620,455
+shares
+82.91
+0 16,491,037,955
+83.00
+2.
+Overseas listed
+foreign shares
+3,398,582,500
+17.09
+Section VII Significant Events (Continued)
+recovered
+China Shenhua Energy Company Limited
+Interest
+0.9
+Including:
+Amount of guarantee provided for the benefit of shareholders, de facto controller and
+their related parties (C)
+Amount of guarantee directly or indirectly provided for the benefit of parties with a
+gearing ratio in excess of 70% (D)
+Portion of the total amount of guarantee in excess of 50% of net assets (E)
+Aggregated amount of the above three amounts of guarantee (C+D+E)
+Description of the potential joint and several repayment liability for outstanding guarantee
+Description of guarantee
+0
+3,260.29
+0
+3,260.29
+Please refer to below
+Please refer to below
+Note: The balance of guarantee provided by the subsidiary to external parties of total amount of guarantee at the
+end of the reporting period equals to the amount of external guarantee of the subsidiary multiplied by the
+shareholding of the Company in the subsidiary.
+As at the end of the reporting period, the total balance of the amount of guarantee provided
+by the Group amounted to RMB3,260.29 million, including:
+(1)
+As at the end of the reporting period, the guarantee provided by Baorixile Energy,
+a subsidiary of which the Company owns 56.61% of the shares, for the benefit of
+external parties was as follows: prior to the acquisition of Baorixile Energy by the
+Company in 2011 and pursuant to the Guarantee Agreement on the Syndicated
+Renminbi Loan for the Cooperative Railway Project Connecting Yimin and Yiershi
+Newly Constructed by Hulunbei'er Liangyi Railway Company Limited, in 2008,
+Baorixile Energy, as one of the guarantors, provided joint and several liability
+guarantee to Hulunbei'er Liangyi Railway Company Limited (hereinafter referred to
+as the "Liangyi Railway Company", of which Baorixile Energy owns 14.22% of the
+shares) for the syndicated loans. The major liability guaranteed was the debts due
+to the lender with a maximum balance of RMB207.47 million from 2008 to 2027,
+regardless of whether the debt is due when the above period expires. The above
+syndicated loans will fall due by tranches between 2011 and 2026. The Guarantee
+Agreement provides that the guarantee period of the debts borne by the guarantor
+shall be calculated from the due date of each tranche to two years after the due date
+of the last tranche, i.e. 2029.
+168 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+(2)
+return for
+3,187.85
+(74.60)
+of the Company at the end of the year under China Accounting Standards for Business
+Enterprises in 2021 (%)
+No
+several
+Railway
+liability
+Company
+Limited
+guarantee
+Total amount of guarantee provided during the reporting period (excluding guarantee
+provided to its subsidiaries)
+Total balance of guarantee at the end of the reporting period (A) (excluding guarantee
+provided to its subsidiaries)
+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%.
+(8.86)
+2021 Annual Report 167
+Section VII Significant Events (Continued)
+2. Guarantee provided by the Company and its subsidiaries for the benefit of its subsidiaries
+Total amount of guarantee provided for the benefit of subsidiaries during the reporting
+period
+Total balance of guarantee provided for the benefit of subsidiaries at the end of the
+reporting period (B)
+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
+72.44
+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.
+3,260.29
+(III) Entrusted cash asset management
+Name of
+borrower
+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
+For the details of the opinions of the Independent Directors, please refer to the
+relevant reports simultaneously disclosed with this Report.
+Determination of
+compensation
+between the
+has been
+of fund
+Whether it
+Relationship
+1.
+Unit: RMB million
+Type of products
+Source of
+funding
+Maximum
+Balance Note
+Outstanding
+ending balance
+Overdue
+Uncollectible
+amount
+Entrusted loans
+General status of entrusted loans
+437.4
+400.0
+0
+Note: Maximum balance refers to the daily highest balance of the entrusted loan of such type of the
+Group in 2021.
+2021 Annual Report 169
+Section VII Significant Events (Continued)
+2. Individual entrusted loans
+Own fund
+Unit: RMB million
+N/A
+13,812,709,196
+83.76
+69.52
+2
+BlackRock, Inc.
+Interest of
+5.18
+Long position
+175,044,309
+0.88
+corporation
+controlled by
+the substantial
+shareholder
+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.
+2021 Annual Report 175
+A shares
+H shares
+Beneficial owner
+H shares/
+A shares held
+1
+Section VIII Changes in Share Capital and Shareholders (Continued)
+Section VIII Changes in Share Capital and Shareholders (Continued)
+(III) Substantial shareholders' interests and short positions in the shares of the
+Company
+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):
+Number of
+No.
+Name of
+shareholders
+Capacity
+H shares/
+A shares
+Nature of
+interest
+Percentage of
+H shares/A shares
+over total issued
+H shares/A shares
+respectively
+Percentage
+of total issued
+share capital of
+the Company
+%
+%
+China Energy
+IV. CHANGES IN CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+Sina Finance
+Controlling shareholder as at the end of the reporting period
+Award Title
+9
+November 2021
+10 December 2021
+11 December 2021
+12
+December 2021
+13 December 2021
+Most Valuable Company in
+Investor Relations of the
+Year of the First China Listed
+Company Classic Award
+The 11th China Securities Golden
+Bauhinia Award and Best Hong
+Kong Stock Connect Listed
+Company Award
+23rd Golden Bull Award for
+Listed Companies and
+2021 Golden Bull Social
+Responsibility Award
+2021 Best Practice Cases for
+the Office of the Board of
+Directors of Listed Companies
+China Top 100 Special
+Contribution Enterprises
+Award, China Top 100
+Enterprises Award, China
+Ethical Enterprises Award
+Award Institution
+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
+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
+China Fund Jihuibao
+Industry Pioneer Title of Chine
+Carbon Company awarded
+by the First Session of China
+Carbon Company
+Award Institution
+Caijing Magazine
+Securities Times
+CDP (Carbon Disclosure
+Project)
+The Listed Companies
+Association of Beijing
+(1)
+SSE
+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.
+September 2021
+Hosted by Hong Kong Ta Kung
+Wen Wei Media Group
+China Association for Public
+Companies
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+Impairment assessment on coal mines related non-current assets
+Refer to Notes 17(i), 18 and 20 to the consolidated financial statements and the accounting policies in
+Note 3.
+Key audit matter
+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.
+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, 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.
+How our audit addressed the key audit matter
+Our procedures in relation to impairment
+assessment on coal mines related non-current
+assets included:
+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;
+assessing the appropriateness of the
+methodologies used by management to
+estimate value in use with reference to the
+requirements of the prevailing accounting
+standards;
+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;
+184
+China Shenhua Energy Company Limited
+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.
+China Business's Top 100
+Forum
+14 December 2021
+182 China Shenhua Energy Company Limited
+2021 Evergreen Award -
+Sustainable Development
+Efficiency Award
+Caijing Magazine
+Section X
+Independent Auditor's Report
+China Securities Journal
+and Financial Statements
+Independent auditor's report to the members of
+China Shenhua Energy Company Limited
+(Incorporated in the People's Republic of China with limited liability)
+OPINION
+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.
+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.
+BASIS FOR OPINION
+KPMG
+8
+The Listed Companies
+Association of Beijing
+August 2021
+00
+Diagram of the equity and controlling relationship between the Company and the
+controlling shareholder at the end of the Reporting Period
+On 8 March 2021, after the Company canceled the repurchased 21,100,500 H shares,
+the shareholding ratio of China Energy became 69.52%.
+2021 Annual Report 177
+Section VIII Changes in Share Capital and Shareholders (Continued)
+(II)
+De facto controller
+1.
+Legal person
+Name
+State-owned Assets Supervision and Administration Commission of the
+State Council
+2.
+3.
+Description of changes in control of the Company during the reporting period
+There was no change in de facto controller of the Company during the reporting period.
+Diagram of the equity and controlling relationship between the Company and
+the de facto controller at the end of the Reporting Period
+Description of changes in controlling shareholders during the reporting period
+3.
+2.
+Section VIII Changes in Share Capital and Shareholders (Continued)
+1. Legal person
+Name
+Legal representative
+Date of incorporation
+Principal business
+Shareholdings in other
+domestic and overseas
+listed subsidiaries and
+associates during the
+reporting period
+China Energy Investment Corporation Limited
+Wang Xiangxi
+23 October 1995
+V.
+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.)
+Directly or indirectly holding 58.56% shares of China
+Longyuan Power Group Corporation Limited;
+Effectively controlling 78.40% shares of Guodian
+Technology & Environment Group Corporation Limited;
+Effectively controlling 51.25% shares of Ningxia
+Yinglite Chemicals Co., Ltd.;
+Effectively controlling 41.24% shares of Yantai
+Longyuan Power Technology Co., Ltd.
+Holding 67.50% shares of Guodian Changyuan Electric
+Co., Ltd.;
+Indirectly holding 20.84% shares of Shenzhen Laibao
+Hi-Tech Co., Ltd.
+176 China Shenhua Energy Company Limited
+Directly or indirectly holding 50.78% shares of GD
+Power Development Co., Ltd.;
+VI.
+There was no change in the controlling shareholder of the Company during the
+reporting period.
+As at the end of the reporting period, there was no other corporate shareholder with more than
+10% shareholding in the Company.
+III. CHINA SHENHUA MAJOR AWARD LIST IN 2021
+No.
+Date of Award
+1
+January 2021
+2
+May 2021
+Section IX Investor Relations (Continued)
+3
+4
+July 2021
+5
+August 2021
+6
+OTHER CORPORATE SHAREHOLDERS WITH MORE THAN 10% SHAREHOLDING
+IN THE COMPANY
+7
+June 2021
+180 China Shenhua Energy Company Limited
+August 2021
+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.
+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.
+Applicable ✓ Not applicable
+VII. DETAILED IMPLEMENTATION OF SHARE REPURCHASE
+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.
+178 China Shenhua Energy Company Limited
+Section IX Investor Relations
+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.
+I.
+RESTRICTIONS ON THE REDUCTION IN THE SHAREHOLDING
+FORMULATING THE "14TH FIVE-YEAR PLAN" TO MAINTAIN THE ENTERPRISE
+DETERMINATION FOR DEVELOPMENT. The Company's management focused on long-term
+development and has organized several strategic seminars to analyze the new situation of China's
+energy development and the characteristics of the Company, and to formulate and optimize the
+"14th Five-Year Plan" of China Shenhua. The Company will actively participate in energy reform
+and develop new energy by adopting various methods such as self-built operation, industrial fund
+and equity investment while continuing to consolidate the advantages of integrated operation.
+STRICTLY CONTROLLING GOVERNANCE RISKS AND CONTINUOUSLY STRENGTHENING
+THE MANAGEMENT OF RELATED TRANSACTIONS. Affected by internal and external factors
+such as the significant increase in coal market prices and the continuous increase in the asset
+size of the Company in 2021, the Company adjusted the annual caps of daily related transactions
+such as the Financial Services Agreement and the Mutual Coal Supply Agreement. During the
+formulation of the agreements, in order to fully protect the interests of small and medium-sized
+shareholders, the management of the Company communicated with the regulators and controlling
+shareholders on the agreement plans for many times, so as to maximize the favorable terms for
+the Company and enhance the operating performance of the Company with strict compliance with
+the listing rules of the two places and reducing the governance risks.
+STRENGTHENING INTERNAL MANAGEMENT AND ENHANCING MANAGEMENT
+EFFICIENCY. The Company continuously strengthened the management of subsidiaries and
+branches and regional management, established the Hebei Branch of China Shenhua Energy
+Company Limited, and further improved the regional integration of the power industry and
+enhanced market competitiveness. Our Company established the Guoneng (Weifang) Energy Co.,
+Ltd., participated in the investment and establishment of the Guoneng Green and Low-Carbon
+Development Investment Fund, and actively sought development opportunities in the field of new
+energy. It completed the capital injection into China Energy Xinshuo Railway Development Co.,
+Ltd., further integrated transportation assets and improved the operational efficiency of railway
+assets.
+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.
+2021 Annual Report 179
+Section IX Investor Relations (Continued)
+II. HOLDING THE POSITION ON BEHALF OF PEOPLE AND CONTINUOUSLY
+OPTIMIZING INVESTOR SERVICES
+PERSISTING IN SUSTAINABLE DEVELOPMENT AND PROTECTING THE
+RIGHTS AND INTERESTS OF INVESTORS
+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.
+Disposal of subsidiaries
+(6,739)
+(6,739)
+1,646
+1,646
+(235)
+¨¨¨¨- (3,392) - 3,392 ---
+256
+(21)
+controlling shareholders
+Distributions to non-
+controlling shareholders
+Contributions from non-
+Others
+56
+(227)
+84,766
+137
+own shares
+194 China Shenhua Energy Company Limited
+449,221
+69,183
+380,038
+22,425 (14,316)
+(227)
+(334)
+19,869
+At 31 December 2021
+(279)
+(246)
+(33)
+(170)
+3,657
+Cancellation of repurchased
+263,971
+5,581
+Other comprehensive income for the year
+Items that will not be reclassified to profit or loss,
+net of income tax:
+Fair value changes on investments in equity
+instruments at fair value through other
+comprehensive income
+292
+99
+56
+Exchange differences
+Items that may be reclassified subsequently to profit or
+loss, net of income tax:
+Share of other comprehensive income of associates
+(172)
+(344)
+66
+(41)
+Fair value changes on investments in debt
+instruments at fair value through other
+comprehensive income
+(4)
+Other comprehensive income for the year,
+net of income tax
+186
+(333)
+Total comprehensive income for the year
+61,195
+43,984
+43,651
+61,009
+43,984
+(2,561)
+(524)
+(1,103)
+(1,090)
+Finance costs
+66
+2,492
+1,684
+(2,583)
+(2,263)
+Share of results of associates
+(874)
+947
+Profit before income tax
+79,170
+59,362
+Income tax expense
+10
+(18,161)
+(15,378)
+Profit for the year
+12
+61,009
+Profit for the year
+12
+190
+Consolidated statement of Profit or Loss and
+Other Comprehensive Income (Continued)
+2021 Annual Report 191
+Consolidated Statement of Financial Position
+At 31 December 2021
+Non-current assets
+Notes
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+Property, plant and equipment
+Construction in progress
+Exploration and evaluation assets
+19
+Intangible assets
+20
+Right-of-use assets
+Interests in associates
+781222
+263,656
+238,198
+26,201
+39,845
+4,000
+The notes on pages 201 to 307 form part of these financial statements.
+China Shenhua Energy Company Limited
+1.803
+16
+For the year ended 31 December 2021
+Year ended 31 December
+Profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+Total comprehensive income
+for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+2021
+Notes
+RMB million
+2020
+RMB million
+51,607
+35,849
+9,402
+8,135
+61,009
+43,984
+51,830
+35,607
+9,365
+8,044
+61,195
+43,651
+Earnings per share
+-Basic/ diluted (RMB)
+2.597
+778
+893
+(194)
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+Timing of revenue recognition from sale of coal (continued)
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+Key audit matter
+How our audit addressed the key audit matter
+comparing, on a sample basis, whether
+specific coal sales transactions recorded
+before and after the financial year end date
+with relevant underlying documentation,
+which included sales invoices, goods
+dispatch notes, customer receipts, or
+shipping documents, as applicable under the
+respective sales transactions contracts, to
+determine whether the related revenue had
+been recognised in the appropriate financial
+period on the basis of the terms of sale as
+set out in the respective sales contracts; and
+inspecting underlying documentation for
+journal entries relating to coal sales which
+were considered to meet specific risk-based
+criteria.
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND
+AUDITOR'S REPORT THEREON
+The directors are responsible for the other information. The other information comprises all the
+information included in the annual report, other than the consolidated financial statements and our
+auditor's report thereon.
+Our opinion on the consolidated financial statements does not cover the other information and we do
+not express any form of assurance conclusion thereon.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the
+other information and, in doing so, consider whether the other information is materially inconsistent with
+the consolidated financial statements or our knowledge obtained in the audit or otherwise appears to be
+materially misstated.
+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.
+2021 Annual Report 187
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
+STATEMENTS
+The directors are responsible for the preparation of the consolidated financial statements that give a
+true and fair view in accordance with IFRSS issued by the IASB and the disclosure requirements of the
+Hong Kong Companies Ordinance and for such internal control as the directors determine necessary
+to enable the preparation of consolidated financial statements that are free from material misstatement,
+whether due to fraud or error.
+In preparing the consolidated financial statements, the directors are responsible for assessing the
+Group's ability to continue as a going concern, disclosing, as applicable, matters related to going concern
+and using the going concern basis of accounting unless the directors either intend to liquidate the Group
+or to cease operations, or have no realistic alternative but to do so.
+The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing the
+Group's financial reporting process.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS
+Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as
+a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor's
+report that includes our opinion. This report is made solely to you, as a body, and for no other purpose.
+We do not assume responsibility towards or accept liability to any other person for the contents of this
+report.
+Reasonable assurance is a high level of assurance but is not a guarantee that an audit conducted in
+accordance with HKSAS will always detect a material misstatement when it exists. Misstatements
+can arise from fraud or error and are considered material if, individually or in the aggregate, they could
+reasonably be expected to influence the economic decisions of users taken on the basis of these
+consolidated financial statements.
+186 China Shenhua Energy Company Limited
+As part of an audit in accordance with HKSAs, we exercise professional judgement and maintain
+professional skepticism throughout the audit. We also:
+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;
+obtaining an understanding of and
+assessing the design, implementation and
+operating effectiveness of key internal
+controls over revenue recognition from the
+sale of coal;
+(5,581)
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+Impairment assessment on coal mines related non-current assets (continued)
+Refer to Notes 17(i), 18 and 20 to the consolidated financial statements and the accounting policies in
+Note 3.
+Key audit matter
+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.
+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.
+How our audit addressed the key audit matter
+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;
+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;
+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
+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.
+2021 Annual Report 185
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+Timing of revenue recognition from sale of coal
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+Key audit matter
+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.
+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.
+How our audit addressed the key audit matter
+Our audit procedures to assess the timing of
+revenue recognition from the sale of coal included
+the following:
+inspecting coal sale contracts on a sample
+basis, to identify terms and conditions
+relating to transfer of the control of the
+coal and assessing the Group's timing of
+revenue recognition with reference to the
+requirements of the prevailing accounting
+standards;
+Identify and assess the risks of material misstatement of the consolidated financial statements,
+whether due to fraud or error, design and perform audit procedures responsive to those risks, and
+obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk
+of not detecting a material misstatement resulting from fraud is higher than for one resulting from
+error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
+override of internal control.
+Obtain an understanding of internal control relevant to the audit in order to design audit
+procedures that are appropriate in the circumstances but not for the purpose of expressing an
+opinion on the effectiveness of the Group's internal control.
+Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
+estimates and related disclosures made by the directors.
+5 7
+335,216
+(239,156)
+233,263
+(162,374)
+Gross profit
+Selling expenses
+96,060
+70,889
+(581)
+(555)
+General and administrative expenses
+Research and development costs
+Other gains and losses
+Other income
+Loss allowances, net of reversal
+Other expenses
+Interest income
+(9,119)
+(8,948)
+(2,499)
+(1,362)
+282
+12
+(955)
+Cost of sales
+Goods and services
+Revenue
+RMB million
+188 China Shenhua Energy Company Limited
+Section X Independent Auditor's Report
+and Financial Statements (Continued)
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS (CONTINUED)
+Conclude on the appropriateness of the directors' use of the going concern basis of accounting
+and, based on the audit evidence obtained, whether a material uncertainty exists related to events
+or conditions that may cast significant doubt on the Group's ability to continue as a going concern.
+If we conclude that a material uncertainty exists, we are required to draw attention in our auditor's
+report to the related disclosures in the consolidated financial statements or, if such disclosures
+are inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained
+up to the date of our auditor's report. However, future events or conditions may cause the Group
+to cease to continue as a going concern.
+Evaluate the overall presentation, structure and content of the consolidated financial statements,
+including the disclosures, and whether the consolidated financial statements represent the
+underlying transactions and events in a manner that achieves fair presentation.
+Obtain sufficient appropriate audit evidence regarding the financial information of the entities
+or business activities within the Group to express an opinion on the consolidated financial
+statements. We are responsible for the direction, supervision and performance of the Group audit.
+We remain solely responsible for our audit opinion.
+We communicate with the Audit Committee regarding, among other matters, the planned scope and
+timing of the audit and significant audit findings, including any significant deficiencies in internal control
+that we identify during our audit.
+We also provide the Audit Committee with a statement that we have complied with relevant ethical
+requirements regarding independence and communicate with them all relationships and other matters
+that may reasonably be thought to bear on our independence and, where applicable, actions taken to
+eliminate threats or safeguards applied.
+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.
+The engagement partner on the audit resulting in the independent auditor's report is Guen Kin Shing.
+KPMG
+4,651
+Certified Public Accountants
+10 Chater Road
+Central, Hong Kong
+25 March 2022
+2021 Annual Report 189
+Consolidated statement of Profit or Loss and
+Other Comprehensive Income
+For the year ended 31 December 2021
+Year ended 31 December
+2021
+Notes
+RMB million
+2020
+8th Floor, Prince's Building
+3,888
+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.
+22,240
+449,221
+429,587
+38
+19,869
+19,890
+360,169
+344,313
+380,038
+364,203
+69,183
+65,384
+449,221
+429,587
+Approved and authorised for issue by the board of directors on 25 March 2022.
+Wang Xiangxi
+Chairman and Executive Director
+Xu Mingjun
+Executive Director
+The notes on pages 201 to 307 form part of these financial statements.
+2021 Annual Report 193
+Consolidated Statement of Changes in Equity.
+For the year ended 31 December 2021
+Equity attributable to equity holders of the Company
+63,824
+Capital Exchange Statutory
+69,628
+1,510
+At 31 December 2021
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Total equity
+Notes
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+49,193
+50,251
+33333
+32
+3,172
+3,241
+36
+8,025
+2,661
+37
+6,754
+6,169
+30
+974
+896
+606
+Consolidated statement of Profit or Loss and
+Other Comprehensive Income (Continued)
+Other Retained
+reserves
+61,009
+(133)
+356
+223
+(37)
+186
+Other comprehensive income
+for the year
+Total comprehensive income
+for the year
+Dividend declared (Note 15)
+Appropriation of maintenance
+and production funds
+(Note (iii)))
+Utilisation of maintenance and
+production funds (Note (iii)
+(133)
+356
+51,607
+51,830
+61,195
+(35,962)
+(35,962)
+24
+(35,962)
+9,402
+reserve
+51,607
+Profit for the year
+reserves earnings
+Share
+premium reserve
+Non-
+controlling
+Total
+Total interests equity
+RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million RMB million
+(Note (i)) (Note (ii))
+Share Treasury
+capital shares
+RMB million RMB million
+(Note 38) (Note 38)
+(Note (iii))
+(Note (iv))
+(Note (v))
+At 1 January 2021
+19,890
+(256)
+85,001
+3,657
+(201)
+20,236
+(14,809)
+250,685
+364,203
+65,384 429,587
+51,607
+Reserves
+9,365
+Equity
+Cash and cash equivalents
+12 220 2
+25
+12,633
+12,750
+26
+13,607
+11,759
+376
+27
+18,514
+17,480
+28
+4,479
+3,391
+1,701
+11,186
+29
+156,706
+112,880
+Assets classified as held for sale
+11
+294
+Time deposits with original maturity over three months
+2,783
+Restricted bank deposits
+comprehensive income
+Share capital
+49,556
+Financial assets at fair value through
+Other non-current assets
+18,597
+Deferred tax assets
+223
+22
+2,174
+1,845
+23
+28,089
+35,890
+30
+3,568
+2,856
+Total non-current assets
+402,287
+390,675
+Current assets
+Inventories
+Accounts and bills receivables
+Financial assets at fair value through other
+Prepaid expenses and other current assets
+Total current assets
+other comprehensive income
+172,229
+Liabilities associated with assets classified
+as held for sale
+217
+Total current liabilities
+91,748
+69,493
+Net current assets
+116,562
+102,736
+Total assets less current liabilities
+518,849
+5,256
+493,411
+China Shenhua Energy Company Limited
+Non-current liabilities
+Borrowings
+Bonds
+Long-term liabilities
+Accrued reclamation obligations
+Deferred tax liabilities
+Lease liabilities
+Total non-current liabilities
+208,310
+Net assets
+192
+6,864
+47,708
+6,313
+Contract liabilities
+Borrowings
+31
+9,917
+8,847
+Accounts and bills payables
+34
+35,216
+28,980
+Accrued expenses and other payables
+35
+29,109
+Current liabilities
+Current portion of lease liabilities
+9,028
+689
+18,949
+1,427
+Income tax payable
+Current portion of long-term liabilities
+242
+187
+33
+36
+263
+18.8
+(19.0)
+29.0
+23.5
+Third-party ports
+Shenshuo Railway
+13.6
+19.5
+(201
+37.9
+29.6
+(1.8
+16.3
+Zhunge'er Mines
+37.2
+444
+66
+419
+96.3
+4301
+30.2
+(16.7)
+Sales to internal power segment
+1
+1.8
+1.5
+(1.5
+13.5
+13.3
+(1.5
+19.9
+19.6
+Shengli Mines
+⠀⠀⠀⠀⠀⠀⠀
+::::::
+13.7
+8.5
+322
+605
+47
+366
+0.9
+4.3
+Sales to internal coal chemical segment
+3
+2
+Sales to external customers
+Classify by internal and external customers
+11
+Sales through Trading Group
+22
+(I) Classify by contract pricing mechanism
+Self-owned railways
+0.5
+193.9
+194.9
+Huanghua Port
+%
+% 100 million tonnes 100 million tonnes
+100 million tonnes 100 million tonnes
+%
+Shendong Mines
+100 million tonnes 100 million tonnes
+239.1
+Change
+2020
+Milion tonnes
+Million tonnes
+240.1
+Self-owned ports
+Change
+Change 31 December 2021 31 December 2020
+Ganquan Railway
+Change 31 December 2021 31 December 2020
+31 December 2021 31 December 2020
+0.4
+153.9
+156.0
+(1.3
+4.9
+23.6
+Direct sales through coal mine pit
+2
+(3) Spot commodity
+(2) Monthly long-term agreement
+(1) Annual long-term agreement
+95.1
+458.7
+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
+87.2
+ཙྪཱ་ྒུབྷཡཱགྷ
+88.9
+(1.9
+263.6
+8.6
+62
+285.7
+%
+billion tonne km billion tonne km
+Change
+2020
+ཝརྞྞབྷཟaག་ཟཁ་རྫོདཿབྷལྷ
+Total railway turnover
+7.3
+23
+113.0
+Total of shipping volume
+State-owned railways
+(53.7)
+70.0
+32.4
+External customers
+Huangda Railway
+106.5
+43.0
+88.8
+121.2
+54.1
+(0.7)
+1.1
+塔然高勒
+Baotou
+As at
+包頭
+Shendong Mines
+A1. 神束礦區
+煤礦 COAL MINE
+Ganqimaodu
+甘其毛都
+6.8
+330.6
+10.9
+44.9
+5.5
+183.4
+23.2
+9.9
+64.7
+1.7
+10.8
+26.9
+-
+45.5
+The Group's internal customers
+Total seaborne coal sales
+(3.9
+74.3
+Table 16 Shipping Volume
+Baotou Mines
+-
+.
+0.3
+0.3
+05
+0.5
+Dazhun Railway
+Baorixile Mines
+Bazhun Railway
+12.6
+11.3
+(1.8
+11.3
+11.1
+(1.5)
+13.5
+13.3
+Tahan Railway
+(1.7)
+268.1
+11.6
+107.6
+64.2
+3.7
+144.2
+141.5
+11.9
+296.8
+332.1
+Total of China Shenhua
+Shuchuang-Huangwan Railway
+%
+Million tonnes
+Million tonnes
+Others
+100.0
+4.8
+Zhunchi Railway
+Change
+2020
+2021
+1
+67.6
+Xinje Mines
+49.4
+44.8
+176
+77.3
+2021
+125
+Table 14 Seaborne Coal at Ports
+17
+702
+714
+(74.4
+1,501
+385
+Others
+0.39
+7.16
+5. Others
+245
+346.5
+2.996
+(7.5
+665
+615
+External transportation charges
+26,499
+36,824
+5.620
+31,204
+343
+671
+130
+88.5
+106
+72
+7.4
+Sichuan
+Sichuan Provincial Local
+Sichuan Energy hydropower)
+950
+565
+193
+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
+1.5
+107.8
+51
+305
+5,921
+811 (14.9
+61.1
+Recair and maintenance
+16.1
+311
+361
+466.7
+3
+17
+22.7
+344
+422
+4,217
+21.3
+5,078
+Personnel expenses
+1.600
+2.000
+2.000
+467
+280
+2.1
+Tarangaole
+2,475
+4,185
+3.231
+30.5
+364
+113
+182
+(1.1)
+736
+728
+14
+3,917
+3,972
+Depreciation and amortization
+210
+300
+-
+300
+465
+365
+62.8
+298
+485
+637.5
+8
+59
+15.2
+316
+690
+Table 15 Railway Cargo Transportation Turnover
+224
+Cost of extemal transportation business
+tax)
+volume
+volume
+tax
+volume
+Sales volume
+Price (excluding
+Price (excluding
+total sales
+Sales
+Sales volume
+Price (excluding
+Percentage to
+Percentage to
+2021
+Change
+2020
+Total sales volume/average price (excluding tax)
+17
+4.675
+4.754
+82.1
+total sales
+tax)
+Million tonnes
+%
+Marketable reserve (under JORC standard)
+As at
+As at
+As at
+As at
+As at
+Recoverable reserve (under PRC standard)
+Coal resources (under PRC standard)
+Table 13 Coal Resources Reserve
+43.4
+8.0
+410
+100.0
+446.4
+588
+100.0
+482 3
+Mines
+%
+%
+RMB/tonne
+%
+Million tonnes
+RMB/tonne
+2.755
+Power Grid
+5.018
+3,314
+125
+3.0
+3.946
+4.065
+82.2
+5.006 2,747
+10.5
+2717
+3,002
+8.7
+62
+20,492 18,847
+960
+950
+(31.9
+1,591
+1,084
+55.9
+396
+18.9
+2.976
+3.539
+Prime business cost
+Other operating costs
+1,020
+1,036
+3.342
+8.5
+22.020 20,304
+Total cost of sales
+Table 12 Coal Sales Price
+0.8
+120
+121
+50.0
+8
+12
+187 (34.8)
+122
+20.7
+421
+508
+Tax and surcharge
+6.7
+609
+568
+46.8
+218
+(1.5
+0.8
+韓家村
+Hunan
+東勝
+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.
+Other A Share
+Shareholders
+51.00%-
+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%-
+-69.52%
+Shenhua Guohua Shouguang Power Generation Company Limited
+-13.48%
+-100.00%-
+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%-
+100.00% China Energy Baoshen Railway Group Co., Ltd.
+88.16%
+88.46 %
+China Energy Guangtou Liuzhou Power Generation Co., Ltd.
+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.
+70.00%-
+60.00%-
+Major
+Controlling
+Companies
+China Energy Guohua Beijing Power Research Institute Co., Ltd.
+釣魚島
+3110
+Heilongjiang
+黑龍江
+Zhejiang
+浙江
+Liaoning
+遼寧
+Jiangsu
+江蘇
+Diaoyu Islands *
+Anhui
+Shandong
+山東
+Hongkong
+香港
+Macau
+澳門
+Guangdong
+廣東
+Jiangxi
+湖南
+安徽
+福建
+Fujian
+台灣
+92.00%-
+PT GH EMM Indonesia
+70.00%-
+Tianjin Guohua Jinneng Power Co., Ltd.
+65.00%-
+China Energy Jinjie Energy Co., Ltd.
+70.00%-
+57.76%- Shenhua Zhunge'er Energy Co., Ltd.
+62.82% Shenhua Beidian Shengli Energy Co., Ltd.
+60.00% - Shenhua Xinjie Energy Co., Ltd.
+-100.00%-China Energy Baotou Energy Co., Ltd.
+56.61%-China Energy Baorixile Energy Co., Ltd.
+50.10%-China Energy Yulin Energy Co., Ltd.
+60.00% Shenhua Bayannur Energy Co., Ltd.
+Shareholders
+17.00%
+H Share
+Major Controlling Companies
+Coal Production
+-100.00% China Energy Shendong Coal Group Co., Ltd.
+China Energy Yudean Taishan Power Co., Ltd.
+80.00%-
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+40.50%-
+Equity structure diagram
+China Energy Hebei Cangdong Power Generation Co., Ltd.
+51.00%-
+----------
+Taiwan
+Shenshuo Railway Branch
+Track Mechanical Maintenance Branch
+12.5% - Haoji Railway Co., Ltd.
+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.
+2,332.63
+138.2
+2,426
+3,352.16
+RMB100 million
+Revenue
+22.1
+1,363.3
+123.3
+1,350
+43.7
+1,664.5
+Power generation
+8.0
+4.464
+101.3
+4.76
+4.823
+100 million tonnes
+5.3
+2.916
+108.1
+100 million kWh
+Costs
+RMB100 million
+2,391.56
+2.423
+approximately 7.4% approximately 5%
+24 China Shenhua Energy Company Limited
+increase of 3.6%
+Year-on-year
+Year-on-year
+increase of
+increase of
+Year-on-year
+of self-produced coal
+Changes in unit production costs
+and net finance costs
+and R&D expenses
+7.4
+114.44
+98.3
+125
+122.90
+RMB100 million
+Sales, general and administration,
+47.3
+1,623.74
+140.3
+1,704
+2.84
+江西
+3.070
+Commercial coal production
+Coal sales
+Major associated companies
+Shengli Energy Branch
+-100.00% Shenhua Geological Exploration Co., Ltd.
+Others
+Major
+Branches
+Major Controlling Companies
+Shandong Branch
+China Energy Group Yueyang Power Generation Co., Ltd.
+Guangdong Branch
+-100.00% China Energy Supply Chain Management Group Co., Ltd.
+-100.00%-China Energy Information Technology Co., Ltd.
+80.00%-
+-40.00%- China Energy Finance Co., Ltd.
+(drectly and indirectly
+China Energy Baotou Coal
+Chemical Co., Ltd.
+Coal Chemical
+Shenhua Shandong Power Sales Co., Ltd.
+-90.00%-
+-100.00%- China Energy Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+China Energy (Guangdong) Electricity Sales Co., Ltd.
+-100.00%-
+PT. Shenhua Guohua Pembangkitan Jawa Bali
+70.00%-
+PT. Shenhua Guohua Lion Power Indonesia
+75.00%-
+100.00%
+Guohua Huizhou Thermal Power Branch
+-100.00% China Shenhua Overseas Development and Investment Co., Ltd.
+-100.00% Shenhua International (Hong Kong) Limited
+%
+%
+change
+Year-on-year
+Actual amount
+for 2020
+of Completion
+Proportion
+Target for
+2021
+Actual amount
+for 2021
+The Group recorded a profit before tax for the year of RMB79,170 million (2020: RMB59,362
+million), representing a year-on-year increase of 33.4%; a profit for the year attributable to equity
+holders of the Company of RMB51,607 million (2020: RMB35,849 million), and basic earnings
+per share of RMB2.597/share (2020: RMB1.803/share), representing a year-on-year increase of
+44.0%.
+The year 2021 is an extraordinary year in China's history of energy industry. No other year
+has witnessed more attention from the central government, more intensive adjustment of
+policies and more volatile changes of the market. In the face of the risky and challenging task
+of supply guarantee and the complex and austere business situation, the Company resolutely
+implemented the work requirements of the CPC Central Committee on "Stability in Six Areas"
+and "Six Priorities", adhered to the mission of "becoming the ballast for energy supply and the
+pioneer in energy revolution", earnestly fulfilled its political and social responsibilities as a central
+state-owned enterprise, realised the compatibility and mutual promotion of energy supply and
+production and operation, and maintain a high level of integrated operation to achieve the annual
+operation targets a sound manner.
+DISCUSSION AND ANALYSIS ON OPERATION RESULTS
+I.
+Section IV Directors' Report (Continued)
+100.00%-China Energy Economy and Technology Institute Co., Ltd.
+-51.00% Shenhua (Tianjin) Financial Leasing Co., Ltd.
+China Energy Shenfu (Shishi) Power Generation Co., Ltd.
+42.53% Beijing GD Power Co., Ltd.
+Associated
+Companies
+51.00%-
+-100.00% China Energy Zhunneng Group Co., Ltd.
+as at 31 December 2021 is for illustrative purpose only.
+The equity structure diagram of China Shenhua (including major branches/subsidiaries)
+100 million tonnes
+河北
+(69)
+Hubei
+B1. 滄��電力
+鳳山電廠 POWER
+Wubu
+吳堡
+(preliminary work in progress)
+Baotou Mines
+Xinjie Taigemiao Exploration Area
+6.新街台格廟勘查區(前期工作階段)
+A5. 包頭確區
+Baorixile Mines
+B5. 北京燃氣
+A4.寶日希勒礦區
+Mines
+Zhunge'er
+A3.勝利礦區
+A2.准格爾礦區
+YELLOW RIVER
+黃河
+SHAANXI
+陝西省
+SHANXI
+山西省
+Shengli Mines
+B2. 定州電力
+B3.
+准能電力
+Shouguang Power
+B14.柳州電力
+B13.壽光電力
+Sichuan Energy
+Mengjin Power
+B10.四川能源
+孟津電力
+B9.
+Huizhou Thermal
+Taishan Power
+Jinjie Energy
+Beijing Gas Power
+惠州熱電
+B8.
+B7. 台山電力
+錦界能源
+B6.
+Shendong Power
+Zhunge'er Power
+Dingzhou Power
+Cangdong Power
+神東電力
+B4.
+Watang
+Liuzhou Power
+瓦塘
+神木北站
+Waixigou
+Daqin Railway
+外西溝
+大秦鐵路
+Diandaigou
+點岱溝
+北京
+Zhangjiakou
+張家口
+INNER MONGOLIA AUTONOMOUS REGION
+大同東
+內蒙古自治區
+承德
+豐寧
+Fengning
+Shendong
+神東站
+Jingbian
+● 靖邊
+Haoleɓaoji
+浩勒報吉
+Batuta
+C 巴圖塔 Dongsheng
+Chengde
+Datong East
+准格爾
+Zhunge'er
+Dongying
+Suning North
+Dingzhou West
+東營
+肅寧北
+定州西
+Huanghua
+Shenchi South
+Shenchi
+黃驊
+神池南
+神池
+Caofeidian Port
+曹妃甸港
+天津市
+TIANJIN
+唐山
+Tangshan
+Qinhuangdao Port
+秦皇島港
+BEIJING
+HEBEI
+河北省
+Shuozhou West
+朔州西
+Shenmu North
+Hanjiacun
+B11.福建能源
+B15. 九江電力
+Jiujiang Power
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+長江
+Sichuan
+2J810
+Ningxia C
+寧夏
+Qinghai
+青海:
+Quasi-liner Shipping Route
+主要資產分佈圖 Assets Distribution Map
+← 准班輪航線
+自有礦區
+Self-owned Railway (in operation)
+- 自有運營鐵路
+State-owned or Local Railway
+「國有或地方鐵路線
+Provincial Boundary
+省界線
+圖例 Legend
+Tibet
+西藏
+Self-owned mines
+2021
+呼倫貝爾
+Hulunbeier
+吉林
+湖北
+Hainan
+海南
+Guangxi
+廣西
+Yunnan
+雲南
+Guizhou
+貴州
+Yangtze River
+Henan
+Shaanxi
+河南
+陝西
+Gansu
+甘肅
+Shanxi
+山西
+Tavan Tolgoi
+Inner Mongolia Autonomous Region
+塔本陶勒盖
+Jilin
+內蒙古自治區
+Dajiawa
+Fujian Energy
+大家洼
+Baotou Coal Chemical
+鐵路 RAILWAY
+Zhuhai Coal Dock
+D3.珠海煤碼頭
+Tianjin Coal Dock
+D2. 天津煤碼頭
+Huanghua Port
+D1. 黃驊港
+港口 PORT
+Bazhun Railway
+C6. 巴准鐵路
+C1. 神朔鐵路
+Huangwan Railway
+Shuohuang Railway
+Shengli Energy
+Yongzhou Power
+勝利能源
+B18.
+Indonesia Java
+B16. 印尼爪哇
+EMM Indonesia
+B12. 南蘇FMM
+B17.永州電力
+C3.黃萬鐵路
+Shenshuo Railway
+C4. 大准鐵路
+Dazhun Railway
+包頭煤化工
+F1.
+煤化工 COAL CHEMICAL
+Shipping Company
+E1. 航運公司
+航運 SHIPPING
+② Prepared on the basis of the map with the approval number of GS(2016)1600.
+Note: ① This map as at 31 December 2021 is for illustrative purpose only.
+② 以審圖號GS(2016)1600號地圖為基礎編制
+① 於2021年12月31日之分佈圖,僅做示意
+註
+Tahan Railway
+C10. 塔韓鐵路
+Zhunchi Railway
+C&.准池鐵路
+Baoshen Railway
+包神鐵路
+55.
+C2. 朔黃鐵路
+Huangda Railway
+C9. 黃大鐵路
+Ganquan Railway
+C7. 甘泉鐵路
+中國 CHINA
+83.1
+307
+423
+50.9
+62,690
+94,575
+Net cash generated from operating activities RMB million
+excluding Finance Company
+7.4%
+10%
+increase of around increase of around
+233,263
+(162,374)
+57,977
+335,216
+(239,156)
+80,008
+(660)
+92
+60,804
+81,167
+(28
+1,047
+(2,951)
+259
+722
+209
+980
+2,678
+2,720
+16,636
+16,310
+7,976
+3,010
+As at
+29,832
+As at
+As at
+As at
+As at
+As at
+562,904
+(133,317)
+(161,376)
+610,597
+RMB million
+RMB million
+424,257
+(154,901)
+RMB million
+446,069
+(176,717)
+(2,425)
+8,864
+RMB million
+(257)
+6,410
+RMB million
+8.065
+(514)
+RMB million
+As at
+As at
+As at
+As at
+31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020
+RMB million
+RMB million RMB million
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+59,125
+16.3
+(61,464)
+(81,075)
+1,853
+321
+5,851
+3.112
+6,195
+6,359
+6,440
+38,723
+40,699
+49,486
+64,124
+190,029
+292,661
+Sub-total of segment revenue
+44.0
+35,849
+51.607
+RMB million
+Profit for the year attributable to equity
+7.4
+122.90
+132
+RMB100 million
+and R&D expenses and net finance
+Segment profit/(loss) from
+operations
+holders of the Company
+(225,126)
+81 289
+94,575
+RMB million
+Net cash generated from operating activities
+Year-on-year
+Year-on-year
+Changes in unit production costs of
+self-produced coal
+44.0
+1.803
+2.597
+RMB/share
+Basic earnings per share
+costs
+(44
+(4,675)
+(4,754)
+(2,755)
+(5,018)
+(3.314)
+(3,342)
+(20,304)
+(22,020)
+(38,729)
+(60,019)
+(153,373)
+Segment cost of sales
+Table 4 Operation Data
+Table 5 Commercial coal production Volume
+Change
+Total power
+7.4
+62.2
+66.8
+Zhunge'er Mines
+Loading volume at Shenhua Tianjin Coal
+5.5
+203.8
+215.0
+million tonnes
+Change in
+output
+output
+%
+RMB million RMB million
+2020
+Power
+Power
+2021
+2020 Change
+2021
+consumption
+Standard coal
+2.3
+185.0
+189.2
+Average
+Shendong Mines
+for power
+Increase/decrease]
+102,865
+unit cost
+dispatch Unit cost
+Cost
+dispatch Unit cost
+Cost
+Cost of coal purchased
+capacity as at 31
+capacity as at 31
+in installed capacity
+capacity as at 31
+outpour
+utilization
+output
+Gross power
+19.4
+21.1
+25.2
+Shengli Mines
+2.2
+45.4
+46.4
+million tonnes
+Equity installed
+Total installed
+Total installed
+Loading volume at Huanghua Port
+railway
+By mines
+(120,171)
+268,067
+5.3
+291.6
+307.0
+Million tonnes
+Million tonnes
+2020 Change
+2021
+Segment total liabilities
+Segment total assets
+Total production
+8.0
+4464
+482.3
+million tonnes
+Coal sales
+5.3
+291.6
+307.0
+million tonnes
+Commercial coal production
+%
+2020
+2021
+31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020 31 December 2021 31 December 2020
+RMB million
+RMB million
+222,984
+(106,897)
+RMB million
+166,654
+(134,566)
+6.2
+285.7
+303.4
+billion tonne km
+Transportation turnover of selfowned
+Table 8 Cost of Sales of Power Segment
+Cost of Sales of Coal Segment
+Table 7
+Table 6 Power Business
+298,827
+(395,716)
+(446,494)
+335,821
+Selling, general and administrative
+(2,950
+(50,470)
+(56,285)
+RMB million
+21,619
+(6,629)
+RMB million
+19,821
+(6,519)
+RMB million
+124,113
+RMB million
+139,551
+RMB million
+RMB million
+150,299
+(110,040)
+8,938
+48,742 111.0
+14.4)
+(81,075)
+2021 Annual Report 13
+Chairman
+Wang Xiangxi
+£ if
+Let us advance into the future together!
+Looking back to our achievements and gains in 2021, we are grateful to our great motherland, the
+great era, and every organization and person who contributed to the development of China Shenhua!
+2022 is an important year to continue the "14th Five-Year Plan", and we will closely unite around the
+Central Party Committee with Comrade Xi Jinping as the core, firmly implement the series of important
+speeches and important instructions and spirits given by General Secretary Xi Jinping during the
+inspection of Yulin Chemical of China Energy Group and others. We will adhere to the working general
+keynote of prudent progress, highlight the working guidance of "prudence, synergy, empowerment and
+improvement", coordinate development and safety, accurately grasp the relationship between energy
+security and green transformation, synergy efficiency and costs reduction and efficiency enhancement,
+innovation drive and industrial upgrade, intensive development and optimization of deployment, strategy
+planning and long-term success. We will spare no efforts to ensure energy security, firmly promote
+green and low-carbon development, enhance enterprise technical innovation, highlight the leading and
+guarding role of high-quality building of the Party, live up to the investors' trusts and reliance, accelerate
+the establishment of a competitive first-class listed energy company in the world, and celebrate the 20th
+National People's Congress with practical actions.
+strengthened market capitalization management and optimized property rights management. We
+reinforced the results of poverty alleviation, comprehensively promoted rural revitalization, arranged
+assistance funds of RMB123 million, and continued to carry out co-development with local enterprises,
+territorial assistance, and other assistance and donations. We implemented the cooperation deployment
+of China's State-owned Assets Supervision and Administration Commission's ("SASAC") "central and
+local hundred pairs of enterprises" to develop the Northeast China, signed a strategic cooperation
+agreement, actively promoted the organization and implementation of the agreement, which contributed
+to the vigorous development of the Northeast China. We solidly promoted ESG governance and won the
+ESG Pioneer 50 Award (ESG50), the first batch of China ESG Demonstration Enterprises (I
+ESG) and the CDP Water Safety Outstanding Performance Award (CDPÈоиÐ).
+Section III Chairman's Statement (Continued)
+12 China Shenhua Energy Company Limited
+With persistent momentum of deepening reform, we fully promoted the establishment of a first-
+class enterprise, conducted capital operation, strengthened management of market capitalization,
+and carried out social responsibility. With persistence and caution, we protected the interests of
+medium to small-sized investors in continuing the distribution of proportional dividends. We continuously
+With ambitious momentum of innovation development, we empowered mines, power plants,
+railways, ports and chemical industry with technology. We strengthened the synergy of industry
+chain and launched the "Harmony Mining Operating System" with large-scale promotion and application
+of intelligent mines and intelligent coal mining working faces, as well as demonstrations of the driverless
+heavy truck. The first heavy-haul railway with a mobile blocking system in China commenced operation,
+and the first autonomous controllable intelligent decentralized control system was successfully applied.
+The world's first coal port to achieve intelligent control of the entire process of dumping, stacking,
+reclaiming and loading equipment was successfully completed and put into operation. The coordinated
+production and operations scheduling system, emergency command platform and ERP integrated
+industrial internet platform are fully online and operational, and driven by data in entering a new stage of
+high-quality development.
+We accelerated the green and low-carbon transformation and assisted with achieving the Peak
+Carbon Dioxide Emissions and Carbon Neutrality. We solidly promoted the safe, green, intelligent
+and efficient development of the coal industry, adhered to the high-end orientation, diversification and
+low-carbonization of the coal chemical industry, expedited the research and development of coal-based
+biodegradable materials and other high-end products. We also made full use of our own land, resources
+and capital to speed up the deployment of new energy industries through multiple channels and forms,
+cooperated to construct the zero-carbon industrial parks and new energy bases, successively contributed
+capital to participate in the establishment of new energy industry funds and low-carbon development
+investment funds, and performed a significant role as pioneer in demonstrating and leading the reform
+of energy.
+We tackled the responsibility and challenges of energy security and supply with great
+determination to protect thousands of families. The Company conscientiously carried out its
+responsibilities and missions as a listed central state-owned-enterprise, vigorously promoting the
+principle of "empowering society and boosting the economy", effectively overcoming the volatility of
+the coal market and impact of extreme weather, making full efforts to stabilize production, price, and
+expectations, and securing supply, heating, and people's livelihoods. We ensured the increase of coal
+production and supply, with production of 310 million tonnes, representing an increase of 5.3%, and coal
+sales of 480 million tonnes, representing an increase of 8.0%. We also seized opportunities to achieve
+consecutive material breakthroughs in resources, obtained the exploration rights certificate of the
+Xinjie Taigemiao Southern Area and achieved rights to high quality resources of the Xinjie Mining Area.
+The Company also improved the transportation efficiency of the "railway, port and shipping", with an
+increase of 6.2% in the transportation turnover of the self-owned railway. We strived to guarantee the
+stable and maximum generation of power, with an increase of 22.1% in power generation. We strictly
+implemented the agreed price under long-term cooperation of coal, and ensured the stabilization and
+security of energy supply.
+2021 marked the 100th anniversary of the founding of the Communist Party of China (the "Party").
+Under the guidance of Xi Jinping's "Thought on Socialism with Chinese Characteristics for a New
+Era", we studied in-depth the major achievements and historical experience of the Party over the past
+century, deeply comprehended the determining significance of "Two Confirmations", executed the
+great call of "Hard Work Making Socialism Realized (1)", implemented the enterprise
+development strategy of "One Target, Three Models and Five Strategies, and Seven First-class",
+integrated advancement of the "Six New Opportunities", being green transformation, driving innovation,
+improving quality and efficiency, improving management, deepening reform, and Party building. We have
+also completed all targets and missions within the year, ultimately initiating high quality development
+of China's "14th Five-Year Plan". This year, the Company has achieved RMB51,607 million in profit for
+the year attributable to owners of the Company and basic earnings per share of RMB2.597. The closing
+gearing ratio was 26.4%, and the total market capitalization reached USD66.2 billion. In the S&P Global
+Platts Top 250 Global Energy Company Rankings (2021 250)" released by S&P Global
+Platts, the Company ranked 2nd, which is the highest ranked Chinese enterprise.
+As time goes by, we experienced a significant year of 2021. On behalf of the Board, I would like to take
+this opportunity to express our sincere gratitude to all shareholders for their concern and support in
+China Shenhua and present you with the 2021 annual report of China Shenhua.
+Dear Shareholders:
+Section III Chairman's Statement
+2021 Annual Report 11
+In the fourth quarter, the decrease in profit for the period attributable to equity holders of
+the Company as compared to the previous three quarters was primarily due to the following
+reasons: (1) the cost expenditure occurred in the fourth quarter is higher than that in the first
+three quarters; (2) certain coal companies, subsidiaries of the Company, actively applied to the
+NDRC for recognition of preferential policies on enterprise income tax for the development of
+the Western region, and continued to calculate the income tax preferential rate of 15% of the
+development of the Western region in the first three quarters. As of the end of reporting period,
+certain coal companies have not yet obtained the recognition and approval documents from the
+NDRC, and adjusted to the rate of 25% for calculating the annual enterprise income tax, resulting
+in an increase in the Group's income tax in the fourth quarter; (3) the Group conducted impairment
+assessment on assets with impairment indications and accrued provisions for impairment of assets
+based on the assessment results; (4) the Company recognized a higher share of losses from
+associates in the fourth quarter.
+27,069
+27,287
+20,605
+19,614
+Net cash generated from operating activities
+10,330
+Section IV Directors' Report
+14,777
+重载技术新突破
+231
+Coal
+Change
+%
+in 2021
+2022
+Change
+Actual amount
+Target for
+Table 3 Results of Each Segment
+Table 2 Financial Indicators
+Overview of China Shenhua's Operating Results for the Year of 2021
+Table 1 Business Targets
+首列重载移动闭塞列车
+国能朔黄铁路
+N
+HXD17140A
+S
+園
+120km/h
+Section III Chairmans Statement (Continued
+CHN ENERGY
+国家能源集团
+中国共产党成立100周 年
+CHN ENERGY
+国家能源集团
+庆祝中
+Power
+14,636
+holders of the Company
+4,014
+3,163
+(3,321)
+1,338
+production and other related expenditure
+Simple production maintenance, safety
+Adjustments for:
+360,189
+376,875
+39,170
+50,269
+Business Enterprises
+Under China Accounting Standards for
+of 2020
+At the end
+of 2021
+2020
+2021
+At the end
+Net profit attributable to equity
+holders of the Company
+Net assets attributable to equity
+holders of the Company
+Unit: RMB million
+VIII. DIFFERENCE IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+Major Financial Indicators (Continued)
+Section II Company Profile and
+Under International Financial Reporting
+11,864
+Standards
+35,849
+Profit for the period attributable to equity
+102,267
+88,970
+76,371
+67,608
+Revenue
+December)
+September)
+June)
+March)
+(October-
+(July-
+(April -
+(January-
+Fourth quarter
+Third quarter
+First quarter Second quarter
+Unit: RMB million
+IX. MAJOR FINANCIAL DATA OF EACH QUARTER OF 2021
+Section II Company Profile and
+Major Financial Indicators (Continued)
+10 China Shenhua Energy Company Limited
+Pursuant to the relevant regulations of the related government authorities in the PRC, the Group
+accrued provisions for simple production maintenance, safety production and other related
+expenditures, recognised as expenses in profit or loss and separately recorded as a specific
+reserve in shareholders' equity. On utilisation of the specific reserve as fixed assets within
+the stipulated scope, the full amount of accumulated depreciation is recognised at the same
+time when the cost of the relevant assets is recorded. Under International Financial Reporting
+Standards, these expenses are recognised in profit or loss as and when incurred. Relevant capital
+expenditure is recognised as property, plant and equipment and depreciated according to the
+relevant depreciation method. The effect on deferred tax arising from such difference is also
+reflected.
+Explanation on differences in domestic and overseas accounting standards:
+364,203
+380,038
+51,607
+Railway
+Port
+Shipping
+335,216
+RMB million
+RMB million
+RMB million
+2020
+2021
+2020
+Total
+-
+1,028
+24
+5,165
+5,851
+1,747
+1,321
+974
+982
+5,804
+6,838
+49,348
+63,959
+169.197
+256,241
+Revenue from external
+38.7
+233,263
+43.984
+customers
+RMB100 million
+825
+297
+1,365
+4,874
+5,385
+5,458
+32,919
+33,861
+138
+165
+20,832
+36.420
+Inter-segment revenue
+2.391.56
+2,048
+RMB100 million
+Cost of sales
+28.7
+79,018
+101,680
+RMB million
+EBITDA
+(11.5)
+3.352.16
+2.966
+Revenue
+61,009
+RMB million
+Profit for the year
+(3.0
+3.070
+2.978
+100 million tonnes
+Commercial coal production
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+2020
+2021
+Eliminations
+Unallocated items
+Coal chemical
+RMB million
+RMB million
+RMB million
+RMB million
+8.4
+1,664.5
+1,805
+100 million kWh
+Power generation
+43.7
+233 263
+335,216
+RMB million
+Revenue
+16.5)
+4.823
+(61,464)
+4.029
+Coal sales
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+100 million tonnes
+100 million
+5,165
+Dock
+357
+275
+5,434
+104.7
+109.8
+North China Power Grid Shandong
+Shuguang Power
+168.76
+171.86
+2. Power segment
+72
+444.3
+100.0
+2,604
+3,720
+3,720
+267
+312
+5,765
+1983
+214.5
+Shaanxi
+North China Power Grid
+Jinje Energy
+205.75
+2,020
+61.57
+2,020
+Table 11 Cost of Sales of Transportation and Coal
+Chemical Segments
+44
+76.6
+16.8
+0.33
+50.22
+2,000
+2,000
+2,000
+364
+276
+6,023
+1205
+Central China Power Grid Jiangxi
+Jiujiang Power
+Including: new energy business
+10.8)
+180.4
+37.6
+5.7
+137.7
+30.5
+Coal Chemical
+Shipping
+Port
+Railway
+1,212
+3. Transportation segments
+1. Coal segment
+Million tonnes
+1,285
+2,520
+2.464
+Others
+amortization
+1.4
+19,453
+19,724
+Others
+1,320
+1,320
+ཐྰ་་་ 'B
+2,810
+357
+294
+6,014
+164.6
+171.9
+Fujian
+st China Power Grid
+East C
+Fujian Energy
+RMB100 million
+RMB100 million
+Change
+Tax and surcharge
+%
+14,850
+1,561.3
+%
+2,378
+3,810
+660
+38,729
+60.019
+Total cost of sales
+631
+846
+Tax and surcharge
+153,373 46.8
+225,126
+Total cost of sales
+4,096
+5,120
+1,021
+2520
+2,852
+4.833
+Other operating costs
+81.6
+8.7
+1,276.5
+1,115
+15.8
+9,531 55.8
+Sichuan Energy Icoal-fired
+2021
+2020
+1.516.4
+1.618.6
+Total of coal-fired power plants/weighted average
+4.7
+60.2
+13.2
+8.51
+4.83
+5,858
+15.5
+17.6
+Indonesia
+PLN
+EMM Indonesia
+4. Coal chemical segment
+(203)
+23.2
+3.9
+8.8
+356.3
+81.4
+664
+102
+10.6
+Hunan
+4.764
+Hunan Power Grid
+*888
+295
+3.6
+365
+378
+132
+2372
+2.686
+Raw materials, fuel and power
+490
+700
+-
+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
+1,200
+303
+Yongzhou Power
+0.55
+0.44
+% RMB million RMB million
+% RMB million RMB million
+% RMB million RMB million
+RMB million RMB million
+2,102
+3,260
+2000
+1260
+424
+325
+3,468
+56.1
+61.0
+Sichuan
+Sichuan Power Grid
+Change
+2020
+2021
+Change
+2020
+2021
+Change
+2020
+2021
+Change
+100 million
+%
+80.69
+50.36
+Shipping
+117.9
+14.0
+6.4
+5.826
+38.7
+408
+Guangxi
+Guangxi Power Grid
+Liuzhou Power
+10.02
+15.38
+2020
+Port
+35.6
+8.7
+4,068
+45.6
+488
+Henan
+Central China Power Grid
+Mengin Power
+39.79
+64.87
+Including: Railway
+power
+16.0
+sales
+115.0
+སོ ཟ ཟཋ ཙ བྷཟཆ་ཤ
+39.9
+8,119
+11,355
+Personnel expenses
+MW
+MW
+MW
+MW
+RMB/MW
+g/kWh
+**
+Shaanxi Provincial Local
+Shaanxi Province
+(6.8
+356.9
+332.8
+thousand tonnes
+Polyethylene sales
+5.9
+195.4
+207.0
+4,792
+222.1
+240.3
+Inner Mongolia
+Cost of power output dispatch
+Northwest North China
+54,340
+35,246
+5.014
+(700)
+5,504
+323
+320
+power
+2,756 13.0
+3,114
+Repair and maintenance
+-
+381
+660
+660
+299
+347
+37.3
+1945
+1.276.5
+24,827
+267.0
+1,561.3
+41.686
+Raw materials, fuel and
+26.1
+1,276.5 276.1
+1561.3
+Shendong Power
+Inner Mongolia
+223
+113.0
+7.3
+Shipment turnover
+billion tonnenm
+2021
+112.1
+93.0
+20.5
+Baotou Mines
+1.2
+1.8
+(33.3)
+100 million kWh 100 million kWh
+hours
+Gross power generation
+billion kWh
+166.45
+136.33
+22.1
+By regions
+Zhunge'er Power
+North China Power Grid
+Inner Mongolia
+36.3
+32.9
+121.2
+million tonnes
+Shipping volume
+KWh RVB/MWh
+127.65
+156.13
+billion kWh
+Baorixile Mines
+24.6
+21.5
+14.4
+Power plants
+Power grid
+Location
+generation
+dispatch
+4.528
+hours
+Power tariff
+December 2020
+for 2021
+December 2021
+December 2021
+Raw materials, fuel and power
+8,567
+7,897
+8.5
+RMB million
+348.1
+KWh RMB/MWh RMB million
+dispatch
+Depreciation and amortization
+5,714
+5,318 24.6
+394
+201
+307
+5,218
+2521
+252.4
+267.1
+Guangdong
+South China Power Grid
+Taishan Power
+Proportion
+2520
+324
+304
+301
+4.666
+108.8
+1176
+Hebei
+North China Power Grid
+Dingzhou Power
+Table 10 Capital Expenditure
+Table 9 Domestic Coal Sales Volume
+2,520
+323
+297
+4,539
+5,120
+6,624
+of domestic
+Completion in 2021
+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
+660
+371
+307
+221
+307
+5,760
+34.3
+312
+380
+38.0
+Guangdong
+South China Power Grid
+Huizhou Thermal
+Plan for 2022
+1144
+108.8
+278
+1.561.3
+1.808
+Repair and maintenance
+12.5
+51,557
+58,027
+Transportation charges
+Power Grid
+(4.7)
+331.2
+315.6
+11.6
+thousand tonnes
+2.5
+93.2
+95.5
+16.0
+18.1
+1.276.5
+2307
+21.0
+1.561.3
+3,277
+Personnel expenses
+Polypropylene sales
+1,320
+Total power output dispatch
+38.5
+4.5
+Shanxi Province
+(15.1)
+Shengli Energy
+1,276.5
+4911
+32.7
+5,105 1.5613
+Depreciation and
+3.0
+North China Power Grid
+16.3
+2,086 1,276.5
+Cangdong Power
+North China Power Grid
+Inner Mongolia
+Hebei
+9.4
+8.4
+712
+352
+(28.8)
+50.0
+(29)
+(37)
+Consolidated Statement of Cash Flows (Continued)
+(3,214)
+For the year ended 31 December 2021
+2020
+RMB million
+Financing activities
+Interest paid (Note 29(b))
+(197)
+(250)
+Year ended 31 December
+2021
+RMB million
+Capital element of lease rentals paid (Note 29(b))
+Interest element of lease rentals paid (Note 29(b))
+China Shenhua Energy Company Limited
+Proceeds from borrowings (Note 29(b))
+44,000
+71,258
+Cash and cash equivalents, at the beginning of the year
+112,880
+41,827
+Effect of foreign exchange rate changes
+(174)
+(131)
+Cash and cash equivalents included in assets
+Net increase in cash and cash equivalents
+classified as held for sale
+Cash and cash equivalents, at the end of the year
+156,706
+112,880
+The notes on pages 201 to 307 form part of these financial statements.
+200
+Notes to the consolidated financial statements
+1. PRINCIPAL ACTIVITIES AND ORGANISATION
+Principal activities
+For the year ended 31 December 2021
+(74)
+(42,079)
+(43,731)
+Net cash used in financing activities
+22,114
+9,940
+Repayments of borrowings (Note 29(b))
+(21,741)
+(13,840)
+Repayments of bonds
+(3,488)
+Proceeds from bills discounted
+995
+996
+Purchase of own shares
+(256)
+Contributions from non-controlling shareholders
+1,129
+606
+Distributions to non-controlling shareholders
+(6,826)
+(8,159)
+Dividend paid to equity holders of the Company (Note 15)
+(35,962)
+(25,061)
+(2,530)
+2021 Annual Report 199
+Increase in contract liabilities
+(6,844)
+2,561
+Loss allowances, net of reversal (Note 12)
+(947)
+874
+(1,684)
+(2,492)
+524
+Share of results of associates
+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)
+Interest income (Note 9)
+Interest expenses
+2,698
+2,334
+(5,027)
+Increase in prepaid expenses and other assets
+(2,689)
+(2,779)
+Increase in accounts and bills receivables
+(909)
+(157)
+Increase in inventories
+Changes in working capital:
+79,697
+105,196
+Operating cash flows before movements in working capital
+(71)
+(115)
+Exchange gain, net (Note 9)
+18
+(2,609)
+36
+87
+7
+9
+160
+(346)
+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
+(1,181)
+1,162
+400
+413
+689
+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.
+17,954
+725
+Amortisation of long-term deferred expenses (Note 12)
+(Gains)/ losses on disposal of property,
+Gains on disposal of financial assets at
+FVTPL (Note 12)
+(449)
+Impairment losses on assets held for sale (Note 12)
+Impairment losses on right-of-use assets (Note 12)
+11
+Impairment losses on intangible assets (Note 12)
+505
+Impairment losses on exploration and evaluation assets (Note 12)
+268
+376
+Impairment losses on construction in progress (Note 12)
+605
+535
+Impairment losses on property, plant and equipment (Note 12)
+134
+financial instruments (Note 12)
+Losses on changes in fair value of derivative
+Impairment losses on goodwill (Note 12)
+Increase in accounts and bills payables
+2,326
+3,693
+1,427
+2,135
+Interest received
+937
+1,613
+Dividend received from associates
+Increase in restricted bank deposits
+614
+2,566
+classified as held for sale
+1,350
+1,389
+(786)
+(123)
+Net cash received from acquisition of subsidiaries
+(1,088)
+(3,023)
+Placing of time deposits with original maturity over three months
+Net cash (used in)/ generated from investing activities
+28,621
+480
+141
+O Collection of other current assets
+expenses and other current assets
+Disposal of interbank certificate of deposits included in prepaid
+(1,191)
+other non-current assets
+Investments in long-term loans included in
+2,016
+10,531
+over three months
+Maturity of time deposits with original maturity
+(11,212)
+(1,046)
+(736)
+Net cash received from disposed of assets
+Net cash received from disposal of subsidiaries
+Purchase of non-controlling interests
+198
+81,289
+94,575
+Net cash generated from operating activities
+(11,804)
+(16,080)
+Income tax paid
+93,093
+110,655
+Cash generated from operations
+472
+1,608
+15,438
+9,488
+Increase in accrued expenses and other liabilities
+China Shenhua Energy Company Limited
+32,048
+Consolidated Statement of Cash Flows (Continued)
+Year ended 31 December
+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)
+(23,236)
+(627)
+Increase in right-of-use assets
+exploration and evaluation assets, construction in progress
+and other non-current assets
+Additions of property, plant and equipment, intangible assets,
+Investing activities
+RMB million
+2020
+2021
+RMB million
+For the year ended 31 December 2021
+Organisation
+Appropriation of maintenance and
+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.
+35,607
+35,849
+15
+(257)
+15
+(257)
+Utilisation of maintenance and
+production funds (Note (ii)
+Dividend declared (Note 15)
+Total comprehensive income for the year
+8,044
+for the year
+Profit for the year
+19,890
+At 1 January 2020
+(333)
+(91)
+(242)
+43,984
+8,135
+35,849
+35,849
+Other comprehensive income
+43,651
+(25,061)
+(25,061)
+(7,950)
+' ' ठ
+(2,164)
+(507)
+(1,696)
+Others
+Disposal of subsidiaries
+shareholders
+Distributions to non-controlling
+606
+606
+shareholders
+Contributions from non-controlling
+(256)
+(256)
+(256)
+Purchase of own shares
+6,181
+(6,181)
+production funds (Note (iii))
+(2,995)
+2,995
+(25,061)
+420,218
+(7,950)
+64,141
+237,218
+reserves
+reserves
+reserve
+reserve
+premium
+shares
+capital
+Total
+controlling
+Retained
+earnings
+Other
+Exchange
+Capital
+Share
+Treasury
+Share
+Non-
+Equity attributable to equity holders of the Company
+For the year ended 31 December 2021
+19,245
+Consolidated Statement of Changes in Equity (Continued)
+Statutory
+Total
+interests
+equity
+(14,824)
+25,118
+56
+90
+3,618
+85,001
+(Note (v))
+(Note (iv))
+(Note (i)
+(Note (i))
+(Note (i))
+(Note 38)
+(Note 38)
+RMB million RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+356,077
+627
+627
+(84)
+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.
+2021 Annual Report 203
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,
+2 or 3 based on the degree to which the inputs to the fair value measurements are observable and
+the significance of the inputs to the fair value measurement in its entirety, which are described as
+follows:
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
+liabilities that the entity can access at the measurement date;
+Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
+observable for the asset or liability, either directly or indirectly; and
+Level 3 inputs are unobservable inputs for the asset or liability.
+Historical cost is generally based on the fair value of the consideration given in exchange for
+goods and services.
+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.
+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.
+Significant accounting policies adopted by the Group are disclosed below.
+Basis of consolidation
+The consolidated financial statements incorporate the financial statements of the Company and
+entities controlled by the Company and its subsidiaries. Control is achieved when the Company:
+has power over the investee;
+is exposed, or has rights, to variable returns from its involvement with the investee; and
+has the ability to use its power to affect its returns.
+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.
+204
+China Shenhua Energy Company Limited
+59,362
+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 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").
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares
+issued to Shenhua Group represented the entire registered and paid-up share capital of the
+Company at that date.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a
+price of 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.
+2021 Annual Report 201
+202
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+1. PRINCIPAL ACTIVITIES AND ORGANISATION (CONTINUED)
+2.
+Immediate parent and ultimate controlling party
+On 28 August 2017, Shenhua Group received the Notice regarding the Restructuring of China
+Guodian Corporation and Shenhua Group Corporation Limited (Guo Zi Fa Gai Ge [2017] No. 146)
+from the State-owned Assets Supervision and Administration Commission of the State Council,
+which approves that China Guodian Corporation (the "China Guodian") and Shenhua Group
+shall implement the joint restructuring, China Guodian shall be merged into Shenhua Group, and
+the company name of Shenhua Group shall be changed to China Energy Investment Corporation
+Limited (the "China Energy Group"). China Energy Group will be the parent company after the
+completion of the restructuring.
+On 27 November 2017, Shenhua Group has completed the industrial and commercial registration
+of changes in the business license. The Directors consider the immediate parent and ultimate
+holding company of the Group to be China Energy Group.
+CHANGES IN ACCOUNTING POLICIES
+The Group has applied the following amendments to IFRSS issued by the IASB to these financial
+statements for the current accounting period:
+•
+Amendments to IFRS 16, Covid-19-Related Rent Concessions beyond 31 December 2021
+Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16, Interest Rate Benchmark
+Reform-phase 2
+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.
+China Shenhua Energy Company Limited
+3.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES
+Basis of preparation
+79,170
+Adjustments for:
+Profit before income tax
+2020
+RMB million
+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)
+(i)
+Notes:
+For the year ended 31 December 2021
+Consolidated Statement of Changes in Equity (Continued)
+2021 Annual Report 195
+429,587
+65,384
+364,203
+(14,809) 250,685
+20,236
+(201)
+6677
+3,657
+85,001
+(256)
+19,890
+At 31 December 2020
+(2,248)
+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 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.
+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.
+Specific reserve for maintenance and production funds
+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 mainly represents the consideration paid for acquisition of subsidiaries under common control, and share of
+other reserves of associates.
+Other reserves
+(iv)
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve
+in 2021 and 2020.
+The appropriation to the discretionary surplus reserve is subject to the shareholders' approval. The utilisation of the
+reserve is similar to that of the statutory surplus reserve.
+Discretionary surplus reserve
+Statutory reserves (Continued)
+(iii)
+Notes: (Continued)
+For the year ended 31 December 2021
+Consolidated Statement of Changes in Equity (Continued)
+196 China Shenhua Energy Company Limited
+Pursuant to the relevant PRC regulations, the Group is required to transfer production and maintenance funds at fixed rates
+based on relevant bases, such as production volume, to a specific reserve account. The production and maintenance funds
+could be utilised when expenses or capital expenditures on production maintenance and safety measures are incurred. The
+amount of production and maintenance funds utilised would be transferred from the specific reserve account to retained
+earnings.
+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.
+Depreciation of property, plant and equipment (Note 12)
+Depreciation of right-of-use assets (Note 12)
+Amortisation of intangible assets (Note 12)
+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.
+214
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+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
+Non-current assets held for sale (Continued)
+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.
+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)
+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.
+208
+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.
+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.
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of
+the Group's foreign operations are translated into the presentation currency of the Group (i.e.
+RMB) using exchange rates prevailing at the end of each reporting period. Income and expenses
+items are translated at the average exchange rates for the period. Exchange differences arising, if
+any, are recognised in other comprehensive income and accumulated in equity under the heading
+of exchange reserve, attributed to non-controlling interests as appropriate.
+In preparing the financial statements of each individual group entity, transactions in currencies
+other than entity's functional currencies (foreign currencies) are recognised at the rates of
+exchange prevailing on the dates of the transactions. At the end of the reporting period, monetary
+items denominated in foreign currencies are retranslated at the rates prevailing at that date.
+Non-monetary items that are measured in terms of historical cost in a foreign currency are not
+retranslated. Exchange differences on monetary items are recognised in profit or loss in the period
+in which they arise.
+Foreign currencies
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+Revenue from contracts with customers
+210
+A contract liability represents the Group's obligation to transfer goods or services to a customer
+for which the Group has received consideration (or an amount of consideration is due) from the
+customer.
+A contract asset represents the Group's right to consideration in exchange for goods or
+services that the Group has transferred to a customer that is not yet unconditional. It is assessed
+for impairment in accordance with IFRS 9. In contrast, a receivable represents the Group's
+unconditional right to consideration, i.e. only the passage of time is required before payment of
+that consideration is due.
+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.
+the Group's performance creates and enhances an asset that the customer controls as the
+Group performs; or
+the customer simultaneously receives and consumes the benefits provided by the Group's
+performance as the Group performs;
+Control is transferred over time and revenue is recognised over time by reference to the progress
+towards complete satisfaction of the relevant performance obligation if one of the following
+criteria is met:
+A performance obligation represents a good or service (or a bundle of goods or services) that is
+distinct or a series of distinct goods or services that are substantially the same.
+2021 Annual Report 209
+2021 Annual Report 207
+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
+2021 Annual Report 205
+Non-controlling interests in subsidiaries are presented separately from the Group's equity
+therein, which represent present ownership interests entitling their holders to a proportionate
+share of net assets of the relevant subsidiaries upon liquidation.
+All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
+transactions between members of the Group are eliminated in full on consolidation.
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
+accounting policies into line with the Group's accounting policies.
+Profit or loss and each item of other comprehensive income are attributed to equity holders of
+the Company and to the non-controlling interests. Total comprehensive income of subsidiaries
+is attributed to equity holders of the Company and to the non-controlling interests even if this
+results in the non-controlling interests having a deficit balance.
+Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and
+ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a
+subsidiary acquired or disposed of during the year are included in the consolidated statement of
+profit or loss and other comprehensive income from the date the Group gains control until the
+date when the Group ceases to control the subsidiary.
+any additional facts and circumstances that indicate that the Group has, or does not have,
+the current ability to direct the relevant activities at the time that decisions need to be
+made, including voting patterns at previous shareholders' meetings.
+206
+rights arising from other contractual arrangements; and
+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:
+Basis of consolidation (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
+potential voting rights held by the Group, other vote holders or other parties;
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+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
+3.
+China Shenhua Energy Company Limited
+Non-controlling interests that are present ownership interests and entitle their holders to a
+proportionate share of the entity's net assets in the event of liquidation are initially measured at
+the non-controlling interests' proportionate share of the recognised amounts of the acquiree's
+identifiable net assets.
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount
+of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously
+held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
+identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the
+acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the
+sum of the consideration transferred, the amount of any non-controlling interests in the acquiree
+and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is
+recognised immediately in profit or loss as a bargain purchase gain.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised
+at their fair value, except that deferred tax assets or liabilities, and assets or liabilities related to
+employee benefit arrangements are recognised and measured in accordance with IAS 12 Income
+Taxes and IAS 19 Employee benefits respectively.
+Acquisitions of businesses, other than business combination under common control are accounted
+for using the acquisition method. The consideration transferred in a business combination is
+measured at fair value, which is calculated as the sum of the acquisition-date fair values of the
+assets transferred by the Group, liabilities incurred by the Group to the former owners of the
+acquiree and the equity interests issued by the Group in exchange for control of the acquiree.
+Acquisition-related costs are generally recognised in profit or loss as incurred.
+Business combinations
+Any difference between the amount by which the non-controlling interests are adjusted, and the
+fair value of the consideration paid or received is recognised directly in equity and attributed to
+owners of the Company.
+Changes in the Group's interests in subsidiaries that do not result in the Group losing control
+over the subsidiaries are accounted for as equity transactions. The carrying amounts of the
+Group's relevant components of equity and the non-controlling interests are adjusted to reflect
+the changes in their relative interests in the subsidiaries, including re-attribution of relevant
+reserves between the Group and the non-controlling interests according to the Group's and the
+non-controlling interests' proportionate interests.
+Changes in the Group's ownership interests in existing subsidiaries
+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.
+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.
+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.
+researching and analysing historical exploration data;
+Exploration and evaluation assets comprise costs which are directly attributable to the search for
+mineral resources, the determination of technical feasibility and the assessment of commercial
+viability of an identified resource:
+Exploration and evaluation assets
+reserves.
+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
+The Group's mining rights are of sufficient duration (or convey a legal right to renew for sufficient
+duration) to enable all reserves to be mined in accordance with current production schedules.
+Mining structures and mining rights are depreciated on a units-of-production basis utilising only
+proved and probable coal reserves in the depletion base.
+gathering exploration data through topographical, geochemical and geophysical studies;
+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.
+Property, plant and equipment (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
+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.
+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.
+Mining structures and mining rights
+determining and examining the volume and grade of the resource;
+surveying transportation and infrastructure requirements; and
+conducting market and finance studies.
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+Government grants
+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.
+Obligations for land reclamation
+Once the final feasibility study has been completed and a development decision has been taken,
+accumulated capitalised exploration and evaluation expenditures in respect of an area of interest
+are transferred to property, plant and equipment. In circumstances when an area of interest
+is abandoned or management decides it is not commercially viable, any accumulated costs in
+respect of that area are written off in the period the decision is made.
+Expenditure during the initial exploration preparation stage of a project is charged to profit or loss as
+incurred. Exploration and evaluation costs, including the costs of acquiring licenses, are capitalised
+as exploration and evaluation assets on a project-by-project basis pending determination of the
+technical feasibility and commercial viability of the project.
+Exploration and evaluation assets (Continued)
+Property, plant and equipment (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 213
+5- 35 years
+5 - 40 years
+8-35 years
+6 - 45 years
+25 years
+8-20 years
+exploratory drilling, trenching and sampling;
+10 - 55 years
+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.
+The measurement of deferred tax liabilities and assets reflects the tax consequences that would
+follow from the manner in which the Group expects, at the end of the reporting period, to recover
+or settle the carrying amount of its assets and liabilities.
+Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the
+period in which the liability is settled or the asset is realised, based on tax rate (and tax laws) that
+have been enacted or substantively enacted by the end of the reporting period.
+The carrying amount of deferred tax assets is reviewed at the end of each reporting period and
+reduced to the extent that it is no longer probable that sufficient taxable profits will be available to
+allow all or part of the asset to be recovered. Unrecognised deferred tax assets are reassessed at
+the end of each reporting year and are recognised to the extent that it has become probable that
+future taxable profit will be available to allow all or part of the deferred tax asset to be recovered.
+Deferred tax liabilities are recognised for taxable temporary differences associated with
+investments in subsidiaries and associates, except where the Group is able to control the reversal
+of the temporary difference and it is probable that the temporary difference will not reverse in the
+foreseeable future. Deferred tax assets arising from deductible temporary differences associated
+with such investments and interests are only recognised to the extent that it is probable that there
+will be sufficient taxable profits against which to utilise the benefits of the temporary differences
+and they are expected to reverse in the foreseeable future.
+The 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.
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+2021 Annual Report 211
+Taxation
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+China Shenhua Energy Company Limited
+Payments to state-managed retirement benefit schemes and a supplemental defined contribution
+pension plan approved by the government are recognised as an expense when employees have
+rendered service entitling them to the contributions.
+Retirement benefit costs
+Government grants that are receivable as compensation for expenses or losses already incurred
+or for the purpose of giving immediate financial support to the Group with no future related costs
+are recognised in profit or loss in the period in which they become receivable.
+Government grants are recognised in profit or loss on a systematic basis over the periods in
+which the Group recognises as expenses the related costs for which the grants are intended to
+compensate. Specifically, government grants whose primary condition is that the Group should
+purchase, construct or otherwise acquire non-current assets are recognised as deferred income
+in the consolidated statement of financial position and transferred to profit or loss on a systematic
+and rational basis over the useful lives of the related assets.
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+212
+Deferred tax is recognised on temporary differences between the carrying amounts of assets
+and liabilities in the consolidated financial statements and the corresponding tax bases used in
+the computation of taxable profit. Deferred tax liabilities are generally recognised for all taxable
+temporary differences. Deferred tax assets are generally recognised for all deductible temporary
+differences to the extent that it is probable that taxable profits will be available against which
+those deductible temporary differences can be utilised. Such deferred tax assets and liabilities
+are not recognised if the temporary difference arises from the initial recognition (other than in
+a business combination) of assets and liabilities in a transaction that affects neither the taxable
+profit nor the accounting profit. In addition, deferred tax liabilities are not recognised if the
+temporary difference arises from the initial recognition of goodwill.
+Term for deprecation (year)
+Notes to the consolidated financial statements (Continued)
+Vessels
+Generators related machinery and equipment
+Railway and port
+Mining related machinery and equipment
+Buildings
+Furniture, fixtures, motor vehicles and other equipment
+Categories
+Property, plant and equipment, except for freehold land, and mining structures and mining rights,
+are depreciated on a straight-line basis at the following rates per annum:
+Depreciation is recognised so as to write-off the cost of items of property, plant and equipment
+(other than freehold land and construction in progress, which are subject to impairment
+assessment) less their residual values over their estimated useful lives. The estimated useful
+lives, residual values and depreciation method are reviewed at the end of each reporting period,
+with the effect of any changes in estimate accounted for on a prospective basis.
+Property, plant and equipment, which consists of freehold land and buildings, mining structures
+and mining rights, mining related machinery and equipment, and other items of plant and
+equipment, held for use in the production or supply of goods or services, or for administrative
+purposes, are stated in the consolidated statement of financial position at cost less subsequent
+accumulated depreciation and subsequent accumulated impairment losses, if any.
+Property, plant and equipment
+Current and deferred tax are recognised in profit or loss, except when they relate to items that
+are recognised in other comprehensive income or directly in equity, in which case, the current and
+deferred tax are also recognised in other comprehensive income or directly in equity respectively.
+Where current tax or deferred tax arises from the initial accounting for a business combination,
+the tax effect is included in the accounting for the business combination.
+Taxation (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Coal chemical related machinery and equipment
+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.
+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.
+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.
+Inventories
+As a lessor
+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.
+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.
+(ii)
+2021 Annual Report
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+218
+217
+Provisions
+Leased assets (Continued)
+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.
+Financial assets that meet the following conditions are subsequently measured at fair value
+through other comprehensive income (the "FVTOCI"):
+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 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 financial asset is held within a business model whose objective is achieved by both
+collecting contractual cash flows and selling; and
+the contractual terms give rise on specified dates to cash flows that are solely payments of
+principal and interest on the principal amount outstanding.
+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
+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).
+The effective interest method is a method of calculating the amortised cost of a financial asset or
+financial liability and of allocating interest income and interest expense over the relevant period.
+The effective interest rate is the rate that exactly discounts estimated future cash receipts and
+payments (including all fees and points paid or received that form an integral part of the effective
+interest rate, transaction costs and other premiums or discounts) through the expected life of
+the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying
+amount on initial recognition.
+Financial assets 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
+Effective interest method
+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.
+Intangible assets (Continued)
+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.
+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
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite
+useful lives are reported at cost less accumulated amortisation and any accumulated impairment
+losses, on the same basis as intangible assets that are acquired separately.
+Intangible assets acquired in a business combination are recognised separately from goodwill and
+are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
+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)
+3. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the consolidated financial statements (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.
+2021 Annual Report 215
+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.
+216
+For the year ended 31 December 2021
+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.
+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)
+3.
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 219
+Recoverable amount is the higher of fair value less costs of disposal and value in use. In assessing
+value in use, the estimated future cash flows are discounted to their present value using a pre-tax
+discount rate that reflects current market assessments of the time value of money and the risks
+specific to the asset (or a cash-generating unit) for which the estimates of future cash flows have
+not been adjusted.
+Notes to the consolidated financial statements (Continued)
+223
+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.
+224
+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.
+Notes to the consolidated financial statements (Continued)
+3.
+220
+China Shenhua Energy Company Limited
+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.
+(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)
+(c)
+a breach of contract, such as a default or past due event;
+(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)
+For the year ended 31 December 2021
+an actual or expected significant deterioration in the operating results of the debtor;
+(d)
+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;
+3.
+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.
+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;
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Classification and subsequent measurement of financial assets (Continued)
+Impairment of financial assets
+Financial assets (Continued)
+an actual or expected significant deterioration in the financial instrument's external
+credit rating (if available);
+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.
+In particular, the following information is taken into account when assessing whether credit
+risk has increased significantly:
+(i)
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Significant increase in credit risk
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+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.
+3.
+The Group recognises a loss allowance for ECL on financial assets which are subject to
+impairment under IFRS 9 (including accounts receivable, other receivables, long-term receivables,
+loans to China Energy Group and fellow subsidiaries, entrusted loans and financial guarantee
+contracts). The amount of ECL is updated at each reporting date to reflect changes in credit risk
+since initial recognition.
+The entity is controlled or jointly controlled by a person identified in (a).
+An entity is related to the Group if any of the following conditions applies:
+(i)
+The entity and the Group are members of the same group.
+(ii)
+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).
+(v)
+Both entities are joint ventures of the same third party.
+(iv)
+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)
+(iii)
+(b)
+(a)
+(iii)
+has significant influence over the Group; or
+(ii)
+has control or joint control over the Group;
+(i)
+A person, or a close member of that person's family, is related to the Group if that person:
+Related parties
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+3.
+China Shenhua Energy Company Limited
+The Group's derivative financial instruments represent cross-currency exchange rate swaps, and
+are initially recognised at fair value at the date when the derivative contracts are entered into, and
+remeasured at fair value at the end of the reporting period, with any gains or losses recognised in
+profit or loss.
+(vii)
+Derivative financial instruments
+is a member of the key management personnel of the Group or the Group's parent.
+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).
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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.
+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.
+Notes to the consolidated financial statements (Continued)
+232
+2021 Annual Report 231
+Notwithstanding that the Group has used all available information to make this estimation,
+inherent uncertainty exists and actual write-offs may be higher or lower than the amount
+estimated.
+In considering the impairment losses that may be required for current receivables and other
+financial assets, future cash flows need to be determined. One of the key assumptions that
+has to be applied is about the ability of the debtors to settle the receivables.
+In considering the impairment losses that may be required for certain of the Group's assets
+which mainly include property, plant and equipment, construction in progress, exploration
+and evaluation assets, intangible assets, right-of-use assets, interests in associates and
+other non-current assets, the recoverable amount of the asset need to be determined. The
+recoverable amount is the higher of its fair value less cost of disposal and value in use. It is
+difficult to precisely estimate fair value because quoted market prices for these assets may
+not be readily available. In determining the value in use, the Group uses all readily available
+information in determining expected cash flows generated by the cash-generating unit to
+which the asset belongs and they are discounted to their present value, which requires
+significant judgement relating to cash flow items such as level of sale volume, selling price,
+amount of operating costs and future returns.
+Impairment losses
+Despite the inherent imprecision in these engineering estimates, these estimates are
+used in determining depreciation expenses and impairment loss. Depreciation rates
+are determined based on estimated proved and probable coal reserve quantity (the
+denominator) and capitalised costs of mining structures and mining rights (the numerator).
+The capitalised cost of mining structures and mining rights are amortised based on the units
+of coal produced.
+Engineering estimates of the Group's coal reserves are inherently imprecise and represent
+only approximate amounts because of the subjective judgements involved in developing
+such information. There are authoritative guidelines regarding the engineering criteria
+that have to be met before estimated coal reserves can be designated as "proved" and
+"probable". Proved and probable coal reserve estimates are updated at regular basis
+and have taken into account recent production and technical information of each mine. In
+addition, as prices and cost levels change from year to year, the estimate of proved and
+probable coal reserves also changes. This change is considered as a change in estimate for
+accounting purposes and is reflected on a prospective basis in related depreciation rates.
+Coal reserves
+The following are the key assumptions concerning the future, and other key sources of
+estimation uncertainty at the end of the reporting period that have a significant risk of
+causing a material adjustment to the carrying amounts of assets and liabilities within the
+next financial year.
+4.2 Key sources of estimation uncertainty
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+China Shenhua Energy Company Limited
+The Directors evaluated whether the Company has the practical ability to lead the relevant
+activities of Dingzhou Power to determine whether the Company has actual control over
+Dingzhou Power. The Company is the largest equity owner of Dingzhou Power and no
+other equity owners individually or in aggregate had the power to control Dingzhou Power
+according to the articles of association. Historically, the Company controlled the operation
+of Dingzhou Power by appointing senior management, approving annual budget and
+determining the remuneration of employees etc. Considering above mentioned factors,
+the Directors are of the opinion that the Company has sufficiently dominant power over
+Dingzhou Power as the Company is the governing body of most of the relevant activities of
+it. Therefore the financial statements of Dingzhou Power are consolidated by the Company
+during the periods presented.
+Note 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.
+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)
+(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.
+For the year ended 31 December 2021
+In the application of the Group's accounting policies, which are described in Note 3, the Directors
+are required to make judgements, estimates and assumptions about the carrying amounts of
+assets and liabilities that are not readily apparent from other sources. The estimates and associated
+assumptions are based on historical experience and other factors that are considered to be
+relevant. Actual results may differ from these estimates.
+The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to
+accounting estimates are recognised in the period in which the estimate is revised if the revision
+affects only that period or in the period of the revision and future periods if the revision affects
+both current and future periods.
+4.1
+Critical judgements in applying accounting policies
+The following are critical judgements, apart from those involving estimation (see Note 4.2
+below), that the Directors have made in the process of applying the Group's accounting
+policies and that have the most significant effect on the amounts recognised in the
+consolidated financial statements.
+Control over Guoneng Hebei Dingzhou Power Co., Ltd. ("Dingzhou Power")
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+Derecognition of financial liabilities
+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.
+the amount of the loss allowance determined in accordance with IFRS 9 /IAS 37 Provisions,
+Contingent Liabilities and Contingent Assets; and
+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.
+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.
+For the year ended 31 December 2021
+Derecognition of financial assets
+ECLs are remeasured at each reporting date to reflect changes in the financial instrument's
+credit risk since initial recognisation. Any change in the ECL amount is recognised as an
+impairment gain or loss in profit or loss. The Group recognises an impairment gain or loss
+for all financial instruments with a corresponding adjustment to their carrying amount
+through a loss allowance account.
+For financial guarantee contracts, the loss allowances are recognised at the higher of the
+amount of the loss allowance determined in accordance with IFRS 9; and the amount
+initially recognised less, where appropriate, cumulative amount of income recognised over
+the guarantee period.
+Interest income is calculated based on the gross carrying amount of the financial asset
+unless the financial asset is credit impaired, in which case interest income is calculated
+based on amortised cost of the financial asset.
+Measurement and recognition of ECL (Continued)
+(v)
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Financial liabilities and equity
+Notes to the consolidated financial statements (Continued)
+The grouping is regularly reviewed by management to ensure the constituents of each
+group continue to share similar credit risk characteristics.
+External credit ratings where available.
+Past-due status; and
+Nature of financial instruments (i.e. the Group's accounts and bills receivables
+and other receivables are each assessed as a separate group. Loans receivable are
+assessed for ECL on an individual basis);
+Where ECL is measured on a collective basis or cater for cases where evidence at the
+individual instrument level may not yet be available, the financial instruments are grouped
+on the following basis:
+For ECL on financial guarantee contracts, the Group will apply a discount rate that reflects
+the current market assessment of the time value of money and the risks that are specific
+to the cash flows but only if, and to the extent that, the risks are taken into account by
+adjusting the discount rate instead of adjusting the cash shortfalls being discounted.
+For a financial guarantee contract, the Group is required to make payments only in the event
+of a default by the debtor in accordance with the terms of the instrument that is guaranteed.
+Accordingly, the expected losses is the present value of the expected payments to
+reimburse the holder for a credit loss that it incurs less any amounts that the Group expects
+to receive from the holder, the debtor or any other party.
+Generally, the ECL is the difference between all contractual cash flows that are due to the
+Group in accordance with the contract and the cash flows that the Group expects to receive,
+discounted at the effective interest rate determined at initial recognition.
+The measurement of ECL is a function of the probability of default, loss given default (i.e.
+the magnitude of the loss if there is a default) and the exposure at default. The assessment
+of the probability of default and loss given default is based on historical data adjusted
+by forward-looking information. Estimation of ECL reflects an unbiased and probability-
+weighted amount that is determined with the respective risks of default occurring as the
+weights.
+Measurement and recognition of ECL
+(v)
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+2021 Annual Report 225
+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
+A financial guarantee contract is a contract that requires the issuer to make specified payments to
+reimburse the holder for a loss it incurs because a specified debtor fails to make payments when
+due in accordance with the terms of a debt instrument. Financial guarantee contract liabilities are
+measured initially at their fair values. It is subsequently measured at the higher of:
+Financial guarantee contracts
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+3.
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+228
+2021 Annual Report 227
+Financial liabilities including borrowings, accounts and bills payables, other payables, long-term
+liabilities, medium-term notes and bonds are subsequently measured at amortised cost, using the
+effective interest method.
+Financial liabilities at amortised cost
+it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits
+the entire combined contract to be designated as at FVTPL.
+the financial liability forms part of a group of financial assets or financial liabilities or both,
+which is managed and its performance is evaluated on a fair value basis, in accordance with
+the Group's documented risk management or investment strategy, and information about
+the grouping is provided internally on that basis; or
+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.
+on initial recognition it is part of a portfolio of identified financial instruments that the Group
+manages together and has a recent actual pattern of short-term profit-taking; or
+it has been acquired principally for the purpose of repurchasing it in the near term; or
+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
+SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)
+the amount initially recognised less, where appropriate, cumulative amortisation recognised
+over the guarantee period.
+Financial assets (Continued)
+Financial liabilities
+All financial liabilities are subsequently measured at amortised cost using the effective interest
+method or at FVTPL.
+Financial liabilities at FVTPL
+Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent
+consideration of an acquirer in a business combination to which IFRS 3 applies, (ii) held for trading
+or (iii) it is designated as at FVTPL.
+A financial liability is classified as held for trading if:
+-
+Financial liabilities and equity (Continued)
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+million
+Depreciation
+982
+6,838 5,804
+63,959 49,348
+256,241 169,197
+9,165 9,553
+1,028
+24
+974 1,321 1,747
+982
+6,838 5,804
+2,538
+1,343
+24 1,028
+525
+974 1,321 1,747
+771
+1,321 1,747
+326,051 223,710
+5,165
+5,851
+449
+449
+211
+1,108 1,061
+'ང'ང
+¨¨¨ 771 525 1,321 1,747
+.
+5,730 4,743
+256,241 169,197 63,959 49,348
+Total
+Shipping
+Others
+5,730 4,743
+5,851
+5,165
+24
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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
+1,028 335,216 233,263
+Geographical markets
+Domestic markets
+Overseas markets
+252,481
+3,760
+168,198 56,991 44,623 6,838
+999 6,968 4,725
+Port
+5,804
+974
+1,321
+1,747
+5,851
+5,165
+24
+982
+4.2 Key sources of estimation uncertainty (Continued)
+Railway
+14,606 11,089
+RMB
+Total
+Other
+Coal chemical
+Shipping
+Port
+Railway
+Power
+Coal
+Segments
+Disaggregation of revenue of business lines and geographical location of customers is as follows:
+5. REVENUE FROM GOODS AND SERVICES
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+million
+234
+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.
+Obligations for land reclamation
+The provision of ECL is sensitive to changes in estimates. The information about the ECL
+and the Group's accounts receivable are disclosed in Notes 26 and 40.2, respectively.
+The Group uses provision matrix to calculate ECL for accounts receivable. The provision
+rates are based on the aging of accounts receivable as groupings of receivables that have
+similar loss patterns. The provision matrix is based on the Group's historical default rates
+taking into consideration forward-looking information that is available without undue costs
+or effort. At every reporting date, the historical observed default rates are reassessed and
+changes in the forward-looking information are considered. In addition, accounts and bills
+receivables with significant balances and credit impaired are assessed for ECL individually.
+Provision of ECL for accounts receivables
+4.2 Key sources of estimation uncertainty (Continued)
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+Certain of the Group's financial assets, unquoted equity instruments and accounts and bills
+receivables amounting to RMB2,550 million as at 31 December 2021 (RMB1,845 million
+as at 31 December 2020) are measured at fair values with fair values being determined
+based on unobservable inputs using valuation techniques as set out in Note 40.3. Changes
+in assumptions relating to any key inputs may have a material impact on the reported fair
+values of these instruments.
+Fair value measurement of financial instruments
+As at 31 December 2021, deferred tax assets of RMB3,568 million (2020: RMB2,856
+million) have been recognised in the Group's consolidated statement of financial position.
+No deferred tax asset has been recognised on the tax losses of RMB7,097 million (2020:
+RMB5,563 million) and deductible temporary differences of RMB8,864 million (2020:
+RMB9,244 million) due to the unpredictability of future profit streams. The realisation of the
+deferred tax assets mainly depends on whether sufficient future profits or taxable temporary
+differences will be available in the future. In cases where the actual future profits generated
+are less or more than expected, a material reversal or further provision of deferred tax assets
+may arise, which will be recognised in profit or loss in the period in which such a reversal or
+further provision takes place.
+Deferred tax assets
+Other than the freehold land and mining structures and mining rights, property, plant and
+equipment are depreciated on a straight-line basis over the estimated useful lives of the
+assets, after taking into account the estimated residual value. The Group reviews the
+estimated useful lives and residual value of the assets regularly based on the Group's
+historical experience with similar assets and taking into account anticipated technological
+changes. Depreciation for future periods is adjusted if there is a significant change from
+previous estimates. The carrying amount of the property, plant and equipment is disclosed
+in Note 17.
+2021 Annual Report 233
+2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB
+RMB
+million million million million
+RMB
+RMB
+616
+574
+5,277 4,549
+4,549
+5,277
+44,321
+56,599
+163,751
+249,569
+6,672 5,446 7,360 5,027
+Coal chemical products
+Others
+44,321
+56,599
+Power
+163,751
+249,569
+Coal
+RMB
+million
+million
+million
+RMB
+million
+2021 2020 2021 2020
+RMB RMB RMB RMB
+million million million million
+Transportation and other services
+2021
+RMB
+RMB
+million
+million
+Types of goods or service
+Sales of goods
+2020
+3.
+19,264
+20,024
+7.
+COST OF SALES
+Coal purchased
+Materials, fuel and power
+Personnel expenses
+Depreciation and amortisation
+Repairs and maintenance
+Transportation charges
+Taxes and surcharges
+Other operating costs
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+For the year ended 31 December 2021
+102,865
+23,696
+19,501
+21,285
+16,066
+18,093
+16,647
+10,722
+48,742
+9,124
+Notes to the consolidated financial statements (Continued)
+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.
+564 39 1,202
+43,377 21,523
+8,065
+6,410
+8,864
+8,938 446,069 424,257 (446,494) (395,716) 610,597 562,904
+(Note (i)
+2021 Annual Report 239
+(120,171) (106,897) (134,566) (110,040) (56,285) (50,470) (6,519) (6,629)
+(257) (2,425) (2,950) (176,717) (154,901) 335,821 298,827 (161,376) (133,317)
+Notes:
+(i)
+(ii)
+(iii)
+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.
+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.
+(514)
+18,764
+15,076
+16,502
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+9. INTEREST INCOME/FINANCE COSTS
+Interest income from:
+- bank deposits
+- other loans and receivables
+Total interest income
+778
+Year ended 31 December
+RMB million
+2020
+RMB million
+2,474
+1,075
+18
+609
+2021
+893
+333
+389
+10,926
+27,229
+26,292
+239,156
+162,374
+8. OTHER INCOME
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+Government grants
+Claim income
+Others
+240
+China Shenhua Energy Company Limited
+465
+424
+39
+21
+851
+2,492
+11
+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
+Unallocated items Eliminations
+Total
+RMB RMB RMB RMB
+million million million million
+2021 2020 2021 2020 2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million
+2021 2020 2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million
+Coal purchased
+Coal chemical
+102,865 48,742
+production
+Cost of coal
+60,899 50,032
+transportation
+58,027 51,557
+17,460
+16,291
+2,947 3,060 1,345 1,238
+Cost of coal
+Power cost
+Shipping
+Railway
+377,145
+6,147
+378,504
+7,070
+335,216
+233,263
+383,292
+385,574
+(d) Major customers
+Port
+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).
+6.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+(e) Other information
+Certain other information of the Group's segments for the years ended 31 December 2021
+and 2020 is set out below:
+Coal
+Power
+China Shenhua Energy Company Limited
+55,186 35,877
+Cost of coal chemical
+production
+Others
+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
+(1,603) (1,449) 2,583 2,617
+17,408 12,315
+980
+722
+259 (2,951) 1,047 92
+92
+(660) 80,008 57,977
+Capital expenditures
+(Note (ii))
+Total assets (Note
+Total liabilities
+209
+28
+44
+568 609
+3,335
+3,042 4,833 2,852 4,560 4,013 395
+254
+3,673
+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
+785
+102,865 48,742
+(4,904) (3,019) 55,995 47,013
+(44,193) (39,669) 35,586 32,477
+(30,467) (16,667) 24,719 19,210
+4,186 4,066
+55
+227,539
+5,724
+1,684
+- lease liabilities
+25.0
+21.0
+21.0
+8.25/16.5*
+8.25/16.5*
+During the years ended 31 December 2021 and 2020, there was no significant assessable profit
+and provision for income tax for the overseas subsidiaries.
+The two-tiered profits tax rates regime is applicable from the year of assessment 2018/19 onwards. The profits tax
+rate for the first Hong Kong Dollars ("HK$") 2,000,000 of profits of corporations will be lowered to 8.25%,
+and profits above that amount will continue to be subject to the tax rate of 16.5%.
+22.0
+11. ASSETS CLASSIFIED AS HELD FOR SALE
+During the year ended 31 December 2021, Shenhua Beidian Shengli Energy Co., Ltd. ("Beidian
+Shengli Company"), a subsidiary of the Company, was committed to dispose of certain idle land use
+rights amounted to approximately RMB38 million, and such assets were classified as held for sale
+as at 31 December 2021.
+2021 Annual Report 243
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+12. PROFIT FOR THE YEAR
+Profit for the year has been arrived at after charging/(crediting)
+Year ended 31 December
+2021
+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.
+2020
+30.0
+%
+15,378
+Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation
+Regulation of the EIT Law, the tax rate applicable for the PRC group entities is 25% (2020: 25%)
+except for subsidiaries and branches operating in the western developing region of the PRC which
+are entitled to a preferential tax rate of 15% from 2011 to 2020.
+On 23 April 2020, the relevant government and tax authorities issued an announcement
+(Announcement [2020] No.23 of Ministry of Finance, State Taxation Administration, and National
+Development and Reform Commission), according to which the future periods of application
+of the preferential tax rate of 15% will be extended for another 10 years from 2021 to 2030, if
+the companies' main business are included in the "Catalogue of Encouraged Industries in the
+Western Region (2020 Version)", which came into effect sine 1 March 2021 with new encouraged
+industries applicable to the coal subsidiaries and branches of the Company..
+242
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+10. INCOME TAX EXPENSE (CONTINUED)
+30.0
+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.
+Australia
+Indonesia
+United States
+Hong Kong, China
+Year ended 31 December
+2021
+2020
+%
+The applicable tax rates of the Group's overseas subsidiaries are as follows:
+RMB million
+RMB million
+Personnel expenses, including
+Depreciation and amortisation (Note)
+21,545
+19,985
+Loss allowances
+-
+― Loans receivables and interbank certificate of deposits
+(2)
+39
+- Trade receivables (Note 40.2)
+275
+- Other receivables and other loans (Note 40.2)
+2,540
+251
+244 China Shenhua Energy Company Limited
+2,561
+524
+21
+101
+Less: amount capitalised
+21,646
+35,499
+29,405
+- Contributions to defined contribution plans
+3,662
+2,504
+Depreciation of property, plant and equipment (Note 17)
+17,965
+Depreciation of right-of-use assets
+807
+713
+Amortisation of intangible assets
+413
+400
+Amortisation of long-term deferred expenses
+1,162
+946
+Depreciation and amortisation charged for the year
+18,161
+- borrowings
+Income tax expense
+(1,465)
+388
+311
+(115)
+(71)
+Total finance costs
+Net finance costs
+2,583
+73
+2,263
+579
+Note:
+Borrowing costs capitalised during the year arose on the general borrowing pools and were calculated by applying a
+capitalisation rate from 1.80% to 4.90% (2020: from 1.80% to 6.15%) per annum to expenditure on qualifying assets.
+2021 Annual Report 241
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+10. INCOME TAX EXPENSE
+91
+Year ended 31 December
+2021
+105
+Unwinding of discount
+- bonds
+2,896
+2,369
+29
+37
+130
+146
+Exchange gain, net
+Total finance costs on financial liabilities not at FVTPL
+2,552
+Less: amount capitalised
+(850)
+(602)
+2,205
+1,950
+Others
+3,055
+RMB million
+Current tax, mainly PRC enterprise income tax
+Over provision in respect of prior years
+Deferred tax
+2020
+- non-deductible expenses
+– non-taxable income
+890
+231
+(296)
+- share of results of associates
+194
+(607)
+(240)
+difference previously not recognised
+(483)
+(224)
+- tax losses and deductible temporary difference not
+recognised
+1,298
+2,463
+- over provision
+- utilisation of tax losses and deductible temporary
+(2,066)
+- different tax rates of branches and subsidiaries
+14,841
+RMB million
+20,260
+15,966
+(1,465)
+(790)
+(634)
+202
+18,161
+15,378
+The tax charge for the year can be reconciled to the profit before income tax per consolidated
+statement of profit or loss and other comprehensive income as follows:
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+Profit before income tax
+79,170
+59,362
+Tax at the PRC income tax rate of 25% (2020: 25%)
+Tax effects of:
+19,793
+(790)
+324,488
+10,728
+Interest on:
+31 December
+2021
+RMB million
+974 1,321 1,747 5,851 5,165
+24 1,028 335,216 233,263
+The Group produces and sells coal and coal chemical products to customers at spot market.
+For sales of coal and coal chemical products, revenue is recognised when control of the goods
+has transferred, being when the goods have been shipped to the customers' specific location.
+According to the Group's historical experiences, there was no significant exchange or return of
+coal and coal chemical products occurred. There is no sales-related warranties associated with
+coal and coal chemical products.
+For sales of power, revenue is recognised upon the transmission of electric power to the power
+grid companies. Power could not be returned or exchanged and there is also no warranties
+associated with power sales.
+The Group provides railway transportation services, shipment transportation services as well as
+port loading and storage services to customers. Such services are recognised as a performance
+obligation satisfied over time as the Group rendering the services. Revenue is recognised for
+these services based on the stage of completion of the performance obligation using output
+method.
+All performance obligations of sales of coal, power and coal chemical products, railway and
+shipment transportation services, and port loading and storage services are part of contracts with
+an original expected duration of one year or less, and as permitted under IFRS 15, the transaction
+price allocated to these unsatisfied contracts is not disclosed.
+2021 Annual Report 235
+982
+Notes to the consolidated financial statements (Continued)
+6.
+SEGMENT AND OTHER INFORMATION
+The Group manages its businesses by divisions, which are organised by business lines (products
+and services). In a manner consistent with the way in which information is reported internally
+to the Group's chief operating decision maker ("CODM"), including president, senior vice
+president and chief financial officer, for the purposes of resource allocation and performance
+assessment, the Group has presented the following six (2020: six) reportable segments. No
+operating segments have been aggregated to form the following reportable segments.
+(1)
+(2)
+Coal operations - which produce coal from surface and underground mines, and the sale of
+coal to external customers, the power operations segment and the coal chemical operations
+segment. The Group sells its coal under long-term supply contracts, which allow periodical
+price adjustments, and at spot market.
+Power operations - which use coal from the coal operations segment and external suppliers,
+thermal power, wind power, water power and gas power to generate electric power for the
+sale to coal operations segment and external customers. Electric power is sold to the power
+grid companies in accordance with planned power output at the tariff rates as approved
+by the relevant government authorities. Electric power produced in excess of the planned
+power output is sold at the tariff rate as agreed upon with the respective power grid
+companies which are generally lower than the tariff rates for planned power output.
+For the year ended 31 December 2021
+(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.
+256,241 169,197 63,959 49,348 6,838 5,804
+(825) (81,075) (61,464)
+5,851
+5,165
+223
+24
+297
+1,028 335,216 233,263
+825 81,075 61,464
+292,661 190,029 64,124 49,486
+Revenue
+40,699 38,723
+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)
+6,440 6,359 6,195 3,112 5,851 5,165
+(4)
+(5)
+(6)
+2021
+RMB
+million
+RMB
+RMB RMB
+2020 2021 2020 2021 2020
+RMB
+RMB
+million
+2021 2020 2021 2020
+RMB RMB RMB
+million million million
+million
+million
+million
+RMB
+million
+2021 2020 2021 2020
+RMB RMB RMB RMB
+million million million million
+Revenue from external customers
+Inter-segment revenue
+256,241 169,197 63,959 49,348
+36,420 20,832 165
+138
+6,838
+million
+Total
+Coal chemical
+Shipping
+(a)
+Port operations - which provide loading, transportation and storage services to the coal
+operations segment and external customers. The Group charges service fees and other
+expenses, which are reviewed and approved by the relevant government authorities.
+Shipping operations - which provide shipment transportation services to the power
+operations segment, the coal operations segment and external customers. The rates of
+freight charges billed to the power operations segment, the coal operations segment and
+external customers are consistent.
+Coal chemical operations – which use coal from the coal operations segment to first
+produce methanol and further process into polyethylene and polypropylene, together with
+other by-products, for sale to external customers. The Group sells its polyethylene at spot
+market.
+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"). Reportable
+segment profit represents the profit earned by each segment without allocation of head
+office and corporate items. Inter-segment sales are primarily charged at prevailing market
+rate which are the same as those charged to external customers.
+236 China Shenhua Energy Company Limited
+6.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+SEGMENT AND OTHER INFORMATION (CONTINUED)
+(a) Segment results (Continued)
+Information regarding the Group's reportable segments as provided to the Group's
+CODM for the purposes of resource allocation and assessment of segment performance for
+the years ended 31 December 2021 and 2020 is set out below:
+(b)
+Coal
+Power
+Railway
+Port
+1,321 1,747
+4,874 1,365
+5,804
+5,458 5,385
+982
+2020
+RMB
+RMB
+RMB
+RMB RMB RMB
+RMB
+RMB RMB
+2021
+million
+million
+million million million million million million
+Timing of revenue recognition
+A point in time
+Over time
+256,241 169,197 63,959 49,348
+5,851 5,165
+326,051 223,710
+million
+6,838
+2020
+2020
+5.
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+REVENUE FROM GOODS AND SERVICES (CONTINUED)
+Segments
+Coal
+Power
+2021 2020 2021
+Railway
+Shipping
+2020
+RMB million
+Other
+Total
+2021 2020 2021 2020 2021 2020 2021
+RMB RMB RMB RMB RMB RMB RMB
+million million million million million million million
+2020
+2021
+Port
+5,804
+982
+974
+Coal chemical
+2021
+Other
+Total
+2020 2021 2020 2021
+RMB RMB RMB RMB RMB RMB RMB
+2020
+million
+million million
+2021 2020 2021 2020 2021 2020
+RMB RMB RMB RMB
+RMB
+million million million million million
+million
+million
+information
+External customers
+Inter-segment
+256,241 169,197 63,959 49,348
+36,420 20,832 165 138
+6,838
+33,861
+5,804
+32,919
+million million
+Shipping
+Port
+Railway
+1,321 1,747
+24
+1,028 9,165 9,553
+Total
+256,241 169,197 63,959 49,348 6,838
+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).
+Set out below is the reconciliation of the revenue with the amounts disclosed in the segment
+information.
+Segments
+Revenue disclosed in segment
+Coal
+2021 2020 2021 2020
+RMB
+RMB
+RMB RMB
+million million million million
+Power
+974
+982
+Coal chemical
+1,321
+335,216
+233,263
+Profit/(loss) before income tax
+81,029
+54,582
+(2,814)
+3,927
+(61,464)
+955
+79,170
+59,362
+Interest expenses
+3,656
+3,333
+900
+861
+853
+(1,963)
+(81,075)
+321
+61
+(2) 1,270
+1,840
+Reconciliations of reportable segment revenue, segment profit and other items
+of profit or loss for the years ended 31 December 2021 and 2020 are set out
+below:
+Reportable
+segment amounts
+Unallocated head office
+and corporate items
+Elimination of
+inter-segment amounts
+1,853
+2021
+RMB million RMB million
+2021
+2020
+RMB million RMB million
+Consolidated
+2021
+2020
+2021
+2020
+RMB million RMB million RMB million RMB million
+Revenue
+415,970
+292,874
+2020
+(1,933)
+2,593
+2,261
+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)
+2,047
+Geographical information
+Revenue from
+external customers
+Year ended 31 December
+2021
+RMB million
+Specified non-
+current assets
+2020
+RMB million
+974
+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.
+947
+(874)
+3,853
+207
+Depreciation and amortisation
+21,421
+19,803
+124
+182
+21,545
+19,985
+Share of results of associates
+344
+326
+(1,133)
+621
+(85)
+Loss allowances and impairment of assets
+1,270
+1,840
+2,583
+7
+3
+Domestic markets
+Overseas markets
+538
+415,970
+292,874
+Reportable segment profit
+Including:
+58,949
+28,992
+2,025
+6,907
+5,165
+15,723
+2,623
+2,487
+1,003
+226
+706
+180
+80
+15,790
+81,029
+5,851
+6,195
+1,747
+(3)
+5,851
+5,165 335,192 232,235
+33,861
+5,458
+5,385 4,874
+3,112
+1,365
+Reportable segment revenue
+292,661 190,029 64,124
+49,486
+40,699
+38,723
+6,440
+6,359
+80,778 60,639
+54,582
+32,919
+849
+297
+726
+844
+21,421 19,803
+Share of results of associates
+345
+154
+313
+(3) 168
+6
+4
+344
+326
+Loss allowances and impairment of assets
+1,140
+Interest expenses
+(4)
+69
+1,297
+1,024
+997
+1,514
+1,341
+761
+869
+136
+270
+2
+1,107
+90
+3,656 3,333
+Depreciation and amortisation
+8,769
+7,413
+5,495
+5,265 5,094
+50
+4,987
+and port
+related
+chemical
+motor
+machinery
+machinery
+related
+Railway
+and
+and
+machinery
+and other
+equipment
+equipment
+vehicles
+fixtures,
+No diluted earnings per share for both 2021 and 2020 were presented as there were no potential
+ordinary shares in existence during both years.
+Mining Generators
+related
+Year ended 31 December
+2021
+million
+Vessels and equipment
+million
+19,890
+(21)
+19,890
+(2)
+19,869
+19,888
+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,
+Mining
+structures
+and mining
+Coal
+2020
+426,905
+Total
+881
+4
+27
+3,493
+Transferred from construction
+in progress
+3,050
+16
+496
+2,894
+955
+Weighted average number of shares in issue
+90
+38
+32
+250
+1,868
+143
+161
+RMB million RMB million
+RMB million RMB million
+RMB million
+RMB million
+RMB million RMB million RMB million
+Cost
+At 1 January 2020
+equipment
+57,603
+66,293
+96,057
+130,679
+7,518
+13,358
+17,998
+Additions
+37,399
+Effect of shares repurchased
+Retirement scheme contributions
+Weighted average number of ordinary shares
+Mr. Zhao Jibin resigned as executive director on 29 May 2020.
+Mr. Zhao Yongfeng was elected and appointed as non-executive director on 29 May 2020 and resigned on 23
+December 2020.
+Dr. Tam Wai Chu, Maria, Dr. Jiang Bo and Ms. Zhong, Yingjie, Christina resigned as independent non-executive
+directors on 29 May 2020.
+Dr. Peng Suping resigned as independent non-executive director on 29 May 2020.
+Mr. Yang Jiping resigned as executive director on 16 November 2021.
+Mr. Zhai Richeng resigned as supervisor and Mr. Luo Meijian was elected and appointed as supervisor on 29 May
+2020.
+The emoluments of Mr. Zhai Richeng were borne by China Energy Group during the year ended 31 December
+2020.
+The emoluments of Mr. Zhang Changyan were borne by China Energy Group during the year ended 31 December
+2021.
+The emoluments of Mr. Zhou Dayu and Mr. Luo Meijian were borne by China Energy Group during the years ended
+31 December 2021 and 2020.
+Except for those emoluments of directors or supervisors whose emoluments were borne by
+China Energy Group, the executive directors' and supervisors' emoluments shown above were
+mainly for their services in connection with the management of the affairs of the Company and
+the Group.
+The independent non-executive directors' emoluments shown above were mainly for their
+services as directors of the Company.
+250 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+14. EMPLOYEES' EMOLUMENTS
+Of the five individuals with the highest emoluments within the Group, three (2020: Nil) were
+directors of the Company whose emoluments are disclosed in note 13. The emoluments of other
+two (2020: five) highest paid individuals are as follows:
+Mr. Gao Song and Mr. Mi Shuhua resigned as executive directors on 29 May 2020.
+Basic salaries, housing and other allowances
+(iv)
+(iii)
+2021 Annual Report 249
+Discretionary bonuses were determined by the remuneration committee in accordance with the
+relevant human resources policies.
+150
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Notes:
+(i)
+The emoluments of these directors were borne by China Energy Group during the years ended 31 December 2021
+and 2020.
+(ii)
+Mr. Yang Jiping and Mr. Xu Mingjun were elected and appointed as executive directors on 29 May 2020.
+Mr. Jia Jinzhong was elected and appointed as non-executive director on 29 May 2020.
+Dr. Chen Hanwen, Dr. Bai Chongen and Dr. Yuan Guoqiang were elected and appointed as independent non-
+executive directors on 29 May 2020.
+Mr. Wang Xingzhong was elected and appointed as employee director on 29 May 2020.
+Mr. Yang Rongming was elected and appointed as non-executive director on 25 June 2021.
+Dr. Li Dong resigned as executive director on 29 March 2020.
+Number of shares in issue at 1 January
+and benefits in kind
+Year ended 31 December
+2021
+RMB million
+252
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+15. DIVIDENDS
+Year ended 31 December
+2021
+2020
+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:
+2021 Annual Report 251
+Discretionary bonuses
+2020
+1
+2020
+RMB million
+0.72
+1.73
+1.56
+3.78
+0.27
+0.33
+2.55
+5.84
+Their emoluments are within the following band:
+Year ended 31 December
+HKD1,000,001 to HKD1,500,000
+HKD1,500,001 to HKD2,000,000
+2021
+1
+2
+7,631
+Classified as assets held for sale
+additions
+48,719
+1,536
+6,920
+12,786
+180,912
+Charge for the year
+1,727
+1,108
+4,152
+4,167
+5,184
+331
+721
+575
+17,965
+36,188
+Reclassification
+47,355
+13,037
+(1,310)
+I
+(1,310)
+At 31 December 2021
+59,577
+48,755
+73,075
+112,979
+142,747
+7,582
+12,987
+18,747
+476,449
+Depreciation and impairment
+At 1 January 2020
+14,371
+(231)
+383
+(48)
+21515
+72
+249
+605
+(1,354)
+(61)
+(274)
+At 31 December 2020
+15,452
+15,323
+51,003
+40,104
+53,657
+1,867
+3.95
+(246)
+63
+(23)
+(38)
+(292)
+Impairment losses (Note (i))
+455
+23
+126
+Disposals or write-off
+(112)
+(157)
+(590)
+(45)
+(316)
+(49)
+(85)
+Exchange adjustment
+(15)
+Classified as assets held for sale
+(12)
+(40)
+(179)
+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
+(25)
+18,180
+Exchange adjustment
+(92)
+(995)
+2,929
+1,381
+(295)
+340
+(548)
+(14)
+2,798
+Disposals or write-off
+(219)
+(169)
+(696)
+(99)
+(367)
+(56)
+(1,698)
+436,240
+Additions
+166
+additions
+(973)
+(215)
+260
+928
+Disposals or write-off
+(219)
+(104)
+(1,558)
+(1,374)
+(389)
+(30)
+(705)
+(4,379)
+Exchange adjustment
+Reclassification and other
+33,224
+1,177
+160
+8,757
+2,091
+163
+1,569
+8
+44
+107
+Reclassification and other
+12,905
+progress (Note 18)
+2,855
+(1)
+2,939
+17,929
+8,151
+14
+Transferred from construction in
+0.19
+Land and
+buildings rights
+1.05
+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,
+1.45
+Housing and
+0.14
+0.39
+Retirement
+scheme
+contributions
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Yang Jiping (Note (ii) and
+Note (iii))
+0.26
+0.78
+0.09
+1.13
+Xu Mingjun
+0.92
+Discretionary
+bonuses
+other allowance
+Discretionary
+bonuses
+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
+0.30
+0.30
+0.90
+0.30
+and benefits
+0.30
+Yuan Guoqiang
+Retirement
+scheme
+Fee
+in kind
+contributions
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Independent non-executive
+directors
+Chen Hanwen
+Bai Chongen
+0.30
+other allowance
+Housing and
+Basic salaries,
+(1,181)
+(449)
+134
+- impairment losses on property, plant and equipment
+(Note 17)
+535
+605
+- impairment losses on construction in progress (Note 18)
+- impairment losses on exploration and evaluation assets
+(Note 19)
+376
+268
+505
+- impairment losses on Intangible assets (Note 20)
+- impairment losses on Interests in associates
+- impairment losses on right-of-use assets
+- impairment losses on assets held for sale
+- impairment losses on goodwill
+- reversal of allowance for prepaid expenses
+- losses on changes in fair value of derivative financial
+instruments
+- write down of inventories
+- gains on disposal of financial assets at FVTPL
+7
+Charge for the year
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+12. PROFIT FOR THE YEAR (CONTINUED)
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+Other gains and losses, represent
+-(gains)/ losses on disposal of property, plant and
+equipment, exploration and evaluation assets,
+intangible assets and non-current assets
+- losses on disposal of subsidiaries and associates
+- gains on changes in fair value arising from
+remeasurement of remaining equity interests after
+losing control
+(346)
+160
+9
+PL =
+11
+60
+3
+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).
+2021 Annual Report 245
+246
+Notes to the consolidated financial statements (Continued)
+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
+Note:
+32
+33
+218
+87
+36
+18
+(57)
+274
+94
+955
+0.33
+194
+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
+Carrying amount of inventories sold
+1.34
+0.83
+1.28
+0.23
+Chen Hanwen (Note (ii))
+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))
+Zhou Dayu (Note (iv))
+Peng Suping (Note (iii))
+Luo Meijian (Note (iv))
+0.23
+Zhong Yingjie, Christina
+Independent non-executive
+directors
+Basic salaries,
+Housing and
+other allowance
+and benefits
+Fee
+in kind
+RMB million
+RMB million
+Tam Wai Chu, Maria
+(Note (iii))
+0.23
+Jiang Bo (Note (iii)
+0.23
+(Note (iii))
+Year ended 31 December 2020
+Zhang Changyan
+Total
+0.20
+0.04
+0.43
+0.19
+0.20
+0.04
+0.43
+0.32
+0.46
+0.06
+0.84
+0.32
+0.46
+0.06
+0.84
+0.19
+Sub-total
+1.37
+0.15
+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
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+China Shenhua Energy Company Limited
+Wang Xiangxi (Note (i))
+Sub-total
+Executive directors
+(Note (i) and Note (iii))
+Basic salaries,
+Housing and
+other allowance
+Retirement
+and benefits
+Discretionary
+scheme
+Fee
+RMB million
+in kind
+RMB million
+bonuses
+Chairman
+contributions
+Year ended 31 December 2020
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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
+13. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+RMB million
+RMB million
+Total
+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
+1.01
+0.07
+0.48
+0.46
+RMB million
+Li Dong
+Gao Song
+(Note (i) and Note (iii))
+Mi Shuhua (
+Yang Jiping (Note (ii))
+0.23
+0.12
+0.24
+0.51
+Xu Mingjun (Note (ii))
+0.23
+0.24
+0.03
+0.50
+Sub-total
+0.04
+1,705
+Note (i) and Note (iii))
+3,883
+Notes to the consolidated financial statements (Continued)
+254
+2021 Annual Report 253
+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
+4,906
+5,381
+84,094
+69,828
+19,503
+31,198
+For the year ended 31 December 2021
+43,521
+17.
+Notes:
+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
+140
+175
+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)
+PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+At 31 December 2021
+2,364
+212,793
+(1,016)
+Classified as assets held for sale
+(1)
+(103)
+Exchange adjustment
+(322)
+(1,383)
+(1,507)
+(238)
+Disposals or write-off
+11
+153
+226
+Impairment losses (Note (i))
+22
+41
+(93)
+30
+5,296
+4,436
+Carrrying values
+8d ! ,,,,
+7,300
+Reclassification
+198,042
+13,336
+8,081
+58,653
+43,151
+53,572
+17,557
+16,056
+At 31 December 2021
+(1,016)
+(124)
+2,201
+(3,908)
+675
+'
+571
+19,264
+13,522
+14
+535
+(25)
+(396)
+131
+Others (Note)
+Materials and supplies
+Coal
+25. INVENTORIES
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 261
+18,597
+613
+231
+At 31 December 2020
+20,530
+1,478
+232
+At 31 December 2021
+Less: write-down of inventories
+Net book value
+17,753
+22,240
+14,884
+31 December
+2020
+(64)
+262
+At the end of the year
+At the beginning of the year
+Write down of inventories
+Write off of inventories
+Movement in write-down of inventories during the year is as follows:
+Note: Others mainly represent properties for sale and properties under development.
+12,750
+12,633
+(2,142)
+(2,251)
+14,892
+906
+1,127
+8,750
+7,384
+5,236
+6,373
+RMB million
+RMB million
+31 December
+2021
+(64)
+(294)
+(3)
+At 31 December 2020
+6
+6
+Classified as assets held for sale
+Disposals
+(713)
+(469)
+(137)
+(158)
+(107)
+(4,637)
+(4,429)
+(157)
+(51)
+At 1 January 2020
+Accumulated depreciation
+28,225
+25,999
+Depreciation
+At 31 December 2020 and 2021
+China Shenhua Energy Company Limited
+(5,343)
+(3)
+Additions
+(61)
+(61)
+At 1 January 2020
+Impairment losses
+(5,921)
+(5,405)
+(4,891)
+(239)
+At 31 December 2021
+(807)
+229
+(599)
+85
+144
+Disposals
+(89)
+(119)
+Depreciation
+(277)
+Year ended 31 December
+2021
+256
+2020
+RMB million
+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
+26. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+125
+6,972
+9,527
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+More than three years
+Two to three years
+Less than one year
+One to two years
+143
+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:
+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:
+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
+Details of credit risks of accounts and bills receivables for the year ended 31 December 2021 are
+set out in Note 40.2.
+534
+717
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+Indonesian Rupiah ("IDR")
+Great Britain Pound ("GBP")
+Euro ("EUR")
+United States Dollars ("USD")
+276
+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 and 31 December 2020, accounts and bills receivables from contracts
+with customers amounted to RMB14,884 million and RMB13,058 million, respectively.
+11,759
+- Associates
+- China Energy Group and fellow subsidiaries
+Accounts receivable
+RMB million
+RMB million
+31 December
+2020
+2021
+31 December
+3,391
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2,142
+2,251
+(539)
+(165)
+2,587
+94
+274
+2,142
+26. ACCOUNTS AND BILLS RECEIVABLES
+2,574
+1,717
+407
+13,607
+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
+RMB million
+509
+(2)
+(493)
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 259
+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.
+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.
+(ii)
+(i)
+1,845
+2,550
+For the year ended 31 December 2021
+1,845
+376
+Accounts and bills receivables (Note (ii))
+2,174
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+Current asset
+Unlisted equity securities (Note (i))
+Note:
+Non-current asset
+23. OTHER NON-CURRENT ASSETS
+equipment purchases and others (Note (i))
+Prepayments for mining projects
+12,853
+400
+400
+631
+392
+10,171
+5,273
+9,807
+Prepayments in connection with construction work,
+4,868
+RMB million
+31 December
+2021
+Notes:
+Long-term deferred expenses (Note (iv))
+Goodwill
+Service concession receivables (Note (iii))
+Long-term entrusted loans (Note (ii))
+Deductible VAT and other tax
+31 December
+2020
+RMB million
+11,044
+22. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+332
+12.50%
+40.00%
+42.53%
+12.50%
+40.00%
+42.53%
+Group's proportion of ownership interest
+53,406
+Carrying amount of equity investment in
+22,238
+51,489
+24,495
+59,029
+company
+Equity attributable to equity holders of the
+(4,967)
+113
+2,795
+65,775
+333
+294
+associated company
+9,798
+227
+6,012
+6,369
+- Total comprehensive income for the year
+- Profit for the year
+Aggregate carrying amount of individually immaterial
+associates in the consolidated financial statements
+Aggregate amounts of the Group's share of those
+associates:
+RMB million
+31 December
+2020
+25,105
+31 December
+2021
+RMB million
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+China Shenhua Energy Company Limited
+6,675
+8,895
+27,974
+6,436
+Aggregate information of associates that are not individually material:
+199
+235
+4,104
+60
+60
+| | | |
+Classified as assets held for sale
+Others
+Transferred from construction
+Disposals
+in progress
+23,388
+860
+(2)
+22,367
+585
+880
+248
+141
+Additions
+At 1 January 2020
+Cost
+Total
+RMB million
+RMB million
+27
+Land use
+rights
+(78)
+(224)
+(143)
+(350)
+Disposals
+2,807
+2,807
+in progress
+Transferred from construction
+1,907
+(78)
+627
+120
+Additions
+24,004
+22,708
+907
+389
+At 31 December 2020
+(224)
+1,160
+properties
+RMB million
+Buildings
+RMB million
+and other
+260
+At the end of the year
+Classified as assets held for sale
+Disposal
+Amortisation
+Additions
+At the beginning of the year
+The movement of long-term deferred expenses during the year is as follows:
+China Shenhua Energy Company Limited
+Pursuant to the Power Purchase Agreements entered between certain power plants of the Group and PT
+Perusahaan Listrik Negara (Persero) ("PLN"), an independent third party, certain power plants of the Group
+build power plants to supply electricity to PLN for a 25-30 years period from the power plant's commercial
+operation date under the service concession scheme. Service concession receivables represents service provided
+in connection with the service concession arrangement, for which a guaranteed minimum payments have been
+agreed. Due to the length of the payment plans, receivables are the present value of future guaranteed cash
+receipts discounted using effective interest rate.
+At 31 December 2021, the Group had prepayments to China Energy Group and fellow subsidiaries amounting to
+RMB377 million (2020: RMB156 million).
+(iv)
+(iii)
+(ii)
+(i)
+35,890
+28,089
+3,602
+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").
+Year ended 31 December
+2021
+2020
+RMB million
+Machinery,
+equipment
+264 China Shenhua Energy Company Limited
+As at 31 December 2021, the Group has no bank loans secured by the Group's right-of-use assets
+(2020: RMB810 million).
+The right-of-use assets represent land use rights paid to the PRC's government authorities and
+the leased assets. The Group is in the process of applying for the title certificates of certain land
+use rights certificates with an aggregate carrying amount of RMB3,685 million as at 31 December
+2021 (2020: RMB1,739 million). The Directors are of the opinion that the Group is entitled to
+lawfully and validly occupy or use the above mentioned lands.
+24. RIGHT-OF-USE ASSETS
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+3,602
+4,104
+(2)
+(1)
+(28)
+(946)
+(1,162)
+884
+1,692
+3,667
+3,602
+RMB million
+At 31 December 2021
+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.
+(1,944)
+103,607
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+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:
+31 December 2021/
+Year ended 31 December 2021
+31 December 2020/
+Year ended 31 December 2020
+Finance
+Haoji
+Beijing GD
+Company
+Railway
+258
+Beijing GD
+Railway
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+Non-current assets
+29,548
+85,451
+9,724
+26,734
+Haoji
+12,295
+2021 Annual Report 257
+40.00
+Coal production and sale
+Sichuan Guangan Power Co., Ltd.
+20.00
+20.00
+Generation and sale of
+electricity
+Guohua (Hebei) Renewables
+Co., Ltd.
+25.00
+25.00
+Generation and sale of
+electricity
+Inner Mongolia Yili Chemical Industry
+Co., Ltd.
+25.00
+Provision of comprehensive
+financial service
+25.00
+Suizhong Power Generation Co., Ltd.
+15.00
+15.00
+Generation and sale of
+electricity
+Inner Mongolia Guohua Hulunbeier
+Power Generation Co., Ltd.
+20.00
+20.00
+Generation and sale of
+electricity
+China Energy Finance Co., Ltd.
+("Finance Company")
+40.00
+Production and sale of
+chemicals
+8,445
+126,331
+59,552
+25,681
+28,136
+Equity attributable to equity holders of
+the company
+59,029
+24,495
+51,489
+65,775
+22,238
+53,406
+Revenue
+101,461
+Non-controlling interests
+4,034
+89,379
+1,050
+5,238
+(Loss)/profit for the year
+(4,009)
+2,117
+(1,944)
+2,794
+118
+(4,967)
+Total comprehensive (loss)/income for the year
+(4,018)
+9,242
+11,305
+81,958
+105,616
+147,381
+149,135
+21,248
+148,568
+Total assets
+155,879
+145,003
+157,105
+175,869
+33,543
+157,013
+Current liabilities
+47,922
+120,417
+2,671
+47,423
+11,305
+3,865
+Non-current liabilities
+23,247
+91
+102,945
+34,535
+99,742
+Total liabilities
+71,169
+120,508
+20.39
+20.39
+Finance
+Company
+Provision of transportation
+service
+(376)
+(268)
+(13)
+26,201
+39,845
+(i)
+(ii)
+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.
+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.
+19. EXPLORATION AND EVALUATION ASSETS
+The movements of the exploration and evaluation assets are as follows:
+At the beginning of the year
+(14)
+Additions
+Impairment losses (Note 12)
+At the end of the year
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+484
+4,000
+16
+(505)
+4,000
+2021 Annual Report 255
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Exchange adjustments
+(1,021)
+(60)
+(2,807)
+Notes to the consolidated financial statements (Continued)
+18. CONSTRUCTION IN PROGRESS
+At the beginning of the year
+Additions
+Transferred to property, plant and equipment (Note 17)
+Transferred to intangible assets (Note 20)
+Transferred to right-of-use assets (Note 24)
+Transferred to other non-current assets
+Exchange adjustment
+Impairment losses (Note (ii))
+Classified as assets held for sale
+At the end of the year
+Notes:
+For the year ended 31 December 2021
+Shendong Tianlong Group Co., Ltd.
+2021
+RMB million
+2020
+RMB million
+39,845
+34,495
+23,388
+14,493
+(33,224)
+(7,631)
+(625)
+(136)
+20. INTANGIBLE ASSETS
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+Year ended 31 December
+Additions
+RMB million
+47,723
+47,380
+(15)
+2,176
+47,708
+49,556
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+21. INTERESTS IN ASSOCIATES (CONTINUED)
+The Group's associates are unlisted and established in the PRC. The following list contains only
+the particulars of associates, which principally affect the results or assets of the Group:
+Name of associate
+RMB million
+Proportion of ownership
+interest and voting power
+held by the Group
+2021
+%
+Principal activities
+2020
+%
+Beijing GD Power Co., Ltd.
+("Beijing GD")
+42.53
+Haoji Railway Co., Ltd.
+("Haoji Railway")
+12.50
+12.50
+2,117
+Generation and sale of
+electricity
+At the beginning of the year
+31 December 31 December
+31 December
+2020
+42.53
+3,888
+Transferred from construction in progress
+31 December
+2021
+Amortisation
+Disposal
+Classified as assets held for sale
+Impairment losses (Note 12)
+21. INTERESTS IN ASSOCIATES
+Unlisted shares, at cost
+Share of post-acquisition profits and other comprehensive
+income, net of dividend received
+256 China Shenhua Energy Company Limited
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+At the end of the year
+(316)
+(11)
+(1)
+4,651
+(1)
+(413)
+(400)
+136
+625
+821
+563
+3,648
+3,888
+(37)
+Interest element of lease rentals paid
+(37)
+(250)
+209
+1,697
+(2,530)
+(2,530)
+Interest paid
+(250)
+6,948
+49,355
+471
+47
+821
+41,115
+At 1 January 2020
+Proceeds from borrowings
+64,188
+Capital element of lease rentals paid
+9,940
+statements
+Repayments of borrowings
+2,576
+Increase in lease liabilities from entering into new
+3,172
+2,539
+37
+Interest expenses
+Amortisation of discount on bonds
+22,119
+(217)
+9,940
+22,336
+(676)
+(223)
+(453)
+Foreign exchange
+(3,488)
+(3,488)
+Repayments of bonds
+(13,840)
+(13,840)
+Deconsolidation of Finance Company's financial
+59,110
+(29)
+(350)
+(3,214)
+Interest paid
+(29)
+Interest element of lease rentals paid
+(197)
+(197)
+Capital element of lease rentals paid
+63,450
+263
+848
+3,241
+59,098
+At 1 January 2021
+(Note 35)
+(Note 33)
+(Note 32)
+(Note 31)
+Total
+RMB million
+leases during the year
+(3,214)
+Proceeds from borrowings
+22,114
+22,114
+(350)
+1,396
+1,396
+Decrease in lease liabilities during the year
+new leases during the year
+Increase in lease liabilities from entering into
+3,189
+3,160
+29
+At 31 December 2021
+Interest expenses
+(437)
+(76)
+༥ཚེ
+Amortisation of discount on bonds
+(361)
+Foreign exchange
+(21,741)
+(21,741)
+Repayments of borrowings
+7
+At 31 December 2020
+61
+277
+RMB million
+RMB million
+RMB million
+2021
+income
+2021
+At 1 January comprehensive 31 December
+in profit or
+loss/other
+(charged)
+Credited/
+Allowances, primarily for receivables and
+Net deferred tax assets
+Others
+Tax allowable expenses not yet incurred
+Unrealised profits from sales within the Group
+Accrued salaries and other expenses not yet
+paid
+Tax losses utilised
+Right-of-use assets
+Property, plant and equipment
+inventories
+Allowances, primarily for receivables and
+609
+(53)
+556
+193
+RMB million
+2,594
+634
+1,960
+252
+445
+(193)
+34
+(24)
+The following are the major deferred tax assets and liabilities recognised and movements thereon
+during the current and prior year:
+58
+179
+1,196
+1
+1
+88
+(8)
+96
+288
+95
+1,375
+30. DEFERRED TAXATION (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+1,960
+218
+226
+185
+RMB million
+RMB million
+2020
+Year ended 31 December
+2021
+Within operating cash flows
+Within financing cash flows
+Amounts included in the consolidated cash flow statement for leases comprise the
+following:
+287
+(c) Total cash outflow for leases
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+267
+2021 Annual Report
+63,450
+263
+848
+3,241
+59,098
+29. CASH AND CASH EQUIVALENTS (CONTINUED)
+277
+411
+These amounts relate to the following:
+2,594
+(896)
+(974)
+2,856
+3,568
+RMB million
+RMB million
+31 December
+2020
+31 December
+2021
+505
+China Shenhua Energy Company Limited
+Deferred tax liabilities
+Deferred tax assets
+For the purpose of the presentation in the consolidated statement of financial position, certain
+deferred tax assets and liabilities have been offset. The following is the analysis of the deferred
+tax balances for financial reporting purpose.
+30. DEFERRED TAXATION
+505
+411
+Lease rental paid
+2020
+RMB million
+Year ended 31 December
+2021
+RMB million
+268
+payable
+RMB million
+Lease
+liabilities
+RMB million
+31 December
+2020
+RMB million
+31,468
+24,621
+888
+671
+400
+459
+2,460
+3,229
+35,216
+28,980
+Included in accounts and bills payables, the following amounts are denominated in foreign
+currencies:
+USD
+Euro
+Others
+31 December
+2021
+31 December
+2020
+RMB million
+RMB million
+Credited/
+2021
+31 December
+More than three years
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+2,064
+1,435
+626
+1,075
+31,100
+1,202
+25,362
+27,872
+1,426
+1,108
+35,216
+28,980
+The following is an aging analysis of accounts and bills payables, presented based on invoice date.
+Less than one year
+One to two years
+Two to three years
+33,790
+Bills payable
+84
+474
+214
+11,155
+8,751
+29,109
+18,949
+Notes:
+Other accrued expenses and payables of the Group included:
+Amounts due to China Energy Group and fellow subsidiaries
+Amounts due to associates
+31 December
+2021
+31 December
+2020
+RMB million
+RMB million
+The above balances are unsecured, interest-free and payable on demand.
+China Shenhua Energy Company Limited
+584
+4
+519
+59
+588
+578
+Other accrued expenses and payables (Note)
+1,422
+1,194
+Dividends payable
+1,760
+747
+2021 Annual Report
+273
+274
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+35. ACCRUED EXPENSES AND OTHER PAYABLES
+31 December
+2021
+521
+12
+RMB million
+Accrued staff wages and welfare benefits
+5,941
+4,359
+Accrued interest payable
+209
+263
+Taxes payable other than income tax
+10,610
+4,154
+31 December
+2020
+RMB million
+interest
+- Third parties
+- China Energy Group, an associate of China Energy Group
+and fellow subsidiaries
+31 December
+2021
+Cash and cash equivalents in the consolidated statement of financial position and the
+consolidated statement of cash flows comprise cash at bank and in hand, and time deposits
+with original maturity within three months.
+Cash and cash equivalents
+(a)
+29. CASH AND CASH EQUIVALENTS
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 265
+Details of impairment assessment of restricted bank deposits are set out in Note 40.2.
+The Group performed impairment assessment on restricted bank deposits and concluded that the
+probability of defaults of the counterparty banks are insignificant and accordingly, no allowance for
+credit losses is provided.
+Restricted bank deposits represent collaterals for bills payable and collaterals related to the
+operating of mines and ports.
+28. RESTRICTED BANK DEPOSITS
+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.
+17,480
+18,514
+3,017
+3,685
+4,999
+8,361
+31 December
+2020
+RMB million
+Deposits with banks and other financial institutions
+Less: Restricted bank deposits
+RMB million
+162,886
+4,479
+RMB million
+Bonds
+Borrowings
+RMB million
+Accrued
+The table below shows the detailed changes in the Group's liabilities arising from financing
+activities, including both cash and non-cash changes. Liabilities arising from financing
+activities are those for which cash flows were, or future cash flows will be, classified in the
+Group's consolidated statement of cash flows as cash flows from financing activities.
+Reconciliation of liabilities arising from financing activities
+(b)
+29. CASH AND CASH EQUIVALENTS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+9,464
+266 China Shenhua Energy Company Limited
+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.
+112,880
+156,706
+cash flow statement
+Cash and cash equivalents in the consolidated
+11,186
+1,701
+Less: Time deposits with original maturity over
+three months
+127,457
+3,391
+Details of impairment assessment of bank deposits are set out in Note 40.2.
+- Associates
+6,468
+3,207
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+606
+656
+1,697
+2,126
+848
+931
+Less: total future interest expenses
+Present value of lease liabilities
+272
+China Shenhua Energy Company Limited
+(429)
+1,697
+(83)
+848
+Notes to the consolidated financial statements (Continued)
+34. ACCOUNTS AND BILLS PAYABLES
+For the year ended 31 December 2021
+Accounts payable
+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
+10,170
+9,675
+4,500
+4,500
+2,234
+2,709
+1,417
+470
+502
+706
+1,512
+37
+RMB million
+31 December
+2020
+RMB million
+2021
+31 December
+Note:
+Prepaid expenses and deposits
+Deductible VAT and other taxes
+Less: impairment losses (Note)
+- Other loans
+1,964
+1,510
+(charged)
+in profit or
+loss/other
+3,854
+4,815
+5,337
+More than one year, but not exceeding two years
+More than two years, but not exceeding five years
+More than five years
+3,804
+5,669
+RMB million
+31 December
+2020
+2021
+RMB million
+10,280
+31 December
+The exposure of the long-term borrowings and the
+contractual maturity dates:
+For the year ended 31 December 2021
+31. BORROWINGS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+China Shenhua Energy Company Limited
+The Group's short-term borrowings are unsecured and bear interest at rates ranging from 3.00%
+to 4.35% per annum (2020: 2.80% to 5.10% per annum), and long-term borrowings bear interest
+at rates ranging from 1.80% to 4.90% per annum (2020: 1.80% to 6.15% per annum).
+59,098
+59,110
+48,178
+Within one year
+49,040
+40,002
+54,862
+1,057
+8,846
+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
+2,667
+3,195
+Interest rates ranging from
+LPR-2.60% to LPR+0.05%
+per annum with maturities
+through 8 October 2041
+35,156
+RMB denominated
+42,388
+31 December
+2020
+RMB million
+RMB million
+31 December
+2021
+Interest rates ranging from
+4.28% to 5.39% per annum
+with maturities through 22
+January 2036
+RMB denominated
+Loans from banks and other institutions
+The Group's long-term borrowings comprise:
+54,055
+41,061
+1,478
+10,920
+Unsecured
+Notes to the consolidated financial statements (Continued)
+270
+2021 Annual Report 269
+1,960
+(202)
+2,162
+Net deferred tax assets
+58
+(193)
+(266)
+For the year ended 31 December 2021
+73
+(7)
+65
+Accrued salaries and other expenses not
+yet paid
+1,196
+(59)
+1,255
+the Group
+1,910
+At 1 January
+2020
+Others
+10,070
+30. DEFERRED TAXATION (CONTINUED)
+31. BORROWINGS
+Secured
+59,098
+59,110
+50,251
+49,193
+Long-term borrowings, less current portion
+Non-current borrowings:
+8,847
+9,917
+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.
+3,804
+5,043
+4,248
+RMB million
+RMB million
+31 December
+2021
+Current portion of long-term borrowings
+Short-term bank and other borrowings
+Current borrowings:
+An analysis of the Group's borrowings is as follows:
+5,669
+Euro denominated
+31 December
+2020
+annum with maturities
+through 22 June 2022
+809
+After 5 years
+366
+341
+628
+476
+After 2 years but within 5 years
+229
+206
+1,015
+267
+After 1 year but within 2 years
+275
+242
+Within 1 year
+216
+187
+RMB million
+RMB million
+RMB million RMB million
+225
+payments
+59
+1
+income
+Interest rate at 2.85% per
+comprehensive
+31 December
+2020
+RMB million
+RMB million
+RMB million
+inventories
+540
+Unrealised profits from sales within
+69
+Property, plant and equipment
+112
+81
+193
+Right-of-use assets
+116
+(20)
+96
+Tax allowable expenses not yet incurred
+609
+lease
+Tax losses utilised
+lease
+payments
+RMB million
+31 December
+2021
+Due date
+Effective
+interest rate
+%
+The Group issued a dollar bond of a total USD500 million on 20 January 2015. The net proceeds
+of the Dollar bond issued were mainly used for repayment of loans of subsidiaries. Details of the
+Group's bond are as follow:
+32. BONDS
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount
+of RMB815 million (2020: RMB893 million) (see Note 17(iii)).
+As at 31 December 2021, included in the above outstanding long-term borrowings, were entrusted
+loans from China Energy Group and fellow subsidiaries amounting to RMB21,179 million (2020:
+RMB21,640 million).
+31. BORROWINGS (CONTINUED)
+4.10%
+For the year ended 31 December 2021
+50,251
+49,193
+(3,804)
+54,055
+54,862
+(5,669)
+3
+lease
+payments
+Less: current portion of long-term borrowings
+2
+2021 Annual Report 271
+19/01/2025
+Notes to the consolidated financial statements (Continued)
+10 year corporate bond
+minimum
+lease
+minimum
+3,172
+minimum
+minimum
+value of the
+Total
+value of the
+payments
+Present
+Total
+Present
+31 December 2021
+3,241
+-
+RMB million
+33. LEASE LIABILITIES
+The lease liabilities were repayable as follow:
+31 December 2020
+31 December
+2020
+276 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS
+40.1 Categories of financial instruments
+Financial assets
+Financial assets at amortised cost
+Equity instruments at FVTOCI (Note 22)
+Accounts and bills receivable at FVTOCI (Note 22)
+31 December
+There were no changes in the Group's approach to capital management compared with previous
+years.
+Financial liabilities
+Amortised cost
+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:
+The Group monitors capital using a gearing ratio which is total liabilities divided by total assets.
+The Group aims to maintain the gearing ratio at a reasonable level. The Group's gearing ratio as
+at 31 December 2021 was 26% (2020: 24%).
+16,491
+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
+3,399
+RMB million
+2020
+31 December
+19,869
+3,378
+2021
+RMB million
+16,491
+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.
+RMB million
+Market risk (Continued)
+196,114
+2020
+2021
+RMB million
+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)
+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
+(i)
+Market risk
+The Group's major financial instruments include accounts and bills receivables, loans and
+advances to/deposits from/amounts due to China Energy Group and fellow subsidiaries,
+amounts due from/to associates, other receivables, accounts and bills payables, borrowings,
+other payables, long-term liabilities and bonds. Details of the financial instruments are
+disclosed in the respective notes. The risks associated with these financial instruments
+include market risk (interest rate and currency risks), credit risk and liquidity risk. The
+policies on how to mitigate these risks are set out below. The management manages and
+monitors these exposures to ensure appropriate measures are implemented on a timely and
+effective manner.
+40.2 Financial risk management objectives and policies
+105,763
+117,341
+157,469
+198,664
+376
+155,624
+1,845
+2,174
+31 December
+2020
+RMB million
+31 December
+1,171
+Registered, issued and fully paid:
+2,661
+8,025
+Non-current liabilities
+689
+1,427
+Current liabilities
+Analysed for reporting purpose as:
+3,350
+9,452
+1,587
+6
+4
+1,431
+1,408
+742
+6,453
+RMB million
+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)
+Assets
+9,452
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,398,582,500 H shares of RMB1.00 each
+3,350
+(i)
+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
+350
+2,654
+565
+3,372
+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.
+(ii)
+Notes:
+31 December
+2,773
+2020
+RMB million
+294
+18
+1,073
+929
+144
+Impairment losses recognised
+Impairment losses reversed
+312
+As at 1 January 2020
+RMB million
+RMB million
+(credit -
+impaired)
+Lifetime ECL
+-
+Lifetime ECL
+(not credit
+impaired)
+Total
+RMB million
+(26)
+(11)
+(37)
+(45)
+(22)
+(23)
+Impairment losses reversed
+66
+58
+8
+Impairment losses recognised
+1,299
+1,163
+136
+As at 1 January 2021
+(49)
+(49)
+Write-offs
+The following table shows the movement in lifetime ECL that has been recognised for
+accounts receivable under the simplified approach.
+Write-offs
+Gross carrying amount (Continued)
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+One to two years past due
+2,035
+1%
+4,025
+1%
+Less than one year past due
+6%
+4,347
+5,609
+0.4%
+Current (not past due)
+RMB million
+RMB million
+2020
+0.4%
+205
+6%
+105
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+282 China Shenhua Energy Company Limited
+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.
+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.
+6,996
+10,076
+419
+20%
+172
+23%
+90
+10%
+65
+10%
+Two to three years past due
+More than three years past due
+40.2 Financial risk management objectives and policies (Continued)
+2020
+(43)
+As at 31 December 2021
+- Impairment losses reversed
+2,611
+2,583
+28
+- Impairment losses recognised
+706
+(1)
+495
+As at 1 January 2021
+(5)
+(5)
+(7)
+(6)
+(1)
+211
+(70)
+(71)
+- Write-offs
+284 China Shenhua Energy Company Limited
+The Group closely monitors cash flow requirements and optimising its cash return. The
+Group prepares cash flow forecasts and ensures it has sufficient cash for the servicing of
+operation, financial, and capital obligations; this excludes the potential impact of extreme
+circumstances that cannot reasonably be predicted, such as natural disasters.
+Liquidity risk is the risk that the Group will not be able to meet its financial obligation as
+they fall due. The approach to managing liquidity is to ensure, as far as possible, that it
+will always have sufficient liquidity to meet its liabilities when due, under both normal and
+stressed conditions, without incurring unacceptable losses or risk damage to the Group's
+reputation.
+Liquidity risk
+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.
+Note:
+3,207
+2,969
+238
+As at 31 December 2021
+23
+23
+- Other (Note)
+(62)
+(62)
+- Impairment losses reversed
+- Write-offs
+(43)
+258
+50
+2021 Annual Report 283
+188
+(638)
+640
+(190)
+2020
+12-month ECL
+RMB million
+2021
+12-month ECL
+RMB million
+Year ended 31 December
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+As at 31 December
+- Impairment losses reversed
+As at 1 January
+The following tables show reconciliation of loss allowances that has been recognised for
+loan receivables and interbank certificate of deposits.
+1,277
+1,156
+121
+New financial assets originated or purchased
+Effect of disposals of subsidiaries
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Gross carrying amount (Continued)
+- Impairment losses recognised
+460
+298
+162
+As at 1 January 2020
+Total
+RMB million
+RMB million
+RMB million
+impaired)
+(credit-
+(not credit-
+impaired)
+ECL
+Lifetime
+12-month
+ECL
+The following tables show reconciliation of loss allowances that has been recognised for
+other receivables and other loans.
+208
+2021
+2021
+Accounts
+receivable
+The analysis is prepared assuming variable-rate borrowings and variable-rate loans and
+receivables outstanding at the end of the reporting period were outstanding for the
+whole year.
+The sensitivity analysis below has been determined based on the exposure to interest
+rates for variable-rate borrowings and variable-rate loans and receivables at the end
+of the reporting period. No sensitivity analysis has been presented for the exposure
+to interest rates for bank balances as the management of the Group considers that,
+taking into account that the fluctuation in interest rates on bank balances is minimal,
+the impact of profit or loss for the year is insignificant.
+Sensitivity analysis
+The Group's exposures to interest rates on financial liabilities are detailed in the
+liquidity risk management section of this note.
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate
+borrowings and variable-rate loans (see Note 31). Other than the concentration of
+interest rate risk related to the movements in London Interbank Offered Rate and the
+loan interest published by the PBOC, the Group has no significant concentration of
+interest rate risk.
+The Group 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).
+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).
+(ii) Interest rate risk
+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
+278 China Shenhua Energy Company Limited
+(99)
+(122)
+Market risk (Continued)
+2021 Annual Report 279
+280
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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)
+112
+China Shenhua Energy Company Limited
+78
+57
+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
+834
+(Decrease)/Increase in profit after
+tax for the year:
+1,127
+1,479
+1,057
+431
+445
+1,202
+RMB million RMB million
+-
+USD
+Year ended 31 December
+JPY
+Year ended 31 December
+-if RMB strengthens against
+foreign currencies
+9
+122
+(112)
+(78)
+(13)
+(57)
+- if RMB weakens against foreign
+currencies
+RMB million RMB million
+Year ended 31 December
+2020
+2021
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+13
+2021
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40.2 Financial risk management objectives and policies (Continued)
+Other items
+2,101
+1,459
+Credit-impaired
+(Note (i))
+6,996
+Financial guarantee
+contracts (Note (ii))
+10,076
+N/A
+26
+4,500
+4,500
+Credit-impaired
+N/A
+Provision matrix
+N/A
+Notes:
+(i)
+Average
+loss rate
+Accounts
+receivable
+Average
+loss rate
+Gross carrying amount
+As part of the Group's credit risk management, the Group uses debtors' ageing to assess
+the impairment for its receivables from customers in relation to its sales of coal, power,
+coal chemical products and transportation services because these customers consist of
+a large number of customers with common risk characteristics that are representative of
+the customers' abilities to pay all amounts due in accordance with the contractual terms.
+The following table provides information about the exposure to credit risk for accounts
+receivables which are assessed based on provision matrix as at 31 December 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.
+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)
+27
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+224
+Other loans
+12-month ECL
+28 N/A
+Restricted bank deposits
+12-month ECL
+23, 27 N/A
+Loans receivables
+400
+4,479
+amortised costs
+2020
+RMB million
+RMB million
+31 December
+2021
+12-month or
+lifetime ECL
+External
+Notes credit rating
+The tables below detail the credit risk exposures of the Group's financial assets and
+financial guarantee contracts, which are subject to ECL assessment:
+Financial assets at
+Cash
+29 N/A
+158,407
+receivables
+12,556
+14,817
+12-month ECL
+23, 27 N/A
+Service concession
+1,324
+949
+Credit-impaired
+2,797
+2,262
+12-month ECL
+27 N/A
+Other receivables
+437
+3,391
+124,066
+Accounts receivable
+12-month ECL
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+Other income
+2020
+RMB million
+Fair value
+hierarchy
+Valuation technique(s)
+and key input(s)
+Financial assets:
+Equity instruments
+2,174
+1,845 Level 3
+Accounts and bills
+receivables
+376
+Level 3
+Market comparison
+approach.
+Fair value is estimated
+based on value of
+comparable listed
+companies, multiples
+and discount for lack of
+liquidity.
+Discounted cash flow
+method. The significant
+unobservable inputs
+used by the Group
+for the valuation are
+the expected rates of
+return.
+There were no transfer between Level 1, Level 2 and Level 3 during the year ended 31
+December 2021 and 2020.
+Fair value of financial assets and financial liabilities that are not measured at fair value
+on a recurring basis
+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:
+31 December 31 December
+2021
+40.3 Fair value measurements
+5,669
+5,391
+Bonds
+4.10
+126
+126
+3,522
+3,774
+3,241
+48,926
+9,218
+22,774
+37,847
+118,765
+105,763
+Saved as discussed above, the Group also makes use of banks and financial institutions
+facilities as one of the effective sources of liquidity.
+The maximum liability of financial guarantees issued by the Group is disclosed in Note 41.2.
+2021 Annual Report 285
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+Fair value of the Group's financial assets and financial liabilities that are measured at fair
+value on a recurring basis
+355
+31 December 2021
+Carrying
+31 December 2020
+Carrying
+amount
+31 December
+2021
+RMB million
+41,369
+22,639
+30,737
+21,918
+5,481
+4,000
+69,489
+56,655
+As at 22 January 2021, the Group entered into a partnership agreement as a limited partner with other partners to
+participate in the establishment of Beijing Guoneng New Energy Industry Investment Fund Partnership (Limited
+Partnership), the committed investment payments under which amounted to RMB4,000 million and the remaining
+uninvested amount is RMB3,573 million.
+As at 29 September 2021, the Group entered into a partnership agreement as a limited
+partner with other partners to participate in the establishment of Guoneng Low Carbon Fund
+Partnership, the committed investment payments under which amounted to RMB2,000
+million and the remaining uninvested amount is RMB1,908 million.
+41.2 Financial guarantees issued
+As at 31 December 2021, the Group had issued certain guarantees in respect of certain
+banking facilities granted to an entity which the Group held less than 20% equity interest.
+The maximum amount guaranteed is RMB128 million (2020: RMB144 million).
+41.3 Legal contingencies
+The Group is the defendant in certain lawsuits as well as the plaintiff in other proceedings
+arising in the ordinary course of business. While the outcomes of such contingencies,
+lawsuits or other proceedings cannot be determined at present, management believes that
+any resulting liabilities will not have a material adverse effect on the financial position or
+operating results of the Group.
+2021 Annual Report 287
+288
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+41. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
+Note:
+Fair value
+- Other (Note)
+evaluation assets
+RMB million RMB million
+RMB million
+Fair value
+RMB million
+amount
+Financial liabilities:
+Fixed rate bank borrowings
+Fixed rate bonds
+6,348
+3,172
+6,645
+3,261
+5,391
+3,241
+5,669
+3,426
+The fair value of fixed rate bank borrowings above in the Level 2 category is measured using
+discounted cash flow method where the future cash flows are estimated based on the
+contract and discounted at a rate that reflects the credit risk of the issuers.
+The fair values of bonds are included in the Level 1 category, which have been derived from
+the quoted prices (unadjusted) in an active market.
+286 China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+41. COMMITMENTS AND CONTINGENT LIABILITIES
+41.1 Capital commitments
+As at 31 December, the Group had capital commitments for land, buildings and mining
+rights, equipment and other as follows:
+Contracted for but not provided
+– Land, buildings, mining rights and exploration and
+- Equipment
+41.4 Environmental contingencies
+811
+4,235
+3,552
+56,779
+55,059
+Borrowings variable
+interest rate
+4.34
+7,741
+4,985
+5,433
+40,870
+59,029
+52,762
+Borrowings fixed interest rate
+2.97
+3,555
+1,445
+1,453
+192
+6,645
+6,348
+Bonds
+6,323
+4.10
+4,587
+liabilities
+40. FINANCIAL INSTRUMENTS (CONTINUED)
+40.2 Financial risk management objectives and policies (Continued)
+Liquidity risk (Continued)
+The following table details the remaining contractual maturity of the Group's financial
+liabilities at the end of the reporting period, which are based on contractual undiscounted
+cash flows (including interest payments computed using contractual rates or, if floating,
+based on rates current at the end of the reporting period) and the earliest date the Group
+can be required to pay:
+Financial liabilities:
+Accounts and bills payables,
+other payables, lease
+31 December 2021
+Weighted
+average
+interest
+On demand
+or less than
+rate
+1 year
+1-2 years
+2-5 years
+% RMB million
+RMB million RMB million
+More than
+5 years
+RMB million
+Total
+undiscounted
+Total
+carrying
+cash flows
+RMB million
+amount
+RMB million
+liabilities and long-term
+42,317
+268
+124
+3,318
+Financial liabilities:
+Accounts and bills payables,
+other payables, lease
+liabilities and long-term
+liabilities
+37,467
+2,088
+3,732
+1,085
+44,372
+43,424
+Borrowings variable interest
+rate
+4.47
+7,098
+6,736
+14,709
+36,407
+64,950
+53,707
+Borrowings fixed interest rate
+2.65
+RMB million
+124
+amount
+Total
+3,566
+3,172
+53,737
+11,141
+16,527
+44,614
+126,019
+117,341
+31 December 2020
+Weighted
+average
+interest
+On demand
+or less than
+More than
+rate
+1 year
+% RMB million
+1-2 years
+RMB million
+2-5 years
+RMB million
+5 years
+RMB million
+Total
+undiscounted
+cash flows
+RMB million
+carrying
+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.
+31 December
+2020
+RMB million
+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).
+(xx) Net deposits placed with Finance Company represents net deposits placed by the
+Group with Finance Company after Finance Company was deconsolidated from the
+Group's consolidated financial statements.
+(xxi) Granting of loans from China Energy Group and fellow subsidiaries.
+(xxii) Repayment of loans to China Energy Group and fellow subsidiaries.
+The Directors are of the opinion that the above transactions with related parties were
+conducted in the ordinary course of business and in accordance with the agreements
+governing such transactions.
+2021 Annual Report 291
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+The Group entered into a number of agreements with China Energy Group, an associate
+of China Energy Group, fellow subsidiaries, and associates of the Group. The terms of the
+principal agreements are summarised as follows:
+(i)
+(ii)
+The Group has entered into a mutual supply agreement for the mutual provision of
+production supplies and ancillary services with an associate of China Energy Group
+and fellow subsidiaries. Pursuant to the agreement, an associate of China Energy
+Group and fellow subsidiaries provide the Group with the production supplies
+and services, ancillary production services including the use of the information
+network system and ancillary administrative services. On the other hand, the Group
+provides fellow subsidiaries with water supplies, rolling stock management, railway
+management, railway transportation and other related or similar production supplies
+or services and use of the information network system.
+The products and services provided under the agreement, other than the sharing of use
+of the information network system which is free of charge, are provided in accordance
+with the following pricing policy:
+price prescribed by the state (including any price prescribed by any relevant
+local government), if applicable;
+where there is no state-prescribed price but where there is a state-guidance
+price, then the state-guidance price;
+where there is neither a state-prescribed price nor a state-guidance price, the
+market price; or
+where none of the above is applicable or where it is not practical to apply the
+above pricing policies in reality, the price to be agreed between the relevant
+parties shall be based on reasonable costs incurred in providing the goods or
+services plus a profit margin of 5% of such costs.
+The Group has entered into coal supply agreements with an associate of China Energy
+Group, fellow subsidiaries and associates of the Group. The coal supplied is charged
+at the prevailing market price.
+292
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+(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.
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+(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.
+(xvi) Other income includes agency income, repairs and maintenance service income,
+sales of ancillary materials and spare parts, management fee income, sales of water
+and electricity, financial service income, lease income, etc. earned from China Energy
+Group, an associate of China Energy Group and fellow subsidiaries.
+Interest expense represents interest incurred from deposits placed and loans from
+China Energy Group and fellow subsidiaries. The applicable interest rate is determined
+in accordance with the prevailing interest rates published by the PBOC.
+Purchases of ancillary materials and spare parts represent purchase of materials and
+utility supplies related to the Group's operations from fellow subsidiaries and an
+associate of China Energy Group.
+Mining service income represents income earned from coal mining services to a
+fellow subsidiary.
+Ancillary and social services represent expenditures for social welfare and support
+services such as property management, water and electricity supply, and canteen
+expense paid to China Energy Group, fellow subsidiaries and an associate of China
+Energy Group.
+(vii) Transportation service income represents income earned from fellow subsidiaries in
+respect of coal transportation services.
+(viii) Transportation service expense represents expense related to coal transportation
+service to fellow subsidiaries.
+(ix)
+Sale of coal represents income from sale of coal to fellow subsidiaries.
+(x) Purchase of coal represents coal purchased from an associate of the Group, an
+associate of China Energy Group and fellow subsidiaries.
+$1
+(xi)
+Property leasing represents rental paid or payable in respect of properties leased from
+China Energy Group and fellow subsidiaries.
+(xii) Repairs and maintenance services expense represents expense related to machinery
+repairs and maintenance services provided by an associate of the China Energy Group
+and fellow subsidiaries.
+(xiii) Coal export agency expense represents expense related to coal export agency
+services provided by a fellow subsidiary.
+290
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+42. EMPLOYEE BENEFITS PLAN
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(xiv) Purchase of equipment and construction work represents expenditure related to
+equipment and construction service provided by fellow subsidiaries.
+(xv) Sale of coal chemical product represents income from sale of coal chemical product
+to a fellow subsidiary.
+(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.
+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.
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(iv)
+Total amounts due from China Energy Group, an
+associate of China Energy Group, fellow subsidiaries
+and associates of the Group
+33,199
+24,085
+Borrowings
+22,472
+20,359
+Accounts payable
+2,690
+2,510
+Accrued expenses and other payables
+657
+578
+Contract liabilities
+1,781
+896
+Total amounts due to China Energy Group, an associate
+of China Energy Group and fellow subsidiaries, and
+associates of the Group
+27,600
+24,343
+Other than those disclosed in Notes 23, 26, 27, 31 and 35, amounts due from/to China
+Energy Group, an associate of China Energy Group, fellow subsidiaries, and associates of
+the Group bear no interest, are unsecured and are repayable in accordance with normal
+commercial terms.
+294
+China Shenhua Energy Company Limited
+704
+(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.
+426
+1,755
+(v)
+(vi)
+The Group has entered into a new financial services agreement with Finance
+Company effective from 1 January 2021. Pursuant to the agreement, Finance
+Company provides financial services to the Group. The interest rate for the deposits
+with Finance Company from the Group and fellow subsidiaries should not be lower
+than the lowest limit published by the PBOC for the same type of deposit. The
+interest rate for loans made by Finance Company to the Group and fellow subsidiaries
+should not be higher than the highest limit published by the PBOC for the same
+type of loan. The above interest rates should be determined by reference to the rate
+charged by normal commercial banks in the PRC for comparable deposits and loans
+on normal commercial terms. The fees charged by Finance Company for the provision
+of other financial services shall be determined according to the rates chargeable by
+the PBOC or the China Banking Regulatory Commission.
+The Group has entered into a property leasing agreement with fellow subsidiaries of
+China Energy Group for leasing of certain properties to each other. No rent is payable
+by the Group before fellow subsidiaries obtains the relevant property ownership
+certificate. The rental charges are based on comparable market rates. If fellow
+subsidiaries of China Energy Group negotiate to sell a leased property to a third party,
+the Company has a pre-emptive right to purchase such property under terms no less
+favorable than other third party.
+The Group has entered into a land leasing agreement with fellow subsidiaries of China
+Energy Group. The annual rent is determined based on the local market rate. The
+Group is not allowed to sub-let the leased land.
+The Group has entered into an agency agreement for the export of coal with a fellow
+subsidiary of China Energy Group. The fellow subsidiary is appointed as a non-
+exclusive export agent of the Group and is entitled to receive an agency fee based
+on the relevant market rates or lower rates. Currently, the rate is 0.7% of the free on
+board sales price of coal exported.
+2021 Annual Report 293
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(vii) The Group entered into an agency agreement for the sale of coal with fellow
+subsidiaries of China Energy Group. The Group is appointed as the exclusive sales
+agent of fellow subsidiaries of China Energy Group for thermal coal and non-exclusive
+sales agent for coking coal. The Group is entitled to receive an agency fee, which is
+based on its related costs incurred plus a profit margin of 5% for sales of coal outside
+the Inner Mongolia Autonomous Region. No agency fee is charged for sales of coal
+within the Inner Mongolia Autonomous Region.
+(viii) The Group has entered into agreements with fellow subsidiaries of China Energy
+Group under which the Group has been granted the right to use certain trademarks.
+Fellow subsidiaries of China Energy Group bear its own cost for the registration of
+such trademarks during the term of the trademarks license agreement and expenses
+for enforcement against any infringement of the licensed trademarks by third parties.
+Amounts due from/to China Energy Group, an associate of China Energy Group, fellow
+subsidiaries, and associates of the Group:
+Cash and time deposits at bank
+Accounts and bills receivables
+Prepaid expenses and other current assets
+Other non-current assets
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+27,126
+3,892
+19,726
+2,735
+920
+(vi)
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+(iv)
+(iv)
+1,773
+(v)
+(v)
+3
+57
+1,294
+1,329
+Transportation service income
+(vii)
+1,813
+1,339
+Transportation service expense
+(viii)
+2,357
+201
+Sale of coal
+(ix)
+96,776
+54,906
+Purchase of coal
+286
+(x)
+810
+19
+43. RELATED PARTY TRANSACTIONS
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group
+The Group is controlled by China Energy Group and has significant transactions and
+relationships with China Energy Group, an associate of China Energy Group and subsidiaries
+of China Energy Group ("fellow subsidiaries"). Related parties refer to enterprises over
+which China Energy Group is able to exercise significant influence or control. The Group
+also has entered into transactions with its associates, over which the Group can exercise
+significant influence.
+The Group had the following transactions with China Energy Group, an associate of China
+Energy Group, fellow subsidiaries, and associates of the Group that were carried out in the
+normal course of business during both years:
+China Shenhua Energy Company Limited
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+Year ended 31 December
+2021
+2020
+RMB million
+RMB million
+parts
+Mining service income
+Interest income
+Income from entrusted loans
+Interest expense
+Purchases of ancillary materials and spare
+Ancillary and social services
+183
+615
+19
+16,696
+1,229
+Property leasing
+3,913
+Repayment of loans from Finance Company
+Net deposits received by Finance Company
+Net deposits placed with Finance Company
+Granting of loans from China Energy Group
+Repayment of loans from China Energy Group
+(xviii)
+13,062
+(xix)
+19,492
+(xx)
+27,126
+19,726
+(xxi)
+10,012
+3,067
+(xxii)
+12,491
+1,596
+2021 Annual Report 289
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+10,073
+43.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(i) Interest income represents interest earned from deposits in and loans to China
+Energy Group and fellow subsidiaries. The applicable interest rate is determined in
+accordance with the prevailing interest rates published by the PBOC.
+(ii)
+Company
+15,205
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+Granting of loans from Finance Company
+Bills receivables discounted from Finance
+(xvii)
+(xi)
+125
+Repairs and maintenance services expense
+(xii)
+70
+17
+Coal export agency expense
+(xiii)
+4
+4
+100
+1,101
+Purchase of equipment and construction work (xiv)
+1,748
+(xvi)
+3,945
+4,395
+(xv)
+Sale of coal chemical product
+494
+6,941
+volume by railway (100 million tonnes)
+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%
+8.8
+1
+The macroeconomic and industry-related contents in this report are for reference only and does not constitute any
+investment advice. The Company has used its best endeavours to ensure the accuracy and reliability of information in
+this section, but does not assume any liability or provide any form of guarantee for the accuracy, completeness or validity
+of all or part of its content. If there is any error or omission, the Company does not assume any liability. The content in
+this section may contain certain forward-looking statements based on subjective assumptions and judgments of future
+political and economic developments; therefore there may exist uncertainties in these statements. The Company does not
+undertake any responsibility for updating the information or correcting any subsequent error that may appear. The opinions,
+estimates and other data set out herein can be amended or withdrawn without further notice. The data contained in this
+section are mainly derived from sources such as the National Bureau of Statistics, National Energy Administration, China
+Coal Market Network, China Coal Resources Network, China Electricity Council and China Coal Transportation & Sales
+Society etc.
+2021 Annual Report 25
+Section IV Directors' Report (Continued)
+25.8
+(2)
+26 China Shenhua Energy Company Limited
+3.
+Section IV Directors' Report (Continued)
+International thermal coal market
+In 2021, the global coal-fired power generation reached an all-time high, and coal
+consumption was approximately 7,900 million tonnes, representing a year-on-year
+increase of 6%. Global coal production gradually recovered, with total coal output
+increased by approximately 4.3%¹ year-on-year, and major coal-producing countries
+such as China, India, the United States, Indonesia and Russia achieved output growth.
+There were differences in the pace of the recovery of coal supply and demand, as
+well as factors such as the general rise in global commodity prices, weather, and
+rising shipping prices, which have led to periods of tight energy supply and sharp
+fluctuations in coal prices. The spot price of Newcastle NEWC thermal coal rose to
+a high of US$253.55/tonne during the year and dropped to US$165.86/tonne at the
+end of the year, representing an increase of 98.1% as compared to the end of the
+previous year.
+Power market environment
+In 2021, China's electricity demand grew rapidly. China's national power consumption
+reached 8,312.8 billion kWh, representing a year-on-year increase of 10.3%, or a two-year
+average of 7.1%. The power generation of sizable power plants nationwide was 8,112.2
+billion kWh, representing a year-on-year increase of 8.1%, or a two-year average of 5.4%.
+Among them, thermal power generated 5,770.3 billion kWh, representing a year-on-year
+increase of 8.4%, and accounting for 71.1% of the national total. The average utilization
+hours of power generation equipment of power plants with the capacity of 6,000 kW and
+above nationwide was 3,817 hours, increasing by 60 hours year-on-year. Among them,
+the average utilization hours of thermal power equipment was 4,448 hours, increasing by
+237 hours year-on-year. The average utilization hours of hydropower were 3,622 hours,
+representing a year-on-year decrease of 203 hours.
+National coal transportation
+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.
+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.
+6.6
+China's thermal coal market
+Coal import (100 million tonnes)
+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%.
+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.
+Coal market environment
+3.2
+2.
+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)
+40.7
+4.7
+(1)
+International Energy Agency (IEA), "Coal 2021" Annual Report.
+34 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+Coal
+Change
+2020
+2021
+Breakdown of cost items
+By business segment
+Operating costs by business segment (before elimination on consolidation)
+Unit: RMB million
+Section IV Directors' Report (Continued)
+32 China Shenhua Energy Company Limited
+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.
+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 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;
+(6)
+(5)
+(4)
+(3)
+(2)
+1
+The operating costs of the Group in 2021:
+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
+repairs and maintenance, depreciation and amortisation,
+other costs, other operating costs, and taxes and
+surcharges
+1.7
+4,675
+4,754
+Raw materials, fuel and power, Personnel expenses,
+Coal chemical
+of external transportation business, and taxes and
+surcharges
+82.1
+2,755
+5,018
+0.8
+47.3
+3,314
+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
+Shipping
+Port
+8.5
+20,304
+22,020
+55.0
+38,729
+60,019
+46.8
+153,373
+3,342
+2021 Annual Report 33
+100.0
+100.0
+9,124
+4.5
+10,722
+Repair and maintenance
+32.5
+9.9
+16,066
+8.9
+21,285
+Personnel expenses
+21.5
+12.0
+19,501
+9.9
+23,696
+Raw materials, fuel and power
+111.0
+30.0
+48,742
+43.0
+102,865
+Cost of purchased coal
+in amount
+5.6
+17.5
+Depreciation and amortization
+18,093
+239,156
+Total operating sales
+3.6
+16.2
+26,292
+11.4
+27,229
+Others
+51.0
+6.7
+10,926
+162,374
+6.9
+Tax and surcharge
+24.5
+9.3
+15,076
+7.8
+18,764
+Transportation charges
+8.7
+10.3
+16,647
+7.6
+16,502
+Section IV Directors' Report (Continued)
+(3) Principal businesses by industry segment
+-
+increase/
+decrease in
+compared
+year
+Increase/
+decrease as
+Year-on-
+Year-on-
+year
+increase/
+decrease in
+Inventory
+(4) Analysis of the production and sales volume of major products
+percentage points
+Increased by 9.2
+1.7
+13.3
+18.7
+(4,754)
+5,851
+Coal chemical
+percentage points
+Increased by 7.5
+82.1
+99.1
+19.0
+(5,018)
+6,195
+with the
+beginning
+Major
+products Unit
+Production
+Sales at the end
+volume of the period
+2021 Annual Report 27
+22.3
+22.1
+156.13
+166.45
+billion kWh
+Power
+tonnes
+23.4
+8.0
+5.3
+Shipping
+24.3
+307.0
+million
+Coal
+%
+%
+%
+volume in inventory
+volume
+of the year
+sales
+production
+482.3
+percentage points
+0.8 Increased by 0.2
+1.3
+previous year
+year
+year
+margin
+costs
+Revenue
+compared with
+previous
+previous
+Operating Gross profit
+Business
+segment
+RMB million RMB million
+margin as
+with
+in gross profit
+compared as compared
+Increase/decrease
+operating
+costs
+revenue as
+operating
+Increase/
+decrease in
+Increase/
+decrease in
+Major business by industry segments in 2021 (before eliminations on consolidation)
+The major business model of the Group is the integrated coal industry
+chain: i.e. coal production → coal transportation (railway, port and shipping)
+conversion of coal (power generation and coal chemical), and there
+are business intercourses between each segment. The percentages of
+gains (before elimination on consolidation) from operations of coal, power,
+transportation and coal chemical segments of the Group were 71%, 4%, 24%
+and 1% in 2021 respectively (2020: 52%, 14%, 34% and 0%).
+with
+2020
+%
+Coal
+48.1
+(3,342)
+6,440
+Port
+percentage points
+percentage points
+8.5 Decreased by 1.7
+55.0 Decreased by 15.3
+5.1
+45.9
+40,699
+%
+Railway
+6.4
+(60,019)
+64,124
+Power generation
+percentage points
+Increased by 3.8
+46.8
+54.0
+23.1
+(225,126)
+292,661
+29.6
+for 2020
+(22,020)
+for 2021
+50.9
+62,690
+94,575
+Net cash inflows from operating
+operating activities of Finance
+Company
+/
+18,599 Note
+Of which: Net cash inflows from
+activities
+16.3
+81,289
+94,575
+Net cash inflows from operating
+18.1
+(15,378)
+(192.3)
+947
+(874)
+(18,161)
+Income tax expense
+Share of results of associates
+14.1
+(2,263)
+(2,583)
+activities excluding the effect of
+Finance Company
+Net cash (outflows)/inflows in
+(6,844)
+with that
+Change
+for 2021
+compared
+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.
+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;
+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;
+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;
+(4)
+(3)
+(2)
+The revenue of the Group in 2021 recorded a year-on-year increase. The main
+reasons for the increase are:
+(1) Factors affecting the revenue
+48.0
+Analysis on revenue and costs
+Section IV Directors' Report (Continued)
+30 China Shenhua Energy Company Limited
+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.
+activities
+3.9
+(42,079)
+(43,731)
+Net cash outflows in financing
+investing activities
+(121.4)
+32,048
+2.
+1,684
+2,492
+Finance costs
+Unit: RMB million
+Items
+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.
+2021
+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.
+(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
+2021
+III.
+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.
+Major operating indicators
+2020
+%
+Interest income
+14.8
+778
+893
+Other income
+388.7
+(524)
+(2,561)
+Credit impairment loss
+392.3
+(194)
+Change
+(955)
+83.5
+(1,362)
+(2,499)
+Research and development costs
+47.3
+(239,156)
+Operating costs
+43.7
+233,263
+335,216
+Revenue
+Other gains and losses
+Unit
+(162,374)
+2020
+dispatch
+144.04
+22.3
+127.65
+156.13
+Billion kWh
+2. Total power output
+153.55
+22.1
+136.33
+166.45
+(IV) Coal chemical
+Billion kWh
+(III) Power generation
+nautical miles
+89.6
+20.5
+93.0
+112.1
+Billion tonne
+5. Shipment turnover
+109.8
+7.3
+113.0
+1. Gross power generation
+121.2
+1. Sales of polyethylene
+332.8
+Breakdown of cost items
+year change
+2021
+costs for
+Amount
+costs for
+Amount
+Year-on-
+to operating
+Percentage
+Percentage
+to operating
+Thousand tonnes
+Unit: RMB million
+Section IV Directors' Report (Continued)
+2021 Annual Report 31
+302.3
+(4.7)
+319.0
+(6.8)
+331.2
+315.6
+Thousand tonnes
+2. Sales of polypropylene
+356.9
+(2) Analysis of costs
+Million tonnes
+64
+Shenhua Tianjin Coal Port
+284.8
+447.1
+06
+5.6
+8.0
+G∞
+296.0
+312.7
+Million tonnes
+Of which: Self-produced
+446.4
+coal
+482.3
+282.7
+5.3
+291.6
+307.0
+Million tonnes
+1. Commercial coal
+production
+(I) Coal
+for 2020
+4. Shipping volume
+%
+2019
+2. Coal sales
+Purchased coal Million tonnes
+Million tonnes
+150.4
+45.4
+46.4
+2.2
+169.6
+44.7
+Million tonnes
+3. Loading volume at
+Huanghua Port
+199.7
+203.8
+215.0
+Million tonnes
+5.5
+self-owned railway
+12.8
+162.3
+Transportation
+1. Transportation turnover of Billion tonne km
+2. Loading volume at
+285.7
+303.4
+6.2
+285.5
+Non-current assets
+RMB million
+733
+1,506
+1,363
+RMB million
+RMB million
+2,757
+25,857
+16,172
+31,098
+Current assets
+RMB million
+RMB million
+16,278
+1,000
+5,134
+436
+505
+4,016
+RMB million
+181
+533
+560
+9,566
+Non-current liabilities
+1,217
+1,827
+6,751
+9,241
+Current liabilities
+5,035
+5,112
+1,452
+2020
+502
+2020
+475
+30.00
+30.00
+PRC
+Guoneng Huanghua Harbour Administration Co., Ltd.
+1,551
+1,474
+3,624
+109
+20.00
+20.00
+PRC
+3,698
+Total equity
+Taishan Power
+3,026
+23
+2021
+3,563
+interests
+31 December
+31 December
+Yulin Shenhua Energy Co., Ltd.
+Guoneng Baorixile Energy
+Industrial Co., Ltd.
+31 December
+31 December 31 December
+2020
+2021
+31 December
+2021
+Zhunge'er Energy
+Individually immaterial subsidiaries with non-controlling
+Details of the Company's material subsidiaries (Continued)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+65,384
+69,074
+China Shenhua Energy Company Limited
+300
+16,532
+16,773
+45. SUBSIDIARIES (CONTINUED)
+37,469
+841
+6,480
+304 China Shenhua Energy Company Limited
+(252)
+(452)
+activities
+Net cash outflow from investing
+1,354
+239
+1,613
+(501)
+720
+operating activities
+Net cash inflow/(outflow) from
+401
+40
+484
+176,702
+197,799
+Total current assets
+105,609
+3,890
+Accounts and bills receivables
+83
+9,220
+7,613
+Prepaid expenses and other current assets
+39,416
+943
+47,244
+3,381
+2,146
+Time deposits with original maturity over
+three months
+10,200
+Cash and cash equivalents
+142,410
+Restricted bank deposits
+143
+21
+21
+5,440
+11,756
+14,892
+Revenue
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+4,050
+Year ended 31 December
+2020
+RMB million
+RMB million
+2021
+Year ended 31 December
+4,135
+4,965
+4,992
+Year ended 31 December
+2021
+RMB million
+34,851
+4,126
+Expenses
+interests
+Dividend paid to non-controlling
+571
+1,516
+825
+1,815
+1,240
+2,666
+2,655
+Profit and total comprehensive
+1,888
+2,365
+2,702
+2,960
+9,764
+11,465
+income for the year
+369
+Limited company RMB7,450 million
+49.00
+Limited company
+PRC
+Guoneng Zhunneng Group Co., Ltd.
+Xinshuo Railway Co., Ltd.")
+(formerly known as "Shenhua
+00
+100
+PRC
+Guoneng Xinshuo Railway Co., Ltd.
+10
+100
+Limited company RMB2,500 million
+PRC
+(Tianjin) Finance Lease Co., Ltd.
+100
+RMB834 million
+100
+10
+China Energy Bayannaoer Coal Chemical PRC
+Co., Ltd.
+Provision of transportation
+services
+and sale of electricity
+development; generation
+100
+70 Coal mining and
+and sale of electricity
+development; generation
+100
+Coal mining and
+development; generation
+Coal mining and
+Note:
+10
+100
+RMB450 million
+Limited company
+and sale of electricity
+100 Provision of financial lease
+services
+Limited company RMB11,700 million
+20
+Investment holding
+100
+100
+HKD5,252 million
+China Shenhua Overseas Development Hong Kong, China Limited company
+%
+%
+2020
+2021
+Principal activities
+held by the Group
+31 December 31 December
+Proportion of ownership
+interest and voting rights
+Particulars of
+registered capital
+3,372
+Type of
+legal entity
+& Investment Co., Ltd. ("Shenhua
+Oversea Capital")
+Shenhua Australia Holding Pty Ltd.
+Australia
+70
+USD63 million
+Limited company
+Indonesia
+PT GH EMM Indonesia
+100
+100
+Guoneng Baoshen Railway Group Co., PRC
+Ltd. (formerly known as "Shenhua
+Baoshen Railway Group Co., Ltd.")
+AUD350 million
+Australia
+Watermark Company
+100
+00
+100
+AUD400 million
+Limited company
+Limited company
+100
+Provision of transportation
+services
+100
+246
+(142)
+59.50
+59.50
+PRC
+Dingzhou Power
+2,064
+2,478
+298
+783
+49.90
+49.90
+PRC
+Yulin Shenhua Energy Co., Ltd.
+2,291
+1,524
+1,666
+Guoneng Jinjie Energy Co., Ltd
+PRC
+PRC
+Guoneng Yuanhai Shipping Co., Ltd.
+17,057
+17,462
+3,627
+3,671
+47.28
+2,918
+47.28
+Guoneng Shuohuang Railway Development Co., Ltd.
+2,781
+3,172
+939
+1,196
+30.00
+30.00
+PRC
+358
+827
+43.39
+31 December 31 December
+Proportion of ownership
+interest and voting rights held
+by non-controlling interest
+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 intragroup eliminations.
+Details of non-wholly owned subsidiaries that have material non-controlling interests
+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.
+2021
+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.
+45. SUBSIDIARIES (CONTINUED)
+For the year ended 31 December 2021
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 299
+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..
+100 Coal chemical
+Coal mining and
+development
+Details of the Company's material subsidiaries (Continued)
+49.00
+2020
+Accumulated
+non-controlling interests
+43.39
+PRC
+Guoneng Baorixile Energy Industrial Co., Ltd.
+14,853
+15,951
+519
+1,166
+Profit allocated to
+non-controlling interests
+Year ended 31 December
+2021
+42.24
+PRC
+Zhunge'er Energy
+2020
+RMB million
+RMB million
+31 December 31 December
+2021
+2020
+RMB million
+RMB million
+42.24
+Inventories
+Expenses
+248,061
+Profit and total comprehensive
+income for the year
+(238)
+414
+414
+3,945
+3,080
+7,760
+7,670
+Dividend paid to non-controlling
+interests
+655
+655
+924
+982
+10,326
+11,686
+3,738
+5,081
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+3,266
+Revenue
+3,564
+9,758
+7,369
+22,008
+20,585
+3,919
+3,004
+3,686
+Year ended 31 December
+3,247
+352
+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)
+Details of the Company's material subsidiaries (Continued)
+Guoneng Yuanhai
+Shipping Co., Ltd.
+Taishan Power
+Guoneng Huanghua Harbour
+Administration Co., Ltd.
+31 December
+(6,155)
+(6,748)
+(2,701)
+(2,832)
+473
+6,052
+3,638
+8,127
+7,906
+Net cash outflow from investing
+activities
+(168)
+Net cash inflow from operating
+activities
+(129)
+(811)
+(1,290)
+(2,398)
+Net cash outflow from financing
+activities
+(180)
+(344)
+(240)
+Year ended 31 December
+Year ended 31 December
+34,480
+For the year ended 31 December 2021
+45. SUBSIDIARIES (CONTINUED)
+Details of the Company's material subsidiaries (Continued)
+Dingzhou Power
+Guoneng Jinjie Energy
+Co., Ltd
+31 December
+31 December
+2021
+RMB million
+2020
+RMB million
+31 December
+2021
+31 December
+2020
+31 December
+Guoneng Shuohuang Railway
+Development Co., Ltd.
+31 December
+Notes to the consolidated financial statements (Continued)
+2021 Annual Report 301
+(47)
+(155)
+Place of
+incorporation
+and operation
+(373)
+(89)
+Net cash outflow from financing
+activities
+(46)
+(46)
+2021
+(331)
+(1,136)
+(799)
+Net cash inflow/(outflow)
+222
+(799)
+313
+(1,947)
+(2,127)
+2020
+RMB million
+RMB million
+915
+3,955
+3,628
+Non-current liabilities
+100
+251
+788
+2,196
+854
+4,447
+Total equity
+2,561
+2,800
+10,303
+9,006
+35,330
+4,674
+31 December
+2,041
+Current liabilities
+RMB million
+RMB million
+Current assets
+796
+934
+4,693
+2,036
+2,129
+9,328
+Non-current assets
+3,994
+4,158
+8,594
+8,739
+34,631
+34,437
+8,118
+Current assets
+2021
+31 December
+2021
+(55)
+(252)
+222
+(22)
+(112)
+(152)
+(641)
+(255)
+(517)
+(1,045)
+Net cash inflow
+239
+249
+3
+6
+activities
+Net cash outflow from financing
+418
+investing activities
+13
+73
+73
+101
+100
+276
+437
+1,742
+345
+(124)
+523
+632
+1,203
+2,383
+2,330
+Net cash inflow/(outflow) from
+Net cash (outflow)/inflow from
+operating activities
+Dividend paid to non-controlling
+interests
+2,075
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+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
+275
+Total non-current assets
+258,390
+133,953
+Investments in subsidiaries
+3,678
+5,518
+46. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY
+31 December
+2021
+31 December
+2020
+RMB million
+RMB million
+Non-current assets
+Property, plant and equipment
+2021 Annual Report 303
+Construction in progress
+Right-of-use assets
+44,737
+44,035
+3,624
+4,702
+1,071
+1,008
+Intangible assets
+1,556
+1,623
+544
+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
+Non-current assets
+2,001
+2,238
+1,394
+31 December
+31 December
+31 December
+2020
+2021
+2020
+RMB million
+43
+RMB million
+RMB million
+RMB million
+RMB million
+Current assets
+2,994
+812
+2,950
+RMB million
+1,204
+1,580
+Total equity
+6,349
+4,993
+4,923
+Expenses
+5,203
+2,903
+10,211
+10,393
+5,462
+2,889
+Profit and total comprehensive
+income for the year
+753
+169
+69
+118
+2,806
+2020
+3,112
+Revenue
+7,547
+6,175
+7,364
+7,752
+11,300
+11,092
+Year ended 31 December
+6,195
+Year ended 31 December
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+2021
+RMB million
+2020
+RMB million
+Year ended 31 December
+Name of the subsidiary
+(969)
+45. SUBSIDIARIES (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+1,278
+3,747
+1,528
+1,999
+39,067
+36,279
+3,391
+4,479
+103,590
+131,263
+3,134
+7,468
+4,644
+4,268
+31 December
+2020
+RMB million
+RMB million
+2021
+31 December
+296 China Shenhua Energy Company Limited
+Accrued expenses and other payables
+Contract liabilities
+Borrowings
+Restricted bank deposits
+Cash and time deposits at banks
+Prepaid expenses and other current assets
+For the year ended 31 December 2021
+44. NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD
+After the end of the reporting period, the Directors proposed a final dividend, the details of which
+are disclosed in Note 15.
+45. SUBSIDIARIES
+PRC
+Zhunge'er Energy
+Shendong Coal Group Co., Ltd.")
+Ltd. (formerly known as "Shenhua
+100
+Limited company RMB4,989 million
+PRC
+Guoneng Shendong Coal Group Co.,
+100 Trading of coal
+100
+Limited company RMB1,889 million
+Accounts and bills receivables
+PRC
+%
+2020
+Principal activities
+held by the Group
+31 December 31 December
+2021
+Proportion of ownership
+interest and voting rights
+Particulars of
+registered capital
+Type of
+legal entity
+Place of
+incorporation
+and operation
+Name of the subsidiary
+The Company's subsidiaries are unlisted. Details of the Company's material subsidiaries at the
+end of the reporting period are set out below:
+Details of the Company's material subsidiaries
+Guoneng Sales Group Co., Ltd.
+Limited company RMB7,102 million
+Balances with other government-related entities, including state-controlled banks in the PRC
+2,104
+Power sales;
+Other than those transactions with China Energy Group, an associate of China Energy
+Group, fellow subsidiaries and associates of the Group as disclosed above, the Group
+conducts business with other government-related entities which include but are not limited
+to the following:
+The Company is ultimately controlled by the PRC government and the Group operates in an
+economic environment currently predominated by government-related entities.
+43.4 Transactions with other government-related entities in the PRC
+The Group participates in various defined contribution post-employment benefit plans
+organised by municipal and provincial governments and a supplemental defined contribution
+pension plan approved by the government for its employees. Further details of the Group's
+post-employment benefit plans are disclosed in Note 42.
+43.3 Contributions to post-employment benefit plans
+Total remuneration is included in "personnel expenses" as disclosed in Note 12.
+10
+1
+10
+1
+9
+RMB million
+2020
+Year ended 31 December
+2021
+RMB million
+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.
+For the year ended 31 December 2021
+43.2 Key management personnel emoluments
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+Details of the Company's material subsidiaries (Continued)
+(59)
+Sales and purchases of coal;
+Transportation services;
+Construction work;
+Purchases of ancillary materials and spare parts;
+2,406
+2,272
+8,961
+9,408
+40,808
+57,437
+74,053
+68,999
+2020
+RMB million
+Year ended 31 December
+2021
+RMB million
+Interest expenses (including amount capitalised)
+3,354
+Interest income
+Power revenue
+Coal revenue
+Transactions with other government-related entities, including state-controlled banks in the
+PRC
+Having considered the potential for transactions to be impacted by related party.
+relationships, the Group's buying, pricing strategy and approval processes, and what
+information would be necessary for an understanding of the potential effect of the
+relationship on the financial statements, the Directors are of the opinion that the following
+transactions with other government-related entities require disclosure:
+These transactions are conducted in the ordinary course of the Group's business on terms
+comparable to those with other entities that are not government-related. The Group has
+established its pricing policies in respect of sale of goods and provision of services, and
+approval process for purchases of products and services. Such policies and approval process
+apply to all counterparties regardless of whether the counterparty is government-related or
+not.
+43.4 Transactions with other government-related entities in the PRC (Continued)
+43. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+2021 Annual Report 295
+Financial services arrangements.
+Ancillary and social services; and
+Transportation costs
+10
+Short-term employee benefits
+Post-employment benefits
+100 Trading of coal; provision of
+integrated services
+Limited company RMB15,231 million
+PRC
+Guoneng Shuohuang Railway
+Development Co., Ltd.
+100 Generation and sale of
+electricity
+00
+100
+Limited company RMB3,280 million
+PRC
+Shenhua Fujian Energy Co., Ltd.
+Sichuan Energy Co., Ltd.")
+electricity; trading of coal
+(formerly known as "Shenhua
+Generation and sale of
+51
+66
+Limited company RMB3,101 million
+PRC
+Guoneng Sichuan Energy Co., Ltd.
+electricity
+Generation and sale of
+41
+41
+Limited company RMB1,561 million
+53
+53
+Provision of transportation
+services
+Guoneng Huanghua Harbour
+China Shenhua Energy Company Limited
+550
+Notes to the consolidated financial statements (Continued)
+For the year ended 31 December 2021
+100 Provision of transportation
+00
+100
+PRC
+Guoneng Railway Transportation Co.,
+Ltd.
+Coal chemical
+100
+100
+PRC
+Limited company RMB5,132 million
+51
+Limited company RMB5,948 million
+PRC
+Guoneng Yuanhai Shipping Co., Ltd.
+(formerly known as "Shenhua
+Zhonghai Shipping Co., Ltd.") (Note)
+Guoneng Baotou Coal Chemical Co., Ltd. PRC
+known as "Shenhua Huanghua
+Harbour Administration Co., Ltd.")
+70 Provision of harbour and
+port services
+Administration Co., Ltd. (formerly
+70
+Limited company RMB6,790 million
+PRC
+PC
+51 Provision of transportation
+services
+Dingzhou Power
+Limited company RMB5,003 million
+Generation and sale of
+Limited company RMB3,024 million
+PRC
+Shenhua Shendong Power Co., Ltd.
+70
+70
+Limited company RMB2,278 million
+Guoneng Jinjie Energy Co., Ltd. (formerly PRC
+known as "Shaanxi Guohua Jinjie
+Energy Co., Ltd.")
+80 Generation and sale of
+electricity
+Generation and sale of
+electricity
+70 Generation and sale
+electricity; coal mining
+development
+loading and transportation
+services
+100
+Coal mining; provision of
+Limited company RMB2,925 million
+PRC
+Beidian Shengli Company
+57 Coal mining; provision of
+loading and transportation
+services
+and sale of electricity
+Coal mining and
+development; generation
+Guoneng Baorixile Energy Industrial Co., PRC
+557
+58
+Limited company RMB1,169 million
+electricity
+63
+100
+Ltd. (formerly known as "Shenhua
+Baorixile Energy Industrial Co., Ltd.")
+Limited company RMB4,670 million
+51
+Guoneng Yuedian Taishan Power Co., PRC
+Ltd. (formerly known as "Guangdong
+Guohua Yuedian Taishan Power Co.,
+Ltd.", "Taishan Power")
+Hebei Guohua Cangdong Power Co., Ltd. PRC
+%
+%
+2020
+2021
+Principal activities
+held by the Group
+31 December 31 December
+interest and voting rights
+Particulars of
+registered capital
+Limited company RMB1,834 million
+Proportion of ownership
+60
+80
+Type of
+legal entity
+2021 Annual Report 297
+298
+Notes to the consolidated financial statements (Continued)
+51
+For the year ended 31 December 2021
+45. SUBSIDIARIES (CONTINUED)
+Details of the Company's material subsidiaries (Continued)
+Place of
+incorporation
+and operation
+Name of the subsidiary
+85,001
+(256)
+17,463
+146
+1,134
+185,760
+289,248
+Profit for the year
+33,263
+Other comprehensive income
+33,599
+336
+336
+Total comprehensive income
+Cancellation of repurchased
+own shares (Note 38)
+Dividend declared (Note 15)
+Appropriation of maintenance
+and production funds
+Utilisation of maintenance
+and production funds
+336
+33,263
+At 1 January 2021
+(235)
+33,263
+for the year
+8
+185,760
+51
+35,283
+35,334
+... - (25,061)
+1,595
+(4,880)
+(256)
+(25,061)
+(1,595)
+4,880
+Attributable share of Finance
+Company's retained
+earning
+1,505
+1,513
+At 31 December 2020
+85,001
+(256)
+17,463
+146
+1,134
+289,248
+256
+Annual Improvements to IFRSS 2018-2020 Cycle
+21
+on or after
+1 January 2022
+1 January 2022
+1 January 2022
+1 January 2022
+Amendments to IAS 1 and IFRS Practice Statement 2, Disclosure of Accounting 1 January 2023
+Polices
+Amendments to IAS 8, Definition of Accounting Estimates
+1 January 2023
+Amendments to IAS 12, Deferred tax related to assets and liabilities arising
+from a single transaction
+1 January 2023
+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.
+2021 Annual Report 307
+Section XI Documents Available for Inspection
+Documents Available for
+Inspection
+The annual report for the year 2021 signed by the Chairman
+The financial statements signed and sealed by the Chairman, the
+Chief Financial Officer, and the Person-in-charge of the Accounting
+Department
+The original copy of the audit report sealed by the accounting firm and
+signed and sealed by the certified public accountant
+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 2021 published on the websites of SSE
+and the HKEX
+(256)
+Approval date of the Board of Directors for submission: 25 March 2022
+Effective for
+accounting
+periods
+beginning
+Amendments to IAS 37, Onerous Contracts - Cost of Fulfilling a Contract
+Amendments to IAS 1, Classification of Liabilities as Current or Non-current
+Amendments to IAS 16, Property, Plant and Equipment: Proceeds before
+Intended Use
+Amendments to IFRS 3, Reference to the Conceptual Framework
+(35,962)
+(35,962)
+3,839
+(3,839)
+(2,165)
+2,165
+At 31 December 2021
+84,766
+19,137
+482
+26
+1,134
+286,906
+306 China Shenhua Energy Company Limited
+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 (CONTINUED)
+According to the Company's Articles of Association, the amount of retained earnings available
+for distribution to equity holders of the Company is the lower of the amount determined in
+accordance with the China Accounting Standards and the amount determined in accordance with
+IFRSS after the appropriation to reserves as detailed in Note (iii) to the consolidated statement of
+changes in equity.
+At 31 December 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).
+47. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND
+INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED
+31 DECEMBER 2021
+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.
+181,387
+and production funds
+729
+(Note 38)
+90
+84
+Total current liabilities
+Net current assets
+140,730
+108,167
+57,069
+68,535
+Total assets less current liabilities
+315,459
+316,596
+Non-current liabilities
+Borrowings
+Lease liabilities
+Long-term liabilities
+Accrued reclamation obligations
+Deferred tax liabilities
+Total non-current liabilities
+802
+4,156
+53
+1,619
+2,080
+2,636
+2,540
+409
+588
+308 China Shenhua Energy Company Limited
+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 (CONTINUED)
+31 December
+2021
+RMB million
+31 December
+2020
+RMB million
+Current liabilities
+Borrowings
+2,054
+Accounts and bills payables
+Current portion of lease liabilities
+Current portion of long-term liabilities
+Income tax payable
+Contract liabilities
+311
+273
+8,961
+127,896
+8,611
+96,021
+344
+133
+Accrued expenses and other payables
+462
+4,120
+67
+Capital
+and other
+reserves
+RMB million
+Retained
+earnings
+Total
+RMB million RMB million
+At 1 January 2020
+85,001
+20,748
+95
+96
+RMB million
+1,126
+277,718
+35,283
+35,283
+- 51 -
+51
+Profit for the year
+Other comprehensive income
+Total comprehensive income
+for the year
+Purchase of own shares
+170,748
+Dividend declared (Note 15)
+Appropriation of maintenance
+and production funds
+Utilisation of maintenance
+income
+RMB million RMB million
+Net assets
+Equity
+Share capital
+Reserves
+Total equity
+8,684
+7,458
+306,775
+309,138
+38
+reserves
+RMB million
+19,869
+286,906
+289,248
+306,775
+309,138
+2021 Annual Report 305
+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 (CONTINUED)
+Other
+Share
+premium
+Treasury
+shares
+Statutory comprehensive
+19,890
+Section XII
+44,137
+The finance information below is extracted from the financial statement prepared by the Group in
+accordance with International Financial Reporting Standards:
+2018
+2019
+2020
+RMB million
+RMB million
+RMB million
+RMB million
+2021
+RMB million
+Total non-current assets
+438,958
+358,330
+402,589
+390,675
+402,287
+Total current assets
+132,644
+233,296
+160,494
+172,229
+208,310
+Total assets
+2017
+As at 31 December
+CONSOLIDATED STATEMENT OF FINANCIAL POSITION
+for the Recent Five Years (Continued)
+Profit for the year attributable to:
+Equity holders of the Company
+47,795
+41,707
+35,849
+51,607
+Non-controlling interests
+9,343
+10,027
+8,070
+571,602
+8,135
+Earnings per share (RMB)
+-Basic/diluted
+2.403
+2.219
+2.097
+1.803
+2.597
+2021 Annual Report 309
+310
+Section XII Summary of Major Financial Information
+9,402
+591,626
+563,083
+562,904
+holders of the Company
+305,541
+331,693
+356,077
+364,203
+380,038
+Non-controlling interests
+73,564
+77,144
+64,141
+Total equity attributable to equity
+65,384
+Total equity
+379,105
+408,837
+420,218
+429,587
+449,221
+China Shenhua Energy Company Limited
+中国神华能源股份有限公司
+CHINA SHENHUA ENERGY COMPANY LIMITED
+Hang Seng Corporate
+Sustainability Index
+Series Member 2021-2022
+69,183
+61,009
+449,221
+420,218
+610,597
+Total current liabilities
+115,905
+123,381
+95,483
+69,493
+91,748
+Total non-current liabilities
+76,592
+59,408
+429,587
+47,382
+69,628
+Total liabilities
+192,497
+182,789
+142,865
+133,317
+161,376
+Net assets
+379,105
+408,837
+63,824
+Summary of Major Financial Information.
+for the Recent Five Years
+43,984
+54,164
+(612)
+(725)
+(640)
+(555)
+(581)
+General and administrative
+expenses
+(9,115)
+(9,854)
+(8,988)
+(8,948)
+(9,119)
+Research and development costs
+(341)
+(454)
+(940)
+(1,362)
+(2,499)
+Other gains and losses
+(1,880)
+(2,844)
+Selling expenses
+96,060
+70,889
+76,892
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+2017
+RMB million
+For the year ended 31 December
+2018
+RMB million
+2019
+RMB million
+2020
+RMB million
+2021
+RMB million
+Revenue
+Operating cost
+(2)
+Gross profit
+264,101
+241,871
+233,263
+(160,460)
+(173,677)
+(164,979)
+(162,374)
+335,216
+(239,156)
+88,286
+90,424
+248,746
+(194)
+(955)
+Other income
+(2,263)
+(2,583)
+Share of results of associates
+534
+448
+433
+947
+(874)
+Profit before income tax
+73,293
+(3,294)
+70,141
+59,362
+79,170
+Income tax expense
+(16,155)
+(15,977)
+(15,145)
+(15,378)
+(18,161)
+Profit for the year
+57,138
+64,922
+49,777
+(5,421)
+Finance costs
+894
+744
+708
+778
+893
+Credit impairment losses
+(152)
+(139)
+(524)
+(2,561)
+(4,416)
+Other expenses
+(3,504)
+(278)
+(1,090)
+(1,103)
+Interest income
+1,205
+1,479
+1,170
+1,684
+2,492
+(1,262)
+1 January 2023
+2021 Annual Report 43
+(5)
+Cash and cash equivalents
+months
+(84.8) Maturity of certain time
+deposits
+maturity over three
+2.0
+11,186
+33
+0.3
+1,701
+Time deposits with original
+restoration fund
+environmental treatment and
+Increase in provision for mine
+32.1
+0.6
+156,706
+3,391
+25.7
+20.1
+4.8
+29,109
+Accrued expenses and other
+payable
+5.1
+28,980
+5.8
+35,216
+Accounts and bills payables
+0.5
+2,783
+0.0
+294
+Assets classified as held for
+sale
+Increase in net cash inflow
+38.8
+112,880
+18,949
+0.7
+Restricted bank deposits
+%
+%
+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
+year
+%
+4,479
+Main reasons for changes
+3,568
+sales receivables
+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
+Deferred tax assets
+Percentage of
+total assets
+at the end of
+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
+Section IV Directors' Report (Continued)
+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)
+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 majority of the coal products produced and sold by the Group were thermal
+coal. In 2021, the Group continuously optimised the production organisation and
+operation, further strengthened the safety and environmental management of
+coal mines, ensured stable and high output of coal mines, and fully guaranteed
+the coal supply. The annual output of commercial coal was 307.0 million tonnes
+(2020: 291.6 million tonnes), representing a year-on-year increase of 5.3%. The
+roadway development at underground mines reached 444 thousand meters
+(2020: 426 thousand meters), representing a year-on-year increase of 4.2%,
+of which, the roadway development at Shendong Mines was 428 thousand
+meters.
+Production, operation and construction
+(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
+Amount at
+the end of the
+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.
+(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
+Junior college
+Undergraduate
+Master degree candidate
+Doctoral candidate
+Number
+Educational structure of research and development personnel
+Category of educational structure
+3.4
+2,619
+Number of research and development personnel in the Group
+Ratio of research and development personnel to the total number
+of persons (%)
+(2) Research and development personnel
+Section IV Directors' Report (Continued)
+2021 Annual Report 37
+During the reporting period, the R&D projects carried out by the Group mainly
+include: research on technologies and equipment related to smart mines;
+demonstration project of high-efficiency and low-emission coal-fired boiler, CO₂
+capture and storage project after combustion in coal-fired power plant, research
+and application of key technology innovation of smart power plant based on
+CPS, and research on the detection and application of heavy-haul railway based
+on geographic spatio-temporal big data technology, research on the expanding
+test and engineering application research project of mobile blocking of
+heavy-haul railway, research on the key technologies of all-weather automatic
+control of stacking and reclaiming under complex working conditions in coal
+port, etc..
+In 2021, the research and development expenditure of the Group amounted
+to RMB3,347 million (2020: RMB2,149 million), representing a year-on-year
+increase of 55.7%; the research and development expenditure accounted for
+1.0% of the revenue (2020: 0.9%), representing a year-on-year increase of 0.1
+percentage point, which was mainly due to the Group's increasing research and
+development expenditure, strengthening scientific and technological innovation
+capability, actively carrying out collaborative innovation of "Industry-University-
+Research" and facilitating the transformation and upgrade of the Company
+under the guidance of innovation-driven development strategy and surrounding
+the three major areas of coal green development, coal clean utilization and coal
+clean transformation.
+25.3
+34
+1.0
+286
+404
+5.
+(II)
+Section IV Directors' Report (Continued)
+38 China Shenhua Energy Company Limited
+The Company is committed to highlighting scientific research practice, building
+a career platform, introducing and training a group of leading scientific and
+technological talents, young scientific and technological backbones, high-level
+innovation teams and outstanding engineers. As of the end of 2021, the
+Company has 1 national key laboratory, 1 academician expert workstation, 6
+post-doctoral expert workstations, and takes the lead in undertaking 7 national
+key R&D projects.
+0
+548
+567
+394
+1,110
+30-40 years old (including 30 years old, excluding 40 years old)
+40-50 years old (including 40 years old, excluding 50 years old)
+50-60 years old (including 50 years old, excluding 60 years old)
+60 years old and above
+Under 30 years old (excluding 30 years old)
+Number
+Age structure of research and development personnel
+Category of age structure
+76
+High School and below
+1,819
+Cash flow
+3,347
+2,499
+(5)
+(4)
+(3)
+(2)
+(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.
+Expenses and other items of income statement
+3.
+Section IV Directors' Report (Continued)
+In 2021, the total procurement from the top five suppliers of the Group
+amounted to RMB37,394 million, accounting for 16.8% (less than 30%) of
+the total procurement for the year, among which, the procurement from its
+largest supplier amounted to RMB20,614 million, representing 9.3% of the total
+procurement for the year.
+Major suppliers
+Except for the above, as far as the Board of the Company is aware, none of the
+Directors of the Company, their close associates or shareholders holding more
+than 5% of shares of the Company has any interest in the top five customers
+of the Group. The Group has maintained long-term cooperative relationship
+with the top five customers. The Company is of the view that such cooperative
+relationship would not cause material risk to the business of the Group.
+In 2021, the total revenue from the top five customers of the Group amounted
+to RMB135,554 million, accounting for 40.4% of the total revenue of the Group,
+including the revenue of the Group from its largest customer of RMB107,461
+million, accounting for 32.1% of the total revenue of the Group. The largest
+customer of the Group was China Energy and its subsidiaries, the controlling
+shareholder of the Company. The Group mainly sells coal products and provides
+coal transportation service to China Energy Group.
+Major customers
+Section IV Directors' Report (Continued)
+(6)
+(6)
+848
+(7)
+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.
+Ratio of capitalised research and development expenditure (%)
+Percentage of total research and development expenditure to
+revenue (%)
+Expensed research and development expenditure in the period
+Capitalised research and development expenditure in the period
+Total research and development expenditure
+Unit: RMB million
+(1) Research and development expenditure
+Research and development expenditure
+4.
+Section IV Directors' Report (Continued)
+36 China Shenhua Energy Company Limited
+The main reason for the year-on-year increase in income tax: the increase of
+pre-tax profit of the Group this year.
+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 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 reasons for the year-on-year increase in interest income: an increase
+in the average balance of deposits of the Group with financial institutions other
+than Finance Company; and deconsolidation of Finance Company, the interest
+income incurred from the deposits which was deposited by the Group in the
+Finance Company would no longer be offset on a consolidated basis.
+The main reason for the year-on-year increase in other income: the increase in
+government subsidies related to daily activities obtained by the Group.
+The credit impairment losses during the reporting period, are mainly: as at
+the end of the reporting period, the Group conducted impairment test on the
+receivables with long ages, and made bad debt provision according to the
+impairment test results.
+(8)
+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.
+2021 Annual Report 35
+(2)
+3.6
+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
+18,597
+4.3
+3.3
+28,089
+made by the Group, and the
+increase in intangible assets
+made by the Group
+(1)
+19.6 The increase of land use right
+assets related to Huangda
+Railway
+replacement indicators
+19.6 The purchase of coal capacity
+permit by Taigemiao South
+Area of Xinjie Mining Area
+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
+Other non-current assets
+26,201
+investigation and exploration
+43.7
+Amount at
+Percentage of
+Unit: RMB million
+to the end of
+Change of the
+amount at the
+end of the
+year compared
+Percentage of
+(3)
+1. Assets and liabilities
+(III) Analysis on Assets and Liabilities
+Section IV Directors' Report (Continued)
+2021 Annual Report 39
+Explanation on Significant Change of Profit Caused by Non-principal Business
+Applicable
+Net cash outflow in financing activities: net cash outflow in 2020 was
+RMB43,731 million net cash outflow in (net cash outflow in 2020: RMB42,079
+million), representing a year-on-year increase of 3.9%, which was mainly
+attributable to the increase in dividends paid by the Group.
+Net cash outflow in investing activities: net cash outflow in 2021 was
+RMB6,844 million (net cash outflow in 2020: RMB32,048 million), representing
+a year-on-year change of 121.4%, which was mainly attributable to the due
+recovery of bank financial products held by the Company in the previous
+year and the increase in cash expenditure for the construction of long-term
+assets, such as fixed assets, intangible assets, etc. during the year.
+Construction in progress
+total assets
+Amount at
+Not applicable
+the end of the at the end of
+238,198
+total assets at
+43.2
+263,656
+Property, plant and
+equipment
+Main reasons for changes
+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.
+the previous
+previous year
+the end of the
+Items
+year
+the end of the
+the year
+previous year
+0.7-1.5
+0.2-0.6
+5-48
+2345
+Zhunge'er Mines
+Long flame coal
+17-38
+4,000-5,300
+0.4-0.5
+5,000-5,800
+17-33
+Shengli Mines
+Baorixile Mines
+Lignite
+2,500-3,100
+Section IV Directors' Report (Continued)
+average,%
+Long flame coal/
+1 Shendong Mines
+%
+kcal/kg
+content
+Content
+Major types of coal
+Ash
+Sulphur
+Calorific
+value of major
+commercial
+No. Mines
+Lignite
+Characteristics of the commercial coal produced in the Group's major mines are
+as follows:
+(5)
+non-caking coal
+coal products
+RMB million
+0.1-0.3
+RMB million
+(225,126)
+(153,373)
+46.8 Increase in the sales
+volume and unit
+production cost of
+self-produced coal;
+increase in the sales
+Operating costs
+volume and unit
+purchased coal
+Gross profit
+margin
+2021 Annual Report 47
+23.1
+19.3 Increased
+by 3.8
+percentage
+purchase cost of
+3,300-3,500
+54.0 Increase in coal sales
+volume and average
+sales price
+292,661
+13-17
+Baotou Mines
+Long flame coal/non-
+caking coal
+3,800-5,000
+0.3-1.0
+20-45
+190,029
+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.
+The operating results of the coal segment of the Group before elimination
+on consolidation
+2021
+2020
+Change
+%
+Main reasons for
+changes
+Revenue
+Operating results
+74.3
+Recoverable
+141.5
+43.4
+46 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(3)
+(4)
+Production safety
+8.0
+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.
+Coal resources
+As at 31 December 2021, under the PRC Standard, the Group had coal
+reserves amounting to 33.21 billion tonnes, representing an increase of 3.53
+billion tonnes as compared with that of the end of 2020, mainly due to the
+acquisition of coal exploration permit in Taigemiao South Area of Xinjie Mine;
+and recoverable coal reserve amounting to 14.15 billion tonnes, representing a
+decrease of 0.27 billion tonnes as compared with that of the end of 2020. The
+Group's marketable coal reserve amounted to 7.43 billion tonnes under the
+JORC Standard, representing a decrease of 300 million tonnes as compared
+with that of the end of 2020.
+In 2021, the Group's coal exploration expenses (which were incurred before
+the conclusion of feasibility study and represented the expenses related to
+exploration and evaluation of coal resources) amounted to approximately
+RMB4.001 billion (2020: RMB0.022 billion), which was mainly attributable to the
+acquisition of detailed coal exploration permit in Taigemiao South Area of Xinjie
+Mine; the Group's relevant capital expenditure of coal mine development and
+exploration amounted to approximately RMB12.717 billion (2020: RMB3.152
+billion), which was mainly attributable to the reassessment of mining rights
+in Shengli and Baorixile mining areas, and the construction expenditure of the
+second panel project in Guojiawan coal mine.
+Unit: 100 million tonnes
+Mines
+Shendong Mines
+Efforts in ensuring production safety of coal mine are detailed in the 2021 ESG
+Report of the Company.
+Coal
+reserve
+80
+410
+0.3
+435
+point
+285.7
+35.4
+Total sales volume/average price
+10
+(exclusive of tax)
+100.0
+580
+588
+446.4
+00
+100.0
+482.3
+33.1
+coal reserve reserve (under
+(under the
+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
+PRC Standard) PRC Standard)
+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
+Profit from
+27.8
+59,125
+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
+36.6
+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)
+RMB million
+Personnel expenses
+and power
+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
+2021
+29,832
+98.2
+operations
+Profit margin from
+%
+20.2
+182,082
+15.7 Increased
+by 4.5
+percentage
+points
+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
+operations
+(139,976)
+42,106
+23.1
+Unit: RMB/tonne
+2021
+2020
+Change Main reasons for changes
+%
+Unit production cost of
+149.9
+Unit production cost of self-produced coal
+139.6
+self-produced coal
+Raw materials fuel
+28.2
+27.1
+4.1
+Rising electricity prices in
+7.4
+West Inner Mongolia Region
+23.1
+(140,804)
+Export and
+overseas
+3,760 (3,380)
+380
+10.1
+999
+42,277
+(828)
+17.1
+Total
+283,734 (206,941)
+76,793
+27.1
+183,081
+171
+589
+42.5
+5.4
+588
+446.4
+100.0 410
+8.0
+43.4
+Note: The above is the summary of the sales of coal products with different calorific
+values of the Group.
+2021 Annual Report 45
+Section IV Directors' Report (Continued)
+By internal and external customers
+2021
+Proportion
+2020
+Changes
+Price
+Proportion
+Price
+Price
+Million
+of tax)
+volume
+sales tax)
+volume
+of tax)
+100.0
+sales
+(exclusive
+Sales
+of total (exclusive of
+Sales
+of total (exclusive
+Sales
+volume
+482.3
+price(exclusive of tax)
+Total sales volume/average
+465
+765 163.5 36.6
+40.7
+196.2
+2. Monthly long-term contracts
+20.0
+20.0
+9.4
+190.0
+44.4
+6.6
+419
+96.3
+430.1
+380
+RMB/
+64.5
+54.6
+44.8 49.4
+176
+3.7
+43.3
+(28.7)
+418
+3. Spot commodity
+17.2
+263 16.3
+4.9
+23.6
+II. Direct sales from pit head
+599 76.6
+11.3
+669
+1081
+Million
+tonnes
+100.0
+40
+410
+80
+8.0
+43.4
+(3)
+By sales regions
+2021
+2020
+Changes
+Proportion
+Price
+Proportion
+Price
+Price
+Sales
+4.9
+of tax)
+volume
+of tax)
+sales
+volume
+446.4
+sales of tax)
+(exclusive
+Sales
+(exclusive
+of total
+Sales
+of total (exclusive
+volume
+588
+100.0
+482.3
+Sales to internal power segment
+44.0
+5.8
+416
+88.2
+394.0
+61.2
+599
+416.8
+Sales to external customers
+tonne
+tonnes
+tonne
+%
+86.4
+RMB/
+12.7
+47.7
+price(exclusive of tax)
+Total sales volume/average
+42.2
+ថ្មី២
+(8.5) 13.7
+322
+532
+1.1
+366
+0.9
+4.3
+Sales to internal coal chemical segment
+374 28.3
+10.7
+4.7
+1.1
+456
+207.9
+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
+43.1
+tonnes
+tonnes
+Price
+Changes
+Price
+Sales
+of total (exclusive
+Sales
+of total
+(exclusive
+Sales (exclusive
+volume
+sales of tax)
+volume
+sales
+of tax)
+volume
+of tax)
+Million
+RMB/
+1. Annual long-term contracts
+605
+95.1
+458.7
+1. Sales through Trading Group
+%
+Proportion
+tonne
+tonnes
+tonne
+%
+tonnes
+RMB/
+Million
+%
+2020
+2021
+Proportion Price
+By contract pricing mechanisms
+RMB million
+Million tonnes
+Sales income
+Sales volume
+Production
+Million tonnes
+Total
+Sales cost
+RMB million
+Thermal coal
+Others Note
+The production and sales of each kind of coal of the Group in 2021 are set out
+below:
+Section IV Directors' Report (Continued)
+Million
+RMB/
+Million
+RMB/
+Types of coal
+tonne
+Gross profit
+307.0
+(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
+RMB million
+283,734
+307.0
+76,793
+0
+206,929
+12
+283,722
+12
+0.0
+482.3
+482.3
+Hebei
+(decreased) during capacity as at 31
+the reporting period December 2021
+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
+5.48
+Shendong Power
+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
+Unit
+36,824
+32,279
+125
+950
+31,204
+December 2020
+capacity as at 31
+Total installed
+Installed capacity
+increased/
+5,620
+Location
+capacity
+MW
+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
+(700) Equity transfer
+5.73 Decreased by 0.25
+gangue-fired power plants)
+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.
+Average selling price of power Unit electricity purchase cost
+(exclusive of tax)
+(exclusive of tax)
+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
+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.
+(6) Operation results of the power sales business
+by 9.9
+percentage
+points
+Increased
+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
+Total installed
+5.37
+percentage points
+22.3
+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
+Section IV Directors' Report (Continued)
+2021 Annual Report 53
+Source: China Electricity Council
+1
+5.59 Decreased by 0.22
+Unit: MW
+(5) Market transaction of power
+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
+Total
+1.6
+30.52
+Guangxi
+21.68
+28.67
+8.01
+16.7
+7.59
+8.86
+Inner Mongolia
+2.9
+347
+357
+19.8
+13.74
+19.9
+14.34
+17.19
+Fujian
+7.1
+365
+391
+41.9
+20.21
+40.8
+4.08
+16.46
+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
+156.13
+22.1
+136.33
+166.45
+(3.4)
+232
+14.3
+0.3
+Total
+3.85
+1.02
+1.06
+Hunan
+0.3
+363
+364
+16.6
+9.86
+16.7
+10.33
+12.05
+Jiangxi
+18.4
+309
+366
+3.87
+3.84
+27.3
+3.04
+467
+Indonesia (overseas)
+11.50
+1.58
+0.4
+563
+1.76
+565
+0.5
+3.75
+3.77
+3.84
+3.85
+(II) Gas-fired power
+0.3
+(11.1)
+523
+11.4
+1.55
+Beijing
+465
+13.1
+1.37
+76.7
+6.8
+2,265
+6.1
+3,195
+23,103
+Personnel expenses
+69.9
+Repairs and maintenance
+39,944
+1,688
+Depreciation and amortisation
+1,989
+6.0
+066
+72.9
+41.1
+(15.1)
+4,932
+9.5
+4,742
+Raw materials, fuel and power
+Others
+4.0
+14.3
+3.2
+%
+44,445
+% RMB million
+162
+Hydro power
+2,307
+146
+11.0
+109
+0.2
+0.2
+23.9
+Total
+56,752
+27.7
+54,340
+100.0
+35,246
+100.0
+54.2
+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.
+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.
+56 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(3)
+Costs of power output dispatch of coal-fired power plants of the Group
+before elimination on consolidation
+2021
+Costs Percentage
+2020
+Costs
+RMB million
+Percentage Change in cost
+%
+4.5
+turnover; increase
+3.0
+Operating costs
+RMB
+(22,020) (20,304)
+8.5
+million
+transportation
+turnover
+Increase in railway
+transportation
+in repair and
+maintenance
+costs due to track
+replacement
+Increase in railway
+overhaul for some
+railway sections
+and postponed
+construction of
+some maintenance
+projects affected by
+the pandemic in the
+same period of last
+Gross profit margin
+20
+45.9
+47.6 Decreased
+by 1.7
+percentage
+points
+Profit from operations
+RMB
+16,636
+4.4
+16,310
+year
+5.1
+40,699 38,723
+RMB
+million
+134.2
+Total cost of power output
+dispatch of coal-fired
+power plant
+52,066
+100.0
+33,084
+100.0
+57.4
+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.
+2021 Annual Report 57
+Section IV Directors' Report (Continued)
+3.
+Railway segment
+(1) Production and operations
+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.
+58 China Shenhua Energy Company Limited
+(2)
+Section IV Directors' Report (Continued)
+Operation results
+The operation results of the railway segment of the Group before elimination on
+consolidation are as follows:
+2021
+2020
+Change
+Main reasons for
+changes
+%
+Revenue
+985
+5.9
+2,520
+4.0
+Guangxi Beihai Power Plant
+48
+Project (2x1,000MW)
+5
+Sichuan Jiangyou Coal
+1,637
+92
+Reserves & Power
+Generation Project
+(2x1,000MW)
+2021 Annual Report 55
+Section IV Directors' Report (Continued)
+4
+(8)
+1 The operation results of the power segment of the Group before
+elimination on consolidation
+2021
+2020
+Change
+Main reasons for
+changes
+%
+Revenue
+RMB million
+64,124
+49,486
+29.6 Increase in power
+output dispatch
+Operation results
+Construction (2 × 1,000MW)
+Generation & Storage Project
+71
+In 2021, the total capital expenditure of the power segment was RMB16,876
+million, mainly for the following items:
+(2.0)
+The
+No.
+Name of Project
+investing amount
+for the
+reporting period
+Unit: RMB Million
+Percentage of
+accumulative
+amount in project
+to the
+total budget
+as of the end of
+the reporting
+period
+%
+1
+Hunan Yongzhou Project
+4,298
+93
+Phase (2×1,000 MW)
+2
+Construction of Inner Mongolia
+3,077
+86
+Shengli Power Plant
+Phase (2x660MW)
+3
+Fujian Luoyuanwan Port Power
+2,727
+Operating costs
+RMB million
+(60,019)
+(38,729)
+Change in
+dispatch
+dispatch
+2021 over
+Power type
+2021
+2020
+Change
+2021
+in 2021
+2020
+in 2020
+2020
+Coal-fired power
+54,458
+42,188
+29.1
+52,066
+95.8
+33,084
+93.9
+57.4
+Gas-fired power
+2,132
+2,111
+1.0
+2,165
+power output
+2,074
+power output
+total costs of
+55.0 increase in coal
+purchase price;
+increase in output
+dispatch
+Gross profit margin
+%
+6.4
+21.7
+Decreased by
+15.3 percentage
+points
+Profit from operations RMB million
+3,010
+7,976
+(62.3)
+Profit margin from
+4.7
+16.1
+Decreased by
+operations
+11.4 percentage
+points
+Revenue and costs from the power output dispatch of the Group before
+elimination on consolidation
+Unit: RMB million
+Revenue from power output dispatch
+Cost of power output dispatch
+Percentage to
+Percentage to
+total costs of
+million
+Unit production cost of major products
+%
+polyolefin products
+Operating costs
+RMB million
+(4,754)
+(4,675)
+1.7
+Gross profit margin
+18.7
+9.5
+Increased
+by 9.2
+percentage
+Increase in the price of
+points
+RMB million
+722
+259
+178.8
+Profit margin from operations %
+12.3
+5.0
+Increased
+by 7.3
+(7) Capital Expenditure
+Polyethylene
+Polypropylene
+percentage
+Profit from operations
+13.3
+5,165
+5,851
+tonnes
+tonne
+Polyethylene
+Polypropylene
+332.8
+6,641
+356.9
+5,459
+315.6
+6,853
+331.2
+6,015
+164
+(6.8)
+21.7
+(4.7)
+13.9
+62 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(2) Operation results
+The operation results of the coal chemical segment of the Group before
+eliminations on consolidation are as follows:
+(3)
+2021
+2020
+Change Main reasons for changes
+%
+Revenue
+RMB million
+points
+tonne
+2021
+Change
+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
+324,488
+(8.1)
+227,539
+Foreign transaction revenue from overseas
+market
+10,728
+5,724
+87.4
+Total
+335,216
+233,263
+43.7
+Note: the revenue from foreign transactions is divided by the location of customers receiving services and
+purchasing products.
+The Group is mainly engaged in the production and sales of coal and 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.
+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.
+64 China Shenhua Energy Company Limited
+42.6
+4,970
+340.1
+5,320
+Unit
+Unit
+Unit
+Production production
+volume
+Thousand
+cost
+RMB/
+Production
+volume
+Thousand
+production
+Production production
+cost
+volume
+cost
+RMB/
+tonnes
+tonne
+tonnes
+tonne
+%
+%
+332.0
+5,447
+360.4
+5,079
+(7.9)
+7.2
+312.5
+2020
+tonnes
+RMB/
+Price
+0.8
+million
+Gross profit margin
+%
+48.1
+47.9 Increased
+by 0.2
+percentage
+Profit from operations
+RMB
+2,720
+2,678
+(3,314)
+point
+1.6
+Profit margin from
+operations
+%
+42.2
+42.1 Increased
+by 0.1
+percentage
+point
+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.
+China Shenhua Energy Company Limited
+5.
+Section IV Directors' Report (Continued)
+Shipping segment
+(1) Production and operations
+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%.
+million
+(3,342)
+RMB
+Operating costs
+40.1
+43.0 Decreased
+by 2.9
+percentage
+points
+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%.
+2021 Annual Report 59
+Section IV Directors' Report (Continued)
+4.
+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.
+(2)
+Operation results
+The operation results of the port segment of the Group before eliminations on
+consolidation are as follows:
+2021
+2020
+Change
+Main reasons for
+changes
+%
+Revenue
+RMB
+6,440
+6,359
+1.3
+Increase in volume of
+million
+port operation
+(2)
+Operation results
+The operation results of the shipping segment of the Group before eliminations
+on consolidation are as follows:
+Main reasons
+209
+368.9
+million
+Profit margin from
+operations
+%
+15.8
+6.7 Increased
+by 9.1
+percentage
+points
+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.
+2021 Annual Report 61
+Section IV Directors' Report (Continued)
+6.
+Coal chemical segment
+(1)
+Production and operations
+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..
+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 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.
+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
+manner.
+The sales of polyethylene and polypropylene products of the Group in 2021 are
+as follows:
+2021
+Sales
+volume
+Thousand
+2020
+Sales
+Price volume
+RMB/ Thousand
+Change
+Sales
+Price
+volume
+980
+Profit margin from
+operations
+RMB
+points
+2021
+2020
+Change
+%
+for changes
+Revenue
+RMB
+6,195
+3,112
+99.1
+Increase in shipping
+million
+volume and average
+freight rates
+Operating costs
+RMB
+(5,018)
+(2,755)
+82.1
+Increase in shipping
+million
+Gross profit margin
+%
+19.0
+11.5 Increased
+by 7.5
+volume; increase in
+vessel rental charges
+percentage
+Profit from operations
+Section IV Directors' Report (Continued)
+60
+Year-on-year
+increase of
+approximately 10%
+790
+109.5 Increase in sales volume and average
+price of coal
+7
+Huanghua Harbour
+6,790
+13,817
+11,300
+1,586
+1,542
+2.9
+Administration
+8
+Beidian Shengli
+2,925
+1,655
+10,006
+6,091
+1,169
+2,499
+1,291
+29.3 Increase in sales volume and average
+price of coal, and increase in power
+output dispatch
+93.6 Increase in sales volume and average
+price of coal
+5
+Trading Group
+1,889
+32,570
+10,128
+2,273
+1,835
+23.9
+Increase in sales volume of coal
+6
+Baorixile Energy
+11,934
+7,102 46,957 37,156
+6,194
+743
+(1)
+(2)
+(3)
+The financial information of the major subsidiaries in the above table was prepared in accordance
+with the China Accounting Standards for Business Enterprises. The data have not been audited or
+reviewed.
+Shendong Coal recorded a revenue of RMB84,288 million and a profit from operations of
+RMB26,673 million in 2021.
+Shuohuang Railway recorded a revenue of RMB22,008 million and a profit from operations of
+RMB10,420 million in 2021.
+Major companies in which the Company has invested
+Please refer to the section headed "Material Related/Connected Transactions" of this
+report for details of Financial Company.
+66 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(IX) Structured Vehicle Controlled by the Company
+Applicable
+Not applicable
+(X) Compliance with Relevant Laws and Regulations
+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.
+Notes:
+1,415
+Increase in average price of coal
+515
+23
+90.4
+Increase in sales volume and average
+price of coal
+9
+Yulin Energy
+2,420
+6,618
+4,965 1,410
+522
+170.1
+Increase in sales volume and average
+price of coal
+10
+Baotou Energy
+2,633 8,765 7,046
+1,235
+139.8
+Zhunge'er Energy
+4
+2,959
+Change for the
+current period
+Change of profit
+for the current
+period
+1,845
+2,174
+329
+0
+376
+376
+0
+1,845
+2,550
+705
+0
+2021 Annual Report 65
+Closing balance
+at the end
+of the period
+Section IV Directors' Report (Continued)
+of the period
+Unit: RMB million
+Section IV Directors' Report (Continued)
+(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
+Applicable ✓ Not applicable
+3.
+Financial assets at fair value
+During the reporting period, the financial assets at fair value held by the Group were
+mainly the non-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
+Other investments in equity instruments
+financing receivables
+Total
+Opening balance
+at the beginning
+(VII) Disposal of Material Assets and Equity Interest
+Applicable
+✓ Not applicable
+10,528
+89.7
+Increase in sales volume and average
+price of coal
+2
+Shuohuang Railway
+15,231 43,959 35,330
+7,755
+7,668
+1.1
+3
+Jinjie Energy
+2,278
+13,116
+10,132
+3,827
+19,967
+4,989 46,235
+Shendong Coal
+Change Main reasons for changes
+(VIII) Analysis on Major Holding and Associated Companies
+1.
+Major subsidiaries
+2.
+Unit: RMB million
+Registered
+capital
+(XI) Relationship with Stakeholders
+Total
+assets
+assets
+No.
+Company
+As at 31 December 2021
+2021
+2020
+Net profit attributable to the equity
+holders of the parent company
+Net
+For details of remuneration and training of the Group's employees, please refer to the
+"Employees" section in this report.
+32,468
+50.22
+produced coal
+Year-on-year
+increase of 7.4%
+The above business targets are subject to factors including changes in scope of
+consolidated financial statements, risks, uncertainties and assumptions. The actual
+outcome may differ materially from these statements. Such statements do not
+constitute actual commitments to investors. Investors should be aware that undue
+reliance on or use of such information may lead to investment risks.
+72 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+2.
+production cost of the self-
+Capital expenditure plan for 2022
+Target of
+2022
+Actual amount
+in 2021
+1. Coal segment
+61.57
+205.75
+2. Power segment
+171.86
+Unit: RMB100 million
+Percentage change of unit
+finance costs
+million
+Revenue
+RMB100
+2,966
+3,352.16
+(11.5)
+million
+Operating costs
+RMB100
+2,048
+2,391.56
+(14.4)
+million
+Selling, general and administrative
+132
+122.90
+7.4
+and R&D expenses and net
+168.76
+kWh
+Of which: new energy business
+3. Transportation segments
+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:
+(1)
+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..
+2021 Annual Report 73
+Section IV Directors' Report (Continued)
+(2)
+(3)
+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.
+(4)
+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.
+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.
+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 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 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 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.
+74 China Shenhua Energy Company Limited
+(5)
+433.77
+326.11
+Total
+80.69
+50.36
+Of which: Railway
+64.87
+39.79
+Port
+15.38
+10.02
+Shipping
+0.44
+0.55
+4. Coal chemical segment
+4.83
+8.51
+5. Others
+7.16
+0.39
+0.33
+8.4
+RMB100
+1,805
+Development Strategy of the Company
+(II)
+Section IV Directors' Report (Continued)
+70 China Shenhua Energy Company Limited
+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.
+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)
+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)
+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
+1,664.5
+(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.
+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.
+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.
+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.
+Section IV Directors' Report (Continued)
+2021 Annual Report 71
+100 million
+Gross power generation
+(16.5)
+4.823
+4.029
+100 million
+Coal sales
+tonnes
+(3.0)
+3.070
+2.978
+100 million
+Commercial coal production
+tonnes
+%
+Increase/
+(decrease)
+in 2021
+Target of 2022
+Unit
+Item
+Actual amount
+Business targets for 2022
+1.
+(III) Business Plan for 2022
+58
+maternity basic pension
+performance
+Retirement
+plan:
+injury,
+Employees'
+work-related
+Basic
+healthcare,
+unemployment,
+Performance remuneration
+(including emoluments)
+Date of
+Appointment
+Including:
+57
+25 June 2021
+Male
+Yes
+28 May 2023
+29 May 2020
+56
+Non-Executive Male
+Director
+Yuen Kwok Keung Independent
+Yang Rongming
+Yes
+28 May 2023
+Jia Jinzhong
+Non-Executive Male
+Director
+Social insurance, housing funds and
+corporate annuities paid by the Company
+14
+Remuneration paid (before tax)
+23 October 2021 All 2 resolutions were
+2021 First A Shareholders
+Class Meeting
+Directors, Supervisors and senior management as at the end of the reporting
+period
+1.
+Unit: RMB ten thousand
+President
+(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
+considered and
+approved at the EGM
+by a combination of
+on-site voting by poll
+and internet voting.
+All the resolutions tabled at the general meeting above were passed.
+22 October 2021
+22 October 2021 The website
+of the SSE
+The website
+of the HKEX
+2021 First Extraordinary
+General Meeting
+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
+2021 First H Shareholders
+Class Meeting
+26 June 2021
+The website
+of the SSE
+25 June 2021
+disclosure of the
+voting results
+Executive Vice
+30.00
+the Party
+parties of the
+monetary remuneration
+corporate
+annuities
+provident
+funds
+Subtotal 1
+year
+tion
+previous
+remunera-
+expiration of
+term of office
+from related
+Total
+Other
+and
+and housing
+for the
+Basic
+Scheduled
+(from the first
+Appoint-ment
+date]
+Gender Age
+Positions
+Name
+compensation
+insurance
+insurance
+Subtotal 2
+publishing the
+voting results
+income
+before tax Company
+29 November 2018 -
+Secretary of
+No
+144.81
+21.61
+380
+13.90
+7.71
+123.20
+51.20
+91.90
+31.30
+Committee and
+28 May 2023
+58
+Executive Director Male
+Xu Mingjun
+Director
+Executive
+Yes
+28 May 2023
+21 June 2019
+59
+Male
+Chairman and
+Wang Xiangxi
+29 May 2020
+Date
+Section IV Directors' Report (Continued)
+2020 Annual General Meeting
+Risk of safety production and environmental protection
+The Group has established the production safety targets of preventing major
+production safety accidents as well as effectively curbing general accidents to achieve
+"zero deaths". Although the Group has been sustaining stable performance in safe
+production for its coal mines, there are uncertainties in the course of production
+safety. Given the facts that national policies on energy-saving and environmental
+protection have been further tightened, that operating costs of enterprises are
+increased due to the levy of environmental tax, and that the demand for better
+ecological environment puts more stringent requirements on the development and
+operation of enterprises, the constraints on energy-saving, emission reduction and
+environmental protection are further imposed on the Group.
+To cope with the risks of production safety for coal mines, the Group will strengthen
+the implementation of the safety production risk prevention and control management
+system, inspections and treatments and assessment of significant risks, reinforce
+the safety production training and emergency rescue management, put into full play
+the advantages of informatisation, innovate the mechanism of safety supervision,
+promote the safety management ability, and consolidate the production safety
+fundamentals.
+To cope with the risks of environmental protection, the Group continues to strengthen
+environmental monitoring, strictly adheres to the ecological red line, vigorously
+promotes the construction of green mines, focuses on the strategy of clean energy
+development, and takes the efficient use of clean coal as the core. The Group spares
+no efforts in constructing ecological civilization through continuously strengthening
+its soft and hard power of environmental protection and the brand image building
+of ultra-low emissions in coal power on an on-going basis. The Group continues
+to identify hidden environmental dangers, further improves the environmental
+management system and strengthens the remediation of potential issues and
+environmental emergency management, actively adapt to the new policy, new
+requirements and new indicators of "Dual Control" of total energy consumption and
+energy intensity in order to achieve energy-saving and emission reduction targets as
+well as to prevent severe environmental pollution incidents.
+2021 Annual Report 75
+Section IV Directors' Report (Continued)
+2.
+Risk of market competition
+3.
+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.
+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.
+Investment risk
+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
+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.
+76 China Shenhua Energy Company Limited
+30.00
+4.
+5.
+Risk of project management
+The overall progress of the Group's existing projects is stable, however, there are
+uncertainties in the construction of specific projects, which includes risks arising
+from safety incidents due to the inadequate fulfillment of safety responsibilities and
+the lack of safety awareness of some of the construction workers; risks of prolonged
+construction period, delayed construction period and increased investment due to
+insufficient project risk prediction and insufficient capacity of the design unit.
+To cope with the risk of project management, the Group continuously strengthens
+its construction safety management, enforces its administration in safety emergency
+plans and eliminates major and more severe safety incidents. Strict control of project
+design and settlement will be implemented, and construction cost control at the early
+stage will be strengthened. The Group keeps track timely, monitors the construction
+of project construction, and formulates effective measures to reduce or eliminate the
+impact of the prolong of construction period.
+Risk of international operations
+The international political situation is increasingly complicated, and the world is
+entering a period of turbulence and change. Different countries have complex political,
+economic and social environments, as well as diverse legal systems, religious
+beliefs and cultural customs. Affected by fluctuations in exchange rates, stricter
+environmental protection requirements, and intensified trade conflicts among certain
+countries, the future international trades and economic situations may experience
+ups and downs as well as fluctuations. Together with the highly competitive energy
+market worldwide and the continuous spread of the COVID-19 pandemic around the
+world, there are certain uncertainties in the Group's international operations.
+To cope with 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.
+2021 Annual Report 77
+1.
+Section IV Directors' Report (Continued)
+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.
+Section IV Directors' Report (Continued)
+30.00 No
+Non-Executive
+Chen Hanwen
+Director
+Independent
+Non-Executive
+Director
+Male
+53
+29 May 2020
+28 May 2023
+30.00
+000
+30.00
+30.00 No
+84 China Shenhua Energy Company Limited
+28 May 2023
+29 May 2020
+58
+Independent Male
+Bai Chong-En
+Non-Executive
+Director
+30.00 No
+30.00
+30.00
+28 May 2023
+29 May 2020
+remuneration
+(IV) Major Risks and Countermeasures
+Date of
+6.
+Risk of macroeconomic fluctuations
+Measures of Ensurance of Independence of Listed Company by Controlling
+Shareholders
+China Energy Group, the controlling shareholder of the Company, complies with the
+principles of honesty and credibility, exercises the rights and obligations of shareholders in
+accordance with the law. When China Energy Group nominated candidates for directors or
+supervisors, it shall follow the conditions and procedures stipulated in laws and regulations
+and the Articles of Association. In the event of consideration of the related transactions
+with controlling shareholders at the Board and general meeting, the connected Directors
+and controlling shareholders shall abstain from voting. There are potential peer competitions
+between the coal business and other business of China Energy Group and the major
+business of the Company and China Energy Group has taken measures to avoid peer
+competitions, as defined below.
+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.
+(II)
+Avoidance of Competition
+There are potential peer competitions between the coal business and other business of
+China Energy Group and the main business of the Company.
+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.
+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.
+2021 Annual Report 81
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+III.
+Pursuant to the Supplemental Agreement to the Existing Non-competition Agreement,
+within five years after the completion of China Energy merging with China Guodian by
+the way of absorption, the Company will discretionally exercise the options and the pre-
+emptive rights to acquire the assets within the retained businesses, and will no longer
+implement the 2014 Non-competition Undertakings. The retained businesses refer to (1)
+original undertaking assets (excluding the completed acquisition of three equity assets by
+the Company in 2015) other than the assets of conventional power generation business,
+and (2) the unlisted businesses held by China Guodian which directly or indirectly compete
+with the main businesses of the Company (excluding the relevant assets that China Guodian
+undertook to inject into its subsidiary Inner Mongolia Pingzhuang Energy Co., Ltd. in 2007).
+For details, please refer to the H share announcement of the Company dated 1 March 2018
+and the A shares announcement of the Company dated 2 March 2018.
+The Company, as an integration platform of the coal business of China Energy Group, will,
+pursuant to the agreements set out in the Non-competition Agreement and its supplemental
+agreement, discretionally exercise the options and the pre-emptive rights to any business
+opportunities and assets which may pose potential competition, thereby gradually reducing
+peer competition.
+GENERAL MEETINGS
+1.
+Shareholders' Rights
+As owners of the Company, the shareholders of the Company are entitled to the rights
+as stipulated in laws, administrative regulations and the Articles of Association. The
+shareholders' general meeting is the highest authoritative body of the Company, through
+which shareholders can exercise their rights. The controlling shareholder takes part in the
+Company's operations and decision-makings through shareholders' general meetings and
+the Board.
+Pursuant to Articles 66, 69 and 75 of the Articles of Association, shareholders may submit
+written request to the Board for the convening of extraordinary general meetings or class
+meetings and submit proposals to the Company at general meetings. Upon providing the
+Company with written evidence of the class and number of shares of the Company held,
+and following verification of the shareholders' identity by the Company, shareholders
+are entitled to inspect the relevant information of the Company or obtain the Articles of
+Association, the register of shareholders, minutes of general meetings, resolutions of
+meetings of the Board and the Supervisory Committee, regular reports and financial and
+accounting reports, etc.
+The Company has formulated an effective shareholder communication policy: on the
+basis of information disclosure in strict compliance with the listing rules of the place
+where it is listed, the Company has set up a telephone, fax and email address for investor
+relations, and uses the e-interactive platform of the Shanghai Stock Exchange to respond
+to shareholders' questions in a timely manner and receive opinions from shareholders;
+regularly hold performance presentation through video and online text communication to
+provide shareholders with opportunities to communicate with the management of the
+Company on a regular basis; the Company has a full-time investor relations staff member
+responsible for shareholder communications in the department responsible for Board affairs.
+The Company has established effective communication channels with shareholders through
+such information disclosure system and investor reception system.
+82 China Shenhua Energy Company Limited
+2.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Convening of general meetings during the reporting period
+The designated
+website for
+Meetings
+(1)
+7.
+II. ENSURANCE OF INDEPENDENCE OF LISTED COMPANY BY CONTROLLING
+SHAREHOLDERS
+80 China Shenhua Energy Company Limited
+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.
+Risk of integrated operations
+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.
+78 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+8.
+Policy risk
+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.
+To cope with the risk of changes in industrial policies, the Group will strengthen the
+research on the latest national industrial policies and regulations, enhance policy
+coordination, pay close attention to the window of policy opportunities for resource
+continuation, correctly understand and grasp the requirements of carbon peak and
+carbon neutrality. The gradual withdrawal from traditional energy should be based on
+the safe and reliable replacement of new energy. The Group will reasonably match
+the investment scale of each industry, accelerate the development of renewable
+energy while firmly promoting the clean and efficient utilization of coal, and promote
+industrial upgrading and structural adjustment.
+VII. REASONS AND CASES OF FAILURE OF DISCLOSURE IN ACCORDANCE WITH
+GUIDELINES BY THE COMPANY DUE TO NON-APPLICABLE GUIDELINES OR
+SPECIAL REASONS
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Applicable ✓ Not applicable
+Please refer to the section headed "Corporate Governance and Corporate Governance Report".
+IX. OTHERS
+Please see the section headed "Significant Events" for management contracts; please see
+the section headed "Corporate Governance and Corporate Governance Report" for permitted
+indemnity provision, interests and dividends of Directors and Supervisors in significant
+transactions, arrangements or contracts; please see the section headed "Changes in Share Capital
+and Shareholders" for repurchase of listed securities.
+2021 Annual Report 79
+Section V Corporate Governance and
+Corporate Governance Report
+I.
+CORPORATE GOVERNANCE
+The Company has established a relatively sound corporate governance structure and a smooth
+operating mechanism, and there are no material differences from the laws, administrative
+regulations and CSRC's regulations on the governance of listed companies.
+The Board is responsible for implementing good corporate governance of the Company. The
+Company has been in compliance with the requirements of corporate governance policies as
+set out in Appendix 14 of the Hong Kong Listing Rules to establish its own system of corporate
+governance.
+The convening, voting and disclosure procedures of board meetings of the Company, rules
+of procedure of the Board and procedures for nomination and appointment of Directors are in
+compliance with relevant requirements. Being a standing decision-making body of the Company,
+the Board is accountable to the shareholders' general meeting, and exercises function and power
+in accordance with the requirements of article 136 of the Articles of Association and relevant
+applicable regulatory requirements. Being a standing executive body of the Company, operating
+management comprising senior management including the chief executive officer, is accountable
+to the Board and exercises function and power in accordance with the requirements of article
+156 of the Articles of Association and relevant applicable regulatory requirements. The Articles of
+Association sets out the respective duties of the Chairman of the Board and the chief executive
+officer in detail. The Chairman of the Board and the chief executive officer are held by different
+personnel.
+During the year ended 31 December 2021, the Company has been in full compliance with the
+provisions of principle and codes and most of the recommended best practices as specified
+therein. For the terms of functions and powers of the Board and the Board Committees under the
+Corporate Governance Code, please refer to the Articles of Association, Rules of Procedure of
+the Board and the Board Committees, which have been published on the websites of the stock
+exchanges where the Company is listed and on the Company's website. During the reporting
+period, the Company has made one amendment to the Articles of Association. For details, please
+refer to the H Share Announcements of the Company dated 28 March and 25 June 2021 and the
+A Share Announcements of the Company dated 27 March and 26 June 2021.
+The Board of the Company has set out the board diversity policy for members of the Board, which
+I was set out in the terms of reference of the nomination committee of the Board of the Company
+and has been disclosed. When selecting the candidates in accordance with the board diversity
+policy of the Company, the Board will use a series of diversified terms, including but not limited
+to gender, age, culture and educational background, race, skills, knowledge and professional
+experience as standard, and will determine in conjunction with the characteristics and role of
+the personnel. As at the end of the reporting period, the Board of the Company consisted of
+8 Directors, including 2 Executive Directors, 2 Non-Executive Director, 3 Independent Non-
+Executive Directors and 1 Employee Director. Directors are from various domestic and overseas
+industries, and the composition of the members features diversity. Each Director's knowledge
+base and field of expertise are professional and complementary in the overall board structure,
+which guarantees the scientific decision-making of the Board.
+VIII. PERFORMANCE OF THE BOARD AND ITS SPECIAL COMMITTEES
+Whether to
+receive
+00
+0.00
+Prior to the foregoing, Dr. Chen had served as a
+distinguished professor of Huiyuan, University of
+International Business and Economics, a first-level
+professor at the International Business School, a
+professor and a doctoral tutor of the Accounting
+Department of the International Business School, and a
+national second-level professor, and the deputy dean of
+the Graduate School, the deputy dean of the School of
+Management, the director, professor, and doctoral tutor
+of the Accounting Department of Xiamen University.
+(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)
+45.00
+5.76
+99
+work-related
+9.53
+of the Party
+Committee
+Li Zhiming
+Executive Vice
+Male
+53
+26 March 2021
+20.87
+29.13
+00
+53
+Retirement
+Including:
+injury,
+Other
+and
+and housing
+for the
+Basic
+Scheduled
+expiration of
+term of office
+date]
+Age
+Gender
+Positions
+Name
+Appoint-ment
+compensation
+insurance
+insurance
+remuneration
+receive
+basic pension
+maternity
+performance
+Date of
+Appointment
+(from the first
+Whether to
+plan:
+0.00
+Total
+50.00
+President
+15.29
+60.29 No
+9410
+10.10
+16.51
+66.51 No
+57
+14
+28 December 2018 -
+25.04
+529
+73.62
+98.66
+7.71
+13.11
+20.82
+119.48
+No
+555
+55
+17 November 2021
+2.09
+38.66
+135.41 No
+21.50
+90
+Xu Shancheng
+Cui Weishan
+Total
+and Member
+of the Party
+Committee
+Chief Financial
+Male
+Officer and
+Member of
+the Party
+Committee
+Member of the
+Party Committee
+and Secretary of
+the Disciplinary
+Committee
+Male
+90
+1.90
+Yes
+68
+Yes
+38.66
+Yes
+NNO
+No
+7.90
+6.41
+2.91
+from related
+previous
+Deputy
+Officer and
+1.26
+25
+%
+0.64
+00
+6.00
+0.00
+30
+Secretary
+3.39
+29 December 2021 -
+57
+Male
+Chief Executive
+Lv Zhiren
+Supervisor
+Representative
+38.66
+38.66
+38.66
+2.61
+of the Party
+Committee
+Huang Qing
+94 China Shenhua Energy Company Limited
+26.22
+18.78
+6 April 2021
+56
+Deputy Secretary Male
+Yang Xiangbin
+Committee
+of the Party
+and Member
+the Board
+379
+13.79
+7.71
+113.91
+47.91
+82.61
+130
+31.30
+6 November 2004
+56
+Male
+Secretary of
+28 May 2023
+remunera-
+2 December 2019
+Employees' Male
+7.71
+107.84
+47.84
+82.80
+25.04
+28 May 2023
+29 May 2020
+53
+Male
+Wang Xingzhong Employee'
+12.28
+Company
+income
+Subtotal 2
+parties of the
+monetary remuneration
+corporate
+annuities
+funds
+Subtotal 1
+year
+tion
+provident
+before tax
+19.99
+127.83
+No
+Zhang Changyan
+28 May 2023
+17 June 2016
+56
+Male
+Supervisor
+Zhou Dayu
+Committee
+Supervisory
+28 May 2023
+29 May 2020
+10
+57
+Male
+Chairman of the
+Luo Meijian
+Committee
+of the Party
+President
+30 December 2019-
+Executive Vice
+Director
+Representative
+51
+587
+and Member
+5.00
+27.87
+214.91
+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.
+None of the personnel mentioned above holds any shares in the Company during the term of
+service in 2021.
+(3)
+The ages were calculated as of 31 December 2021.
+2021 Annual Report
+87
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(II) Details of current and resigned Directors, Supervisors and members of senior
+management of the Company during the Reporting Period
+17.55
+1.
+(1) Directors in office as at the end of the reporting period
+Name
+Wang Xiangxi
+Chairman and
+Executive Director
+Biographical details
+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.
+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.
+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.
+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.
+88 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Brief biography
+10.32
+187.04
+99.04
+and Secretary of
+the Disciplinary
+Committee
+90
+56
+21 June 2018
+23 August 2021
+16.69
+71.15
+47.84
+87.84
+5.16
+8.35
+36
+Notes:
+(1)
+(2)
+13.51
+35T1
+113.56 No
+101.35
+No
+37.56
+149.48
+Name
+Party Committee
+Xu Mingjun
+Biographical details
+Biographical details
+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.
+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.
+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).
+92 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Bai Chong-En
+Independent Non-
+executive Director
+Biographical details
+Independent
+Non-executive
+Director
+Born in October 1963, male, Chinese. Dr. Bai received a
+Ph.D. in Mathematics from the University of California,
+San Diego in 1988, and a Ph.D. in Economics from
+Harvard University in 1993. Dr. Bai has extensive
+experience in economic management, finance and
+corporate governance.
+Dr. Bai has served as 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.
+2021 Annual Report 93
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Chen Hanwen
+Independent Non-
+executive Director
+Biographical details
+Born in January 1968, male, Chinese and a member
+of the Communist Party. Dr. Chen graduated from
+Accounting Department of School of Economics of
+Xiamen University in 1997 with a doctorate degree
+in economics. Dr. Chen has extensive experience
+in auditing, 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).
+0.00
+Dr. Chen has served as the Independent Non-executive
+Director of the fifth session of the Board of the
+Company since May 2020. Dr. Chen is a professor of
+Nanjing Audit University, and he also serves as chair
+professor at China Business Executives Academy,
+Dalian and executive director of the China Auditing
+Society concurrently. Dr. Chen serves as an external
+supervisor of Bank of Communications Co., Ltd. and
+an independent director of Beijing Tri-Prime Gene
+Pharmaceutical Co., Ltd., and independent director of
+Shenwan Hongyuan Securities Co., Ltd.
+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.
+Yuen Kwok Keung
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Born in October 1963, male, Chinese, a member of the
+Communist Party of China, a graduate of postgraduate
+program and a senior political engineer. Mr. Xu has
+extensive experience in corporate management.
+Mr. Xu has served as the Executive Director of the fifth
+session of the Board of the Company since May 2020,
+the secretary of the Party Committee of the Company
+since September 2018, and the executive vice president
+of the Company since November 2018.
+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.
+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.
+2021 Annual Report 89
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Jia Jinzhong
+Non-executive
+Director
+Biographical details
+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.
+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.
+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.
+90 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Yang Rongming
+Non-executive
+Director
+Biographical details
+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.
+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..
+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.
+2021 Annual Report 91
+Executive Director,
+Secretary of the
+Party Committee
+and Executive Vice
+President
+Female
+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.
+Secretary of the
+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.
+(5)
+The ages were calculated as of 31 December 2021.
+86 China Shenhua Energy Company Limited
+2.
+period
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Directors, Supervisors and senior management resigned during the reporting
+Unit: RMB ten thousand
+Social insurance, housing funds and
+Remuneration paid (before tax)
+corporate annuities paid by the Company
+Performance
+remuneration
+Basic
+healthcare,
+(including
+unemployment,
+emoluments)
+work-related
+Retirement
+Date of
+appointment
+Including
+injury,
+maternity
+(4)
+plan: basic
+None of the personnel mentioned above hold any shares in the Company during the term of service
+in 2021.
+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.
+00
+0.64
+Party Committee
+Member of the
+1.08
+88
+157.03
+521.24
+224.27
+678.27
+44.29
+75.05
+505
+1.72
+12
+6.72 No
+119.34
+797.61
+2021 Annual Report
+85
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Notes:
+(2)
+(3)
+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.
+pension
+(1)
+insurance and
+annuities
+Subtotal 2
+Deputy
+income
+before tax Remark
+Yang Jiping
+Executive Director Male
+51
+29 May 2020
+16 November
+20.87
+51.20
+99.20
+5.16
+9.20
+14.36
+2021
+Chief Executive
+23 August 2019
+Officer and
+performance
+Yang Suping
+Total
+funds
+Subtotal 1
+78.33
+-tion
+(from the
+Scheduled
+previous year
+Basic
+remuneration
+housing
+and
+expiration of
+remunera
+for the
+provident
+first appoint
+Other
+monetary remuneration
+Total
+Name
+term of office
+Positions
+insurance
+Gender
+Age
+corporate
+-ment date)
+Decreased by 1.8
+15.7
+%
+(18.3)
+the period
+Return on net assets as at the end of
+%
+13.7
+11.9
+of the period
+EBITDA
+Return on total assets as at the end
+13.7 percentage points
+RMB million
+At the end of 2022
+18.4
+121,536
+Before
+restatement
+2022
+%
+109,734
+restatement
+After
+114,573
+the end of 2023
+as compared with
+that of the end of
+At the end
+of 2023
+Unit
+Items
+(5.7)
+Decreased by 2.7
+percentage points
+18.4
+121,536
+Increase or
+decrease at
+109,734
+Profit for the year
+RMB million
+75,192
+RMB million
+(0.4)
+344,533
+344,533
+343,074
+85,398
+RMB million
+%
+that of 2022
+Total assets
+Total liabilities
+Before
+restatement
+Increase or
+decrease at 2023
+as compared with
+Revenue
+89,687
+85,357
+Profit for the year attributable to
+activities
+Net cash generated from operating
+(11.4)
+3.669
+3.670
+3.253
+(12.0)
+RMB/share
+(11.4)
+72,903
+72,925
+64,625
+RMB million
+equity holders of the Company
+Basic earnings per share
+RMB million
+―
+625,320
+26.0
+Total debt to total equity ratio
+%
+7.3
+10.7
+Decreased by 2.0
+26.0 percentage points
+Decreased by 3.4
+10.7 percentage points
+China Shenhua Energy Company Limited
+Section II Company Profile and
+Major Financial Indicators (Continued)
+Reasons for Restatement of Financial Statements:
+The Group has implemented Amendments to International Accounting Standard 12, "Deferred
+Tax related to Assets and Liabilities arising from a Single Transaction" to which the provision
+applies from 1 January 2023. Taxable and deductible temporary differences arising on recognition
+of assets and liabilities in a single transaction to which the provision applies are no longer subject
+to the accounting treatment of initial recognition exemption for deferred tax. According to the
+relevant requirements of International Accounting Standard 12, "Income Taxes", the corresponding
+deferred tax liabilities and assets shall be recognised respectively at the time of the transaction.
+Meanwhile, for the deferred tax related to assets and liabilities arising from the related single
+transactions between the beginning of the earliest period presented in the financial statements
+in which the Group first applied the above provisions and the effective date, the retrospective
+adjustments shall be made. For details of the above changes in accounting policies and the
+restatement of the financial statements, please refer to the announcement headed Inside
+Information Changes in Accounting Policies published by the Company on the website of HKEX
+on 28 April 2023 and "Changes in Accounting Policies" in notes to the financial statements of
+this report.
+VIII. DIFFERENCE IN ACCOUNTING DATA UNDER DOMESTIC AND OVERSEAS
+ACCOUNTING STANDARDS
+Under China Accounting Standards for
+Unit: RMB million
+Net profit attributable to equity
+holders of the Company
+2023
+2022
+393,854
+393,900
+restatement
+408,692
+69,626
+69,648
+24.0
+59,694
+Net assets attributable to equity
+holders of the Company
+At the end of 2022
+After Before
+restatement
+restatement
+At the end
+of 2023
+Before
+restatement
+restatement
+After
+Business Enterprises
+%
+Gearing ratio
+3.7
+Equity attributable to equity holders
+4.1
+462,722
+462,796
+481,651
+RMB million
+of the Company
+Total equity
+162,456
+162,524
+151,761
+RMB million
+1.3
+625,178
+(6.6)
+633,412
+RMB million
+396,983
+19.98
+19.98
+20.71
+RMB/share
+Equity attributable to equity holders
+per share
+0.0
+411,478
+19,869
+19,869
+RMB million
+period
+Total share capital at the end of the
+3.7
+396,937
+19,869
+After
+China Shenhua Energy Company Limited
+2023
+中國神華
+Abbreviation/Short Name of English Name of CSEC/China Shenhua
+the Company
+Legal Representative of the Company
+Authorised Representative of
+the Company under the Hong Kong
+Listing Rules
+Mr. Wang Xiangxi resigned as the Chairman and Executive
+Director of the Company on 29 July 2022. The selection
+and appointment of the new chairman are in progress.
+Lv Zhiren, Song Jinggang
+CONTACTS AND CONTACT DETAILS
+Secretary to the Board, Joint Company
+Secretary
+Song Jinggang
+Name
+Address
+22 Andingmen Xibinhe Road, Dongcheng
+District, Beijing
+Tel
+Fax
+E-mail
+(Postal Code: 100011)
+(8610) 5813 1088
+(8610) 5813 1804/1814
+Room B, 54th Floor, Bank of China Tower,
+Hong Kong Office of the Company
+ir@csec.com
+(8610) 5813 1804/1814
+(8610) 5813 3355
+(Postal Code: 100011)
+中國神華能源股份有限公司
+22 Andingmen Xibinhe Road, Dongcheng
+District, Beijing
+Representative of Securities Affairs,
+Joint Company Secretary
+District, Beijing
+22 Andingmen Xibinhe Road, Dongcheng
+Address
+Office of the Board of the Company
+1088@csec.com
+Zhuang Yuan
+English Name of the Company
+the Company
+Short Name of Chinese Name of
+Shenzhen-Hong Kong Stock
+Connect
+Shanghai-Hong Kong Stock
+Connect
+Total debt to total equity ratio
+Gearing ratio
+EBITDA
+Articles of Association
+RMB
+International Financial Reporting
+Standards
+Section | Definitions (Continued)
+China Shenhua Energy Company Limited
+Rules Governing the Listing of Securities on the HKEX
+Rules Governing the Listing of Stocks on SSE
+Adjustments for:
+The Stock Exchange of Hong Kong Limited
+China Accounting Standards for
+Business Enterprises
+1 Garden Road, Central,
+Reporting Period
+International Financial Reporting Standards issued by the
+International Accounting Standards Board
+Chinese Name of the Company
+INFORMATION OF THE COMPANY
+II.
+I.
+Major Financial Indicators
+Section II Company Profile and
+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
+05
+January to December 2023
+Renminbi unless otherwise specified
+A mutual access and connect mechanism for transactions in stock
+markets between Shenzhen Stock Exchange and HKEX
+A mutual access and connect mechanism for transactions in stock
+markets between SSE and HKEX
+[Long-term interest-bearing debt + short-term interest-bearing
+debt (including notes payable)]/[long-term interest-bearing debt +
+short-term interest-bearing debt (including notes payable) + total
+shareholder equity]
+Articles of Association of China Shenhua Energy Company Limited
+Profit for the year + net financial costs + income tax + depreciation
+and amortization - share of profits and losses of associates
+Total liabilities/total assets
+2023 Annual Report
+2022
+Hong Kong
+Tel
+Fax
+Accounting Firm Engaged
+by the Company (Chinese
+Mainland)
+Accounting Firm Engaged by
+the Company (Hong Kong)
+Name
+Office Address
+KPMG Huazhen LLP
+8th, Tower E2, Oriental Plaza, 1 East Chang
+An Avenue, Beijing
+Signing Auditors Zhang Nan, Wang Xia
+Name
+Office Address
+KPMG (Public Interest Entity Auditor
+registered in accordance with the
+Accounting and Financial Reporting
+Council Ordinance)
+8th Floor, Prince's Building, 10 Chater Road,
+Central, Hong Kong
+Signing Auditors Guen Kin Shing
+Share Registrar of the
+Company (A Share)
+Name
+Office Address
+Share Registrar of the
+Company (H Share)
+Unit
+Items
+VII. MAJOR ACCOUNTING DATA AND FINANCIAL INDEX
+Major Financial Indicators (Continued)
+Section II Company Profile and
+80
+VI. OTHER RELEVANT INFORMATION
+08
+17M Floor, Hopewell Centre, 183 Queen's
+Road East, Wanchai, Hong Kong
+Computershare Hong Kong Investor Services
+Limited
+188 Yanggao South Road, Pudong New
+Area, Shanghai
+China Securities Depository and Clearing
+Corporation Limited Shanghai Branch
+Office Address
+Name
+2023 Annual Report 07
+601088
+01088
+China Shenhua
+China Shenhua
+SSE
+HKEX
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+N/A
+22 Andingmen Xibinhe Road, Dongcheng District, Beijing
+100011
+(852) 2915 0638
+2578 1635
+(852)
+www.csec.com and www.shenhuachina.com
+ir@csec.com
+E-mail
+the Company
+Change of Registered Address of
+Registered Address of the Company
+Postal Code of Registered Address of
+the Company
+III. PARTICULARS
+(8610) 5813 1804/1814
+(8610) 5813 1088/3399/3355
+Office Address of the Company
+Postal Code of Office Address of
+the Company
+Company Website
+(Postal Code: 100011)
+06
+Section II Company Profile and
+Major Financial Indicators (Continued)
+H Share
+A Share
+Stock Code
+Abbreviation
+Stock Exchange
+Type
+China Shenhua Energy Company Limited
+BASIC INFORMATION ON SHARES
+www.sse.com.cn and www.hkexnews.hk
+SSE, Office of the Board of the Company and Hong
+Kong Office of the Company
+Securities Times and Securities Daily
+of annual report of the Company
+Place where the Company's annual
+report is available for inspection
+Stock exchange websites for disclosure
+Media for disclosure of annual report of China Securities Journal, Shanghai Securities News,
+the Company
+IV. INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION
+V.
+Simple production maintenance, safety
+Australasian Code for Reporting of Mineral Resources and Ore
+Reserves
+4,931
+Independent Auditor's Report and Financial Statements
+Section X
+208
+Investor Relations
+Section IX
+196
+Changes in Shares and Particulars of Shareholders
+Section VIII
+167
+Significant Events
+Section VII
+154
+Environmental and Social Responsibility
+Section VI
+85
+Corporate Governance and Corporate Governance Report
+Section V
+16
+Directors' Report
+217
+Section IV
+Section XI
+354
+Shendong Coal Branch of China Shenhua Energy Company Limited
+China Energy Shendong Coal Group Co., Ltd.
+China Energy and its subsidiaries (excluding the Group)
+China Energy Investment Corporation Limited (ª¤¶¶
+有限責任公司)
+the Company and its subsidiaries
+Shendong Power
+Shendong Coal Branch
+Shendong Coal
+China Energy Group
+China Energy
+The Group
+China Shenhua Energy Company Limited
+China Shenhua/the Company
+meanings:
+Unless the context otherwise requires, the following terms used in this report have the following
+Section Definitions
+355
+Summary of Major Financial Information for the Recent Five Years
+Section XII
+Documents Available for Inspection
+11
+Board's Statement
+Section III
+V.
+IV.
+III.
+II.
+I.
+Important Notice
+China Energy Driving force for constant progress
+國家能源——不斷前進的動力
+E
+Practitioner of Developing China's Transportation Strength
+Leader in Green, Digital and Smart Transportation
+Transportation
+Industry
+Annual Report 2023
+Stock Code: 01088
+(a joint stock limited company incorporated in the People's Republic of China with limited liability)
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+00000000
+Shanghai Stock Exchange
+VI.
+The Board, Supervisory Committee and all directors, supervisors and senior management of the
+Company warrant that this annual report does not contain any misrepresentations, misleading
+statements or material omissions, and are liable for the authenticity, accuracy and completeness
+of the information contained in this annual report.
+This report was approved at the twenty seventh meeting of the fifth session of the Board of the
+Company. 6 out of 8 directors attended the meeting in person.
+KPMG has issued a standard unqualified independent auditor's report in accordance with the Hong
+Kong Standards on Auditing on the Company's financial statements for the year 2023 prepared
+under the International Financial Reporting Standards.
+06
+production and other related expenditure
+Section II
+03
+Definitions
+Section I
+1000+ Contents
+NAKA
+00000000000
+Shenhua Shendong Power Co., Ltd.
+01
+Material risk alert: Due to the impact of factors such as supply and demand in the coal and power
+generation industries and adjustments in industrial policies, the Group is exposed to certain
+uncertainties as to the achievement of the business targets for the year 2024. In addition, the
+Company has explained in detail the risks faced by the Company, such as safety production,
+environmental protection, market competition, project management, investment, integrated
+operation, compliance, policy and international operation, in the section headed "Directors'
+Report", which investors should pay attention to.
+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. Any provision of external guarantee that has violated the applicable decision-making procedures:
+No
+VII. Any appropriation of funds by the controlling shareholder and other related parties for non-
+operating purposes: No
+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.
+The Board proposed the payment of a final dividend in cash of RMB2.26 per share (inclusive
+of tax) for the year 2023 based on the total registered share capital on the record date of the
+implementation of the equity distribution. The profit distribution proposal is subject to the approval
+by shareholders at the shareholders' general meeting. According to the total share capital of
+19,868,519,955 shares of the Company as at 31 December 2023, the final dividend totaling
+RMB44,903 million (inclusive of tax) will be paid.
+Lv Zhiren, the person in charge of the Company, Song Jinggang, Chief Financial Officer, and Yu
+Yanling, person-in-charge of the accounting department, warrant the authenticity, accuracy and
+completeness of the financial statements contained in this report.
+2023 Annual Report
+Shenhua Zhunge'er Energy Co., Ltd.
+Company Profile and Major Financial Indicators
+Baorixile Energy
+China Energy (Huizhou) Thermal Power Co., Ltd.
+China Energy Shenhua Jiujiang Power Co., Ltd.
+China Energy Mengjin Thermal Power Co., Ltd.
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+China Energy Jinjie Energy Co., Ltd.
+China Energy Hebei Cangdong Power Co., Ltd.
+China Energy Yudean Taishan Power Co., Ltd.
+Hong Kong Listing Rules
+Shanghai Listing Rules
+HKEx
+SSE
+JORC
+Dayan Mining
+Hangjin Energy
+Capital Holdings
+Finance Company
+Qingyuan Power
+Beihai Power
+Shengli Energy
+China Energy Guohua (Beijing) Gas-fired Power Co., Ltd.
+China Energy Shouguang Power Generation Company Limited
+China Energy Guangtou (Liuzhou) Power Generation Co., Ltd.
+PT. Shenhua Guohua Pembangkitan Jawa Bali
+Yueyang Power
+China Energy Group Yongzhou Power Co., Ltd.
+China Energy Finance Co., Ltd.
+3,277
+Zhunge'er Energy
+3,277
+2,786
+3,083
+3,083
+Under International Financial Reporting
+Standards
+64,625
+72,925
+72,903
+411,478
+396,983
+396,937
+2023 Annual Report
+09
+Inner Mongolia Dayan Mining Industry Group Co., Ltd.
+China Energy Hangjin Energy Co., Ltd.
+China Energy Capital Holdings Co., Ltd.
+China Energy Guangtou (Beihai) Power Generation Co., Ltd.
+China Energy Qingyuan Power Generation Co., Ltd.
+Yongzhou Power
+China Energy Group Yueyang Power Generation Co., Ltd.
+Shengli Energy Branch of the Company
+Liuzhou Power
+Fujian Energy
+Sichuan Energy
+Bayannur Energy
+Shipping Corporation
+Baotou Coal Chemical
+Tianjin Harbour Administration
+Zhuhai Harbour Administration
+Huanghua Harbour Administration China Energy Huanghua Harbour Administration Co., Ltd.
+China Energy Railway Equipment Co., Ltd.
+China Energy Baorixile Energy Co., Ltd.
+Shuohuang Railway
+Trading Group
+Yulin Energy
+China Energy Shuohuang Railway Development Co., Ltd.
+China Energy Trading Group Limited
+China Energy Yunlin Energy Co., Ltd.
+China Energy Baotou Energy Co., Ltd.
+Baotou Energy
+China Energy Beidian Shengli Energy Co., Ltd.
+Pembangkitan Jawa
+Beidian Shengli
+EMM Indonesia
+Zhunge'er Power
+Railway Equipment
+Cangdong Power
+Huizhou Thermal
+Shenmu Power
+Jiujiang Power
+Mengjin Power
+Dingzhou Power
+Jinjie Energy
+Taishan Power
+Section | Definitions (Continued)
+03
+04
+China Energy Shaanxi Shenmu Power Co., Ltd.
+Energy
+Power-generating division controlled and operated by Zhunge'er
+PT.GH EMM INDONESIA
+Shenhua (Fujian) Energy Co., Ltd.
+China Energy Sichuan Energy Co., Ltd.
+Shenhuan Bayannur Energy Co., Ltd.
+China Energy Baotou Coal Chemical Co., Ltd.
+China Energy (Tianjin) Harbour Administration Co., Ltd.
+China Energy Zhuhai Harbour Administration Co., Ltd.
+Guoneng Yuanhai Shipping Co., Ltd.
+2023 Annual Report
+Beijing Gas-fired Power
+Shouguang Power
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Independent
+Non-executive
+Director
+Bai Chong-En
+Name
+Prior to the foregoing, Dr. Chen had served as
+a distinguished professor of Huiyuan, University of
+International Business and Economics, a first-level
+professor at the International Business School,
+a professor and a doctoral tutor of the Accounting
+Department of the International Business School, and a
+national second-level professor, and the deputy dean of
+the Graduate School, the deputy dean of the School of
+Management, the director, professor, and doctoral tutor
+of the Accounting Department of Xiamen University.
+2023 Annual Report
+Dr. Yuen had served as Secretary for Justice of the
+HKSAR (2012 to 2018), Recorder of the High Court
+(2006 to 2012), a member of the Judicial Officers
+Recommendation Commission (2009 to 2018), chairman
+of the Hong Kong Bar Association (2007 to 2009),
+a nonofficial member of the Advisory Committee on
+Corruption of the Independent Commission Against
+Corruption (2009 to 2012), and a non-executive director
+of Mandatory Provident Fund Schemes Authority (2010
+to 2012).
+Biographical details
+97
+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.
+Born in January 1968, male, Chinese and a member
+of the Communist Party. Dr. Chen graduated from
+Accounting Department of School of Economics of
+Xiamen University in 1997 with a doctorate degree
+in economics. Dr. Chen has extensive experience in
+auditing and accounting theory and methods, risks and
+internal control.
+Dr. Bai has served as department chair of department of
+economics, associate dean and executive associate dean
+of School of Economics and Management of Tsinghua
+University, and associate professor at the School of
+Economics and Finance of the University of Hong Kong,
+independent director of China CITIC Bank Corporation
+Limited, and member of the Executive Committee of
+the International Economic Association.
+98
+China Shenhua Energy Company Limited
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Chen Hanwen
+Independent
+Non-executive
+Director
+Biographical details
+Dr. Chen has served as the independent non-executive
+director of the fifth session of the Board of the Company
+since May 2020. Dr. Chen is an honorary dean and a
+professor of the School of Internal Audit in Nanjing Audit
+University, and he also serves as executive director of
+the China Auditing Society concurrently. Dr. Chen serves
+as an external supervisor of Bank of Communications
+Co., Ltd. and an independent director of Shenwan
+Hongyuan Securities Co., Ltd., and Bank of Suzhou Co.,
+Ltd..
+Dr. Bai has served as the independent non-executive
+director of the fifth session of the Board of the Company
+since May 2020. Dr. Bai has been the dean of the School
+of Economics and Management of Tsinghua University
+since 2018 and Mansfield Freeman chair professor of
+the school since 2004. Dr. Bai currently also serves as
+the vice president of All-China Federation of Industry
+and Commerce (I), the vice president of the
+tenth session of Society of Public Finance of China and
+a member of the Academic Committee of the Council
+of the society, vice president of China Association of
+Labour Economics.
+Dr. Yuen has served as the independent non-executive
+director of the fifth session of the Board of the Company
+since May 2020 and is a Senior Counsel with Temple
+Chambers. Dr. Yuen is also a committee member of
+the International Commercial Expert Committee of the
+International Commercial Court of the Supreme People's
+Court of the People's Republic of China, a co-chairperson
+of the Hong Kong International Arbitration Centre and a
+member of the Hong Kong Exchange Fund Advisory
+Committee concurrently.
+Born in July 1963, male, Chinese, a member of the
+Communist Party, a professor-level senior engineer,
+and received a master's degree in engineering. Mr. Jia
+has been engaged in railway transportation production
+management.
+Biographical details
+2023 Annual Report
+Jia Jinzhong
+Non-executive
+Director
+Biographical details
+Mr. Jia has served as the non-executive director of the
+fifth session of the Board of the Company since May
+2020, and has served as the Senior Business Officer
+of China Energy from July 2021 to July 2023. Mr. Jia
+served as the chief economist of China Energy from
+May 2018 to July 2021. From March 2017 to September
+2019, he served as vice president of the Company.
+Prior to the foregoing, Mr. Jia had successively served
+as the deputy general manager, standing deputy general
+manager, secretary of the Party Committee, chairman
+of the board of Shuohuang Railway Development Co.,
+Ltd., the deputy section head of Yuanping Train Depot,
+and deputy director of Taiyuan West Railway Station
+of Taiyuan Railway Branch, as well as the manager of
+Yuanping Branch, secretary of the Party Committee,
+and manager of Suning Branch of Shuohuang Railway
+Development Co., Ltd...
+2023 Annual Report
+95
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Born in June 1964, male, Chinese, Senior Counsel, Hong
+Kong Grand Bauhinia Medal, and Justice of the Peace.
+Dr. Yuen received a master's degree in laws from City
+University of Hong Kong in 1997 and an honorary doctor
+degree in laws from Hong Kong Shue Yan University in
+2018. Dr. Yuen has extensive legal experience.
+Yang Rongming
+Biographical details
+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.
+Mr. Yang has served as the non-executive director of the
+fifth session of the Board of the Company since June
+2021, and has served as the first-level chief business
+officer of coal and transportation industry management
+department of China Energy Group since March 2023.
+Mr. Yang served as the director of coal and transportation
+industry management department of China Energy Group
+from December 2020 to March 2023. From May 2018
+to December 2020, he served as secretary of the Party
+Committee and chairman of Shenhua Zhunneng Group
+Co., Ltd.. From May 2009 to May 2018, he served as
+deputy general manager, general manager and deputy
+secretary of Party Committee of Shenhua Shendong
+Coal Group Co., Ltd., director, general manager and
+deputy secretary of Party Committee of Shenhua Xinjie
+Energy Co., Ltd., secretary of the Party Committee,
+director and chairman (legal representative) of Yulin
+Shenhua Energy Co., Ltd.
+Prior to the foregoing, Mr. Yang had served as deputy
+head of Liuta Colliery, former Shenhua Group Wanli
+Coal Company Limited, manager of Shuozhou Branch,
+assistant to the general manager and deputy general
+manager of Wanli Coal Branch of China Shenhua Energy
+Company Limited.
+96
+China Shenhua Energy Company Limited
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Yuen Kwok Keung
+Independent
+Non-executive
+Director
+Non-executive
+Director
+99
+Executive Vice
+President and
+Member of the
+Party Committee
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Prior to the foregoing, Mr. Zhou had successively held
+the post of the general manager of capital operation
+department and general manager of the Business
+Administration Department of former Shenhua
+Group Corporation and the Company, and the deputy
+general manager and general manager of the Planning
+Department and a deputy director of the Policy and Law
+Research Office of former Shenhua Group Corporation.
+102 China Shenhua Energy Company Limited
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Zhang Feng
+Employee
+Supervisor
+Biographical details
+Born in November 1975, male, Chinese and a member
+of the Communist Party of China and a senior engineer.
+He graduated from North China Electric Power University
+in 1997, majoring in power plant centralized control
+operation.
+Mr. Zhang has served as the employee supervisor of
+the fifth session of the Supervisory Committee of the
+Company since July 2022, the deputy director of the
+office of committee for discipline inspection of the
+Company since April 2022. From June 2018 to April 2022,
+he served as a staff member and the manager of the
+general office of the organisational personnel department
+(human resources department) of the Company. From
+February 2013 to June 2018, he served as senior director
+of general manager working department, secretary of
+the Party group, deputy division-level staff member
+of general manager working department, secretary of
+Youth League Committee, assistant to the director and
+deputy director of the general office of the Party group
+of GD Power Development Co., Ltd.
+Prior to the foregoing, Mr. Zhang had served as the
+chief engineer of the information department of Guodian
+Zhejiang Beilun No. 1 Power Generation Co., Ltd. and
+other positions.
+2023 Annual Report 103
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(3) Senior management in office as at the end of the Reporting Period
+For the biographical details of Lv Zhiren and Xu Mingjun, please refer to
+the biographical details of directors. The biographical details of other senior
+management are as follows:
+Name
+Wang Xingzhong
+Biographical Details
+Born in April 1968, male, Chinese, a member of the
+Communist Party and a professor-level senior engineer.
+Mr. Wang has long experience in railway transport,
+operation and management. He graduated from the
+Shanghai Railway Institute () in 1989,
+majoring in railway engineering and obtained the master
+academic qualification and a Ph.D. degree in engineering
+from China Academy of Railway Sciences (+ £ÙNŞ
+) in 2011.
+Mr. Wang has served as executive vice president and a
+member of the Party Committee of the Company since
+December 2019, and a director of Beijing GD Power
+Co., Ltd. since February 2023. Mr. Wang has served as
+a director and vice chairman of Haoji Railway Co., Ltd.
+since March 2023, and the employee director of the
+fifth session of the Board of the Company from May
+2020 to July 2022. Mr. Wang served as the director
+and deputy secretary of operating management center
+of transport industry of China Energy and the Company
+from May 2018 to December 2019, and the general
+manager of transport management department of the
+former Shenhua Group Corporation and the Company
+from February 2015 to May 2018.
+Prior to the foregoing, Mr. Wang had successively
+served as deputy secretary of the Party Committee and
+chairman of Shenhua Baoshen Railway Group Co., Ltd.,
+deputy secretary of the Party Committee, chairman
+and general manager of Shenhua Baoshen Railway
+Group Co., Ltd., chairman of Shenhua Ganquan Railway
+Co., Ltd., and the deputy general manager of Shenhua
+Zhunge'er Energy Co., Ltd and general manager of
+Dazhun Railway Company.
+104 China Shenhua Energy Company Limited
+ĦRĀ) since April 2021. Mr. Zhou served as a
+director of the inspection team of the Party Leadership
+Group of China Energy since April 2023 to December
+2023, a director of the Materials and Procurement
+Supervision Department of the China Energy from March
+2020 to April 2023 and a supervisor of the fourth session
+of Supervisory Committee of the Company from June
+2017 to May 2020, a supervisor of the third session
+of Supervisory Committee of the Company from June
+2016 to June 2017, and the director of the Industrial
+Coordination Department of China Energy from May
+2018 to March 2020.
+Mr. Zhou has served as the supervisor of the fifth
+session of the Supervisory Committee of the Company
+since May 2020, the senior business director of China
+Energy from December 2023, and a director of China
+National Energy Group Materials Co., Ltd. (X⠀F₤
+Born in October 1965, male, Chinese, a member of the
+Communist Party and a researcher. Mr. Zhou obtained
+a bachelor's degree in National Economic Management
+at Peking University in 1986 and a master's degree in
+International Finance at Peking University in 2001.
+Biographical details
+Name
+8
+Liu Xiaolei
+Employee Director
+Biographical details
+Born in October 1974, female, Chinese and a member of
+the Communist Party of China, a senior economist. She
+graduated from the China University of Political Science
+and Law (CUPL) in 1999 majoring in law and obtained a
+Ph.D. degree in Legal Theory from CUPL in 2016.
+Ms. Liu has served as the employee director of the
+fifth session of the Board of the Company since July
+2022, the manager of the legal division of the corporate
+management and legal affairs department of the Company
+since November 2018. From May 2010 to November
+2018, she served as the manager of the dispatched
+directors division of the property rights administration
+office of former Shenhua Group Corporation Limited and
+the Company, and a staff member of the legal division of
+the corporate management and legal affairs department
+of the Company.
+100 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(2) Supervisors in office as at the end of the Reporting Period
+99
+Name
+Chairman of
+the Supervisory
+Committee
+Biographical details
+Born in February 1968, male, Chinese and a member of
+the Communist Party of China, a senior accountant. Mr.
+Tang has extensive experience in financial management.
+He graduated from Changsha Institute of Water
+Conservancy and Electric Power in 1991, majoring in
+finance and accounting.
+Mr. Tang has served as the chairman of the fifth session
+of the Supervisory Committee of the Company since
+June 2022, a non-executive director of China Longyuan
+Power Group Corporation Limited since June 2021 and
+the head of audit department of China Energy since April
+2023. From April 2021 to April 2023, Mr. Tang has served
+as the head of capital operation department of China
+Energy. From November 2016 to April 2021, Mr. Tang
+served as the chief financial officer, deputy manager and
+Member of the Party Committee of Guodian Technology
+& Environment Group Corporation Limited.
+Prior to the foregoing, Mr. Tang had served as the
+chairman, deputy general manager, chief financial
+officer and member of Leading Party Group of Guodian
+Technology & Environment Group Corporation Limited;
+deputy general manager and member of Leading Party
+Group of former China Guodian Capital Holdings Ltd (
+國電資本控股有限公司), and deputy general manager
+and member of Leading Party Group of former Guodian
+Finance Co., Ltd. ().
+2023 Annual Report 101
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Zhou Dayu
+Tang Chaoxiong
+Supervisor
+Name
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Li Zhiming
+Decision-making procedures
+for the remuneration of the
+directors, supervisors and
+senior management
+Whether the directors should
+abstain from discussing their
+own remuneration matters at
+the Board
+Details of the recommendations
+Imade by the Remuneration and
+Assessment Committee or the
+special meeting of independent
+directors on the remuneration
+of the directors, supervisors
+and senior management
+Basis for remuneration
+determination of the directors,
+supervisors and senior
+management
+Actual payment of remuneration
+of the directors, supervisors
+and senior management
+Total remuneration actually
+obtained by all the directors,
+supervisors and senior
+management as at the end of
+the Reporting Period
+110 China Shenhua Energy Company Limited
+The remuneration package of directors and supervisors
+of the Company was submitted to the shareholders'
+general meeting for approval after consideration.
+and approval by the Remuneration and Assessment
+Committee of the Board and the Board, and the
+remuneration package of senior management was
+submitted to the Board for approval after consideration
+and approval by the Remuneration and Assessment
+Committee of the Board.
+Yes
+The Remuneration and Assessment Committee of the
+Board agreed to submit the matters relating to the
+remuneration of the directors, supervisors and senior
+management to the Board for consideration.
+The remuneration package of relevant directors
+and supervisors was proposed by the Company in
+accordance with international and domestic practices
+and with reference to the remuneration of directors
+and supervisors of large listed companies in China.
+The remuneration package of senior management
+of the Company was formulated by the Company
+in accordance with relevant provisions on the
+administration of the annual remuneration of the senior
+management and performance assessment results for
+the year and for the term of office.
+Please refer to "Changes in Shareholding and
+Remuneration of Directors, Supervisors and Senior
+Management" in this section
+Please refer to 'Changes in Shareholding and
+Remuneration of Directors, Supervisors and Senior
+Management" in this section
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(IV) Changes of Directors, Supervisors and Senior Management of the Company
+Name
+Position
+Particulars
+of changes
+Reason for the change
+Song Jinggang
+Secretary to the Board
+Appointed
+Appointed at the 21st meeting of the fifth
+session of the Board
+Huang Qing
+Member of Party Committee, Resigned
+Secretary to the Board,
+Adjustment of work arrangements
+(III) Remuneration of Directors, Supervisors and Senior Management
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 109
+2005-07
+Vice President of the
+2019-10
+Tenth Session and
+Member of the
+Academic Committee
+of the Council
+China Association of Labour Economics Vice President
+2016-11
+Chen Hanwen
+Nanjing Audit University
+Professor and Doctoral
+2021-07
+Supervisor
+Shenwan Hongyuan Securities Co., Ltd.
+Independent Director
+2021-05
+Bank of Communications Co., Ltd.
+External Supervisor
+2019-06
+Beijing Tri-Prime Gene Pharmaceutical
+Independent Director
+2018-11
+2023-01
+Co., Ltd.
+Suzhou Bank Co., Ltd. (Independent Director
+2023-02
+限公司)
+China Auditing Society
+Standing Director
+Company Secretary, General
+Legal Counsel
+(V) Securities Transaction of Directors, Supervisors and Senior Management
+During the Reporting Period, none of the directors, supervisors and senior management of
+the Company held shares of the Company, and none of the change in shareholding of the
+Company shall be disclosed pursuant to the Administrative Rules Concerning the Holding
+and Change of Shares held by Directors, Supervisors and Senior Management of a Listed
+Company promulgated by the CSRC.
+As at 31 December 2023, none of the directors, supervisors or chief executives of the
+Company held any shares of the Company, nor did they have any interest or short position
+in the shares or underlying shares of the Company or any of its associated corporations
+(within the meaning of Part XV of the SFO (Chapter 571 of the Laws of Hong Kong)) which
+were required, pursuant to section 352 of the SFO, to be recorded in the register referred
+therein, or to be notified to the Company and the HKEx pursuant to the Model Code for
+Securities Transactions by Directors of Listed Issuers (the "Model Code") as set out in
+Appendix C3 to the Hong Kong Listing Rules.
+The 20th meeting of the fifth 24 March 2023
+session of the Board
+On-site
+3
+The 21st meeting of the fifth 28 April 2023
+session of the Board
+On-site
+4
+The 22nd meeting of the
+fifth session of the Board
+25 August 2023
+On-site
+Meeting Resolutions
+On-site with
+correspondence
+On-site with
+correspondence
+All 3 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 15
+February 2023 and A share announcement
+of the Company dated 16 February 2023
+for details
+All 20 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 24
+March 2023 and A share announcement
+of the Company dated 25 March 2023 for
+details
+All 17 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 28
+April 2023 and A share announcement
+of the Company dated 29 April 2023 for
+details
+All 3 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 25
+August 2023 and A share announcement
+of the Company dated 26 August 2023 for
+details
+All 3 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated
+27 September 2023 and A share
+announcement of the Company dated 28
+September 2023 for details
+All 6 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 27
+October 2023 and A share announcement
+of the Company dated 28 October 2023 for
+details
+All 4 resolutions were considered and
+approved, please refer to the H share
+announcement of the Company dated 28
+December 2023 and A share announcement
+of the Company dated 29 December 2023
+for details
+5
+The 23rd meeting of the fifth 27 September 2023 On-site with
+session of the Board
+correspondence
+60
+The 24th meeting of the fifth 27 October 2023
+session of the Board
+7
+The 25th meeting of the fifth 28 December 2023 On-site with
+session of the Board
+correspondence
+114 China Shenhua Energy Company Limited
+2
+Society of Public Finance of China
+Methods
+1
+The securities transactions of the directors of the Company have been carried out in
+accordance with the Model Code which is complied with by the Company. The Model
+Code is also applicable to the supervisors and senior management of the Company. After
+making specific enquiries to all directors, supervisors and senior management, the directors,
+supervisors or senior management of the Company have confirmed that they have fully
+complied with the Model Code and the code of conduct regarding securities transactions
+by directors during their respective terms of office in 2023.
+2023 Annual Report 111
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(VI) Sanction from Securities Regulatory Authorities in the Last Three Years
+☐ Applicable ✓ Not applicable
+(VII) Others
+The Company has entered into service contracts with all of its directors and supervisors.
+None of the directors or supervisors has entered into or proposed to enter into any
+service contract with members of the Group which cannot be terminated by the Group
+within one year without any compensation (other than the statutory compensation). The
+Company has maintained appropriate liability insurance for its directors, supervisors and
+senior management. The directors of the Company are entitled to be indemnified for the
+verification and inspection costs, individual investigation costs, corporate verification and
+inspection expenses, corporate investigation expenses, losses arising from negotiable
+securities compensation claims incurred by or relating to the execution and performance
+of their duties subject to the applicable laws and under the coverage of directors liability
+insurance taken out by the Company for the directors. These provisions are valid during
+the year ended 31 December 2023 and remain to be valid as at the date of this report.
+Other than their working relationships in the Company, none of the directors, supervisors
+or senior management has any financial, business or family relationship or any relationship
+in other material aspects with each other. As at 31 December 2023, the Company had
+not granted any equity securities or warrants to its directors, supervisors and senior
+management or their respective spouses or children under the age of 18.
+112 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+V. BOARD OF DIRECTORS
+(1) Function and Power of the Board
+The Board of the Company shall be accountable to the shareholders at general meetings,
+and please refer to Article 136 of the Articles of Association for its functions and powers.
+The Board of the Company performed its responsibilities in respect of corporate governance
+in accordance with Rule A.2.1 of Appendix C1 to the Hong Kong Listing Rules: (1) to
+develop and review the Company's policies and practices on corporate governance
+and make recommendations to the Board; (2) to review and monitor the training and
+continuous professional development of the directors and senior management; (3) to
+review and monitor the Company's policies and practices on compliance with legal and
+regulatory requirements; (4) to develop, review and monitor the code of conduct and
+compliance manual (if any) applicable to employees and directors; and (5) to review the
+Company's compliance with the Corporate Governance Code and disclosure in the corporate
+governance report.
+During the Reporting Period, the Board of the Company reviewed and revised relevant
+corporate governance systems, such as the rules of procedure for three special committees
+including the Remuneration and Assessment Committee of the Board, the working rules
+of the secretary to the Board, and the working rules for independent directors; organised
+directors and senior management to participate in various trainings conducive to their
+continuous professional development; reviewed the compliance management of the
+Company; reviewed the Company's compliance with the Corporate Governance Code
+and approved the disclosure the section headed "Corporate Governance and Corporate
+Governance Report" of this report.
+The Board of the Company is responsible for the preparation of the accounts. The
+Company's accounting firm has stated its reporting responsibilities in its audit report on
+the financial statements for the year 2023.
+(II)
+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
+7304
+2023 Annual Report 113
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+In 2023, the Board of the Company held a total of 7 meetings, at which all the proposals
+were considered and approved. Details of the meetings are as follows:
+No.
+Name
+Date
+The 19th meeting of the fifth 15 February 2023
+session of the Board
+Commerce
+2022-12
+Vice Chairman
+Senior Business Officer
+2021-07
+2023-07
+First-level business
+2023-03
+Rongming
+director of Coal
+Supervisors of China Tang
+Shenhua
+and Transportation
+Industry Management
+department
+Director of Coal and
+2020-12
+2023-03
+Transportation
+Industry Management
+department
+China Energy
+Director of Audit
+2023-04
+Chaoxiong
+Department
+Director of the Capital
+2021-04
+2023-04
+Zhou Dayu
+China Longyuan Power Group
+Corporation Limited
+China Energy
+Non-executive Director
+2021-06
+Senior Business Director 2023-12
+China Energy
+China Energy
+Yang
+Jia Jinzhong
+Directors of China
+Shenhua
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+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, executive vice
+president of the Company since March 2021, and
+director of Inner Mongolia Branch of China Energy and
+the Company since October 2022. From December 2015
+to December 2020, he successively served as general
+manager, deputy secretary of the Party Committee,
+chairman (legal representative) and secretary of the Party
+Committee of Shenhua Beidian Shengli Energy Co., Ltd.,
+and standing deputy general manager, general manager,
+secretary of the Party Committee and executive director
+of the Shengli Energy Branch of the Company.
+Prior to the foregoing, Mr. Li had served as deputy
+general manager of engineering management
+department of former Shenhua Group Corporation and
+the Company, deputy general manager of Shenhua
+Zhunge'er Energy Co., Ltd and other positions.
+2023 Annual Report 105
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Biographical Details
+Born in November 1974, male, Chinese, a member of
+the Communist Party and a senior accountant. Mr. Song
+has extensive experience in financial management.
+He graduated from Chongqing Institute of Industrial
+Management in 1997, majoring in accounting, and
+obtained a master's degree in business administration
+from Sichuan College of Business Administration in
+2005.
+Song Jinggang
+Chief Financial
+Officer, Secretary
+to the Board and
+Member of the
+Party Committee
+Director of the Inspection 2023-04
+Mr. Song served as a member to the Party Committee of
+the Company since June 2022, the chief financial officer
+of the Company since August 2022 and the secretary
+to the Board of the Company since April 2023, the joint
+company secretary of the Company since March 2024.
+From October 2020 to June 2022, Mr. Song served as
+a director, general manager and deputy secretary of the
+Party committee of China Energy Capital Holdings Co.,
+Ltd. From April 2020 to October 2020, he served as
+the director, general manager and deputy secretary of
+the Party committee of China Energy Finance Company
+Limited. From December 2019 to April 2020, he served
+as the first-level business director of China Energy
+Capital Holdings Co., Ltd. and the former Guodian
+Finance Co., Ltd. From April 2017 to December 2019, he
+served as the deputy secretary of the Party committee,
+director, inspector and first-level business director of
+Changjiang Property Insurance Co., Ltd.
+106 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+The Company resolutely implemented the new requirements on political
+construction in the new era, and strengthened the overall leadership of the
+Party. The Company has revised and improved the Articles of Association and
+rules and regulations of the Company, institutionalized the Party Committee
+research and discussion as a pre-procedure of major decision-making, and
+organically integrated the Party leadership with the improvement of corporate
+governance.
+Mr. Xu Mingjun ceased to be the secretary of the Party Committee of the
+Company from 17 November 2023. Mr. Yang Xiangbin ceased to be the deputy
+secretary of the Party Committee of the Company from 30 October 2023. Mr.
+Cui Weishan ceased to be the secretary of the Disciplinary Committee of the
+Company from 23 February 2024.
+The directors and supervisors of the Company have performed their duties
+in accordance with the requirements of the Articles of Association, Rules of
+Procedure of the Board Meeting and Rules of Procedure of the Supervisory
+Committee Meeting of the Company. Lv Zhiren, chief executive officer and
+deputy secretary to the Party Committee, is accountable to the Board and
+exercises his responsibilities as chief executive officer in accordance with
+the requirements of the Articles of Association. Other senior management
+members are responsible for business operation of the Company subject to
+the decision and authorisation of the Board.
+2023 Annual Report 107
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2. Positions held in the Shareholders' Companies
+Commencement Expiry of term
+of term of office of office
+Category
+Name
+Name of shareholder
+Position
+Prior to the foregoing, Mr. Song had served as the
+deputy director of the financial management department
+of former China Guodian Corporation, the chief
+accountant and a member of the Party group of Guodian
+Changyuan Electric Power Co., Ltd. and a member of the
+Party group of Guodian Hubei Electric Power Co., Ltd.,
+deputy chief accountant and head of financial property
+department of Guodian Dadu River Basin Hydropower
+Development Co., Ltd...
+Name
+2023-12
+Leadership Group
+Hong Kong International Arbitration
+Centre
+Co-Chairman
+2020-06
+Hong Kong Exchange Fund Advisory
+Committee
+Member
+2018-09
+International Commercial Court of
+Member of the
+2018-08
+the Supreme People's Court of the
+International
+People's Republic of China
+Commercial Expert
+Committee
+Temple Chambers
+Senior Counsel
+2018-05
+Bai Chong-En
+School of Economics and Management
+Dean
+2018-08
+of Tsinghua University
+National Center of Fiscal and Tax Policy Director
+2008-08
+Research at Tsinghua University
+School of Economics and Management Professor
+2004-07
+of Tsinghua University
+All-China Federation of Industry and
+2018-11
+Council Member
+Shenzhen Court of International
+Arbitration
+2023-11
+Director of the Materials
+2020-03
+2023-04
+and Procurement
+Supervision
+Department
+China Energy Group Materials Director
+2021-04
+Senior Management Wang
+Co. Ltd.
+Beijing GD Power Co., Ltd.
+Director
+2023-02
+of China Shenhua
+Xingzhong
+Li Zhiming
+Team of the Party
+China Energy
+2022-10
+Mongolia Branch
+108 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+3.
+Positions held in Other Entities
+Commencement Expiry of term
+Name
+Name of other entity
+Position
+of term of office of office
+Yuen Kwok Keung Hong Kong Aerospace Technology
+Group Limited
+Independent Director
+2022-01
+Director of Inner
+Operation Department
+When considering any matters or transactions at any Board meeting, the directors are
+required to declare any direct or indirect interests and recuse themselves where appropriate.
+Saved as their own service contracts, ② the 2021-2023 Mutual Coal Supply Agreement
+and the 2021-2023 Mutual Supplies and Services Agreement entered into on 27 August
+2021, the 2024-2026 Mutual Coal Supply Agreement and the 2024-2026 Mutual Supplies
+and Services Agreement entered into on 28 April 2023, and the Supplemental Agreement
+Il to the Existing Non-Competition Agreement entered into on 28 April 2023 between the
+Company and China Energy, ③ the 2021-2023 Financial Service Agreement entered into on
+26 March 2021, the Supplemental Agreement to the Financial Service Agreement entered
+into on 28 October 2022 and the 2024-2026 Financial Services Agreement entered into on
+28 April 2023 between the Company and Finance Company, ④ the 2023-2025 Factoring
+Service Agreement entered into between the Company and National Factoring Company
+on 28 April 2023, and ⑤ other related party/connected transactions between the Company,
+and China Energy, the controlling shareholder, and its subsidiaries, none of the directors
+and supervisors of the Company has any material personal interests, directly or indirectly,
+in material contracts, transactions or arrangements entered into by the Company or any of
+its subsidiaries in 2023 and subsisting during or at the end of the year; the directors and
+supervisors of the Company have confirmed that they and their associates have not entered
+into any connected transaction with the Company and its subsidiaries.
+2.5
+Selection and recruitment of accounting firm and the supervision over
+its auditing work
+In addition, the Audit and Risk Management Committee listened to and
+put forward requirements on KPMG's report on 2023 audit plan of the
+Company on 24 October 2023.
+The Audit and Risk Management Committee carefully considered the
+first and third quarterly financial reports of 2023 of the Company, and
+approved the relevant proposals.
+The Audit and Risk Management Committee conducted the necessary
+process to review the interim financial report of 2023. On 30 June 2023,
+the Audit and Risk Management Committee considered and approved the
+2023 Interim Review Plan of China Shenhua Energy Company Limited,
+approving KPMG to conduct the interim review in accordance with
+such review plan. On 23 August 2023, the Audit and Risk Management
+Committee listened to KPMG's work report on the 2023 interim review
+of China Shenhua and had communication with them on noteworthy
+items thereof. The Audit and Risk Management Committee considered
+and approved the Proposal of the Interim Financial Report of 2023 of
+the China Shenhua Energy Company Limited fully based on sufficient
+consideration of the opinions on the annual audit from KPMG.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 123
+The Audit and Risk Management Committee fulfilled its mandatory duties
+to review the 2022 financial report. Before conducting formal review on
+the results for the year 2022, the Audit and Risk Management Committee
+previewed the 2022 financial report (draft) at a meeting and the 2022
+Financial Report of China Shenhua Energy Company Limited (Draft)
+was approved. On 21 March 2023, the Audit and Risk Management
+Committee listened to the report of annual audit work by the Company's
+auditor, KPMG, reviewed the audit report on internal control, confirmed
+the efficiency of internal control over the annual financial report, and
+convened separate meetings with KPMG to further discuss on the
+significant risk identified during annual auditing, the independence of
+auditors, information security and other matters. The Audit and Risk
+Management Committee considered and approved the Proposal of the
+2022 Financial Report of China Shenhua Energy Company Limited fully
+based on sufficient consideration of the opinions on the annual audit
+from KPMG.
+During the process of selecting and recruiting auditors for 2023, the
+Audit and Risk Management Committee carefully considered the relevant
+proposals, and evaluated the audit fee, relevant qualifications and
+professionality of KPMG Huazhen LLP and KPMG (collectively known
+as "KPMG"). The Audit and Risk Management Committee believes
+that KPMG has the professional ability, experience and qualifications to
+provide audit services for the Company, and possesses the corresponding
+independence and investor protection ability, which enables it to meet
+the Company's annual audit work requirements for 2023 and is in the
+interests of the Company and its shareholders as a whole. The Audit and
+Risk Management Committee approved the re-appointment of KPMG as
+the auditors of the Company, and recognised the annual audit fee.
+Financial reporting
+In 2023, the Audit and Risk Management Committee performed its duties
+in strict compliance with the Rules of Procedures of the Audit and Risk
+Management Committee of the Board, the Rules on Work of the Audit and
+Risk Management Committee of the Board and the Rules on Work of the
+Annual Report of the Audit and Risk Management Committee of the Board. The
+Audit and Risk Management Committee held a total of ten meetings for the
+consideration and approval of 41 resolutions, listened to 5 reports and had one
+separate communication with our auditor, KPMG. All proposals were approved.
+Work summary for the year
+Supervising and assessing the work of the external auditors; proposing to
+engage or replace the external auditors; supervising and evaluating the internal
+audit work; coordinating the internal audit and the external audit; auditing
+the financial information of the Company and its disclosure; supervising and
+evaluating the internal control of the Company; and other matters authorised
+by laws and regulations, the Articles of Association and the Board.
+Major duties of the Audit and Risk Management Committee
+(2)
+(1)
+Audit and Risk Management Committee
+(1)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+During the Reporting Period, the Audit and Risk Management Committee
+carefully listened to KPMG's report on the performance of the audit work
+in 2022, and separate communications were conducted on key concerns
+such as material risks, auditor independence and information security
+in 2022. The Audit and Risk Management Committee attached great
+importance to the information security of the Company in the course of
+receiving audit services. KPMG assured that relevant measures had been
+taken in relation to the information security of the Company.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+0 No
+7/7
+3/3
+Liu Xiaolei
+No
+7
+7
+124 China Shenhua Energy Company Limited
+1
+0 No
+7/7
+3/3
+Note: In the above table, the in-person attendance rate of Board meetings = number of attendances in person/
+number of required attendances at Board meetings; the attendance rate of the general meeting = number
+of attendances in person/number of required attendances at general meetings. The same below.
+The Company secures the conditions for directors to carry out their work and actively
+adopts the suggestions and opinions put forward by the directors. The Company's
+"Procedure Rules for the Board" and "Working Rules for Independent Directors" provide
+policy guarantees for directors to perform their duties; the departments designated to
+undertake the affairs of the Board, the affairs of independent directors and the work of the
+independent Board committee assist directors in carrying out research, attending meetings
+and expressing opinions.
+In 2023, the Board of the Company held 7 meetings and considered 56 resolutions, and
+disclosed the voting results of all resolutions in a timely manner. If the resolution of the
+Board meeting has any interest in any director or any associate of the director, or the
+director has an related party/connected relationship with the enterprise involved in the
+resolution of the Board meeting, the related/connected director have abstained from voting.
+All directors acted in good faith, prudently and diligently in the interest of the Company as
+a whole in the performance of their duties and effectively performed their management,
+operation and decision-making powers over the Company.
+2023 Annual Report 115
+0
+2.
+122 China Shenhua Energy Company Limited
+Agreed.
+0
+0
+2
+2
+2
+No
+No
+Jia Jinzhong
+2
+Lv Zhiren
+Attendances
+by proxy
+person correspondence
+meeting
+Attendance by
+Attendance in
+the committee
+Independent
+director or not
+Absences Attendance rate
+2
+2
+0
+to Investment Proposal for 2023 by China
+Shenhua Energy Company Limited
+18 December 2023 To consider the Proposal on the Adjustment
+Comprehensive Plan Arrangement for 2023
+Implementation of the 2022 Comprehensive
+Plan of China Shenhua and the
+Agreed.
+To consider the Proposal on the
+13 February 2023
+and suggestions
+Meeting content
+Convening date
+Key opinions
+(4) Convening of committee meetings
+Note: Attendance by correspondence includes the number of written meetings. Same as below.
+2/2
+222
+2/2
+0
+0
+Name of director
+2
+7
+not
+this year
+in person correspondence
+by proxy
+Absence or proxy
+rate
+meetings
+Name of director
+Lv Zhiren
+Jia Jinzhong
+Yang Rongming
+2 2 2 2
+No
+7
+7
+0
+Xu Mingjun
+0 No
+general
+attendance
+(III) Performance of Duties of the Directors
+Attendance at Board meetings
+Two
+consecutive
+Required
+absences
+Attendance
+attendance
+attendance
+rate of
+Independent
+at Board
+personal
+In-person shareholders'
+director or
+meetings Attendance Attendance by Attendance
+without
+7/7
+No
+7
+Yes
+7
+3
+2
+0 No
+3/7
+3/3
+Yuen Kwok Keung
+Bai Chong-En
+7
+6
+1
+0 No
+6/7
+Chen Hanwen
+Yes
+Yes
+6/7
+0 No
+0
+4
+0
+3
+0
+No
+4/7
+0/3
+No
+7
+6
+4
+1
+0 No
+6/7
+3/3
+7
+6
+7
+Required
+attendance at
+(3) Attendance of committee meetings by each committee member
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Energy
+(person)
+Skills and experience
+directors
+Number of
+Directors' skills matrix
+The following directors' skills matrix graphically illustrates the professional skills or
+knowledge and experience of the members of the Board.
+Possessing many years of experience in the operation and management of large-scale coal and
+power generation enterprises, assets or projects.
+When selecting the candidates in accordance with the board diversity policy of the
+Company, the Board will use a series of diversified terms, including but not limited to
+gender, age, culture and educational background, race, skills, knowledge, and professional
+experience, and will determine taking both the characteristics and role of the personnel
+into account. As at the end of the Reporting Period, the Board consisted of 8 directors,
+including 2 executive directors, 2 non-executive directors, 3 independent non-executive
+directors and 1 employee director. Among them, there were 7 male directors and 1 female
+director, and 7 directors from the PRC and 1 director from Hong Kong Special Administrative
+Region of China. The directors are from various domestic and overseas industries, and
+the composition of the members features diversity. Each director's knowledge base and
+field of expertise are professional and complementary in the overall board structure, which
+guarantees the scientific decision-making of the Board. The Board expects the number of
+its female members to remain at least at the current level. And the Board will continue to
+seek opportunity to increase the proportion of female members in the future as appropriate.
+(VI) Diversity of the Board
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+118 China Shenhua Energy Company Limited
+H shares has not yet
+commenced
+Period, the repurchase of
+As at the end of the Reporting
+H shares has not yet
+commenced
+The Board of the Company has established the board diversity policy for members of the
+Board, which mainly includes policy statements, measurable objectives, monitoring and
+reporting, which were set out and disclosed in the rules of procedure of the nomination
+committee of the Board of the Company.
+Period, the repurchase of
+3
+Possessing many years of experience in the operation and management of domestic railways, ports
+and shipping enterprises.
+4
+Legal professionals, or have experience in corporate legal affairs management.
+Possessing experience in enterprise ESG management or ESG risk management.
+ESG management
+Law
+2
+Possessing experience in corporate risk and internal control management or being a professional in
+this field.
+Risk management
+Transportation
+Possessing experience in corporate financial management, auditing, or being a professional in these
+fields.
+1
+Being an expert or veteran in the field of economics or finance and is responsible for or participated
+in relevant research or internal management in the enterprise.
+Economics and finance
+2
+Responsible for or participated in the formulation and implementation of the long-term development
+direction, objectives, tasks and strategies of the enterprise.
+Strategic management
+2
+Finance and audit
+As at the end of the Reporting
+As at the end of the Reporting
+Period, the repurchase of
+H shares has not yet
+commenced
+For details, please see the section
+headed "Significant Events" of
+this report
+2
+Meeting
+2022 Annual General
+Status
+Subject Matter
+No. General Meeting
+(V) Implementation of Resolutions Passed at the General Meetings by the Board
+2023 First A
+Shareholders Class
+Meeting
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+For the attendance of independent directors at Board meetings and shareholders' general
+meetings, please refer to the section of "Performance of Duties of the Directors". For
+details of the work of independent directors, please refer to the "2023 Work Report of
+Independent Directors of China Shenhua Energy Company Limited" disclosed by the
+Company on 22 March 2024.
+During the Reporting Period, the independent directors of the Company strictly complied
+with the requirements of relevant laws and regulations, the Articles of Association, relevant
+rules of procedure of meetings and the independent directors system of the Company.
+They maintained their independence as independent directors, performed their functions
+of supervision, participated in the formation of various important decisions of the Company
+and reviewed periodic reports, financial reports and related party/connected transactions of
+the Company. Therefore, the independent directors of the Company play an important role
+in the regulated operation of the Company and protect the legitimate interests of minority
+shareholders. The Company guaranteed the conditions for independent directors to carry
+out their work and actively adopted the advices and opinions put forward by independent
+directors. According to the changes in the relevant regulations of the regulatory authorities
+and the actual situation of the Company, the Company revised the "Independent Director
+System" and renamed it as "Working Rules for Independent Directors", which was
+considered and approved by the 24th meeting of the fifth session of the Board, providing
+an institutional guarantee for independent directors to perform their duties. The Company
+has designated a department to undertake the affairs of independent directors and the
+work of independent directors committees to assist independent directors in conducting
+research, convening meetings, expressing independent opinions and others.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+116 China Shenhua Energy Company Limited
+The independent directors of the Company conduct self-inspection on their independence
+annually and submit the findings to the Board. The Board assessed the independence of
+current independent directors during the Reporting Period and issued special opinions.
+The Company has received annual written confirmation from each of the independent non-
+executive directors confirming their independence. The Company is of the view that all of
+the independent non-executive directors are independent. The number and background of
+the independent directors are in compliance with the requirements of the listing rules of
+the places of listing.
+The fifth session of the Board of the Company has three independent non-executive
+directors: Yuen Kwok Keung, Bai Chong-En and Chen Hanwen, among whom Chen Hanwen
+is a professional in audit and accounting. Dr. Chen is an honorary dean and a professor of
+the School of Internal Audit of Nanjing Audit University, and he also serves in a number
+of auditing and accounting academic research institutions in China. He is a member of
+the Institute of Internal Auditors, focusing on auditing and accounting theory and practice,
+internal control, risk management and corporate governance. He has published many
+papers in international accounting journals and authoritative journals in the field of economic
+management in China.
+2023 Annual Report 117
+3
+2023 First H
+Shareholders Class
+Meeting
+For details, please see the section
+headed "Significant Events" of
+this report
+For details, please see the section
+headed "Significant Events" of
+this report
+For details, please see the section
+headed "Significant Events" of
+this report
+For details, please see the section
+headed "Significant Events" of
+this report
+Completed
+Completed
+Completed
+To approve the grant of the general mandate for the
+Board to repurchase H shares
+To approve the grant of the general mandate for the
+Board to Repurchase H shares
+To approve the 2024-2026 Financial Services
+Agreement entered into between the Company
+and China Energy Finance Co., Ltd.
+To approve the conditional Supplemental
+Agreement II to the Non-Competition Agreement
+entered into between the Company and China
+Energy Investment Corporation Limited
+To approve the grant of the general mandate for the
+Board to repurchase H shares
+To approve the 2024-2026 Mutual Coal Supply
+Agreement entered into between the Company
+and China Energy Investment Corporation Limited
+To approve the 2024-2026 Mutual Supplies and
+Services Agreement entered into between
+the Company and China Energy Investment
+Corporation Limited
+To approve the remuneration of directors and
+supervisors of the Company for the year 2022
+To approve the purchase of liability insurance for
+directors, supervisors and senior management
+To approve the appointment of KPMG Huazhen
+LLP and KPMG as the PRC and the international
+auditors of the Company for the year of 2023,
+respectively
+To approve the Financial Report of China Shenhua
+Energy Company Limited for the year 2022
+To approve the profit distribution plan of the
+Company for the year 2022
+Limited for the Year 2022
+Committee of China Shenhua Energy Company
+To approve the Report of the Supervisory
+To approve the Report of the Board of Directors of
+China Shenhua Energy Company Limited for the
+Year 2022
+2023 Annual Report 119
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(VII) Continuous Professional Development of Directors
+All directors of the Company proactively participate in continuous professional development
+to develop and refresh their knowledge and skills. All directors have provided their relevant
+training records for the year of 2023 to the Company, and all directors have attended
+relevant trainings organised by regulatory authorities or industry associations as required.
+During the year, the total duration of various trainings such as special training for directors
+and supervisors, training for independent directors and compliance management of listed
+companies attended by all directors was approximately 133.7 hours. The Company also
+regularly provided the directors with its operational and financial information, regulatory
+developments in China's mainland and Hong Kong, industry information, typical cases
+and other information to ensure that they continue to contribute to the Board with
+comprehensive information under appropriate situation.
+Strategy and Investment Committee
+Special committees of the fifth session of the Board
+As at the end of the Reporting Period, the Company has established five special committees
+under the Board, and the details are as follows:
+Composition of the Committees
+(1)
+VI. THE PERFORMANCE OF DUTIES OF THE COMMITTEES UNDER THE BOARD
+DURING THE REPORTING PERIOD
+Corporate Governance Report (Continued)
+Audit and Risk Management
+Section V Corporate Governance and
+33.5
+120 China Shenhua Energy Company Limited
+the SASAC, the Beijing branch of
+the China Securities Regulatory
+Commission, Shanghai Stock
+Exchange, China Association
+for Public Companies
+Shanghai Stock Exchange,
+China Association for Public
+Companies and Xinjiang
+branch of the China Securities
+Regulatory Commission
+Shanghai Stock Exchange
+etc.
+Reform of independent directors
+system
+Special training for directors and
+supervisors, strengthening
+performance capabilities of directors
+and supervisors, and compliance
+management of listed companies,
+Special trainings for reforms of
+independent directors system, ESG
+and comprehensive registration
+system
+39.35
+Committee
+Remuneration and Assessment
+Committee
+2023 Annual Report 121
+In 2023, the Strategy and Investment Committee held 2 meetings by way of
+written resolutions, including the implementation of the Group's comprehensive
+plan for 2022 and the comprehensive plan arrangement for 2023. All proposals
+were approved.
+Work summary for the year
+(2)
+Studying the Company's long-term development strategic planning and annual
+comprehensive plan; studying the adjustment of the principal business, negative
+list of investment projects, major investment and financing, asset restructuring,
+transfer of property rights, capital operation, reform and restructuring and other
+major issues that require decisions by the Board, and providing consideration
+opinions to the Board; and other authorities as conferred by the Board.
+(1) Major duties of the Strategy and Investment Committee
+Strategy and Investment Committee
+1.
+During the Reporting Period, each special committee under the Board did not express any
+dissenting views in performing their duties. The performance of duties of each special
+committee is set out as follows:
+(II) The Duties and Performance of Duties of the Special Committees
+Lv Zhiren (Chairman), Yang Rongming, Liu Xiaolei
+Bai Chong-En (Chairman), Chen Hanwen, Xu Mingjun
+Yuen Kwok Keung (Chairman), Chen Hanwen, Xu
+Mingjun
+Chen Hanwen (Chairman), Yuen Kwok Keung, Bai
+Chong-En
+Lv Zhiren, Jia Jinzhong
+Safety, Health, Environment and ESG
+Working Committee
+Nomination Committee
+Chen Hanwen Independent Non-executive
+Director
+Employee Director
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Director
+8
+37.6
+the SASAC, the Beijing branch of
+the China Securities Regulatory
+Commission, China Association
+for Public Companies, etc.
+Beijing branch of the China
+Policy of capital markets, the
+supervision of listed companies,
+etc.
+Corporate governance, special training
+for strengthening performance
+capabilities of directors and
+supervisors
+Executive Director, Chief
+Executive Officer and
+Deputy Secretary of the
+Party Committee
+Executive Director and
+Executive Vice President
+Xu Mingjun
+2
+9.25
+Lv Zhiren
+(hours)
+Training sponsor
+Training content
+Position
+Name
+No.
+Cumulative
+training time
+1
+3
+Jia Jinzhong
+4
+7
+Bai Chong-En Independent Non-executive
+6
+2.5
+38
+2
+28
+Securities Regulatory
+Commission, China Association
+for Public Companies, etc.
+the Company
+Beijing branch of the China
+Securities Regulatory
+Commission, China Association
+for Public Companies, etc.
+Shanghai Stock Exchange
+Reform of independent directors
+system
+Independent Non-executive
+Director
+Keung
+Yuen Kwok
+5
+Anti-graft and anti-corruption
+Special training for directors and
+supervisors
+Rongming
+Non-executive Director
+Non-executive Director
+Yang
+Liu Xiaolei
+The Company has developed and implemented various systems to ensure that the Board
+receives independent views and opinions. These systems include engaging and appointing
+an independent financial adviser to make recommendations to the independent Board
+committee on the resolution of material related party/connected transactions; conducting
+various forms of research activities for independent directors, such as on-site visits to
+production and operation site; inquiring relevant information with the Company's office
+system; regularly receiving digitalized information submitted by the Company such as
+special reports of directors and supervisors and weekly stock updates to obtain reference
+information for decision-making. The address book of the management of the Company is
+open to the independent directors to facilitate the communication of information between
+the independent directors and the management at any time.
+(IV) Independence of the Board and Performance of Duties of Independent
+Directors
+rate
+3.
+128 China Shenhua Energy Company Limited
+On 18 March 2024, the Audit and Risk Management Committee listened to
+KPMG's report on the audit work in 2023, and discussed with them the scope
+of their audit work and audit procedures, key audit matters and key concerns,
+auditors' independence and other matters that require the management's
+attention; listened to the report on the execution of the agreements on
+continuing connected transactions; reviewed the financial report for the year
+2023, the financial information in the 2023 annual report and internal control
+audit report, and assessed the effectiveness of the financial reporting and
+internal control; reviewed a total 15 of proposals, including the evaluation report
+on internal control as well as the ESG report; and agreed to submit such reports
+to the Board for consideration.
+Agreed.
+The Company will improve the
+management and control of China
+Energy Digital and Intelligent
+Technology and Development (Beijing)
+Co., Ltd. after the completion of capital
+increase.
+Agreed.
+Agreed.
+2. improve the risk assessment of Finance
+Company, pay more attention to the
+changes of accounts receivables and
+the control over risks.
+1. increase the investment in audit
+resources, improve accountability
+mechanism, strengthen the training and
+study of audit staff.
+The Company shall:
+Agreed.
+To consider two proposals including the
+Proposal on China Shenhua Energy
+Company Limited's Participation in the
+Investment and Establishment of Guoneng
+Scientific and Technological Achievements
+Transformation Investment Fund (Phase I).
+To consider three proposals including the
+Proposal on Capital Increase in China
+Energy Digital and Intelligent Technology
+and Development (Beijing) Co., Ltd.; to
+listen to the KPMG's report on annual
+audit plan for 2023.
+To consider the Proposal on Joint
+Establishment of PT. Guoneng Indonesia
+Energy
+To consider four proposals including the
+Proposal on Interim Financial Report
+of 2023 of the China Shenhua Energy
+Company Limited; to listen to KPMG's
+report on the interim review work of the
+Company.
+Proposal on Interim Review Work Plan for
+2023 of China Shenhua Energy Company
+Limited.
+26 December 2023
+24 October 2023
+20 September 2023
+23 August 2023
+Agreed.
+To consider two proposals including the
+30 June 2023
+Agreed.
+To consider the Proposal on Application for
+Approval of Non-assurance Service by
+KPMG to China Energy Group Jin Shajiang
+Branch and Guoneng Shendong Coal
+Group.
+9 May 2023
+Key opinions and suggestions
+Meeting content
+Convening date
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Remuneration and Assessment Committee
+(1)
+The principal duties of the Remuneration and Assessment Committee
+2
+2
+130 China Shenhua Energy Company Limited
+222
+2
+Xu Mingjun
+Yes
+2
+Yuen Kwok Keung Yes
+Chen Hanwen
+rate
+of absence
+by proxy
+in person correspondence
+meeting
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Number Attendance
+Number of
+attendance by
+Number of
+attendance
+Number
+of required
+attendance
+at committee
+Independent
+director
+Name of
+director
+(3) Attendance of committee members
+The Remuneration and Assessment Committee adopted the mode (ii) as set out
+under the Code Provision E.1.2(c) of the Corporate Governance Code, which
+is to make recommendations to the Board on the remuneration packages for
+individual executive director and senior management, including benefits in
+kind, pension rights and compensation payments (including any compensation
+payable for loss or termination of their office or appointment).
+In terms of director's annual remuneration of 2023, the Remuneration and
+Assessment Committee shall assess the performance of executive directors
+who hold management position in the Company based on the remuneration
+policy for management and makes recommendation on remuneration. The
+Company did not pay compensation to non-executive directors and the proposed
+remuneration for independent non-executive directors is RMB300,000 per year.
+The Remuneration and Assessment Committee will make recommendations
+to the Board on the director's remuneration scheme formulated by it. The
+Company entered into a service contract with Lv Zhiren during the Reporting
+Period.
+In 2023, the Remuneration and Assessment Committee held 2 meetings by
+way of written resolution, at which all proposals were approved.
+Work summary for the year
+(2)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 129
+To make recommendations to the Board on formulation of the remuneration plan
+or proposal for directors, supervisors, chief executive officer and other senior
+management, including but not limited to the criteria, procedures and the major
+systems of performance assessment, key incentive and punishment plans and
+systems; to study the assessment standards for directors, supervisors, chief
+executive officer and other senior management, and examine the performance
+of duties by directors, supervisors, chief executive officer and other senior
+management of the Company and carry out annual assessment of their
+performance of duties; to supervise the implementation of the remuneration
+system of the Company, review and approve the remuneration determined
+by performance in accordance with the Company's objectives determined
+by the Board; to exercise the following duties as authorised by the Board: to
+determine the specific remuneration of all the executive directors, supervisors,
+chief executive officer and other senior management, including non-monetary
+benefits, pension rights and compensation (including the compensation for the
+loss or termination of their duties or appointment); to review and approve the
+payment of compensation to executive directors, supervisors, chief executive
+officer and other senior management in relation to the loss or termination
+of their duties or appointment, so as to ensure that such compensation is
+determined in accordance with the related terms of the contract; or otherwise,
+such compensation shall be fair and reasonable and does not impose an
+undue burden on the Company; to review and approve the compensation
+arrangements involved in the dismissal or removal of directors due to their
+improper conduct, so as to ensure that such arrangements are determined
+in accordance with the related terms of the contract; or otherwise, such
+arrangements shall be reasonable and appropriate; to make recommendations
+to the Board on the remuneration of the non-executive directors (factors to be
+considered include remuneration packages offered by comparable companies,
+time commitment and responsibilities of each director, employment conditions
+for other positions of the Group and whether the remuneration should be
+based on performance, etc.); to ensure that none of the directors or any of
+their associates determines their own remunerations; to review and/or approve
+matters relating to share schemes under Chapter 17 of the Hong Kong Listing
+Rules, and to execute other matters as authorised by the Board.
+Number
+of attendance
+2023 Annual Report 127
+related party transactions.
+3. ensure fair price, procedure compliance
+and information disclosure of the
+LO
+88
+8
+10
+Bai Chong-En Yes
+8
+10
+Yes
+Keung
+Yuen Kwok
+10/10
+0
+0
+2
+ܣ
+ܣ
+10
+Chen Hanwen Yes
+In-person
+attendance Number of attendance
+by proxy
+absence
+rate
+in person correspondence
+Number of
+Number of
+attendance by
+Number of
+attendance
+at the
+committee
+meeting
+Independent
+director or not
+Name of
+director
+Number of
+required
+attendance
+(3) Attendance of committee meetings by each committee member
+In 2023, the Audit and Risk Management Committee did not receive
+any reports or complaints about its misconduct to the Company from
+the Company's employees and other stakeholders (such as customers,
+suppliers) by any ways.
+In terms of financial monitoring, the Audit and Risk Management
+Committee, by considering proposals, reviewed and unanimously passed
+the Company's proposals on Implementation of the Annual Business
+Plans for 2022 and the Annual Business Plans and Arrangements for 2023,
+profit distribution plan for 2022, capital budget and debt financing plan for
+2023, accounting policy changes and other matters. In terms of operation
+monitoring, the Audit and Risk Management Committee reviewed
+and approved the proposals relating to daily related party/continuing
+connected transactions on mutual coal supply, mutual supplies and
+services, financial services, and factoring services, the proposals relating
+to related party/connected transactions on entering into the Supplemental
+Agreement II to the Non-competition Agreement, establishment of PT.
+Guoneng Indonesia Energy, a joint venture company, and participation
+and establishment of investment fund, and the proposals on equity
+acquisition, capital increase in subsidiaries and other matters. In terms
+of compliance monitoring, the Audit and Risk Management Committee
+reviewed and approved the proposals on the formulation of management
+measures for the financial derivatives business, amendments to Rules
+of Procedures of the Audit and Risk Management Committee, the 2022
+Internal Control Evaluation Report and other matters, and evaluated the
+necessity, feasibility and risk control of futures trading and derivatives
+by the Company, and found no internal control deficiencies.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+10
+2
+5
+2 2
+system and expand personnel training.
+2. improve the transition from previous
+accounting policies to current ones,
+better communicate with auditors on
+information disclosure.
+1. improve basic financial derivative
+business, refine measures for
+management and control, and
+strengthen the implementation of
+The Company shall:
+Agreed.
+3. enhance ESG disclosure to ensure true
+and comprehensive disclosure of the
+Company is made in the report.
+2. improve the communication with
+1. pay attention to information security in
+the process of receiving audit.
+The Company shall:
+Agreed.
+Agreed.
+1. make information disclosure, establish
+communication channels for investors
+and manage public opinion on market.
+2. strengthen the management and
+control of Jinjie Energy and its finance
+after the acquisition.
+The Company shall:
+Agreed.
+Key opinions and suggestions
+3
+To consider 12 proposals including the
+Proposal on 2024-2026 Mutual Coal Supply
+Agreement Entered into between China
+Shenhua Energy Company Limited and
+China Energy.
+To consider the Proposal on Implementation
+of the Annual Business Plans for 2022
+and the Annual Business Plans and
+Arrangements for 2023 of China Shenhua
+Energy Company Limited; to listen to the
+report on progress of the acquisition of
+30% equity interests in Jinjie Energy held
+by Ducheng Weiye Group Co., Ltd..
+To consider the two proposals including
+the Proposal on 2022 Financial Report of
+China Shenhua Energy Company Limited
+(Draft).
+25 April 2023
+21 March 2023
+13 March 2023
+14 February 2023
+Meeting content
+Convening date
+(4) Convening of committee meetings
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+126 China Shenhua Energy Company Limited
+8/10
+0
+8/10
+0
+To consider 12 proposals, including the
+2022 Proposal on Internal Control Audit
+Report of China Shenhua Energy Company
+Limited and the Proposal on 2022
+Financial Report of China Shenhua Energy
+Company Limited; to review the Proposal
+on 2022 Internal Audit Work Report of
+China Shenhua Energy Company Limited;
+to listen to KPMG's audit work report, the
+implementation of Company's continuing
+connected transactions agreement for
+2022.
+2023 Annual Report 125
+O O O
+2222
+0
+O O
+5
+5
+5
+LOLO
+5
+5
+5
+G55
+No
+Liu Xiaolei
+No
+Yang Rongming
+No
+Lv Zhiren
+Number Attendance
+of absence
+by proxy
+Number of Number of
+attendance by attendance
+meeting in person correspondence
+attendance Number of
+Independent at committee attendance
+director
+Name of
+director
+Number
+of required
+(3) Attendance of committee members
+In 2023, the Safety, Health, Environment and ESG Working Committee held 5
+meetings by way of written resolution, at which all proposals were approved.
+Work summary for the year
+(2)
+To supervise the implementation of safety, health, environmental protection and
+ESG working plans of the Company; to make recommendations to the Board
+or the chief executive officer on material issues in respect of safety, health,
+environmental protection and ESG working of the Company, including but not
+limited to climate change, biodiversity and water resources management, as
+well as employee development and other relevant risks and opportunities;
+to give adequate consideration and assessment of the sustainable risks
+and opportunities in respect of strategy formulation, material transactions,
+investment decision-making and other matters; to inquire into the material
+incidents and responsibilities regarding the Company's production, operations,
+property assets, staff or other facilities, as well as to review and supervise
+the handling of such incidents; to review the Company's annual ESG report;
+to review the Statement of the Board disclosed in the Company's annual ESG
+report; to supervise and review the identification, evaluation and management
+process of the matters related to the Company's ESG governance activities and
+the progress of related objectives, including but not limited to climate change,
+biodiversity and water resources management and employee development; and
+other issues as authorised by the Board.
+(1) The principal duties of the Safety, Health, Environment and ESG Working
+Committee
+Safety, Health, Environment and ESG Working Committee
+0
+OOO
+0
+5/5
+134 China Shenhua Energy Company Limited
+Being responsible to all shareholders, the Supervisory Committee of the Company had performed
+their supervisory duties faithfully and carried out their work proactively and effectively to protect
+the lawful interests of the Company and its shareholders in accordance with the relevant
+requirements under the Company Law of the People's Republic of China (the "Company Law")
+and the Articles of Association.
+VII. SUPERVISORY COMMITTEE'S REPORT
+Agreed.
+To consider the Proposal on the Rules
+of Procedures of the Safety, Health,
+Environment Protection and ESG
+Working Committee of the Board
+of China Shenhua Energy Company
+Limited
+8 October 2023
+Agreed.
+To consider the Proposal on the ESG
+Governance Work Performance Report
+of China Shenhua for the First Half
+Year in 2023
+15 August 2023
+Safety and Occupational Health of
+China Shenhua for 2023
+Statement on Goal Setting of ESG
+Agreed.
+To consider the Proposal on the
+28 July 2023
+Corporate Governance Report (Continued)
+and Corporate Governance Report
+of China Shenhua Energy Company
+Limited for 2022
+Agreed.
+To consider the Proposal on the
+23 March 2023
+Agreed.
+Key opinions
+and suggestions
+To consider the Proposal on the
+Performance in 2022 and the Key
+Points of Work in 2023 of China
+Shenhua in the Environmental,
+Social Responsibility and Corporate
+Governance
+19 January 2023
+Meeting content
+Convening date
+(4) Convening of the committee meeting
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 133
+5/5
+0
+Environmental, Social Responsibility
+Section V Corporate Governance and
+5.
+132 China Shenhua Energy Company Limited
+meeting
+Number of
+attendance
+by
+Number of
+attendance in
+Number of
+required
+attendance at
+the committee
+Independent
+director or not
+Name of
+director
+(3) Attendance of committee meetings by each committee member
+The Nomination Committee shall disclose the Board diversity in the corporate
+governance report of the Company annually and monitor the implementation of
+the Board diversity policy. The Nomination Committee is of the view that (1) the
+Board diversity policy of the Company complies with the relevant requirements
+of the place of listing which can meet the development needs of the Company;
+(2) the structure of the Board of the Company under the prevailing diversity
+policy is reasonable and can effectively play the role of the Board in corporate
+governance.
+In 2023, the Nomination Committee held 2 meetings by way of written
+resolution, at which all proposals were approved.
+(2) Work summary for the year
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 131
+To formulate the Board diversity policy, regularly review the structure, size
+and diversity of the Board, and to make recommendations to the Board with
+regard to any proposed changes; to assess and verify the independence of
+independent non-executive directors; to develop standards, procedures and
+systems for selection of directors, chief executive officer and other senior
+management, and make recommendations to the Board, taking into account
+the Company's corporate strategy and the combination of skills, knowledge,
+experience and diversity needed in the future; to expand search for qualified
+candidates of directors, chief executive officer and other senior management;
+to examine the candidates of directors, chief executive officer and other senior
+management and make recommendations; to nominate candidates for members
+of the Board committees (other than members of the Nomination Committee
+and the chairman of any Board committee); to draft development plans for
+chief executive officer, other senior management and key backup talents taking
+into account the Company's corporate strategy and the combination of skills,
+knowledge, experience and diversity needed in the future; to review the board
+diversity policy where appropriate, and review the quantitative objectives set
+up by the Board to implement the Board diversity policy and the achievement
+progress thereof, as well as to disclose the review results in the corporate
+governance report annually; to make recommendations to the Board on the
+appointment or re-appointment of directors, general managers and other senior
+management and succession planning; and to carry out any other matters as
+authorised by the Board.
+(1) The principal duties of the Nomination Committee
+person correspondence
+Nomination Committee
+Proposal on Appraisal Result of Annual
+Business Performance of Management
+Level for 2022
+Agreed.
+To consider 2 proposals including the
+25 April 2023
+Agreed.
+Key opinions
+and suggestions
+To consider 5 proposals including the
+Proposal on Remuneration of the
+Directors and Supervisors for 2022
+of China Shenhua Energy Company
+Limited
+21 March 2023
+Convening date Meeting content
+(4) Convening of the committee meeting
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2/2
+2/2
+2/2
+4.
+O o O
+Number of
+attendances
+by proxy
+Attendance
+To consider the Proposal on Appointment Agreed.
+of Secretary to the Board of the
+Company
+Agreed.
+Key opinions
+and suggestions
+To consider the Proposal on Assessing
+the Effectiveness of the Board
+Diversity Policy of China Shenhua
+25 April 2023
+17 March 2023
+Convening date Meeting content
+(4) Convening of committee meetings
+2/2
+2/2
+2/2
+2222
+0
+0
+Number of
+DO
+0
+0
+0
+22 2
+22 2
+2 2 2
+No
+Xu Mingjun
+Yes
+Chen Hanwen
+Yes
+Bai Chong-En
+rate
+absence
+0
+To perform its duties of reviewing internal control evaluation report, the
+Audit and Risk Management Committee, by way of correspondence on
+13 March 2023, pre-reviewed the 2022 Internal Control Evaluation Report
+of China Shenhua Energy Company Limited (Draft). On 21 March 2023,
+the Proposal on the 2022 Internal Control Evaluation Report of China
+Shenhua Energy Company Limited was reviewed again and passed
+unanimously. On 23 August 2023, the Audit and Risk Management
+Committee reviewed and approved the Proposal on the 2023 Internal
+Evaluation Plan. On 26 December 2023, the Audit and Risk Management
+Committee reviewed and approved the Proposal on List for Climate Risks
+and Opportunities for 2024 of China Shenhua Energy Company Limited
+and made suggestions relating to the work.
+shareholders on dividend distribution.
+Risk management and internal control
+On 21 March 2023, the Audit and Risk Management Committee reviewed
+and unanimously passed the relevant proposals such as the 2022 internal
+audit work report and 2023 internal audit work points of the Company,
+and put forward requirements on the internal audit work in 2023. On
+23 August 2023, the Audit and Risk Management Committee reviewed
+the Proposal on Internal Audit Work Report of China Shenhua Energy
+Company Limited for the First Half of 2023 and spoke highly of the
+internal audit work in the first half of 2023, and required the Company
+to continue to strengthen the investment in internal audit resources,
+improve the accountability mechanism, strengthen training and learning,
+and promote the effective functioning of internal audit function.
+Internal review
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(4)
+(3.
+During the Reporting Period, the Audit and Risk Management Committee
+reviewed the internal evaluation plan of the Company, reviewed the
+annual internal evaluation report and other material matters related to
+internal control and risk management of the Company, completed the
+work related to the supervision and guidance of internal control and
+risk management delegated by the Board and communicated with the
+management to advise on the construction of internal control and risk
+management system, which promoted the internal control and risk
+compliance management of the Company.
+Proposal on the Conditional Supplementary
+unanimously
+of China Shenhua Energy Company
+Limited
+Passed
+Proposal of the 2023 First Quarterly Report
+Company Limited
+Committee
+the Supervisory
+fifth session of
+Proposal of the 2023 First Quarterly Financial Passed
+Report of China Shenhua Energy
+meeting of the
+Passed
+All
+In-writing
+28 April 2023 Beijing
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Three current supervisors of the Company are Tang Chaoxiong, Zhou Dayu and Zhang Feng.
+Please refer to "Details of Current and Resigned Directors, Supervisors and Members
+of Senior Management of the Company during the Reporting Period" in this report for
+biographical details of the three supervisors.
+During the Reporting Period, in compliance with the requirements of the Articles of
+Association and the Rules of Procedures of Meetings of the Supervisory Committee,
+the Supervisory Committee of the Company conducted strict supervisions on the
+lawful operations, financial position and the performance of duties of the Board and the
+management of the Company, and did not have any dissenting view over the matters it
+supervised during the Reporting Period.
+unanimously
+The fifteenth
+The sixteenth
+meeting of the
+unanimously
+On-site &
+correspondence
+27 October Beijing
+2023
+meeting of the
+The seventeenth
+unanimously
+Shenhua Energy Company Limited
+Proposal of the 2023 Interim Report of China Passed
+the Supervisory
+Committee
+fifth session of
+Company Limited
+unanimously
+Report of China Shenhua Energy
+unanimously
+Passed
+Proposal of the 2023 Interim Financial
+All
+In-writing
+25 August 2023 Beijing
+Passed
+Energy Investment Corporation Limited
+Proposal of Accounting Policy Changes of
+China Shenhua Energy Company Limited
+Agreement Entered into between China
+Shenhua Energy Co., Ltd. and China
+1. Attendance at the Meeting
+Agreement II to the Non-competition
+In 2023, the Supervisory Committee of the Company held four meetings in total.
+Details are set as follows:
+Venue
+Date
+Proposal of the 2022 Internal Control
+Passed
+Evaluation Report of China Shenhua
+unanimously
+Energy Company Limited
+Proposal of the 2022 Supervisory
+Committee Report of China Shenhua
+Passed
+unanimously
+Energy Company Limited
+2023 Annual Report 135
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Method
+Attendance of
+Meetings
+Date
+Venue
+of meeting
+supervisors
+Subject matter
+unanimously
+Meetings
+Responsibility and Corporate Governance
+Report of China Shenhua Energy
+Company Limited
+unanimously
+All
+Method
+of meeting
+Attendance of
+supervisors
+Subject matter
+The fourteenth
+24 March 2023 Beijing
+On-site
+All
+meeting of the
+fifth session of
+the Supervisory
+Committee
+Poll results
+Proposal of the 2022 Financial Report of
+China Shenhua Energy Company Limited
+Proposal of the 2022 Profit Distribution
+Plan of China Shenhua Energy Company
+Limited
+Passed
+unanimously
+Passed
+unanimously
+Proposal of the 2022 Annual Report of China Passed
+Shenhua Energy Company Limited
+Proposal of the 2022 Environment, Social
+Passed
+Proposal of the 2023 Third Quarterly
+(1) Performance of Duties of the Supervisory Committee
+Financial Report of China Shenhua Energy unanimously
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+2023 Annual Report 141
+With respect to the handling and release of insider information, the Company has
+formulated internal systems such as the Regulations on Registration of Insider
+Information and Informants and Regulations on Information Disclosure and Internal
+Reporting of Material Matters, which set forth the scope of insider information and
+informants, the reporting process, registration and filing, and prohibited acts. Prior to
+the release of insider information, the Company implements differentiated handling
+of the flow of insider information and strictly controls the scope of informants;
+registers the informants of insider information in a complete and timely manner and
+requires them to sign a confidentiality undertaking to prevent the leakage of insider
+information.
+Handling and Release of Inside Information
+The management of the Company confirms the effectiveness of the risk management
+and internal control system to the Board and the Audit and Risk Committee by voting
+at the general manager's office meeting.
+The management of the Company studies and reviews important matters such as
+internal audit work plan and work systems, listens to and reviews annual and semi-
+annual internal audit work reports, and monitors the operation of internal audit work
+on a regular basis.
+The principals of the Company are responsible for leading the establishment of a sound
+internal control risk management system and supervising its effective operation. The
+management of the Company is responsible for the internal control risk management.
+It is responsible for the implementation of internal control risk management, studying
+and reviewing internal control risk management related matters, organizing the
+formulation of special systems, work plans and countermeasures for internal control
+risk management in various fields and supervising the implementation thereof.
+The management of the Company is responsible for organizing and promoting the
+Environmental, Social and Corporate Governance (ESG) management, reviewing the
+Company's medium and long-term ESG planning and annual work plan, approving
+the implementation rules of the Company's ESG management work, organizing and
+promoting the identification, assessment, management process and achievement of
+related objectives of ESG activities of the Company.
+The Company's Management Continuously Monitors the Risks (Especially
+Environmental, Social and Governance Risks), and the Scope and Quality of
+the Internal Control System
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+6.
+7.
+5.
+Significant and material deficiencies will be finally recognised by the Board. For the
+identified significant and material deficiencies, the Board shall adopt appropriate
+countermeasures to keep the risks under control to a tolerable extent and hold the
+relevant departments or personnel accountable therefor.
+The Company has an internal control supervision and inspection mechanism to
+review the effectiveness of the risk management and internal control system through
+annual evaluation of internal control. The procedures for evaluation of internal control
+include: formulation of internal control evaluation plan, formation of a working group
+for internal control inspection; commencement of self-evaluation, inspection and
+evaluation of internal control; communication, identification and rectification of
+internal control deficiencies; preparation of internal control evaluation report after
+the review and disclosure of the Board.
+The Procedures for Reviewing the Effectiveness of the Risk Management and
+Internal Control System and for Addressing Severe Internal Control Deficiencies
+The Company's procedures for identifying, evaluating and managing material risks
+include: risk assessment and reporting at the beginning of the year, quarterly material
+risk monitoring, risk management and special supervision and inspection, and annual
+evaluation of its internal control. At the end of each year, the Company will organize
+a comprehensive risk assessment for the following year, collect various types of
+risk-related information in a timely manner in accordance with the strategies and
+operational and management objectives, effectively identify various types of risks
+affecting such strategies and operational and management objectives in conjunction
+with the internal and external environment of the Company, analyze and evaluate
+the identified risks, analyze the likelihood and conditions of the occurrence of risks,
+evaluate their impact on the Company's achievement of its objectives and determine
+the results of risk assessment. The Company will determine risk response strategies
+based on risk preference and risk tolerance, take appropriate control measures and
+follow up and monitor significant risks on a quarterly basis. The Company will inspect
+significant risk through annual evaluation of internal control.
+Procedures for Identifying, Evaluating and Managing Material Risks
+The Company reports on annual internal control evaluation and presented the internal
+control evaluation reports to the Board and the Audit and Risk Management Committee
+on an annual basis, and timely reports on material matters and management plan
+related to internal risk of the Company based on actual circumstances, so as to help
+the Board to assess the monitoring and effectiveness of risk management of the
+Company.
+4.
+3.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 139
+In accordance with the relevant laws and regulations of the PRC as well as the
+corporate regulatory system on internal control of the Company, the Board is
+responsible for the maintenance of the risk management and internal control system
+as well as reviewing the effectiveness of such systems and honestly disclosing
+the internal control evaluation reports. Due to the inherent limitations of its internal
+control, the Company aims to manage rather than eliminate the risk of failure to
+achieve business goals, and can only provide reasonable and not absolute assurance
+against material misstatement or loss. In addition, there are risks in inferring the
+effectiveness of future internal control based on the results of internal control
+evaluations as changes in the circumstances may cause internal control to become
+inappropriate or the degree of compliance with control policies and procedures to
+be reduced.
+140 China Shenhua Energy Company Limited
+The Board is responsible for the maintenance of the risk management and
+internal control system
+8.
+The Company has set up an internal control risk department with internal control
+risk management personnel who possess auditing, accounting and management
+background and relevant qualifications. Each department of the Company has
+designated internal control risk management personnel who is responsible for internal
+control and special risk management in different business areas. Each subsidiary has
+set up internal control risk management department and internal control risk personnel
+who is responsible for the internal control risk management of each subsidiary. The
+Company conducts business training for internal control risk management personnel
+every year, and organizes occasional training for the management and all employees
+in relation to internal control risk management. The Company entrusts experienced
+intermediaries to jointly implement the annual internal control evaluation work to
+ensure the quality of the annual internal control evaluation work.
+Passed
+The development plans and decisions made by the Board are in line with the corporate culture of
+the Company. The Board is also committed to establishing a sound compliance culture to ensure
+the Company's compliance with the securities regulations in both the Chinese mainland and Hong
+Kong. During the reporting period, the Company stepped up building law-based governance, and
+promoted the theory of compliance with the laws to be embraced by its employees. The Company
+advanced the implementation of the plan of "law-based China Shenhua" and the "eighth five-year
+on improving legal awareness". The Company strengthened legal review to ensures projects to
+be conducted according to the compliance with laws, revised and improved its "Requirements
+for Compliance Management", to supplement and strengthen the compliance management
+and operation mechanism which included compliance review, reporting on compliance risks,
+responses to and disposal of compliance risks and effective evaluations.
+To ensure that the corporate culture is clearly communicated to all employees, the Company
+actively organized and conducted publicizing and implementation of the core value of the
+Company's corporate culture and corporate culture. A corporate culture column on the Company's
+website has been set up to facilitate employees and relevant people to understand the Company's
+corporate culture. As a result, sub-cultural brands with our own characteristics have been built,
+such as the Party-building brand of "one party branch builds one brand, one brand features one
+characteristic", a brand for united front of "journey to China Shenhua Energy" and a brand for
+youth culture "Youth л". Furthermore, we organized activities for advanced models of spiritual
+civilization and corporate culture with the aid of their exemplary and leading roles, thereby creating
+a good working atmosphere and contributing spiritual strength to the Company's operation and
+development.
+The core values of the Company's corporate culture take "building a world class integrated energy
+listed company with global competitiveness" as the Company's goal. It remains committed to
+the strategy of "achieving one target through playing three roles and bearing six responsibilities"
+and to "contributing to the whole society and economic development". The Company serves the
+purpose of the "cornerstone for energy supply and leader for energy innovations" by devoting
+itself to the core value of "green development and pursuit of excellence". Guiding by the spirit of
+"socialism is established through action", we strive to develop the spirit of "diligence, dedication,
+innovation, and pioneer".
+CORPORATE CULTURE
+Please refer to "APPOINTMENT AND REMOVAL OF AUDITORS" in the "Significant Events"
+section of this report.
+X.
+IX. AUDITORS' REMUNERATION AND RELATED MATTERS
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 143
+The Company exercises effective control over its subsidiaries in major areas and key
+areas through the establishment of rules and regulations, supervision and evaluation, and
+information technology construction. In terms of control system according to the provisions
+of the articles of association of its subsidiaries, the Company reviews resolutions involving
+the appointment and removal and evaluation of personnel, the appointment of directors,
+supervisors and senior management and the establishment of organisation to be submitted
+to the general meeting, the board and the supervisory committee of the subsidiaries for
+consideration, and exercised nominations rights and voting rights in accordance with
+the provisions of the articles of association of the subsidiaries. In terms of finance, the
+Company has established an integrated and efficient financial information system and
+formulated relevant financial accounting systems, fund management, guarantee and other
+related systems to standardise the accounting and fund supervision and control of its
+subsidiaries and branches. In terms of internal control, the Company inspects and evaluates
+the effectiveness of the internal control of its subsidiaries, and supervises and inspects
+the rectification of internal control deficiencies. In terms of related party transaction, the
+Company formulates the management system and defines the procedures of management,
+review and approval, supervision and inspection of related party transactions of its
+subsidiaries. In terms of material matters, the Company formulates a system in relation
+to information disclosure, internal report for material matters and inside information
+management to standardise the confidentiality and transmission of material information,
+and the review and disclosure process of material matters. The resolutions of the meetings
+of the Board and general meetings, together with other documents of importance, shall be
+submitted to the Company by the subsidiaries in a timely manner.
+Assurance of the Company's Internal Control Functions
+(III) Management Control over Subsidiaries
+KPMG Huazhen LLP, engaged by the Company, has issued the standard unqualified Audit
+Report on Internal Control. The Audit Report on Internal Control is of the opinion that
+as at 31 December 2023, China Shenhua had maintained effective internal control over
+its financial reporting in all material aspects in accordance with the Basic Standard for
+Enterprise Internal Control and the relevant requirements. The above audit opinions are in
+line with the opinions set out in the Self-assessment Report of the Board.
+(II) Description of Self-Assessment Report on Internal Control and Audit Report
+on Internal Control
+☐ Applicable ✔ Not applicable
+Material defects in the internal control during the Reporting Period:
+During the Reporting Period, the Company did not have any material control failures
+or significant control weaknesses and the Company's procedures in relation to
+financial reporting and compliance with the Hong Kong Listing Rules are effective.
+Corporate Governance Report (Continued)
+Section V Corporate Governance and
+142 China Shenhua Energy Company Limited
+As reviewed and approved in the 2023 Report on Internal Control Evaluation of the
+Board, no material defects were found in the internal control of financial reporting
+as at the reference date of the Report on Internal Control Evaluation, pursuant to the
+identification of material defects in the internal control over the financial reporting of
+the Company. The Board is of the opinion that the Company has maintained effective
+internal control over its financial reporting in all material aspects in accordance
+with the requirements under the Enterprise Internal Control Normative System and
+relevant regulations and its supplementary guidelines as well as other regulatory
+requirements on internal control. Based on the identification of material defects in
+the internal control over non-financial reporting of the Company, no material defects
+were identified by the Company in the internal control over non-financial reporting
+as at the base date of the Report on Internal Control Evaluation. Nothing that would
+affect the evaluation result of the effectiveness of internal control has occurred from
+the reference date of the Report on Internal Control Evaluation to the date of issuance
+of the Report on Internal Control Evaluation.
+The Company reviews and evaluates its risk management and internal control system
+on an annual basis during the reporting period. The Company's report on the internal
+control evaluation for 2023 has been reviewed and approved by the Board, which,
+together with the Audit and Risk Management Committee of the Company, consider
+that the inspection and supervision mechanism is able to evaluate the effectiveness
+of the Company's internal control and risk management operations. According
+to the evaluation, during the Reporting Period, the Company has included all the
+businesses and matters involving significant risks (including the financial, operational
+and compliance aspects) in the scope of evaluation, and the internal control system
+has been established and effectively implemented for all significant businesses and
+matters, and the objectives of the Company's internal control have been achieved.
+The Company has complied with the provisions of the code of conduct related to
+risk management and internal control.
+Internal Control Evaluation
+Please refer to the relevant report disclosed on the website of the SSE at the same time as
+this report for the 2023 Report on Internal Control Evaluation and Audit Report on Internal
+Control.
+The Company's internal control and risk management system is characterized by the
+establishment of a closed-loop management mechanism integrating regular material
+risk assessment and monitoring, annual internal control evaluation, daily risk audit
+and special supervision and inspection of internal control, and the establishment of an
+organizational structure with hierarchical responsibilities of the Board and its Audit and
+Risk Management Committee, various functional departments of the headquarters
+and the subsidiaries (branches) of the Company to ensure effective operation of risk
+management and internal control. The objectives of the Company's internal control
+are to reasonably ensure compliance of its operation and management with laws and
+regulations, safety of its assets, truthfulness and integrity of its financial reports and
+related information, so as to improve operational efficiency and effectiveness, and
+facilitate the accomplishment of its development strategies.
+144 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+During the Reporting Period, there were no major acquisition and disposal of assets of
+the Company.
+(VI) Independent Opinion of the Supervisory Committee on the Self-assessment
+Report on Internal Control of the Company
+The self-assessment report on internal control of the Company has truthfully reflected the
+establishment and implementation of the internal control of the Company and its internal
+control system is sound and effective.
+(VII) Independent Opinion of the Supervisory Committee on the Establishment and
+Implementation of the Measures on Insider Management
+The insider management system of the Company is sound and comprehensive, effective
+in its implementation and able to keep all insider information confidential.
+The Supervisory Committee of the Company will continue to perform its duties with due
+care to facilitate the standardised operation of the Company and to safeguard the lawful
+interests of the Company and its shareholders in strict compliance with the Company Law
+and the Articles of Association.
+138 China Shenhua Energy Company Limited
+(V) Independent Opinion of the Supervisory Committee on the Major Acquisition
+and Disposal of Assets of the Company
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(1)
+Establishment and Implementation of the Risk Management and Internal
+Control System
+1.
+2.
+The Main Characteristics of Risk Management and Internal Control System
+Poll results
+The Company has established a risk-oriented internal control system and has an
+internal audit department to specifically perform the internal audit functions. The
+Company reviews and evaluates its risk management and internal control system
+annually during the Reporting Period. According to the evaluation, during the
+Reporting Period, the Company has considered that the internal control system
+has been established and effectively implemented for significant businesses and
+matters, and the objectives of the Company's risk management and internal control
+have been achieved.
+VIII. RISK MANAGEMENT AND INTERNAL CONTROL
+After careful review of the related party transactions of the Company in 2023, the
+Supervisory Committee is of the opinion that related party transactions with China
+Energy, Finance Company, Guoneng (Beijing) Commercial Factoring Co., Ltd., GD Power
+Development Co., Ltd., Guohua Energy Investment Co., Ltd and Guohua Investment
+Development Asset Management (Beijing) Co., Ltd. are necessary for the daily operation of
+the Company. The relevant considerations are in accordance with prevailing market principle
+and the transactions are carried out in strict compliance with the principles of fairness,
+equality and openness under the statutory decision-making procedures. The related party
+transactions carried out are in accordance with the applicable rules and requirements of the
+listing rules, and the information disclosure thereof is standardised and transparent. The
+Supervisory Committee is not aware of any act prejudicial to the interest of the Company.
+(IV) Independent Opinion of the Supervisory Committee on Related Party
+Transactions of the Company
+Corporate Governance Report (Continued)
+Passed
+of China Shenhua Energy Company
+unanimously
+Limited
+The Supervisory Committee made recommendations on work, including to strengthen
+management of property right, improve auditing and further improve quality action
+plan for listed companies by listening to the report of the management and
+effective considerations of the meeting resolutions, and fluent communications with
+management of the Company. The management has implemented them carefully
+and made timely feedback.
+136 China Shenhua Energy Company Limited
+2.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Investigation and Research
+In March 2023, the supervisors of the Company conducted on-site survey on the
+public welfare foundation of China Energy Group (the "Public Welfare Foundation").
+They watched the themed films in respect of the implementing the national strategy
+of rural booming and prosperity, supporting cultural education, environmental
+protection, community co-building and other matters committed by the Public
+Welfare Foundation to develop its own "Benevolent Hearted" public welfare brand,
+and gained a further understanding on capital investment, project implementation,
+and construction of donation service platform, and other matters. They also carried
+out sufficient discussion and exchange in respect of the public welfare direction, the
+tracking and management of investments in public welfare.
+(II) Independent Opinion of the Supervisory Committee on the Lawful Operation
+of the Company
+In 2023, the Company has conducted one annual general meeting, one class meeting of
+holders of A shares, one class meeting of holders of H shares, and seven Board meetings.
+Supervisors of the Company attended meetings as required.
+The Supervisory Committee is of the opinion that the Board and the management of the
+Company have acted in strict accordance with the Company Law, the Articles of Association
+and relevant regulations of the jurisdiction where the Company is listed, performed their
+duties with integrity and diligence and conscientiously implemented the resolutions
+approved and authorization granted by the general meetings; and that the decisions and
+operations are in compliance with the laws and regulations and the Articles of Association.
+During the Reporting Period, having reviewed the directors' attendance in meetings and
+performance of their duties, all directors of the Company have diligently and faithfully
+performed their duties as directors. the Supervisory Committee is not aware of any act
+committed by the Board and the management of the Company during their performance
+of duties which were in breach of laws, regulations and the Articles of Association or
+prejudicial to the interests of the Company.
+(III) Independent Opinion of the Supervisory Committee on the Financial Position
+of the Company
+The Supervisory Committee is of the opinion that the Company has regulated financial
+audit and sound internal control system, and the financial statements of the Company give
+an objective, true and fair view of the financial position and the operating results of the
+Company in all material aspects. The financial report for 2023 has been audited by KPMG
+Huazhen LLP and KPMG in accordance with China Accounting Standards for Business
+Enterprises and International Financial Reporting Standards, each of whom had issued a
+standard unqualified audit report.
+2023 Annual Report 137
+the Supervisory
+Committee
+fifth session of
+Proposal of the 2023 Third Quarterly Report
+Company Limited
+The final dividend for the year 2023, which is denominated and declared in RMB,
+will be paid in RMB to holders of the Company's A shares (including holders of the
+Company's A shares through the Northbound Trading Link of the Shanghai-Hong
+Kong Stock Connect, hereinafter referred to as the "Northbound Shareholders"), and
+holders of the Company's H shares through the Southbound Trading Link (including
+Shanghai and Shenzhen markets, hereinafter referred to as the "Southbound
+Shareholders"). Dividends to holders of the Company's H shares, except the
+Southbound Shareholders, will be paid in HKD. The dividend paid in HKD is calculated
+as the average benchmark rate of RMB against HKD of five business days preceding
+the date of declaration of such dividend, as published by the Bank of China.
+18 June 2024
+21 June 2024
+4:30 p.m. on Monday,
+17 June 2024
+2
+Entitled to the final dividend
+Saturday,
+for the year 2023
+29 June 2024
+Friday,
+5 July 2024
+4:30 p.m. on Friday,
+28 June 2024
+Computershare Hong
+Kong Investor
+Services Limited
+Computershare 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 2023 of the Company for the
+non-resident enterprise shareholders whose name would appear on the register of
+members for H shares of the Company on 5 July 2024.
+150 China Shenhua Energy Company Limited
+7.
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+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%.
+Friday,
+Tuesday,
+Attending and voting at the
+2023 annual general
+meeting
+registrar for H shares
+The proposed final dividend plan for the year 2023 outlined above was in compliance
+with the requirement of the Articles of Association, and there were no circumstances
+under which the cash dividend plan may prejudice the interests of the listed company
+or minority shareholders as stipulated in No. 3 Guideline for the Supervision of Listed
+Companies Cash Dividend Distribution of Listed Companies. Such final dividend
+plan has been approved by the Board. When proposing the final dividend plan for the
+year 2023, the Board has attended to and considered the opinions and concerns of
+the shareholders of the Company. The Company will hold the 2023 annual general
+meeting on Friday, 21 June 2024 to consider the relevant resolutions, including the
+above dividend plan as proposed by the Board.
+2023 Annual Report 149
+3.
+2.
+148 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+4.
+5.
+Pursuant to the Articles of Association:
+In accordance with the preliminary arrangement of profit distribution plan for year
+2023 and the 2023 annual general meeting of the Company, the final dividend for
+the year 2023 for the Company's H shareholders is estimated to be distributed on
+or about 21 August 2024.
+(1)
+After the SSE is closed in the afternoon on Tuesday, 18 June 2024, the
+shareholders of A shares of the Company and its proxies of shareholders as
+registered in the China Securities Depository and Clearing Corporation Limited
+Shanghai Branch are entitled to attend and vote at the 2023 annual general
+meeting of the Company;
+According to the relevant regulations of China Securities Depository and
+Clearing Corporation Limited Shanghai Branch and market practice adopted for
+final dividend distribution for A shares, the Company will publish a separate
+announcement on implementation of equity distribution in respect of the
+distribution of final dividend for the year 2023 to holders of A shares after the
+2023 annual general meeting to determine the record date, ex-rights date and
+dividend distribution date for the distribution of final dividend for the year 2023
+to holders of A shares.
+The Arrangement of Temporary Closure of the Register of Members of H Shares
+of the Company:
+6.
+Temporary closure of the register of members
+The last day for
+The Company's share
+No.
+Corresponding rights
+First day (inclusive) Last day (inclusive) registering members
+(2)
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+(IV) Outsourced Work in 2023
+100.4
+RMB
+Amount of
+cash dividend
+(inclusive of tax)
+(inclusive of tax)
+Dividend per
+10 shares
+Profit distribution scheme/plan for the recent three years (including the Reporting Period)
+The Board proposed the payment of a final dividend in cash of RMB2.26 per share
+(inclusive of tax) for the year 2023 based on the total share capital registered on
+the equity registration date of implementing equity distribution. Calculated based on
+the total share capital of 19,868,519,955 shares of the Company as at 31 December
+2023, the final dividend totals RMB44,903 million (inclusive of tax), accounting for
+69.5% of the profit for the year attributable to equity holders of the Company under
+the International Financial Reporting Standards, or 75.2% of the net profit for the year
+attributable to equity holders of the Company under the China Accounting Standards
+for Business Enterprises.
+Net profit attributable to equity holders of the Company for 2023 under the China
+Accounting Standards for Business Enterprises amounted to RMB59,694 million,
+with basic earnings per share of RMB3.004/share; profit attributable to equity holders
+of the Company for 2023 under the International Financial Reporting Standards
+amounted to RMB64,625 million, with basic earnings per share of RMB3.253/share.
+As at 31 December 2023, the profit available for distribution to shareholders of the
+Company under the China Accounting Standards for Business Enterprises amounted
+to RMB201,416 million.
+Cash Dividend Scheme for 2023
+1.
+(III) Cash Dividend Scheme/Plan
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 147
+✓ Yes ☐ No
+Whether small and medium shareholders have adequate opportunities
+to express the opinions and concerns, and whether their legitimate
+rights are fully protected
+✓ Yes ☐ No
+✓ Yes ☐ No
+Whether the relevant decision procedures and mechanism are complete
+Whether independent directors have performed their duties and
+responsibilities and played their full role
+unambiguous
+✓ Yes ☐ No
+✓ Yes ☐ No
+Whether it complies with the provisions of the Articles of Association or
+the requirements of the proposals of the general meeting
+Whether the criteria and percentage of dividends are clear and
+RMB million
+The Company shall use the registered address ("registered address") as
+recorded in the register of members of H shares on 5 July 2024 as the criterion
+in determining the residence of the individual shareholders of H shares who
+are entitled to receive the final dividend for the year 2023 of the Company, and
+withhold and pay individual income tax accordingly. If the residence of the
+individual shareholders of H shares is inconsistent with the registered address,
+such shareholders shall notify the Company's share registrar for H shares at or
+before 4:30 p.m. on 28 June 2024 with the relevant evidence at Computershare
+Hong Kong Investor Services Limited of 17M Floor, Hopewell Centre, 183
+Queen's Road East, Wan Chai, Hong Kong, telephone (852) 2862 8555.
+Net profit attributable
+the Company in the
+50,269
+50,466
+25.4
+Final dividend for the year 2021
+72.8
+69,626
+50,665
+25.5
+Final dividend for the year 2022
+75.2
+59,694
+44,903
+22.6
+Final dividend for the year 2023 (Proposed)
+%
+statements
+to equity holders of
+the Company in the
+consolidated financial
+profit attributable
+RMB million
+statements of the
+respective dividend year
+in accordance with China
+Accounting Standards for
+Business Enterprises
+consolidated financial Percentage to the net
+to equity holders of
+2023 Annual Report 151
+Environmental Protection Information of the Companies and Their Significant
+Subsidiaries Classified as the Key Environmental Supervision Units¹ as
+Designated by the Competent Environmental Protection Authorities of the
+PRC
+Corporate Governance Report (Continued)
+Number of current employees of the branches/subsidiaries
+of the Company (number of person)
+83,240
+Total number of current employees of the Group
+(number of person)
+83,439
+Number of retired employees in respect of which the Company and
+subsidiaries bore cost (number of person)
+13,814
+Category of function
+199
+Operation and repair
+(V) Gender Diversity of Employees
+The differences in education, cultural background, occupational background and job
+requirements of employees are the main factors affecting the gender diversity of
+employees. The Company continues to bring in various types of professionals of different
+genders and nationalities in accordance with its development needs, so as to cultivate and
+build a pipeline of talents with appropriate scale, high-end leadership, reasonable structure
+and excellent quality, establish and maintain the Company's talent advantage in the industry
+in which it operates and lay a solid talent foundation for the realisation of the Company's
+development strategy. Further details about the diversity of employees are set out in the
+2023 Environment, Social and Governance Report of the Company, which will be disclosed
+in conjunction with this report.
+As at the end of 2023, the Group had 12,553 female employees, accounting for 15.0% of
+total employees, and 70,886 male employees, accounting for 85.0% of total employees.
+146 China Shenhua Energy Company Limited
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+XII. 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質量的意見》)
+and the Guideline on Encouragement of Cash Dividend Distribution of Listed Companies
+promulgated by the CSRC.
+74.32 million hours
+CNY5,383 million
+Pursuant to the Articles of Association, the profit distribution of the Company shall be
+made based on the profit for the year attributable to equity holders of the Company in
+the consolidated financial statements prepared under the China Accounting Standards for
+Business Enterprises and the International Financial Reporting Standards, whichever is
+lower ("Distribution Base"). Annual profit distribution in cash shall be no less than 35% of
+the Distribution Base subject to the relevant conditions.
+(number of person)
+(1) Employees as at the End of 2023
+The Company has established a training system with different levels and channels to
+provide the employees with appropriate training in job skills, safe production and group
+management, etc. In 2023, the accrued capital used for training was approximately RMB319
+million. The number of attendances in training was approximately 1,136,800 with training
+hours of approximately 9,719,800 hours in aggregate. For details, please refer to the 2023
+Environment, Social and Governance Report of the Company.
+(III) Training Program
+The Company insists on efficiency and effectiveness orientation and has formulated a salary
+policy that combines salary and performance evaluation, tilts toward front-line employees
+and is competitive in the industry. The Company has also deepened the reform of the
+distribution system, optimised the income distribution structure, given full play to the role
+of salary incentive, and stimulated the vitality of corporate talents.
+(II) Remuneration Policy
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+2023 Annual Report 145
+83,439
+13,311
+7,992
+Number of current employees of the headquarter of the Company
+20,320
+4,058
+Total
+Graduate of technical school, high school and below
+Specialized secondary school graduate
+persons
+Number of
+Education Level
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+XI. EMPLOYEES
+37,758
+In order to implement the Securities Law of the PRC, strengthen the protection of investors'
+legitimate rights and interests, and respond to the demands of investors, especially minority
+shareholders, as approved on the 2022 first extraordinary general meeting of the Company
+and in line with the Article of Association, the profit distributed by the Company in cash
+for each year from 2022 to 2024 shall not be less than 60% of the net profit attributable
+to equity holders of the Company realised in that year.
+(II) Special Description for Cash Dividend Policy
+Management and administration
+1. Information on Pollutant Discharge
+Total number of working hours of outsourced work
+Total remuneration paid for outsourced work
+(1)
+ENVIRONMENTAL INFORMATION
+I.
+Section VI Environmental and Social Responsibility
+2023 Annual Report 153
+The Company insists on the unity of incentives and constraints, highlights quality and efficiency,
+emphasizes sustainable development and establishes a remuneration mechanism that matches
+the operating performance, risks and responsibilities, and fully mobilizes the enthusiasm of
+senior management. The Company has deepened the contractual management of the tenure
+system, combined with the division of senior management positions, and signed differentiated
+appointment agreements, annual operating performance responsibility letters and tenure operating
+performance responsibility letters for one person per position. The main production and operation
+indicators in the business performance assessment index are shared by the senior management;
+personalized assessment indicators are added according to the division of business; safety and
+environmental protection indicators are linked to the performance of each senior management.
+All public indicators and personal performance indicators for senior management in 2023 are set
+to be high. The annual performance evaluation of senior management is conducted at the end of
+the year based on the completion of relevant metrics, and the annual remuneration will be paid
+in accordance with the evaluation results.
+XIV. APPRAISAL MECHANISM FOR SENIOR MANAGEMENT, AND THE
+ESTABLISHMENT AND IMPLEMENTATION OF THE INCENTIVE MECHANISM
+DURING THE REPORTING PERIOD
+As at 31 December 2023, a total of 36 subsidiaries of the Group that classified as the
+key environmental supervision units ("Key Units") published by the environmental
+protection authorities (including key pollutant discharge units and key environment
+risk control units in terms of atmospheric environment, water environment and soil
+contamination), are mainly coal-fired power plants, coal chemical plants and coal
+mines, which are located in areas including Inner Mongolia, Shaanxi, Hebei, Fujian
+and Guangdong.
+☐ Applicable ✓ Not applicable
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+152 China Shenhua Energy Company Limited
+Pursuant to the Articles of Association, the Company is entitled to forfeit the
+dividends which have been declared for more than six years but yet to be
+claimed, subject to compliance with relevant Chinese laws and administrative
+regulations. Shareholders are advised to collect the dividends distributed by
+the Company in a timely manner.
+The Company assumes no responsibility arising from any delayed or inaccurate
+determination of the status of the shareholders or any dispute over the
+mechanism of withholding. Shareholders should consult their tax advisers
+regarding China's mainland, Hong Kong and other tax implications of owning
+and disposing of the Company's H shares.
+According to the relevant provisions under the "Notice of MOF, SAT and CSRC
+on the Tax Policies for Shanghai-Hong Kong Stock Connect Pilot Programme" (Cai
+Shui [2014] No. 81) and the "Notice of MOF, SAT and CSRC on the Tax Policies for
+Shenzhen-Hong Kong Stock Connect Pilot Programme" (Cai Shui [2016] No. 127)
+under the Ministry of Finance, State Administration of Taxation of China and CSRC,
+the Company shall withhold individual income tax at the rate of 20% with respect
+to dividends received by individual investors in China's mainland for investing in
+H-shares listed on the HKEx through Shanghai-Hong Kong Stock Connect and
+Shenzhen-Hong Kong Stock Connect. The dividends and bonuses earned by securities
+investment funds in China's mainland investing in shares listed on the HKEx through
+Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect shall be
+withheld on an individual income tax basis. The Company is not required to withhold
+income tax on dividends derived by enterprise investors in China's mainland, and
+such enterprises shall report the income and make tax payment by themselves. The
+record date and the relevant arrangements of dividend distribution for Southbound
+Shareholders are the same as that of the Company's shareholders of H shares.
+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.
+10.
+9.
+8.
+XIII. THE SHARE OPTIONS INCENTIVE PLAN, EMPLOYMENT STOCK OWNERSHIP
+SCHEME OR OTHER EMPLOYEE INCENTIVE SITUATION OF THE COMPANY
+AND THEIR IMPACTS
+The main pollutants in the atmospheric environment are sulfur dioxide, nitrogen
+oxides and soot, which are emitted organisationally and continuously to the
+atmosphere through the chimneys. The enterprises are mainly public thermal power
+plants, coal-to-chemical captive power plants, heating boilers for mines and coking
+plants. Emission standards implemented include Emission Standards for Air Pollutants
+Produced by Thermal Plants (GB13223-2011), Emission Standards for Air Pollutants
+Produced by Boilers (GB13271-2014) and Emission Standards for Pollutants Produced
+by Coking Chemical Industry (GB16171-2012).
+The main pollutants of the water environment are chemical oxygen demand (COD),
+which are discharged continuously or discontinuously to the surface water through
+the sewage outfall of the enterprises. The enterprises are mainly coal chemical
+enterprises and public thermal power plants. The emission standards implemented
+were the Comprehensive Emission Standards for Sewage (GB8978-1996).
+1.
+Finance
+Research and development
+Technical support
+Sales and marketing
+Others
+Total
+Category of education level
+Postgraduate and above
+University graduate
+College graduate
+Function
+Number of
+persons
+51,459
+14,697
+1,532
+3,030
+8,361
+680
+154 China Shenhua Energy Company Limited
+The Administrative Measures for the List of Key Environmental Supervision and Control Units (Decree No. 27) shall come
+into force on January 2023, and the Notice on Printing and Issuing the Provisions on the Administrative Measures for
+the List of Key Pollutant Discharging Entities (Trial) (Huan Ban Jian Ce [2017] No. 86) shall be abolished simultaneously.
+Section V Corporate Governance and
+3,680
+83,439
+100
+1,474.02
+33.2
+862
+1 All units share one emission outlet
+1,031.81
+20.1
+520
+38
+NO
+Dianta Power Plant of
+Shendong Power
+80
+0
+100
+0
+O O O
+521.88
+2.8
+92
+Soot
+2 Every two units share one emission
+outlet
+2,591.88
+21.8
+860
+NOX
+1,814.32
+13.1
+554
+Dingzhou Power
+0
+Soot
+100
+60
+294.80
+pollution
+Approved Number of
+Average
+rate of
+Operation
+Section VI Environmental and Social Responsibility (Continued)
+100
+0
+O 2 O
+O O O
+0
+100
+0
+156 China Shenhua Energy Company Limited
+13.52
+0.1
+0.2
+Soot
+67.6
+43.1
+15
+NO
+Thermal Power Plant
+1 All units share one emission outlet
+47.32
+0.1
+0.1
+SO₂
+Shendong Power Daliuta
+2.4
+100
+O o O
+O 10
+2.5
+42
+Soot
+1,542
+40.4
+732
+2 Each unit has one emission outlet
+1,079
+19.1
+342
+ទង្គ
+NOX
+SO₂
+Mengjin Power
+80
+0
+0
+100
+0
+O O O
+174
+2.8
+95
+Soot
+1,444.3
+41.7
+1,400
+NOX
+Power Generation Co., Ltd.
+308
+O O O
+0
+100
+292.06
+2.5
+111
+2 Every two units share one emission
+outlet
+1,563.76
+21.9
+984
+1,303.13
+10.8
+494
+888
+Soot
+NOX
+SO,
+Main
+Cangdong Power
+1.7
+56
+Soot
+1,925
+33.3
+1,065
+NOX
+2 Each unit has one emission outlet
+1,347.5
+15.9
+515
+SO₂
+Shouguang Power
+0
+192.5
+2 Each unit has one emission outlet
+Total
+Total
+2 Each of Phase I and Phase II has
+3,840
+24.4
+381
+ទង្គ
+NOX
+SO₂
+Zhunge'er Power
+352
+1.2
+23
+Soot
+1,760
+73.0
+1,675
+NOX
+Energy Co., Ltd.
+4 Each unit has one emission outlet
+880
+34.3
+852
+ទ
+Power Plant of Guoneng Yili
+0
+O O O
+100
+0
+0
+0
+608
+880
+39.3
+one emission outlet
+1,337.09
+30.1
+325
+NOX
+One boiler has four emission outlets,
+2,674.18
+9.9
+117
+290.4
+2.9
+1,271
+28.5
+742
+2 Each unit has one emission outlet
+1,016.4
+10.9
+294
+ཨྰཿབིང
+Soot
+NOX
+233 23
+SO,
+Baotou Coal Chemical
+SO₂
+Shengli Energy
+576
+4.4
+64
+Soot
+3,840
+100
+0
+880
+SO₂
+Shenmu Power
+600
+100
+1 All units share one emission outlet
+2220
+1.8
+25
+Soot
+30.7
+383
+3.1
+49
+38
+NOX
+SO,
+Shendong Power Guojiawan
+Power Plant
+hour
+tonne/year
+tonne mg/Nm3
+facilities
+emissions
+outlets Distribution of emission outlets
+emissions
+emissions concentration
+pollutants
+Name of the entity
+Excessive prevention
+Emission
+ទង្គ
+143
+19.5
+189
+100
+0
+O O O
+0
+100
+80
+O O O
+884.45
+2.6
+176
+Soot
+3 Every two units share one emission
+outlet
+4,422.18
+32.9
+emission
+2,335
+2,459
+18.2
+1,044
+SO₂
+Jinjie Energy (Power Plant)
+54
+2.3
+16
+Soot
+270
+34.7
+250
+NOX
+1 All units share one emission outlet
+NOX
+a separate emission outlet is set
+924
+547
+3,675
+22.1
+964
+SO,
+China Energy Shenfu (Shishi)
+136.2
+1.1
+32
+Soot
+712.9
+26.1
+711
+NOX
+2 Each unit has one emission outlet
+771.2
+4.8
+161
+SO₂
+Beihai Power
+0
+0
+100
+100
+0
+O o O
+O O O
+559
+1.7
+17
+2 Each unit has one emission outlet
+Soot
+Power Generation Co., Ltd.
+1,811
+100
+0
+O O O
+52
+0.8
+Soot
+260
+42.2
+199
+NOX
+Thermal Power Co., Ltd.
+1 All units share one emission outlet
+182
+15.9
+75
+China Energy Shenfu (Jinjiang) SO₂
+10
+80
+100
+80
+100
+220
+060
+309
+4.6
+198
+Soot
+3,675
+41.7
+NOx
+1,863.6
+34.2
+340
+2,212
+NOX
+6 Units No. 1 and 2 share one
+4,780
+18.5
+1,717
+838
+SO,
+Taishan Power
+%
+hour
+tonne/year
+tonne mg/Nm³
+facilities
+emissions
+outlets Distribution of emission outlets
+emissions
+emissions concentration
+pollutants
+Name of the entity
+Operation
+rate of
+pollution
+Excessive prevention
+Total Emission
+emission
+Total
+Main
+Approved Number of
+Average
+In 2023, the emissions of the Key Units in terms of atmospheric environment are
+as follows:
+Section VI Environmental and Social Responsibility (Continued)
+23.8
+9,560
+emission outlet; each of Units No.
+Soot
+NOX
+1 All units share one emission outlet
+3,727.2
+15.4
+159
+71.65
+1.4
+ន
+Soot
+716.46
+40.3
+672
+NOX
+833 83
+0
+SO₂
+1 All units share one emission outlet
+501.52
+25.2
+417
+SO₂
+Huizhou Thermal
+0
+80
+100
+O O O
+3-7 has one emission outlet
+1,620
+1.6
+153
+Liuzhou Power
+16.3
+80
+268
+709
+ទង្គ
+Wanzhou Electric Power
+SO,
+China Energy Chongqing
+110
+1.1
+29
+Soot
+1,080
+38.9
+995
+100
+2 Each unit has one emission outlet
+895
+19.8
+524
+88
+NOX
+SO₂
+Yongzhou Power
+hour
+tonne/year
+tonne mg/Nm3
+facilities
+emissions
+outlets Distribution of emission outlets
+emissions
+emissions concentration
+17.9
+pollutants
+1,291.5
+NOX
+China Energy Sichuan Tianming SO₂
+100
+030
+240
+5.6
+67
+Soot
+23
+1,200
+37.0
+454
+NOX
+Power Co., Ltd.
+1 All units share one emission outlet
+600
+12.9
+153
+China Energy Jiangyou Thermal SO₂
+80
+100
+O O O
+367.5
+1.8
+69
+Soot
+Co., Ltd.
+1,837.5
+41.7
+1,603
+2 Each unit has one emission outlet
+Name of the entity
+Excessive prevention
+Emission
+Soot
+23
+2,282.2
+41.3
+1,533
+2 Each unit has one emission outlet
+1,632.2
+27.2
+1,011
+ទង្គ
+мох
+Gangdian Co., Ltd.
+SO₂
+China Energy (Lianjiang)
+100
+030
+360
+3.1
+42
+Soot
+23
+839
+43.7
+576
+NOX
+Power Generation Co., Ltd.
+1 All units share one emission outlet
+358
+20.3
+177
+4.8
+466.34
+124
+Total
+emission
+Total
+Main
+pollution
+Approved Number of
+Average
+rate of
+Operation
+Section VI Environmental and Social Responsibility (Continued)
+2023 Annual Report 155
+0
+1,050
+0.8
+China Energy Shenfu (Longyan) SO₂
+31
+3,014
+37.5
+1,417
+NOX
+100
+0
+2 Each unit has one emission outlet
+2,805
+9.6
+366
+ទង្គ
+Jiujiang Power
+880
+100
+Soot
+Soot
+O O O
+Date
+O O O
+selection of affiliated
+collieries
+equipment for coal dry
+procedures for new smart
+In progress
+20.27 Failure to apply for EIA
+20 November 2023 No. 5-39 of E Huan
+Fa [2023]
+Shendong Coal Group
+4 Beyond planned water usage Rectified
+No. 04 of Shen Shui
+Li Fa Jue Ding
+[2023]
+28 June 2023
+timely manner
+affiliated collieries in a
+drainage permits of
+Renewed
+45 Failure to renew expired
+No. 17 of Shan K
+Huan Fa [2023]
+10 April 2023
+timely manner
+Baotou Energy Lijiahao 3 April 2023
+Colliery
+No. 02 of (E) Shui Fa
+10 Failure to renew expired
+Renewed
+Penalty No.
+Date
+Unit name
+In 2023, the Group continued to carry out in-depth pollution prevention and control,
+comprehensively promoted the construction of green mines, green transportation, green
+power and green chemicals, resulting a sustained reduction in the emission of major
+pollutants. The Group adopted a combination of measures to ensure source prevention
+and control, intensified efforts to advance the comprehensive governance of air pollution,
+and implemented a number of tasks to secure environment quality. The Group gave
+priority to conservation, enhanced recycling, and took coordinated steps to promote the
+high-efficiency utilisation of water resources. The Group insisted on source reduction,
+process resourcefulness and end harmless treatment and strengthened the disposal of
+hazardous waste in compliance with laws and regulations. The Group strictly upheld the
+red lines for ecological protection, strengthened the management of soil pollution, took
+steps to enhance the integrated protection and remediation of mountains, rivers, forests,
+farmlands, lakes, grasslands and deserts, and promoted the ecological remediation and
+governance and protection of biodiversity in a well-coordinated way. The reclamation rate
+of the surface mine dump and the governance rate of stabilised subsidence areas have
+reached the international advanced level, and key enterprises in the Yangtze River and
+Yellow River basins have achieved the full coverage of remote sensing monitoring of soil
+and water conservation and ecological management. In addition, the Group will continue to
+carry out the investigation and treatment of hidden ecological and environmental hazards,
+establish a tiered and classified treatment system for risks and hidden dangers, thereby
+significantly improving its ability to prevent ecological and environmental risks.
+In 2023, the Group invested RMB2.339 billion in environmental protection. The open-cut
+mine land reclamation area increased by 490,000 square meters, and the underground
+mines subsidence area's land governance coverage increased by 29.73 million square
+meters. The greening coverage increased by 22.75 million square meters.
+164 China Shenhua Energy Company Limited
+Rectification
+Amount
+Section VI Environmental and Social Responsibility (Continued)
+affiliated collieries in a
+2023 Annual Report 161
+40 Failure to take water in
+compliance with the
+conditions of an approved
+water access licence
+[2023]
+Shui Li Fa Jue Zi
+(包頭能源神山露天礦)
+Open-cut Mine
+Baotou Energy Shenshan 6 September 2023 No. 27 of (Zhun)
+(包頭能源李家壕煤礦)
+water access licence
+Jue [2023]
+Completed renewal
+and change of
+water access
+licence
+drainage permits
+Renewed
+45 Failure to renew expired
+No. 4 of Ba Huan (6)
+Fa Zi [2023]
+21 August 2023
+Bayannur Energy
+Rectified
+implemented for open
+coal storage
+measures were
+10 No effective dust-proof
+27 No disinfection facilities at Rectified
+domestic sewage outlets
+Rectified
+10 Uncontrolled emission of
+10 No protective measures
+were implemented in
+accordance with national
+environmental protection
+standards in the industrial
+solid waste storage
+process
+of Baotou Energy
+Huan Fa [2023]
+No. 6 of Bao Huan
+Shuiquan Open-cut Mine 14 April 2023
+4 September 2023 No. 143 of Shan K
+No. 72 of Shan K
+Fu Gu Huan Fa
+[2023]
+17 May 2023
+Shendong Power
+Guojiawan Power
+Plant
+progress
+of penalty Reason for penalty
+RMB0'000
+Fa 150221 [2023]
+of penalty Reasons for penalty
+RMB0'000
+Rectified
+160 China Shenhua Energy Company Limited
+Rectified
+23.61 Other illegal acts
+No. 1 of E Huan Yi
+Fa [2023]
+No. 11 of Shan K
+Huan Fa [2023]
+15 March 2023
+Shendong Coal Branch 3 January 2023
+progress
+of penalty Reasons for penalty
+RMB0'000
+Penalty No.
+Date
+smoke during coal loading
+Unit name
+Amount
+1. Administrative Penalties for Environmental Problems
+Units
+(II) Environmental Issues of Companies Other Than Those Classified as the Key
+☐ Applicable ✓ Not applicable
+Other Environmental Information that should be Disclosed
+7.
+Section VI Environmental and Social Responsibility (Continued)
+in coking plants
+Rectification
+progress
+Yulin Energy Qinglongsi 10 January 2023
+Colliery (榆林能源青龍
+No. 20 of Shan K
+1.26
+Key Units
+tonnes
+tonnes
+tonnes
+tonnes
+tonnes
+0,000
+0,000
+2.54
+0,000
+(COD)
+Soot
+oxide
+dioxide
+Hazardous
+oxygen
+demand
+Nitrogen
+Sulfur
+Chemical
+waste
+During the Reporting Period, the total emissions of major pollutants of the Group
+were as follows:
+0.18
+52,781.46
+2023 Annual Report 163
+☐ Applicable ✓ Not applicable
+(III) Explanation of the Follow-up Progress or Changes in the Disclosure of
+Environmental Information during the Reporting Period
+☐ Applicable ✓ Not applicable
+Explanation of Reasons for Non-disclosure of Environmental Information by
+Companies Other Than Those Classified as the Key Units
+3.
+The environmental information set forth in the 2023 Environmental, Social and
+Governance Report of the Company has been independently verified by KPMG
+Huazhen LLP, and an assurance report was issued.
+Note: Since 2022, the Group has calculated the total solid hazardous waste emissions based on the
+Directory of National Hazardous Wastes (2021 Edition).
+60,160.67
+0
+443.51
+4.82
+2.27
+Total
+7,379.21
+443.51
+0.18
+2.28
+1.01
+Other enterprises
+0.36
+Penalty No.
+Other Environmental Information
+Section VI Environmental and Social Responsibility (Continued)
+25 September 2023 No.164 of Shan K
+Huan Fa [2023]
+5 September 2023 No. 151 of Shan K
+Huan Fa [2023]
+司榆林車輛維修分公司)
+Company (鐵路裝備公
+of Railway Equipment
+Maintenance Branch
+Yulin Vehicle
+Fu Gu Huan Fa
+[2023]
+Colliery (榆林能源郭家
+灣煤礦)
+Jinjie Energy (Coal Mine) 3 November 2023
+(錦界能源(煤礦))
+No. 26 of Shan K
+from environmental
+Fu Gu Huan Fa
+[2023]
+Rectified
+1.07 No approval procedures
+Rectified
+20 Appointment of incapable
+third parties to dispose
+gangue
+Fu Gu Huan Fa
+[2023]
+No. 28 of Shan K
+10 January 2023
+寺煤礦)
+Yulin Energy Guojiawan 10 January 2023
+2.
+No. 177 of Shan K
+Huan Fa [2023]
+Shen Mu Huan Fa
+[2023]
+162 China Shenhua Energy Company Limited
+acceptance inspection
+on the completion of
+environmental protection
+facility construction after
+capacity additions
+40 Failure to pass the
+after capacity additions
+for EIA reports in timely
+472.46 Failure to apply for approval In progress
+Rectified
+over a long period of time
+vehicle spraying section
+29 November 2023 No. 145 of Shan K
+outlet of the whole
+water treatment plant
+8.5 Failure to replace the
+the sodium hypochlorite
+generator at the mine
+12 Failure to operate normally Rectified
+temporary gangue dump
+implemented in
+10 No dust proof measures Rectified
+hazardous waste
+new temporary storage of
+protection authority for
+activated carbon of the
+attached VOC treatment
+facility at the emission
+Section VI Environmental and Social Responsibility (Continued)
+Unit name
+Rectification
+Bayannur Energy
+0
+O O O
+100
+401.13
+2.7
+32
+6.
+5.
+502
+Section VI Environmental and Social Responsibility (Continued)
+The Group carried out related work in accordance with the national emergency
+plan and management requirements for unexpected environmental incidents. The
+emergency plan filing for unexpected environmental incidents of the Key Units
+can be searched on the websites of the local ecological environmental protection
+department.
+Emergency Plan for Unexpected Environmental Incidents
+In terms of construction projects, the Group carried out the "three simultaneous"
+management of environmental impact appraisal, energy conservation appraisal,
+water and soil conservation inspection and acceptance, as well as environmental
+protection inspection and acceptance. The environmental impact appraisal, as well as
+environmental protection inspection and acceptance, water environmental protection
+inspection and acceptance and other relevant tasks upon construction completion
+have been conducted, respectively, on all construction projects in accordance with
+the law. All the Key Units have obtained pollutant discharge licences in compliance
+with the national environmental requirements.
+Environmental Effect Appraisal of Construction Project and Other Administrative
+Approvals on Environmental Protection
+The Group has built desulfurisation, denitration, dust collectors, wastewater,
+solid waste and noise prevention and control facilities for all production and
+operation enterprises in accordance with national and local pollution prevention and
+environmental protection standards. During the Reporting Period, operation of the
+pollution prevention and control facilities was effective and reliable overall, and no
+environmental pollution incidents of general or above level occurred.
+Construction and Operation of Pollution Prevention and Control Facilities
+With regard to the provisions under the existing laws, the management believes
+that there is no contingent risk in relation to environmental protection that may
+bring material and adverse effects to the financial position or operating results of
+the Group. Contingent liabilities which may arise in the future cannot be accurately
+predicted.
+Investors should be aware that the above data are the results of the self-monitoring
+of the Company, which have not been confirmed by the local ecological and
+environmental protection regulatory authorities and may differ from the final data
+recognised by the local ecological and environmental protection regulatory authorities.
+4.
+2023 Annual Report 159
+3.
+53
+132
+1 One emission outlet for coalfired
+Registration
+211
+0.72
+SO,
+33
+NO
+Baotou Energy
+Shuiquan Open-cut Mine of
+21.7
+emission outlet for dust removal
+station
+for sulfur recovery facilities
+96
+7.9
+19
+Soot
+900
+273.3
+334
+NOX
+2 One coke oven chimney and one
+0.14
+2.
+158 China Shenhua Energy Company Limited
+O O O
+and two emission outlets for coal
+preparation plant
+4 Two emission outlets for the colliery
+18.03
+17.6
+90.17
+123.2
+24
+Soot
+0
+32
+58.8
+15
+888
+Guoneng Yili Energy Co., Ltd. NOx
+SO,
+Huangyuchuan Colliery of
+0
+0
+80
+72.13
+Section VI Environmental and Social Responsibility (Continued)
+100
+go
+A), generated 52,781.46 tonnes of hazardous waste and entrusted
+qualified units to dispose the waste in compliance with the laws and regulations.
+In 2023, the Key Units, in terms of soil pollution and key environment risk control,
+including 10 enterprises, i.e. Baotou Coal Chemical, Zhunge'er Energy, Explosive
+Plant of Zhunge'er Energy, Bayannur Energy, Baorixile Energy, Dianta Power Plant of
+Shendong Power, Mengjin Power, Shouguang Power, Cangdong Power, Cangzhou
+Locomotives and Trains Maintenance Branch of Railway Equipment (*
+In 2023, the Key Units, in terms of water environment, including three enterprises,
+i.e. Baotou Coal Chemical, Power Plant of Guoneng Yili Energy Co., Ltd., and Mengjin
+Power, achieved zero external discharge and 100% operation rate of pollution
+prevention facilities.
+14.5
+19.0
+2
+Soot
+0
+80
+0
+100
+1 One emission outlet for coal-fired
+boiler
+72.51
+226.0
+51
+NOX
+53.24
+132.0
+30
+Shendong Coal Bu'ertai Colliery SO₂
+0
+104
+management,
+Soot
+126
+1 4 coal fired boilers share one
+gas-fired boilers has one emission
+outlet
+emission outlet and each of 3
+12.48
+16.1
+76.16
+88.4
+42
+100
+4 5 coal-fired boilers share one
+69.6
+32
+226
+Soot
+NOX
+SO₂
+Zhunge'er Energy
+17.14
+12.8
+59.02
+80.02
+22
+O O O
+Amount
+Administrative Penalty for Environmental Problems during the Reporting Period
+The Group standardised the management of the online environmental protection
+monitoring system, and formulated the Administration Measures for the Online
+Environmental Protection Monitoring System* ( KERESENKR) ) and
+other management systems in accordance with the relevant national standards and
+administrative regulations for online monitoring of pollution sources. All the Key
+Units have completed the compilation of their self-monitoring plans. All automatic
+monitoring data and commissioned monitoring data in relation to wastewater,
+exhaust gas, etc., have been timely uploaded to the monitoring platform of the local
+environmental protection department according to relevant requirements.
+Environmental Self-monitoring Plan
+28.7
+4
+emission outlet
+52.5
+207.2
+15
+42
+34
+Soot
+34
+NOX
+Open-cut Mine
+32
+SO,
+China Shenhua Ha'erwusu
+100
+198.5
+8.57
+114
+3 Each plant has one emission outlet
+pollution
+Approved Number of
+Average
+rate of
+Operation
+Section VI Environmental and Social Responsibility (Continued)
+2023 Annual Report 157
+0
+100
+Main
+0
+80
+100
+3060
+100
+March)
+boiler (the emission outlet was
+dismantled for transformation in
+not approved
+71.76
+0.68
+O O O
+60
+Total
+Total
+79.71
+71.2
+367
+Soot
+NOX
+SO₂
+Baotou Energy Wanli First
+Colliery
+hour
+tonne/year
+emission
+mg/Nm3
+facilities
+emissions
+outlets Distribution of emission outlets
+emissions
+emissions concentration
+pollutants
+Name of the entity
+Excessive prevention
+Emission
+tonne
+(IV) Actions Taken by the Company to Protect Ecology, Prevent Pollution and Take
+on Environmental Responsibilities
+Section VI Environmental and Social Responsibility (Continued)
+In 2023, the Group paid a total fee of RMB2.02 million for the non-assurance services such as
+inspection of properties and land, consultation on tax-related risks, provided by other institutions
+under common control as the aforesaid auditors.
+II.
+(V) Measures and Effects Taken to Reduce Carbon Emissions during the Reporting
+Period
+described
+DETAILS OF THE COMPANY'S ACTIVE FULFILMENT OF SOCIAL
+RESPONSIBILITIES
+Internal Control Auditor
+Applicable ✓ Not applicable
+VII. MATERIAL LITIGATION AND ARBITRATION
+☐ Applicable Not applicable
+As at the end of the Reporting Period, the Group was not involved in any material litigation or
+arbitration. As far as the Group was aware, the Group did not have any material litigation or claim
+which was pending or threatened against the Group.
+As at 31 December 2023, the Group was the plaintiff, defendant or the party of certain non-
+material litigations and arbitrations. The management believes that any possible legal liability
+which may be incurred from the aforesaid cases will not have any material impact on the financial
+position of the Group.
+VIII. SANCTIONS AND RECTIFICATIONS IMPOSED ON THE LISTED COMPANY AND
+ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING
+SHAREHOLDER, DE FACTO CONTROLLER AND ACQUIRERS
+KPMG Huazhen LLP
+☐ Applicable ✓ Not applicable
+Section VII Significant Events (Continued)
+IX. EXPLANATION FOR INTEGRITY OF THE COMPANY AND ITS CONTROLLING
+SHAREHOLDER AND DE FACTO CONTROLLER
+Applicable ✓ Not applicable
+After enquiring the National Enterprise Credit Information Publicity System, neither the Company
+nor China Energy, the controlling shareholder of the Company, was included in the list of
+enterprises with serious illegal and dishonest acts during the Reporting Period.
+X. MATERIAL RELATED PARTY/CONNECTED TRANSACTIONS
+(I) Related Party/Connected Transactions During the Daily Operation
+The Company has a related party/connected transaction team under the direct supervision
+of the Chief Financial Officer, which is responsible for the management of related party/
+connected transactions; and the Company has established a business process, which
+properly delineates the responsibilities of the Company, its subsidiaries and branches in the
+management of related party/connected transactions. The Company has also established
+routine examinations, reporting systems and accountability systems in the subsidiaries
+and branches of the Company, as to ensure the related party/connected transactions be
+conducted in accordance with the terms of framework agreement.
+170 China Shenhua Energy Company Limited
+RMB0.95 million
+In 2023, the above two auditors did not serve as the external auditors of subsidiaries of the
+Company. In 2023, the audit fee of the Company remained unchanged from last year.
+Remuneration
+☐ Applicable Not applicable
+V. APPOINTMENT AND REMOVAL OF AUDITORS
+Name of Domestic Auditors of the Company
+Name of Audit Partner of Domestic Auditors of the Company
+Remuneration of Domestic Auditors of the Company (RMB million)
+Term of Auditing of Domestic Auditors of the Company (year)
+Name of Certified Public Accountant of Domestic Auditors of
+the Company
+Cumulative Term of Audit Services of Certified Public Accountant of
+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
+Zhang Nan
+7.15
+Zhang Nan, Wang Xia
+5
+KPMG
+1.4
+5
+2023 Annual Report 169
+On 16 June 2023, KPMG Huazhen LLP and KPMG were appointed as the domestic and
+international (Hong Kong) auditors of the Company respectively for 2023 at the Company's 2022
+annual general meeting. The Company did not replace auditors in any year of the last three years.
+Name
+As at the end of the Reporting Period and during the Reporting Period, the continuing
+related party/connected transaction agreements entered into by the Company include:
+1.
+Non-exempt Continuing Related Party/Connected Transactions Between the
+Group and China Energy Group
+China Energy holds 69.52% equity interest in the Company, and it is the related party
+of the Company as defined under the Shanghai Listing Rules and the connected
+person of the Company as defined under the Hong Kong Listing Rules. On 22 October
+2021, the Company's 2021 first extraordinary general meeting approved the 2021-
+2023 Mutual Coal Supply Agreement (the "Mutual Coal Supply Agreement") and
+the 2021-2023 Mutual Supplies and Services Agreement (the "Mutual Supplies and
+Services Agreement") with China Energy on 27 August 2021, and determined the
+annual transaction caps of such daily related party/connected transactions for the
+years from 2021 to 2023. These agreements expired on 31 December 2023. Due
+to the rise in coal and service prices and the increase in demand, the Company's
+2021 annual general meeting held on 24 June 2022 approved the revision of both
+the annual caps for supply of coal by the Group to China Energy Group for the years
+from 2021 to 2023 under the Mutual Coal Supply Agreement and the annual caps for
+supply of products and services by the Group to China Energy Group for the years
+from 2022 to 2023 under the Mutual Supplies and Services Agreement. (Please
+refer to the Company's H share announcement dated 25 March 2022 and A share
+announcement dated 26 March 2022)
+(6)
+The transportation fees.
+2023 Annual Report 173
+Section VII Significant Events (Continued)
+B.
+Where the price of mutual coal supplies between both parties is not applicable
+under the pricing principles of this agreement due to any changes by laws
+and regulations, policies and market of China, both parties may adjust pricing
+principles based on aforesaid changes.
+The Mutual Supplies and Services Agreement entered into between the
+Company and China Energy
+On 27 August 2021, the Company entered into the Mutual Supplies and
+Services Agreement with China Energy. The Mutual Supplies and Services
+Agreement was effective from 1 January 2021 and expired on 31 December
+2023. Pursuant to the Mutual Supplies and Services Agreement, the Group and
+China Energy Group mutually supplied products and provided services.
+The pricing principles for the products and services provided under the Mutual
+Supplies and Services Agreement are set out below:
+(1) General pricing principles
+a.
+b.
+C.
+Government-prescribed price and government-guided price: if at
+any time, the government-prescribed price is applicable to any
+particular product or service, such product or service shall be
+supplied at the applicable government-prescribed price. Where
+a government-guided fee standard is available, the price shall be
+agreed within the range of the government-guided price.
+Tender and bidding price: where tender and bidding process is
+necessary under applicable laws and regulations, the price shall be
+ultimately determined in accordance with the tender and bidding
+process.
+Market price: shall be determined in accordance with normal
+commercial terms and on the following basis: the price of the same
+or similar products or services provided by an independent third
+party during its ordinary course of business on normal commercial
+terms. The management shall consider at least two comparable
+transactions with independent third parties for the same period
+when determining whether the price for any product or service
+transaction under this agreement is the market price. The Group
+shall conduct market price research through industry websites and
+various independent industry information providers, and participate
+in activities organised by leading industry organisation.
+174 China Shenhua Energy Company Limited
+The quantity of coal; and
+(III) The Company's Analysis and Explanation about the Reasons for and Impact
+of Correction to Material Previous Errors
+(5)
+The current trading coal prices of the local coal exchange or market in
+the PRC, i.e., the coal price with the same quality that is offered to or
+offered by independent third parties under normal market conditions and
+normal commercial terms in the same or nearby regions. For local spot
+coal price, reference is generally made to (i) the spot price index of the
+local coal exchange or market in Bohai-rim region or nearby provinces as
+published on China Coal Market Website (www.cctd.com.cn) operated
+by China Coal Transportation and Distribution Association in the PRC; (ii)
+the sale price of local large-scale coal enterprises as published by each
+coal industry website (if any); and/or (iii) the price quotations of a number
+of enterprises with comparable quality, quantity and location (if any);
+2023 Annual Report 171
+Section VII Significant Events (Continued)
+Finance Company is 60% owned by China Energy, the Company's controlling
+shareholder, and the Finance Company is a related party of the Company as defined
+under the Shanghai Listing Rules and the connected person of the Company as
+defined under the Hong Kong Listing Rules. Within its business scope, the Finance
+Company provides the members of the Group with financial services. The Company's
+2020 annual general meeting held on 25 June 2021 approved the 2021-2023 Financial
+Services Agreement (the "Financial Services Agreement") entered into between the
+Company and the Finance Company on 26 March 2021 and the annual transaction
+caps from 2021 to 2023 for such related party/connected transactions during
+the daily operation thereunder. In view of the significant increase in the Group's
+demand for deposit and settlement and other financial services provided by the
+Finance Company as a result of the continuous increase in the Group's business
+scale and the cash and bank balances held, on 28 October 2022, the Company's
+2022 first extraordinary general meeting approved the Supplementary Agreement to
+the Financial Services Agreement (the "Supplementary Agreement") entered into
+between the Company and the Finance Company, which revised certain terms of the
+Financial Services Agreement, and revised the annual caps for daily deposit balance
+(including interests accrued thereon) of deposits placed by the Company and its
+controlling subsidiaries with the Finance Company for 2022 and 2023. The term of
+validity of the Supplementary Agreement was from 1 January 2022 to 31 December
+2023. (Please refer to the Company's H share announcement dated 23 September
+2022 and A share announcement dated 24 September 2022)
+Guoneng (Beijing) Commercial Factoring Co., Ltd. ("Guoneng Factoring") is an
+indirect wholly-owned subsidiary of China Energy, a controlling shareholder of the
+Company. Accordingly, Guoneng Factoring is a related party of the Company as
+defined under the Shanghai Listing Rules and the connected person of the Company
+as defined under the Hong Kong Listing Rules. On 28 April 2023, the Company and
+Guoneng Factoring entered into the Factoring Service Agreement between China
+Shenhua Energy Company Limited and Guoneng (Beijing) Commercial Factoring
+Co., Ltd. ("Factoring Services Agreement") and agreed on the annual caps for the
+transactions for the years from 2023 to 2025 thereunder, effective from 1 January
+2023 to 31 December 2025. Pursuant to Factoring Services Agreement, Guoneng
+Factoring has agreed to provide the members of the Group with factoring services
+(including recourse factoring, non-recourse factoring, reverse factoring, etc.) and
+factoring-related services such as relevant consulting, agency, asset management,
+and supply chain finance platform services. (For details, please refer to the H share
+announcement of the Company dated 28 April 2023 and the A share announcement
+of the Company dated 29 April 2023)
+172 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+A.
+The Mutual Coal Supply Agreement entered into between the Company
+and China Energy
+On 27 August 2021, the Company entered into the Mutual Coal Supply
+Agreement with China Energy. The Mutual Coal Supply Agreement was
+effective from 1 January 2021 and expired on 31 December 2023. Pursuant
+to the Mutual Coal Supply Agreement, the Group and China Energy Group
+mutually supplied coal.
+The pricing policy for mutual coal supply under the Mutual Coal Supply
+Agreement sets out below: the supply price under this agreement is calculated
+by the unit price RMB/tonne multiplied by the actual weight. The unit price of
+coal shall be determined by both parties after arm's length negotiations with
+reference to the market price and conditions and the following factors, provided
+that the transaction terms shall not be less favourable than those provided by
+independent third parties:
+(1)
+(2)
+(3)
+(4)
+In 2023, the Company established a low-carbon development leadership team and issued
+the 2023 Low-carbon Development Work Plan to steadily advance low-carbon development.
+Firstly, the Group optimised the safe, clean, efficient and intelligent development and
+utilisation of coal, promoted green coal exploitation processes and implemented ecological
+environmental governance projects. The Group put into operation four clean and high-
+efficiency generating units with a capacity of one million KW, so as to tap into the full
+potential of coal power in supporting and regulating production operations. Secondly, the
+Group accelerated the cultivation of new energy development momentum, making full
+use of land resources such as the dump site of open-cut mine and reclamation areas,
+the Group has already constructed and put into production photovoltaic project with
+512,000 KW. Thirdly, the Group promoted the intelligent and intensive development
+of the industry. The Group continuously improved energy efficiency by optimising
+production processes and promoting energy-saving technology transformation, energy-
+saving technology transformation. The "linkage of three reforms" of existing coal power
+units have made further progress, resulting in a year-on-year decrease of 0.61% in standard
+coal consumption for power supply of coal-fired power generators. The Group explored
+the development of clean fuels based on the utilisation of hydrogen and ammonia energy,
+improved the upgrading of technology and equipment by, for example, replacing coal
+with electricity and replacing oil with electricity, with key projects such as "Research and
+Engineering Verification of Key Technologies for 600MW Coal-fired Boiler Mixed Ammonia
+Combustion" achieved breakthroughs in core technologies. Fourthly, the Group promoted
+the comprehensive coordination and management of carbon assets. Our affiliated emission
+control enterprises have fulfilled their obligations in the carbon market, with a total of 6.598
+million tonnes of quotas traded throughout the year, amounting to approximately RMB462
+million (excluding taxes). The Shendong Coal Baode Colliery's "Underground and Surface
+Joint Efficient Drainage Demonstration Project for Coal Mine Gas" has been designated
+as one of the first-batch demonstration projects for efficient drainage and utilisation of
+mine gas by the National Energy Administration. The CCUS device at Jinjie Energy's power
+plant has captured over 30,000 tonnes of CO2 throughout the year. The subsidiaries have
+I given full play to carbon reduction and carbon sequestration through tree planting, land
+reclamation, etc., and advanced natural carbon sink.
+The national industrial policy as well as industry and market conditions
+in the PRC;
+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 quality of the coal (including the estimated calorific value of coal as
+required by different coal-fired power generating units);
+The changes in above accounting policies have been considered and approved at the 21st
+meeting of the fifth session of the Board of the Company.
+Section VII Significant Events (Continued)
+Section VII Significant Events (Continued)
+perform in
+Any
+timely and
+performance
+time, future
+Background of Type of
+Undertaking
+undertakings undertakings
+The Group has implemented Amendments to International Accounting Standard No. 12,
+"Deferred Tax Related to Assets and Liabilities arising from a Single Transaction" to which
+the provision applies from 1 January 2023. Taxable and deductible temporary differences
+arising on recognition of assets and liabilities in a single transaction to which the provision
+applies are no longer subject to the accounting treatment of initial recognition exemption for
+deferred tax. According to the relevant requirements of International Accounting Standard
+No. 12, "Income Taxes", the corresponding deferred tax liabilities and assets shall be
+recognised respectively at the time of the transaction. Meanwhile, for the deferred tax
+related to assets and liabilities arising from the related single transactions between the
+beginning of the earliest period presented in the financial statements in which the Group
+first applied the above provisions and the effective date, the retrospective adjustments
+shall be made. Such retrospective adjustments have no material impact on the financial
+statements of the Group. For details, please refer to the "Changes in Accounting Policies"
+as set out in the Notes to the Financial Statements for the year 2023 prepared by the
+Company according to the International Financial Reporting Standards.
+Contents of undertakings
+Date of
+Commitment
+deadline for Duration of
+strictly
+shall be
+plans shall be
+performance Commitment
+performed
+started
+VI. INSOLVENCY OR RESTRUCTURING RELATED MATTERS
+incomplete
+Undertaking
+Whether
+for the
+Please refer to the 2023 Environmental, Social and Governance Report of the Company.
+2023 Annual Report 165
+Section VI Environmental and Social Responsibility (Continued)
+III. DETAILS OF THE COMPANY'S EFFORTS TO CONSOLIDATE AND EXPAND THE
+ACHIEVEMENTS OF POVERTY ALLEVIATION AND RURAL REVITALISATION
+In 2023, the Group thoroughly studied and implemented the important expositions and important
+instructions of General Secretary Xi Jinping on the work related to agriculture, rural areas and
+rural residents, resolutely fulfilled the political and social responsibilities entrusted to central
+enterprises, and fully consolidated the achievements of poverty alleviation in three targeted
+assistance counties based on local resource endowments, i.e. Mizhi County and Wubu County
+in Shaanxi Province and Butuo County in Sichuan Province. The Group firmly upheld the bottom
+line of preventing people from returning to poverty on a large scale and comprehensively
+promoted the revitalisation of industry, talent, culture, ecology, and organisation, strengthened
+industrial assistance, cultivated and expanded rural industrial projects to facilitate the sustainable
+development of local specialty industries. The Group enhanced the supply of basic public
+services in rural areas, improved the living environment for local residents, and built liveable
+and prosperous rural areas. The Group motivated the inner driving forces by increasing people's
+confidence and helping them acquire knowledge and skills, expanded the scope of consumption-
+based aid to assist more poor and low-income people in seeking employment in nearby places.
+During the Reporting Period, the Group invested approximately RMB74.55 million in assistance
+funds to the three targeted counties, introduced external assistance funds of RMB 600,000,
+implemented 31 projects such as industrial assistance and infrastructure construction, trained
+5,749 technical professionals and grass-root cadres, recruited 27 undergraduates from families
+with financial difficulties to work for the subsidiaries of China Shenhua, and agricultural product
+purchases and sales amounted to RMB28.37 million.
+In 2023, Ding Hongyan, the first accredited secretary of Sichuan Energy in Bozuo Village, Butuo
+County, was awarded the honorary title of "Excellent First Accredited Secretary in the Province".
+The achievements of rural revitalisation by Sichuan Energy were selected as one of the nine
+typical cases of assistance by the Provincial State-owned Assets Supervision and Administration
+Commission. The targeted assistance working group of Shendong Coal was awarded the title of
+"Advanced Collective in Assistance" in Shaanxi Province, and Shendong Coal was ranked first in
+the "2023 Consumption Assistance Enterprise Contribution Ranking" in Ordos City.
+Apart from the targeted counties, the Company's headquarters and 16 subsidiaries continued to
+join hands with local communities for shared development, offered assistance to targeted regions
+and provide paired supports. During the Reporting Period, the Group implemented 48 relevant
+projects and donated RMB170 million in total.
+For more information on environmental and social responsibilities, please refer to the Company's
+2023 Environmental, Social and Governance Report.
+166 China Shenhua Energy Company Limited
+Section VII
+Significant Events
+I. PERFORMANCE OF COMMITMENTS
+In case of
+failure to
+perform in
+time, the
+specific
+reasons
+In case of
+failure to
+Non-competition China Energy The two parties entered into the
+party
+Long-term:
+potential competition.
+For details of the commitment, please refer to "Avoidance of Competition" of Section V of this
+report.
+2023 Annual Report 167
+Section VII Significant Events (Continued)
+II.
+III.
+APPROPRIATION OF FUNDS BY ITS CONTROLLING SHAREHOLDER AND
+OTHER RELATED PARTIES FOR NON-OPERATIONAL PURPOSES DURING
+THE REPORTING PERIOD
+☐ Applicable ✓ Not applicable
+24 May 2005; Yes
+Applicable ✓ Not applicable
+IV. AUDIT OPINIONS AND OTHER EXPLANATIONS
+(1)
+Explanation from the Board and the Supervisory Committee for the "Non-
+standard Audit Report" Issued by the Auditors
+☐ Applicable ✓ Not applicable
+(II) The Company's Analysis and Explanation about the Reasons for and Impact of
+Changes in Accounting Policies, Accounting Estimates or Accounting Method
+The Group has implemented the Interpretation of Accounting Standards for Business
+Enterprises No. 16, which provides that the accounting treatment of initial recognition
+exemption does not apply to taxable and deductible temporary differences arising on
+recognition of assets and liabilities in a single transaction from 1 January 2023. For taxable
+and deductible temporary differences arising on recognition of assets and liabilities in a
+single transaction to which the provision applies, corresponding deferred tax liabilities
+and deferred tax assets shall be recognised respectively at the time of the transaction
+according to Accounting Standards for Business Enterprises No. 18, "Income Taxes" and
+other relevant provisions. Meanwhile, for the deferred tax related to assets and liabilities
+arising from the related single transactions between the beginning of the earliest period
+presented in the financial statements in which the Group first applied the above provisions
+and the effective date, the retrospective adjustments shall be made. Such retrospective
+adjustments have no material impact on the financial statements of the Group. For details,
+please refer to the "Major Changes in Accounting Policies" as set out in the Notes to the
+Financial Statements for the year 2023 prepared by the Company according to the PRC
+Accounting Standards for Business Enterprises.
+168 China Shenhua Energy Company Limited
+and assets which may pose
+any business opportunities
+GUARANTEES IN VIOLATION OF REGULATIONS
+27 August
+connection
+N/A
+1 March
+2018
+N/A
+progress
+2028
+with initial
+public
+offering
+undertaking
+"Non-competition Agreement"
+on 24 May 2005, the
+"Supplemental Agreement to
+the Existing Non-Competition
+Agreement" on 1 March
+2018, and the "Supplemental
+Agreement II to the Existing
+Non-Competition Agreement"
+on 28 April 2023. As the
+Company is an integrated
+platform which is responsible
+for the coal business and
+affiliated to China Energy,
+China Energy has undertaken
+not to compete with the
+Company in respect of the
+Company's core businesses
+(coal exploration, mining,
+processing, sales; production
+and sales of comprehensive
+utilization of coal products;
+development and management
+of mineral products;
+and ancillary services
+related to the business
+aforementioned) whether
+inside of outside of the PRC,
+and granted the Company
+options and pre-emptive rights
+to acquire and be transferred
+Yes, in
+railway transportation; port
+transportation; the industry
+made in
+Equipment supply: tender and bidding price.
+C.
+Overhaul services and railway track maintenance services: agreed
+price or tender and bidding price.
+b.
+a. Rolling stock usage: agreed price.
+In addition to the above, for certain types of products or service, the
+following pricing policy is adopted:
+2023 Annual Report 183
+Agreed price: to be determined by adding a reasonable cost and a
+reasonable profit margin. The management shall consider at least
+two comparable transactions with independent third parties for the
+same period when determining the reasonable profit of any product
+or service under this agreement.
+182 China Shenhua Energy Company Limited
+Business consulting and technical services: agreed price or tender
+and bidding price.
+Section VII Significant Events (Continued)
+184 China Shenhua Energy Company Limited
+the Company and China Railway
+Framework Agreement between
+5.2
+d.
+d.
+(3)
+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;
+On 22 March 2024, the twenty-seventh meeting of the fifth session
+of the Board of the Company approved the Factoring Services
+Agreement for the years from 2024 to 2025 (the "New Factoring
+Services Agreement") entered into between the Company and
+Guoneng Factoring and the transaction cap amounts for each of the
+years from 2024 to 2025 thereunder. The New Factoring Services
+Agreement shall be effective from 1 January 2024 and expire on
+31 December 2025. Meanwhile, the original Factoring Services
+Agreement shall be terminated from the date on which the New
+Factoring Services Agreement becomes effective. For details,
+please refer to the Company's H share announcement dated 22
+March 2024 and A share announcement dated 23 March 2024.
+On 16 June 2023, the 2022 annual general meeting of the
+Company approved the Mutual Coal Supply Agreement for 2024-
+2026 and the Mutual Supplies and Services Agreement from 2024
+to 2026 entered into between the Company and China Energy on
+28 April 2023, and the Financial Services Agreement from 2024 to
+2026 entered into between the Company and Finance Company,
+and determined the annual cap amounts of such related party/
+connected transactions for each year from 2024 to 2026, with
+effect from 1 January 2024 and expiring on 31 December 2026. For
+details, please refer to the H share announcement of the Company
+dated 28 April 2023, the A share announcement of the Company
+dated 29 April 2023 and the circular of the general meeting of the
+Company dated 17 May 2023.
+3.
+Implementation of and Review Opinions on the Non-exempt Continuing Related
+Party/Connected Transactions
+In 2023, the implementation of the abovementioned agreements A to E is set out in
+the table below. In particular, the total amount of related party/connected transactions
+for sale of products and provision of services by the Group to China Energy Group
+under the Mutual Coal Supply Agreement and the Mutual Supplies and Services
+Agreement amounted to RMB112,084 million, representing 32.7% of the revenue
+of the Group during the Reporting Period.
+10,494
+Provision of products and services
+by the Group to related
+2023 Annual Report 181
+Section VII Significant Events (Continued)
+Section VII Significant Events (Continued)
+The price of other products and services mutually provided by the China
+Railway Group and the Group shall be determined in accordance with
+the following general principles and order:
+a.
+b.
+C.
+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;
+Market price: the price shall be determined according to the
+prices of the same or similar products or services provided by an
+independent third party during its ordinary course of business on
+normal commercial terms. The management shall consider at least
+two comparable transactions with independent third parties for the
+same period when determining whether the price for any product
+or service transaction under this agreement is the market price;
+and
+20,000
+The specified guidelines issued by NDRC setting out the coal
+purchase prices (if any);
+2,317
+transactions
+RMB million
+RMB million
+%
+RMB million
+RMB million
+%
+A.
+Mutual Coal Supply Agreement
+Period
+99,000
+42.4
+29,000
+The estimated transportation fees.
+f.
+The quantity of coal; and
+e.
+The quality of the coal (including the estimated calorific value of
+coal as required by different coal-fired power generating units);
+For local spot coal price, reference is made to (i) the spot price
+index of the local coal exchange or market in Bohai-rim region or
+nearby provinces as published on the website of China Coal Market
+Website (www.cctd.com.cn) operated by China Coal Transportation
+and Distribution Association in the PRC; (ii) the sale price of local
+large coal enterprises as published by each coal industry website
+(if any); and/or (iii) price quotation of one or more other enterprises
+with comparable quality, quantity and location (if any);
+The current coal transaction price of the local coal exchange or
+market in the PRC, i.e., the price of the coal with comparable
+quality that is sold to or by independent third parties under normal
+market conditions and normal commercial terms in the same or
+nearby regions.
+93,939
+сар
+transactions
+Period
+Purchase of products and services from
+related parties/connected persons by
+the Group and other outflows
+Transaction
+Name of agreement
+parties/connected persons and other inflows
+Transaction
+Existing
+amount
+Proportion
+effective
+during the
+in the same
+Existing
+effective
+amount
+Proportion
+during the
+in the same
+transaction
+Reporting
+type of
+Reporting
+type of
+cap
+The national industrial policy as well as industry and market
+conditions in the PRC;
+d.
+C.
+b.
+B.
+Mutual Supplies and Services
+39,000
+18,145
+17,000
+7,357
+Agreement between the
+Company and China Energy
+including: Products
+6,948
+7.6
+2,937
+2.7
+2 Services
+11,197
+36.5
+4,420
+14.1
+E.
+Continuing Connected Transactions
+7,400
+Energy
+1.0
+between the Company and China
+12,430
+a.
+The price of coal mutually supplied by the China Railway Group and
+the Group is the product of the unit price RMB/tonne multiplied by the
+actual weight. The unit price of coal shall be determined by both parties
+after arm's length negotiations with reference to the market price and
+conditions and the following factors, provided that the transaction terms
+shall not be less favourable than those provided by independent third
+parties:
+(2)
+Section VII Significant Events (Continued)
+180 China Shenhua Energy Company Limited
+If neither comparable market prices nor prices of non-connected
+transactions are available for reference, the prices shall be
+determined upon negotiation according to the aggregate of the
+total actual costs for providing the relevant services, reasonable
+profits and taxes and additional charges paid.
+If none of the above-mentioned pricing standards is available,
+the prices shall be determined with reference to the prices of
+non-connected transactions between the connected persons and
+independent third parties;
+Except for applying the prices specified by the government, the
+guidance prices set by the government and the industry settlement
+rules, if there are comparable market prices or pricing standards,
+priority shall be given to such market prices or pricing standards
+as reference to determine the prices upon negotiation;
+If the prices are not specified by the government and the
+government has not set applicable guidance prices, the prices
+shall be determined in accordance with the applicable industry
+price settlement rules;
+If the prices are not specified by the government, the prices
+shall be determined in accordance with the pricing standards and
+rules of national railways within the guidance prices set by the
+government;
+The prices as determined by the government;
+f.
+e.
+d.
+C.
+b.
+a.
+The prices of transportation service mutually provided by the China
+Railway Group and the Group shall be determined in the following
+priority:
+(1)
+The prices of the transactions under the Continuing Connected Transactions
+Framework Agreement shall be agreed in the implementation agreements in
+accordance with the following general pricing principles:
+Section VII Significant Events (Continued)
+20.1
+transaction
+If the above pricing principles cannot be applied by China Railway
+Group and the Group due to changes in national laws, regulations,
+policies and other circumstances, China Railway Group and the
+Group can adjust the pricing principles of corresponding services
+according to such changes.
+China Railway Taiyuan Group Co., Ltd. ("Taiyuan Railway Bureau") is the
+parent company of Daqin Railway Co., Ltd., which is a substantial shareholder
+of Shuohuang Railway, a significant subsidiary of the Company. China Railway
+is the controlling shareholder of Taiyuan Railway Bureau. Therefore, China
+Railway constitutes a connected person of the Company under the Hong
+Kong Listing Rules. On 28 October 2022, the Company and Taiyuan Railway
+Bureau which acted for and on behalf of China Railway entered into the 2023
+to 2025 Continuing Connected Transactions Framework Agreement (the
+"Continuing Connected Transactions Framework Agreement"), effective from
+1 January 2023 to 31 December 2025. Pursuant to the Continuing Connected
+Transactions Framework Agreement, the Group and China Railway Group
+(China Railway and its subsidiaries, including Taiyuan Railway Bureau Group
+(including Taiyuan Railway Bureau and its subsidiaries)) have agreed to provide
+transportation service, supply coal and provide other products and services to
+each other.
+Hardware and software equipment and related technology services:
+market price (including tender and bidding price).
+f.
+Chemical products: market price.
+g.
+Production equipment and spare parts, office products: market
+price.
+2023 Annual Report 175
+Power transaction: government-guided price shall prevail if there
+is any; the uniform clearing price shall prevail in centralised
+price bidding transaction; the independent negotiated transaction
+shall refer to transaction price of the recent market comparable
+transactions.
+Section VII Significant Events (Continued)
+k.
+I.
+m.
+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 mechanisms and fee standards, with
+reference to the market customs of the information technology
+industry, actual standards and market price, taking into account
+the actual condition of the Company's information technology
+construction.
+Logistics and support services and training services: agreed price
+(cost plus a profit margin of approximately 5%).
+h.
+Basic social security and pension management services and staff
+data recording services: agreed price (cost plus a profit margin of
+approximately 5%).
+Refined oil products: the government-guided price.
+Rail transportation: price prescribed by National Development and
+Reform Commission of the People's Republic of China (NDRC) and
+other related government competent authorities.
+The aforesaid transactions under agreements A to D are related
+party transactions as defined under the Shanghai Listing Rules, and
+the aforesaid transactions under agreements A to E are continuing
+connected transactions as defined under the Hong Kong Listing
+Rules.
+2023 Annual Report 179
+Tendering services: price prescribed by National Development and
+Reform Commission of the People's Republic of China.
+i.
+j.
+Section VII Significant Events (Continued)
+Construction: where tender and bidding process is necessary under
+applicable laws and regulations, the price ultimately determined
+in accordance with the tender and bidding process; where tender
+and bidding process is not necessary under applicable laws and
+regulations, the market price will be enforced.
+(2)
+In addition to the above, the parties further agree on the following pricing
+policies in respect of following products and services:
+a.
+b.
+C.
+d.
+e.
+d.
+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%).
+Agreed price: to be determined by adding a reasonable profit
+margin over a reasonable cost. The management shall consider at
+least two comparable transactions with independent third parties
+for the same period when determining the reasonable profit of any
+product or service transaction under the Agreement. The Group
+shall conduct market price research through industry websites and
+various independent industry information providers, and participate
+in activities organised by leading industry organisation.
+176 China Shenhua Energy Company Limited
+Subject to compliance with the relevant rules and regulations of
+PBOC, CBIRC and other relevant regulatory authorities, the service
+fees charged by Finance Company for the provision of the above
+financial services to the members of the Group shall be not more
+than the service fees charged by major commercial banks in the
+PRC for comparable financial services provided to the members of
+the Group and shall be negotiated in normal commercial terms.
+The Factoring Services Agreement entered into by the Company and
+Guoneng Factoring
+On 28 April 2023, the Company entered into the Factoring Services Agreement
+with Guoneng Factoring, with a valid period from 1 January 2023 to 31
+December 2025. Pursuant to the Factoring Services Agreement, Guoneng
+Factoring agreed to provide members of the Group with factoring services
+(including recourse factoring, non-recourse factoring, reverse factoring, etc.)
+and factoring-related services such as consulting, agency, asset management,
+and supply chain finance platform services.
+The pricing principles for the provision of factoring services by Guoneng
+Factoring to members of the Group are as follows:
+(1)
+For the provision of factoring services by Guoneng Factoring to members
+of the Group, the financing cost shall not be higher than that determined
+by an independent third-party factoring company for providing the
+same kind of services to the member of the Group, and it should be
+determined on normal commercial terms. Where it is difficult to obtain
+the financing fee determined by the independent third-party factoring
+company for providing the same kind of services, it shall not be higher
+than the financing fee calculated based on the Loan Prime Rate (LPR) of
+the PBOC for the same period;
+Finance Company can provide paid consultation, agency,
+settlement, transfer, investment, letter of credit, online banking,
+entrusted loan, guarantee, bill acceptance and other related
+services to the members of the Group.
+178 China Shenhua Energy Company Limited
+(2)
+For the service fee charged for the provision of other relevant services by
+Guoneng Factoring to members of the Group, the service fee shall not be
+higher than that charged by an independent third-party factoring company
+for providing the same kind of services to members of the Group, and it
+should be determined on normal commercial terms. Where it is difficult
+to obtain the service fee charged by the independent third-party factoring
+company for providing the same kind of services, it shall be determined
+at the cost plus a reasonable profit margin (around 10%).
+Continuing Connected Transactions Framework Agreement between the
+Company and China State Railway Group Co., Ltd. ("China Railway")
+Where the price of mutual supplies and services between the Group
+and China Energy Group is not applicable under the pricing principles of
+this agreement due to the changes in laws and regulations, policies and
+the market of China, both parties may adjust the pricing principles of
+respective supplies and services based on aforesaid changes.
+Non-exempt Continuing Connected Transactions Between the Group and Other
+Parties
+E.
+Section VII Significant Events (Continued)
+b.
+2.
+In terms of paid services provided by Finance Company to the members
+of the Group:
+C.
+a.
+On 26 March 2021, the Company entered into the Financial Services Agreement
+with the Finance Company. The Financial Services Agreement was effective
+from 1 January 2021 to 31 December 2023. On 28 October 2022, the
+Company's first extraordinary general meeting in 2022 approved the signing
+of the Supplementary Agreement between the Company and the Finance
+Company, effective from 1 January 2022 to 31 December 2023. Pursuant to the
+Financial Services Agreement, Finance Company would provide comprehensive
+credit (without any pledge and guarantee provided by the members of
+the Group) and other financial services to the members of the Group, and
+the members of the Group may place deposits in Finance Company. The
+pricing policy of the Financial Services Agreement (revised according to the
+Supplementary Agreement) is as follows:
+In terms of deposits and loans or similar services provided by Finance
+Company to the members of the Group, subject to compliance with the
+relevant rules and regulations of People's Bank of China (the "PBOC"),
+the China Banking and Insurance Regulatory Commission (currently
+known as the "National Financial Regulatory Administration") and other
+relevant regulatory authorities:
+Section VII Significant Events (Continued)
+a.
+b.
+(1)
+The interest rates for deposits placed by the members of the
+Group with Finance Company shall be not less than the benchmark
+deposit interest rate for the same period published by the PBOC
+and the interest rate paid by major commercial banks in the PRC
+for comparable deposits services provided to the members of the
+Group and shall be negotiated in normal commercial terms.
+(2)
+D.
+Section VII Significant Events (Continued)
+The Financial Services Agreement entered into between the Company and
+finance Company
+2023 Annual Report 177
+The interest rates for loans granted by Finance Company to the
+members of the Group shall be not more than the loan prime
+rate for the corresponding period stipulated by the PBOC or the
+interest rates stipulated by major commercial banks in the PRC for
+comparable loans services provided to the members of the Group
+and shall be negotiated in normal commercial terms.
+(execution
+benefit of Related
+Beginning
+Guarantor
+Guarantee
+date of date of
+guaranteed agreement) guarantee
+Expiry date Type of
+of guarantee guarantee
+performance Whether Amount of counter
+has been guarantee guarantee guarantee related
+completed is overdue overdue is provided parties
+guarantor
+and the listed
+company
+Amount
+No
+relationship
+Baorixile Energy Controlling
+subsidiary
+Hulunbei'er Liangyi 53.12 2008.08.30 2008.08.30 2029.08.29 Joint and several No
+Railway Company
+liability
+Limited
+0 No
+No
+NA
+N/A
+guarantee
+is for the
+Total amount of guarantee provided during the Reporting Period
+(excluding guarantee provided to its subsidiaries)
+party
+Whether
+2023 Annual Report 191
+Whether
+guarantee
+(9.66)
+100,000
+3,578
+shareholder
+shareholder
+Finance Company Subsidiary of the controlling Issue of acceptance
+bill
+100,000
+7,943
+Finance Company Subsidiary of the controlling Intermediary business
+400
+7
+shareholder
+Note: The maximum daily balance of the comprehensive credit facilities (including loans, bill acceptance
+and discount, etc.) provided by Finance Company to the Group as approved by the general meeting
+of the Company is RMB100,000 million.
+Section VII Significant Events (Continued)
+XI. MATERIAL CONTRACTS AND THEIR PERFORMANCE
+(1) Trust, Contracting and Leasing
+During the Reporting Period, the Company did not enter into or have any management
+and administration contracts in respect of the whole or any material part of the business
+of the Company.
+(II) Guarantees
+Unit: RMB million
+1. Guarantee provided by the Company to external parties
+(excluding the guarantee granted to its subsidiaries)
+Date of
+Relation
+between the
+provision of
+guarantee
+Whether
+Total balance of guarantee at the end of the Reporting Period (A)
+(excluding guarantee provided to its subsidiaries)
+(2)
+2. Guarantee provided by the Company and its subsidiaries to its subsidiaries
+Section VII Significant Events (Continued)
+Finance Company Subsidiary of the controlling Bill discount
+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 at the end of the Reporting Period, Baorixile Energy, in proportion to its
+shareholding, repaid the principal on the loans on behalf of Liangyi Railway Company
+amounting to a total of RMB107.36 million. Baorixile Energy already made full
+provision for impairment on its 14.22% equity interests in Liangyi Railway Company
+and the repayment amount paid on its behalf. Together with other shareholders,
+Baorixile Energy will continue to call for improvement of business operation of Liangyi
+Railway Company. As at 31 December 2023, Liangyi Railway Company had a gearing
+ratio of 195%.
+As at the end of the Reporting Period, the amount of guarantee between subsidiaries
+in consolidated reports of the Company, in proportion to its shareholding, amounted
+to approximately RMB2,927.46 million, which was mainly due to the fact that
+Shenhua Hong Kong Limited, the wholly-owned subsidiary of the Company, provided
+guarantees for the rest USD413.33 million bonds among the total USD0.5 billion
+bonds issued by China Shenhua Overseas Capital Co., Ltd., its wholly-owned
+subsidiary.
+(III) Entrusted Cash Asset Management
+1. General Status of Entrusted Loans
+Closing
+Unit: RMB million
+Type of products
+Source of fund
+2023 Annual Report 193
+Amount
+incurred
+during the
+Reporting
+Period
+undue of the
+Unrecovered
+Reporting
+Period
+amount
+overdue
+Entrusted loans
+Own fund
+400
+0
+400
+Note: Amount incurred during the year refers to the daily maximum principal balance of such entrusted
+loans of the Group during the Reporting Period.
+194 China Shenhua Energy Company Limited
+balance
+As at the end of the Reporting Period, the guarantee provided by Baorixile Energy, a
+subsidiary of which the Company owns 56.61% equity interests, to external parties
+was as follows: prior to the acquisition of Baorixile Energy by the Company in 2011
+and pursuant to the Guarantee Agreement on the Syndicated Renminbi Loan for the
+Cooperative Railway Project Connecting Yimin and Yiershi Newly Constructed by
+Hulunbei'er Liangyi Railway Company Limited, in 2008, Baorixile Energy, as one of
+the guarantors, provided joint and several liability guarantee to Hulunbei'er Liangyi
+Railway Company Limited (hereinafter referred to as the "Liangyi Railway Company",
+of which Baorixile Energy owns 14.22% equity interests) for the syndicated loans.
+The major liability guaranteed was the debts due to the lender with a maximum
+balance of RMB207.47 million from 2008 to 2027, regardless of whether the debt
+is due when the above period expires. The above syndicated loans will fall due
+by tranches between 2011 and 2026. The guarantee agreement provides that the
+guarantee period of the debts borne by the guarantor shall be calculated from the due
+date of each tranche to two years after the due date of the last tranche, i.e. 2029.
+(1)
+As at the end of the Reporting Period, the total balance of the amount of guarantee provided
+by the Group amounted to RMB2,980.58 million, including:
+Total amount of guarantee provided to its subsidiaries during
+the Reporting Period
+(478.23)
+Total balance of guarantee provided to its subsidiaries at the end of
+the Reporting Period (B)
+2,927.46
+192 China Shenhua Energy Company Limited
+Section VII Significant Events (Continued)
+3. Total amount of guarantee (including guarantee provided to its subsidiaries)
+Total amount of guarantee (A+B)
+2,980.58
+Proportion of total amount of guarantee to the net assets attributable
+to shareholders of the Company at the end of the year under
+China Accounting Standards for Business Enterprises in 2023 (%)
+Including:
+0.7
+Amount of guarantee provided to its shareholders, de facto controller
+and their related parties (C)
+Amount of guarantee directly or indirectly provided to its 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
+2,980.58
+0
+2,980.58
+Please refer
+to below
+Please refer
+to below
+Note: The balance of guarantee provided by the subsidiary to external parties of the total amount of guarantee
+at the end of the Reporting Period equals to the amount of external guarantee of the subsidiary multiplied
+by the shareholding of the Company in the subsidiary.
+53.12
+the period
+Total amount
+Business Type
+10% of total deposits
+9
+Total amount of investment not higher than 70% of net capital
+<70%
+58.63%
+10
+Net amount of fixed assets not higher than 20% of net capital
+<20%
+0.05%
+The above monitoring indicators of the Finance Company meet the regulatory
+requirements.
+3.
+0.00%
+Deposit Business
+Amount for the period
+Related party
+Related party
+relationship
+Maximum
+daily deposit
+Deposit
+Total amount Total amount
+interest rate
+Opening
+deposited for
+Closing
+limit
+Unit: RMB million
+range
+≤10%
+8
+>25%
+33.89%
+3
+Loan balance not higher than 80% of the sum of the deposit
+balance and the paid-in capital
+≤80%
+78.05%
+4
+Total external liabilities not higher than net capital
+≤100%
+0.00%
+5
+Security deposits for bank acceptance bills not higher than
+Balance of bills acceptance not higher than 15% of the total
+3.25%
+assets
+6
+Balance of bill acceptance no more than 3 times of the
+balance of interbank deposits
+≤300%
+80.52%
+7
+Total amount of bills acceptance and rediscounting not higher
+≤100%
+24.50%
+than net capital
+≤15%
+balance
+the period
+the period
+Closing
+balance
+the period
+for the period
+balance
+Finance Company Subsidiary of the
+100,000 1.97%-4.26%
+25,719
+7,954
+22,681
+10,992
+of repayment
+controlling shareholder
+25,719
+7,954
+22,681
+10,992
+Note: "Loan limit" refers to the maximum daily balance (including accrued interest incurred) of the loans
+provided by Finance Company to the Group during the Reporting Period.
+5.
+Credit Facilities or Other Financial Business
+Unit: RMB million
+Related party
+Related party
+relationship
+Amount for
+Total
+of loan for
+Opening
+Loan interest
+rate range
+balance
+Finance Company Subsidiary of the
+75,000
+0.3%-3.2%
+58,850
+589,101
+573,485
+74,466
+controlling shareholder
+Total
+58,850
+589,101
+573,485
+74,466
+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.
+190 China Shenhua Energy Company Limited
+4.
+Loan Business
+Section VII Significant Events (Continued)
+Unit: RMB million
+Amount for the period
+Total amount
+Related party
+Related party
+relationship
+Loan limit
+Quota
+withdrawn for
+incurred
+2
+to the Group
+Related party relationship
+Related parties
+Funds offered by related parties
+Unit: RMB million
+(III) Debts and Liabilities Between Related Parties
+Section VII Significant Events (Continued)
+balance
+2023 Annual Report 187
+1. On 27 September 2023, the 23rd meeting of the fifth session of the Board of the
+Company considered and approved the Proposal on the Joint Establishment of PT.
+CHNENERGY INDONESIA ENERGY CORPORATION, approving that the Company and
+GD Power Development Co., Ltd. ("GD Power"), a controlling subsidiary of China
+Energy, shall contribute in cash in the amount of USD9 million and USD1 million,
+respectively, to establish a joint venture in the Republic of Indonesia ("Indonesia").
+The name of the joint venture approved by the Indonesian Investment Coordinating
+Board is PT. Guoneng Indonesia Energy ("Indonesian Energy"). GD Power is an
+associate of China Energy and a related/connected person of the Company, and the
+transaction contemplated under the Joint Venture Agreement for the establishment
+of the Indonesian Energy (the "Joint Venture Agreement") constitutes a related/
+connected transaction of the Company. As all applicable percentage ratios are less
+than 0.1%, all these transactions are exempt from the reporting, announcement and
+independent shareholders' approval requirements under Chapter 14A of the Hong
+Kong Listing Rules (for details, please refer to the H share announcement of the
+Company dated 27 September 2023 and the A share announcement of the Company
+dated 28 September 2023). As at the end of the Reporting Period, the Joint Venture
+Agreement was signed, and Indonesian Energy was incorporated. Its principal
+business covers the production and sales of electricity and heat, the development
+and application of new energy projects, high and new technology and environmental
+protection industry, and information consultant service, etc.
+(II) Material Related Party/Connected Transactions Regarding Joint External
+Investments
+Section VII Significant Events (Continued)
+186 China Shenhua Energy Company Limited
+21 types of related party transactions were disclosed in Note 42 of the financial
+statements for the year 2023 prepared by the Company under the International
+Financial Reporting Standards. According to the Hong Kong Listing Rules, except for
+the transactions under item ii "income from entrusted loans", the purchase of coal
+from affiliated companies of the Group under item ix "purchase of coal" and certain
+transactions under item xv "other income", all of the other related party transactions
+disclosed in Note 42 constituted connected transactions under the Hong Kong Listing
+Rules and were required to be disclosed in accordance with Chapter 14A of the Hong
+Kong Listing Rules. The Company has complied with the disclosure requirements of
+Chapter 14A of the Hong Kong Listing Rules in respect of disclosure of the above
+connected transactions and continuing connected transactions.
+KPMG, the international auditors of the Company, have reviewed the continuing
+connected transactions under the above agreements A to E and issued a letter to
+the Board, indicating that they were not aware of any matters for which they would
+consider that the above continuing connected transactions (1) were not approved
+by the Board of the Company; (2) were not conducted according to the Company's
+pricing policy in terms of all material aspects; (3) were not conducted according to
+the terms of the relevant agreements of transactions in terms of all material aspects;
+and (4) exceeded the caps.
+The independent non-executive directors of the Company have confirmed to the
+Board of the Company that they have reviewed the transactions contemplated
+under the abovementioned agreements A to E and are of the view that (1) those
+transactions were entered into in the ordinary course of business of the Group; (2)
+those transactions were on normal commercial terms or better terms; and (3) those
+transactions were conducted according to the agreements governing them on terms
+that are fair and reasonable and in the interest of the shareholders of the Company
+as a whole.
+2. On 28 December 2023, the 25th meeting of the fifth session of the Board of
+the Company approved the Company's proposal to contribute RMB60 million
+as a limited partner with its own funds, with a capital contribution ratio of
+30%, to the jointly establishment of the Guoneng Scientific and Technological
+Achievements Transformation Investment Fund (Limited Partnership) (the "Scientific
+and Technological Achievements Transformation Fund") in collaboration with Shaanxi
+Provincial Government Investment Leading Fund Partnership (Limited Partnership) and
+Guohua Energy Investment Co., Ltd (the "Guohua Investment") as limited partners
+and Guohua Investment Development Asset Management (Beijing) Co., Ltd. (the
+"Guohua Asset Management") as a general partner, and enter into the Partnership
+Agreement of Guoneng Scientific and Technological Achievements Transformation
+Investment Fund (Limited Partnership) (the "Partnership Agreement"). Guohua
+Investment and Guohua Asset Management are associates of China Energy and
+related/connected persons of the Company, and the transactions contemplated under
+the Partnership Agreement constitute related/connected transactions of the Company.
+As all applicable percentage ratios are less than 0.1%, all these transactions are
+exempt from the reporting, announcement and independent shareholders' approval
+requirements under Chapter 14A of the Hong Kong Listing Rules (for details, please
+refer to the H share announcement of the Company dated 28 December 2023 and
+the A share announcement of the Company dated 29 December 2023). As at the date
+of disclosure of this report, the Partnership Agreement has not been signed yet.
+Amount Closing
+incurred balance
+Opening Amount
+Closing
+400
+Others
+Other related parties
+10,992
+(14,727)
+25,719
+74,466
+15,616
+58,850
+Subsidiary of the controlling shareholder
+Finance Company
+702
+(172)
+874
+Controlling shareholder
+balance
+balance
+The above continuing related party/connected transactions were in the ordinary course
+of business of the Company, and they were strictly in compliance with procedures
+of review and approval by independent directors or independent shareholders as
+well as disclosure requirements. The Company confirms that the execution and
+implementation of the specific agreements under the above continuing connected
+transactions during the Reporting Period have followed the pricing principles of such
+continuing connected transactions.
+0
+Section VII Significant Events (Continued)
+0
+100,000
+(1) Daily balance of comprehensive credit provided by Finance
+Company to the members of the Group (including loans,
+Financial Services
+Agreement
+between the
+Company and
+Finance Company
+China Energy
+C.
+RMB million
+RMB million
+28,575
+Period
+Transaction
+amount during
+the Reporting
+effective
+Existing
+Transaction item
+Name of agreement
+Section VII Significant Events (Continued)
+Liquidity ratio not lower than 25%
+transaction cap
+credit loans, bill acceptance and discount, non-financing
+letters of guarantee, letter of indemnity, overdraft letters of
+credit) (including interest accrued thereon)
+(2)
+Maximum daily balance (including interests accrued thereon)
+of deposits placed by members of the Group with the
+Finance Company
+20
+20
+1,982
+2,000
+7
+400
+agency fee, handling fee or other service fees) charged per
+annum for providing other related services (including but not
+limited to providing consulting, agency, management and
+other services)
+the total fees (including but not limited to consulting fee,
+(2)
+Guoneng Factoring
+between the
+Company and
+Agreement
+Factoring Services
+D.
+(3) The agency fee, handling fee, consultation fee and other
+services fee charged by the Finance Company for providing
+members of the Group with financial services including but
+not limited to consultation, agency, settlement, transfer,
+letter of credit, online banking, entrusted loan, non-financing
+letters of guarantee, bill acceptance and other services
+(1) Maximum daily balance (including interest, factoring service
+fee and other related financing fee) for providing factoring
+services by Guoneng Factoring to members of the Group
+(including recourse factoring, non-recourse factoring, reverse
+factoring, etc.)
+74,988
+75,000
+2023 Annual Report 185
+400
+Funds provided to related parties
+Opening
+880
+196,733
+242,369
+RMB million
+24.2
+221,886
+275,585
+RMB million
+23.2
+Total liabilities
+Change
+%
+2022
+2023
+31 December 31 December
+Unit
+45.8
+2,010
+Total assets
+Owner's equity
+RMB million
+33,216
+12.90%
+≥10.5%
+Capital adequacy rate not lower than regulatory requirements
+1
+2023
+31 December
+Indicator
+requirement
+Monitoring indicators
+No.
+As at
+Major Risk Indicators of the Finance Company
+2.
+Section VII Significant Events (Continued)
+2023 Annual Report 189
+Note: The above financial data was prepared in accordance with the China Accounting Standards for
+Business Enterprises.
+553
+25,153
+2,930
+RMB million
+32.1
+48.3
+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.
+Internal decision-making procedures have been
+performed in respect of the above related debts and
+liabilities in accordance with relevant regulations.
+The entrusted loans issued or received by the
+Group.
+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
+The Group's deposits in/loans from the Finance
+Company;
+(2)
+13,127
+27,146 (14,019)
+59,250 15,616 74,866
+(1)
+Reasons for debts and liabilities
+between related parties
+Total
+1,433
+Net profit
+The above borrowings and entrusted loans are
+beneficial to the relevant project construction and
+production operation of the Group, and they have
+no material impacts on the operating results and
+financial position of the Company.
+188 China Shenhua Energy Company Limited
+The long-term and short-term borrowings
+provided by China Energy to the Group;
+(IV) Financial Business Between the Company and the Finance Company Which
+is a Related Party of the Company
+2,546
+Section VII Significant Events (Continued)
+3,775
+RMB million
+Total profit
+4,036
+4,670
+RMB million
+15.7
+%
+Change
+2022
+2023
+Unit
+Major Financial Indicators of the Finance Company
+Revenue
+1.
+5,493
+9.3
+3,844
+3,556
+5,214
+4,602
+1.4
+(11.7) 5,569
+27,380 25,041
+8.1
+Total cost of sales
+25
+246
+395
+333
+62
+318
+905
+26
+|
+Others
+8.9
+coal slurry)
+24.9
+Coal resources (under PRC standard)
+16.1
+135
+Million tonnes
+Million tonnes
+198.9
+Self-owned ports
+Marketable reserve (under JORC standard)
+Recoverable reserve (under PRC standard)
+Change
+2022
+2023
+2022
+5.6
+2023
+2022
+2023
+Table 13 Coal Resources Reserve
+Table 12 Coal Sales Price
+Table 15 Railway Cargo Transportation Turnover
+Table 14 Seaborne Coal at Ports
+419.59
+368.04
+Total
+54.7
+Change
+147
+Coal chemical segment
+11
+7,165
+43
+892
+910
+(2.0)
+1,568
+1,839
+(14.7)
+Shipping
+2.26
+1.17
+7,476
+Other power plants
+26,180 22,649
+15.6
+3.412
+3,179
+7.3
+4,589
+5,203
+(11.8) 4,814
+1.5
+By usage
+Thermal coal
+Prime business cost
+Cost of external transportation business
+12.0
+35.3
+External transportation charges
+524
+720 (272)
+2.056 2.281
+9.9
+300
+412
+39,164
+4.000
+43,164
+33,127
+Others
+1,437
+800
+79.6
+812
+752
+292
+302
+13.3)
+151
+119 26.9
+Others
+34.6
+7.8
+342.5
+27.3)
+77.4
+8.4
+58.3
+13.2
+65.1
+(10.4)
+Others
+6.27
+0.09
+Hydropower
+Photovoltaic power
+6.6
+64
+Chemical (including
+5.228
+125
+125
+62
+Tax and surcharge
+434
+538
+(19.3
+96
+88
+9.1
+8
+227
+(1.5)
+617
+608
+Metallurgy
+16.8
+3.8
+14.9
+12.8
+23.62
+227
+Gas-fired power
+39.4
+38.5
+4,152
+194
+555
+950
+-
+950
+950
+Other operating costs
+766
+1.854
+(58.7)
+336
+289
+16.3
+5
+316.1
+4,741
+Railway
+300
+19,831
+7,169
+7,417
+7,858
+8,646
+504,228
+489,271
+(499,423)
+469,551
+633,412
+625,320
+(7,120)
+(7,931)
+(601)
+(424)
+(2,080)
+(3,206)
+(203,455)
+(201,295
+386,333
+363,163
+(151,761)
+(162,524)
+Table 4 Operation Data
+Table 5 Commercial Coal Production Volume
+18,885
+Change
+RMB million
+RMB million
+Segment total assets
+301,482
+294,168
+167,912
+150,632
+Segment total liabilities
+(134,258)
+128,036
+(139,580)
+(131,621)
+RMB million
+125,301
+(51,000)
+124,906
+153,174)
+RMB milion
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+2023
+2022
+Commercial coal production
+212.26
+191.28
+Total power output dispatch
+billion kWh
+199.75
+179.81
+Polyethylene sales
+thousand tonnes
+364.4
+358.4
+Polypropylene sales
+thousand tonnes
+341.5
+340.6
+༄ཋཐ བའ ཊྛུཡྻུཥྛཎྜཋཤྩ
+%
+3.5
+Total production
+2023
+2022
+Change
+Million tonnes
+Million tonnes
+324.5
+313.4
+billion kWh
+133.6
+164.7
+billion tonnenm
+million tonnes
+324.5
+313.4
+Coal sales
+million tonnes
+450.0
+417.8
+Transportation turnover of self-owned
+railway
+billion tonne km
+309.4
+297.6
+Loading volume at Huanghua Port
+RMB million
+million tonnes
+205.2
+Loading volume at Tianjin
+million tonnes
+45.8
+45.2
+Coal Dock
+Shipping volume
+Shipment turnover
+Gross power generation
+million tonnes
+152.9
+136.3
+209.5
+RMB million
+RMB million
+RMB million
+137.27
+9.3
+Profit for the year attributable to equity
+RMB million
+64,625
+72.925
+(11.4)
+Segment profit before income tax
+63,753
+73,536
+10,910
+7.969
+11,152
+12,742
+2,307
+2,268
+100
+706
+180
+538
+3,946
+1,468
+428
+427
+92,776
+150
+Selling, general and administrative RMB100 million
+(226 624)
+(232.537)
+548
+529
+(83,831)
+(79,063)
+343,074
+344,533
+2,358
+2,325.37
+14
+Segment cost of sales
+(196,959)
+192,753
+99,654
+(77,594)
+(27,380)
+(25,041)
+(3.844
+(3,556)
+(4,602)
+(5,214)
+(5,569)
+(5,493
+(23
+(27)
+83,434
+78.961
+(73,491)
+3.5
+and R&D expenses and net finance
+holders of the Company
+As at
+As at
+As at 31 December 2022
+increase of around
+decrease of
+31 December 2023
+(Restated)
+31 December 2023
+(Restated)
+31 December 2023
+(Restated)
+31 December 2023
+Restated)
+31 December 2023
+(Restated) 31 December 2023
+31 December 2022 31 December 2023
+Restated 31 December 2023
+31 December 2022 31 December 2023
+Restated)
+10%
+2.3%
+Net cash generated from operating activities RMB million
+89.687
+109,734
+(18.3
+31 December 2022
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+As at
+Changes in unit production costs of
+self-produced coal
+Year-on-year
+Year-on-year
+Basic earnings per share
+costs
+RMB/share
+3.670
+(11.4)
+As at
+31 December 2022
+As at
+1 December 2022
+As at
+31 December 2022
+As at
+31 December 2022
+As at
+31 December 2022
+3.253
+Table 6 Power Business
+Table 7 Cost of Sales of Coal Segment
+Table 8 Cost of Sales of Power Segment
+314
+1.320
+1,320
+1,320
+Tax and surcharge
+Others
+3.783
+1997.5
+18.8
+2.946 1,798.1
+16.4 14.6
+16,600
+18,083
+(8.2
+1.7
+Shaanxi Province
+92.5
+92.5
+Cangdong Power
+North China Power Grid
+Hebei
+118.1
+1123
+4,685
+295
+327
+4.488
+546
+59.2
+Recair and maintenance
+1,653
+1,997.5
+8.3
+1,927 1,798.1
+10.7 (224)
+11.0
+By regions
+Power Grid
+Others
+27,036
+25,340
+399
+6.7
+6,723
+1,997.5
+33.7 6,040 1,798.1 336
+0.3
+11.1
+Inner Mongolia
+225.9
+215.9
+4.6
+Shengli Energy
+North China Power Grid
+Inner Mongolia
+Depreciation and amortization
+4.3
+2.520
+1,285
+5.581
+303
+463
+5,120
+5,120
+4,096
+Total cost of sales
+77,594
+1,090
+73.491
+Huizhou Thermal
+South China Power Grid
+Guangdong
+43.8
+39.8
+6.631
+297
+438
+660
+660
+660
+Qingyuan Power
+South China Power Grid
+Table 9 Domestic Coal Sales Volume
+Table 10 Capital Expenditure Plan
+Fujan Energy
+270.9
+285.7
+Guangdong
+South China Power Grid
+Other operating costs
+4.285
+3.957
+03
+Shanxi Province
+6.1
+5.0
+22.0
+Dingzhou Power
+North China Power Grid
+Hebei
+122.3
+2,520
+113.4
+305
+397
+2,520
+2,520
+1,021
+Total cost of sales
+196,959
+192,753
+2.2
+Tax and surcharge
+1,077
+Taishan Power
+4,854
+6.379
+50,094
+Transportation charges
+output
+Change in
+Cost of coal purchased
+67,886
+65,079
+4.3
+Cost
+dispatch Unit cost
+Cost
+dispatch Unit cost unit cost
+Raw materials, fuel and power
+9,726
+9,601
+1.3
+100 million
+100 million
+RMB million
+KWh RMB/MWh RMB million
+KWh RMB/MWh %
+MW
+MW
+MW
+MW
+Personnel expenses
+12,512
+Power
+Power
+output
+%
+RMB million
+4.0
+By mines
+Shendong Mines
+190.5
+187.6
+1.5
+21
+Zhunge'er Mines
+72.9
+69.5
+4.9
+Power plants/power type
+14,400
+Power grid
+100 million kWh 100 million kWh
+hours
+akWh
+RMBMW
+Standard coal
+===1_939=
+2023
+2022
+Change
+2023
+2022 (Restated)
+RMB million
+Location
+52,236
+(13.1)
+28.3
+1.8
+1.8
+Shendong Power
+Northwest/North China/
+Inner Mongolia
+269.7
+249.4
+5.378
+316
+379
+5,014
+5,014
+4,528
+Depreciation and amortization
+7,983
+6,966
+14.6
+Personnel expenses
+4,207
+1.997.5
+21.1
+3.823 1,798.1
+21.3 (0.9
+23.3
+Shaanxi Provincial Local
+Baotou Mines
+122
+361.6
+1,798.1 380.7 (5.0)
+1,997.5 279.7 53,708 1,798.1 298.7 (6.4
+55.866
+27.1
+4.4
+Baorixile Mines
+31.0
+27.4
+13.1
+Zhunge'er Power
+North China Power Grid
+Inner Mongolia
+38.7
+34.8
+5,863
+Shengli Mines
+341
+660
+660
+381
+Repair and maintenance
+2,980
+3,190
+(6.6)
+Cost of power output dispatch
+72,232
+1.997.5
+68,444
+Raw materials, fuel and power
+327
+6,098
+6,051
+4,836
+Hunan
+Hunan Power Grid
+Yongzhou Power
+69.29
+68.21
+Transportation segments
+7.8
+135.5
+33.0
+146.1
+Eastern China
+87.1
+91.6
+Guangxi
+Guangxi Power Grid
+Beihai Power
+159.22
+171.78
+Power segment
+23
+141.7
+32.7
+144.9
+Northern China
+By regions
+88.1
+83.8
+Central China and
+73.6
+Total of coal-fired power plants/weighted average
+4.85
+12.49
+Port
+54
+41.1
+9.8
+43.3
+Northeast China
+124
+14.3
+Indonesia
+32.8
+PLN
+63.27
+53.46
+Including: Railway
+Southern China
+16.0
+16.6
+Hunan
+Hunan Power Grid
+Yueyang Power
+25.6
+58.6
+16.7
+EMM Indonesia
+2,074.0
+346
+Guangxi Power Grid
+Change
+2022
+domestic sales
+2023
+2022
+2023
+Change
+2022
+2023
+1212
+2,020
+2020
+418
+277
+5.213
+100.0
+105.3
+Shandong
+North China Power Grid
+Shouguang Power
+Completion in 2023
+Plan for 2024
+Proportion of
+Coal chemical
+Shipping
+Jiujiang Power
+Central China Power Grid Jiangxi
+113.1
+107.9
+Liuzhou Power
+188.72
+98.16
+Coal segment
+7.4
+412.2
+100.0
+442.5
+Domestic sales
+5,489
+1352
+142.7
+Guangxi
+Sichuan
+Sichuan Energy
+41.1
+44.3
+Central China Power Grid Henan
+Mengin Power
+RMB100 million
+RMB100 million
+%
+Million tonnes
+%
+Million tonnes
+5,656
+Sichuan Power Grid
+Port
+1,950.1
+276
+38.8
+3,581
+4.971
+Repair and maintenance
+1,600
+2,000
+2,000
+477
+283
+4,405
+13.2
+402
+455
+(4.5)
+22
+21
+1.8
+382
+389
+17.1
+4,792
+5,612
+Personnel expenses
+2,000
+2,000
+249
+233
+6.9
+32
+300
+498
+366
+4,775
+740 (2.4)
+722
+(9.1)
+175
+159
+30.0
+534
+694
+2,000
+7.9
+3,458
+Depreciation and amortization
+1,900
+2,000
+2000
+470
+284
+24.3
+296
+368
+45.5
+22
+3,204
+698699688
+436
+(2.11
+2,600
+432
+294
+%
+% RMB million RMB million
+% RMB million RMB million
+% RMB million RMB million
+RMB million RMB million
+612
+1,200
+1,200
+413
+302
+3,688
+Change
+2022
+2023
+Change
+2022
+2023
+Change
+2,000
+2,000
+2,000
+436
+2,600
+1,666
+Cost of internal transportation business
+18,704
+3,184
+3,118
+18.0
+562
+461
+2.2
+368
+376
+13.2
+2,387
+2.702
+Raw materials, fuel and power
+298
+490
+700
+454
+314
+4,944
+(10.2)
+3,364
+3,021
+11.1
+2,269
+2.520
+20.8
+15,484
+700
+210
+Railway
+3.720
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Commercial coal production
+100 million tonnes
+3.161
+3.245
+(2.6)
+Coal sales
+100 million tonnes
+4.353
+4.500
+(3.3)
+Revenue
+RMB million
+343,074
+344,533
+10.41
+Revenue from external customers
+228,149
+236,305
+RMB million
+RMB million
+RMB million
+RMB million
+Port
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+Shipping
+2023
+Coal chemical
+2022
+2023
+92,202
+2022
+2022
+Eliminations
+2023
+2022
+Total
+2023
+2022
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Unallocated items
+2023
+%
+84,341
+13,423
+548
+529
+(83,831)
+(79,063)
+Revenue
+RMB100 million
+3.300
+3,430.74
+(3.8
+Cost of sales
+RMB100 million
+EBITDA
+RMB million
+114,573
+121,536
+15.7
+Sub-total of segment revenue
+273,306
+277,474
+92,407
+84,525
+42,961
+42,197
+6,749
+6,441
+-
+3,925
+3,240
+4.482
+2,017
+1.959
+1,596
+2,126
+6.098
+6,379
+-
+343,074
+344,533
+Power generation
+100 million kWh
+2.163
+13.012
+2,122.6
+RMB million
+75,192
+85,398
+(12.0)
+Inter-segment revenue
+45,157
+41,169
+205
+184
+29,949
+28,774
+4.732
+Profit for the year
+and Coal Chemical Segments
+Power
+%
+Explanation on Differences in Domestic and Overseas Accounting Standards:
+Pursuant to the relevant regulations of the related government authorities in the PRC, the Group
+accrued provisions for simple production maintenance, safety production and other related
+expenditures, recognised as expenses in profit or loss and separately recorded as a specific
+reserve in shareholders' equity. On utilisation of the specific reserve as fixed assets within the
+stipulated scope, the full amount of accumulated depreciation is recognised at the same time when
+the cost of the relevant assets is recorded. Under International Financial Reporting Standards,
+these expenses are recognised when incurred. Relevant capital expenditure is recognised as
+property, plant and equipment and depreciated according to the relevant depreciation method.
+The effect on deferred tax arising from such difference has also been reflected.
+IX. MAJOR FINANCIAL DATA OF EACH QUARTER OF 2023
+Unit: RMB million
+Second
+Third
+Fourth
+First quarter
+quarter
+(January-
+(April
+March)
+quarter
+(July-
+June) September)
+quarter
+(October -
+December)
+Revenue
+87,042
+82,400
+83,025
+90,607
+Profit for the period attributable to
+equity holders of the Company
+Net cash generated from operating
+activities
+20,677
+16,184
+Major Financial Indicators (Continued)
+Section II Company Profile and
+10
+11.1
+3,720
+3.720
+317
+309
+5.611
+193.3
+208.7
+Shaanxi
+North China Power Grid
+Jinje Energy
+Table 11 Cost of Sales of Transportation
+3,406
+15,640
+4,810
+431
+292
+5,532
+254.6
+266.1
+1,020
+2,000
+2,000
+412
+268
+5,726
+10.7
+4,810
+Coal
+2023
+12,124
+17,146
+Fourthly, we will adhere to the drive of scientific and technological innovation for motivating
+new momentum for development. We will stay on faster track to develop platforms for tackling core
+technologies, increase investment in technological development and improve systems and mechanisms
+for scientific and technological innovation. We will shape a source of original and leading technology
+in green intelligent mining, coordinated and efficient operation of transportation and logistics, high-end
+diversified and low-carbon development of modern coal chemical industry.
+Fifthly, we will focus on enterprise value management and improve the Company's comprehensive
+governance. We will unwaveringly consolidate the deepening reform of enterprises by strengthen
+compliance risk management and control for refined operation management, and develop a first-
+class financial management system. We will further promote the coordination of industry and finance
+to optimise the quality of core assets and follow the assessment requirements of market value
+management for improved effectiveness of capital operation. Bearing the "investor-based" concept
+in mind, we will work hard on information disclosure and investor relations services to reward
+shareholders. We will enhance the ability to create value and lend more glories to the Company's
+prestige brand.
+Sixthly, we will fulfill social responsibilities with high standards as contributions to high-quality
+development of the Company. We will continue to improve the ESG system with ESG management
+methods at the core and ESG-related special systems as the support to facilitate the upgrade of the
+ESG information system. We will put in place the requirements of regulatory disclosure guidance,
+improve quality of ESG report disclosure, reinforce comprehensive ESG governance, thus enhancing
+the influence of the Company's ESG performance in the industry and the globe.
+Board of Directors
+China Shenhua Energy Company Limited
+22 March 2024
+2023 Annual Report
+15
+Section IV
+Directors' Report
+C
+H
+D
+Overview of China Shenhua's Operating Results for 2023
+Table 1 Business Targets
+Table 2 Financial Indicators
+Table 3 Results of Each Segment
+Target for
+2024
+Actual amount
+Change
+in 2023
+%
+2023
+2022
+(Restated)
+Change
+Thirdly, we will better serve the national strategy by playing our part as a centrally administrated
+state-owned enterprise. Guided by the national goal of carbon peaking and carbon neutrality as the
+guiding value, we will keep a close eye on climate change to improve the clean and efficient use of
+coal. We will reinforce green mine development and steadily implement clean energy replacement in
+transportation systems. We will take a holistic approach to study on strategic emerging industries and
+future industries to accelerate the formation of new quality productive forces and better serve the
+economic and social development.
+Secondly, we will optimise the integrated operational model by extending, supplementing and
+strengthening the chain. This involves the orderly advancement of a number of new coal mines,
+coal power, coal chemical projects such as Xinjie No. 1 Mine and Xinjie No. 2 Mine, Jiangxi Jiujiang
+Power Plant Phase II, Guangdong Qingyuan Power Plant Phase II, Guangxi Beihai Power Plant Phase
+II, and Baotou Coal Chemical Coal-to-Olefins Upgrading Demonstration Project, the asset acquisition
+of Hangjin Energy and Dayan Mining, the creation of a multi-functional comprehensive modern energy
+transportation channel, and the continuous enhancement of core competitiveness of integrated
+industries.
+Section III Board's Statement (Continued)
+China Shenhua Energy Company Limited
+28,371
+14,967
+Subject to external factors such as climate change, supply-demand relationship in the coal power
+market, coal and electricity price fluctuations, as well as other factors including the settlement
+cycle of cost and expense, asset impairment testing and non-operating expenditures, the Group's
+results varied from quarter to quarter. For the operation profile of the Group in this year, please
+refer to Section IV "Director's Report" in this report.
+Explanation on the differences between quarterly data and disclosed periodic report data:
+☐ Applicable ✓ Not applicable
+China Shenhua Energy Company Limited
+Section III Board's Statement
+Dear Shareholders,
+2023 marks the inaugural year for comprehensively implementing the guiding principles of the 20th
+CPC National Congress, and is a crucial year for connecting the past with the future under the "14th
+Five-Year Plan." The on-the-upturn economy came with balanced supply and demand of energy on the
+whole, and the green and low-carbon transformation and high-quality development were promoted in
+depth. Following the guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a
+New Era, China Shenhua comprehensively studied and implemented the guiding principles of the 20th
+CPC National Congress and thoroughly put into practice the spirit delivered in General Secretary Xi
+Jinping's important speech on his inspection of Huanghua Port, resolutely carried out the decision and
+deployment made by the CPC Central Committee and the State Council, actively implemented the policy
+for energy supply and price stability, fulfilled the missions and duties as a central government-owned
+enterprise, practiced the original aspiration of common prosperity and a shared prosperous future,
+successfully completed all annual tasks and goals, and maintained a high-quality development trend of
+stability and progress. The Company achieved a profit for the year attributable to equity holders of the
+Company of RMB64.625 billion, a basic earnings per share of RMB3.253 per share, a gearing ratio at the
+end of the period of 24.0%, and a total market capitalisation of RMB598.9 billion at the end of the year.
+This year saw us consolidate the cornerstone for energy security through integrated operation.
+We deeply practiced our responsibility and mission of being the "Ballast for Energy Supply, Pioneer in
+Energy Revolution", actively responded to challenges such as increased coal imports, energy market
+price fluctuations, and extreme weather conditions, reinforced the foundation of energy supply security,
+ensured safe, compliant, and efficient production, and further strengthened the capability of securing
+coal supply. As a result, the production and sales of commercial coal rose by 3.5% and 7.7% year-
+on-year, respectively. We deepened the integrated operation of coal and power, ensured stable and
+increased power generation from electric power units, continuously leveraged the role of coal-fired
+power in providing basic energy support, and achieved a year-on-year increase of 11.0% and 11.1% in
+the annual power generation and sales of power. We smoothed the energy transportation guarantee
+lines, in an effort to establish a multi-functional, comprehensive and modern transportation system
+that combines railways, ports and shipping. We recorded year-on-year increases in self-owned railway
+transportation turnover, port loading volume and shipment turnover. With synergistic and efficient
+operations across various sectors, we successfully achieved stable production and energy supply
+throughout the year and demonstrated the mission and duty of China Shenhua with outstanding results.
+2023 Annual Report
+11
+12
+29,203
+Section III Board's Statement (Continued)
+This year, we, aligning to strategic goals, developed new markets for new energy. Guided by the
+"goals of carbon peaking in 2030 and carbon neutrality in 2060", we solidly promoted the development of
+strategic emerging industries. We prepared the Company's 2023 work plan for low-carbon development
+and set up the leading group accordingly for that. We worked to coordinate the strategic cooperation
+between the internal and external enterprises of China Energy and local governments and branched
+out into new energy industry in diverse channels and forms. As at the end of the Reporting Period, the
+new energy projects planned, under construction and put into operation had a capacity of approximately
+3,610 MW. The 150 MW centralized photovoltaic power station at the dump site of open-cut mine of
+Shengli Energy of the Company, and the distributed photovoltaic projects of Baorixile open-cut mine
+and Guojiawan Power Plant were connected to the grid, and the two new energy industry investment
+funds invested and sponsored by the Company yielded stable returns. Focusing on the clean and
+efficient use of coal, we promoted the "three types of technical reforms" of coal-fired power units,
+and the standard coal consumption of coal-fired power units decreased by 1.8 g/kWh year on year. We
+kept an eye on climate change, carried out comprehensive management of air pollution and soil and
+water conservation, and promoted the coordinated development of ecological, environmental, social
+and economic benefits. The Mine Eco-tourism Scenic Spot of Zhunge'er Energy has been rated as a
+national 3A tourist attraction, showcasing that our eco-friendly mining development has set a benchmark
+in the industry.
+China Shenhua Energy Company Limited
+Section III Board's Statement (Continued)
+This year, we advanced the reform to motivate the endogenous power for innovation development.
+We further consolidated the results of the three-year action to reform state-owned enterprises and
+mapped out a blueprint for consolidating and upgrading world-class demonstration enterprise. We
+established and improved the term and contractual management system for management members
+to further enhance management effectiveness. We anchored the path of scientific and technological
+innovation and actively participated in major national scientific and technological research projects. The
+"600 MW coal-fired power generating unit with ammonia blending combustion" test led by us was
+successful and the "High-safety and High-precision Positioning Application Demonstration for Group
+Train Operation Control" organized by us was approved by the Ministry of Science and Technology
+of China. We expedited the construction of intelligent projects, with Daliuta and Heidaigou collieries
+passing the acceptance of national intelligent demonstration coal mine construction projects. A number
+of scientific and technological innovation projects such as intelligent mines, smart transportation, new
+energy technology, and integrated operations have achieved staged progress. Focusing on directions
+such as carbon capture and utilisation, hydrogen energy, ammonia energy, and the production and
+application of green methanol, we actively planned scientific and technological innovation research on
+forward-looking strategic industries.
+This year, we worked hard to lift our corporate governance to a higher level through more
+standardised operation. With a deep understanding of the core positioning as a state-owned
+enterprise, we well unified the CPC's leadership with corporate governance. Specifically, we continued
+work on the foundation of "the general meeting, the Board and the Supervisory Committee", revised
+and improved the rules of procedure for special committees under the Board, and effectively leveraged
+the role and responsibilities of the Board. We formulated an action plan for market value enhancement
+with proactive expectation management, researched and set a "3+4" expectation management indicator
+system, formulated cash dividend policies in a scientific manner and implemented dividend distribution
+than expectation, which together further improved the market value management. We worked on the
+risk prevention and control capacity, and the Company's "six in one" internal control evaluation method
+was selected as a case study for corporate governance by the State-owned Assets Supervision and
+Administration Commission of the State Council. As a return of the optimised ESG system, the Company
+was selected for two consecutive years in the Fortune China ESG Influence List (ESG
+), ranked first among listed energy companies in the "2023 China Brand Value Evaluation
+Information" (2023+), and was presented the highest honours of the best practice
+case in terms of the board of directors, corporate governance and the office of board of directors of
+listed companies in 2023 by the China Association for Public Companies. We actively participated in
+social welfare and charity causes and received awards such as the China Top 100 Enterprises Award
+and China Ethical Enterprise.
+2023 Annual Report
+13
+Section III Board's Statement (Continued)
+This year, we fully empowered the high-quality development of the enterprise guided by the
+Party building. We adhered to and strengthened the overall leadership of the CPC, kept in mind
+the "big picture of the country" and the "essentials of the enterprise" firmly practiced the "two
+maintenances" and ensured that the spirit of the 20th CPC National Congress and the important
+instructions and directives of General Secretary Xi Jinping were implemented. We fully leveraged the
+role of controlling the direction, having the big picture, and ensuring the implementation of the Party
+Committee, and strictly implemented the "first issue" system. We implemented the "one main line,
+two guarantees, three combinations and three leads" for the central group of the Party Committee
+and yielded more fruits from the "One Branch with One Brand, One Brand with One Characteristic"
+building activity. We profoundly and comprehensively governed the Party with strict discipline, held
+"Year of Style Construction" and integrity education activities, and made solid and effective efforts in
+Party style and clean government construction and anti-corruption work. We carefully organised the
+"China Shenhua Energy Tour 2023" characteristic united front activity, created the "Youth л" youth
+culture brand, further unified thoughts, built cohesion, and escorted high-quality corporate development.
+Braving difficulties and riding the wave, we stand at the forefront of the trend; with a mission
+on our shoulders, we set sail at the right time. 2024 is the 75th anniversary of the founding of the
+People's Republic of China, the key year for implementing the "14th Five-Year Plan" and the crucial year
+for comprehensive construction of a world-class integrated energy listed company. We will adhere to the
+guidance of Xi Jinping Thought on Socialism with Chinese Characteristics for a New Era, fully implement
+the spirit of the 20th CPC National Congress and the Second Plenary Session of the 20th CPC Central
+Committee, earnestly implement the deployment of the Central Economic Work Conference and the
+Central Financial Work Conference, and accurately grasp the new mission and positioning of "general
+objectives, general principles and general requirements, "enhance corporate core competitiveness
+and functionality", and "technology innovation, industry control and security underpinning". Closely
+concentrating on the corporate development strategy of "one goal, three roles, six responsibilities", we
+will adhere to the work orientation of "seeking progress while maintaining stability, promoting stability
+through progress, and establishing before breaking". We will ensure stable energy supply in a safe and
+compliant manner, promote green and low-carbon transformation of industries, strengthen research on
+strategic emerging industries and future industries, further enhance capital operation efficiency, actively
+implement market value management assessment requirements, improve corporate governance, and
+constantly create a new situation in building a world-class integrated energy listed company.
+Firstly, we will enhance the resilience of the industrial chain and solidify the foundation for
+development. It is crucial to firmly establish a red-line awareness and bottom-line thinking on safety
+and environmental protection, actively respond to policies and market changes, fully focus on ensuring
+continuous coal production and stable power supply, maintain smooth energy transportation channels,
+make all-out efforts to complete the production and operation goals and tasks for the year, consolidate
+and improve the capability of secure energy supply.
+14
+This year witnessed us enhance core competitiveness with focus on industry control. We further
+improved the resilience and safety level of the supply chain of the integrated industrial chain. We
+accelerated the acquisition and connection of high-quality coal resources, obtained mining license
+approvals for Xinjie No. 1 Mine and Xinjie No. 2 Mine. We accelerated the construction of high-quality
+power points, with Guangdong Qingyuan Power Plant Phase I (2×1,000MW) and Hunan Yueyang Power
+Plant (2×1,000MW) projects successively put into commercial operation, and Guangxi Beihai Power Plant
+Phase II (2×1,000 MW) Project II under construction. We accelerated the development of transportation
+corridor capacity, made steady progress in the Shenshuo Railway Capacity Expansion Project and
+Huangwan Railway Electrification Transformation Project, successfully achieved two-way navigation
+for 70,000-tonne ships at Huanghua Port, continuously expanded non-coal transportation and reverse
+transportation businesses, and realised the interconnection of the "land-port-shipping" integrated
+two-way heavy-haul multimodal transportation. We accelerated the upgrading and transformation of
+coal chemical projects, with the smooth commencement of the Baotou Coal-to-Olefins Upgrading
+Demonstration Project. We carried out the "Hundred-Day Safety Production Campaign" in depth and
+ensured smooth and orderly production and operation. We steadily carried forward the asset injection
+work and completed on-site due diligence for Hangjin Energy and Dayan Mining.
+billion tonne km
+Guangdong
+Fujan
+Changel
+%
+惠州熱電
+B8.
+台山電力
+B7.
+錦界能源
+B6.
+Shendong Power
+Zhunge'er Power
+Dingzhou Power
+北京燃氣
+B5.
+神東電力
+B4.
+准能電力
+B3.
+B2. 定州電力
+Cangdong Power
+B1. 滄東電力
+鳳山電廠 POWER
+HEBEI
+河北省
+B2 Dingzhou
+定州
+Daqin Railway
+大秦鐵路
+Tahan Railway
+C10. 塔韓鐵路
+B9. 孟津電力
+Zhunchi Railway
+Jinjie Energy
+B16. 印尼爪哇
+港口 PORT
+Bazhun Railway
+C6. 巴准鐵路
+Huangwan Railway
+C3.黃萬鐵路
+B15.九江電力
+Jiujiang Power
+B20. 岳陽電力
+Yueyang Power
+B10. 四川能源
+Sichuan Energy
+Beijing Gas Power
+Beihai Power
+Shengli Energy
+Yongzhou Power
+北海電力
+B19.
+B18. 勝利能源
+Liuzhou Power
+Shouguang Power
+B14. 柳州電力
+壽光電力
+B13.
+B12.南蘇EMM
+EMM Indonesia
+Mengjin Power
+Huizhou Thermal
+Taishan Power
+B17. 永州電力
+Qingyuan Power
+B21. 清遠電力
+Indonesia Java
+B11. 福建能源
+Fujian Energy
+D1.黃驊港
+CB.准池鐵路
+C5. 包神鐵路
+Watang
+● 瓦塘
+Shenmu North
+神木北
+Shuozhou
+朔州
+Shenchi South
+神池南
+Zhunge'er
+Datong East
+大同東
+Waixigou
+外西溝
+准格爾
+Diandaigou
+點岱溝
+北京
+Zhangjiakou
+張家口
+INNER MONGOLIA AUTONOMOUS REGION
+內蒙古自治區
+Chengde
+承德
+豐寧
+Fengning
+Shendong
+神東站
+Jingbian
+山西省
+Baoshen Railway
+SHANXI
+SHAANXI
+Shuchuang Railway
+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
+Xinjie Taigemiao Mining Area
+A6.新街台格廟礦區
+Baorle Mines
+Baotou Mines
+A5. 包頭礦區
+A4.寶日希勒礦區
+Shengli Mines
+Zhunge'er Mines
+Shendong Mines
+A3勝利礦區
+A2.准格爾礦區
+A1. 神束礦區
+Wubu
+吳堡
+YELLOW RIVER
+黃河
+陝西省
+Huanghua Port
+D2.天津煤碼頭
+Tianjin Coal Dock
+廣西
+Guizhou
+貴州
+Henan
+Shaanxi
+河南
+陝西
+Gansu
+甘肅
+Yunnan
+雲南
+Yangtze River
+長江
+Sichuan
+四川 0
+89
+Shanxi
+Qinghai
+Shandong
+山西
+Ningxia
+青海
+山東
+寧夏
+Hebew
+河北:
+甘其毛都
+Ganqimaodu
+Guangxi
+Inner Mongolia Autonomous Region
+海南
+湖北
+billion tonne km
+East China Power Grid
+Taiwan
+台灣
+Diaoyu Islands 。。
+釣魚島
+Mevery
+Zhejiang
+浙江
+Liaoning
+遼寧
+Hongkong
+香港
+Macau
+Guangdong
+廣東
+Fujian
+福建
+Hunan
+Jiangxi
+湖南
+江西
+Jiangsu
+江蘇
+Anhui
+安徽
+Hubei
+Hainan
+塔本陶勒蓋
+Tavan Tolgoi
+Jilin
+內蒙古自治區
+C3
+Wanjia Dock
+Caofeidian Port
+萬家碼頭
+曹妃甸港
+TIANJIN
+天津市
+唐山
+Tangshan
+Qinhuangdao Port
+秦皇島港
+BEIJING
+Wangzuo
+王佐
+Baotou Coal Chemical
+包頭煤化工
+F1.
+煤化工 COAL CHEMICAL
+Shipping Company
+航運公司
+航運 SHIPPING
+② Prepared on the basis of the map with the approval number of GS(2019)1818.
+Note: ① This map as at 31 December 2023 is for illustrative purpose only
+② 以審圖號GS(2019)1818號地圖為基礎編製
+① 於2023年12月31日之分佈圖,僅做示意
+註:
+Zhuhai Coal Dock
+D3. 珠海煤碼頭
+黃驊南
+Huanghua South
+肅寧
+Suning
+吉林
+Heilongjiang
+黑龍江
+Dayan Mines
+大雁礦區
+2023
+主要資產分佈圖 Assets Distribution Map
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+Main Shipping Route
+- 主要航線
+Self-owned mines
+自有礦區
+● 靖邊
+Self-owned Railway (in operation)
+State-owned or Local Railway
+國有或地方鐵路線
+Provincial Boundary
+省界線
+圖例 Legend
+Tibet
+西藏
+Dajiawa
+BB3
+大家洼
+「中國 CHINA
+Dongying
+東營
+---- 自有運營纖路
+Dongsheng
+E1.
+Hanjiacun
+1.6
+1.9
+Ganguan Railway
+742
+15.5
+27.0
+Third-party ports
+12.9
+65.5
+63.6
+(1.4)
+85.7
+84.5
+(1.3
+151.6
+149.7
+Shendong Mines
+19.3
+7.7
+644
+100.0
+417.8
+584
+100.0
+450.0
+Total sales volume/average price (excluding tax)
+4.4
+18.8
+51.8
+L. Classify by contract pricing mechanism
+3. Spot commodity
+(3.3
+21.3
+20.6
+(2.1)
+29.0
+28.4
+(1.9
+36.5
+35.8
+Zhunge'er Mines
+!!!
+***** ***
+1.1
+4.9
+Sales to internal coal chemical segment
+16.6
+74.6
+Sales to internal power segment
+823
+370.5
+Sales to external customers
+II. Classify by internal and external customers
+5.1
+22.8
+Direct sales through coal mine pit
+2. Monthly long-term agreement
+1. Annual long-term agreement
+Il Sales through Trading Group
+54.1
+Shenshuo Railway
+(100.0
+Mines
+excluding tax
+Sales volume
+excluding tax)
+total sales volume
+Sales volume
+As at
+As at
+As at
+As at
+As at
+As at
+Price
+Price
+Percentage to
+Price
+(excluding tax)
+RMB/tonne
+Million tonnes
+total sales volume
+Sales volume
+Percentage to
+4.0
+297.6
+309.4
+Self-owned railways
+3.8
+東勝
+191.6
+31 December 2023 31 December 2022
+Change 31 December 2023
+31 December 2022
+Change
+0.1
+%
+100 million tonnes
+100 million tonnes
+%
+100 million tonnes
+% 100 million tonnes
+100 million tonnes
+100 million tonnes
+%
+RMB/tonne
+%
+Million tonnes
+Dazhun Railway
+4.9
+42.7
+Tianjin Coal Dock
+(4.3)
+9.2
+8.8
+Baoshen Railway
+Change
+3.6
+150.8
+156.2
+Huanghua Port
+31 December 2022
+31 December 2023
+40.7
+32.3
+Zhuhai Coal Dock
+12.2
+12.5
+555
+15.9
+66.3
+15.7
+84.5
+97.8
+The Group's internal customers
+(3.3
+98.0
+94.8
+(3.7)
+138.9
+133.8
+(1.0)
+329.0
+325.8
+Total of China Shenhua
+19.9
+6.8
+664
+83.0
+346.8
+20.6
+3.4
+4.1
+Huangda Railway
+5.4
+58.0
+49.3
+17.6
+Batuta
+巴圖塔
+28.8
+Haoleɓaoji
+Tarangaole
+浩勒報吉
+韓家村
+塔然高勒
+Baotou
+包頭
+煤礦 COAL MINE
+12.2
+136.3
+%
+152.9
+5.9
+346.9
+367.4
+Total railway turnover
+(1.1)
+4.3
+451
+1.1
+4.7
+6.4
+51.8
+55.1
+External customers
+Total of shipping volume
+Million tonnes
+State-owned railways
+Change
+(3.5
+8.6
+8.3
+(27.8
+10.8
+7.8
+123
+13.1
+12.8
+Baorixile Mines
+11.1
+2.7
+Bazhun Railway
+Table 16 Shipping Volume
+(12.5
+2.1
+(2.3)
+13.1
+12.8
+(1.5
+19.4
+19.1
+Shengli Mines
+9.1
+Million tonnes
+207.1
+225.9
+Total seaborne coal sales
+24
+Zhunchi Railway
+3.0
+12.9
+2022
+2023
+1
+1
+108.0
+108.0
+Xinjie Mines
+10.3
+329
+5.5
+228
+2.7
+187.2
+-
+04
+(17.5)
+192.3
+Baotou Mines
+0.4
+-
+0.3
+12.9
+-
+0.2
+0.2
+Shuchuang-Huangwan Railway
+03
+Industrial and Commercial
+%
+28,224,064
+0.14
+40,207,864
+Fund
+Bank of China-Shanghai
+266,400
+0.00
+Index 50 Trading Open-end
+Index Securities Investment
+Percentage
+0.20
+Total
+account and credit account
+Unit: share
+Total Percentage
+lent by way of
+at the end of
+the period
+Total
+refinancing at the
+beginning of the period
+Percentage
+Total Percentage
+the period
+at the beginning of
+securities lending and
+***
+account and credit account
+Shares held by
+shareholders in ordinary
+National Social Security Fund
+Outstanding shares
+lent by way of
+securities lending and
+refinancing at the
+end of the period
+15,795,095
+0.00
+2,127,700
+Index Exchange Traded
+Open-ended Index Fund
+Outstanding shares
+2023 Annual Report 201
+Shanghai-Shenzhen 300
+Huatai-Pinebridge
+Bank of China Limited-
+49,200
+0.12
+24,588,635
+0.00
+80,000
+0.07
+13,415,335
+Industrial and Commercial
+0.08
+- Self-owned Fund
+0
+0.12
+24,832,310
+0
+0
+0.03
+6,320,189
+Huaxia Life Insurance Co., Ltd.
+Portfolio 101
+0
+13
+0.15
+30,126,155
+0.01
+0
+shareholders in ordinary
+China Energy, the controlling shareholder of the Company, planned to increase its
+shareholding in the A shares of the Company through its wholly-owned subsidiary,
+Capital Holdings, by means permitted by the SSE (including but not limited to
+centralized bidding transactions, block trades, etc.) by an amount of not less than
+RMB500 million and not exceeding RMB600 million, and at a price of not more than
+RMB33.10 per share, within 12 months from 20 October 2023 (the "Shareholding
+Increase Plan", please refer to the Company's H share announcement dated 19
+October 2023 and A share announcement dated 20 October for details). As at
+31 December 2023, Capital Holdings had cumulatively increased its shareholding
+of the Company by 8,655,481 A shares, representing 0.0436% of the total share
+capital of the Company, through centralized bidding transactions on the SSE, with
+an cumulative amount of RMB269.1832 million (exclusive of commissions and tax
+and charges), which accounted for 53.8% of the minimum amount of RMB500
+million under the Shareholding Increase Plan. China Energy directly and indirectly
+held 13,821,364,677 A shares of the Company, representing 69.5641% of the total
+share capital of the Company.
+Participation of top ten shareholders in lending of shares by way of securities lending and refinancing
+Unknown
+16.96
+HKSCC NOMINEES LIMITED 3,369,264,907
+0
+0
+69.52
+0 13,812,709,196
+69.52
+China Energy Investment 13,812,709,196
+Corporation Limited
+%
+Percentage
+refinancing at the
+end of the period
+Total
+at the end of
+the period
+Total Percentage
+Total Percentage
+Unknown 3,369,078,025
+Total Percentage
+Shares held by
+shareholders in ordinary
+account and credit account
+Outstanding shares
+lent by way of
+securities lending and
+refinancing at the
+beginning of the period
+Shares held by
+shareholders in ordinary
+account and credit account
+at the beginning of
+the period
+Name of shareholder
+(full name)
+Unit: share
+Participation of top ten shareholders in lending of shares by way of securities lending and refinancing
+Participation of Top Ten Shareholders in Lending of Shares by way of Securities
+Lending and Refinancing
+2.
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+2023 Annual Report 199
+Note: The H shares are held by HKSCC NOMINEES LIMITED on behalf of a number of its clients; the A
+shares are held by Hong Kong Securities Clearing Company Limited on behalf of a number of its
+clients.
+N/A
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+Details regarding the holders of preference shares
+with voting rights restored and the number of
+shares held
+Outstanding shares
+lent by way of
+securities lending and
+Shares held by
+16.96
+Unknown
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+Name of shareholder
+(full name)
+200 China Shenhua Energy Company Limited
+0
+0.32
+0.00 40 0 63,987,924
+702,800
+Management Ltd.
+Guoxin Investment Co., Ltd.
+0
+0.53
+106,077,400
+☐ 0 0
+0.53
+106,077,400
+Unknown
+Central Huijin Asset
+1.11
+0 221,001,857
+0
+1.62
+Hong Kong Securities Clearing 320,937,248
+Corporation Limited
+0
+0
+2.99
+0 594,718,004
+0
+2.99
+594,718,004
+China Securities Finance
+Company Limited
+3.
+Directly and indirectly holding 51.25% shares of
+GD Power Development Co., Ltd.;
+Changes in the top ten shareholders from the end of the previous period
+0.05
+69.52
+83.76
+13,812,709,196
+8,655,481
+Long position
+A share
+Long position
+A share
+Beneficial owner
+Interest of the corporation
+Corporation Limited
+China Energy Investment
+%
+Percentage
+total share
+capital of the
+Company
+%
+0.04
+A shares
+Number of
+A shares held
+Nature of
+interest
+A share
+Capacity
+Name of
+shareholder
+As at 31 December 2023, persons set out in the table below had an interest and/or short
+position in the shares or underlying shares of the Company, which is required to be
+recorded in the register of equity interests and/or short positions pursuant to section 336
+of Part XV of the Securities and Futures Ordinance (the "SFO", Chapter 571 of the Laws
+of Hong Kong):
+(III) Major Shareholders' Interests and Short Positions in the Shares of the
+Company
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+202 China Shenhua Energy Company Limited
+Authority
+0.08
+15,552,675
+0
+0
+Percentage of
+A shares held in
+the total issued
+Withdrawal
+controlled by the major
+shareholder Note
+As at 31 December 2023, save as disclosed above, there were no other persons who held
+interests and/or short positions in the shares or underlying shares of the Company, which
+are required to be recorded in the register to be kept under section 336 of Part XV of the
+SFO, or who was a major shareholder of the Company.
+Both HKSCC NOMINEES LIMITED and Hong Kong Securities Clearing Company
+Limited are wholly-owned subsidiaries of Hong Kong Exchanges and Clearing
+Limited; the custodian bank of both Industrial and Commercial Bank of China-
+Shanghai Index 50 Trading Open-end Index Securities Fund and Industrial and
+Commercial Bank of China Limited - Huatai-Pinebridge Shanghai-Shenzhen 300
+Index Exchange Traded Open-ended Index Fund is Industrial and Commercial
+Bank. Save as disclosed above, the Company is not aware of any related party
+relationships between the top ten shareholders without selling restrictions and
+the top ten shareholders, and whether they are parties acting in concert as
+defined in the Measures for Administration of Acquisition of Listed Companies.
+controls or participates
+Directly and indirectly holding 58.56% shares of
+China Longyuan Power Group Corporation Limited;
+during the Reporting
+Period
+Directly holding 67.50% shares of CHN Energy
+Changyuan Electric Power Co., Ltd.;
+(4)
+Indirectly holding 51.11% shares of Yantai
+Longyuan Power Technology Co., Ltd.;
+204 China Shenhua Energy Company Limited
+(5)
+Indirectly holding 50.99% shares of Ningxia
+Yinglite Chemicals Co., Ltd.
+overseas listed
+other domestically or
+(1)
+Note: As at 31 December 2023, China Energy Capital Holdings Co., Ltd., a wholly-owned subsidiary of China
+Energy, directly held 8,655,481 A shares of the Company.
+The shareholdings in
+23 October 1995
+Liu Guoyue
+China Energy Investment Corporation Limited
+Date of incorporation
+Principal business
+Legal representative
+Name
+Legal Person
+1.
+Controlling Shareholder as at the end of the Reporting Period
+(1)
+IV. CHANGES OF CONTROLLING SHAREHOLDER AND DE FACTO CONTROLLER
+Particulars of Shareholders (Continued)
+Section VIII Changes in Shares and
+2023 Annual Report 203
+State-owned assets operating activities within the
+scope authorised by the State Council; investment
+and management activities in various sectors including
+resource products (e.g. coal), coal-to-liquids, chemical
+processing of coal, electricity, heat, ports, various kinds
+of transportation, finance, domestic and international
+trade and logistics, real estate, advanced technology
+and information consultation; planning, organising,
+coordinating and managing the production and operating
+activities in the above sectors of the members of
+China Energy; and sales of chemical materials and
+chemical products (excluding hazardous chemicals),
+textiles, construction materials, machinery, electronic
+equipment and office equipment. (Market entity is
+allowed to choose the business to be engaged in and
+carry out such business activities pursuant to laws; for
+projects that are subject to approval pursuant to the
+law, business operations shall commence in accordance
+with the business scope as approved and upon receipt
+of such approval from relevant authorities; no business
+activities which are prohibited or restricted by the
+national or Beijing industrial policies shall be carried out.)
+Abu Dhabi Investment
+Portfolio 106
+0.02
+0
+0
+- Self-owned Fund
+Huaxia Life Insurance Co., Ltd. Addition
+0.15
+30,126,155
+0
+Addition
+National Social Security Fund
+Portfolio 101
+0.32
+63,987,924
+0
+0
+Addition
+24,832,310
+Guoxin Investment Co., Ltd.
+%
+Percentage
+Total
+Percentage
+Total
+and outstanding shares
+lent by way of securities
+lending and refinancing
+at the end of the period
+at the end of the period
+and refinancing
+Outstanding shares
+lent by way of securities lending
+Withdrawals
+during the
+Reporting Period
+Name of shareholder
+(full name)
+Additions/
+Shares held by
+shareholders in ordinary
+account and credit account
+Unit: share
+%
+0.12
+Industrial and Commercial
+Addition
+3,219,997
+0
+Withdrawal
+National Social Security Fund
+Privately Offered Fund
+- Ruifeng Huibang No. 3
+0.11
+22,233,848
+0
+0
+Withdrawal
+0.02
+4,172,109
+0
+0
+Management Co., Ltd.
+Zhuhai Ruifeng Huibang Asset
+49,200
+0.00
+24,637,835
+0.12
+Bank of China Limited-
+Huatai-Pinebridge Shanghai-
+Changes in the Top Ten Shareholders from the Previous Period
+Shenzhen 300 Index
+ended Index Fund
+China Life Insurance Company Withdrawal
+-
+Limited Dividends -
+Personal Dividends - 005L
+- FH002 (Shanghai)
+Exchange Traded Open-
+Details regarding the related party relationships
+among the above shareholders or whether they
+are parties acting in concert
+of fund of compensation
+24,588,635
+(1)
+The Company did not issue any ordinary share, convertible corporate bond, warrant bond,
+corporate bond or other derivative securities, nor did it enter into any equity-linked agreement
+during the Reporting Period.
+II. ISSUANCE AND LISTING OF SECURITIES
+Applicable ✓ Not applicable
+(II) Changes of Shares with Selling Restrictions
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+196 China Shenhua Energy Company Limited
+As at the disclosure date of this report, so far as the Company's Directors are aware,
+the Company has satisfied the minimum public float requirement under Rule 8.08 of
+the Hong Kong Listing Rules.
+Save as disclosed above, for the year ended 31 December 2023, neither the Company
+nor any of its subsidiaries has repurchased, sold or redeemed any listed securities of
+the Company or its subsidiaries as defined in the Hong Kong Listing Rules.
+References are made to the announcement of the Company dated 14 January
+2015 in relation to, among others, the US$500,000,000 3.875% bonds due 2025
+(the "Bonds") issued by China Shenhua Overseas Capital Company Limited, an
+indirect wholly-owned subsidiary of the Company, the notice of listing of the Bonds
+on the HKEX dated 20 January 2015 and the announcement dated 10 August 2023
+in relation to partial redemption and cancellation of the Bonds. As at 10 August
+2023, China Shenhua Overseas Capital Company Limited has redeemed the Bonds
+with an aggregate principal amount of US$86,674,000, representing 17.33% of the
+initial principal amount of the Bonds, and the cancellation has been completed.
+Upon such cancellation of the Bonds, there is also an aggregate principal amount
+of US$413,326,000 of the Bonds outstanding, representing 82.67% of the initial
+principal amount of the Bonds.
+Explanations of Changes of Shares
+2.
+100.00
+0 19,868,519,955
+Changes of the Total Number of Ordinary Shares, the Shareholding Structure
+and the Asset and Liability Structure of the Company
+0
+19,868,519,955
+17.00
+0 3,377,482,000
+0
+17.00
+3,377,482,000
+2. Overseas listed foreign shares
+III. Total number of shares
+83.00
+16,491,037,955
+0
+0
+83.00
+16,491,037,955
+1. RMB ordinary shares
+100.00
+19,868,519,955 100.00
+☐ Applicable Not applicable
+There are no provisions for pre-emptive rights under the Articles of Association and the
+PRC laws which would entitle the existing shareholders to have priority to subscribe for
+new shares on a pro rata basis in the event of new share issuance by the Company.
+Number pledge, tag or lock-up
+shares held
+Decrease
+Shares subject to
+Shareholdings of top ten shareholders (excluding lending of shares by way of refinancing)
+Number of
+Increase/
+Unit: share
+Name of
+shareholder
+Shareholdings of Top Ten Shareholders and Top Ten Holders of Marketable
+Shares (or Shareholders without Selling Restrictions) as at the end of the
+Reporting Period
+1.
+(II) Shareholdings of Top Ten Shareholders and Top Ten Holders of Marketable
+Shares (or Shareholders without Selling Restrictions) as at the end of the
+Reporting Period
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+2023 Annual Report 197
+(II) Pre-emptive Rights
+1,839
+147,431
+149,270
+prior to the disclosure date of this annual report (accounts)
+Including: Holders of A shares (including China Energy)
+Total number of ordinary shareholders at the end of last month
+1,862
+Registered holders of H shares
+137,848
+Including: Holders of A shares (including China Energy)
+139,710
+Total number of shareholders of ordinary shares as at the end of
+the Reporting Period (accounts)
+Total Number of Shareholders
+(1)
+III.
+SHAREHOLDERS
+Registered holders of H shares
+0
+0
+100.00
+Elion Chemical
+procedures
+for 2023
+2023
+rate
+(2)
+of fund
+of loans
+through legal
+recovered
+return for
+Interest
+Investment Determination
+Source
+Joint stock
+company
+Duration
+entrusted Initial date
+loans of loans
+and the Group Trustee
+Name of borrower
+the borrower
+has been
+Principal
+Actual
+Amount of
+Relation between
+Whether it
+Unit: RMB million
+Individual Entrusted Loans
+2.
+Section VII Significant Events (Continued)
+Expiry date
+of loans
+Bank of China
+400 2020/12/24
+2023/12/23
+19,868,519,955
+II. Marketable shares without selling
+restrictions
+0.00
+0
+0
+0
+0.00
+1. Shares with selling restrictions
+%
+Number Percentage
+Subtotal
+Number Percentage cancellation
+Repurchase
+and
+As at 31 December 2023
+Change
+As at 31 December 2022
+Unit: share
+3 years
+Own fund Replacement Interest to be paid
+of loans quarterly
+4.75%
+19.26
+0
+Yes
+during the
+The entrusted loan of RMB400 million provided to Elion Chemical Industry Co., Ltd.
+("Elion Chemical") by Shendong Power, a wholly-owned subsidiary of the Company,
+has expired on 23 December 2023. As at the end of the reporting period, Elion
+Chemical failed to repay the principal on time. For the entrusted loan, Elion Chemical
+has implemented guarantee through asset pledge. The two parties are currently
+negotiating the extension of the entrusted loan, etc. The entrusted loan will not have
+a significant effect on the financial condition of the Group.
+2023 Annual Report 195
+Section VIII Changes in Shares and
+Particulars of Shareholders
+I. CHANGES OF ORDINARY SHARE CAPITAL
+(I) Changes of the Number of Ordinary Shares
+1.
+Changes of the Number of Shares
+As at 31 December 2023, the Group did not grant entrusted loans with an amount
+exceeding 5% of the Group's latest audited net assets attributable to equity holders
+of the Company to any individual party. The Company did not utilise the proceeds
+raised to grant entrusted loans, and there was no entrusted loan that was involved in
+litigations. No provision for impairment for the above entrusted loans has been made
+by the Group. Under centralised capital management of the Group, the entrusted
+loans among the Company and its subsidiaries were used for meeting operating and
+development needs. Such entrusted loans have been eliminated in the consolidated
+financial statements of the Group.
+entrusting of voting rights, entrusted voting rights
+and waivers of voting rights
+at the end of
+Reporting the Reporting
+Period
+Туре
+Type and number of shares
+without selling
+restrictions held
+Name of shareholder
+Number of shares
+Shareholdings of top ten shareholders without selling restrictions
+Changes in Shares and
+Particulars of Shareholders (Continued)
+Section VIII
+198 China Shenhua Energy Company Limited
+Open-ended Index Fund
+Index Exchange Traded
+Shanghai-Shenzhen 300
+Bank of China Limited
+- Huatai-Pinebridge
+Others
+Number
+N/A
+0.12
+24,588,635
++11,173,300
+Others
+N/A
+NA
+0 Nil
+0.12
+24,832,310
++18,512,121
+Fund Portfolio 101
+Huaxia Life Insurance Co.,
+Ltd. - Self-owned Fund
+Industrial and Commercial
+Others
+N/A
+NA
+Nil
+0 Nil
+China Energy Investment Corporation Limited
+HKSCC NOMINEES LIMITED
+13,812,709,196
+24,588,635 RMB ordinary shares
+24,832,310
+24,832,310 RMB ordinary shares
+30,126,155
+30,126,155 RMB ordinary shares
+N/A
+Description of the abovementioned shareholders'
+N/A
+Description of the special repurchase accounts of
+the top ten shareholders
+National Social Security Fund Portfolio 101
+Huaxia Life Insurance Co., Ltd. - Self-owned Fund
+Industrial and Commercial Bank of China Limited -
+Huatai-Pinebridge Shanghai-Shenzhen 300 Index
+Exchange Traded Open-ended Index Fund
+Investment Fund
+Index 50 Trading Open-end Index Securities
+40,207,864
+40,207,864 RMB ordinary shares
+13,812,709,196 RMB ordinary shares
+Industrial and Commercial Bank of China - Shanghai
+63,987,924 RMB ordinary shares
+Guoxin Investment Co., Ltd.
+106,077,400
+106,077,400 RMB ordinary shares
+Central Huijin Asset Management Ltd.
+221,001,857
+221,001,857 RMB ordinary shares
+Hong Kong Securities Clearing Company Limited
+594,718,004
+594,718,004 RMB ordinary shares
+China Securities Finance Corporation Limited
+3,369,078,025
+Overseas-listed foreign
+shares
+3,369,078,025
+63,987,924
+0.15
++14,331,060 30,126,155
+National Social Security
+Hong Kong Securities
+Corporation Limited
+Others
+N/A
+NA
+☐0 Nil
+2.99
+0 594,718,004
+China Securities Finance
+corporation
+Overseas
+Unknown N/A
+16.96
+-186,882 3,369,078,025
+-99,935,391 221,001,857
+HKSCC NOMINEES LIMITED
+Corporation Limited
+State-owned
+N/A
+0 Nil
+69.52
+0 13,812,709,196
+China Energy Investment
+%
+Nature of
+shareholders
+Status Number
+restrictions
+Percentage
+Period
+with selling
+corporation
+1.11
+O Nil N/A
+Overseas
+Investment Fund
+end Index Securities
+Index 50 Trading Open-
+Bank of China Shanghai
+Others
+corporation
+State-owned
+HA
+N/A
+0 Nil
+20
+0.20
++11,983,800 40,207,864
+Industrial and Commercial
+HA
+O Nil N/A
+0.32
+Clearing Company Limited
+corporation
+Central Huijin Asset
+0
+106,077,400
+0.53
+of shares
+☐ 0 Nil
+MA
+State-owned
+Management Ltd.
+corporation
+Guoxin Investment Co., Ltd. +63,285,124
+63,987,924
+N/A
+companies in which it
+No
+May 2023
+No
+Interpretation of the third
+Ping An Capital
+Oral
+Company conference
+2 November
+13
+No
+Interpretation of interim results
+and disclosed information
+room
+Capital Group
+Oral
+Company conference
+17 October
+12
+No
+Topsperity Securities Interpretation of interim results
+and disclosed information
+room
+room
+quarterly results and disclosed
+information
+6 November
+A Share Best Practice Award
+in Energy Industry
+(A股能源行業最佳實踐獎)
+Best Practice Award in Energy
+Industry of Hong Kong Stock
+Market (港股能源行業最佳實踐獎)
+2022 Ranking of Chinese Listed
+Companies by Market Value - Top
+5 in the Energy Industry
+Top 50 Listed Companies by
+Popularity among Institutions
+Top 50 Listed Companies by
+Market Capitalization
+Listed in China ESG Listed
+Company Pioneer 100
+(中國ESG上市公司先鋒100) List
+Rank 42nd among Fortune Top 500
+Listed Companies in China in 2023
+Outstanding CSR Report Release
+for Enterprises in Coal Industry
+2022-2023 A-level Information
+Disclosure Work
+(信息披露工作A級評價)
+Listed in Central SOES (ESG):
+Pioneer 100 Index
+(央企ESG•先鋒100指數)
+Wind ESG Rating
+China Media Group
+Fortune
+China National Coal
+Association
+SSE
+The 6th China Enterprise
+Forum
+214 China Shenhua Energy Company Limited
+Oral
+Company conference
+14
+Oral
+20 September Company conference
+11
+Date
+No.
+Section IX Investor Relations (Continued)
+2023 Annual Report 211
+No
+Interpretation of the contents
+disclosed in the annual report
+and the first quarterly report
+room
+Fidelity International
+Oral
+Company conference
+17 May
+8
+No
+Interpretation of the contents
+disclosed in the annual report
+and the first quarterly report
+room
+CITIC Securities
+Oral
+Location
+Way of
+Communication
+Name of
+Institution
+Main Content of
+Communication
+fundamental information and
+disclosed information
+room
+Interpretation of the Company's No
+TF Securities
+Oral
+Company conference
+5 July
+10
+2022 Hong Kong Stock Best
+Practice Award (Environment)
+A Share Best Practice Award
+(Environment)
+disclosed information
+Interpretation of the Company's No
+room
+Huatai Securities
+Oral
+Company conference
+8 June
+9
+Information
+Provided
+fundamental information and
+September 2023
+15
+September 2023
+No.
+Date of Award
+Name of Major Award
+1
+January 2023
+Awarded by
+Xinhua Credit Jinlan Cup-Pioneering
+Practice Case for ESG Corporate
+Governance
+The Fourth Forum
+for Credit System
+Construction of Chinese
+Cities
+2
+January 2023
+Special Contribution Award for
+Energy Restructuring and Green
+Development
+Energy
+3
+February 2023
+4
+III. AWARDS OF CHINA SHENHUA IN 2023
+Section IX Investor Relations (Continued)
+212 China Shenhua Energy Company Limited
+information
+room
+quarterly results and disclosed
+information
+15
+7 November
+Company conference
+Oral
+Aegon-Industrial Fund Interpretation of the third
+room
+May 2023
+quarterly results and disclosed
+16
+20 November Company conference
+Oral
+GF Securities
+Interpretation of the third
+No
+room
+quarterly results and disclosed
+information
+Company conference
+5
+May 2023
+No.
+Date of Award
+Name of Major Award
+Awarded by
+9
+May 2023
+Best Listed Company of The 5th
+New Fortune Award
+New Fortune
+10
+June 2023
+11
+June 2023
+12
+July 2023
+13
+August 2023
+14
+Section IX Investor Relations (Continued)
+2023 Annual Report 213
+Companies
+Relations of Chinese Listed
+6
+May 2023
+7
+May 2023
+8
+Yinhua Fund
+Listed in 2022 Forbes China TOP
+50 Sustainable Development
+Industrial Enterprises
+Forbes China
+LO
+Listed in Fortune China ESG Impact Fortune
+List
+2023 China Brand Value Evaluation
+Information
+The Company's H shares were
+included in the list of Hang
+Seng China Enterprises Index
+(HSCEI) and Hang Seng Stock
+Connect China Enterprises Index
+(HSSCCEI)
+Investor Relations Gold Award
+of P5w.net (2022)
+"Best IR Company" (IRA)
+"Best Corporate Communication
+Award”(最佳機構溝通獎)
+China Council for Brand
+Development
+Hang Seng Indexes
+Company Limited
+P5w.net
+The 14th Tianma Award for Investor Securities Times
+Top Listed Energy Company by
+No
+7 16 May
+Interpretation of the contents
+disclosed in the annual report
+and the first quarterly report
+0.04%
+China Shenhua Energy Company Limited
+206 China Shenhua Energy Company Limited
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+No
+As at the end of the Reporting Period, there were no other corporate shareholders with
+shareholding of more than 10% in the Company.
+VI. RESTRICTIONS ON THE REDUCTION IN SHAREHOLDING
+☐ Applicable ✓ Not applicable
+VII. DETAILED IMPLEMENTATION OF SHARE REPURCHASE
+☐ Applicable ✓ Not applicable
+2023 Annual Report 207
+Section IX Investor Relations
+China Energy Capital Holdings Co., Ltd.
+In 2023, China Shenhua strictly implemented the requirements of the Securities Law of the PRC,
+the PRC Company Law, the Opinions of the State Council on Further Improving the Quality of Listed
+Companies* ( ‹¤¾ÀUÀ£ÀLAĦĦIKĦL)), the Work Guidelines for the Investor
+Relations Management of Listed Companies* ( KEDA¬RAZU)) and relevant laws
+and regulations and documents, aimed at improving the quality of the listed company, continuously
+stabilized production and operation, deepened reform and transformation, strengthened standardized
+operation, intensified capital market work, paid attention to the appeals of investors, ensured and
+safeguarded the legitimate rights and interests of investors, and unhindered communication between
+the board of directors and investors. The Company strengthened expectation management, continuously
+explored ways to improve investor relations management, and was committed to building harmonious
+investor relations and sharing the dividends of corporate development with shareholders.
+FOCUSING ON THE APPEALS OF INVESTORS TO IMPROVE THE QUALITY
+OF THE LISTED COMPANY
+Build up resilience of the industrial chain on the basis of core businesses. The management
+of the Company sized up the situation and formulated long-term development strategies to ensure
+the sustainable development of the Company. In 2023, the Company accelerated the acquisition
+and subsequent replenishment of high-quality coal resources, steadily promoted the construction
+of new power points, continued to maintain transportation channels in an unimpeded manner,
+and actively developed new energy business, so as to give full play to the role of state-owned
+enterprises in technological innovation, control of industry and safety support. With a view to
+realising carbon peak and carbon neutralization, the Company has established a low-carbon
+development leading group, formulated and implemented the 2023 Low Carbon Development
+Work Plan of China Shenhua* (+2023), and further promoted
+transformation and upgrade.
+Strictly regulate the operation and enhance profitability. The Company continued consolidating
+the achievements of the three-year state-owned enterprise reform, and comprehensively
+strengthened the capability construction of risk prevention and control. The "Six in One* (
+"internal control evaluation method of the Company was selected by SASAC as an
+exemplary case of corporate governance. In 2023, the Company entered into the Supplemental
+Agreement II to the Non-competition Agreement with the controlling shareholder to commence
+the acquisition of two assets of the controlling shareholder, Dayan Mining and Hangjin Energy,
+which underscores regional advantages of integrated operations and a promising prospect for
+business growth.
+208 China Shenhua Energy Company Limited
+Section IX Investor Relations (Continued)
+II.
+Strengthen related transactions and prevent and resist risks. In 2023, the Company adjusted
+the caps for daily related party transactions such as the mutual coal supply agreement, the mutual
+supplies and services agreement and financial services agreement. During the preparation and
+formulation of the proposal, the Company fully respected and guaranteed the interests of all
+shareholders. The management of the Company communicated with the regulators and controlling
+shareholder oftentimes, explained the necessity and rationality of the transaction as well as the
+basis and principle for determining the cap to major public shareholders, so as to obtain the
+support from the shareholders. The Company strictly implemented the regulatory rules of the
+two markets to avoid the risk of non-compliance and strive to maximise profits.
+Implement the dividend policy and establish mutual trust and win-win investor relations.
+The Company attaches great importance to the return to shareholders. In the three-year
+shareholders return plan (2022-2024), the Company committed that the profit distribution in the
+form of cash dividends shall be no less than 60% of the net profit attributable to equity holders of
+the parent company, further increasing minimum percentage of dividends distribution. The Board
+recommended to pay a final dividend of RMB2.26 per share (tax inclusive) in 2023, RMB44,903
+million (tax inclusive) in total, accounting for approximately 75.2% of the net profit attributable to
+equity holders of the Company under the China Accounting Standards for Business Enterprises
+in 2023. Since its listing, the Company has distributed cash dividends (including final dividends
+for 2023) of RMB447.032 billion (tax inclusive) in total.
+PROVIDING GOOD SERVICES FOR INVESTORS TO PRESERVE IMAGE IN THE
+CAPITAL MARKET
+Stick to the key tasks and strengthen the ability to perform due diligence and guarantee
+services. The Company continuously improved the level of information disclosure, adhered to
+the principle of "disclose information on a best-effort basis", disclosed major information of
+the Company in a proactive, timely and accurate manner, as a result of which, the information
+disclosure work of the Company was awarded Grade A by SSE for 10 consecutive years. Paying
+attention to improve the management's ability to perform duties, the Company strengthened
+the form and intensity of training and organized 26 training sessions for the Directors throughout
+the year. In order to improve the quality and efficiency of investor communication, the Company
+set up a special working group on investor communication to enhance the daily cooperation for
+supporting investor communication, improve the working mechanism, and guarantee overall
+service by drawing upon experience gained from key areas.
+2023 Annual Report 209
+I.
+69.52%
+100%
+China Energy Investment Corporation Limited
+2.
+3.
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+Description of Changes of the Controlling Shareholder during the Reporting
+Period
+There were no changes of the controlling shareholder of the Company during the
+Reporting Period
+Diagram of the Equity and Controlling Relation between the Company and Its
+Controlling Shareholder at the end of the Reporting Period
+China Energy Investment Corporation Limited
+100%
+69.52%
+China Energy Capital Holdings Co., Ltd.
+0.04%
+China Shenhua Energy Company Limited
+2023 Annual Report 205
+Section VIII Changes in Shares and
+Particulars of Shareholders (Continued)
+(II) De Facto Controller
+1.
+Legal Person
+Name
+State-owned Assets Supervision and
+Administration Commission of
+the State Council
+2.
+3.
+Description of Changes of the Control of the Company during the Reporting
+Period
+There were no changes of the de facto controller of the Company during the
+Reporting Period.
+Diagram of the Equity and Controlling Relation between the Company and Its
+De Facto Controller at the end of the Reporting Period
+State-owned Assets Supervision and
+Administration Commission
+of the State Council
+100%
+Section IX Investor Relations (Continued)
+Stick to results briefings and consolidate the pertinence and effectiveness of results
+interpretation. In 2023, with the goal of improving the effect of investor communication, the
+Company held three high-quality results briefings, namely for the year 2022 and the first quarter of
+2023, the half year of 2023 and the third quarter of 2023 to explain the Company's current results
+and development plan in details and guide investors to accurately understand the Company's
+operation and establish reasonable expectations. In the three briefings, the Company replied
+to a total of 142 pre-meeting and on-site questions. In order to take into account investors'
+preferences to access information, facilitate investors to understand the Company's results,
+and improve the dissemination of results briefing materials, the Company prepared and released
+results documents, photos and interpretation video clips at SSE Roadshow Center to explain and
+interpret results, and selected production units to make a series of videos for cloud exhibition,
+adopting diversified and visual forms to continuously improve the results interpretation.
+V. OTHER CORPORATE SHAREHOLDERS WITH SHAREHOLDING OF MORE
+THAN 10% IN THE COMPANY
+Take proactive actions and continuously improve the service quality for investors. The
+Company strengthened the quality and efficiency of investor communication services, and further
+promoted a multi-level and constructive interaction mechanism to ensure effective response to
+investors' appeals. We ensured smooth communication through investor hotline, e-mail and SSE
+e-interactive, addressing investors' concerns and clarifying queries in a timely manner. Throughout
+the year, the Company answered 41 questions raised by investors on SSE e-interactive. The
+Company actively carried out publicity and education of investor protection, regularly conducted
+shareholder analysis and dispatched annual reports, ESG reports and other materials, gradually
+expanding the scope of investor service audience. Shareholders' concerns and demands were
+reported to the management and the Board of the Company in a timely manner so as to maintain
+two-way communication as well as establish a long-term mutual trust and win-win investment
+relationship between the Company and shareholders.
+Mizuho Securities
+room
+Interpretation of information
+contained in the annual report
+No
+4
+10 May
+Company conference
+Oral
+Haitong Securities
+Interpretation of the contents
+No
+room
+disclosed in the annual report
+and the first quarterly report
+5
+10 May
+Company conference
+Oral
+Guosheng Securities
+room
+Interpretation of the contents
+disclosed in the annual report
+and the first quarterly report
+No
+6
+Ensure responsibilities are duly fulfilled and make every effort to safeguard the legitimate
+rights and interests of investors. The Company attached great importance to investors'
+right to know and issued a total of 195 disclosure documents on the websites of SSE and the
+HKEx throughout the year. We made every effort to safeguard investors' right to participate
+and decision-making. In 2023, the Company held an annual general meeting and A shareholder
+class meeting and H shareholder class meeting. The management of the Company had in-
+depth communication with the participating shareholders and took on board their opinions and
+suggestions in relation to the Company's future development. More than 400 A shareholders
+participated in on-site and online voting on the resolutions, who fully discussed and voted on the
+resolutions submitted at the meeting and fully exercised their rights to participate in the major
+decision-making and corporate governance of the Company.
+Company conference
+Oral
+Industrial Securities
+room
+Oral
+Company conference
+10 May
+3
+18 April
+210 China Shenhua Energy Company Limited
+Section IX Investor Relations (Continued)
+In 2023, the survey result of the Company's reception for investors was as follows:
+No. Date
+Location
+Way of
+Communication
+Name of
+Institution
+Main Content of
+Communication
+Information
+Provided
+1
+6 January
+Company conference
+Interpretation of the third
+Cinda Securities
+Oral
+fundamental information and
+periodic reports
+No
+Interpretation of the Company's
+TF Securities
+Oral
+room
+1 February
+2
+periodic reports
+Interpretation of the Company's No
+fundamental information and
+room
+Company conference
+Our procedures in relation to impairment
+assessment on property, plant and equipment,
+construction in progress, exploration and evaluation
+assets, intangible assets and applicable right-of-
+use assets and other non-current assets included:
+obtaining an understanding of and assessing
+the design, implementation and operating
+effectiveness of key internal controls relating
+to impairment assessment on these non-
+current assets, understanding of the Group's
+procedures to identify impairment indicators
+of these non-current assets and evaluating
+management's identification of impairment
+indicators, if any, based on the internal
+sources and external sources of information;
+assessing the appropriateness of the
+methodologies used by management to
+estimate value in use with reference to the
+requirements of the prevailing accounting
+standards;
+challenging the reasonableness of significant
+judgements and estimates, such as sales
+growth rate related to future market supply
+and demand conditions, future sales
+price, future capital expenditure, future
+operating costs and discount rates used in
+management's calculation of value in use
+based on our knowledge of the business and
+industry;
+218 China Shenhua Energy Company Limited
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+Impairment assessment on property, plant and equipment, construction in progress, exploration
+and evaluation assets, intangible assets and applicable right-of-use assets and other non-current
+assets (continued)
+Refer to Note 11 (ii) to the consolidated financial statements and the accounting policies in Note 3.
+Key audit matter
+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;
+As set out in Note 11 (ii) to the consolidated
+financial statements, management concluded
+that impairment provisions for property, plant and
+equipment, construction in progress, exploration
+and evaluation assets, intangible assets and
+applicable right-of-use assets and other non-
+current assets of RMB3,003 million were required
+for the current year.
+We identified impairment assessment on property,
+plant and equipment, construction in progress,
+exploration and evaluation assets, intangible
+assets and applicable right-of-use assets and other
+non-current assets as a key audit matter due to
+these assets to the Group's consolidated financial
+statements, the significant judgement made by
+management in determining the recoverable
+amounts of the assets and considering the
+possibility of management bias in the selection of
+assumptions adopted.
+How our audit addressed the key audit matter
+How our audit addressed the key audit matter
+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;
+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
+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.
+2023 Annual Report 219
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+KEY AUDIT MATTERS (CONTINUED)
+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.
+As at 31 December 2023, management performed
+an impairment assessment on assets or assets
+group with indications of impairment on the
+balance sheet date. The recoverable amounts of
+these non-current assets is determined based on
+the higher of value in use that based on future
+discounted cash flows on a cash generating unit
+basis and the net value of the assets or assets
+group's fair value minus disposal costs.
+KEY AUDIT MATTERS (CONTINUED)
+As at 31 December 2023, the Group's property,
+plant and equipment, construction in progress,
+exploration and evaluation assets, intangible
+assets and applicable right-of-use assets and other
+non-current assets had a total carrying value of
+RMB371,039 million.
+Sustainability Inclusion Award
+Securities Daily
+Caijing Magazine
+Section X Independent Auditor's Report and
+Financial Statements
+KPMG
+Independent auditor's report to the members of
+China Shenhua Energy Company Limited
+(Incorporated in the People's Republic of China with limited liability)
+OPINION
+In our opinion, the consolidated financial statements give a true and fair view of the consolidated
+financial position of the Group as at 31 December 2023, and of its consolidated financial performance
+and its consolidated cash flows for the year then ended in accordance with International Financial
+Reporting Standards ("IFRSS") issued by the International Accounting Standard Board ("IASB") and have
+been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies
+Ordinance.
+BASIS FOR OPINION
+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.
+KEY AUDIT MATTERS
+Key audit matters are those matters that, in our professional judgement, were of most significance in
+our audit of the consolidated financial statements of the current period. These matters were addressed
+in the context of our audit of the consolidated financial statements as a whole, and in forming our
+opinion thereon, and we do not provide a separate opinion on these matters.
+2023 Annual Report 217
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+Impairment assessment on property, plant and equipment, construction in progress, exploration
+and evaluation assets, intangible assets and applicable right-of-use assets and other non-current
+assets
+Refer to Note 11 (ii) to the consolidated financial statements and the accounting policies in Note 3.
+Key audit matter
+In accordance with the prevailing accounting
+standards, management performed assessment
+at the end of the reporting period to determine
+whether there was any indication that these
+non-current assets may be impaired. An asset
+is impaired when its recoverable amount, or the
+recoverable amount of the cash generating unit to
+which it belongs, is less than its carrying amount.
+We have audited the consolidated financial statements of China Shenhua Energy Company Limited and
+its subsidiaries (collectively referred to as the "Group") set out on pages 224 to 353, which comprise
+the consolidated statement of financial position as at 31 December 2023, and the consolidated
+statement of profit or loss and other comprehensive income, the consolidated statement of changes
+in equity and the consolidated statement of cash flows for the year then ended and notes, comprising
+material accounting policy information and other explanatory information.
+2023 Evergreen Award
+224 China Shenhua Energy Company Limited
+September 2023
+17
+October 2023
+18
+November 2023
+19
+November 2023
+Awarded by
+2023 Best Return to Shareholders
+in Hong Kong Stock Exchange
+Listed Company of Phoenix Star
+(鳳凰之星港股最佳股東回報
+上市公司)
+2023 Corporate Governance Best
+Practices(公司治理最佳實踐案例)
+16
+2023 Listed Companies' ESG
+The 25th Listed Company
+Gold Bull Awards
+Best Investment Value Award
+(最具投資價值獎)
+Hong Kong Stock Golden Bull
+Award (港股金牛獎)
+Top 100 ESG Golden Bull Award
+(ESG 金牛獎百強)
+ESG Golden Bull Award for
+Top 50 State-owned Enterprises
+(ESG金牛獎央企五十強)
+Phoenix Satellite
+Television Group
+China Association for
+Public Companies
+China Association for
+Public Companies
+Best Practice Cases
+(上市公司ESG最佳實踐案例)
+Excellent Practice Cases Award
+(優秀實踐案例)
+China Securities Journal
+Name of Major Award
+No.
+RESPONSIBILITIES OF THE DIRECTORS FOR THE CONSOLIDATED FINANCIAL
+STATEMENTS
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+2023 Annual Report 221
+If, based on the work we have performed, we conclude that there is a material misstatement of this
+other information, we are required to report that fact. We have nothing to report in this regard.
+In connection with our audit of the consolidated financial statements, our responsibility is to read the
+other information and, in doing so, consider whether the other information is materially inconsistent
+with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears
+to be materially misstated.
+Our opinion on the consolidated financial statements does not cover the other information and we do
+not express any form of assurance conclusion thereon.
+The directors are responsible for the other information. The other information comprises all the
+information included in the annual report, other than the consolidated financial statements and our
+auditor's report thereon.
+INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS
+AND AUDITOR'S REPORT THEREON
+inspecting underlying documentation for journal
+entries relating to coal sales which were
+considered to meet specific risk-based criteria.
+comparing, on a sample basis, whether
+specific coal sales transactions recorded
+before and after the financial year end date
+with relevant underlying documentation, which
+included sales invoices, goods dispatch notes,
+customer receipts, or shipping documents,
+as applicable under the respective sales
+transactions contracts, to determine whether
+the related revenue had been recognised in the
+appropriate financial period on the basis of the
+terms of sale as set out in the respective sales
+contracts; and
+How our audit addressed the key audit matter
+Key audit matter
+Date of Award
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+KEY AUDIT MATTERS (CONTINUED)
+Section X Independent Auditor's Report and Financial
+Statements (Continued)
+220 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 coal
+revenue recognition as a key audit matter because
+of the different terms of trade of coal offered by
+the Group to its customers which increases the
+risk that revenue could be recorded in the incorrect
+period or could be subject to manipulation to meet
+targets or expectations.
+Sale of coal accounted for 65% of the Group's
+revenue for the year ended 31 December 2023.
+Sale of coal is recognised when the control of the
+coal is transferred to the customer. Management
+evaluates the terms of individual contracts in order
+to determine the appropriate timing for revenue
+recognition, which varies amongst contracts.
+Key audit matter
+Section IX Investor Relations (Continued)
+Timing of revenue recognition from sale of coal (continued)
+The directors are responsible for the preparation of the consolidated financial statements that give a
+true and fair view in accordance with IFRSS issued by the IASB and the disclosure requirements of the
+Hong Kong Companies Ordinance and for such internal control as the directors determine is necessary
+to enable the preparation of consolidated financial statements that are free from material misstatement,
+whether due to fraud or error.
+20
+November 2023
+Beijing Enterprise
+Confederation
+Beijing Entrepreneurs
+Association
+Beijing Listed
+Companies Association
+China Business Top 100
+Forum
+Wind ESG Rating
+Practices among Chinese Listed
+Companies
+2023 Best Practice Award of Office China Association for
+of Board of Directors
+Public Companies
+26
+December 2023
+China Securities Golden Bauhinia
+Awarded by
+Awards
+Best Listed Company for
+ESG Practice
+Best Listed Company for
+ESG Information Disclosure
+Outstanding Listed Company of
+High-quality Development
+22
+27
+December 2023
+2023 ESG Pioneer
+28
+December 2023
+International Finance
+Forum (Hong Kong)
+20
+December 2023
+AA-Level Top 100 Best ESG
+Top 100 Most Valuable Companies
+Securities Times
+21
+224
+December 2023
+Listed on the Main Board
+(主板上市公司價值100強)by
+the 17th Value Selection of
+the PRC Listed Companies
+2023 Outstanding Achievements
+in Reform and Development of
+Chinese Enterprises
+(中國企業改革發展優秀成果)
+China Enterprise Reform
+and Development
+Society
+2023 Annual Report 215
+Section IX Investor Relations (Continued)
+25
+No.
+Name of Major Award
+22
+December 2023
+Ranking 20 of 2023 Top 100
+Beijing Listed Enterprises
+223
+23
+December 2023
+China's Top 100 Enterprises Award
+China's Most Ethical
+Enterprises Award
+China's Top 100 Enterprises with
+Special Contribution Award
+24
+December 2023
+Date of Award
+216 China Shenhua Energy Company Limited
+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.
+AUDITOR'S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED
+FINANCIAL STATEMENTS
+Profit for the year
+85,398
+75,192
+11
+Profit for the year
+(14,256)
+(17,584)
+10
+Income tax expense
+99,654
+92,776
+Profit before income tax
+Other comprehensive income for the year
+2,223
+Share of results of associates
+(3,930)
+(3,117)
+3,071
+2,634
+66
+Finance costs
+(2,136)
+(5,003)
+Interest income
+Other expenses
+(1,337)
+3,565
+(285)
+Items that will not be reclassified to profit or loss,
+75,192
+86,838
+75,651
+1,440
+459
+Total comprehensive income for the year
+net of income tax
+Other comprehensive income for the year,
+(7)
+11
+Share of other comprehensive income of associates
+4
+comprehensive income
+net of income tax:
+instruments at fair value through other
+898
+192
+Exchange differences
+Items that may be reclassified subsequently to profit or
+loss, net of income tax:
+326
+160
+Share of other comprehensive income of associates
+96
+comprehensive income
+instruments at fair value through other
+Fair value changes on investments in equity
+85,398
+Fair value changes on investments in debt
+The directors are assisted by the Audit Committee in discharging their responsibilities for overseeing
+the Group's financial reporting process.
+11
+1,100
+For the year ended 31 December 2023
+Consolidated Statement of Profit or Loss and
+Other Comprehensive Income
+2023 Annual Report 223
+22 March 2024
+Central, Hong Kong
+10 Chater Road
+8th Floor, Prince's Building
+Certified Public Accountants
+KPMG
+The engagement partner on the audit resulting in the independent auditor's report is Guen Kin Shing.
+From the matters communicated with the Audit Committee, we determine those matters that were
+of most significance in the audit of the consolidated financial statements of the current period and
+are therefore the key audit matters. We describe these matters in our auditor's report unless law or
+regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
+determine that a matter should not be communicated in our report because the adverse consequences of
+doing so would reasonably be expected to outweigh the public interest benefits of such communication.
+We 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.
+(Expressed in Renminbi ("RMB"))
+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.
+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)
+China Shenhua Energy Company Limited
+222
+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.
+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.
+Loss allowances, net of reversal
+Year ended 31 December
+2023
+RMB million
+1,272
+Other income
+(3,184)
+(3,583)
+11
+Other gains and losses
+(3,722)
+(3,007)
+Research and development costs
+(9,930)
+(9,812)
+General and administrative expenses
+Notes
+(410)
+Selling expenses
+117,909
+110,537
+Gross profit
+344,533
+(226,624)
+343,074
+(232,537)
+5 7
+Cost of sales
+Goods and services
+Revenue
+(Restated)
+2022
+RMB million
+(425)
+219
+Refer to Note 5 to the consolidated financial statements and the accounting policies in Note 3.
+Timing of revenue recognition from sale of coal
+Inventories
+5,510
+Contract liabilities
+7,208
+5,597
+Total current liabilities
+91,585
+98,404
+Net current assets
+107,366
+4,757
+112,646
+541,827
+526,916
+226 China Shenhua Energy Company Limited
+Consolidated Statement of Financial Position (Continued)
+At 31 December 2023
+(Expressed in RMB)
+Non-current liabilities
+31 December
+2023
+Notes
+RMB million
+31 December
+Total assets less current liabilities
+Income tax payable
+674
+5,184
+198,951
+211,050
+Current liabilities
+Borrowings
+Accounts and bills payables
+Accrued expenses and other payables
+Current portion of lease liabilities
+Current portion of long-term liabilities
+331
+30
+2022
+4,622
+33
+38,901
+38,972
+34
+30,613
+34,724
+32
+300
+297
+35
+12,630
+RMB million
+(Restated)
+Borrowings
+64,120
+Net assets
+Equity
+Share capital
+Reserves
+Equity attributable to equity holders of the Company
+Non-controlling interests
+Total equity
+481,651
+462,796
+37
+60,176
+19,869
+391,609
+377,114
+411,478
+396,983
+70,173
+65,813
+481,651
+462,796
+Approved and authorised for issue by the board of directors on 22 March 2024.
+Lv Zhiren
+Executive Director
+Xu Mingjun
+Executive Director
+19,869
+Total non-current liabilities
+1,194
+Other non-current liabilities
+Bonds
+31
+Long-term liabilities
+Accrued reclamation obligations
+Deferred tax liabilities
+Lease liabilities
+33323
+30
+29,636
+38,438
+2,972
+3,453
+35
+15,125
+10,613
+36
+8,780
+9,005
+29
+1,137
+1,166
+1,332
+1,445
+Total current assets
+131,458
+108,174
+28
+Non-current assets
+31 December
+2023
+Notes
+RMB million
+31 December
+2022
+RMB million
+(Restated)
+Property, plant and equipment
+Construction in progress
+Exploration and evaluation assets
+At 31 December 2023
+(Expressed in RMB)
+Intangible assets
+Interests in associates
+678022
+16
+290,839
+274,103
+17
+18,955
+20,843
+18
+5,519
+Right-of-use assets
+5,218
+Consolidated Statement of Financial Position
+The notes on pages 234 to 353 form part of these financial statements.
+2022
+Notes
+RMB million
+RMB million
+(Restated)
+64,625
+72,925
+10,567
+12,473
+75,192
+2023 Annual Report 225
+85,398
+74,184
+10,614
+12,654
+75,651
+86,838
+Earnings per share
+- Basic/diluted (RMB)
+15
+3.253
+3.670
+65,037
+19
+4,662
+4,059
+24
+12,846
+12,096
+25
+19,858
+12,100
+comprehensive income
+21
+254
+502
+24
+Prepaid expenses and other current assets
+16,007
+15,849
+Restricted bank deposits
+27
+7,298
+6,357
+Time deposits with original maturity over three months
+34,514
+32,688
+Cash and cash equivalents
+26
+414,270
+434,461
+Financial assets at fair value through other
+23
+23,994
+24,023
+55,635
+49,714
+Equity instruments at fair value through
+other comprehensive income
+21
+2,486
+2,386
+Other non-current assets
+Deferred tax assets
+22
+22
+27,070
+28,905
+29
+5,301
+5,019
+Total non-current assets
+Current assets
+2,649
+Accounts and bills receivables
+The notes on pages 234 to 353 form part of these financial statements.
+2023 Annual Report 227
+Consolidated Statement of Changes in Equity
+For the year ended 31 December 2023
+(Note (iii)))
+(Note (iv))
+(Note (v))
+(Expressed in RMB)
+Non-
+controlling
+Total
+Total
+interests
+equity
+(Note (ii))
+RMB million RMB million RMB million RMB million
+(Restated)
+19,869
+84,766
+3,657
+(334)
+22,425
+(14,316)
+263,786
+379,853
+69,143
+At 31 December 2021
+448,996
+earnings
+reserve
+84,766
+3,657
+517
+31,010
+(19,981) 291,640 411,478
+70,173
+481,651
+228 China Shenhua Energy Company Limited
+Consolidated Statement of Changes in Equity (Continued)
+For the year ended 31 December 2023
+reserves
+RMB million
+Equity attributable to equity holders of the Company
+Share
+Capital Exchange
+premium
+reserve
+RMB million
+(Note 37)
+RMB million
+(Note (i))
+Statutory
+reserves
+RMB million RMB million RMB million
+Other
+Retained
+Share
+capital
+19,869
+Impact on initial application
+Income Taxes: Deferred
+554
+705
+72,925
+72,925
+12,473
+85,398
+1,259
+181
+1,440
+54
+705
+554
+74,184
+12,654
+86,838
+(50,466) (50,466)
+Appropriation of maintenance
+and production funds
+(Note (iii)))
+6,006
+(6,006)
+Utilisation of maintenance and
+72,925
+of amendments to IAS 12,
+705
+for the year (Restated)
+tax related to assets and
+liabilities arising from a single
+transaction (Note 2)
+24
+24
+224
+24
+9
+33
+At 1 January 2022 (Restated)
+19,869
+Dividend declared (Note 14)
+84,766
+(334)
+22,425
+(14,316)
+263,810 379,877
+69,152
+449,029
+Profit for the year (Restated)
+Other comprehensive income
+for the year
+Total comprehensive income
+3,657
+At 31 December 2023
+261
+138
+84,766
+3,657
+371
+25,782
+(20,415)
+282,907 396,937
+65,785
+462,722
+Impact on initial application
+of amendments to IAS
+19,869
+12, Income Taxes:
+and liabilities arising from a
+single transaction (Note 2)
+At 1 January 2023
+Profit for the year
+Other comprehensive income
+for the year
+Total comprehensive income
+for the year
+Dividend declared (Note 14)
+---- 46 46 28 74
+Deferred tax related to assets
+19,869
+At 31 December 2022
+equity
+(Expressed in RMB)
+Equity attributable to equity holders of the Company
+Share
+capital
+Share
+premium
+Capital
+reserve
+(Note 37)
+RMB million RMB million
+(Note (i))
+Statutory
+reserves
+RMB million RMB million RMB million
+(Note (ii))
+(Note (iii))
+Exchange
+RMB million RMB million RMB million RMB million
+Other
+reserve
+reserves
+earnings
+RMB million
+(Note (iv))
+(Note (v))
+Non-
+controlling
+Total
+Total
+interests
+Retained
+84,766
+3,657
+371
+(Note (iii))
+9,620
+(9,620)
+Utilisation of maintenance and
+production funds (Note (iii)
+(4,392)
+4,392
+Contributions from
+non-controlling shareholders
+574
+and production funds
+574
+shareholders
+Disposal of subsidiaries
+Others
+(6,781)
+(6,781)
+(185)
+(185)
+168
+(45)
+123
+Distributions to non-controlling
+Appropriation of maintenance
+(50,665)
+(50,665)
+25,782 (20,415)
+282,953
+396,983
+65,813
+462,796
+146
+16
+146
+46
+266
+64,625
+64,625
+10,567
+75,192
+412
+47
+459
+266
+64,625
+65,037
+10,614
+75,651
+(50,665)
+2023
+Year ended 31 December
+Non-controlling interests
+for the year attributable to:
+Equity holders of the Company
+(1,267)
+1,611
+Increase/(decrease)/in contract liabilities
+1,100
+1,256
+Increase in accrued expenses and other liabilities
+2,794
+(931)
+(Decrease)/increase in accounts and bills payables
+(319)
+Cash generated from operations
+(2,032)
+523
+(8,476)
+(Increase)/decrease in accounts and bills receivables
+48
+(1,438)
+(Increase)/decrease in inventories
+Changes in working capital:
+125,855
+118,345
+Operating cash flows before movements in working capital
+Increase in prepaid expenses and other assets
+(176)
+108,335
+Income tax paid
+1,501
+Proceeds from disposal of property, plant and equipment,
+intangible assets and other non-current assets
+(1,819)
+(26,865)
+(36,103)
+(981)
+Increase in right-of-use assets
+RMB million
+2022
+RMB million
+Year ended 31 December
+2023
+128,734
+exploration and evaluation assets, construction in progress
+and other non-current assets
+Investing activities
+(Expressed in RMB)
+For the year ended 31 December 2023
+Consolidated Statement of Cash Flows (Continued)
+2023 Annual Report 231
+109,734
+89,687
+Net cash generated from operating activities
+(19,000)
+(18,648)
+Additions of property, plant and equipment, intangible assets,
+1,236
+(53)
+564
+3
+86
+52
+2,151
+2,782
+(179)
+(188)
+71
+1,287
+2,781
+348
+Amortisation of long-term deferred expenses (Note 11)
+Losses/(gains) on disposal of property, plant and equipment,
+intangible assets and non-current assets (Note 11)
+Gains on disposal of subsidiaries and associates (Note 11)
+Impairment losses on property, plant and equipment (Note 11)
+Impairment losses on construction in progress (Note 11)
+Impairment losses on intangible assets (Note 11)
+413
+Amortisation of intangible assets (Note 11)
+849
+834
+Depreciation of right-of-use assets (Note 11)
+20,626
+20,851
+Depreciation of property, plant and equipment (Note 11)
+Adjustments for:
+99,654
+486
+Other income
+Impairment losses on right-of-use assets (Note 11)
+201
+85
+Exchange loss, net (Note 9)
+1,337
+3,338
+285
+2,989
+Interest expenses
+Loss allowances, net of reversal (Note 11)
+(2,223)
+(3,565)
+Share of results of associates
+(3,071)
+136
+(2,634)
+489
+688
+Write-down of inventories (Note 11)
+47
+Impairment losses on other non-current assets (Note 11)
+(6)
+Reversal of allowance for prepaid expenses (Note 11)
+56
+30
+Impairment losses on goodwill (Note 11)
+Interest income (Note 9)
+Investments in associates
+(3,345)
+(519)
+Decrease in cash and cash equivalents
+(78,734)
+(76,131)
+Net cash used in financing activities
+(50,466)
+(50,665)
+Dividend paid to equity holders of the Company (Note 14)
+(8,919)
+(6,781)
+Distributions to non-controlling shareholders
+(23,418)
+1,669
+Contributions from non-controlling shareholders
+(10,004)
+-
+interest in subsidiaries
+Consideration for acquisition of non-controlling
+1,040
+(77)
+(36,424)
+(29,628)
+(660)
+724
+Proceeds from bills discounted
+574
+Redemption of bonds (Note 28(b))
+(25,585)
+131,458
+234 China Shenhua Energy Company Limited
+In 2007, the Company issued 1,800,000,000 A shares with a par value of RMB1.00 each, at a price
+of RMB36.99 per A share in the PRC. The A shares were listed on the Shanghai Stock Exchange.
+In 2005, the Company issued 3,089,620,455 H shares with a par value of RMB1.00 each, at a
+price of Hong Kong Dollars ("HKD") 7.50 per H share by way of a global initial public offering.
+In addition, 308,962,045 domestic state-owned ordinary shares of RMB1.00 each owned by
+Shenhua Group were converted into H shares. A total of 3,398,582,500 H shares were listed on
+The Stock Exchange of Hong Kong Limited.
+On 8 November 2004, in consideration for Shenhua Group transferring the coal mining and power
+generating assets and liabilities to the Company, the Company issued 15,000,000,000 domestic
+state-owned ordinary shares with a par value of RMB1.00 each to Shenhua Group. The shares
+issued to Shenhua Group represented the entire registered and paid-up share capital of the
+Company at that date.
+Effective on 31 December 2003, the coal production and power generation operations previously
+operated by various entities wholly-owned or controlled by Shenhua Group were restructured
+and managed separately (the "Restructuring"), and those assets and liabilities related to the
+operations and businesses that were transferred to the Company were revalued by China
+Enterprise Appraisal Co., Ltd., an independent valuer registered in the PRC, as at 31 December
+2003 as required by the PRC rules and regulations.
+The Company was established in the PRC on 8 November 2004 as a joint stock limited company
+as part of the Restructuring (as defined below) of Shenhua Group, a state-owned enterprise under
+the direct supervision of the State Council of the PRC.
+Organisation
+China Shenhua Energy Company Limited (the "Company") and its subsidiaries (hereinafter
+collectively referred to as the "Group") are principally engaged in: (i) the production and sale
+of coal; and (ii) the generation and sale of coal-based power to provincial/regional electric grid
+companies in the People's Republic of China (the "PRC"). The Group operates an integrated
+railway network and seaports that are primarily used to transport the Group's coal sales from its
+mines. The primary customers of the Group's coal sales include power plants, metallurgical and
+coal chemical producers in the PRC.
+Principal activities
+1. PRINCIPAL ACTIVITIES AND ORGANISATION
+Cash and cash equivalents, at the beginning of the year
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements
+2023 Annual Report 233
+The notes on pages 234 to 353 form part of these financial statements.
+131,458
+108,174
+Cash and cash equivalents, at the end of the year
+337
+134
+Effect of foreign exchange rate changes
+156,706
+For the year ended 31 December 2023
+27,653
+12,926
+(2,925)
+8,011
+67,221
+over three months
+Maturity of time deposits with original maturity
+(38,998)
+(69,047)
+over three months
+Placing of time deposits with original maturity
+(1,878)
+(941)
+Repayment of investment from associates
+Increase in restricted bank deposits
+3,312
+Interest received
+1,075
+854
+Dividend received from associates
+294
+held for sale
+Net cash received from disposal of assets classified as
+19
+Net cash received from disposal of subsidiaries
+2,796
+458
+Collection of other current assets
+78
+(2,454)
+Repayments of borrowings (Note 28(b))
+Proceeds from borrowings (Note 28(b))
+Interest paid (Note 28(b))
+(43)
+(25)
+(238)
+(142)
+Capital element of lease rentals paid (Note 28(b))
+Interest element of lease rentals paid (Note 28(b))
+Financing activities
+RMB million
+2022
+RMB million
+2023
+Year ended 31 December
+(Expressed in RMB)
+For the year ended 31 December 2023
+Consolidated Statement of Cash Flows (Continued)
+(56,585)
+(36,974)
+232 China Shenhua Energy Company Limited
+Net cash used in investing activities
+82
+92,776
+Profit before income tax
+RMB million
+RMB million
+1
+41
+86
+1,936
+1,936
+(14,629)
+(14,629)
+6
+92
+At 31 December 2022
+(Restated)
+19,869
+84,766
+3,657
+371
+production funds (Note (i))
+25,782
+GT
+(10,004)
+Total comprehensive income
+Profit for the year attributable to:
+Equity holders of the Company
+Non-controlling interests
+(Expressed in RMB)
+For the year ended 31 December 2023
+Consolidated Statement of Profit or Loss and
+Other Comprehensive Income (Continued)
+Acquisition of non-controlling
+interest in subsidiaries
+Contributions from
+non-controlling shareholders
+Distributions to non-controlling
+shareholders
+Others
+(6,698)
+(50,466)
+(6,698)
+(3,306)
+45
+(20,415) 282,953 396,983
+(2,649)
+462,796
+Consolidated Statement of Cash Flows
+Operating activities
+230 China Shenhua Energy Company Limited
+The notes on pages 234 to 353 form part of these financial statements.
+Included in the retained earnings of the Group were its share of the surplus reserve of its domestic subsidiaries amounted
+to RMB32,249 million as at 31 December 2023 (31 December 2022: RMB29,631 million).
+Retained earnings
+(v)
+Other reserves mainly represents the consideration paid for acquisition of subsidiaries under common control, acquisition
+of non-controlling interests in subsidiaries and share of other reserves of associates.
+Other reserves
+(iv)
+The appropriation to the discretionary surplus reserve is subject to the shareholders' approval. The utilisation of the
+reserve is similar to that of the statutory surplus reserve.
+Discretionary surplus reserve
+Pursuant to the relevant PRC regulations, the Group is required to transfer production and maintenance funds at fixed
+rates based on relevant bases, such as production volume, to a specific reserve account. The production and maintenance
+funds could be utilised when expenses or capital expenditures on production maintenance and safety measures are
+incurred. The amount of production and maintenance funds utilised would be transferred from the specific reserve
+account to retained earnings.
+65,813
+Specific reserve for maintenance and production funds
+For the year ended 31 December 2023
+(Expressed in RMB)
+The directors of the Company (the "Directors") have not proposed any appropriation to the discretionary surplus reserve
+in 2023 and 2022.
+2022
+Year ended 31 December
+2023
+Consolidated Statement of Changes in Equity (Continued)
+2023 Annual Report 229
+For the year ended 31 December 2023
+Notes:
+(i)
+(ii)
+(Expressed in RMB)
+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).
+(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.
+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.
+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.
+2023 Annual Report 237
+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
+The amendments introduce a temporary mandatory exception from deferred tax accounting for
+the income tax arising from tax laws enacted or substantively enacted to implement the Pillar
+Two model rules published by the Organization for Economic Co-operation and Development
+("OECD") (income tax arising from such tax laws is hereafter referred to as "Pillar Two income
+taxes"), including tax laws that implement qualified domestic minimum top-up taxes described
+in those rules. The amendments also introduce disclosure requirements about such tax. The
+amendments are immediately effective upon issuance and require retrospective application. Based
+on a preliminary analysis, which was limited to data of companies in the Group, there would have
+been no notable additional tax expense in the relevant countries if the Pillar Two income taxes
+had been required to be applied in respect of the year ended 31 December 2023. For the impact
+analysis to be carried out conclusively, it would need to include not only companies in the Group
+but also China Energy Group and fellow subsidiaries. It is therefore not currently possible to rule
+out that the inclusion of China Energy Group and fellow subsidiaries would have had an effect
+on the tax expense, with financial implications for the Group, if the Pillar Two income taxes had
+been required to be applied for the year ended December 31, 2023.
+rules
+Amendments to IAS 12, Income taxes: International tax reform - Pillar Two model
+Notes to the Consolidated Financial Statements (Continued)
+3.
+MATERIAL ACCOUNTING POLICIES
+For the year ended 31 December 2023
+Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or
+liabilities that the entity can access at the measurement date;
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Basis of preparation (Continued)
+The consolidated financial statements have been prepared on the historical cost basis, except
+for certain financial instruments as disclosed in Note 39.3, which have been measured at fair
+value at the end of each reporting period, as explained in the accounting policies set out below.
+Historical cost is generally based on the fair value of the consideration given in exchange for
+goods and services.
+Fair value is the price that would be received to sell an asset or paid to transfer a liability in an
+orderly transaction between market participants at the measurement date, regardless of whether
+that price is directly observable or estimated using another valuation technique. In estimating the
+fair value of an asset or a liability, the Group takes into account the characteristics of the asset
+or liability if market participants would take those characteristics into account when pricing the
+asset or liability at the measurement date. Fair value for measurement and/or disclosure purposes
+in the Group's consolidated financial statements is determined on such a basis, except for share-
+based payment transactions that are within the scope of IFRS 2 Share-based Payment, leasing
+transactions that are within the scope of IFRS 16 Leases, and measurements that have some
+similarities to fair value but are not fair value, such as net realisable value in IAS 2 Inventories
+or value in use in IAS 36 Impairment of Assets.
+In addition, for financial reporting purposes, fair value measurements are categorised into Level 1,
+2 or 3 based on the degree to which the inputs to the fair value measurements are observable and
+the significance of the inputs to the fair value measurement in its entirety, which are described
+as follows:
+Level 2 inputs are inputs, other than quoted prices included within Level 1, that are
+observable for the asset or liability, either directly or indirectly; and
+Level 3 inputs are unobservable inputs for the asset or liability.
+The preparation of financial statements in conformity with IFRSS requires management to make
+judgements, estimates and assumptions that affect the application of policies and reported
+amounts of assets, liabilities, income and expenses. The estimates and associated assumptions
+are based on historical experience and various other factors that are believed to be reasonable
+under the circumstances, the results of which form the basis of making the judgements about
+carrying values of assets and liabilities that are not readily apparent from other sources. Actual
+results may differ from these estimates.
+238 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+2. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Amendments to IAS 12, Income taxes: Deferred tax related to assets and liabilities arising
+from a single transaction
+Prior to the amendments, the Group applied the initial recognition exemption to lease transactions
+and decommissions obligations and had not recognised the related deferred tax. Following
+the amendments, the Group has determined the temporary differences in relation to lease
+transactions and decommissioning obligations separately. The impact of the retrospective
+adjustments of the above accounting policy changes on the consolidated financial statements
+of the Group, which was prepared in accordance with IFRSS, is as follows: for the consolidated
+statements of profit or loss and other comprehensive income for the year ended 31 December
+2023 and 2022, income tax expense decreased by RMB118 million and RMB41 million and profit
+increased by RMB118 million and RMB41 million, respectively; for the consolidated statement
+of financial position as at 31 December 2023, consolidated statements of financial position as
+at 31 December 2022 and 1 January 2022, deferred tax assets increased by RMB267 million,
+RMB142 million and RMB86 million, deferred tax liabilities increased by RMB75 million, RMB68
+million and RMB53 million, and total equity increased by RMB192 million, RMB74 million and
+RMB33 million, respectively.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+1. PRINCIPAL ACTIVITIES AND ORGANISATION (CONTINUED)
+Immediate parent and ultimate controlling party
+On 28 August 2017, Shenhua Group received the Notice regarding the Restructuring of China
+Guodian Corporation and Shenhua Group Corporation Limited (Guo Zi Fa Gai Ge [2017] No. 146)
+from the State-owned Assets Supervision and Administration Commission of the State Council,
+which approves that China Guodian Corporation (the "China Guodian") and Shenhua Group shall
+implement the joint restructuring, China Guodian shall be merged into Shenhua Group, and the
+company name of Shenhua Group shall be changed to China Energy Investment Corporation
+Limited (the "China Energy Group"). China Energy Group will be the parent company after the
+completion of the restructuring.
+On 27 November 2017, Shenhua Group has completed the industrial and commercial registration
+of changes in the business license. The Directors consider the immediate parent and ultimate
+holding company of the Group to be China Energy Group.
+2.
+CHANGES IN ACCOUNTING POLICIES
+The Group has applied the following new and amended IFRSS issued by the IASB to these
+financial statements for the current accounting period:
+•
+IFRS 17, Insurance contracts
+Amendments to IAS 8, Accounting policies, changes in accounting estimates and errors:
+Definition of accounting estimates
+Amendments to IAS 1, Presentation of financial statements and IFRS Practice Statement
+2, Making materiality judgements: Disclosure of accounting policies
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Amendments to IAS 12, Income taxes: International tax reform - Pillar Two model rules
+The Group has not applied any new standard or interpretation that is not yet effective for the
+current accounting period. Impacts of the adoption of the new and amended IFRSS are discussed
+below:
+IFRS 17, Insurance contracts
+2023 Annual Report 235
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+2. CHANGES IN ACCOUNTING POLICIES (CONTINUED)
+Amendments to IAS 8, Accounting policies, changes in accounting estimates and
+errors: Definition of accounting estimates
+The amendments provide further guidance on the distinction between changes in accounting
+policies and changes in accounting estimates. The amendments do not have a material impact
+on these financial statements as the Group's approach in distinguishing changes in accounting
+policies and changes in accounting estimates is consistent with the amendments.
+Amendments to IAS 1, Presentation of financial statements and IFRS Practice
+Statement 2, Making materiality judgements: Disclosure of accounting policies
+The amendments require entities to disclose material accounting policy information and provide
+guidance on applying the concept of materiality to accounting policy disclosure. The Group has
+revisited the accounting policy information it has been disclosing and considered it is consistent
+with the amendments.
+Amendments to IAS 12, Income Taxes: Deferred tax related to assets and liabilities
+arising from a single transaction
+The amendments narrow the scope of the initial recognition exemption such that it does not
+apply to transactions that give rise to equal and offsetting temporary differences on initial
+recognition such as leases and decommissioning liabilities. For leases and decommissioning
+liabilities, the associated deferred tax assets and liabilities are required to be recognised from the
+beginning of the earliest comparative period presented, with any cumulative effect recognised
+as an adjustment to retained earnings or other components of equity at that date. For all other
+transactions, the amendments are applied to those transactions that occur after the beginning
+of the earliest period presented.
+236 China Shenhua Energy Company Limited
+Basis of preparation (Continued)
+has the ability to use its power to affect its returns.
+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 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.
+in which the investment is acquired.
+On acquisition of the investment in an associate, any excess of the cost of acquisition over
+the Group's share of the net fair value of the identifiable assets, liabilities of the investee is
+recognised as goodwill, which is included within the carrying amount of the investment. Any
+excess of the Group's share of the net fair value of the identifiable assets and liabilities over the
+cost of investment, after reassessment, is recognised immediately profit or loss in the period
+Investments in associates (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+242 China Shenhua Energy Company Limited
+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.
+Goodwill (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+When the Group reduces its ownership interest in an associate but the Group continues to use
+the equity method, the Group reclassifies to profit or loss the proportion of the gain or loss that
+had previously been recognised in other comprehensive income relating to that reduction in
+ownership interest if that gain or loss would be reclassified to profit or loss on the disposal of
+the related assets or liabilities.
+When a group entity transacts with an associate of the Group, profits and losses resulting
+from the transactions with the associate are recognised in the Group's consolidated financial
+statements only to the extent of interests in the associate that are not related to the Group.
+Non-current assets held for sale
+244 China Shenhua Energy Company Limited
+2023 Annual Report 243
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Non-current assets held for sale (Continued)
+When the Group is committed to a sale plan involving disposal of an investment, or a portion of an
+investment, in an associate or joint venture, the investment or the portion of the investment that
+will be disposed of is classified as held for sale when the criteria described above are met, and
+the Group discontinues the use of the equity method in relation to the portion that is classified
+as held for sale from the time when the investment (or a portion of the investment) is classified
+as held for sale.
+For the year ended 31 December 2023
+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.
+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.
+Revenue from contracts with customers
+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.
+Notes to the Consolidated Financial Statements (Continued)
+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.
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 239
+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.
+-
+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 when the Company:
+Basis of consolidation
+Material accounting policies adopted by the Group are disclosed below.
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Basis of consolidation (Continued)
+Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and
+ceases when the Group loses control of the subsidiary. Specifically, income and expenses of a
+subsidiary acquired or disposed of during the year are included in the consolidated statement of
+profit or loss and other comprehensive income from the date the Group gains control until the
+date when the Group ceases to control the subsidiary.
+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
+Non-controlling interests that are present ownership interests and entitle their holders to a
+proportionate share of the entity's net assets in the event of liquidation are initially measured at
+the non-controlling interests' proportionate share of the recognised amounts of the acquiree's
+identifiable net assets.
+Goodwill is measured as the excess of the sum of the consideration transferred, the amount
+of any non-controlling interests in the acquiree, and the fair value of the acquirer's previously
+held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the
+identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the
+acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the
+sum of the consideration transferred, the amount of any non-controlling interests in the acquiree
+and the fair value of the acquirer's previously held interest in the acquiree (if any), the excess is
+recognised immediately in profit or loss as a bargain purchase gain.
+At the acquisition date, the identifiable assets acquired and the liabilities assumed are recognised
+at their fair value, except that deferred tax assets or liabilities, and assets or liabilities related to
+employee benefit arrangements are recognised and measured in accordance with IAS 12 Income
+Taxes and IAS 19 Employee benefits respectively.
+Acquisitions of businesses, other than business combination under common control are accounted
+for using the acquisition method. The consideration transferred in a business combination is
+measured at fair value, which is calculated as the sum of the acquisition-date fair values of the
+assets transferred by the Group, liabilities incurred by the Group to the former owners of the
+acquiree and the equity interests issued by the Group in exchange for control of the acquiree.
+Acquisition-related costs are generally recognised in profit or loss as incurred.
+Business combinations
+2023 Annual Report 241
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+240 China Shenhua Energy Company Limited
+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 ownership interests in existing subsidiaries
+Non-controlling interests in subsidiaries are presented separately from the Group's equity therein,
+which represent present ownership interests entitling their holders to a proportionate share of
+net assets of the relevant subsidiaries upon liquidation.
+All intragroup assets and liabilities, equity, income, expenses and cash flows relating to
+transactions between members of the Group are eliminated in full on consolidation.
+Where necessary, adjustments are made to the financial statements of subsidiaries to bring their
+accounting policies into line with the Group's accounting policies.
+Profit or loss and each item of other comprehensive income are attributed to equity holders of
+the Company and to the non-controlling interests. Total comprehensive income of subsidiaries
+is attributed to equity holders of the Company and to the non-controlling interests even if this
+results in the non-controlling interests having deficit balance.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+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.
+IFRS 17, which replaces IFRS 4, sets out the recognition, measurement, presentation and
+disclosure requirements applicable to issuers of insurance contracts. The standard does not have
+a material impact on these financial statements as the Group does not have contracts within the
+scope of IFRS 17.
+Non-current assets and disposal groups are classified as held for sale if their carrying amount
+will be recovered principally through a sale transaction rather than through continuing use. This
+condition is regarded as met only when the asset (or disposal group) is available for immediate
+sale in its present condition subject only to terms that are usual and customary for sales of such
+asset (or disposal group) and its sale is highly probable. Management must be committed to the
+sale, which should be expected to qualify for recognition as a completed sale within one year
+from the date of classification.
+When the Group is committed to a sale plan involving loss of control of a subsidiary, all of the
+assets and liabilities of that subsidiary are classified as held for sale when the criteria described
+above are met, regardless of whether the Group will retain a non-controlling interest in the
+relevant subsidiary after the sale.
+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.
+10-55 years
+Term for deprecation (year)
+Categories
+Property, plant and equipment, except for freehold land, and mining structures and mining rights,
+are depreciated on a straight-line basis at the following rates per annum:
+Depreciation is recognised so as to write-off the cost of items of property, plant and equipment
+(other than freehold land and construction in progress, which are subject to impairment
+assessment) less their residual values over their estimated useful lives. The estimated useful
+lives, residual values and depreciation method are reviewed at the end of each reporting period,
+with the effect of any changes in estimate accounted for on a prospective basis.
+Property, plant and equipment, which consists of freehold land and buildings, mining structures
+and mining rights, mining related machinery and equipment, and other items of plant and
+equipment, held for use in the production or supply of goods or services, or for administrative
+purposes, are stated in the consolidated statement of financial position at cost less subsequent
+accumulated depreciation and subsequent accumulated impairment losses, if any.
+Buildings
+Property, plant and equipment
+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.
+Taxation (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (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.
+Mining related machinery and equipment
+Generators related machinery and equipment
+Railway and port
+Mining structures and mining rights
+An item of property, plant and equipment is derecognised upon disposal or when no future
+economic benefits are expected to arise from the continued use of the asset. Any gain or loss
+arising on the disposal or retirement of an item of property, plant and equipment is determined
+as the difference between the sales proceeds and the carrying amount of the asset and is
+recognised in profit or loss.
+Items may be produced while bringing an item of property, plant and equipment to the location
+and condition necessary for it to be capable of operating in the manner intended by management.
+The proceeds from selling any such items and the related cost are recognised in profit or loss.
+Construction in progress intended to be used for production, supply or administrative purposes
+are carried at cost, less any recognised impairment loss. Costs include professional fees and, for
+qualifying assets, borrowing costs capitalised in accordance with the Group's accounting policy.
+Such properties are classified to the appropriate categories of property, plant and equipment when
+completed and ready for intended use. Depreciation of these assets, on the same basis as other
+property, plant and equipment, commences when the assets are ready for their intended use.
+Property, plant and equipment (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+248 China Shenhua Energy Company Limited
+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.
+5 - 35 years
+8 - 35 years
+6 - 45 years
+25 years
+8 - 20 years
+5 - 40 years
+Furniture, fixtures, motor vehicles and other equipment
+Coal chemical related machinery and equipment
+Vessels
+2023 Annual Report 247
+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.
+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.
+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.
+Government grants are recognised in profit or loss on a systematic basis over the periods in
+which the Group recognises as expenses the related costs for which the grants are intended to
+compensate. Specifically, government grants whose primary condition is that the Group should
+purchase, construct or otherwise acquire non-current assets are recognised as deferred income in
+the consolidated statement of financial position and transferred to profit or loss on a systematic
+and rational basis over the useful lives of the related assets.
+Government grants are not recognised until there is reasonable assurance that the Group will
+comply with the conditions attaching to them and that the grants will be received.
+Government grants
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+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.
+Notes to the Consolidated Financial Statements (Continued)
+Borrowing costs directly attributable to the acquisition, construction or production of qualifying
+assets, which are assets that necessarily take a substantial period of time to get ready for
+their intended use or sale, are added to as part of the cost of those assets, until such time as
+the assets are substantially ready for their intended use or sale. All other borrowing costs are
+expensed in the period in which they are incurred.
+Borrowing costs
+For the purpose of presenting the consolidated financial statements, the assets and liabilities of
+the Group's foreign operations are translated into the presentation currency of the Group (i.e.
+RMB) using exchange rates prevailing at the end of each reporting period. Income and expenses
+items are translated at the average exchange rates for the period. Exchange differences arising, if
+any, are recognised in other comprehensive income and accumulated in equity under the heading
+of exchange reserve, attributed to non-controlling interests as appropriate.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Revenue from contracts with customers (Continued)
+2023 Annual Report 245
+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.
+The contributions made by the Group to such insurance plans on behalf of employees are fully
+attributed to the employees at the time of payment, therefore the Group has no abandoned
+contributions that can be utilized.
+Deferred tax liabilities are recognised for taxable temporary differences associated with
+investments in subsidiaries and associates, except where the Group is able to control the reversal
+of the temporary difference and it is probable that the temporary difference will not reverse in the
+foreseeable future. Deferred tax assets arising from deductible temporary differences associated
+with such investments and interests are only recognised to the extent that it is probable that there
+will be sufficient taxable profits against which to utilise the benefits of the temporary differences
+and they are expected to reverse in the foreseeable future.
+The Group recognised deferred tax assets and deferred tax liabilities separately in relation to its
+lease liabilities and right-of-use assets.
+those related to the income taxes arising from tax laws enacted or substantively enacted
+to implement the Pillar Two model rules published by the OECD.
+taxable temporary differences arising on the initial recognition of goodwill; and
+temporary differences related to investment in subsidiaries, associates and joint venture
+to the extent that the Group is able to control the timing of the reversal of the temporary
+differences and it is probable that they will not reverse in the foreseeable future;
+temporary differences on the initial recognition of assets or liabilities in a transaction that
+is not a business combination and that affects neither accounting nor taxable profit or loss
+and does not give rise to equal taxable and deductible temporary differences;
+Deferred tax is not recognised for:
+Taxation (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+246 China Shenhua Energy Company Limited
+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.
+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.
+Income tax expense represents the sum of the tax currently payable and deferred tax.
+Taxation
+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.
+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.
+254 China Shenhua Energy Company Limited
+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.
+Derecognition of intangible assets
+Intangible assets (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+252 China Shenhua Energy Company Limited
+Subsequent to initial recognition, intangible assets acquired in a business combination with finite
+useful lives are reported at cost less accumulated amortisation and any accumulated impairment
+losses, on the same basis as intangible assets that are acquired separately.
+Intangible assets acquired in a business combination are recognised separately from goodwill and
+are initially recognised at their fair value at the acquisition date (which is regarded as their cost).
+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.
+Foreign currencies
+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;
+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.
+the technical feasibility of completing the intangible asset so that it will be available for
+use or sale;
+Impairment of tangible and intangible assets other than goodwill
+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.
+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, 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.
+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)
+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
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 253
+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 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.
+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:
+Intangible assets (Continued)
+surveying transportation and infrastructure requirements; and
+determining and examining the volume and grade of the resource;
+exploratory drilling, trenching and sampling;
+gathering exploration data through topographical, geochemical and geophysical studies;
+researching and analysing historical exploration data;
+Exploration and evaluation assets comprise costs which are directly attributable to the search for
+mineral resources, the determination of technical feasibility and the assessment of commercial
+viability of an identified resource:
+Exploration and evaluation assets
+Property, plant and equipment (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 249
+reserves.
+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
+conducting market and finance studies.
+Internally-generated intangible assets - research and development expenditure (Continued)
+Expenditure during the initial exploration preparation stage of a project is charged to profit or
+loss as incurred. Exploration and evaluation costs, including the costs of acquiring licenses,
+are capitalised as exploration and evaluation assets on a project-by-project basis pending
+determination of the technical feasibility and commercial viability of the project.
+250 China Shenhua Energy Company Limited
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 251
+Expenditure on research activities is recognised as an expense in the period in which it is incurred.
+Internally-generated intangible assets - research and development expenditure
+Intangible assets with finite useful lives that are acquired separately are carried at costs less
+accumulated amortisation and any accumulated impairment losses. Amortisation for intangible
+assets with finite useful lives is recognised on a straight-line basis over their estimated useful
+lives. The estimated useful life and amortisation method are reviewed at the end of each reporting
+period, with the effect of any changes in estimate being accounted for on a prospective basis.
+Intangible assets 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.
+Obligations for land reclamation
+Property, plant and equipment (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+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.
+Mining structures and mining rights are depreciated on a units-of-production basis utilising only
+proved and probable coal reserves in the depletion base.
+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.
+Financial assets (Continued)
+As a lessee (Continued)
+(ii)
+The lease liability is remeasured when there is a change in future lease payments arising
+from a change in an index or rate, or there is a change in the Group's estimate of the
+amount expected to be payable under a residual value guarantee, or there is a change
+arising from the reassessment of whether the Group will be reasonably certain to exercise
+a purchase, extension or termination option. When the lease liability is remeasured in this
+way, a corresponding adjustment is made to the carrying amount of the right-of-use asset,
+or is recorded in profit or loss if the carrying amount of the right-of-use asset has been
+reduced to zero.
+The lease liability is also remeasured when there is a change in the scope of a lease or
+the consideration for a lease that is not originally provided for in the lease contract ("lease
+modification") that is not accounted for as a separate lease. In this case the lease liability is
+remeasured based on the revised lease payments and lease term using a revised discount
+rate at the effective date of the modification. The only exceptions are any rent concessions
+which arose as a direct consequence of the COVID-19 pandemic and which satisfied the
+conditions set out in paragraph 46B of IFRS 16 Leases. In such cases, the Group took
+advantage of the practical expedient set out in paragraph 46A of IFRS 16 and recognised
+the change in consideration as if it were not a lease modification.
+In the consolidated statement of financial position, the current portion of long-term lease
+liabilities is determined as the present value of contractual payments that are due to be
+settled within twelve months after the reporting period.
+As a lessor
+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.
+When a contract contains lease and non-lease components, the Group allocates the
+consideration in the contract to each component on a relative stand-alone selling price basis.
+When the Group is an intermediate lessor, the sub-leases are classified as a finance lease
+or as an operating lease with reference to the right-of-use asset arising from the head lease.
+If the head lease is a short-term lease to which the Group applies the exemption method,
+then the Group classifies the sub-lease as an operating lease.
+2023 Annual Report 255
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(i)
+(Expressed in RMB)
+Inventories
+Inventories are stated at the lower of cost and net realisable value. Costs of inventories are
+calculated using the weighted average method. Net realisable value represents the estimated
+selling price for inventories less all estimated costs of completion and costs necessary to make
+the sale.
+Provisions
+Provisions are recognised when the Group has a present obligation (legal or constructive) as a
+result of a past event, it is probable that the Group will be required to settle that obligation, and
+a reliable estimate can be made of the amount of the obligation.
+Provisions are measured at the best estimate of the consideration required to settle the present
+obligation at the end of the reporting period, taking into account the risks and uncertainties
+surrounding the obligation. When a provision is measured using the cash flows estimated to
+settle the present obligation, its carrying amount is the present value of those cash flows (where
+the effect of the time value of money is material).
+When some or all of the economic benefits required to settle a provision are expected to be
+recovered from a third party, a receivable is recognised as an asset if it is virtually certain that
+reimbursement will be received and the amount of the receivable can be measured reliably.
+Financial instruments
+Financial assets and financial liabilities are recognised when a group entity becomes a party
+to the contractual provisions of the instrument. All regular way purchases or sales of financial
+assets are recognised and derecognised on a trade date basis. Regular way purchases or sales
+are purchases or sales of financial assets that require delivery of assets within the time frame
+established by regulation or convention in the market place.
+Financial assets and financial liabilities are initially measured at fair value except for trade
+receivables arising from contracts with customers. Transaction costs that are directly attributable
+to the acquisition or issue of financial assets and financial liabilities (other than financial assets
+or financial liabilities measured at fair value through profit and loss (the "FVTPL")) are added to
+or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on
+initial recognition. Transaction costs directly attributable to the acquisition of financial assets or
+financial liabilities FVTPL are recognised immediately in profit or loss.
+256 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Effective interest method
+Leased assets (Continued)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Generally, the ECL is the difference between all contractual cash flows that are due to
+the Group accordance with the contract and the cash flows that the Group expects to
+receive, discounted at the effective interest rate determined at initial recognition.
+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.
+(v) Measurement and recognition of ECL
+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.
+(iv) Write-off policy
+Impairment of financial assets (Continued)
+Financial assets (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 261
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+the disappearance of an active market for that financial asset because of financial
+difficulties.
+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)
+a breach of contract, such as a default or past due event;
+(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
+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.
+it is becoming probable that the borrower will enter bankruptcy or other financial
+re-organisation; or
+The effective interest method is a method of calculating the amortised cost of a financial asset or
+financial liability and of allocating interest income and interest expense over the relevant period.
+The effective interest rate is the rate that exactly discounts estimated future cash receipts and
+payments (including all fees and points paid or received that form an integral part of the effective
+interest rate, transaction costs and other premiums or discounts) through the expected life of
+the financial asset or financial liability, or, where appropriate, a shorter period, to the net carrying
+amount on initial recognition.
+Financial assets
+Classification and subsequent measurement of financial assets
+The Group always recognises lifetime ECL for accounts receivable. The ECL on these assets
+are assessed individually for credit-impaired debtors or using a provision matrix with appropriate
+groupings.
+For all other instruments, the Group measures the loss allowance equal to 12-month ECL, unless
+when there has been a significant increase in credit risk since initial recognition, the Group
+recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based
+on significant increases in the likelihood or risk of a default occurring since initial recognition.
+(i)
+Significant increase in credit risk
+In assessing whether the credit risk has increased significantly since initial recognition,
+the Group compares the risk of a default occurring on the financial instrument as at the
+reporting date with the risk of a default occurring on the financial instrument as at the date
+of initial recognition. In making this assessment, the Group considers both quantitative and
+qualitative information that is reasonable and supportable, including historical experience
+and forward-looking information that is available without undue cost or effort.
+2023 Annual Report 259
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+Impairment of financial assets (Continued)
+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.
+(i) Significant increase in credit risk (Continued)
+an actual or expected significant deterioration in the financial instrument's external
+credit rating (if available);
+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;
+existing or forecast adverse changes in business, financial or economic conditions
+that are expected to cause a significant decrease in the debtor's ability to meet its
+debt obligations;
+an actual or expected significant deterioration in the operating results of the debtor;
+an actual or expected significant adverse change in the regulatory, economic, or
+technological environment of the debtor that results in a significant decrease in the
+debtor's ability to meet its debt obligations.
+Irrespective of the outcome of the above assessment, the Group presumes that the credit
+risk has increased significantly since initial recognition when contractual payments are more
+than 30 days past due, unless the Group has reasonable and supportable information that
+demonstrates otherwise.
+Despite the foregoing, the Group assumes that the credit risk on a debt instrument has
+not increased significantly since initial recognition if the debt instrument is determined to
+have low credit risk at the reporting date. A debt instrument is determined to have low
+credit risk if i) it has a low risk of default, ii) the borrower has a strong capacity to meet
+its contractual cash flow obligations in the near term and iii) adverse changes in economic
+and business conditions in the longer term may, but will not necessarily, reduce the ability
+of the borrower to fulfil its contractual cash flow obligations.
+For financial guarantee contracts, the date that the Group becomes a party to the irrevocable
+commitment is considered to be the date of initial recognition for the purposes of assessing
+the financial instrument for impairment. In assessing whether there has been a significant
+increase in the credit risk since initial recognition of financial guarantee contracts, the Group
+considers the changes in the risk that the specified debtor will default on the contract.
+260 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial assets (Continued)
+particular, the following information is taken into account when assessing whether credit
+risk has increased significantly:
+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
+Financial assets (Continued)
+Financial assets that meet the following conditions are subsequently measured at amortised cost:
+the financial asset is held within a business model whose objective is to collect contractual
+cash flows; and
+the contractual terms give rise on specified dates to cash flows that are solely payments
+of principal and interest on the principal amount outstanding.
+Financial assets that meet the following conditions are subsequently measured at fair value
+through other comprehensive income (the "FVTOCI"):
+the financial asset is held within a business model whose objective is achieved by both
+collecting contractual cash flows and selling; and
+the contractual terms give rise on specified dates to cash flows that are solely payments
+of principal and interest on the principal amount outstanding.
+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.
+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.
+2023 Annual Report 257
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(ii)
+Classification and subsequent measurement of financial assets (Continued)
+(i) Amortised cost and interest income
+(ii)
+Interest income is recognised using the effective interest method for financial assets
+measured subsequently at amortised cost. Interest income is calculated by applying the
+effective interest rate to the gross carrying amount of a financial asset, except for financial
+assets that have subsequently become credit-impaired (see below). For financial assets that
+have subsequently become credit-impaired, interest income is recognised by applying the
+effective interest rate to the amortised cost of the financial asset from the next reporting
+period. If the credit risk on the credit-impaired financial instrument improves so that the
+financial asset is no longer credit-impaired, interest income is recognised by applying
+the effective interest rate to the gross carrying amount of the financial asset from the
+beginning of the reporting period following the determination that the asset is no longer
+credit impaired.
+Equity instruments designated as at FVTOCI
+Investments in equity instruments at FVTOCI are subsequently measured at fair value with
+gains and losses arising from changes in fair value recognised in other comprehensive
+income and accumulated in the other reserves; and are not subject to impairment
+assessment. The cumulative gain or loss will not be reclassified to profit or loss on disposal
+of the equity investments, and will be transferred to retained earnings.
+Dividends from these investments in equity instruments are recognised in profit or loss
+when the Group's right to receive the dividends is established, unless the dividends clearly
+represent a recovery of part of the cost of the investment. Dividends are included in the
+"other income" line item in profit or loss.
+(iii) Financial assets at FVTPL
+Financial assets that do not meet the criteria for being measured at amortised cost or
+FVTOCI or designated as FVTOCI are measured at FVTPL.
+Financial assets at FVTPL are measured at fair value at the end of each reporting period,
+with any fair value gains or losses recognised in profit or loss. The net gain or loss
+recognised in profit or loss includes any dividend or interest earned on the financial asset
+and is included in the "other gains and losses" line item.
+258 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+For a financial guarantee contract, the Group is required to make payments only in the
+event of a default by the debtor in accordance with the terms of the instrument that
+is guaranteed. Accordingly, the expected losses is the present value of the expected
+payments to reimburse the holder for a credit loss that it incurs less any amounts that the
+Group expects to receive from the holder, the debtor or any other party.
+For ECL on financial guarantee contracts, the Group will apply a discount rate that reflects
+the current market assessment of the time value of money and the risks that are specific
+to the cash flows but only if, and to the extent that, the risks are taken into account by
+adjusting the discount rate instead of adjusting the cash shortfalls being discounted.
+262 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Impairment of financial assets (Continued)
+264 China Shenhua Energy Company Limited
+All financial liabilities are subsequently measured at amortised cost using the effective interest
+method or at FVTPL.
+Financial liabilities
+An equity instrument is any contract that evidences a residual interest in the assets of an entity
+after deducting all of its liabilities. Equity instruments issued by the Company are recognised at
+the proceeds received, net of direct issue costs.
+Equity instruments
+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.
+Classification as debt or equity
+Financial liabilities and equity
+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.
+On derecognition of a financial asset measured at amortised cost, the difference between the
+asset's carrying amount and the sum of the consideration received and receivable is recognised
+in profit or loss.
+The Group derecognises a financial asset only when the contractual rights to the cash flows
+from the asset expire, or when it transfers the financial asset and substantially all the risks and
+rewards of ownership of the asset to another entity. 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
+Financial assets (Continued)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(i) Significant increase in credit risk (Continued)
+For the year ended 31 December 2023
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+Financial assets (Continued)
+Impairment of financial assets (Continued)
+Where ECL is measured on a collective basis or cater for cases where evidence at the
+individual instrument level may not yet be available, the financial instruments are grouped
+on the following basis:
+Nature of financial instruments (i.e. the Group's accounts and bills receivables and
+other receivables are each assessed as a separate group. Loans receivable are
+assessed for ECL on an individual basis);
+Past-due status; and
+(v) Measurement and recognition of ECL (Continued)
+The grouping is regularly reviewed by management to ensure the constituents of each
+group continue to share similar credit risk characteristics.
+Interest income is calculated based on the gross carrying amount of the financial asset
+unless the financial asset is credit impaired, in which case interest income is calculated
+based on amortised cost of the financial asset.
+For financial guarantee contracts, the loss allowances are recognised at the higher of the
+amount of the loss allowance determined in accordance with IFRS 9; and the amount
+initially recognised less, where appropriate, cumulative amount of income recognised over
+the guarantee period.
+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.
+2023 Annual Report 263
+Notes to the Consolidated Financial Statements (Continued)
+External credit ratings where available.
+Total
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Other
+2023
+2023
+2023
+2022
+2023
+2022
+Coal
+2022
+2023 2022
+2023
+2022
+Segments
+The estimation of the liabilities for reclamation and mine closure involves the estimates of
+the amount and timing for the future cash spending as well as the discount rate used for
+reflecting current market assessments of the time value of money and the risks specific
+to the liability. The Group considers the factors including development plan of the mines,
+the geological structure of the mining regions and reserve volume to determine the scope,
+amount and timing of reclamation and mine closure works to be performed. Determination
+of the effect of these factors involves judgements from the Group and the estimated
+liabilities may turn out to be different from the actual expenditure to be incurred. The
+discount rate used by the Group may also be altered to reflect the changes in the market
+assessments of the time value of money and the risks specific to the liability, such as
+change of the borrowing rate and inflation rate in the market. As changes in estimates
+occur (such as mine plan revisions, changes in estimated costs, or changes in timing of the
+performance of reclamation activities), the revisions to the obligation will be recognised
+at the appropriate discount rate. The carrying amounts of the obligations are disclosed in
+Note 36.
+5. REVENUE FROM GOODS AND SERVICES
+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 16.
+Deferred tax assets
+As at 31 December 2023, deferred tax assets of RMB5,469 million (2022: RMB5,019
+million as restated) have been recognised in the Group's consolidated statement of financial
+position. No deferred tax asset has been recognised on the tax losses of RMB8,481 million
+(2022: RMB8,621 million) and deductible temporary differences of RMB9,331 million (2022:
+RMB9,349 million) due to the unpredictability of future profit streams. The realisation of
+the deferred tax assets mainly depends on whether sufficient future profits or taxable
+temporary differences will be available in the future. In cases where the actual future
+profits generated are less or more than expected, a material reversal or further provision
+of deferred tax assets may arise, which will be recognised in profit or loss in the period in
+which such a reversal or further provision takes place.
+Fair value measurement of financial instruments
+Certain of the Group's financial assets, unquoted equity instruments and accounts and bills
+receivables amounting to RMB2,740 million as at 31 December 2023 (RMB2,888 million
+as at 31 December 2022) are measured at fair values with fair values being determined
+based on unobservable inputs using valuation techniques as set out in Note 39.3. Changes
+in assumptions relating to any key inputs may have a material impact on the reported fair
+values of these instruments.
+270 China Shenhua Energy Company Limited
+4.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Disaggregation of revenue of business lines and geographical location of customers is as follows:
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+Provision of ECL for accounts and bills 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 25 and 39.2, respectively.
+Obligations for land reclamation
+2022
+2023 Annual Report 271
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+4.2 Key sources of estimation uncertainty (Continued)
+2023 2022 2023 2022
+million
+RMB
+85,418 77,767
+5,495 5,777
+5,495 5,777
+603
+602
+14,088 13,431
+Transportation and other services
+Railway
+221,448 230,050
+Port
+Total
+228,149 236,305 92,202 84,341
+11,259 11,618
+.
+1,615
+1,677
+1,591 2,089
+1,753 1,805
+Shipping
+Others
+6,701 6,255 6,784 6,574
+Coal chemical products
+Others
+85,418 77,767
+RMB
+RMB
+million million
+million
+million
+million
+RMB RMB RMB RMB
+million million million
+RMB
+RMB
+RMB
+million
+million
+RMB RMB
+million million
+RMB RMB
+million million
+Types of goods or service
+Sales of goods
+Coal
+221,448 230,050
+Power
+RMB RMB
+million
+1,596 2,126
+3,240 3,925
+402
+(4,732)
+(45,157) (41,169) (205) (184) (29,949) (28,774)
+Adjustment and eliminations
+529 426,905 423,596
+548
+6,098 6,379
+(4,482)
+4,836 6,051
+6,749
+273,306 277,474 92,407 84,525 42,961 42,197
+529 83,831 79,063
+343,074 344,533
+548
+548
+6,441
+(3,240) (3,925)
+Revenue
+228,149 236,305 92,202 84,341 13,012 13,423 2,017 1,959 1,596 2,126 6,098 6,379
+(1)
+The Group manages its businesses by divisions, which are organised by business lines (products
+and services). In a manner consistent with the way in which information is reported internally to
+the Group's chief operating decision maker ("CODM"), including president, senior vice president
+and chief financial officer, for the purposes of resource allocation and performance assessment,
+the Group has presented the following six (2022: six) reportable segments. No operating
+segments have been aggregated to form the following reportable segments.
+SEGMENT AND OTHER INFORMATION
+6.
+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.
+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.
+5. REVENUE FROM GOODS AND SERVICES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 273
+For sales of power, revenue is recognised upon the transmission of electric power to the power
+grid companies. Power could not be returned or exchanged and there is also no warranties
+associated with power sales.
+The Group produces and sells coal and coal chemical products to customers at spot market.
+For sales of coal and coal chemical products, revenue is recognised when control of the goods
+has transferred, being when the goods have been shipped to the customers' specific location.
+According to the Group's historical experiences, there was no significant exchange or return of
+coal and coal chemical products occurred. There is no sales-related warranties associated with
+coal and coal chemical products.
+343,074 344,533
+(548) (529) (83,831) (79,063)
+6,379
+6,098
+326,449 327,025
+16,625 17,508
+13,012 13,423 2,017 1,959
+184 29,949 28,774 4,732 4,482
+Total
+Other
+Coal chemical
+Shipping
+Port
+Railway
+Power
+Coal
+Segments
+Set out below is the reconciliation of the revenue with the amounts disclosed in the segment
+information.
+The Group's revenue from contracts with customers is RMB342,935 million for the year ended
+31 December 2023 (2022: RMB344,456 million).
+343,074 344,533
+6,098 6,379
+2,126
+2,017 1,959 1,596
+2023 2022
+RMB RMB
+RMB
+million million million
+(2)
+2023 2022 2023 2022
+2022
+228,149 236,305 92,202 84,341
+45,157 41,169 205
+Inter-segment
+External customers
+information
+Revenue disclosed in segment
+2023 2022
+RMB RMB
+million million
+million
+2023 2022 2023 2022 2023 2022
+RMB RMB RMB RMB RMB RMB
+million million million million million
+million
+million
+million
+RMB
+RMB
+RMB
+RMB RMB
+million million
+2023
+Coal operations - which produce coal from surface and underground mines, and the sale of
+coal to external customers, the power operations segment and the coal chemical operations
+segment. The Group sells its coal under long-term supply contracts, which allow periodical
+price adjustments, and at spot market.
+Power operations - which use coal from the coal operations segment and external suppliers,
+thermal power, photovoltaic power, wind power, water power and gas power to generate
+electric power for the sale to coal operations segment and external customers. Electric
+power is sold to the power grid companies in accordance with planned power output at the
+tariff rates as approved by the relevant government authorities. Electric power produced
+in excess of the planned power output is sold at the tariff rate as agreed upon with the
+respective power grid companies which are generally lower than the tariff rates for planned
+power output.
+274 China Shenhua Energy Company Limited
+2,017
+1,959
+1,596
+2,126
+6,098 6,379
+343,074 344,533
+Geographical markets
+Domestic markets
+Overseas markets
+222,404 230,421 85,619 77,945 13,012
+5,745 5,884 6,583 6,396
+13,423
+2,017
+1,959
+1,596
+2,126
+84,341 13,012 13,423
+6,098
+92,202
+16,625 17,508
+202
+282
+5
+37
+13,012 13,423 2,017
+1,959 1,596 2,126
+6,098
+6,379
+326,449 327,025
+11,259 11,618
+1,615 1,677
+1,591
+2,089
+2,160
+2,124
+228,149 236,305
+4.2 Key sources of estimation uncertainty (Continued)
+6,379
+12,280
+2022 2023 2022 2023 2022 2023 2022 2023 2022
+RMB RMB
+million million
+RMB RMB
+million million
+Coal chemical
+2023 2022
+2023
+RMB RMB RMB RMB RMB RMB RMB RMB
+million million million million
+million million million million
+Other
+Total
+2022 2023 2022
+Timing of revenue recognition
+A point in time
+Over time
+228,149 236,305 92,202 84,341
+6,098 6,379
+13,012 13,423
+2,017
+1,959
+1,596 2,126
+2023
+RMB RMB RMB RMB
+million million million million
+330,746 332,253
+12,328
+Shipping
+Railway
+Total
+228,149 236,305 92,202 84,341 13,012
+13,423
+2,017 1,959 1,596 2,126
+6,098
+6,379
+343,074 344,533
+272 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+5. REVENUE FROM GOODS AND SERVICES (CONTINUED)
+Segments
+Coal
+Power
+Port
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+Financial liabilities at amortised cost
+(Expressed in RMB)
+the amount of the loss allowance determined in accordance with IFRS 9/IAS 37 Provisions,
+Contingent Liabilities and Contingent Assets; and
+the amount initially recognised less, where appropriate, cumulative amortisation recognised
+over the guarantee period.
+Derecognition of financial liabilities
+The Group derecognises financial liabilities when, and only when, the Group's obligations are
+discharged, cancelled or have expired. The difference between the carrying amount of the
+financial liability derecognised and the consideration paid and payable is recognised in profit or
+loss.
+Derivative financial instruments
+The Group's derivative financial instruments represent cross-currency exchange rate swaps,
+and are initially recognised at fair value at the date when the derivative contracts are entered
+into, and remeasured at fair value at the end of the reporting period, with any gains or losses
+recognised in profit or loss.
+Related parties
+(a)
+A person, or a close member of that person's family, is related to the Group if that person:
+(i)
+has control or joint control over the Group;
+(ii)
+has significant influence over the Group; or
+(iii)
+is a member of the key management personnel of the Group or the Group's parent.
+China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Related parties (Continued)
+A financial guarantee contract is a contract that requires the issuer to make specified payments to
+reimburse the holder for a loss it incurs because a specified debtor fails to make payments when
+due in accordance with the terms of a debt instrument. Financial guarantee contract liabilities are
+measured initially at their fair values. It is subsequently measured at the higher of:
+Financial guarantee contracts
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+(Expressed in RMB)
+4.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+3. MATERIAL ACCOUNTING POLICIES (CONTINUED)
+Financial liabilities and equity (Continued)
+Financial liabilities at FVTPL
+Financial liabilities are classified as at FVTPL when the financial liability is (i) contingent
+consideration of an acquirer in a business combination to which IFRS 3 applies, (ii) held for trading
+or (iii) it is designated as at FVTPL.
+A financial liability is classified as held for trading if:
+it has been acquired principally for the purpose of repurchasing it in the near term; or
+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
+(b)
+it is a derivative, except for a derivative that is a financial guarantee contract or a designated
+and effective hedging instrument.
+such designation eliminates or significantly reduces a measurement or recognition
+inconsistency that would otherwise arise; or
+the financial liability forms part of a group of financial assets or financial liabilities or both,
+which is managed and its performance is evaluated on a fair value basis, in accordance
+with the Group's documented risk management or investment strategy, and information
+about the grouping is provided internally on that basis; or
+it forms part of a contract containing one or more embedded derivatives, and IFRS 9 permits
+the entire combined contract to be designated as at FVTPL.
+228,149 236,305 92,202 84,341 13,012 13,423
+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.
+2023 Annual Report 265
+266
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+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:
+An entity is related to the Group if any of the following conditions applies:
+Total
+The entity and the Group are members of the same group.
+The following are critical judgements, apart from those involving estimation (see Note 4.2
+below), that the Directors have made in the process of applying the Group's accounting
+policies and that have the most significant effect on the amounts recognised in the
+consolidated financial statements.
+Control over Guoneng Hebei Dingzhou Power Co., Ltd. ("Dingzhou Power")
+Note 44 describes that Dingzhou Power is a subsidiary of the Company although the
+Company has only 41% ownership interest and voting rights in Dingzhou Power. The
+remaining 59% of ownership interest and voting rights are owned by two shareholders that
+are unrelated to the Group as to 19% and 40%, respectively. Details of Dingzhou Power
+are set out in Note 44.
+The 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.
+268 China Shenhua Energy Company Limited
+4.
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY (CONTINUED)
+4.2 Key sources of estimation uncertainty
+The following are the key assumptions concerning the future, and other key sources of
+estimation uncertainty at the end of the reporting period that have a significant risk of
+causing a material adjustment to the carrying amounts of assets and liabilities within the
+next financial year.
+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.
+Impairment losses
+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.
+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.
+2023 Annual Report 269
+Notes to the Consolidated Financial Statements (Continued)
+(i)
+For the year ended 31 December 2023
+Critical judgements in applying accounting policies
+4.1
+In considering the impairment losses that may be required for current receivables and other
+financial assets, future cash flows need to be determined. One of the key assumptions that
+has to be applied is about the ability of the debtors to settle the receivables.
+In the application of the Group's accounting policies, which are described in Note 3, the Directors
+are required to make judgements, estimates and assumptions about the carrying amounts
+of assets and liabilities that are not readily apparent from other sources. The estimates and
+associated assumptions are based on historical experience and other factors that are considered
+to be relevant. Actual results may differ from these estimates.
+The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to
+accounting estimates are recognised in the period in which the estimate is revised if the revision
+affects only that period or in the period of the revision and future periods if the revision affects
+both current and future periods.
+(ii)
+(iii)
+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).
+(iv)
+(v)
+One entity is a joint venture of a third entity and the other entity is an associate of
+the third entity.
+The entity is a post-employment benefit plan for the benefit of employees of either
+the Group or an entity related to the Group.
+(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).
+Both entities are joint ventures of the same third party.
+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.
+4. CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION
+UNCERTAINTY
+(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.
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+(Expressed in RMB)
+Individually material operating segments are not aggregated for financial reporting purposes
+unless the segments have similar economic characteristics and are similar in respect of the
+nature of products and services, the type or class of customers, the methods used to distribute
+the products or provide the services, and the nature of the regulatory environment. Operating
+segments which are not individually material may be aggregated if they share a majority of these
+criteria.
+Operating segments, and the amounts of each segment item reported in the financial statements,
+are identified from the financial information provided regularly to the Group's most senior
+executive management for the purposes of allocating resources to, and assessing the performance
+of, the Group's various lines of business and geographical locations.
+2023 Annual Report 267
+Segment reporting
+million
+184
+1,596 2,126 6,098
+1,959
+2,017
+13,423
+84,341 13,012
+228,149 236,305 92,202
+45,157 41,169 205
+2023 2022 2023 2022
+RMB RMB RMB RMB
+million million million million
+million
+million
+million
+million
+Revenue from external customers
+Inter-segment revenue
+29,949
+42,197
+4,732
+RMB
+63,753
+Reportable segment profit
+Including:
+538 88,402 97,759
+6,379 426,357 423,067
+6,051 6,098
+4,836
+28,774
+6,441
+42,961
+84,525
+273,306 277,474 92,407
+Reportable segment revenue
+6,379 343,074 344,533
+83,283 78,534
+3,240 3,925
+4,482
+6,749
+RMB
+6. SEGMENT AND OTHER INFORMATION (CONTINUED)
+RMB
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 275
+For the purposes of assessing segment performance and allocating resources between
+segments, the Group's CODM monitors the results attributable to each reportable segment
+based on profit before income tax ("reportable segment profit"). Reportable segment
+profit represents the profit earned by each segment without allocation of head office and
+corporate items. Inter-segment sales are primarily charged at prevailing market rate which
+are the same as those charged to external customers.
+(a) Segment results
+Coal chemical operations - which use coal from the coal operations segment to first
+produce methanol and further process into polyethylene and polypropylene, together with
+other by-products, for sale to external customers. The Group sells its polyethylene at spot
+market.
+Shipping operations which provide shipment transportation services to the power
+operations segment, the coal operations segment and external customers. The rates of
+freight charges billed to the power operations segment, the coal operations segment and
+external customers are consistent.
+Port operations - which provide loading, transportation and storage services to the coal
+operations segment and external customers. The Group charges service fees and other
+expenses, which are reviewed and approved by the relevant government authorities.
+(6)
+(5)
+(4)
+(3) Railway operations – which provide railway transportation services to the coal operations
+segment, the power operations segment, the coal chemical operations segment and
+external customers. The rates of freight charges billed to the coal operations segment, the
+power operations segment, the coal chemical operations segment and external customers
+are consistent and do not exceed the maximum amounts approved by the relevant
+government authorities.
+6. SEGMENT AND OTHER INFORMATION (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+73,536 10,910
+RMB
+(a) Segment results (Continued)
+Coal
+RMB
+RMB
+RMB
+million million
+2023 2022
+2022
+2023
+2023 2022
+2022
+2023 2022 2023
+RMB RMB RMB
+million million million
+Total
+Coal chemical
+Shipping
+Port
+Railway
+Power
+Information regarding the Group's reportable segments as provided to the Group's CODM
+for the purposes of resource allocation and assessment of segment performance for the
+years ended 31 December 2023 and 2022 is set out below:
+7,969
+283
+2,307 2,268
+2022
+2023
+Consolidated
+inter-segment amounts
+and corporate items
+amounts
+2023
+Elimination of
+Reportable segment
+(b) Reconciliations of reportable segment revenue, segment profit and other
+items of profit or loss for the years ended 31 December 2023 and 2022 are
+set out below:
+24,787 23,134
+595 1,213
+34 3,736 3,868
+30
+30
+Unallocated head office
+2022
+2023
+2022
+million
+million
+million
+million million
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+RMB
+2022
+2023
+(31)
+62
+2
+753
+6,702
+12
+154
+145
+772
+561
+1,656
+1,193 1,252 1,825
+10,431 8,954 7,045
+Depreciation and amortisation
+Interest expenses
+180
+180
+706
+100
+100
+5,136
+11,152 12.742
+5,357
+1,057
+1,015
+1,097
+4
+3
+4
+4
+322
+883
+14
+1,595 1,315
+574
+1,344
+Loss allowances and impairment of assets
+Share of results of associates
+7786
+776
+770
+288
+1,122
+12 3,706 3,488
+13
+million million
+92,776
+Profit before income tax
+2022
+(Restated)
+RMB million
+RMB million
+Year ended 31 December
+2023
+The tax charge for the year can be reconciled to the profit before income tax per consolidated
+statement of profit or loss and other comprehensive income as follows:
+14,256
+17,584
+(1,226)
+(311)
+(2,813)
+1,161
+18,295
+16,734
+99,654
+2022
+(Restated)
+RMB million
+2023
+Year ended 31 December
+(Expressed in RMB)
+For the year ended 31 December 2023
+Current tax, mainly PRC enterprise income tax
+Under/(over) provision in respect of prior years
+Deferred tax
+10. INCOME TAX EXPENSE
+Notes to the Consolidated Financial Statements (Continued)
+280 China Shenhua Energy Company Limited
+Borrowing costs capitalised during the year arose on the general borrowing pools and were calculated by applying a
+capitalisation rate from 2.25% to 4.41% (2022: from 1.80% to 4.41%) per annum to expenditure on qualifying assets.
+859
+483
+3,930
+3,117
+564
+RMB million
+Tax at the PRC income tax rate of 25% (2022: 25%)
+23,194
+24,914
+United States
+Indonesia
+The applicable tax rates of the Group's overseas subsidiaries are as follows:
+Under the Law of the PRC on Enterprise Income Tax (the "EIT Law") and Implementation
+Regulation of the EIT Law, the tax rate applicable for the PRC group entities is 25% (2022: 25%)
+except for subsidiaries and branches operating in the western developing region of the PRC which
+are qualified to be entitled to a preferential tax rate of 15% from 2021 to 2030.
+10. INCOME TAX EXPENSE (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 281
+14,256
+17,584
+Income tax expense
+(2,813)
+1,161
+- under/(over) provision in respect of prior years
+282
+696
+Tax effects of:
+- different tax rates of branches and subsidiaries
+(7,109)
+(8,229)
+- non-deductible expenses
+1,501
+85
+1,074
+(922)
+(585)
+- utilisation of tax losses and deductible temporary
+difference previously not recognised
+(937)
+(387)
+- tax losses and deductible temporary difference not
+recognised
+- share of results of associates
+993
+928
+132
+Total interest income
+- other loans and receivables
+- bank deposits
+Interest income from:
+9. INTEREST INCOME/FINANCE COSTS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 279
+61
+31
+Carbon emission quota at the end of the year
+4.
+47
+1
+193
+3
+Purchased quota/expense
+4
+269
+1
+36
+3.
+Interest on:
+Carbon emission quota reduced for the
+(1)
+Quota consumed
+185
+10
+(2)
+Quota sold/income
+current year
+Hong Kong, China
+- borrowings
+- bonds
+174
+2,241
+1,930
+Note:
+Net finance costs
+Total finance costs
+Exchange loss, net
+Unwinding of discount
+Others
+(497)
+(299)
+Less: amount capitalised
+2,738
+2,229
+Total finance costs on financial liabilities not at FVTPL
+135
+120
+Year ended 31 December
+2023
+2022
+RMB million
+RMB million
+2,616
+- lease liabilities
+18
+2,634
+3,071
+2,084
+2,560
+25
+43
+3,053
+18
+Year ended 31 December
+2023
+2022
+(i)
+Notes:
+37
+34
+272
+396
+audit service
+Auditors' remuneration
+lease payments
+leases, leases of low-value assets and variable
+Operating lease charges relating to short-term
+168,743
+170,468
+Carrying amount of inventories sold
+3,184
+3,583
+489
+- impairment losses on intangible assets (Note 19)
+- impairment losses on right-of-use assets (Note 23)
+- impairment losses on goodwill
+- reversal of allowance for prepaid expenses
+- impairment losses on other non-current assets
+- write down of inventories
+3
+Cost of sales include an amount of depreciation and amortisation of RMB21,263 million for the year ended 31
+December 2023 (2022: RMB19,237 million).
+348
+201
+30
+56
+(6)
+47
+688
+136
+86
+(ii)
+Coal
+segment
+RMB million
+998
+1,292
+700
+30
+3
+136
+3
+52
+2,782
+10
+27
+23
+113
+3
+998
+1,217
+22
+30
+Power
+segment
+Railway
+segment
+Others
+Total
+RMB million RMB million
+RMB million RMB million
+The Group has recorded impairment losses for certain long-term assets:
+Property, plant and equipment (Note 16)
+Intangible assets (Note 19)
+Right-of-use assets (Note 23)
+Goodwill
+Total
+284 China Shenhua Energy Company Limited
+557
+Construction in progress (Note 17)
+(2)
+52
+2,151
+486
+413
+910
+854
+20,632
+20,861
+Depreciation of property, plant and equipment (Note 16)
+Depreciation of right-of-use assets (Note 23)
+Amortisation of intangible assets (Note 19)
+4,225
+4,812
+© Contributions to defined contribution plans
+42,157
+42,050
+Personnel expenses, including
+2022
+RMB million
+RMB million
+2023
+Year ended 31 December
+%
+%
+22.0
+22.0
+21.0
+21.0
+Amortisation of long-term deferred expenses (Note 22)
+8.25/16.5*
+During the years ended 31 December 2023 and 2022, 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 HKD 2,000,000 of profits of corporations will be lowered to 8.25%, and profits above that
+amount will continue to be subject to the tax rate of 16.5%.
+282 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+11. PROFIT FOR THE YEAR
+Profit for the year has been arrived at after charging/(crediting)
+8.25/16.5*
+- impairment losses on construction in progress (Note 17)
+2,782
+Depreciation and amortisation charged for the year
+2,782
+(188)
+71
+(179)
+- impairment losses on property, plant and
+equipment (Note 16)
+- gains on disposal of subsidiaries and associates
+- losses/(gains) on disposal of property, plant and
+equipment, intangible assets and non-current assets
+Other gains and losses, represent
+2022
+RMB million
+RMB million
+Year ended 31 December
+2023
+11. PROFIT FOR THE YEAR (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 283
+1,337
+285
+24,910
+23,316
+Less: amount capitalised
+31
+68
+Depreciation and amortisation (Note)
+1,288
+24,879
+Loss allowances
+- Trade receivables (Note 39.2)
+(6)
+- Other receivables and other loans (Note 39.2)
+291
+(55)
+1,392
+23,248
+61
+154
+Allocated quota (free of charge)
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+2023
+2022
+2023 2022 2023
+(Restated)
+RMB
+million
+2022
+(Restated)
+RMB RMB
+million million
+2023 2022 2023
+(Restated)
+RMB RMB RMB
+million million million
+Total
+Eliminations
+Unallocated items
+Revenue from any individual customer of the Group does not exceed 10% of the Group's
+revenue. Certain of the Group's customers are entities, which controlled, jointly controlled
+or significantly influenced by the PRC government ("government-related entities") and
+collectively considered as the Group's major customers. During the year ended 31
+December 2023, revenue from the Group's top five major customers of coal and power
+segments amounted to RMB144,875 million (2022: RMB137,050 million).
+2023 Annual Report 277
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+6. SEGMENT AND OTHER INFORMATION (CONTINUED)
+(Restated)
+(e) Other information
+Coal
+Power
+Railway
+Port
+Shipping
+Coal chemical
+Certain other information of the Group's segments for the years ended 31 December 2023
+and 2022 is set out below:
+(d) Major customers
+(Restated)
+(Restated)
+52,236 50,094
+Cost of coal
+transportation
+(7,305) (6,854) 61,832 63,681
+69,137 70,535
+production
+Cost of coal
+67,886 65,079
+65,079
+67,886
+Coal purchased
+million million
+million
+million
+million
+million
+million
+million
+RMB
+million
+RMB
+RMB
+RMB
+RMB
+RMB
+(Restated)
+RMB
+RMB
+RMB
+RMB RMB
+million
+million
+million
+RMB
+19,138
+391,898
+344,533
+114
+92
+23,134
+24,787
+Depreciation and amortisation
+3,234
+2,858
+(1,734)
+(2,171)
+1,100
+1,293
+3,868
+3,736
+Interest expenses
+99,654
+92,776
+427
+Revenue
+426,357
+423,067
+548
+529
+(83,831)
+24,879
+(79,063)
+344,533
+Profit before income tax
+88,402 97,759
+3,946
+1,468
+428
+343,074
+410,773
+23,248
+595
+343,074
+385,779
+6,119
+406,767
+4,006
+332,253
+12,280
+330,746
+12,328
+2022
+RMB million
+Year ended 31 December
+2023
+current assets
+Specified non-
+Year ended 31 December
+2023
+2022
+RMB million RMB million RMB million
+Revenue from external
+customers
+Domestic markets
+Overseas markets
+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.
+(c) Geographical information
+6. SEGMENT AND OTHER INFORMATION (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+276 China Shenhua Energy Company Limited
+1,213
+2,586
+851
+384
+159
+3,565
+Share of results of associates
+2,223
+3,706
+3,488
+270
+1,221
+3,976
+4,709
+Loss allowances and impairment of assets
+3,003
+16,022 2,947
+1,561
+19,972
+18,385
+18,930
+19,026
+10,715
+12,034
+19,237
+21,263
+25,663
+25,090
+33,365
+33,468
+65,079
+67,886
+RMB million
+RMB million
+2022
+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.
+278 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+7.
+COST OF SALES
+Coal purchased
+35,385
+Materials, fuel and power
+Personnel expenses
+Depreciation and amortisation
+Repairs and maintenance
+Transportation charges
+Taxes and surcharges
+Other operating costs
+Government grants
+Claim income
+Carbon emission quota income (Note)
+Others
+For the year ended 31 December 2023
+(Expressed in RMB)
+Year ended 31 December
+2023
+8. OTHER INCOME
+Capital expenditures consist of addition in property, plant and equipment, construction in process,
+exploration and evaluation assets, intangible assets, long-term deferred expenses, land use rights and
+prepayment for mining projects.
+33,663
+226,624
+(1)
+current year
+Carbon emission quota increased for the
+2.
+10
+61
+Carbon emission quota at the beginning of
+the year
+1.
+Amount
+RMB million
+million tonnes
+million tonnes RMB million
+Quantity
+Amount
+Quantity
+2022
+2023
+During the year, trading of carbon emission rights recorded a net loss amounting to approximately RMB76 million. Details
+of carbon emission rights trading are listed below.
+Year ended 31 December
+2023
+RMB million
+2022
+RMB million
+318
+497
+261
+232,537
+27
+47
+500
+529
+1,272
+1,100
+Note:
+193
+2,646
+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.
+(ii)
+(83,434) (78,951) 232,537 226,624
+27
+22
+23
+23
+5,493
+5,569
+5,214
+4,602
+196,959 192,753 77,594 73,491 27,380 25,041 3,844 3,556
+Total cost of sales
+1,526
+(1,910) (1,746) 3,051 3,130
+24,796 25,263
+27
+13
+23
+617
+Power cost
+73,309 69,534
+Cost of coal chemical
+production
+Others
+(37,921) (37,181) 37,961 33,107
+(36,298) (33,170) 37,011 36,364
+Profit from operations
+(Note (i))
+Capital expenditures
+(Note (ii))
+18,872 10,638 15,922 11,103
+Total assets (Note (iii) 301,482 294,168 167,912 150,632
+Total liabilities
+4,961
+7,700 7,045 4,285 3,957 8,242 9,019
+897
+910
+3,041
+3,688
+608
+4,876
+(iii)
+67,684 74,717 12,544
+2,428
+(i)
+Notes:
+(424) (2,080) (3,206) (203,455) (201,295) 386,333 363,163 (151,761) (162,524)
+(601)
+(7,931)
+(7,120)
+(134,258) (128,036) (139,580) (131,621) (51,000) (53,174)
+(Note (i))
+8,646 504,228 489,271 (499,423) (469,551) 633,412 625,320
+7,858
+7,417
+7,169
+19,831
+41,959 31,945
+96
+9
+333
+2,394
+46
+642
+24
+124
+560
+8,957 11,489 13,508
+(601) (1,528)
+6,327 6,740
+125,301 124,906 18,885
+485
+2,868
+117
+167
+227
+(397) (112) 93,317 99,138
+11. PROFIT FOR THE YEAR (CONTINUED)
+16. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
+0.98
+Non-executive directors
+Jia Jinzhong (Note (i))
+Yang Rongming (Note (i))
+Sub-total
+288 China Shenhua Energy Company Limited
+I
+I
+I
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Independent non-executive directors
+Chen Hanwen
+Bai Chongen
+Yuan Guoqiang
+Sub-total
+Employee director
+Liu Xiaolei (Note (ii))
+Wang Xingzhong (Note (iii)
+2.32
+0.31
+1.23
+0.78
+RMB million
+RMB million
+Discretionary
+bonuses
+RMB million
+Retirement
+scheme
+contributions
+Total
+RMB million
+RMB million
+Executive directors
+Sub-total
+Lv Zhiren (Note (ii))
+0.44
+0.15
+0.98
+Xu Mingjun
+0.39
+0.79
+0.16
+1.34
+Sub-total
+0.39
+in kind
+Supervisors
+Zhou Dayu (Note (i))
+0.90
+0.30
+0.30
+0.30
+0.90
+0.17
+0.15
+0.06
+0.38
+0.33
+0.71
+0.14
+1.18
+0.50
+0.86
+0.20
+1.56
+99
+0.15
+0.30
+0.30
+0.30
+RMB million
+Luo Meijian (Note (iii) Note (iv))
+Tang, Chaoxiong (Note (i) Note (ii))
+Zhang Changyan (Note (iii) Note (iv))
+Sub-total
+Total
+Year ended 31 December 2022
+Basic salaries,
+housing and
+other allowance
+Zhang, Feng (Note (ii))
+Retirement
+Discretionary
+Fee
+in kind
+RMB million
+RMB million
+bonuses
+RMB million
+scheme
+contributions
+Total
+RMB million
+and benefits
+0.16
+Fee
+other allowance
+Yuan Guoqiang
+Sub-total
+Employee director
+Liu Xiaolei (Note (ii))
+Sub-total
+Supervisors
+Year ended 31 December 2023
+other allowance
+and benefits
+Fee
+in kind
+Basic salaries,
+housing and
+Discretionary
+bonuses
+Retirement
+scheme
+contributions
+Total
+RMB million
+RMB million
+Bai Chongen
+Chen Hanwen
+Independent non-executive directors
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Total
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+0.40
+1.15
+0.15
+RMB million
+1.70
+1.26
+0.13
+1.72
+0.73
+2.41
+0.28
+3.42
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+0.33
+and benefits
+RMB million
+0.30
+0.12
+1.00
+Total
+0.90
+1.50
+3.38
+0.52
+6.30
+2023 Annual Report 287
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Chairman
+Wang Xiangxi (Note (iii) Note (iv))
+Sub-total
+Year ended 31 December 2022
+Basic salaries,
+housing and
+0.51
+0.37
+Sub-total
+Tang, Chaoxiong (Note (i) Note (ii))
+0.30
+0.30
+0.90
+0.30
+0.30
+0.30
+0.90
+0.40
+0.46
+RMB million
+0.12
+0.46
+0.12
+0.98
+Zhang, Feng (Note (ii))
+0.37
+0.51
+0.12
+1.00
+Zhou Dayu (Note (i))
+0.40
+0.06
+0.37
+0.15
+Total
+RMB million RMB million RMB million RMB million
+Cost
+At 1 January 2022
+59,577
+48,755
+73,075
+112,754
+142,747
+7,582
+12,987 18,747
+476,224
+Additions
+712
+3,586
+1,525
+268
+2,975
+21
+equipment
+Vessels equipment
+and other
+and
+structures
+machinery machinery
+Land and
+and mining
+and
+and
+Railway
+buildings
+rights
+712
+equipment
+equipment
+RMB million RMB million RMB million
+and port
+Coal Furniture,
+chemical
+fixtures,
+related
+motor
+machinery
+vehicles
+RMB million RMB million
+Mining related related
+9,802
+progress (Note 17)
+(2,187)
+Exchange adjustment
+127
+G
+159
+14
+305
+At 31 December 2022
+62,531
+52,491 76,623 124,322
+151,113
+7,595
+13,351
+Additions
+731
+9,634
+769
+109
+2,985
+(198)
+(108)
+(343)
+(108)
+3,656
+237
+2,132
+11,249
+5,395
+10
+501
+673
+23,853
+Transferred from construction in
+Reclassification and other additions
+(87)
+831
+339
+(50)
+23
+Disposals or write-off
+(485)
+(5)
+(940)
+(1,056)
+Mining Generators
+16. PROPERTY, PLANT AND EQUIPMENT
+For the year ended 31 December 2023
+(Expressed in RMB)
+Mr. Luo Meijian resigned as supervisor on 24 June 2022.
+Mr. Wang Xingzhong resigned as employee director on 5 July 2022.
+Mr. Zhang Changyan resigned as supervisor on 5 July 2022.
+Mr. Wang Xiangxi resigned as chairman and executive director on 29 July 2022.
+The emoluments of Mr. Wang Xiangxi, Mr. Luo Meijian and Mr. Zhang Changyan were borne by China Energy
+Group during the years ended 31 December 2022.
+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.
+290 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+13. EMPLOYEES' EMOLUMENTS
+Of the five individuals with the highest emoluments within the Group, two (2022: two) were
+directors of the Company whose emoluments are disclosed in note 12. The emoluments of other
+three (2022: three) highest paid individuals are as follows:
+Basic salaries, housing and other allowances
+and benefits in kind
+Discretionary bonuses
+Retirement scheme contributions
+Their emoluments are within the following band:
+HKD1,000,001 to HKD1,500,000
+HKD1,500,001 to HKD2,000,000
+Year ended 31 December
+2023
+Mr. Zhang Feng was elected and appointed as supervisor on 5 July 2022.
+Ms. Liu Xiaolei was elected and appointed as employee director on 5 July 2022.
+Mr. Lv Zhiren was elected and appointed as executive director on 24 June 2022.
+(iv)
+0.16
+0.06
+0.37
+0.90
+1.43
+2.25
+0.57
+5.15
+Discretionary bonuses were determined by the remuneration committee in accordance with the
+relevant human resources policies.
+RMB million
+2023 Annual Report 289
+For the year ended 31 December 2023
+(Expressed in RMB)
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS (CONTINUED)
+Notes:
+(i)
+The emoluments of these directors and supervisors were borne by China Energy Group during the years ended
+31 December 2023 and 2022.
+(ii)
+Mr. Tang Chaoxiong was elected and appointed as supervisor on 24 June 2022.
+(iii)
+Notes to the Consolidated Financial Statements (Continued)
+2022
+RMB million
+1.02
+1.06
+RMB million
+50,665
+50,466
+Subsequent to the end of the reporting period, a final dividend in respect of the year ended 31
+December 2023 of RMB44,903 million, at RMB2.26 per ordinary share (in respect of the year
+ended 31 December 2022: final dividend RMB50,665 million, at RMB2.55 per ordinary share) has
+been proposed by the Directors and is subject to approval by the shareholders in the following
+general meeting.
+15. EARNINGS PER SHARE
+The calculation of basic earnings per share is based on the profit attributable to ordinary equity
+holders of the Company of RMB64,625 million (2022: RMB72,925 million as restated) and the
+weighted average of 19,869 million ordinary shares (2022: 19,869 million shares) in issue during
+the year, calculated as follows:
+Weighted average number of ordinary shares
+Year ended 31 December
+2023
+million
+RMB million
+2022
+Number of shares in issue at 1 January and
+31 December
+19,869
+19,869
+Weighted average number of shares in issue
+19,869
+19,869
+No diluted earnings per share for both 2023 and 2022 were presented as there were no potential
+ordinary shares in existence during both years.
+292 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+million
+scheme
+contributions
+2022
+2022 final - RMB2.55 (2022: 2021 final - RMB2.54) per
+ordinary share
+3.30
+1.94
+0.42
+0.41
+4.74
+3.41
+Year ended 31 December
+2023
+2022
+Year ended 31 December
+2023
+-
+3
+3
+3
+2023 Annual Report 291
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+14. DIVIDENDS
+Dividend approved and paid during the year:
+13
+45
+Discretionary
+bonuses
+Fee
+(1,831)
+(51)
+(93)
+(261)
+(87)
+(891)
+Exchange adjustment
+(447)
+in kind
+26
+7
+126
+932
+249
+Disposals or write-off
+753
+65
+11
+2,289
+2,034
+Charge for the year
+233,894
+14,323
+8,698
+73
+2,518
+49,286
+56,495
+19,996
+18,697
+At 31 December 2022
+149
+63,881
+4,020
+Impairment losses
+24
+53,572
+17,557
+16,056
+At 1 January 2022
+Depreciation and impairment
+RMB million RMB million RMB million RMB million
+43,151
+Total
+Vessels equipment
+and other
+and
+vehicles
+machinery
+motor
+equipment
+(14)
+58,653
+8,081
+(10)
+Reclassification
+20,632
+815
+717
+317
+2,201
+5,363
+3,541
+2,382
+2,280
+Charge for the year
+212,793
+13,522
+5,217
+5,566
+5,291
+318
+4,691
+86,699
+82,866
+39,641 20,924
+45,491
+At 31 December 2023
+4,094
+Carrying values
+14,863
+9,394
+2,775
+69,351
+55,915
+57,059
+252,109
+22,239
+6,433 290,839
+43,834
+China Shenhua Energy Company Limited
+As at 31 December 2023, the property, plant and equipment with carrying amount of RMB251 million (2022:
+RMB826 million) have been pledged to the banks to secure the banking facilities granted to the Group.
+The Group was in the process of applying for the title certificates of certain of its properties with an aggregate
+carrying amount of RMB3,331 million as at 31 December 2023 (2022: RMB3,421 million). The Directors are of
+the opinion that the Group is entitled to lawfully and validly occupy or use the above mentioned properties.
+As at 31 December 2023, the carrying amount of the Group's investment property included in the property, plant
+and equipment was RMB1,366 million (As at 31 December 2022: RMB926 million).
+(iii)
+(ii)
+At 31 December 2022
+(i)
+5,648 274,103
+4,653
+5,077
+87,232
+20,128 75,036
+32,495
+Notes:
+20,513
+At 31 December 2023
+11
+25
+3
+998
+1,204
+55
+191
+2,782
+306
+24
+(26)
+Reclassification
+20,861
+633
+710
+Impairment losses (Note (i))
+Disposals or write-off
+(513)
+(237)
+1--7...3
+from construction
+Impairment losses-transferred
+18
+(12)
+16
+14
+Exchange adjustment
+(5,457)
+(109)
+(17)
+(61)
+(821)
+(164)
+(3,535)
+related
+fixtures,
+2,151
+Furniture,
+Recoverable amount by calculating fair value less costs of disposal:
+For the year ended 31 December 2023, power segment had recorded impairment losses of
+RMB1,113 million towards property, plant and equipment, construction in progress, intangible
+assets and right-of-use assets with carrying amount of RMB5,531 million and recoverable amount
+of RMB4,418 million; railway segment had recorded impairment loss of RMB998 million towards
+property, plant and equipment with carrying amount of RMB1,240 million and recoverable amount
+of RMB242 million; power segment and others had recorded goodwill impairment losses of
+RMB27 million and RMB3 million, respectively (2022: power segment and coal segment recorded
+goodwill impairment losses of RMB14 million and RMB42 million respectively). The pre-tax
+discount rate used in the impairment assessment was based on the weighted average cost of
+capital, ranging from 6.62% to 9.08% (2022: 7.67% to 8.69%).
+As of 31 December 2023, the Group had treated companies with impairment indicators as
+individual cash-generating units, and had made relevant impairment assessment by calculating
+the present value of estimated future cash flow of each cash generating unit.
+chemical
+19,971
+507,997
+102
+14,384
+As of 31 December 2023, the Group had determined the recoverable amount by using fair value
+less cost of disposal. Certain assets had been valued via market method. The fair value was
+categorised into Level 3 measurement. For the year ended 31 December 2023, power segment
+and others had recognised impairment losses of RMB152 million and RMB10 million towards
+property, plant and equipment, construction in progress, intangible assets and right-of-use assets
+with carrying amount of RMB154 million, recoverable amount of RMB2 million, and carrying
+amount of RMB11 million and recoverable amount of RMB1 million. Coal segment recognised
+impairment losses towards RMB700 million towards property, plant and equipment, construction
+in progress and right-of-use assets with carrying amount of RMB780 million and recoverable
+amount of RMB80 million.
+Transferred from construction in
+5,546
+2,716
+14,525
+2,862
+125
+1,349
+27,139
+Reclassification and other additions
+progress (Note 17)
+2023 Annual Report 285
+286
+Notes to the Consolidated Financial Statements (Continued)
+and benefits
+Retirement
+other allowance
+housing and
+Basic salaries,
+Year ended 31 December 2023
+China Shenhua Energy Company Limited
+Sub-total
+Yang Rongming (Note (i))
+Jia Jinzhong (Note (i))
+Non-executive directors
+Sub-total
+Xu Mingjun
+Lv Zhiren (Note (ii))
+Executive directors
+Directors' and supervisors' remuneration for the year, disclosed pursuant to the applicable Listing
+Rules and CO, is as follows:
+12. DIRECTORS' AND SUPERVISORS' EMOLUMENTS
+(Expressed in RMB)
+For the year ended 31 December 2023
+(2,023)
+1,944
+Recoverable amount by calculating present value of estimated future cash flow:
+Disposals or write-off
+77,983
+138,781
+156,050
+7,466
+13,488
+21,296
+542,948
+2023 Annual Report 293
+294
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+Mining Generators
+Mining
+related
+related
+structures
+Land and and mining
+buildings
+rights
+machinery machinery
+and
+and
+equipment equipment
+79
+and port
+RMB million RMB million
+RMB million RMB million RMB million
+Coal
+61,880
+66,004
+Railway
+(989)
+(147)
+(6,625)
+(207)
+(4,069)
+(252)
+(807)
+Exchange adjustment
+26
+32
+53
+53
+At 31 December 2023
+(33)
+(121)
+2. Loading volume at Huanghua Million tonnes
+Port
+209.5
+205.2
+2.1
+215.0
+3. Loading volume at Tianjin
+Million tonnes
+Coal Dock
+2023 Annual Report
+303.4
+2.9
+312.7
+Purchased coal
+Million tonnes
+124.6
+101.6
+45.8
+22.6
+(II) Transportation
+1. Transportation turnover of
+self-owned railway
+Billion tonne km
+309.4
+297.6
+4.0
+169.6
+316.2
+45.2
+46.4
+179.81
+11.1
+156.13
+(IV) Coal chemical
+1. Sales of polyethylene
+2. Sales of polypropylene
+Thousand tonnes
+364.4
+358.4
+1.7
+332.8
+Thousand tonnes
+341.5
+340.6
+0.3
+315.6
+34
+China Shenhua Energy Company Limited
+199.75
+Billion kWh
+166.45
+11.0
+4. Shipping volume
+Million tonnes
+152.9
+136.3
+12.2
+121.2
+5. Shipment turnover
+Billion tonne
+1.3
+nautical miles
+133.6
+23.3
+112.1
+(III) Power generation
+1. Gross power generation
+2. Total power output dispatch
+Billion kWh
+212.26
+191.28
+164.7
+325.4
+307.0
+Of which: Self-produced coal
+(17,584)
+Income tax expense
+60.4
+2,223
+3,565
+Share of results of associates
+(14,256)
+(20.7)
+(3,117)
+Finance costs
+(14.2)
+3,071
+2,634
+Interest income
+(3,930)
+134.2
+23.3
+operating activities
+Detailed explanation on material changes in the business type, composition
+of profit or source of profit of the Company during the Reporting Period:
+☐ Applicable ✓ Not applicable
+(3.3)
+(78,734)
+(76,131)
+activities
+Net cash used in financing
+Net cash generated from
+(34.7)
+(36,974)
+activities
+Net cash used in investing
+(18.3)
+109,734
+89,687
+(56,585)
+Million tonnes
+(2,136)
+Other expenses
+that for 2022
+2021
+%
+(I) Coal
+1. Commercial coal production Million tonnes
+2. Coal sales
+324.5
+2022
+313.4
+33
+Million tonnes
+450.0
+417.8
+7.7
+482.3
+3.5
+(5,003)
+2023
+Major operating indicators
+(78.7)
+(1,337)
+(285)
+Loss allowance, net of reversal
+33
+Section IV Directors' Report (Continued)
+Unit
+2.
+(1) Factors affecting the revenue
+The revenue of the Group in 2023 recorded a slight year-on-year decrease. The
+main reasons for the decrease are:
+(1)
+subject to the supply-demand relationship in the coal market, the average
+coal sales price of the Group decreased by 9.3% year-on-year and the
+revenue from coal sales decreased year-on-year;
+subject to the decrease in average shipping price, the revenue from
+shipping operation of the Group decreased year-on-year.
+Change
+for 2023
+compared with
+Analysis on Revenue and Costs
+Major Associated Companies
+China Energy (Shangdong) Power Sales Co., Ltd.
+Section IV Directors' Report (Continued)
+1.
+INDUSTRY IN WHICH THE COMPANY OPERATED DURING THE REPORTING
+PERIOD¹
+1
+II.
+Section IV Directors' Report (Continued)
+increase of 10.9%
+Macroeconomic Environment
+increase of
+approximately 10%
+Year-on-year
+Year-on-year
+decrease of 2.3%
+China Shenhua Energy Company Limited
+of self-produced coal
+Changes in unit production costs
+costs
+Year-on-year
+(8.0)
+In 2023, confronted with the intricate and severe international environment and the arduous
+task of domestic reform, development and stabilisation, all regions and departments in
+China conscientiously implemented the decisions and arrangements of the CPC Central
+Committee and the State Council, adhered to the general principle of seeking progress
+while maintaining stability, fully, accurately and comprehensively implemented the
+new development philosophy by accelerating the construction of a new development
+pattern, comprehensively deepening reform and opening-up, increase the intensity of
+macroeconomic regulation and control, focus on expanding domestic demand, optimising
+the structure, boosting confidence and preventing and resolving risks. With China's
+reviving economy in line with the improved stable supply and demand coupled with active
+promotion of transformation and upgrading, employment and prices were generally stable,
+people's livelihood was effectively guaranteed with high-quality development being steadily
+promoted, which successfully achieved major expected goals. The annual gross domestic
+product (GDP) increased by 5.2% as compared with the previous year in terms of constant
+prices.
+(1) China's thermal coal market
+Coal import (100 million tonnes)
+2.9
+46.6
+scale in China (100 million tonnes)
+%
+Year-on-year
+change
+2. Coal Market Environment
+2023
+Section IV Directors' Report (Continued)
+27
+2023 Annual Report
+etc.
+The macroeconomic and industry-related contents in this report are for reference only and does not constitute any
+investment advice. The Company has used its best endeavours to ensure the accuracy and reliability of information in this
+section, but does not assume any liability or provide any form of guarantee for the accuracy, completeness or validity of
+all or part of its content. The Company disclaims all responsibility for any error or omission. The content in this section
+may contain certain forward-looking statements based on subjective assumptions and judgments of future political and
+economic developments; therefore there may exist uncertainties in these statements. The Company does not undertake
+any responsibility for updating the information or correcting any subsequent error that may appear. The opinions, estimates
+and other data set out herein can be amended or withdrawn without further notice. The data contained in this section are
+mainly derived from sources such as the National Bureau of Statistics, National Energy Administration, China Coal Market
+Network, China Coal Resources Network, China Electricity Council, China Coal Transportation & Distribution Association,
+In 2023, as China's economic growth stimulated energy demands, the commercial
+coal consumption kept growing. The production capacity of coal supply continued
+to be released, the coal storage in major sectors of the society was at a high level,
+the national coal economic operation remained basically stable, and coal price hub
+declined overall. As at the end of 2023, the medium- and long-term contract price of
+the National Coal Seaborne Thermal-Coal Price Index (NCEI) (XTOUCAH☀)
+(5,500 kcal) was RMB710 per tonne, representing a decrease of RMB18 per tonne
+as compared with that at the end of the previous year; the annual average medium-
+and long-term contract price was approximately RMB714 per tonne, representing
+a decrease of approximately RMB7 per tonne compared with that of last year,
+which played the role of "stabiliser" for coal prices. The spot trading price trended
+downwards with oscillation. The average transaction price for thermal coal price index
+(5,500 kcal) at Qinhuangdao Port for the year was approximately RMB980 per tonne,
+representing a year-on-year decrease of approximately 23.7%.
+Industrial raw coal output above designated
+149.21
+88.6
+155
+104.1
+2,039
+2,122.6
+100 million kWh
+Power generation
+7.7
+1,912.8
+4.178
+4.358
+4.500
+100 million tonnes
+Coal sales volume
+3.5
+3.134
+103.3
+11.0
+Revenue
+RMB100 million
+137.27
+RMB100 million
+Sales, general and administration,
+2.6
+2,266.24
+92.6
+2,510
+2,325.37
+RMB100 million
+Costs
+(0.4)
+3,445.33
+98.0
+3,500
+3,430.74
+4.7
+104.9
+61.8
+(100 million tonnes)
+Revenue
+%
+Change
+Unit: RMB million
+2022
+(Restated)
+2023
+343,074
+Items
+1.
+(1) Analysis on Principal Businesses
+V. MAJOR OPERATION RESULTS DURING THE REPORTING PERIOD
+Section IV Directors' Report (Continued)
+32 China Shenhua Energy Company Limited
+(IV) Industrial technology and innovation capabilities: The Group strengthens its industrial
+technology and innovation capabilities continuously. The Group's technology in green coal
+exploitation and safety production has secured a leading position in the global market,
+and that of clean coal-fired power generation, heavy-haul railway transportation and smart
+port operation has secured a leading position in the domestic market. China Shenhua has
+basically established an integrated operation model for technological resources, which
+includes scientific decision-making, systematic management, research and development,
+and commercialisation of achievements and a technological innovation-driven development
+model.
+Analysis on Changes in the Major Items in the Consolidated Statement of Profit
+or Loss and Other Comprehensive Income and the Consolidated Statement of
+Cash Flows
+(III) Management team focusing on principal businesses and advanced business concepts:
+The management team of the Group has profound knowledge and management experience
+in the industry, attaches great importance to enhancement of the Company's capabilities in
+value creation, conducts operation with a focus on the principal businesses of the Company,
+and persistently focuses on clean generation, clean transportation and clean conversion in
+the energy sector.
+Cost of sales
+344,533
+(226,624)
+15.6
+1,100
+1,272
+Other income
+12.5
+(3,184)
+(232,537)
+(3,583)
+(19.2)
+(3,722)
+(3,007)
+Research and development costs
+2.6
+(0.4)
+Other gains and losses
+(11) Coal reserves: The Group possesses an abundant pool of high-quality coal resources which
+are suitable for building modern high-output and high-efficient coal mines. The Group is
+among the top of listed coal companies in China in terms of coal reserves.
+In 2023, the Group focused on synergy to create efficiency and increase revenue,
+strengthened the efficient matching of supply chain, actively optimised energy distribution,
+enhanced the construction of various links such as production, transportation, sales, storage
+and utilisation, which guaranteed the safe and stable supply of energy, and continuously
+improved the benefit-creation capability of the value chain, thus cementing its overall
+strengths.
+Unique operation and profitability model: The Group has a large and efficient operation of
+coal and power generation business, and possesses a large-scale integrated transportation
+network consisting of railways, ports and ships, which efficiently connects resource supply
+of China West with the energy needs of the southeast seaboard. Hence, we have formed
+a core competitive advantage of integrated development of coal, power, transportation
+and coal-to-chemical industry, one-stop operation of production, transportation and sales,
+in-depth cooperation and effective synergy among various industrial sectors.
+30
+20
+29
+2023 Annual Report
+In 2023, in view of improved global coal supply landscape and high level of inventory
+among most international thermal coal end-users, the coal price trended downwards
+with oscillation. The International Energy Agency pointed out that coal is still the
+most important energy source for global power generation, steel-making, and cement
+production. It expected that in 2023, the global coal demand would reach 8.54 billion
+tonnes, representing an increase of 1.4% year-on-year, and the global coal production
+would be 8.74 billion tonnes, representing an increase of 1.8% year-on-year.
+According to statistical data, the total coal production in India in 2023 was 1.01
+billion tonnes, representing a year-on-year increase of 10.9%; the coal production
+in Indonesia reached 780 million tonnes, representing a year-on-year increase of
+13.0%; the coal production in Mongolia reached 81.192 million tonnes, representing
+a year-on-year increase of 1.18 times. According to the shipping data, the global
+growth rate of seaborne coal trade has accelerated, with a cumulative global load
+of seaborne coal (excluding domestic coastal transportation) of 1.34 billion tonnes
+in 2023, representing an increase of 6.0% compared to the last year. The exported
+volume from Indonesia, Australia, Russia, the United States, Mongolia, and other
+countries maintained growth; the imported volume of China, India, Türkiye, Vietnam
+and other countries increased, while the imported volume of Germany, Japan, South
+Korea and Taiwan, China declined year-on-year. As at the end of 2023, the spot price
+of Newcastle NEWC thermal coal was US$149.0/tonne, representing a decrease of
+62.9% as compared to the end of the previous year.
+International thermal coal market
+Section IV Directors' Report (Continued)
+(2)
+In respect of the demand side, China's commercial coal consumption increased by
+approximately 7.5% year-on-year in 2023. Of which the commercial coal consumption
+of power generation industry accounted for approximately 59.1% of the total coal
+consumption, representing a year-on-year increase of 11.5%, showing a relatively
+rapid growth; commercial coal consumption in the chemical industry increased
+by 5.4% year-on-year; commercial coal consumption by steel sector increased by
+approximately 3.0% year-on-year.
+In respect of the supply side, the policy of ensuring supply continued to exert
+strength, the overall coal capacity utilisation rate was at a high level and coal
+production maintained growth. During the year, the industrial raw coal output above
+designated scale in China was 4,660 million tonnes, representing a year-on-year
+increase of 2.9%. The annual raw coal output in Inner Mongolia, Shanxi, Shaanxi
+and Xinjiang accounted for 81.2% of the industrial raw coal output above designated
+scale in China, with rising market share. Central coal enterprises took the lead to
+implement the long-term contract thermal coal mechanism, ensuring the thermal
+coal supply to the greatest extent. The total coal output during the year was 1,130
+million tonnes, representing a year-on-year increase of 4.5%. During the year, the
+total imported coal was 470 million tonnes, representing a year-on-year increase of
+61.8%, mainly from Indonesia, Russia, Australia, Mongolia, etc., with a decrease of
+approximately 19.5% for imported coal average cost.
+28
+28
+2.6
+27.5
+China Shenhua Energy Company Limited
+3.
+Power Market Environment
+In 2023, China's power supply and demand were generally tightly balanced, and remained
+relatively tight during peak hours in some regions. China's national power consumption
+reached 9,224.1 billion kWh, representing a year-on-year increase of 6.7%. The power
+generation by power plants above designated scale in China was 8,909.1 billion kWh,
+representing a year-on-year increase of 5.2%. In particular, thermal power generation
+amounted to 6,231.8 billion kWh, representing a year-on-year increase of 6.1%, accounting
+for 69.9% of the national power generation; hydropower generation amounted to 1,140.9
+billion kWh, representing a year-on-year decrease of 5.6%. The average utilisation hours of
+power generation equipment of power plants in China with the installed capacity of 6,000
+kW and above were 3,592 hours, decreasing by 101 hours year-on-year. Among them, the
+average utilisation hours of thermal power equipment were 4,466 hours, increasing by
+76 hours year-on-year (the average utilisation hours of coal power equipment were 4,685
+hours, increasing by 92 hours year-on-year). The average utilisation hours of hydropower
+equipment were 3,133 hours, representing a year-on-year decrease of 285 hours.
+(1)
+The core competitiveness of the Group is mainly:
+IV. ANALYSIS ON CORE COMPETITIVENESS DURING THE REPORTING PERIOD
+Section IV Directors' Report (Continued)
+31
+2023 Annual Report
+The integrated operation mode of "production-transportation (railway, port and shipping)-
+conversion (power generation and coal chemical industry)" formed by the Group on the basis
+of coal products has the advantages of complete chain, high efficiency, safety and stability,
+and low-cost operation. The Group's technology in coal exploitation and safety production has
+secured a leading position in the global market, and that of clean coal-fired power generation,
+heavy-haul railway transportation and smart port operation has secured a leading position in the
+domestic market.
+The Group owns high-quality coal resources located in Shendong Mines, Zhunge'er Mines, Shengli
+Mines, Baorixile Mines, etc. In 2023, the Group realised commercial coal production of 324.5
+million tonnes and the sales of coal of 450.0 million tonnes. The Group controls and operates
+high-capacity clean coal-fired power generators with great parameters. The Group controlled and
+operated power generators with an installed capacity of 44,634 MW by the end of 2023, with a
+total power output dispatch of 199.75 billion kWh in 2023. The Group controls and operates a
+network of concentric and radial transportation railways around the major coal production bases in
+western Shanxi, northern Shaanxi and southern Inner Mongolia and the "Shenshuo – Shuohuang
+Line" a major channel for coal transportation from western to eastern China, as well as Huangda
+Railway, a new energy channel in Bohai Rim, with total railway operating mileage reaching 2,408
+km. The transportation turnover of the self-owned railway reached 309.4 billion tonne km for the
+year. The Group also controls and operates a number of ports and terminals (with a total ship
+loading capacity of approximately 270 million tonnes/year), such as Huanghua Port, owns the
+fleet of ships with approximately 2.13 million tonnes of deadweight capacity and conducts coal-
+to-olefins projects with approximately 0.6 million tonnes/year of production capacity. During the
+Reporting Period, the Group made no significant change in the scope of its principal businesses.
+-
+The Company was established in Beijing in November 2004, and was listed on the HKEx in June
+2005 and on the SSE in October 2007. The Group is principally engaged in the production and sale
+of coal and electricity, railway, port and shipping transportation, and coal-to-olefins businesses.
+III. BUSINESSES ENGAGED IN BY THE COMPANY DURING THE REPORTING
+PERIOD
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+The reform of power mechanism has continued to deepen, the market mechanisms play
+a decisive role in the allocation of resources in electricity market. In 2023, power trading
+centres across China organised and completed a total of 5,667.9 billion kWh of market
+transactions, representing a year-on-year increase of 7.9%, accounting for 61.4% of total
+power consumption in the whole society, representing a year-on-year increase of 0.6
+percentage point. With multi-level power market system operating effectively, the medium-
+to long-term power direct trading volume in the national power market was 4,428.9 billion
+kWh, representing a year-on-year increase of 7.0%, and the pilot work of the electricity
+spot market progressed with stability.
+Investment in non-fossil power has accelerated, emphasising the role of coal power. In
+2023, the proportion of non-fossil power generation investment in power source investment
+reached 90%, with installed capacity of non-fossil energy maintaining rapid growth. By the
+end of 2023, installed capacity of power generation nationwide reached 2,920 GW, of which
+installed capacity of non-fossil energy reached 1,570 GW, accounting for 53.9% of the total
+installed capacity. The installed capacity of thermal power generation reached 1,390 GW,
+of which the installed capacity of coal power generation reached 1,160 GW, representing
+a year-on-year increase of 3.4%, accounting for 39.9% of total installed capacity of power
+generation, down to below 40% for the first time, representing a year-on-year decrease of
+4.0 percentage points. The ratio of coal power generation to total power generation in 2023
+was nearly 60%. Coal power remains the major source of electricity supply in China, which
+reflects the role of thermal power serving as backup guarantee. In 2023, the capacity tariff
+policy was introduced, effectively playing the support and adjustment role of coal power
+to promote renewable energy consumption in the future.
+National coal transportation volume by railway
+3.094
+R&D expenses and net finance
+100 million tonnes
+- 69.52%
+Other A Share
+Shareholders
+-13.48%
+China Shenhua
+Energy Company Limited
+Major Branches
+Shendong Coal Branch
+Corporation
+Limited
+Ha'erwusu Open-cut Mine
+52.00%-
+-100.00%-
+Coal Sales
+100.00%
+China Energy Trading Group Limited
+-100.00%-
+-66.00%-
+China Energy
+Investment
+51.00%-
+Shenhua (Fujian) Energy Co., Ltd.
+H Share
+Coal Production
+Major Controlling Companies
+90.00%-
+China Energy Group Weifang Energy Co., Ltd.
+-100.00%-
+17.00%
+Shareholders
+China Energy Baotou Energy Co., Ltd.
+56.61%-China Energy Baorixile Energy Co., Ltd.
+50.10%-China Energy Yulin Energy Co., Ltd.
+-100.00% China Energy Zhunneng Group Co., Ltd.
+60.00%-
+China Energy Shouguang Power Generation Company Limited
+-100.00%-
+Major
+Controlling
+Companies
+Shenhua Shendong Power Co., Ltd.
+-100.00%-
+5.00% China National Coal Exchange Co, Ltd.
+60.00% Shenhua Xinjie Energy Co, Ltd.
+Power Generation
+3.245
+70.00%-
+PT.Shenhua Guohua Pembangkitan Jawa Bali
+Railway
+75.00% China Energy Huangda Railway Co., Ltd.
+100.00%-China Energy Railway Equipment Co., Ltd.
+-100.00%-
+China Energy (Guangdong) Energy Development Co., Ltd.
+China Energy Shuchuang Railway Development Co., Ltd.
+-100.00%-
+Shenshuo Railway Branch
+Major Branches
+-100.00%-
+China Energy Guohua (Beijing) Distributed Energy Technology Co., Ltd.
+Track Mechanical Maintenance Branch
+-90.00%-
+China Energy (Huizhou) Thermal Power Co., Ltd.
+Major Controlling Companies
+52.72%
+PT.Shenhua Guohua Lion Power Indonesia
+70.00%-
+China Energy Mengjin Thermal Power Co, Ltd.
+China Energy Sichuan Energy Co., Ltd.
+China Energy Guangtou Beihai Power Generation Co., Ltd.
+China Energy Guohua (Beijing) Gas Thermal Power Co., Ltd.
+China Energy Shenhua Jiujiang Power Generation Co., Ltd.
+China Energy Group Yongzhou Power Generation Co., Ltd.
+China Energy Guangtou Liuzhou Power Generation Co., Ltd.
+-51.00%-
+China Energy Qingyuan Power Generation Co., Ltd.
+-100.00%
+China Energy Xinshuo Railway Co., Ltd.
+-100.00%-
+China Energy (Qingyuan) Clean Energy Co., Ltd
+90.00%
+85.00%-
+China Energy Xinzhun Railway Co., Ltd.
+China Energy Xinshuo Zhunchi Railway (Shanxi)
+Company Limited
+-75.00%-
+-80.00%
+PTGH EMM Indonesia
+-100.00% China Energy Baoshen Railway Group Co., Ltd.
+-88.16% China Energy Baoshen Railway Co., Ltd.
+97.27%- Shenhua Ganquan Railway Co., Ltd.
+Tianjin Guohua Jinneng Power Co., Ltd.
+The equity structure diagram of China Shenhua (including major branches/subsidiaries)
+Huizhou Thermal Power Branch
+Shengli Energy Branch
+Shandong Branch
+51.00% - Shenhua (Tianjin) Financial Leasing Co., Ltd.
+-100.00% China Energy Economy and Technology Institute Co., Ltd.
+Beijing Guoneng Green and Low Carbon
+Development Investment Fund
+as at 31 December 2023 is for illustrative purpose only.
+33.33%-
+39.92% -
+Major Associated Companies
+Beijing Guoneng New Energy
+Hebei Branch
+Guangxi Branch
+Major
+Branches
+Industry Investment Fund
+42.53%- Beijing GD Power Co, Ltd.
+26
+Section IV Directors' Report
+70.00%-
+Commercial coal production
+%
+change
+2022
+Year-on-year
+Proportion of Actual amount for
+completion
+Target for 2023
+Actual amount
+for 2023
+Unit
+Item
+In the year of 2023, the Group recorded profit before income tax of RMB92,776 million (2022:
+RMB99,654 million), representing a year-on-year decrease of 6.9%; profit for the year attributable
+to equity holders of the Company of RMB64,625 million (2022: RMB72,925 million, restated),
+representing a year-on-year decrease of 11.4%; and basic earnings per share of RMB3.253/share
+(2022: RMB3.670/share, restated), representing a year-on-year decrease of 11.4%.
+In the year of 2023, the Group actively implemented the national policies on securing energy
+supply and stabilising prices, and honoured its corporate mission of "serving as the ballast for
+energy supply and pioneering in energy revolution", with integrated operation being safe and
+efficient and energy supply being firmly secured. To this end, the Group focused on the clean
+and efficient utilisation of coal, boosted the development of strategic emerging industries, and
+efficiently accomplished its annual business targets. The operating results for the year decreased
+year-on-year as affected by downward coal prices and other factors.
+DISCUSSION AND ANALYSIS ON OPERATION RESULTS
+I.
+Henan Branch
+-100.00% China Energy Supply Chain Management Group Co.Ltd.
+-100.00% China Energy Information Technology Co., Ltd.
+-100.00% China Shenhua Overseas Development and Investment Co, Ltd.
+-100.00%- Shenhua International (Hong Kong) Limited
+Associated
+Companies
+40.00% China Energy Finance Co., Ltd.
+65.00%-
+(directly and indirecti
+62.82% China Energy Beidian Shengli Energy Co., Ltd.
+57.76%- Shenhua Zhunge'er Energy Co., Ltd.
+China Energy Jinjie Energy Co., Ltd.
+-100.00%-
+-100.00%-China Energy Shendong Coal Group Co., Ltd.
+China Energy Yudean Taishan Power Co., Ltd.
+80.00%-
+China Energy Hebei Dingzhou Power Generation Co., Ltd.
+China Energy Hebei Cangdong Power Generation Co., Ltd.
+51.00%-
+Equity structure diagram
+12.50%- Haoji Railway Co., Ltd.
+95.00%-
+40.50%-
+China Energy Baotou Coal
+Chemical Co., Ltd.
+Major Controlling Companies
+China Energy Group Yueyang Power Generation Co., Ltd.
+100.00%
+Jiangxi Branch
+Hunan Branch
+Coal Chemical
+Shipping
+Guangdong Branch
+Others
+Port
+China Energy Huanghua Harbour Administration Co., Ltd.
+70.00% -
+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.
+(136)
+Net book value
+At 31 December 2023
+486
+1,097
+(401)
+(401)
+At 31 December 2023
+At 31 December 2022
+Additions
+(265)
+(265)
+At 1 January 2022
+Additions
+(201)
+22,411
+(201)
+(64)
+(64)
+(136)
+23,994
+31 December
+363
+2023
+Impairment losses
+RMB million
+31 December
+2022
+RMB million
+7,705
+(Expressed in RMB)
+For the year ended 31 December 2023
+At 31 December 2022
+Less: write-down of inventories
+Materials and supplies
+Coal
+24. INVENTORIES
+Notes to the Consolidated Financial Statements (Continued)
+302 China Shenhua Energy Company Limited
+24,023
+22,347
+1,313
+Others (Note)
+(6,627)
+698
+(313)
+(5,921)
+(5,405)
+(239)
+(277)
+At 1 January 2022
+Accumulated depreciation
+31,022
+28,914
+1,410
+At 31 December 2023
+(2,341)
+(1,620)
+6,385
+(411)
+Disposals
+943
+(310)
+Depreciation
+(149)
+(168)
+(593)
+(212)
+At 31 December 2023
+1,058
+532
+190
+336
+Disposals
+(854)
+(6,102)
+(636)
+(122)
+Depreciation
+(6,831)
+(5,998)
+(407)
+(426)
+At 31 December 2022
+(910)
+(96)
+6,516
+As at 31 December 2023, certain accounts and bills receivables were classified as financial assets at FVTOCI, as
+certain subsidiaries' business model is achieved both by collecting contractual cash flows and selling of these
+assets.
+1,256
+19,858
+1,132
+7,983
+1,096
+845
+- Third parties
+507
+- Associates
+36
+6,631
+China Energy Group and fellow subsidiaries
+Bills receivable
+10,968
+11,875
+(1,221)
+(1,195)
+Less: allowance for credit losses
+12,100
+As at 31 December 2023 and 31 December 2022, accounts and bills receivables from contracts
+with customers amounted to RMB21,053 million and RMB13,321 million, respectively.
+Bills receivable were mainly issued by PRC banks and others financial institutions, were expiring
+within one year. As at 31 December 2023, the Group has no bills (2022: Nil) pledged to secure
+bills payable.
+As 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:
+10,968
+11,875
+208
+943
+127
+27
+50
+155
+12,189
+10,578
+31 December
+2022
+RMB million
+2023
+RMB million
+31 December
+304 China Shenhua Energy Company Limited
+More than three years
+Two to three years
+One to two years
+Less than one year
+11,460
+238
+13,070
+9,686
+10,581
+688
+2,251
+2,223
+2022
+RMB million
+RMB million
+2023
+At the end of the year
+At the beginning of the year
+Write-down of inventories
+Write-off of inventories
+489
+Year ended 31 December
+Note: Others mainly represent properties for sale and properties under development.
+12,096
+12,846
+(2,223)
+(2,631)
+14,319
+15,477
+1,236
+Movement in write-down of inventories during the year is as follows:
+6,698
+(280)
+2,631
+2,472
+31
+11
+2,478
+- Third parties
+- Associates
+China Energy Group and fellow subsidiaries
+Accounts receivable
+RMB million
+(517)
+31 December
+2022
+2023
+31 December
+25. ACCOUNTS AND BILLS RECEIVABLES
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 303
+2,223
+RMB million
+300 China Shenhua Energy Company Limited
+Transferred from construction in progress
+981
+Equity attributable to equity holders of the
+160
+2,010
+209
+758
+2,930
+3,535
+Total comprehensive income for the year
+160
+2,010
+179
+company
+758
+3,529
+Profit for the year
+14,008
+5,415
+119,297
+14,769
+6,618
+111,155
+Revenue
+51,678
+26,505
+2,930
+61,408
+34,435
+52,402
+Total assets
+Current assets
+Non-current assets
+20. INTERESTS IN ASSOCIATES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+China Shenhua Energy Company Limited
+6,460
+10,602
+24,555
+6,551
+13,774
+26,117
+associates
+Carrying amount of equity investment in
+13%
+40%
+43%
+13%
+40%
+43%
+Group's proportion of ownership interest
+51,678
+26,505
+57,736
+57,736
+52,402
+34,435
+61,408
+159,783
+276,860
+147,481
+Total assets
+149,925
+87,677
+107,038
+150,567
+232,600
+117,022
+11,148
+135,540
+29,147
+9,216
+44,260
+30,459
+Non-current assets
+Current assets
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million RMB million
+Haoji
+Railway
+31 December 2022/
+Year ended 31 December 2022
+Finance
+Company
+136,185
+31 December 2023/
+Year ended 31 December 2023
+223,217
+Current liabilities
+the company
+Equity attributable to equity holders of
+27,201
+28,778
+Non-controlling interests
+109,395
+196,712
+51,248
+107,381
+242,425
+57,295
+Total liabilities
+101,266
+36
+14,855
+93,450
+61
+18,880
+Non-current liabilities
+8,129
+196,676
+36,393
+13,931
+242,364
+38,415
+161,073
+Beijing GD
+31 December 2022/
+Shendong
+Tianlong
+2023
+31 December
+– Total comprehensive income for the year
+- Profit for the year
+associates in the consolidated financial statements
+Aggregate amounts of the Group's share of those
+associates:
+Aggregate carrying amount of individually immaterial
+Aggregate information of associates that are not individually material:
+20. INTERESTS IN ASSOCIATES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+31 December
+2022
+2023 Annual Report 299
+731
+2,363
+764
+2,575
+25%
+20%
+25%
+20%
+Group's proportion of ownership interest
+Carrying amount of equity investment in
+associates
+2,924
+11,589
+Note: As Suizhong Power is a subsidiary of Beijing GD and its financial information has been included in the consolidated
+financial statements of Beijing GD, the financial information of Suizhong Power is not listed separately.
+RMB million
+RMB million
+3,433
+The above unlisted equity investments represent the Group's equity interest in entities established in the PRC.
+The Directors of the Company have elected to designate these equity investments as FVTOCI as it is the Group's
+strategy to hold these investments for long-term purposes and realising their performance potential in the long run.
+2,888
+2,740
+(ii)
+(i)
+Notes:
+502
+254
+Accounts and bills receivables (Note (ii))
+2,386
+2,486
+RMB million
+RMB million
+31 December
+2022
+2023
+31 December
+Current asset
+Unlisted equity securities (Note (i))
+Non-current asset
+21. FINANCIAL ASSETS AT FAIR VALUE THROUGH OTHER COMPREHENSIVE
+INCOME
+273
+112
+272
+85
+3,319
+3,056
+12,629
+Equity attributable to equity holders of
+the company
+144
+Non-current liabilities
+648
+2,857
+199
+3,449
+Current liabilities
+3,606
+14,615
+3,255
+16,530
+3,038
+8,257
+568
+6,358
+2,853
+8,432
+402
+8,098
+RMB million
+RMB million
+RMB million
+RMB million
+Hebei
+Renewables
+Shendong
+Tianlong
+Hebei
+Renewables
+452
+Year ended 31 December 2022
+169
+Total liabilities
+5,998
+128
+3,840
+Total comprehensive income for the year
+144
+4,380
+128
+2,722
+Profit for the year
+480
+13,356
+457
+11,279
+Revenue
+2,924
+11,589
+3,056
+12,629
+the company
+Equity attributable to equity holders of
+Non-controlling interests
+682
+3,026
+199
+Notes to the Consolidated Financial Statements (Continued)
+34
+31,119
+1,301
+Railway
+Finance
+Company
+RMB million
+Prepayments in connection with construction work,
+equipment purchases and others (Note (i))
+Prepayments for mining projects
+Deductible VAT and other tax
+Service concession receivables (Note (ii))
+Goodwill
+Long-term deferred expenses (Note (iii))
+Notes:
+(i)
+(ii)
+31 December
+2023
+(iii)
+RMB million
+4,945
+5,861
+2,000
+4,000
+478
+315
+15,901
+14,967
+113
+3,633
+143
+31 December
+2022
+22. OTHER NON-CURRENT ASSETS
+(Expressed in RMB)
+For the year ended 31 December 2023
+(21)
+Disposal
+(792)
+(943)
+Transferred to right-of-use assets (Note 23)
+(43)
+(164)
+Transferred to intangible assets (Note 19)
+(23,853)
+(27,139)
+Transferred to property, plant and equipment (Note 16)
+19,416
+26,388
+Additions
+26,201
+20,843
+At the beginning of the year
+RMB million
+RMB million
+2022
+2023
+Year ended 31 December
+For the year ended 31 December 2023
+(Expressed in RMB)
+17. CONSTRUCTION IN PROGRESS
+Notes to the Consolidated Financial Statements (Continued)
+3,619
+27,070
+28,905
+At 31 December 2023, the Group had prepayments to China Energy Group and fellow subsidiaries amounting to
+RMB110 million (2022: RMB94 million).
+equipment
+and other
+Buildings
+RMB million
+properties
+Land use
+rights
+RMB million RMB million
+Total
+RMB million
+Cost
+At 1 January 2022
+509
+1,717
+Additions
+280
+3
+25,999
+1,819
+28,225
+2,102
+Transferred from construction in progress
+792
+792
+At 31 December 2022
+789
+1,720
+28,610
+Additions
+320
+Machinery,
+Impairment losses (Note (ii))
+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.
+The right-of-use assets represent land use rights paid to the PRC's government authorities and
+the leased assets. The Group is in the process of applying for the title certificates of certain land
+use rights certificates with an aggregate carrying amount of RMB3,200 million as at 31 December
+2023 (2022: RMB3,130 million). The Directors are of the opinion that the Group is entitled to
+lawfully and validly occupy or use the above mentioned lands.
+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
+At the end of the year
+Year ended 31 December
+2023
+RMB million
+2022
+RMB million
+3,619
+2,800
+4,104
+813
+(2,782)
+(1,288)
+(4)
+(10)
+3,633
+3,619
+2023 Annual Report 301
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+23. RIGHT-OF-USE ASSETS
+As at 31 December 2023, the Group has no bank loans secured by the Group's right-of-use
+assets (2022: Nil).
+Haoji
+(52)
+Others
+13
+13
+Railway") (Note)
+Provision of transportation
+Haoji Railway Co., Ltd. ("Haoji
+financial service
+40
+Provision of comprehensive
+Generation and sale of
+electricity
+43
+43
+service
+40
+("Finance Company")
+China Energy Finance Co., Ltd.
+("Beijing GD")
+Beijing GD Power Co., Ltd.
+%
+31 December 31 December
+2022
+2023
+%
+Principal activities
+Name of associate
+Proportion of ownership
+interest and voting power
+held by the Group
+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:
+40
+Shendong Tianlong Group Co., Ltd.
+("Shendong Tianlong")
+20
+Beijing GD
+Year ended 31 December 2023
+31 December 2023/
+Summarised financial information of the material associates, adjusted for any differences
+in accounting policies, and reconciled to the carrying amounts in the consolidated financial
+statements, are disclosed below:
+20. INTERESTS IN ASSOCIATES (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+298
+2023 Annual Report 297
+The Company has significant influence over Haoji Railway and Suizhong Power as the Company appointed a director in
+the respective board of directors of these companies.
+Note:
+Generation and sale of
+electricity
+15
+15
+Co., Ltd. ("Suizhong Power")
+(Note)
+Suizhong Power Generation
+Generation and sale of
+electricity
+25
+25
+Co., Ltd. ("Hebei Renewables")
+Guohua (Hebei) Renewables
+Coal production and sale
+20
+20
+20. INTERESTS IN ASSOCIATES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+49,714
+55,635
+20. INTERESTS IN ASSOCIATES
+At the end of the year
+Impairment losses
+Disposal
+Amortisation
+Transferred from construction in progress
+Additions
+At the beginning of the year
+The movement of intangible assets, mainly licenses, software and franchises, is as follows:
+19. INTANGIBLE ASSETS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 295
+Exploration and evaluation assets represent the expenditures related to coal exploration and
+evaluation activities incurred by the Group. As at 31 December 2023, the carrying amount of the
+exploration and evaluation assets was RMB5,519 million (31 December 2022: RMB5,218 million).
+18. EXPLORATION AND EVALUATION ASSETS
+As a result of deferral of certain projects, management performed impairment assessment of the related
+construction in progress and concluded that impairment provision of RMB52 million was required and charged
+into profit or loss for the current year.
+As at 31 December 2023, the Group is in the process of obtaining requisite permits for certain of its power plants
+and railways from the relevant government authorities. The Directors are of the opinion that the Group will be
+able to obtain the requisite permits in due course.
+(ii)
+(i)
+Notes:
+20,843
+18,955
+At the end of the year
+43
+Unlisted shares, at cost
+(86)
+Share of post-acquisition profits and other comprehensive
+income, net of dividend received
+Year ended 31 December
+1,474
+4,508
+48,240
+51,127
+RMB million
+31 December
+2022
+RMB million
+31 December
+2023
+4,059
+4,662
+(348)
+(3)
+(676)
+(1)
+(486)
+(413)
+43
+164
+875
+856
+4,651
+4,059
+2022
+RMB million
+RMB million
+2023
+296 China Shenhua Energy Company Limited
+3,901
+These amounts relate to the following:
+2,060
+32. LEASE LIABILITIES
+The lease liabilities were repayable as follow:
+31 December 2023
+Within 1 year
+31 December 2022
+Present
+value of the
+Total
+Present
+value of the
+Total
+minimum
+minimum
+3,453
+lease
+payments
+payments
+minimum
+lease
+payments
+minimum
+lease
+payments
+RMB million RMB million
+RMB million
+RMB million
+300
+400
+297
+360
+lease
+2,972
+19/01/2025
+4.10%
+USD denominated
+Interest rates SOFR+2.40% per
+annum with maturities through
+26 December 2034
+9,266
+9,114
+Japanese Yen ("JPY")
+Interest rates ranging from 1.80% to
+denominated
+2.60% per annum with maturities
+through 20 March 2031
+584
+803
+Less: current portion of long-term borrowings
+312 China Shenhua Energy Company Limited
+31,331
+1,695
+45,852
+7,414
+29,636
+38,438
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+30. BORROWINGS (CONTINUED)
+As at 31 December 2023, included in the above outstanding long-term borrowings, were entrusted
+loans from China Energy Group and fellow subsidiaries amounting to RMB10,480 million (2022:
+RMB23,162 million).
+Certain borrowings are secured over certain property, plant and equipment with a carrying amount
+of RMB251 million (2022: RMB826 million) (see Note 16(iii)).
+31. BONDS
+The Group issued a dollar bond of a total USD500 million on 20 January 2015, and had redeemed
+a cumulative amount of the dollar bond of USD87 million as at 31 December 2023 (2022: USD11
+million). The net proceeds of the Dollar bond issued were mainly used for repayment of loans of
+subsidiaries. Details of the Group's bond are as follow:
+10-year corporate bond
+Effective
+interest rate
+%
+Due date
+31 December
+2023
+RMB million
+31 December
+2022
+RMB million
+After 1 year but within 2 years
+4,268
+170
+240
+and fellow subsidiaries
+- Associates
+- Third parties
+Bills payable
+31 December
+2023
+RMB million
+31 December
+2022
+RMB million
+2,132
+895
+2,158
+35,293
+China Energy Group, an associate of China Energy Group
+956
+34,757
+37,871
+581
+1,101
+38,901
+38,972
+The following is an ageing analysis of accounts and bills payables, presented based on invoice date.
+Less than one year
+One to two years
+Two to three years
+More than three years
+31 December
+2023
+31 December
+2022
+38,320
+Accounts payable
+33. ACCOUNTS AND BILLS PAYABLES
+(Expressed in RMB)
+316
+After 2 years but within 5 years
+328
+505
+348
+530
+After 5 years
+834
+1,166
+857
+1,214
+1,332
+1,911
+1,445
+Less: total future interest expenses
+Present value of lease liabilities
+1,632
+2,311
+1,742
+2,420
+(679)
+1,632
+(678)
+1,742
+2023 Annual Report 313
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+240
+RMB million
+2,553
+Interest rates ranging from
+816
+88
+(88)
+1
+1
+1,375
+54
+1,429
+34
+376
+410
+(2)
+493
+(9)
+252
+490
+742
+2,627
+1,226
+3,853
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+29. DEFERRED TAXATION (CONTINUED)
+At the end of the reporting period, the Group has unused tax losses of RMB8,481 million (2022:
+RMB8,621 million) and unrecognised deductible temporary differences of RMB9,331 million
+(2022: RMB9,349 million) available for offset against future profits. No deferred tax asset has
+been recognised in respect of the remaining RMB8,481 million (2022: RMB8,621 million) losses
+due to the unpredictability of future profit streams. Included in unrecognised tax losses are losses
+of RMB340 million (2022: RMB589 million) that will be expired in 2024.
+30. BORROWINGS
+An analysis of the Group's borrowings is as follows:
+31 December
+(11)
+323
+466
+(90)
+Others
+742
+(268)
+474
+Net deferred tax assets
+3,853
+311
+4,164
+Allowances, primarily for receivables and
+inventories
+Property, plant and equipment
+Tax losses utilised
+Tax allowable expenses not yet incurred
+Unrealised profits from sales within the Group
+Accrued salaries and other expenses not yet
+paid
+Lease transactions
+Others
+Net deferred tax assets
+310 China Shenhua Energy Company Limited
+(Charged)/
+credited
+in profit or
+loss and other
+comprehensive 31 December
+At 1 January
+2022
+(Restated)
+RMB million
+income
+(Restated)
+2022
+(Restated)
+RMB million
+RMB million
+556
+2023
+LPR-1.00% to LPR+0.10% per
+annum with maturities through
+8 October 2041
+31 December
+2022
+RMB million
+31 December
+2022
+RMB million
+The exposure of the long-term borrowings and the
+contractual maturity dates:
+Within one year
+1,695
+7,414
+More than one year, but not exceeding two years
+More than two years, but not exceeding five years
+More than five years
+1,578
+718
+2,541
+3,388
+RMB million
+25,517
+The Group's long-term borrowings comprise:
+Loans from banks and other institutions
+RMB denominated
+Interest rates ranging from 2.10% to
+5.60% per annum with maturities
+through 21 October 2041
+31,331
+45,852
+31 December
+2023
+RMB million
+31 December
+2022
+RMB million
+18,928
+31,667
+RMB denominated
+34,332
+31 December
+2023
+30. BORROWINGS (CONTINUED)
+(Expressed in RMB)
+Current borrowings:
+Short-term bank and other borrowings
+Current portion of long-term borrowings
+2,927
+5,216
+1,695
+7,414
+4,622
+12,630
+Non-current borrowings:
+Long-term borrowings, less current portion
+29,636
+38,438
+Secured
+Unsecured
+34,258
+51,068
+9,984
+9,709
+24,274
+41,359
+34,258
+51,068
+The Group's short-term borrowings are unsecured and bear interest at rates ranging from 1.78%
+to 4.35% per annum (2022: 1.65% to 3.50% per annum), and long-term borrowings bear interest
+at rates ranging from 1.80% to 5.60% per annum (2022: 1.80% to 5.60% per annum).
+2023 Annual Report 311
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+RMB million
+RMB million
+32,073
+34,476
+32,688
+34,514
+Less: Time deposits with original maturity over
+three months
+6,357
+170,503
+149,986
+7,298
+Less: Restricted bank deposits
+Deposits with banks and other financial institutions
+31 December
+2022
+RMB million
+RMB million
+2023
+31 December
+Cash and cash equivalents in the consolidated
+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.
+28. CASH AND CASH EQUIVALENTS
+Details of impairment assessment of restricted bank deposits are set out in Note 39.2.
+The Group performed impairment assessment on restricted bank deposits and concluded that the
+probability of defaults of the counterparty banks are insignificant and accordingly, no allowance
+for credit losses is provided.
+Restricted bank deposits represent collaterals for bills payable and collaterals related to the
+operating of mines and ports.
+27. RESTRICTED BANK DEPOSITS
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+306 China Shenhua Energy Company Limited
+As at 31 December 2023, the entrusted loan was an entrusted loan of RMB400 million by Shenhua Shendong
+Electric Power Co., Ltd. (hereinafter referred to as "Shendong Power") made to Inner Mongolia Yili Chemical
+Industry Co., Ltd. (hereinafter referred to as "Elion Chemical"), an associate of the Group, with a fixed interest
+rate of 4.75% per annum and a term of 3 years. The entrusted loan was due for repayment on 23 December 2023
+but Elion Chemical has not repaid the entrusted loan yet. The entrusted loan was secured by certain assets of
+Elion Chemical. Shendong Power and Elion Chemical are negotiating for an extension of the entrusted loan and
+other related matters.
+15,849
+16,007
+3,127
+3,930
+(a) Cash and cash equivalents
+cash flow statement
+108,174
+131,458
+3,453
+51,068
+At 1 January 2023
+(Note 34)
+(Note 32)
+(Note 31)
+(Note 30)
+RMB million
+RMB million
+RMB million
+RMB million
+Total
+payable
+interest
+Lease
+liabilities
+Bonds
+Borrowings
+RMB million
+Accrued
+The table below shows the detailed changes in the Group's liabilities arising from financing
+activities, including both cash and non-cash changes. Liabilities arising from financing
+activities are those for which cash flows were, or future cash flows will be, classified in
+the Group's consolidated statement of cash flows as cash flows from financing activities.
+(b) Reconciliation of liabilities arising from financing activities
+28. CASH AND CASH EQUIVALENTS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 307
+Details of impairment assessment of bank deposits are set out in Note 39.2.
+As at 31 December 2023, the Group performed impairment assessment on bank balances
+and concluded that the probability of defaults of the counterparty banks are insignificant
+and accordingly, no allowance for credit losses is provided.
+7,106
+1,742
+6,218
+5,616
+- Service concession receivables (Note 22(ii))
+Financial assets measured at amortised cost
+26. PREPAID EXPENSES AND OTHER CURRENT ASSETS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 305
+Certain subsidiaries of the Company entered into accounts receivables factoring agreements with
+financial service companies, and the subsidiaries transferred accounts receivables to the financial
+service companies and received bills receivables and cash, respectively. During the year ended
+31 December 2023, the subsidiaries paid RMB2 million (2022: RMB7 million) for the accounts
+receivables factoring and recognised in expenses.
+As at 31 December 2023, the Group endorsed bills receivable amounting to RMB1,790 million
+(2022: RMB274 million) to suppliers to settle the accounts payable of same amounts and
+discounted bills receivable amounting to RMB2,970 million (2022: RMB4,288 million) to banks.
+In accordance to the relevant laws in the PRC, the holders of the bills receivable have a right of
+recourse against the Group if the issuing banks default payment (the "Continuing Involvement").
+In the opinion of the Directors, the fair values of the Continuing Involvement are insignificant, and
+the Group has transferred substantially all the risks and rewards of ownership relating to these
+bills receivable, and accordingly derecognised the full carrying amounts of the bills receivable,
+in case of bills receivable endorsed to suppliers, derecognised the associated accounts payable.
+Transfers of financial assets
+939
+1,084
+- Entrusted loan (Note (i))
+400
+539
+498
+31 December
+2022
+RMB million
+RMB million
+2023
+31 December
+United States Dollars ("USD")
+Indonesian Rupiah ("IDR")
+Included in accounts receivable, the following amounts are denominated in foreign currencies:
+Details of credit risks of accounts and bills receivables for the year ended 31 December 2023
+are set out in Note 39.2.
+As at 31 December 2023, included in the Group's accounts receivables are debtors with gross
+carrying amount of RMB5,287 million (2022: RMB5,743 million) which are past due as at the
+reporting date. The past due balances are not considered as in default because the debtors are
+not in significant financial difficulty and the management expects that the debtor is able and likely
+to pay for the debts. The Group does not hold any collateral over these balances.
+25. ACCOUNTS AND BILLS RECEIVABLES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+586
+- Other receivables due from associates
+© Other receivables
+- Other loans
+5,859
+4,674
+4,936
+10,290
+10,795
+4,500
+4,500
+2,817
+3,192
+500
+471
+400
+400
+2,073
+2,232
+RMB million
+31 December
+2022
+RMB million
+31 December
+2023
+(i)
+Note:
+Amount less than RMB500,000
+*
+Deductible VAT and other taxes
+Prepaid expenses and deposits
+Financial assets measured at fair value through profit or loss
+Less: impairment losses
+*
+127
+56,390
+Capital element of lease rentals paid
+51,068
+308 China Shenhua Energy Company Limited
+Amount less than RMB500,000
+At 31 December 2022
+283
+283
+23
+new leases during the year
+Increase in lease liabilities from entering into
+2,886
+2,843
+43
+3,453
+Interest expenses
+8
+Amortisation of discount on bonds
+1,255
+350
+905
+Foreign exchange
+(77)
+(77)
+Redemption of bonds
+(36,424)
+(36,424)
+Repayments of borrowings
+8
+1,742
+127
+127
+4,133
+1,804
+1,158
+874
+1,537
+1,818
+38,901
+38,972
+Included in accounts and bills payables, the following amounts are denominated in foreign
+currencies:
+USD
+Euro
+Others
+314 China Shenhua Energy Company Limited
+31 December
+2023
+RMB million
+31 December
+2022
+RMB million
+351
+426
+65
+71
+600
+423
+1,016
+920
+Amounts included in the consolidated cash flow statement for leases comprise the
+following:
+(c) Total cash outflow for leases
+28. CASH AND CASH EQUIVALENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+56,390
+(176)
+(176)
+Income from debt restructuring
+27,653
+25
+120
+120
+Interest accrual
+*
+Amortisation of discount on bonds
+(49)
+59
+(108)
+Foreign exchange
+(660)
+(660)
+Redemption of bonds
+(29,628)
+(29,628)
+Repayments of borrowings
+12,926
+12,926
+Proceeds from borrowings
+(2,454)
+(2,454)
+Interest paid
+(25)
+(25)
+Interest element of lease rentals paid
+(142)
+(142)
+2,360
+28
+2,385
+Increase in lease liabilities from entering into
+27,653
+Proceeds from borrowings
+(2,925)
+(2,925)
+Interest paid
+(43)
+(43)
+Interest element of lease rentals paid
+(238)
+(238)
+Capital element of lease rentals paid
+64,188
+209
+1,697
+3,172
+59,110
+At 1 January 2022
+38,895
+32
+33
+33
+1,632
+2,972
+34,258
+32
+At 31 December 2023
+new leases during the year
+Interest expenses
+39
+Within operating cash flows
+Within financing cash flows
+Lease transactions
+2023 Annual Report 309
+3,853
+4,164
+5,019
+(1,166)
+(1,137)
+5,301
+RMB million
+RMB million
+31 December
+2022
+(Restated)
+2023
+31 December
+Deferred tax assets
+Deferred tax liabilities
+For the purpose of the presentation in the consolidated statement of financial position, certain
+deferred tax assets and liabilities have been offset. The following is the analysis of the deferred
+tax balances for financial reporting purpose.
+29. DEFERRED TAXATION
+553
+563
+2022
+RMB million
+RMB million
+Year ended 31 December
+2023
+553
+563
+167
+272
+396
+2022
+RMB million
+RMB million
+Year ended 31 December
+2023
+Lease rental paid
+(11)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+281
+29. DEFERRED TAXATION (CONTINUED)
+167
+(Expressed in RMB)
+(243)
+410
+paid
+1,265
+(164)
+1,429
+237
+236
+1
+1,491
+675
+816
+Accrued salaries and other expenses not yet
+36
+502
+The following are the major deferred tax assets and liabilities recognised and movements thereon
+during the current and prior year:
+in profit or
+loss and other
+At 1 January
+2023
+Credited/
+(charged)
+RMB million
+comprehensive 31 December
+income
+RMB million RMB million
+Allowances, primarily for receivables and
+inventories
+Property, plant and equipment
+Tax allowable expenses not yet incurred
+Unrealised profits from sales within the Group
+466
+2023
+12-month ECL
+28 N/A
+Cash
+400
+7,298
+12-month ECL
+N/A
+27
+Restricted bank deposits
+12-month ECL
+RMB million
+26
+Loans receivables
+amortised costs
+2022
+RMB million
+31 December
+2023
+12-month or
+lifetime ECL
+Notes credit rating
+External
+142,688
+Financial assets at
+N/A
+400
+6,357
+164,146
+Credit-impaired
+26 N/A
+The tables below detail the credit risk exposures of the Group's financial assets and
+financial guarantee contracts, which are subject to ECL assessment:
+11,901
+Provision matrix
+Credit-impaired
+(Note (i))
+N/A
+25
+Accounts receivable
+4,500
+4,500
+26 N/A
+Other loans
+receivables
+17,040
+18,133
+967
+2,350
+3,301
+362
+Credit-impaired
+12-month ECL
+22, 26 N/A
+Service concession
+12-month ECL
+Other receivables
+Credit risk and impairment assessment (Continued)
+(ii) Interest rate risk
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+Sensitivity analysis
+The Group's exposures to interest rates on financial liabilities are detailed in the
+liquidity risk management section of this note.
+The Group is also exposed to cash flow interest rate risk in relation to variable-rate
+borrowings and variable-rate loans. Other than the concentration of interest rate risk
+related to the movements in London Interbank Offered Rate and the loan interest
+published by the PBOC, the Group has no significant concentration of interest rate
+risk.
+The Group is exposed to fair value interest rate risk in relation to fixed-rate loan and
+receivables, borrowings and bonds (see Notes 30 and 31).
+10,944
+Market risk (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 319
+(142)
+(133)
+68
+80
+47
+70%
+(70)
+(68)
+foreign currencies
+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.
+39.2 Financial risk management objectives and policies (Continued)
+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.
+Credit risk and impairment assessment
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 321
+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
+order to minimise the credit risk, the management of the Group has delegated a team
+responsible for determination of credit limits and credit approvals. Before accepting any
+new customer, the Group uses an internal credit scoring system to assess the potential
+customer's credit quality and defines credit limits by customer. Limits and scoring attributed
+to customers are reviewed once a year. Other monitoring procedures are in place to
+ensure that follow-up action is taken to recover overdue debts. In this regard, the Directors
+consider that the Group's credit risk is significantly reduced.
+Accounts and bills receivables arising from contracts with customers
+Credit risk and impairment assessment (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+320 China Shenhua Energy Company Limited
+As at 31 December 2023, other than those financial assets whose carrying amounts best
+represent the maximum exposure to credit risk, the Group's maximum exposure to credit
+risk which will cause a financial loss to the Group arising from the amount of financial
+guarantees provided by the Group is disclosed in Note 40.2. The Group does not hold any
+collateral or other credit enhancements to cover its credit risks associated with its financial
+assets and financial guarantee contracts.
+If interest rates had been 100 basis points (2022: 100 basis points) higher/lower
+and all other variables were held constant, the Group's profit for the year ended
+31 December 2023 would decrease/increase by RMB219 million (2022: decrease/
+increase by RMB335 million).
+1,169
+6,446
+Other items
+121
+Impairment losses recognised
+Impairment losses reversed
+Write-offs
+As at 1 January 2022
+Total
+RMB million
+RMB million
+(credit-
+impaired)
+Lifetime ECL
+Lifetime ECL
+(not credit-
+impaired)
+RMB million
+The following table shows the movement in lifetime ECL that has been recognised for
+accounts receivable under the simplified approach.
+Gross carrying amount (Continued)
+Credit risk and impairment assessment (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 323
+During the year ended 31 December 2023, the Group provided RMB6 million (2022: RMB36
+million) impairment allowance for accounts receivable and reversed RMB12 million (2022:
+RMB91 million), based on the provision matrix.
+The estimated loss rates are estimated based on historical observed default rates over
+the expected life of the debtors and are adjusted for forward-looking information that is
+available without undue cost or effort. The grouping is regularly reviewed by management
+to ensure relevant information about specific debtors is updated.
+10,944
+11,901
+1,156
+116
+1,277
+19
+1,116
+79
+As at 31 December 2023
+(20)
+(20)
+(12)
+(12)
+Impairment losses reversed
+Write-offs
+6
+6
+Impairment losses recognised
+1,221
+1,116
+105
+As at 1 January 2023
+(1)
+(1)
+(91)
+(58)
+(33)
+36
+17
+1,245
+21%
+20%
+Accounts
+receivable
+2023
+RMB million
+2023
+Average
+loss rate
+Gross carrying amount
+As part of the Group's credit risk management, the Group uses debtors' ageing to assess
+the impairment for its receivables from customers in relation to its sales of coal, power,
+coal chemical products and transportation services because these customers consist of
+a large number of customers with common risk characteristics that are representative of
+the customers' abilities to pay all amounts due in accordance with the contractual terms.
+The following table provides information about the exposure to credit risk for accounts
+receivables which are assessed based on provision matrix as at 31 December 2023 within
+lifetime ECL (not credit-impaired). Accounts receivable with credit-impaired with gross
+carrying amounts of RMB1,169 million (2022: RMB1,245 million) as at 31 December 2023
+were assessed individually.
+Provision matrix - debtors' ageing
+Credit risk and impairment assessment (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+322 China Shenhua Energy Company Limited
+For financial guarantee contracts, the gross carrying amount represents the maximum amount the Group
+has guaranteed under the respective contracts.
+For accounts receivable, the Group has applied the simplified approach in IFRS 9 to measure the loss
+allowance at lifetime ECL. Except for debtors with credit-impaired, the Group determines the ECL on
+these items by using a provision matrix, grouped by debtors' aging.
+111
+94
+94
+(ii)
+(i)
+Notes:
+N/A
+Financial guarantee
+contracts (Note (ii))
+Average
+loss rate
+96
+2022
+RMB million
+More than three years past due
+26
+10%
+56
+10%
+Two to three years past due
+160
+6%
+252
+6%
+One to two years past due
+4,196
+1%
+4,883
+1%
+Less than one year past due
+- if RMB strengthens against
+0.4%
+6,614
+0.2%
+Current (not past due)
+Accounts
+receivable
+2022
+142
+903
+23
+11,287
+20,309
+674
+10,613
+15,125
+5,184
+11,287
+20,309
+2,307
+582
+784
+5,714
+1,352
+1,386
+7,046
+12,425
+RMB million
+RMB million
+31 December
+2022
+2023
+31 December
+(i)
+Notes:
+The payables for acquisition of mining rights is the present value of the payable mining rights. The mining rights
+payable shall be paid annually during the execution of the contract.
+Non-current liabilities
+(ii)
+36. ACCRUED RECLAMATION OBLIGATIONS
+For the year ended 31 December 2023
+37. SHARE CAPITAL
+Notes to the Consolidated Financial Statements (Continued)
+9,005
+8,780
+(266)
+(630)
+986
+405
+6,754
+1,531
+9,005
+2022
+RMB million
+RMB million
+2023
+Year ended 31 December
+316 China Shenhua Energy Company Limited
+At the end of the year
+Accrued reclamation obligations utilised
+Accretion expense
+Addition for the year
+At the beginning of the year
+Deferred income mainly represents grants provided by several local governments in the PRC to encourage the
+construction of non-current assets.
+(Expressed in RMB)
+Current liabilities
+Others
+Other accrued expenses and payables (Note)
+6,904
+6,902
+Dividends payable
+7,176
+5,159
+Taxes payable other than income tax
+127
+33
+8,750
+7,424
+Accrued interest payable
+Accrued staff wages and welfare benefits
+RMB million
+31 December
+2022
+RMB million
+2023
+31 December
+34. ACCRUED EXPENSES AND OTHER PAYABLES
+For the year ended 31 December 2023
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+11,095
+Analysed for reporting purpose as:
+11,767
+Other accrued expenses and payables of the Group included:
+Defined benefit plans
+Deferred income (Note (ii))
+Payables for acquisition of mining rights (Note (i))
+35. LONG-TERM LIABILITIES
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 315
+953
+1,254
+945
+8
+1,198
+56
+RMB million
+RMB million
+31 December
+2022
+2023
+31 December
+34,724
+30,613
+The above balances are unsecured, interest-free and payable on demand.
+Amounts due to China Energy Group and fellow subsidiaries
+Amounts due to associates
+Note:
+133
+Registered, issued and fully paid:
+31 December
+758
+803
+583
+1,195
+955
+74
+106
+2022
+RMB million
+Year ended 31 December
+2023
+RMB million
+2022
+RMB million
+RMB million
+2023
+Year ended 31 December
+Assets
+Liabilities
+Other currencies
+USD
+JPY
+The carrying amounts of the Group's foreign currency denominated monetary assets
+and monetary liabilities at the end of the reporting period are as follows:
+Market risk (Continued)
+39.2 Financial risk management objectives and policies (Continued)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+584
+(Expressed in RMB)
+2,418
+Sensitivity analysis
+(68)
+(47)
+70
+68
+foreign currencies
+- if RMB weakens against
+tax for the year:
+RMB million RMB million RMB million RMB million RMB million RMB million
+Increase/(decrease) in profit after
+2022
+2023
+Year ended 31 December
+Year ended 31 December
+2022
+2023
+2022
+2023
+Year ended 31 December
+Other currencies
+JPY
+USD
+The following table details the Group's sensitivity to a 10% increase or decrease in
+exchange rate of each foreign currency against RMB, while all other variables are
+held constant. The sensitivity analysis includes only outstanding foreign currency
+denominated monetary items at the end of the reporting period.
+2,258
+16,491,037,955 domestic listed A shares of RMB1.00 each
+3,377,482,000 H shares of RMB1.00 each
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+The functional currency of most of the group entities is RMB in which most of the
+transactions are denominated. However, certain of the Group's receivables, bank
+balances, borrowings and payables are denominated in foreign currencies other than
+the functional currency in which they are measured. The carrying amounts of the
+Group's receivables, bank balances, borrowings and payables denominated in foreign
+currencies are set out in Notes 25, 30 and 33, respectively.
+39. FINANCIAL INSTRUMENTS
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 317
+There were no changes in the Group's approach to capital management compared with previous
+years.
+The Group monitors capital using a gearing ratio which is total liabilities divided by total assets.
+The Group aims to maintain the gearing ratio at a reasonable level. The Group's gearing ratio as
+at 31 December 2023 was 24% (31 December 2022: 26%).
+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'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.
+38. CAPITAL RISK MANAGEMENT
+All A shares and H shares rank pari passu in all material aspects.
+19,869
+19,869
+3,378
+3,378
+16,491
+16,491
+RMB million
+RMB million
+31 December
+2022
+2023
+39.1 Categories of financial instruments
+318 China Shenhua Energy Company Limited
+The carrying amounts of each of the following categories of financial assets and financial
+liabilities at the end of the reporting period are set out as follows:
+Financial assets at amortised cost
+Currency risk
+(i)
+Market risk
+The Group's major financial instruments include accounts and bills receivables, loans and
+advances to/deposits from/amounts due to China Energy Group and fellow subsidiaries,
+amounts due from/to associates, other receivables, accounts and bills payables, borrowings,
+other payables, long-term liabilities and bonds. Details of the financial instruments are
+disclosed in the respective notes. The risks associated with these financial instruments
+include market risk (interest rate and currency risks), credit risk and liquidity risk. The
+policies on how to mitigate these risks are set out below. The management manages and
+monitors these exposures to ensure appropriate measures are implemented on a timely
+and effective manner.
+39.2 Financial risk management objectives and policies
+Amount less than RMB500,000
+119,589
+107,659
+206,074
+194,344
+2,386
+502
+203,186
+*
+191,604
+2,486
+254
+31 December
+2022
+RMB million
+RMB million
+31 December
+2023
+Financial liabilities
+Amortised cost
+Financial assets measured at fair value through
+profit or loss
+Accounts and bills receivable at FVTOCI (Note 21)
+Equity instruments at FVTOCI (Note 21)
+Financial assets
+324 China Shenhua Energy Company Limited
+(i) Currency risk (Continued)
+(xii)
+2-5 years
+RMB million
+5 years
+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.
+Total
+undiscounted
+cash flows
+Total
+carrying
+amount
+RMB million
+RMB million
+RMB million
+liabilities and long-term
+liabilities
+RMB million
+56,766
+3,061
+4,144
+66,703
+65,068
+Borrowings variable interest
+rate
+4.12
+9,568
+3,062
+8,110
+2,732
+1-2 years
+1 year
+RMB million
+%
+326 China Shenhua Energy Company Limited
+62,415
+10,041
+9,936
+33,787
+116,179
+107,659
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+39.2 Financial risk management objectives and policies (Continued)
+Liquidity risk (Continued)
+Financial liabilities:
+Accounts and bills payables,
+other payables, lease
+Weighted
+31 December 2022
+average
+On demand
+interest
+or less than
+More than
+rate
+31,077
+2,972
+51,817
+Borrowings fixed interest rate
+39.3 Fair value measurements
+Fair value of the Group's financial assets and financial liabilities that are measured at fair
+value on a recurring basis
+31 December 31 December
+2023
+2022
+Fair value
+hierarchy
+RMB million
+RMB million
+Valuation technique(s)
+and key input(s)
+Financial assets:
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+Financial assets
+value through profit
+or loss
+Unlisted equity
+securities
+Level 1
+Quoted price in active
+market.
+2,486
+2,386 Level 3
+Accounts and Bills
+Receivables
+254
+502
+measured at fair
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2.83
+4,691
+233
+1,719
+296
+6,939
+6,641
+Bonds
+4.10
+132
+132
+3,413
+3,677
+3,453
+71,157
+6,159
+16,303
+35,517
+129,136
+119,589
+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 40.2.
+2023 Annual Report 327
+44,427
+Level 3
+3,047
+113
+(28)
+(28)
+As at 1 January 2023
+268
+4,406
+4,674
+- Impairment losses recognised
+2
+299
+301
+103
+- Impairment losses reversed
+- Write-offs
+(5)
+(10)
+(29)
+(29)
+As at 31 December 2023
+Liquidity risk
+265
+4,671
+4,936
+Liquidity risk is the risk that the Group will not be able to meet its financial obligation as
+they fall due. The approach to managing liquidity is to ensure, as far as possible, that it
+will always have sufficient liquidity to meet its liabilities when due, under both normal and
+stressed conditions, without incurring unacceptable losses or risk damage to the Group's
+reputation.
+(5)
+103
+(210)
+(210)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+39.2 Financial risk management objectives and policies (Continued)
+Credit risk and impairment assessment (Continued)
+Gross carrying amount (Continued)
+The following tables show reconciliation of loss allowances that has been recognised for
+other receivables and other loans.
+As at 1 January 2022
+- Impairment losses recognised
+- Impairment losses reversed
+- Effect of disposals of subsidiaries
+- Write-offs
+12-month ECL
+(not credit-
+impaired)
+Lifetime ECL
+(credit-
+impaired)
+Total
+RMB million
+RMB million
+RMB million
+238
+2,969
+3,207
+30
+1,572
+1,602
+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.
+2,934
+2023 Annual Report 325
+For the year ended 31 December 2023
+6,453
+72,835
+70,429
+Borrowings variable
+interest rate
+3.98
+3,055
+1,421
+3,531
+26,832
+5,072
+34,839
+Borrowings fixed interest rate
+2.78
+2,537
+1,086
+1,333
+502
+5,458
+5,146
+Bonds
+4.10
+29,112
+4,600
+56,710
+liabilities
+(Expressed in RMB)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+39.2 Financial risk management objectives and policies (Continued)
+Liquidity risk (Continued)
+The following table details the remaining contractual maturity of the Group's financial
+liabilities at the end of the reporting period, which are based on contractual undiscounted
+cash flows (including interest payments computed using contractual rates or, if floating,
+based on rates current at the end of the reporting period) and the earliest date the Group
+can be required to pay:
+Financial liabilities:
+Accounts and bills payables,
+other payables, lease
+Weighted
+31 December 2023
+average
+interest
+rate
+On demand
+Total
+Total
+or less than
+1 year
+% RMB million
+1-2 years
+RMB million
+2-5 years
+RMB million
+More than undiscounted
+5 years
+cash flows
+RMB million RMB million
+carrying
+amount
+RMB million
+liabilities and long-term
+Notes to the Consolidated Financial Statements (Continued)
+*
+Amount less than RMB500,000
+Market comparison
+6,948
+7,712
+Other income
+(xv)
+2,506
+2,041
+Net deposits placed with Finance Company
+(xvi)
+15,616
+58,850
+(xiv)
+Granting of loans from China Energy Group
+(xvii)
+9,134
+18,196
+Repayment of loans from China Energy
+Group and fellow subsidiaries
+(xviii)
+23,153
+13,522
+Bills receivables discounted from Finance
+Company
+and fellow subsidiaries
+Sale of coal chemical product
+1,190
+1,303
+2,076
+Sale of coal
+(viii)
+93,939
+94,195
+Purchase of coal
+(ix)
+14,140
+11,967
+Property leasing
+(x)
+23
+40
+Repairs and maintenance services expense
+(xi)
+37
+61
+Coal export agency expense
+(xii)
+3
+Purchase of equipment and construction
+work
+(xiii)
+(xix)
+1,459
+3,578
+The issuance of bills by Finance Company
+Bills receivables discounted from Finance Company represents bill acceptance and discount services
+provided by Finance Company to the Group.
+(xxi)
+(xx)
+(xix)
+(xviii) Repayment of loans from China Energy Group and fellow subsidiaries.
+Granting of loans from China Energy Group and fellow subsidiaries.
+Net deposits placed with Finance Company represents net deposits placed by the Group with Finance
+Company.
+Other income includes agency income, repairs and maintenance service income, sales of ancillary materials
+and spare parts, management fee income, sales of water and electricity, financial service income, lease
+income, etc. earned from China Energy Group, associates of China Energy Group and fellow subsidiaries.
+Sale of coal chemical product represents income from sale of coal chemical product to fellow subsidiaries.
+(xvii)
+The issuance of bills by Finance Company refers to the issuance of acceptance bills by Finance Company
+to the Group.
+(xvi)
+(xiv)
+(xiii) Purchase of equipment and construction work represents expenditure related to equipment and
+construction service provided by fellow subsidiaries.
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 333
+Coal export agency expense represents expense related to coal export agency services provided by a
+fellow subsidiary.
+Repairs and maintenance services expense represents expense related to machinery repairs and
+maintenance services provided by associates of China Energy Group and fellow subsidiaries.
+(xv)
+Factoring services refer to receiving factoring services from China Energy Group and fellow subsidiaries.
+The transaction of factoring services for this year is RMB6,832 million.
+Property leasing expense represents rental paid or payable in respect of properties leased from fellow
+subsidiaries.
+Purchase of coal represents coal purchased from associates of the Group, associates of China Energy
+Group and fellow subsidiaries.
+(xx)
+7,943
+1,959
+332 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+(ii)
+(iii)
+(iv)
+(v)
+(vi)
+Interest income represents interest earned from deposits in fellow subsidiaries. The applicable interest
+rate is determined in accordance with the prevailing interest rates published by the PBOC.
+Income from an entrusted loan represents interest earned from an entrusted loan to an associate of the
+Group. The applicable interest rate is determined in accordance with the prevailing interest rates published
+by the PBOC.
+Interest expense represents interest incurred from loans from China Energy Group and fellow subsidiaries.
+The applicable interest rate is determined in accordance with the prevailing interest rates published by
+the PBOC.
+Purchases of ancillary materials and spare parts represent purchase of materials and utility supplies related
+to the Group's operations from fellow subsidiaries and associates of China Energy Group.
+Ancillary and social services represent expenditures for social welfare and support services such as
+property management, water and electricity supply, and canteen expense paid to China Energy Group,
+fellow subsidiaries and associates of China Energy Group.
+Transportation service income represents income earned from fellow subsidiaries in respect of coal
+transportation services.
+(vii) Transportation service expense represents expenses paid to fellow subsidiaries in respect of coal
+transportation services.
+(viii)
+(ix)
+(x)
+Sale of coal represents income from sale of coal to fellow subsidiaries and associates of China Energy
+Group.
+4,376
+(vii)
+Transportation service expense
+8,807
+3,453
+3,265
+The fair value of fixed rate bank borrowings above in the Level 2 category is measured
+using discounted cash flow method where the future cash flows are estimated based on
+the contract and discounted at a rate that reflects the credit risk of the issuers.
+The fair values of bonds are included in the Level 1 category, which have been derived
+from the quoted prices (unadjusted) in an active market.
+2023 Annual Report 329
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+40. COMMITMENTS AND CONTINGENT LIABILITIES
+40.1 Capital commitments
+2,870
+As at 31 December, the Group had capital commitments for land, buildings and mining
+rights, exploration and evaluation assets, equipment and other as follows:
+- Land, buildings, mining rights and
+exploration and evaluation assets
+- Equipment
+- Other
+31 December
+2023
+31 December
+2022
+RMB million
+RMB million
+42,074
+39,638
+46,276
+Contracted for but not provided
+6,525
+6,641
+4,901
+approach.
+Fair value is estimated based
+on value of comparable
+listed companies, multiples
+and discount for lack of
+liquidity.
+Discounted cash flow
+method. The significant
+unobservable inputs used
+by the Group for the
+valuation are the expected
+rates of return.
+There were no transfer between Level 1, Level 2 and Level 3 during the years ended 31
+December 2023 and 2022.
+328 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+39. FINANCIAL INSTRUMENTS (CONTINUED)
+39.3 Fair value measurements (Continued)
+Fair value of financial assets and financial liabilities that are not measured at fair
+value on a recurring basis
+Except as detailed in the following table, the Directors consider that the carrying amounts
+of financial assets and financial liabilities recorded at amortised cost in the consolidated
+financial statements approximate their fair values:
+31 December 2023
+Carrying
+31 December 2022
+Carrying
+Financial liabilities:
+Fixed rate bank borrowings
+Fixed rate bonds
+amount
+RMB million RMB million
+Fair value
+amount
+RMB million
+Fair value
+RMB million
+5,146
+2,972
+48,042
+3,903
+7,060
+92,253
+(i)
+810
+408
+Income from entrusted loans
+(ii)
+18
+18
+Interest expense
+(iii)
+563
+812
+Purchases of ancillary materials and spare
+parts
+(iv)
+2,819
+2,756
+Ancillary and social services
+(v)
+1,739
+1,697
+Transportation service income
+(vi)
+8,691
+Interest income
+(xi)
+RMB million
+Year ended 31 December
+2023
+RMB million
+94,740
+40.2 Financial guarantees issued
+As at 31 December 2023, the Group had issued certain guarantees in respect of certain
+banking facilities granted to an entity which the Group held less than 20% equity interest.
+The maximum amount guaranteed is RMB94 million (2022: RMB111 million).
+40.3 Legal contingencies
+The Group is the defendant in certain lawsuits as well as the plaintiff in other proceedings
+arising in the ordinary course of business. While the outcomes of such contingencies,
+lawsuits or other proceedings cannot be determined at present, management believes that
+any resulting liabilities will not have a material adverse effect on the financial position or
+operating results of the Group.
+330 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+40. COMMITMENTS AND CONTINGENT LIABILITIES (CONTINUED)
+40.4 Environmental contingencies
+To date, the Group has not incurred any significant expenditure for environmental
+remediation, is currently not involved in any environmental remediation, and apart from the
+provision for land reclamation costs, has not accrued any further amounts for environmental
+remediation relating to its operations. Under the existing legislation, management believes
+that there are no probable liabilities that will have a material adverse effect on the financial
+position or operating results of the Group. The regulatory bodies, however, have moved,
+and may move further towards the adoption of more stringent environmental standards.
+Environmental liabilities are subject to considerable uncertainties which affect the Group's
+ability to estimate the ultimate cost of remediation efforts. These uncertainties include (i)
+the exact nature and extent of the contamination at various sites including, but not limited
+to coal mines and land development areas, whether operating, closed or sold; (ii) the
+extent of required cleanup efforts; (iii) varying costs of alternative remediation strategies;
+(iv) changes in environmental remediation requirements; and (v) the identification of new
+remediation sites. The amount of such future cost is indeterminable due to such factors
+as the unknown magnitude of possible contamination and the unknown timing and extent
+of the corrective actions that may be required. Accordingly, the outcome of environmental
+liabilities under future environmental legislation cannot reasonably be estimated at present,
+and could be material.
+41. EMPLOYEE BENEFITS PLAN
+The Group participates, in line with the regulations of the PRC, mainly in various defined
+contribution retirement plans organised by municipal and provincial governments for its
+employees. The Group is required to make contributions to the retirement plans at 16% of the
+salaries, bonuses and certain allowances of the employees. In addition, as approved by the
+government, the Group makes contribution to a supplemental defined contribution pension plan
+for its employees. The fund is managed by a qualified fund manager. The Group has no other
+material obligation for the payment of pension benefits associated with these plans beyond the
+annual contributions described above. The Group's contributions for the year ended 31 December
+2023 were RMB4,812 million (2022: RMB4,225 million).
+42. RELATED PARTY TRANSACTIONS
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group
+The Group is controlled by China Energy Group and has significant transactions and
+relationships with China Energy Group, an associate of China Energy Group and subsidiaries
+of China Energy Group ("fellow subsidiaries"). Related parties refer to enterprises over
+which China Energy Group is able to exercise significant influence or control. The Group
+also has entered into transactions with its associates, over which the Group can exercise
+significant influence.
+The Group had the following transactions with China Energy Group, an associate of China
+Energy Group, fellow subsidiaries, and associates of the Group that were carried out in
+the normal course of business during both years:
+2023 Annual Report 331
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+Notes
+2022
+(i)
+334 China Shenhua Energy Company Limited
+Co., Ltd. ("Shenhua Oversea
+Capital")
+100
+Coal mining and
+development; generation
+and sale of electricity
+100 Provision of transportation
+services
+100 Provision of financial lease
+services
+100 Provision of transportation
+services
+100
+100
+RMB1,658 million
+Coal mining and
+development
+The Company has the practical ability to lead and control the operations of Dingzhou Power, therefore, Dingzhou
+Power has been accounted for as a subsidiary (Note 4.1).
+The above table lists subsidiaries of the Group which, in the opinion of the Directors, principally
+affected the results or assets of the Group. To give details of other subsidiaries would, in the
+opinion of the Directors, result in particulars of excessive length.
+As at 31 December 2023, Shenhua Oversea Capital had issued a bond of USD413 million (Note
+31). Other than Shenhua Oversea Capital, none of the subsidiaries had issued any debt securities
+at the end of the year.
+344 China Shenhua Energy Company Limited
+interest and voting rights
+Particulars of
+registered capital
+Type of
+legal entity
+and operation
+Name of the subsidiary
+*
+Proportion of ownership
+Limited company
+Guoneng Zhunneng Group
+Co., Ltd.
+USD63 million
+70
+70
+Guoneng Baoshen Railway
+Group Co., Ltd.
+PRC
+Limited company
+RMB13,913 million
+100
+100
+PRC
+(Tianjin) Finance Lease Co., Ltd. PRC
+RMB4,665 million
+100
+100
+Guoneng Xinshuo Railway
+Co., Ltd.
+PRC
+Limited company
+RMB10,888 million
+100
+100
+Limited company
+Place of
+incorporation
+(Expressed in RMB)
+Details of the Company's material subsidiaries (Continued)
+Beidian Shengli Company
+services
+loading and transportation
+Industrial Co., Ltd.
+Coal mining; provision of
+57
+57
+RMB1,169 million
+Limited company
+PRC
+PRC
+and sale of electricity
+development; generation
+58 Coal mining and
+58
+RMB7,102 million
+Limited company
+PRC
+Zhunge'er Energy
+100 Trading of coal; provision of
+integrated services
+Guoneng Baorixile Energy
+Limited company
+RMB2,925 million
+63
+44. SUBSIDIARIES (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+electricity
+100 Generation and sale of
+electricity; coal mining
+development
+342 China Shenhua Energy Company Limited
+100
+RMB3,024 million
+Limited company
+PRC
+Shenhua Shendong Power
+Co., Ltd.
+Generation and sale of
+100
+100
+RMB3,802 million
+Limited company
+Guoneng Jinjie Energy Co., Ltd. PRC
+services
+loading and transportation
+Coal mining; provision of
+63
+Limited company
+Indonesia
+PT GH EMM Indonesia
+Investment holding
+Limited company
+RMB3,280 million
+10
+100
+100
+Generation and sale of
+electricity
+Guoneng Shuohuang Railway
+PRC
+Limited company
+Shenhua Fujian Energy Co., Ltd. PRC
+RMB15,231 million
+Development Co., Ltd.
+53 Provision of transportation
+services
+Guoneng Huanghua Harbour
+PRC
+Limited company
+RMB6,790 million
+70
+Administration Co., Ltd.
+70 Provision of harbour and
+port services
+53
+electricity; trading of coal
+66 Generation and sale of
+66
+held by the Group
+31 December 31 December
+Principal activities
+2023
+2022
+%
+Hebei Guohua Cangdong Power PRC
+Co., Ltd.
+Limited company
+RMB1,834 million
+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
+Guoneng Yuanhai Shipping
+100 Trading of coal
+PRC
+RMB5,948 million
+Details of the Company's material 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
+Principal activities
+44. SUBSIDIARIES (CONTINUED)
+31 December 31 December
+2022
+%
+China Shenhua Overseas
+Development Investment
+Hong Kong,
+China
+Limited company
+HKD5,252 million
+100
+100
+2023
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+51
+51
+Co., Ltd.
+Provision of transportation
+services
+Guoneng Baotou Coal Chemical PRC
+Limited company
+RMB5,590 million
+100
+10
+100
+Coal chemical
+Co., Ltd.
+Guoneng Railway Transportation PRC
+Limited company
+RMB6,300 million
+100
+100
+100
+Provision of transportation
+Co., Ltd.
+2023 Annual Report 343
+Limited company
+100
+100
+RMB4,989 million
+Total remuneration is included in "personnel expenses" as disclosed in Note 11.
+10
+14
+1
+1
+9
+13
+RMB million
+RMB million
+2022
+2023
+Year ended 31 December
+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.
+42.2 Key management personnel emoluments
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+338 China Shenhua Energy Company Limited
+Other than those disclosed in Notes 22, 25, 26, 30, 33 and 34, amounts due from/to China
+Energy Group, an associate of China Energy Group, fellow subsidiaries, and associates of
+the Group bear no interest, are unsecured and are repayable in accordance with normal
+commercial terms.
+32,486
+18,898
+Total amounts due to China Energy Group, an associate
+of China Energy Group and fellow subsidiaries, and
+associates of the Group
+1,129
+1,245
+1,109
+1,507
+3,114
+3,027
+42.3 Contributions to post-employment benefit plans
+The Group participates in various defined contribution post-employment benefit plans
+organised by municipal and provincial governments and a supplemental defined contribution
+pension plan approved by the government for its employees. Further details of the Group's
+post-employment benefit plans are disclosed in Note 41.
+2023 Annual Report 339
+Notes to the Consolidated Financial Statements (Continued)
+RMB million
+RMB million
+2022
+100
+Year ended 31 December
+Interest expenses (including amount capitalised)
+Interest income
+Transportation costs
+Power revenue
+Coal revenue
+Transactions with other government-related entities, including state-controlled banks in
+the PRC
+42.4 Transactions with other government-related entities in the PRC (Continued)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+27,134
+340 China Shenhua Energy Company Limited
+These transactions are conducted in the ordinary course of the Group's business on terms
+comparable to those with other entities that are not government-related. The Group has
+established its pricing policies in respect of sale of goods and provision of services, and
+approval process for purchases of products and services. Such policies and approval
+process apply to all counterparties regardless of whether the counterparty is government-
+related or not.
+Financial services arrangements.
+Ancillary and social services; and
+Purchases of ancillary materials and spare parts;
+Construction work;
+Transportation services;
+Sales and purchases of coal;
+Power sales;
+Other than those transactions with China Energy Group, an associate of China Energy
+Group, fellow subsidiaries and associates of the Group as disclosed above, the Group
+conducts business with other government-related entities which include but are not limited
+to the following:
+The Company is ultimately controlled by the PRC government and the Group operates in
+an economic environment currently predominated by government-related entities.
+42.4 Transactions with other government-related entities in the PRC
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+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:
+81,806
+13,119
+Accrued expenses and other payables
+The Group has entered into an agency agreement for the export of coal with a
+fellow subsidiary of China Energy Group. The fellow subsidiary is appointed as a
+non-exclusive export agent of the Group and is entitled to receive an agency fee
+based on the relevant market rates or lower rates. Currently, the rate is 0.7% of the
+free on board sales price of coal exported. When obtaining export agent conditions
+from a third party that are equal to or inferior to those of the China Energy Group,
+the Company shall give preference to the China Energy Group as the export agent
+of coal products.
+The Group 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.
+O Group. The interest rate for the deposits with Finance Company from the Group
+should not be lower than the lowest limit published by the PBOC for the same type
+of deposit. The interest rate for loans made by Finance Company to the Group should
+not be higher than the highest limit published by the PBOC for the same type of loan.
+The above interest rates should be determined by reference to the rate charged by
+normal commercial banks in the PRC for comparable deposits and loans on normal
+commercial terms. The fees charged by Finance Company for the provision of other
+financial services shall be determined according to the rates chargeable by the PBOC
+or the China Banking Regulatory Commission.
+The Group has entered into a financial services agreement with Finance Company.
+Pursuant to the agreement, Finance Company provides financial services to the
+(vii)
+(vi)
+(v)
+(iv)
+(iii)
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 335
+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 associates of China Energy Group and
+fellow subsidiaries. Pursuant to the agreement, associates of China Energy Group
+and fellow subsidiaries provide the Group with the production supplies and services,
+ancillary production services including the use of the information network system
+and ancillary administrative services. On the other hand, the Group provides fellow
+subsidiaries with water supplies, rolling stock management, railway management,
+railway transportation and other related or similar production supplies or services and
+use of the information network system.
+(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:
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+The Group entered into an agency agreement for the sale of coal with fellow
+subsidiaries of China Energy Group. The Group is appointed as the exclusive sales
+agent of fellow subsidiaries of China Energy Group for thermal coal and non-exclusive
+sales agent for coking coal. The Group is entitled to receive an agency fee, which
+is based on its related costs incurred plus a profit margin of 5% for sales of coal
+outside the Inner Mongolia Autonomous Region. No agency fee is charged for sales
+of coal within the Inner Mongolia Autonomous Region.
+336 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+Accounts payable
+Borrowings
+63,031
+85,238
+Total amounts due from China Energy Group, an
+associate of China Energy Group, fellow subsidiaries
+and associates of the Group
+110
+110
+1,814
+1,299
+2,262
+9,363
+58,845
+74,466
+31 December
+2022
+RMB million
+Contract liabilities
+RMB million
+Prepaid expenses and other current assets
+Other non-current assets
+Accounts and bills receivables
+Cash and time deposits at bank
+Amounts due from/to China Energy Group, an associate of China Energy Group, fellow
+subsidiaries, and associates of the Group:
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+42. RELATED PARTY TRANSACTIONS (CONTINUED)
+(Expressed in RMB)
+For the year ended 31 December 2023
+Notes to the Consolidated Financial Statements (Continued)
+2023 Annual Report 337
+The Group has entered into a factoring service agreement with Guoneng (Beijing)
+Commercial Factoring Co., Ltd. ("Guoneng Factoring Company"). Pursuant to the
+agreement, Guoneng Factoring Company agreed to provide the Group with factoring
+services and factoring-related services. For the provision of factoring services by
+Guoneng Factoring Company to the Group, the financing cost shall not be higher
+than that determined by an independent third-party factoring company for providing
+the same kind of services to the Group, and it should be determined on normal
+commercial terms. When the financing fee determined by the independent third-party
+factoring company for providing the same kind of services is difficult to obtain, it shall
+not be higher than the financing fee calculated based on the Loan Prime Rate (LPR)
+of the PBOC for the same period. For the service fee charged from the provision of
+other relevant services by Guoneng Factoring Company to the Group, the service fee
+shall not be higher than that charged by an independent third-party factoring company
+for providing the same kind of services to the Group, and it should be determined on
+normal commercial terms. When the service fee charged by the independent third-
+party factoring company for providing the same kind of services is difficult to obtain,
+it shall be determined at the cost plus a reasonable profit margin (around 10%).
+(ix)
+(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.
+42.1 Transactions with China Energy Group, an associate of China Energy Group,
+fellow subsidiaries, and associates of the Group (Continued)
+31 December
+2023
+76,889
+2023
+78,829
+43. NON-ADJUSTING EVENTS AFTER THE REPORTING PERIOD
+1,178
+1,231
+2,385
+2,388
+23,934
+21,139
+6,357
+7,298
+105,295
+68,216
+2,576
+2,314
+5,153
+2023 Annual Report 341
+6,037
+RMB million
+31 December
+2023
+Contract liabilities
+Accrued expenses and other payables
+Borrowings
+Restricted bank deposits
+Cash and time deposits at banks
+Prepaid expenses and other current assets
+Accounts and bills receivables
+Balances with other government-related entities, including state-controlled banks in the PRC
+2,066
+1,829
+2,627
+1,789
+31 December
+2022
+RMB million
+Notes to the Consolidated Financial Statements (Continued)
+After the end of the reporting period, the Directors proposed a final dividend, the details of which
+are disclosed in Note 14.
+(Expressed in RMB)
+10,086
+9,097
+Limited company
+Guoneng Shendong Coal Group PRC
+Co., Ltd.
+100
+RMB7,789 million
+For the year ended 31 December 2023
+Guoneng Sales Group Co., Ltd. PRC
+%
+2022
+2023
+Limited company
+Principal activities
+44. SUBSIDIARIES
+31 December 31 December
+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
+86,858
+Type of
+legal entity
+Particulars of
+registered capital
+Proportion of ownership
+interest and voting rights
+held by the Group
+Place of
+incorporation
+and operation
+2,860
+8,440
+Financial assets at FVTOCI
+2,030
+8,804
+RMB million
+3,032
+9,734
+9,570
+2,482
+2,821
+RMB million
+4,844
+2,916
+Inventories
+Current assets
+45. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+348 China Shenhua Energy Company Limited
+Note: Restatement due from the changes in accounting policies of Amendments to IAS 12, Income Taxes: Deferred
+tax related to assets and liabilities arising from a single transaction (Note 2).
+92
+(6)
+(437)
+(758)
+(1,868)
+(605)
+2,397
+1,357
+Net cash (outflow)/inflow
+Net cash outflow from investing activities
+Net cash outflow from financing activities
+Net cash inflow from operating activities
+646
+446
+8,841
+7,392
+Year ended 31 December
+2023
+RMB million
+2022
+(Restated)
+RMB million
+Revenue
+Expenses
+Non-current assets
+7,049
+3,793
+3,415
+Profit and total comprehensive income for the year
+2,709
+2,794
+Dividend paid to non-controlling interests
+6,840
+31 December
+2023
+RMB million
+2,728
+47,954
+42,938
+Equity investments at FVTOCI
+2,338
+2,223
+Other non-current assets
+Investments in associates
+57,704
+Deferred tax assets
+2,001
+1,828
+Total non-current assets
+337,446
+292,683
+31,151
+Accounts and bills receivables
+160,655
+-
+31 December
+2022
+(Restated)
+RMB million
+Property, plant and equipment
+Construction in progress
+Intangible assets
+Right-of-use assets
+49,393
+166,829
+43,584
+3,657
+1,035
+1,026
+5,163
+5,621
+Investments in subsidiaries
+5,029
+2022
+(Restated)
+income for the year
+31 December
+12,848
+4,766
+5,408
+3,041
+2,964
+Profit and total comprehensive
+12
+6,040
+6,510
+74
+521
+1,577
+1,513
+Dividend paid to non-controlling
+interests
+2,535
+6,064
+14,249
+5,069
+5,131
+6,051
+Year ended 31 December
+Year ended 31 December
+2023
+2022
+2023
+2022
+(Restated)
+2023
+2022
+226
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Revenue
+Expenses
+22,217
+21,663
+4,836
+RMB million
+526
+406
+826
+Net cash (outflow) / inflow
+(116)
+(20)
+(193)
+(260)
+2,093
+1,819
+2023 Annual Report 347
+(1,078)
+Notes to the Consolidated Financial Statements (Continued)
+(Expressed in RMB)
+44. SUBSIDIARIES (CONTINUED)
+Details of non-wholly owned subsidiaries that have material non-controlling
+interests (Continued)
+Current assets
+Non-current assets
+Current liabilities
+Non-current liabilities
+Total equity
+Beidian Shengli Company
+31 December
+For the year ended 31 December 2023
+2023
+(244)
+(6,342)
+Net cash inflow from operating
+activities
+8,508
+8,379
+983
+1,256
+2,332
+2,499
+(7,298)
+Net cash outflow from investing
+(2,282)
+(1,101)
+(932)
+(438)
+(239)
+(680)
+Net cash outflow from financing
+activities
+activities
+Prepaid expenses and other current assets
+(Expressed in RMB)
+43,307
+1,134
+181,399
+286,918
+1
+At 1 January 2022 (Restated)
+84,766
+19,137
+482
+1,134
+181,400
+286,919
+Profit for the year (Restated)
+----- 68,733
+68,733
+Other comprehensive income
+246
+246
+482
+19,137
+from a single transaction
+(Note 2)
+assets and liabilities arising
+728
+45. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+Other
+Capital
+and other
+Retained
+income
+reserves
+earnings
+Total comprehensive income
+for the year (Restated)
+Total
+RMB million RMB million RMB million RMB million
+Share Treasury Statutory comprehensive
+premium shares reserves
+RMB million RMB million RMB million
+At 31 December 2021
+(Restated)
+84,766
+Impact on initial application
+of amendments to IAS 12,
+Income Taxes:
+Deferred tax related to
+Year ended 31 December
+246
+68,733
+68,979
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+45. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+Share Treasury Statutory comprehensive
+premium shares
+RMB million RMB million RMB million
+reserves
+At 31 December 2022
+84,766
+2023 Annual Report 351
+Impact on initial application
+Deferred tax related to
+assets and liabilities arising
+from a single transaction
+(Note 2)
+21,542
+Other
+income
+Capital
+and other
+reserves
+RMB million RMB million RMB million RMB million
+Retained
+of amendments to IAS 12,
+Income Taxes:
+For the year ended 31 December 2023
+305,446
+1,150
+Dividend declared (Note 14)
+14) ----- (50,466)
+(50,466)
+Appropriation of maintenance
+and production funds
+Utilisation of maintenance and
+production funds
+- 3,851
+(3,851)
+(1,446)
+197,260
+1,446
+16
+(2)
+14
+At 31 December 2022
+(Restated)
+84,766
+21,542
+728
+Others
+29,276
+Notes to the Consolidated Financial Statements (Continued)
+334,637
+31 December
+2022
+(Restated)
+RMB million
+Borrowings
+161
+Accounts and bills payables
+10,101
+367
+10,429
+Accrued expenses and other payables
+143,822
+140,683
+Current portion of lease liabilities
+457
+599
+Current portion of long-term liabilities
+3,510
+216
+Income tax payable
+2,485
+RMB million
+31 December
+2023
+Note
+Current liabilities
+Restricted bank deposits
+6,109
+4,801
+Time deposits with original maturity over
+three months
+30,813
+28,176
+Cash and cash equivalents
+2,723
+98,351
+Total current assets
+175,383
+202,533
+2023 Annual Report 349
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+45. INFORMATION ABOUT THE FINANCIAL POSITION AND RESERVES OF THE
+COMPANY (CONTINUED)
+114,937
+Contract liabilities
+76
+134
+Deferred tax liabilities
+93
+29
+Total non-current liabilities
+Net assets
+Equity
+Share capital
+Reserves
+6,743
+Total equity
+17,580
+14,750
+334,637
+325,315
+37
+19,869
+314,768
+19,869
+305,446
+350 China Shenhua Energy Company Limited
+325,315
+5,289
+5,207
+Total current liabilities
+Net current assets
+160,612
+155,151
+14,771
+47,382
+Total assets less current liabilities
+352,217
+Accrued reclamation obligations
+340,065
+Borrowings
+1,124
+1,311
+Lease liabilities
+1,208
+1,460
+Long-term liabilities
+9,866
+Non-current liabilities
+10,059
+21,500
+6,996
+47
+47
+49
+49
+30
+37
+2222233
+42
+1,302
+1,726
+18,837
+17,610
+43
+1,564
+1,572
+3,390
+2,577
+59
+43
+42
+2222233
+2022
+(Restated)
+2023
+RMB million RMB million RMB million
+2022
+(Restated)
+RMB million
+Zhunge'er Energy (Note)
+PRC
+Guoneng Baorixile Energy Industrial Co., Ltd.
+PRC
+214
+Dingzhou Power
+Guoneng Shuohuang Railway Development Co., Ltd.
+PRC
+Guoneng Yuanhai Shipping Co., Ltd.
+PRC
+Guoneng Huanghua Harbour Administration Co., Ltd.
+PRC
+Beidian Shengli Company
+PRC
+PRC
+2023
+397
+1,677
+70,173
+65,813
+Note: The Company was informed that the relevant supervising authority has approved the non-controlling shareholder's
+disposal of its interests in Zhunge'er Energy, a subsidiary of the Company. Currently, the Company is still in the
+process to discuss with the relevant parties in this regard.
+2023 Annual Report 345
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+44. SUBSIDIARIES (CONTINUED)
+Details of non-wholly owned subsidiaries that have material non-controlling
+interests (Continued)
+Zhunge'er Energy
+Guoneng Baorixile Energy
+Industrial Co., Ltd.
+Dingzhou Power
+31 December
+31 December 31 December
+31 December 31 December
+31 December
+2023
+19,953
+earnings
+non-controlling interests
+Individually immaterial subsidiaries with
+2,872
+3,080
+14,800
+14,478
+36
+255
+3,237
+3,428
+1,696
+30
+470
+3,343
+3,264
+37
+1,052
+1,079
+3,370
+2,826
+486
+2022
+(Restated)
+2022
+Year ended 31 December
+Effective for
+accounting
+Amendments to IAS 1, Presentation of financial statements:
+Noncurrent liabilities with covenants (" 2022 amendments")
+Classification of liabilities as current or non-current ("2020 amendments")
+Amendments to IAS 1, Presentation of financial statements:
+Up to the date of issue of these financial statements, the IASB has issued a number of new or
+amended standards, which are not yet effective for the year ended 31 December 2023 and which
+have not been adopted in these financial statements. These developments include the following
+which may be relevant to the Group.
+46. POSSIBLE IMPACT OF AMENDMENTS, NEW STANDARDS AND
+INTERPRETATIONS ISSUED BUT NOT YET EFFECTIVE FOR THE YEAR ENDED
+31 DECEMBER 2023
+(Expressed in RMB)
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+352 China Shenhua Energy Company Limited
+At 31 December 2023, the aggregate amount of retained earnings determined in accordance with
+the China Accounting Standards available for distribution to equity holders of the Company was
+RMB201,416 million (2022: RMB195,879 million as restated).
+According to the Company's Articles of Association, the amount of retained earnings available
+for distribution to equity holders of the Company is the lower of the amount determined in
+accordance with the China Accounting Standards and the amount determined in accordance with
+IFRSS after the appropriation to reserves as detailed in Note (iii) to the consolidated statement
+of changes in equity.
+314,768
+202,580
+1,206
+817
+25,399
+79
+periods
+beginning
+on or after
+1 January 2024
+1 January 2024
+354 China Shenhua Energy Company Limited
+Approval date of the Board of Directors for submission: 22 March 2024
+The annual report for the year 2023 published on the websites of SSE and
+the HKEX
+The original copies of all documents and announcements of the Company
+publicly disclosed on the newspapers designated by the CSRC during the
+Reporting Period
+The auditor's report chopped with the official chop of the accounting firm
+and signed and chopped by the certified public accountant
+The financial statements signed by the person-in-charge of the Company,
+Chief Financial Officer and person-in-charge of the accounting department
+and chopped with the official chop of the Company
+The annual report for the year 2023 with the signature of the
+person-in-charge of the Company
+Documents Available
+for Inspection
+23
+Section XI Documents Available for Inspection
+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.
+1 January 2025
+Amendments to IAS 21, The effects of changes in foreign exchange rates:
+Lack of exchangeability
+Financial Instruments: Disclosures: Supplier finance arrangements
+1 January 2024
+Amendments to IAS 7, Statement of cash flows and IFRS 7,
+1 January 2024
+Amendments to IFRS 16, Leases: Lease liability in a sale and leaseback
+2023 Annual Report 353
+31 December 31 December
+56
+(6,222)
+84,766
+At 1 January 2023
+(24)
+...- (24)
+305,470
+197,284
+1,150
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+44. SUBSIDIARIES (CONTINUED)
+Details of non-wholly owned subsidiaries that have material non-controlling
+interests
+Summarised financial information in respect of each of the Group's subsidiaries that has material
+non-controlling interests is set out below. The summarised financial information below represents
+amounts before intragroup eliminations.
+Name of the subsidiary
+Place of
+incorporation
+and operation
+Proportion of
+ownership interest and
+voting rights held by
+non-controlling interest
+Profit allocated to
+non-controlling interests
+Accumulated
+non-controlling interests
+31 December 31 December
+2023
+21,542
+728
+1,150
+197,260
+(50,665)
+84,766
+At 31 December 2023
+-- (2,365)
+-- 6,222
+---- - (50,665)
+59,908
+59,819
+2,365
+89
+89
+Dividend declared (Note 14)
+Appropriation of maintenance
+and production funds
+Utilisation of maintenance and
+production funds
+Others
+Total comprehensive income
+for the year
+Other comprehensive income
+59,819
+59,819
+Profit for the year
+305,446
+89
+10,284
+2023
+2023
+Net cash outflow
+(4)
+(279)
+(212)
+(233)
+(1)
+346 China Shenhua Energy Company Limited
+Notes to the Consolidated Financial Statements (Continued)
+For the year ended 31 December 2023
+(Expressed in RMB)
+44. SUBSIDIARIES (CONTINUED)
+Details of non-wholly owned subsidiaries that have material non-controlling
+interests (Continued)
+Guoneng Shuohuang Railway
+Development Co., Ltd.
+Guoneng Huanghua Harbour
+Administration Co., Ltd.
+Guoneng Yuanhai
+Shipping Co., Ltd.
+31 December
+31 December 31 December
+31 December 31 December
+31 December
+(1,024)
+(883)
+(1,430)
+(2,302)
+833
+636
+2,518
+1,541
+1,046
+1,255
+Net cash outflow from investing
+activities
+2023
+(808)
+(428)
+(344)
+(164)
+(234)
+Net cash outflow from financing
+activities
+(29)
+(38)
+(877)
+activities
+2022
+RMB million
+10,269
+10,347
+543
+427
+2,462
+3,257
+Non-current liabilities
+4,135
+4,585
+63
+44
+395
+328
+Total equity
+29,695
+29,016
+6,607
+Current liabilities
+11,875
+11,430
+5,012
+RMB million
+RMB million
+2022
+(Restated)
+RMB million
+2023
+2022
+RMB million
+RMB million
+Current assets
+2023
+8,501
+2,411
+2,455
+1,711
+1,769
+Non-current assets
+35,598
+34,601
+4,802
+9,347
+2022
+Net cash inflow from operating
+256
+7,750
+4,075
+4,778
+1,660
+1,799
+Non-current liabilities
+1,438
+1,138
+2,575
+2,679
+5
+75
+Total equity
+44,292
+41,401
+7,582
+5,696
+6,848
+Current liabilities
+3,835
+3,685
+2022
+RMB million
+RMB million RMB million
+(Restated)
+RMB million
+RMB million
+RMB million
+Current assets
+37,164
+2,852
+34,459
+5,055
+832
+857
+Non-current assets
+15,414
+15,830
+8,355
+8,098
+5,877
+246
+2,818
+Year ended 31 December
+9,247
+4,380
+4,169
+4,205
+4,104
+Profit and total comprehensive
+income for the year
+2,904
+10,716
+3,947
+3,490
+359
+668
+Dividend paid to non-controlling
+interests
+13
+17
+1,874
+3,466
+Year ended 31 December
+4,940
+7,816
+Year ended 31 December
+2023
+2022
+2023
+(Restated)
+2022
+(Restated)
+2023
+2022
+4,680
+RMB million
+RMB million
+RMB million
+RMB million
+RMB million
+Revenue
+Expenses
+14,275
+14,017
+8,490
+RMB million
+Total
+CHINA SHENHUA ENERGY COMPANY LIMITED
+中国神华能源股份有限公司
+60,817
+562,904
+563,083
+Total assets
+198,951
+211,050
+208,310
+172,229
+160,494
+893
+1,100
+1,272
+Loss allowance, net of reversal
+(139)
+(524)
+(2,561)
+(1,337)
+(285)
+Other expenses
+(278)
+(1,090)
+(1,103)
+(2,136)
+(5,003)
+Interest income
+1,170
+1,684
+2,492
+3,071
+2,634
+610,458
+625,320
+633,412
+Total current liabilities
+Non-controlling interests
+411,478
+396,983
+379,877
+364,203
+356,077
+equity holders of the Company
+Total equity attributable to
+481,651
+462,796
+449,029
+429,587
+420,218
+Net assets
+Finance costs
+151,761
+161,429
+133,317
+142,865
+Total liabilities
+60,176
+64,120
+69,681
+63,824
+47,382
+Total non-current liabilities
+98,404
+91,748
+69,493
+95,483
+162,524
+64,141
+(3,294)
+(2,583)
+8,135
+9,371
+12,473
+10,567
+Total current assets
+434,461
+414,270
+402,148
+390,675
+402,589
+Total non-current assets
+(restated)
+RMB million RMB million
+2023
+2022
+2021
+RMB million
+(restated)
+RMB million RMB million
+2020
+2019
+As at 31 December
+CONSOLIDATED STATEMENTS OF FINANCIAL POSITION
+Section XII Summary of Major Financial Information
+for the Recent Five Years (Continued)
+2023 Annual Report 355
+3.253
+3.670
+2.588
+1.803
+2.097
+- Basic
+8,070
+Non-controlling interests
+64,625
+72,925
+(3,930)
+(3,117)
+Share of results of associates
+433
+947
+(874)
+2,223
+3,565
+Profit before income tax
+64,922
+59,362
+78,945
+99,654
+92,776
+(2,263)
+Income tax expense
+(15,378)
+(18,128)
+(14,256)
+(17,584)
+Profit for the year
+49,777
+43,984
+85,398
+75,192
+Profit for the year attributable to:
+Equity holders of the Company
+41,707
+35,849
+51,446
+(15,145)
+65,384
+91,585
+65,813
+(640)
+(555)
+(581)
+(410)
+(425)
+General and administrative expense
+(8,988)
+(8,948)
+(9,119)
+69,152
+(9,812)
+Selling expenses
+Research and development costs
+(1,362)
+(2,499)
+(3,722)
+(3,007)
+Other gains and losses
+(2)
+(194)
+(955)
+(3,184)
+(3,583)
+Other income
+(940)
+708
+110,537
+95,835
+Section XII Summary of Major Financial
+Information for the Recent Five Years
+The finance information below is extracted from the financial statement prepared by the Group in
+accordance with International Financial Reporting Standards:
+CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND
+OTHER COMPREHENSIVE INCOME
+For the year ended 31 December
+2019
+2020
+RMB million RMB million
+2021
+RMB million
+(restated)
+2022
+2023
+RMB million RMB million
+117,909
+(restated)
+Operating cost
+241,871 233,263
+(164,979) (162,374)
+335,640
+344,533
+343,074
+(239,805)
+(226,624)
+(232,537)
+Gross profit
+76,892
+70,889
+Revenue
+778
+(9,930)
+356 China Shenhua Energy Company Limited
+481,651
+462,796
+449,029
+429,587
+420,218
+Total equity
+70,173
+Earnings per share (RMB per share)
+4.6
+projects were completed and
+put into operation
+(9.1) Some power generation
+projects were completed
+and put into operation and
+transferred to property, plant
+and equipment
+gains on investment in
+1 Mine and No. 2 Mine in
+Xinjie Mining Area, Bulianta
+Colliery, Shangwan Colliery
+11.9 Completion of capital increase
+in Finance Company and
+28,905
+associates were recognised
+(6.3) transfer of assets related to the
+14.9 Increase in assets related to
+the mining rights of No.
+33
+China Shenhua Energy Company Limited
+27,070
+Other non-current assets
+mining rights of No. 1 Mine
+8.8 49,714
+55,635
+Interests in associates
+0.6
+4,059
+0.7
+years old)
+4.3
+8.0
+and No. 2 Mine in Xinjie
+Mining Area
+12,846
+Amount at
+Percentage
+Section IV Directors' Report (Continued)
+43
+2023 Annual Report
+discounting or endorsement
+upon maturity
+intended to be used for
+(49.4) Collection of bank acceptances
+bills for sales of coal and
+electricity
+increase in settlement on
+power sales; and the
+0.1
+502
+302
+Inventories
+value through other
+comprehensive income
+254
+Financial assets at fair
+Increase in receivables from
+64.1
+1.9
+12,100
+3.1
+Increase in coal inventories
+6.2
+1.9
+12,096
+2.0
+20
+Accounts and bills receivable 19,858
+0.0
+Intangible assets
+3.3
+20,843
+the amount
+at the end
+Change of
+assets at
+Percentage
+of total
+Amount at
+Percentage
+of total
+Unit: RMB million
+1. Assets and Liabilities
+(III) Analysis on Assets and Liabilities
+730
+50-60 years old (including 50 years old, excluding 60
+years old)
+649
+60 years old and above
+0
+As at the end of 2023, the Group had one national key laboratory, and set
+up one national scientific research platform, and it took the leading role
+(participated in) in undertaking 11 national key R&D projects (topics).
+2023 Annual Report 41
+42
+Section IV Directors' Report (Continued)
+5.
+Cash Flow
+The Group formulated capital management policies that aimed to achieve maximised
+interests for the shareholders, optimized capital structure while reducing the costs
+of capital under the premise of safeguarding the operation on an on-going basis, and
+carried out capital management and investments in accordance with the policy of
+the Company.
+(1)
+(2)
+(3)
+Net cash generated from operating activities: net cash inflow in 2023 was
+RMB89,687 million (net cash inflow in 2022: RMB109,734 million), representing
+a year-on-year decrease of 18.3%, mainly due to the decline in sales revenue
+of coal and increase in operation costs.
+Net cash used in investing activities: net outflow of RMB36,974 million in 2023,
+mainly for the purchase and construction of property, plant and equipment,
+intangible assets and other long-term assets, representing a decrease of 34.7%
+compared to a net outflow of RMB56,585 million in 2022, mainly attributable
+to the significant increase in time deposits placed with financial institutions
+as compared with the corresponding period last year, which led to the higher
+principal for this year.
+Net cash used in financing activities: net outflow of RMB76,131 million in 2023,
+mainly attributable to repayment of borrowings and payment of dividends,
+representing a decrease of 3.3% from the net outflow of RMB78,734 million
+in 2022.
+(II) Explanation on Significant Change of Profit Caused by Non-principal Business
+☐ Applicable ✓ Not applicable
+of the year
+compared to
+Amount at
+assets at the
+3.0
+18,955
+Construction in progress
+equipment
+Some power generation
+6.1
+43.8
+274,103
+45.9
+290,839
+Property, plant and
+%
+%
+Main reasons for changes
+Section IV Directors' Report (Continued)
+Percentage
+of total
+year
+year
+year
+the year
+Items
+the previous
+the previous
+the previous
+end of the
+the end of
+the end of
+4,662
+the end of
+the end of
+year
+Change of
+business, taxes and surcharges, and other
+operating costs
+of the year
+(11.8) Decrease in employee wages
+0.1
+669.1
+payable and resource taxes
+payable, etc.
+Increase in payables related to
+special rectification of coal
+resources field
+(13.7) Decrease in profit before
+income tax
+Increase in advance payment
+for coal
+(22.9) Optimisation of the use
+of internal funds and
+repayment of more long-term
+borrowings
+borrowings
+(13.9) Repurchase and cancellation
+of certain U.S. dollar-
+denominated bonds
+payables for mining rights of
+Bulianta Colliery, Shangwan
+Colliery
+/ Mainly the output tax of VAT to
+be transferred out related to
+the financial leasing business
+2,972
+0.5
+3,453
+0.6
+Long-term liabilities
+15,125
+2.4
+10,613
+1.7
+42.5
+The recognition of long-term
+Other non-current liabilities
+repayment of short-term
+(63.4) Optimisation of the use of
+payables
+Current portion of long-term
+5,184
+0.8
+674
+10
+liabilities
+Income tax payable
+4,757
+0.8
+5,510
+0.9
+Contract liabilities
+internal funds and increased
+7,208
+5,597
+0.9
+28.8
+Long-term borrowings
+29,636
+4.7
+38,438
+6.1
+Bonds
+(17.7) The decrease in net cash
+generated from operating
+activities; payment of 2022
+final dividend and repayment
+of borrowings
+1.1
+1,194
+0.2
+50
+6,357
+1.2
+7,298
+Restricted bank deposits
+%
+%
+Main reasons for changes
+year
+year
+year
+year
+year
+the
+1.0
+Items
+the previous
+the previous
+end of the
+the end of
+the end of
+the end of
+the end of
+assets at the
+Amount at
+compared to
+assets at
+of total
+Unit: RMB million
+the previous
+14.8
+The increase in the balance of
+the special account for the
+Group's mine geographical
+environment governance
+recovery fund
+44 China Shenhua Energy Company Limited
+0
+00
+0.0
+40-50 years old (including 40 years old, excluding 50
+5.6
+34,724
+4.8
+30,613
+Accrued expenses and other
+2.0
+12,630
+0.7
+4,622
+Short-term borrowings
+21.0
+131,458
+17.1
+108,174
+Cash and cash equivalents
+deposits
+maturity over three months
+The increase in bank time
+5.6
+5.2
+32,688
+5.4
+34,514
+Time deposits with original
+the amount
+at the end
+30-40 years old (including 30 years old, excluding 40
+years old)
+1,164
+Under 30 years old (excluding 30 years old)
+487
+29.2
+67,886
+Cost of purchased coal
+%
+%
+amount
+2022
+2022
+2023
+Year-on-year
+change in
+Percentage to
+Amount for cost of sales for
+Amount for cost of sales for
+2023
+Breakdown of cost items
+Percentage to
+Unit: RMB million
+(2) Analysis of costs of sales
+28.7
+Section IV Directors' Report (Continued)
+4.3
+33,468
+Depreciation and amortisation
+12.3
+4.7
+10,715
+5.2
+12,034
+Repair and maintenance
+(2.2)
+11.3
+25,663
+10.8
+25,090
+Personnel expenses
+0.3
+14.7
+33,365
+14.4
+Raw materials, fuel and power
+21,263
+Shipping
+4,602
+Increase/
+decrease in
+Increase/
+decrease in
+cost of
+Increase/decrease
+sales as
+Gross profit compared with compared with
+revenue as
+in gross profit margin
+as compared with
+Business segment
+Revenue Cost of sales
+RMB million RMB million
+margin
+%
+previous year previous year
+previous year
+%
+%
+Coal
+Principal businesses by business segment in 2023 (before elimination on consolidation)
+Cost of internal transportation business
+The following revenue, cost of sales and others of business segments are
+the data before elimination on consolidation of each segment. For details of
+costs by business segment, please refer to "Operation Results by Business
+Segment" in this section and the table of operating results overview in this
+report.
+→
+5,214
+(11.7)
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, external
+transportation charges, and other
+expenses), cost of external transportation
+business, taxes and surcharges and other
+operating costs
+Coal chemical
+Raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+depreciation and amortisation, taxes and
+surcharges, and other operating costs
+5,569
+5,493
+1.4
+36
+China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(3) Principal businesses by business segment
+The major business model of the Group is the integrated coal industry
+chain: i.e. coal production → coal transportation (railway, port and shipping)
+conversion of coal (power generation and coal chemical), and there are
+business intercourses between each segment. The percentages of profit before
+income tax (before elimination on consolidation) of coal, power, transportation
+and coal chemical segments of the Group in 2023 were 72%, 12%, 16% and
+0%, respectively (2022: 75%, 8%, 16% and 1%).
+273,306
+9.1
+8.5
+depreciation and amortisation, other
+expenses, repairs and maintenance,
+5.6
+73,491
+77,594
+Power generation Raw materials, fuel and power, personnel
+and surcharges, and other operating costs
+2.2
+192,753
+196,959
+Cost of purchased coal, raw materials, fuel
+and power, personnel expenses, repairs
+and maintenance, depreciation and
+amortisation, transportation costs, taxes
+Coal
+%
+Change
+2022
+2023
+Breakdown of cost items
+expenses, taxes and surcharges, and
+other operating costs
+Cost of sales by business segment in 2023 (before elimination on consolidation)
+Railway
+27,380
+expenses), cost of external transportation
+depreciation and amortisation, and other
+(raw materials, fuel and power, personnel
+expenses, repairs and maintenance,
+8.1
+3,556
+3,844
+Cost of internal transportation business
+Port
+operating costs
+business, taxes and surcharges, and other
+expenses), cost of external transportation
+transportation charges, and other
+depreciation and amortisation, external
+expenses, repairs and maintenance,
+(raw materials, fuel and power, personnel
+9.3
+25,041
+Cost of internal transportation business
+19,237
+Unit: RMB million
+By business
+33,663
+15.2
+35,385
+Others
+(7.9)
+8.8
+19,972
+7.9
+18,385
+Tax and surcharge
+0.5
+8.4
+18,930
+8.2
+19,026
+Transportation charges
+10.5
+14.9
+segment
+5.1
+232,537
+Section IV Directors' Report (Continued)
+55
+35
+2023 Annual Report
+the main reasons for the year-on-year increase in other costs: the
+increases in costs of outsourced stripping work for certain open-cut
+mines and others.
+the main reasons for the year-on-year decrease in taxes and surcharges:
+the year-on-year decrease in resource taxes as a result of the decrease
+in income from the sale of self-produced coal;
+the main reasons for the year-on-year increase in depreciation and
+amortisation: the increase in property, plant and equipment of the
+Group due to the operation of generating units, purchase of coal mine
+equipment and other impacts;
+the main reason for the year-on-year increase in repairs and maintenance
+costs: more railway maintenance due to the maintenance plan;
+the main reasons for the year-on-year increase in the cost of purchased
+coal: the increases in the sales volume of purchased coal and purchase
+cost;
+(4)
+(3)
+(1)
+Of the cost of sales of the Group in 2023:
+2.6
+100.0
+226,624
+100.0
+Total cost of sales
+(196,959)
+65,079
+(1.5)
+(4)
+Loss allowance, net of reversal during the Reporting Period are mainly due to:
+the Group conducted impairment test on the amount with long ages, and made
+bad debt provision according to the impairment test results.
+(5)
+(6)
+(7)
+(8)
+The main reasons for the year-on-year increase in other expenses: the increase
+in special rectification expenses related to coal resource field, cost of carbon
+emissions trading and others.
+The main reason for the year-on-year decrease in interest income: the decrease
+in interest income due to the decrease in the average deposits balance.
+The main reason for the year-on-year decrease in financial costs: The Group
+continued to optimize its debt structure and financing model, strived to reduce
+its interest-bearing liabilities and financing costs, registering a year-on-year
+decrease in interest expenses; net foreign exchange losses decreased year-
+on-year.
+The main reason for the year-on-year increase of the share of results of
+associates: the year-on-year increase in the Group's investment income from
+power generation and railway associates and Finance Company.
+2023 Annual Report
+39
+Section IV Directors' Report (Continued)
+4.
+(9)
+The main reasons for the year-on-year increase in income tax: when certain
+coal subsidiaries of the Group settled and paid the enterprise income tax for
+the same period last year, the overpaid tax in previous years was offset against
+the current income tax, resulting a year-on-year increase of income tax for this
+year.
+Research and Development Expenditure
+The main reason for the year-on-year increase in other income: the increase
+of revenue from carbon emissions trading and others.
+(1) Research and development expenditure
+Other gains and losses during the Reporting Period were aggregated as losses,
+I which is mainly due to the following reasons: The Group conducted impairment
+tests on certain asset groups with low utilization rate such as railways and loss-
+making power plants, as well as inventories such as spare parts whose value
+had decreased due to equipment upgrades, and made impairment provisions
+based on the impairment test results.
+(3)
+☐ Applicable Not applicable
+Changes in the scope of consolidation due to changes in shareholding of
+major subsidiaries during the Reporting Period
+Applicable ✓ Not applicable
+(7)
+Information related to significant changes or adjustment of businesses,
+products or services of the Company in the Reporting Period
+☐ Applicable ✓ Not applicable
+(8) Major customers
+In 2023, the total revenue from the top five customers of the Group amounted
+to RMB146,086 million, accounting for 42.6% of the total revenue of the
+Group, including the revenue of the Group from its largest customer of
+RMB112,933million, accounting for 32.9% of the total revenue of the
+Group. The largest customer of the Group was China Energy (the controlling
+shareholder of the Company) and its subsidiaries. The Group mainly sells coal
+products and provides coal transportation service to China Energy and its
+subsidiaries.
+Except for the above, as far as the Board of the Company is aware, none of the
+directors of the Company, their close associates or shareholders holding more
+than 5% of shares of the Company has any interests in the top five customers
+of the Group. The Group has maintained long-term cooperative relationship
+with the top five customers. The Company is of the view that such cooperative
+relationship would not cause material risk to the business of the Group.
+China Shenhua Energy Company Limited
+3.
+Section IV Directors' Report (Continued)
+(9) Major suppliers
+In 2023, the total procurement from the top five suppliers of the Group
+amounted to RMB32,953 million, accounting for 15.9% of the total procurement
+for the year, of which the procurement from its largest supplier amounted to
+RMB19,787 million, representing 9.5% of the total procurement for the year.
+Expenses and Other Items of Gains and Losses
+(1)
+(2)
+The main reason for the year-on-year decrease in R&D expenses: mainly
+affected by R&D progress.
+(6)
+Unit: RMB million
+3,007
+3.6
+Educational structure of research and development personnel
+Category of educational structure
+Number
+Person
+Doctoral candidate
+Master degree candidate
+Undergraduate
+Junior college
+High school and below
+82
+440
+2,040
+386
+82
+Age structure of research and development personnel
+Category of age structure
+Number
+Person
+number of total staff (%)
+Expensed research and development expenditure
+in the period
+Ratio of research and development personnel to the
+27.9
+Capitalised research and development expenditure
+in the period
+1,446
+Total research and development expenditure
+Percentage of total research and development
+4,453
+expenditure to revenue (%)
+1.3
+Ratio of capitalised research and development
+expenditure (%)
+32.5
+In 2023, the research and development expenditure of the Group amounted
+to RMB4,453 million (2022: RMB5,404 million), representing a year-on-year
+decrease of 17.6%; research and development expenditure accounted for
+1.3% of total revenue (2022: 1.6%), representing a year-on-year decrease of
+0.3 percentage point.
+During the Reporting Period, the R&D projects carried out by the Group
+mainly include: green mines, research on technologies and equipment related
+to smart mines, research on clean and efficient combustion technology for
+ammonia-mixed coal-fired boilers, research on technology of carbon dioxide
+resources and energy utilisation in coal-fired power plant, research on unit
+for high temperature subcritical efficiency improvement technology, research
+on intelligent technology and equipment for heavy-haul trains and heavy-haul
+railway, research on hydrogen power equipment of heavy-haul railway, research
+on collaborative function technology of "network-source-storage-vehicle" (
+), research on intelligent ship-related technology, R&D of high-end coal-to-
+olefins products, etc. In 2023, the Group was granted one Outstanding Awards
+under the umbrella of Patent Awards of China, 2 provincial-level awards, and
+48 prizes from industry associations, as well as a total of 763 licensed patents,
+including 241 invention patents.
+40
+China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(2)
+Research and development personnel
+3,030
+(5) Performance of material purchase contracts and material sales contracts
+Number of research and development personnel in the
+Group
+11.0
+(3,844)
+43.0
+4.8
+8.1
+Decreased by 1.8
+percentage points
+Shipping
+4,836
+(4,602)
+4.8
+(20.1)
+(11.7)
+Decreased by 9.0
+percentage points
+Coal chemical
+6,098
+(5,569)
+6,749
+8.7
+Port
+Decreased by 4.4
+11.1
+2.2
+Decreased by 2.6
+percentage points
+Power generation
+92,407
+(77,594)
+16.0
+9.3
+5.6
+Increased by 2.9
+Railway
+42,961
+(27,380)
+36.3
+1.8
+9.3
+percentage points
+(4.4)
+percentage points
+Decreased by 5.2
+the period
+production sales volume
+the year
+%
+%
+%
+Coal
+Power
+Million tonnes
+billion kWh
+324.5
+450.0
+3.5
+7.7
+4.9
+212.26
+1.4
+199.75
+volume
+Production
+23.4
+beginning of
+2023 Annual Report
+Major products Unit
+percentage points
+37
+38
+(4) Analysis of the production and sales volume of major products
+Increase/
+decrease in
+inventory as
+Year-on-year Year-on-year
+Section IV Directors' Report (Continued)
+Inventory at
+decrease in
+Sales
+the end of
+increase/
+decrease in
+compared
+increase/
+with the
+RMB/
+tonnes
+tonne
+tonnes
+%
+tonne
+%
+Self-produced coal
+Million
+325.4
+72.3
+%
+RMB/
+volume
+of tax)
+volume
+of tax)
+volume
+volume
+of tax)
+volume
+sources of coal
+(exclusive
+Sales
+(exclusive
+548
+to total sales
+Million
+316.2
+417.8
+597
+Sales
+By contract pricing mechanism
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+48
+In 2023, the purchased coal sales volume of the Group was 124.6 million
+tonnes (2022: 101.6 million tonnes), representing a year-on-year increase
+of 22.6%, accounting for 27.7% of the total coal sales volume of the
+Group (2022: 24.3%), which mainly due to the fact that the Group had
+strengthened its marketing management and coal resource organization,
+resulting an increased sales volume of purchased coal.
+The purchased coal sold by the Company includes purchased coal in the
+vicinity of its own mines and along the railway lines, coal from domestic
+trade and imported to transit trade.
+(9.3)
+7.7
+644
+100.0
+584
+100.0
+450.0
+price (exclusive of tax)
+Total sales volume/average
+(13.9)
+22.6
+789
+24.3
+101.6
+679
+27.7
+124.6
+Purchased coal
+(8.2)
+2.9
+75.7
+(exclusive
+The Group has independently operated railway transportation channels for
+collection and distribution. These channels are mainly distributed in the rim of
+self-owned core mines, and can satisfy the transportation needs in the core
+mines.
+Sales
+In 2023, the Group fulfilled its responsibility as a state-owned enterprise and
+made effort to ensure the coal supply. The fulfilment rate of medium- and
+long-term thermal coal contracts is over 100%. The Group flexibly adjusted
+its business strategy, innovated its pricing mechanism, increased resources,
+expanded the market, and concurrently made efforts in terms of both the
+purchase and sales, achieving year-on-year growths in coal sales volume,
+purchased and imported coal volume. During the year, the coal sales volume
+of the Group reached 450.0 million tonnes (2022: 417.8 million tonnes),
+representing a year-on-year increase of 7.7%. The sales volume for the top five
+external coal customers was 192.4 million tonnes, accounting for 42.8% of the
+total coal sales volume; in particular, the coal sold to China Energy Group, the
+largest customer, was 168.8 million tonnes, representing 37.5% of the total
+coal sales volume. The top five external coal customers are mainly electrical,
+chemical and coal trading companies.
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+46
+The coal sold by the Group is mainly self-produced coal. In order to fulfil the
+needs of customers and adequately make use of railways transportation, the
+Group also purchased the coal from third parties in the surrounding areas of
+the self-owned mines and along railway lines for blending to produce different
+kinds and levels of coal products and sell them to external customers. The
+Group implemented specialised division management. In particular, production
+enterprises are responsible for production of coal, the railway, port and shipping
+companies of the Company are mainly responsible for transportation of coal,
+and the Trading Group of the Company is mainly responsible for sales of coal.
+Customers are involved in different industries, such as power, metallurgy,
+chemical and construction materials.
+(2) Sales of coal
+The Group consolidated and promoted the application level of achievements
+of intelligent and digital technologies for coal mines. By the end of 2023, the
+Group had built 35 intelligent underground coal mining working faces, 61
+intelligent tunneling working faces and 19 intelligent coal preparation plants,
+and had equipped 208 unmanned production vehicles in open-cut coal mines.
+Also, the Group had developed and applied an aggregate of over 200 coal
+mining robots in five categories, namely tunneling, mining, transportation,
+safety control and rescue.
+The Group moved to promote the continuation of coal resources, license
+application and production capacity increase in an orderly way. As at the date of
+the disclosure of this report, the mining license for Xinjie No. 1 Mine and No. 2
+Mine of Xinjie Taigemiao Mine, Inner Mongolia, which is of great significance to
+the sustained development of the Group's coal resources, has been obtained.
+The mining licenses of Bulianta Colliery, Shangwan Colliery, Wanli No. 1 Mine
+and Ha'erwusu Open-cut Mine have completed the change of mining area, and
+new mining licenses have been obtained. We have obtained reply from the
+National Mine Safety Administration in respect of the application for increasing
+of Baode Coal Mine's production capacity from 5 million tonnes/year to 8 million
+tonnes/year. The application for the increase of production capacity of Lijiahao
+Colliery and Shengli No. 1 Open-cut Mine was progressed in an orderly manner.
+Section IV Directors' Report (Continued)
+2023 Annual Report 45
+The majority of the coal products produced and sold by the Group were
+thermal coal. In 2023, the Group insisted on ensuring the energy safety
+through coal, consolidating and expanding the normalised long-term supply
+security mechanism, and maintained stable coal production at high levels.
+The annual output of commercial coal was 324.5 million tonnes (2022: 313.4
+million tonnes), representing a year-on-year increase of 3.5%. The Group
+vigorously promoted the optimization of the layout of the production system,
+popularized the technique of gob-side entry retaining without coal pillar, so
+as to optimize the ratio of mining and tunneling of mines and improve the
+production efficiency. The total footage of advancing tunnels at underground
+mines for this year was 404 thousand meters (2022: 446 thousand meters), of
+which Shendong Mines recorded footage of advancing tunnels of 385 thousand
+meters (2022: 426 thousand meters).
+Production, operation and construction
+(1)
+Coal Segment
+1.
+(IV) Operation Results by Business Segment
+As at 31 December 2023, the distributable reserves of the Company to shareholders
+were RMB201,416 million.
+Distributable Reserves to Shareholders
+The Group is free from seizure and detention of main assets. As at the end of the
+Reporting Period, the balance of the restricted assets of the Group was RMB7,549
+million, of which security deposits for bank acceptance bills, relevant deposits related
+to port operations, deposit for letter of credit and mine geographical environment
+governance and restoration fund amounted to RMB7,298 million in total; other
+restricted assets mainly consisted of property, plant and equipment secured and
+guaranteed for acquiring bank borrowings.
+Restrictions on Main Assets
+As at 31 December 2023, the total offshore assets of the Group amounted to
+RMB29,674 million, representing 4.7% of total assets, which were mainly composed
+of the power generation assets in Indonesia, and assets from U.S. dollar-denominated
+bonds issued in Hong Kong, the PRC.
+Offshore Assets
+4.
+3.
+2.
+Section IV Directors' Report (Continued)
+2023
+2023, due to the supply-demand relationship in the coal market, the
+average coal sales price of the Group was RMB584/tonne (exclusive of tax)
+(2022: RMB644/tonne), representing a year-on-year decrease of 9.3%.
+The production and sales of each kind of coal of the Group in 2023 are set out
+below:
+Types of coal
+Production Sales volume Sales income
+Million tonnes Million tonnes RMB million
+Types of
+Price
+Price
+Percentage
+Price
+Percentage
+Change
+2022
+2023
+By types of sources of coal
+The coal sales of the Group in 2023 is set out below:
+Section IV Directors' Report (Continued)
+2023 Annual Report 47
+to total sales
+90,395
+262,868
+450.0
+324.5
+90,395
+0
+172,229
+244
+262,624
+244
+449.8
+0.2
+324.5
+Total
+Others
+Thermal coal
+Gross profit
+RMB million
+Sales cost
+RMB million
+172,473
+2022
+920
+Percentage
+kcal/kg
+%
+%
+1 Shendong Mines Long flame coal/
+4,185-5,704
+0.2-0.6
+Ash content
+7.0-18.4
+Zhunge'er Mines
+non-caking coal
+Long flame coal
+4,412-4,685
+0.4-0.7
+26.6-29.9
+3
+2
+Shengli Mines
+content
+Calorific value
+of major
+commercial
+coal products
+Xinjie Mines
+108.0
+Total
+Notes:
+325.8
+133.8
+Sulphur
+55.7
+94.8
+1. Trusted reserve and proved reserve are calculated based on the Classifications for
+Mineral Resources and Mineral Reserves (GB/T 17766-2020).
+2. The trusted reserve of Baotou Mines is 1.067 million tonnes.
+Characteristics of the commercial coal produced in the Group's major mines
+are as follows:
+No. Mines
+Major types
+of coal
+30.6
+0.2
+Lignite
+1.0
+Section IV Directors' Report (Continued)
+52
+52
+(4)
+Operating results
+(1)
+51
+The operating results of the coal segment of the Group before elimination
+on consolidation
+2022
+Change Main reasons for changes
+%
+Revenue
+RMB million
+273,306
+277,474
+2023
+2,956
+2023 Annual Report
+non-caking coal
+24.0
+4
+Baorixile Mines
+Lignite
+3,520
+0.2
+Note: The average calorific value, sulphur content and ash content of major commercial
+coal products produced by coal mine in each mine site may be inconsistent with the
+characteristics of the commercial coal products produced by individual coal mine and
+those of the commercial coal products sold by the Company due to storage conditions and
+production process.
+15.6
+5
+Baotou Mines
+Long flame coal/
+3,985-4,427
+0.5-1.1
+13.3-19.8
+LO
+0.1
+0.0
+0.3
+Coal resources
+As at 31 December 2023, under the PRC Standard, the Group had coal reserves
+amounting to 32.58 billion tonnes, representing a decrease of 0.32 billion
+tonnes as compared with that of the end of 2022; and recoverable coal reserve
+amounting to 13.38 billion tonnes, representing a decrease of 0.51 billion
+tonnes as compared with that of the end of 2022. The Group's marketable coal
+reserve amounted to 9.48 billion tonnes under the JORC Standard, representing
+a decrease of 0.32 billion tonnes as compared with that of the end of 2022.
+In 2023, the Group's coal exploration expenses (which were incurred before
+the conclusion of feasibility study and represented the expenses related to
+exploration and evaluation of coal resources) amounted to approximately
+RMB226 million (2022: RMB1.218 billion), which was mainly used for the
+preliminary expenses of Xinjie Mine; the Group's relevant capital expenditure
+of coal mine development and exploration amounted to RMB10.794 billion
+(2022: RMB7.008 billion), which was mainly attributable to the payment of the
+mining right related expenditure for the coal resource of Shangwan Colliery and
+Bulianta Colliery in Shendong Mine, as well as project construction expenditure
+of various mines and others.
+China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+Recoverable
+(3)
+Trusted
+coal reserve
+reserves
+Mines
+(under
+the PRC
+Standard)
+(under
+the PRC
+Standard)
+Coal reserve
+(under
+the PRC
+Standard)
+(9.3)
+Change
+0.1
+1,191
+(100.0)
+1.2
+1,035
+44.2
+7.7
+(26.3)
+price (exclusive of tax)
+450.0
+100.0
+584
+417.8
+100.0
+Total sales volume/average
+Unit: 100 million tonnes
+Proved
+reserve
+Shengli Mines
+19.1
+12.8
+5.1
+0.2
+2.1
+20.6
+Baorixile Mines
+7.8
+4.2
+1.7
+8.3
+Baotou Mines
+0.4
+12.8
+11.7
+7.2
+28.4
+(under
+the PRC
+Standard)
+Marketable
+coal reserve
+(under
+the JORC
+Standard)
+Shendong Mines
+149.7
+84.5
+39.2
+16.9
+63.6
+Zhunge'er Mines
+35.8
+(1.5) Decrease in average sales price
+(23.3)
+of coal
+RMB million
+Note: The sales cost of purchased coal includes the purchase cost of purchased coal, as
+well as the transportation and port charges incurred to realise the sales.
+Unit production cost of self-produced coal
+Unit: RMB/tonne
+2023
+2022
+Change Main reasons for changes
+37.7
+%
+162.4
+166.3
+(2.3)
+self-produced coal
+Raw materials, fuel and
+30.1
+Unit production cost of
+30.7
+101,372
+34.4
+million million
+million
+million million
+Self-produced coal
+Purchased coal
+178,242
+(89,856) 88,386
+84,626 (82,617) 2,009
+268,996 (167,624)
+49.6
+52.3
+2.4
+80,178 (77,627) 2,551
+3.2
+Total
+262,868 (172,473) 90,395
+188,818 (89,997) 98,821
+million
+(2.0)
+Personnel expenses
+2023 Annual Report
+53
+Section IV Directors' Report (Continued)
+2.
+Power Segment
+(1) Production and operation
+Other costs consist of the following three components: (1) expenses
+directly related to production, including expenses for coal washing,
+selecting and processing expenses, and mining engineering expenses,
+etc., accounting for 66%; (2) auxiliary production expenses, accounting
+for 19%; and (3) land requisition and surface subsidence compensation,
+environmental protection expenses, tax, etc., accounting for 15%.
+In 2023, the Group brought into full play the role of coal-fired power generation
+as a stabiliser by achieving high utilisation rates, high load rates and long
+periods of uninterrupted operation of coal-fired power generating units.
+The Group promoted the construction of highly-efficient clean coal power
+generating units, putting No. 1 and No. 2 power generation units of the Hunan
+Yueyang Project as well as No. 1 and No. 2 power generation units of the
+Guangdong Qingyuan Phase I Project into operation successively. Under the
+"integration, price, cost and profit" () business philosophy, the Group
+coordinated its efforts in volume-secured price maintenance, spot trading
+and thermal power marketing to realise increase in both sales volume and
+revenue. The Group realised a total power output dispatch of 199.75 billion
+kWh throughout the year, accounting for 2.2% of 9,224.1 billion kWh¹ of the
+total power consumption of the society in the corresponding period, of which
+the market-based trading power reached 194.56 billion kWh, accounting for an
+increase to 97.4% of the total power output dispatch. The average electricity
+selling price was RMB414/MWh (2022: RMB418/MWh), representing a year-
+on-year decrease of 1.0%.
+The Group expends renewable energy business development channels and
+continuously ramps up investment. In 2023, the Group took full advantage
+of land resources including open-cut mine dumps, reclamation areas and idle
+land along the railway to invest in and build photovoltaic projects. The 150
+MW centralised photovoltaic power station at the dump site of open-cut mine
+of Shengli Energy and the distributed photovoltaic projects in the Baorixile
+open-cut mine and the Guojiawan Power Plant achieved grid-connected
+power generation. As at the end of 2023, the Group has put into operation 77
+photovoltaic power generation projects with a total installed capacity of 512
+MW, of which the total installed capacity for external commercial operation
+is 395 MW. As at the end of 2023, Beijing Guoneng New Energy Industry
+Investment Fund and Beijing Guoneng Green and Low-Carbon Development
+Investment Fund, which were established with the participation of the
+Company, had completed the merger and acquisition of 37 new energy projects
+covering photovoltaic, wind power and hydrogen equipment manufacturing,
+with a cumulative return from project divestment of RMB98 million.
+Source: National Energy Administration
+54
+54
+1
+China Shenhua Energy Company Limited
+Intensifying the "three reforms linkages" (of coal-fired power units
+and promoting green and low-carbon-oriented transformation and development.
+In 2023, the Group completed energy-saving and consumption-reducing
+transformation of 10.20 GW, flexibility transformation of 5.58 GW and heating
+transformation of 4.40 GW of coal-fired power units, thereby adding a new
+heating capacity of 268 MW, enhancing the peak-shaving operation capacity
+by 525 MW, and lowering the standard coal consumption of coal-fired power
+generation units to 294.9 g/kWh (2022: 296.7 g/kWh), a decrease of 1.8 g/kWh
+as compared with the same period of last year.
+power
+6.9 Increases in costs of outsourced open-cut
+mine stripping work and others
+(9.9) Affected by the maintenance plan, the
+decrease in repair costs for some
+open-cut mines
+37.4
+44.8
+Repairs and maintenance
+9.1
+10.1
+Depreciation and
+4.8 Additional mine production equipment;
+increase in amortisation of long-term
+deferred expenses
+23.9
+amortisation
+Other costs
+61.9
+57.9
+(16.5) Mainly affected by appraisal, etc.;
+higher benchmark last year
+22.8
+RMB RMB RMB
+RMB RMB
+RMB
+Gross
+Gross
+Sales
+Regions
+revenue
+RMB
+2022
+Sales Gross profit
+costs profit margin
+RMB RMB
+Sales
+revenue costs profit
+RMB RMB RMB
+million million million
+Sales
+Gross profit
+margin
+%
+Domestic
+million million million
+Export and overseas
+2023
+income tax
+(196,959)
+(192,753)
+2.2 Increase in sales and purchase cost
+of purchased coal; increase in
+depreciation and amortisation,
+costs of outsourced stripping
+work for certain open-cut mines
+and others
+Gross profit margin %
+27.9
+The gross profit from the sales of coal products of the Group by regions
+before elimination on consolidation
+30.5 Decreased by
+points
+Profit before
+RMB million
+63,753
+73,536
+(13.3)
+2.6 percentage
+257,117 (166,785) 90,332
+5,751 (5,688) 63
+35.1
+263,112 (162,133) 100,979
+Gross
+Sales
+Sales
+Coal source
+revenue
+cost profit
+Gross
+Gross profit
+margin
+Sales
+Gross profit
+revenue
+cost
+profit
+margin
+Sales
+2022
+2023
+The gross profit from sales of coal products of the Group by coal source
+before elimination on consolidation
+38.4
+1.1
+5,884
+(5,491) 393
+6.7
+Total
+262,868 (172,473) 90,395
+34.4
+268,996 (167,624)
+101,372
+10
+37.7
+China Shenhua Energy Company Limited
+3.
+Section IV Directors' Report (Continued)
+Cost of sales
+3.6
+644
+1.3
+100.0
+584
+417.8
+100.0
+644
+7.7
+450.0
+(9.3)
+By internal and external customers
+2023
+Percentage
+Price
+2022
+Percentage
+Change
+Price
+Note: The above is a summary of the sales of the coal products with different calorific
+value of the Group, including thermal coal and other coals.
+Price
+price (exclusive of tax)
+(0.3)
+46.3
+(17.5)
+II. Direct sales at the coal
+mine pit
+22.8
+5.1
+Total sales volume/average
+328
+59
+5.5
+329
+29
+00
+0.0
+22.8
+776
+Sales to total sales
+Sales to total sales
+tonne
+%
+%
+664
+6.8
+(9.9)
+%
+12.5
+4.3
+(1.1)
+Sales to external customers
+370.5
+82.3
+598
+(5.4)
+(exclusive
+tonne
+RMB/
+(exclusive
+Sales
+(exclusive
+volume
+volume
+of tax)
+tonnes
+volume
+of tax)
+volume
+of tax)
+Million
+RMB/
+Million
+volume
+9.5
+40.0
+(7.4)
+of tax)
+Million
+RMB/
+Million
+RMB/
+tonnes
+volume
+tonne
+%
+tonne
+10
+%
+%
+1. Sales through Trading
+tonnes
+Group
+of tax)
+volume
+Price
+Percentage
+Price
+Price
+Sales
+to total sales
+volume
+(exclusive
+(exclusive
+Sales
+(exclusive
+volume
+volume
+of tax)
+Sales to total sales
+427.2
+94.9
+598
+contract
+110.0
+24.4
+3. Spot commodity
+58.5
+13.0
+2. Monthly long-term
+6480
+133.5
+640
+4380
+32.0
+873
+(17.6)
+808
+(2.9)
+16.8
+515
+98
+395.0
+94.5
+662
+70
+8.2
+18
+(9.7)
+1. Annual long-term
+contract
+258.7
+57.5
+500
+221.5
+53.0
+346.8
+83.0
+tonnes
+Sales to internal power
+197.6
+43.9
+450
+188.1
+45.0
+475
+1. Direct arrival
+5.1
+2. Seaborne
+225.9
+50.2
+695
+206.7
+49.5
+(5.3)
+775
+(8.1)
+632
+412.2
+98.7
+888
+638
+7.4
+(8.9)
+790
+(I) Self-produced
+purchased coal
+423.5
+94.1
+581
+394.8
+94.5
+coal and
+9.3
+(10.3)
+(II) Sales of domestic
+1.3
+II. Export sales
+0.0
+III. Overseas sales
+7.5
+282
+5.7
+706
+0.0
+0.4
+1.7
+763
+5.2
+212
+5.5
+coal
+Sales of imported
+(23.3)
+trading coal
+13.3
+33
+29
+2.9
+50
+556
+11.9
+19
+2.9
+20
+725
+25
+11.8
+18
+581
+98.3
+7.3
+I. Domestic sales
+151
+Total sales volume/average
+price (exclusive of tax)
+450.0
+100.0
+584
+451
+417.8
+00
+644
+7.7
+(9.3)
+2023 Annual Report
+49
+100.0
+50
+442.5
+446
+segment
+74.6
+16.6
+525
+25
+66.3
+4.7
+15.9
+55
+Sales to internal coal
+chemical segment
+4.9
+1.1
+46
+555
+50
+1.1
+(4)
+volume
+of tax) Sales volume
+of tax)
+Million
+RMB/
+RMB/
+volume
+tonnes
+tonnes
+%
+tonne
+%
+%
+Section IV Directors' Report (Continued)
+tonne
+of tax)
+Million
+By sales regions
+volume
+2023
+2022
+Change
+Percentage
+to total sales
+Price
+(exclusive
+Sales
+Price
+Price
+Sales to total sales
+(exclusive
+(exclusive
+volume
+Percentage
+186.72
+412
+11.1
+195.01
+175.36
+11.2
+416 (1.0)
+458
+34.06
+32.39
+5.2
+32.14
+30.52
+5.3
+207.40
+Guangdong
+(1) Coal-fired power
+Section IV Directors' Report (Continued)
+%
+446
+(2)
+Power output dispatch and price of electricity sold
+Gross power generation
+Total power output dispatch
+Operation location/
+power type
+(billion kWh)
+(billion kWh)
+Price of electricity sold
+(RMB/MWh)
+2023
+2022 Change
+2023
+2022 Change
+2023
+2022 Change
+%
+2.7
+3
+Total
+100.0
+Put into operation
+2
+Hunan Yueyang Power Plant (2×1,000MW)
+3,068
+100.0
+5,176
+China Shenhua Energy Company Limited
+The unit transportation cost in the port segment was RMB12.5/tonne in
+2023 (2022: RMB12.0/tonne), representing a year-on-year increase of 4.2%,
+I mainly due to the increase in depreciation and amortisation resulting from the
+increased port operating assets.
+1.7
+2,268
+2,307
+Profit before income tax RMB million
+percentage points
+64
+Guangdong Qingyuan Power Plant Phase I (2×1,000MW)
+1
+%
+investment in
+Contribution
+amount
+Phase of
+project to the
+projects at
+for the
+total budget as
+Reporting
+at the end of the
+the end of
+the Reporting
+No. Name of project
+Period
+Reporting Period
+Period
+RMB million
+44.8 Decreased by 1.8
+Percentage of
+accumulated
+43.0
+amortisation; increase in loading
+volume on port
+Speeding up the enhanced transportation capacity of ports. The Group actively
+implemented the spirit as conveyed in the important speech of General
+Secretary Xi Jinping during his inspection at Huanghua Port, and facilitated the
+complete run-through of the "railway, port and shipping" integrated reverse
+transportation, thereby realising the integrated two-way and heavy-loaded
+multimodal transportation. Huanghua Port's two-way route was successfully
+opened to 70,000-tonne ships. The Group also steadily pushed forward Phase
+V of Huanghua Port (coal port area), Phase II of Tianjin Coal Dock, capacity
+expansion of Zhuhai Port and Phase II of Fujian Luoyuanwan Port, so as
+to enhance its downstream diversion capacity. The ports have seen rapid
+development in bulk logistics business, with the 3# and 4# general bulk cargo
+terminals (50,000 tonnes) of Huanghua Port being put into operation, the bulk
+cargo volume builds up. The port segment of the Group handled a transportation
+volume of non-coal commodities of 12.5 million tonnes, representing a year-
+on-year increase of 62.3%.
+(2)
+Section IV Directors' Report (Continued)
+63
+2023 Annual Report
+In 2023, the port segment of the Group optimised the production organisation
+for arrangement, thereby ensuring the efficient and smooth progress of the
+integrated industrial chain in all efforts. Loading volume of coal at Huanghua
+Port was 209.5 million tonnes (2022: 205.2 million tonnes), representing a
+year-on-year increase of 2.1%, successively ranking the first in terms of the
+coal loading volume in China. Coal loading volume at Tianjin Coal Dock was
+45.8 million tonnes (2022: 45.2 million tonnes), representing a year-on-year
+increase of 1.3%.
+Focusing on the intelligent and green development of ports. The Group has
+intensified the R&D and application of automatic lading technologies, and
+Huanghua Port has become the first coal port in China to realise smart lading.
+The Group undertook the pilot project of "Green Port Development" in the
+campaign of building a powerful country via transportation infrastructure, which
+has been accepted by the Ministry of Transport. The Group realised the shore
+power facilities covering all the self-owned terminals and vessels, and achieved
+remarkable results in reducing pollutants and carbon emissions.
+(1) Production and operation
+4.
+In 2023, the unit transportation cost in the railway segment was RMB0.085/
+tonne km (2022: RMB0.076/tonne km), representing a year-on-year increase of
+11.8%, which was mainly due to the increase in repair and maintenance costs,
+personnel expenses and others.
+(12.5)
+12,742
+11,152
+Profit before income tax RMB million
+Port Segment
+Operation results
+The operation results of the port segment of the Group before eliminations on
+consolidation are as follows:
+2023
+Increase in depreciation and
+8.1
+(3,556)
+(3,844)
+RMB million
+Cost of sales
+Increase in loading volume on port
+4.8
+6,441
+6,749
+RMB million
+Revenue
+%
+Change Main reasons for changes
+2022
+Gross profit margin
+In 2023, the total capital expenditure of the power generation segment
+was RMB15,922 million, the capital expenditure breakdown of major power
+generation projects is set out as below:
+(7) Capital expenditure
+Section IV Directors' Report (Continued)
+5.15
+Decreased by 0.04
+percentage point
+Source: China Electricity Council
+2023 Annual Report
+57
+5.11
+58
+(5)
+Market transaction of power
+2023
+2022
+Change
+%
+Section IV Directors' Report (Continued)
+4.9
+4,925
+5,167
+percentage point
+Hydropower
+5,228
+5,340
+(2.1)
+0.28
+0.42 Decreased by 0.14
+percentage point
+Photovoltaic power
+905
+905
+725
+25
+24.8
+Weighted average
+Total volume of power in market-
+Put into operation
+194.56
+162.92
+2022
+RMB/MWh
+2023
+RMB/MWh
+2022
+2023
+2022
+1
+Shandong
+7.15
+5.82
+417
+420
+416
+417
+China Shenhua Energy Company Limited
+Billion kWh
+2023
+percentage points
+Unit cost of power
+purchase (exclusive of tax)
+Power output dispatch
+19.4
+based transactions (billion kWh)
+Total volume of on-grid power
+199.75
+179.81
+11.1
+(billion kWh)
+Percentage of the power in market-
+based transactions (%)
+97.4
+90.6
+Increased
+by 6.8
+percentage
+points
+(6) Operation results of the power sales business
+The principal operation model of the Group's subsidiary, Shandong Power Sales
+Company, is to earn profit through the price difference between the purchase
+and sales of electricity, which mainly engages in providing value-added
+services, such as procurement and sales of power, cross-province transactions,
+power equipment management, green power trading and power demand-side
+response agency. In 2023, the agent power output dispatch from Shandong
+Power Sales Company (excluding those from the Group's self-owned power
+plants) were 7.15 billion kWh, with the corresponding revenue from power
+sales and power purchase cost amounting to RMB3,366 million and RMB2,970
+million, respectively.
+No. Province
+Average price of electricity
+sold (exclusive of tax)
+Decreased by 0.01
+Decreased by 4.4
+36.3
+85,616
+%
+290.0
+0.0
+10
+0.1
+77,942
+39
+17
+80
+Photovoltaic power
+(0.9)
+0.2
+109
+370.6
+9.8 72,232
+100.0
+68,444
+in cost
+Percentage
+Costs
+Percentage
+Costs
+Change
+2022
+2023
+Cost of power sales of coal-fired power plant of the Group before
+elimination on consolidation
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+In 2023, the power segment consumed a total of 73.2 million tonnes
+(2022: 66.0 million tonnes) of coal sold within the Group (including self-
+produced coal and purchased coal of the Group), representing a year-on-
+year increase of 10.9%, mainly due to the year-on-year increase in power
+generation and the Group's integrated operation advantages to ensure
+the coal supply for power plants. The coal sold within the Group that
+was consumed by the power segment accounted for 78.0% of the total
+coal consumption of power segment, which was 93.8 million tonnes.
+The Group's cost of power sales is mainly comprised of raw materials,
+fuel and power, personnel expenses, repair and maintenance,
+depreciation and amortisation and other costs. The unit cost of power
+sales of the Group in 2023 was RMB361.6/MWh (2022: RMB380.7/
+MWh), representing a year-on-year decrease of 5.0%, mainly due to the
+decline of average coal purchase price.
+5.5
+100.0
+0.1
+RMB million
+108
+148
+83,252
+Coal-fired power
+%
+over 2022
+in 2022
+2022
+75,658
+in 2023
+Change
+2022
+2023
+Power type
+in 2023
+power sales
+2023
+10.0
+000
+70,273
+146
+Hydropower
+(17.7)
+3.2
+2,201
+2.5
+1,812
+0.9
+2,119
+2,138
+Gas-fired power
+6.3
+96.6
+66,124
+97.3
+(1.4)
+% RMB million
+%
+Raw material, fuel and power
+2022
+2023
+The operation results of the railway segment of the Group before elimination
+on consolidation are as follows:
+Operation results
+Section IV Directors' Report (Continued)
+(2)
+Change Main reasons for changes
+62 China Shenhua Energy Company Limited
+In 2023, the railway segment of the Group organised coal transportation
+efficiently with a view of securing energy supply. The Group implemented
+refinement of management of special railway lines, strengthen the effective
+connection between special railway line management and transportation
+resources, and improve the ability of safeguarding railway equipment in a
+professional, intensive and integrated manner. With the completion of the
+capacity expansion and transformation project of the Wochang Station of
+Zhunchi Railway, 20,000-tonne-heavy-haul loaded trains could operate safely
+across sections of Zhunchi Railway and Shuohuang Railway, further improving
+the efficiency of coal transportation. In 2023, the transportation turnover of
+self-owned railway of the Group reached 309.4 billion tonnes km (2022: 297.6
+billion tonnes km), representing a year-on-year increase of 4.0%. As the Group
+actively promoted the development of railway large-scale logistics business, the
+transportation volume of non-coal goods such as iron ore, manganese ore and
+chemicals reached 22.3 million tonnes (2022: 19.6 million tonnes), representing
+a year-on-year increase of 13.8%, of which the reverse transportation volume
+reached 16.9 million tonnes during the year.
+Production and operation
+(1)
+Railway Segment
+3.
+Section IV Directors' Report (Continued)
+The Group continued to promote the development of its railway collection and
+distribution system and improve the overall transportation capacity of its railway
+lines. The Group made sustained efforts to promote the 300 million-tonne and
+450 million-tonne capacity expansion and transformation project for Shenshuo
+Railway and Shuohuang Railway, respectively, which are expected to enhance
+the transformation capacity for its main channels. The Group accelerated the
+electrification of the Huangwan Railway to improve its downstream diversion
+capacity. The construction of special railway lines including Dongyue line
+was advanced to enhance the resource acquisition capacity on collection and
+transportation sides.
+%
+Revenue
+RMB million
+Gross profit margin
+turnover of self-owned railway
+others; increase in transportation
+costs, personnel expenses and
+Increase in repair and maintenance
+9.3
+(25,041)
+(27,380)
+RMB million
+Cost of sales
+self-owned railway
+Increase in transportation turnover of
+1.8
+42,197
+42,961
+61
+2023 Annual Report
+The cost of power sales of coal-fired power plant increased by 6.3%
+year-on-year. Among them, the year-on-year growth of cost of raw
+materials, fuel and power was mainly due to the increase in power sales;
+the year-on-year increase in personnel expenses was mainly due to a
+number of newly-added generating units of the Group put into operation,
+which resulted in the increase in related power production personnel;
+the year-on-year decrease in repair and maintenance costs was mainly
+due to the overhaul plan; the year-on-year increase in depreciation and
+amortisation was mainly due to the commissioning of several new units
+of the Group and the increases in property, plant and equipment; and
+the year-on-year increase in other costs was mainly attributable to the
+increase in the other costs related to the newly-commissioned units of
+the Group, among others.
+6.3
+1,854
+2.2
+1,576
+Repair and maintenance
+10.3
+5.6
+3,733
+5.9
+4,117
+Personnel expenses
+4.8
+78.5
+51,919
+77.4
+54,414
+2.8
+40.7
+(15.0)
+6,553
+100.0
+66,124
+100.0
+70,273
+Total cost of power sales of
+coal-fired power plant
+30.9
+4.2
+2,760
+5.2
+3,613
+Others
+11.9
+8.9
+5,858
+9.3
+Depreciation and amortisation
+power sales
+1.57
+2.4
+0.00
+0.02
+Shaanxi
+194 139.7
+465
+0.00
+0.02
+0.03
+0.03
+Guangdong
+(4.6)
+477
+455
+133.3
+0.00
+0.00
+271
+333 (18.6)
+Henan
+319
+0.01
+0.01
+Hebei
+2.0
+348
+355
+0.0
+0.01
+0.01
+0.0
+0.01
+0.01
+Shandong
+0.07 0.03
+0.00
+0.03 133.3
+Fujian
+0.64
+0.67 (1.5)
+0.66
+Sichuan
+0.4
+226
+0.65
+227
+0.65
+0.64
+(1.5)
+0.67
+0.66
+(III) Hydropower
+(1.5)
+(1.5)
+227
+(IV) Photovoltaic power
+201
+0.11
+0.12
+Inner Mongolia
+444 (28.4)
+0.4
+226
+275
+318
+525.0
+0.04
+0.25
+550.0
+0.04
+0.26
+0.07
+0.00
+575
+Total
+new units
+2,000 The operation of
+Hunan
+Description
+Increase
+of installed
+capacity
+MW
+Location
+Yueyang Power
+Company
+44,634
+4,333
+40,301
+Total
+395
+333
+In 2023, the changes of the Group's installed capacity for coal-fired power
+generating units are as follows:
+Qingyuan Power
+Guangdong
+Total
+Power consumption ratio of power plant (%)
+2022 Change
+2023
+Average utilisation hours (Hours)
+2022 Change
+2023
+Power type
+The average utilisation hours of coal-fired generators of the Group reached
+5,221 hours for the year 2023, representing a year-on-year increase of 270
+hours and 536 hours higher than the national average utilisation hours of 4,685
+hours for coal-fired generating units with the installed capacity of 6,000KW
+and above.
+Utilisation rate of power generation equipment
+Section IV Directors' Report (Continued)
+(4)
+new units
+4,000
+2,000 The operation of
+56 China Shenhua Energy Company Limited
+Source: China Electricity Council
+1
+62
+Photovoltaic power
+125
+0
+At the end of the Reporting Period, the total installed capacity of the Group's
+power generating units reached 44,634 MW, of which the total installed
+capacity of the coal-fired power generating units was 43,164 MW, accounting
+for approximately 3.1% of the total installed capacity of thermal power
+generating units of the society (being 1.39 billion kW¹).
+Installed capacity
+(3)
+Section IV Directors' Report (Continued)
+55
+2023 Annual Report
+Note: In 2023, both the power generation and output dispatch of the photovoltaic power stations
+of the Group in Henan Province was 1.86 million kWh.
+(1.0)
+418
+414
+11.1
+179.81
+199.75
+11.0
+212.26 191.28
+Unit: MW
+(1.6)
+Total installed
+capacity as at 31
+Total installed
+125
+Hydropower
+950
+0
+950
+Gas-fired power
+43,164
+4,000
+39,164
+Coal-fired power
+December 2023
+Reporting Period
+December 2022
+Power type
+during the capacity as at 31
+Installed capacity
+increased
+1.56
+564
+2.4
+(8.3)
+349
+320
+10.0
+12.16
+13.38
+Sichuan
+10.0
+14.67
+Inner Mongolia
+(5.9)
+423
+398
+1.0
+13.34
+14.27
+12.09
+18.0
+2.8
+429
+441
+170.0
+4.44
+11.99
+4.69 169.1
+12.62
+Guangxi
+0.0
+432
+432
+18.7
+11.39
+13.52
+22.35
+Jiangxi
+22.57
+23.82
+30.27
+33.46
+Shaanxi
+5,221
+4,951
+5.5
+10.5
+5.20
+Decreased by 0.04
+gangue-fired power plants)
+percentage point
+Gas-fired power
+4,152
+4,054
+5.24
+30.75
+27.79
+10.7
+24.04
+Hebei
+(4.6)
+452
+431
+16.4
+21.88
+25.46
+16.3
+22.89
+26.61
+Fujian
+(1.2)
+341
+337
+0.9
+11.31
+11.74
+(3.7)
+(6.8)
+1.33
+1.24
+(7.1)
+1.54
+1.43
+498
+Indonesia (overseas)
+391
+(12.6) 413
+4.70
+4.11
+(11.9)
+5.03
+5.6
+555
+(10.3)
+(II) Gas-fired power
+3.76
+3.85
+2.3
+3.85
+3.94
+Beijing
+(1.6)
+564
+555
+2.4
+3.76
+3.85
+2.3
+3.85
+3.94
+4.43
+Henan
+0.5
+416
+427
+418
+6.8
+9.36
+10.00
+7.0
+9.84
+10.53
+Shandong
+2.6
+425
+436
+(3.7)
+11.20
+10.79
+(2.1)
+555
+Hunan
+9.38
+418
+(2.3)
+9.29
+9.08
+(2.1)
+9.70
+9.50
+Chongqing
+(0.2)
+477
+476
+11.5
+8.95
+9.98
+11.6
+10.47
+Change
+Coal-fired power (including
+Cost of power sales
+6
+Guangdong Qingyuan Power Plant Phase II Expansion Project (2x1,000MW)
+272
+4.0
+Under construction
+7
+(150MW)
+Guangxi Beihai Power Plant Phase II Expansion Project (2x1,000MW)
+2.1
+Under construction
+Hebei Dingzhou Power Plant Phase III Expansion and Thermal Power Project
+(2x660MW)
+Approved
+9
+Hebei Cangdong Power Plant Phase III Expansion Project (2×660MW)
+149
+Approved
+Put into operation
+312
+Percentage to
+total costs of
+total costs of
+Percentage to
+Guangdong Huizhou Thermal Power Phase II Gas-thermal Power Project
+929
+46.0
+85.0
+Under construction
+4
+350
+4.8
+Under construction
+5
+Shengli Energy Open-cut Dump Disposal Photovoltaic Power Station Project
+(2x400MW)
+(8) Operation results
+Jiangxi Jiujiang Power Plant Phase II Expansion Project (2×1,000MW)
+2023
+points
+Profit before
+income tax
+RMB million
+10,910
+7,969
+36.9
+2.9 percentage
+2023 Annual Report
+60
+60
+The operation results of the power generation segment of the Group
+before elimination on consolidation
+Revenue from and cost of the power sales of the Group before
+elimination on consolidation
+Unit: RMB million
+Revenue from power sales
+59
+Increased by
+Section IV Directors' Report (Continued)
+16.0
+13.1
+9.3 Increase in the power output
+dispatch
+Revenue
+Change Main reasons for changes
+%
+RMB million
+92,407
+Increase in the power output
+dispatch
+2022
+Cost of sales
+RMB million
+(77,594)
+(73,491)
+5.6
+84,525
+Gross profit margin %
+3.245
+3.161
+100 million tonnes
+Commercial coal production
+in 2023
+Increase/
+(decrease)
+Target of 2024
+Unit
+%
+(2.6)
+Gross power generation
+100 million tonnes
+4.353
+4.500
+(3.3)
+100 million kWh
+2,163
+2,122.6
+1.9
+Revenue
+RMB100 million
+Actual amount
+3,300
+Coal sales
+Item
+(1) Industry Structure and Trend
+(III) Business Plan for 2024
+3,430.74
+(XII) Donations
+During the Reporting Period, the Group made external donations of RMB438 million.
+(XIII) Contingent Liabilities
+Details of the Group's contingent liabilities are set out in the "Commitments and Contingent
+Liabilities" in the notes to the financial statements in this report.
+(XIV) Pension Plan
+Details of the pension plan for the Group's employees are set out in the "Significant
+Accounting Policies" in the notes to the financial statements in this report in relation to the
+retirement benefit costs. There are no forfeited contributions under the defined contribution
+pension plans that may be used by the Group, being the contributions processed by
+employers on behalf of employees who withdrew from such plans prior to vesting fully in
+such contributions.
+(XV) Subsequent Matters
+☐ Applicable ✓ Not applicable
+2023 Annual Report 71
+Section IV Directors' Report (Continued)
+VI. THE COMPANY'S OUTLOOK FOR FUTURE DEVELOPMENT
+In 2024, the favourable conditions for China's development will outweigh the unfavourable
+factors, and the fundamental trend of economic recovery and long-term improvement will
+remain unchanged. The economic work of China will adhere to the principle of seeking
+progress while maintaining stability and promoting stability with incremental development,
+and establishing the new before abolishing the old, reinforcing the counter-cyclical and
+inter-cyclical adjustment of macro policies. To this end, China will continue to adopt
+proactive fiscal policies and sound monetary policies, take proactive steps to implement
+the policies for stabilising expectations, growth and employment, develop and expand
+strategic emerging industries, accelerate the development of new productivity boosters,
+and endeavour to promote the transition of growth models, structural adjustment, and
+quality and efficiency improvement, so as to promote the steady and long-term economic
+development in a sustainable manner. It is expected that China's economy will continue
+to rebound and improve in 2024, with a GDP growth rate of around 5%.
+For the coal industry, sustained economic recovery in China will stimulate the growth
+of energy demand. With the release of new coal production capacity and reinforced
+supervision on production safety, coal production will remain stable in general. Coal imports
+are expected to remain high. Generally, supply and demand of the coal market in 2024 is
+poised to be balanced and relaxed, and the price median of coal may remain stable at a
+reasonable range. As affected by seasonal fluctuations, emergencies and other factors,
+tight supply may occur in some areas and during some periods.
+For the power industry, taking into account factors such as macro-economy and
+electrification of energy-consuming equipment, China Electricity Council expected that
+the total electricity consumption of the whole society will increase by approximately 6%
+year-on-year in 2024, and the increment of installed capacity of power generation in 2024
+is expected to be basically equal to that in 2023, and the installed capacity of new energy
+power generation may for the first time outweigh the installed capacity of coal-fired power
+generation. In view of factors such as growing demand for electricity consumption and
+commissioning of power supplies, it is expected that the overall power supply and demand
+in China will be tight and balanced in 2024, and the power supply and demand in some
+regions will be tight during peak hours.
+72 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+(II) Development Strategy of the Company
+2023 is the first year to fully implement the spirit of the 20th National Congress of the
+Communist Party of China. According to the deployment of the CPC Central Committee and
+the State Council, the energy industry will be coordinated in respect of the development
+and safety, so as to promote the high-quality development of energy, and realize the
+improvement and stability of energy security supply and clean transformation, ensuring
+the solid guarantee for promoting high-quality economic development and meeting the
+people's need for a better life. Currently, energy supply has become routine, the role
+of coal in ensuring the energy supply and the role of coal power in ensuring the basic
+guarantee and systematic adjustment in the construction of a new power system have
+become increasingly obvious.
+In 2024, the Group will adhere to the guidance of Xi Jinping Thought on Socialism with
+Chinese Characteristics for a New Era, fully implement the guiding principles of the 20th
+National Congress of CPC and put in place the new strategy of "Four Revolutions and
+One Cooperation" for energy security, and the goal of carbon peak and carbon neutrality,
+earnestly carry out the comprehensive development strategy of "One Target, Three Roles
+and Six Responsibilities", adhere to the work-oriented principle of "seeking progress while
+maintaining stability, promoting stability with advancement, and establishing the new before
+abolishing the old", focus on enhancing core functions, enhancing core competitiveness,
+and focus on safe development, innovative development, green development, coordinated
+development, value development and Party building. We will build ourself into a world-class
+clean and low-carbon energy technology leader and a first-class comprehensive energy
+listed company, pursue steady and high-quality development, and constantly give back to
+investors, give full play to our role in technological innovation, industrial control, and safety
+support, and contribute China's Shenhua Power to China-style modernization with an aim to
+comprehensively promote the construction of a powerful country and national rejuvenation.
+In the second half of the "14th Five-Year Plan" period, the Group will continue to consolidate
+the core advantages of integrated operation, ensure the safe and stable supply of energy,
+obtain more access to coal resources and speed up the clean and efficient development and
+utilisation of coal to improve the comprehensive efficiency of energy utilisation, build clean
+and high-efficient thermal power unit and strengthen the development of comprehensive
+energy projects. We will optimise the layout of the transportation network, promote the
+integration of dedicated railway and connection lines, innovate and develop large-scale
+logistics business, and create a multi-functional, comprehensive and modern energy
+transportation channel. We will develop high value-added products such as coal-based
+new materials, and promote the development of high-end, diversified and low-carbon coal
+chemical industry. We will also leverage the advantages of high-level platform and strong
+financial position as a listed company, implement market value management and appraisal
+requirements, strengthen the cooperation with local government and enterprises, promote
+the steady and sustainable development of renewable energy including wind power and
+photovoltaic, study investment opportunities in strategic emerging industries such as
+energy storage, hydrogen energy, biomass energy projects, and foster future industries and
+accelerate the development of new quality productive forces so as to lay a solid foundation
+for the sustainable and sound development of the Company.
+2023 Annual Report
+73
+Section IV Directors' Report (Continued)
+1. Business Targets for 2024
+(3.8)
+(5,214)
+RMB100 million
+171.78
+159.22
+In 2023, there was no material dispute between the Group and its stakeholders.
+69.29
+53.46
+63.27
+Port
+12.49
+4.85
+Shipping
+2.26
+1.17
+Coal chemical segment
+23.62
+2.27
+Others
+6.27
+0.09
+Total
+74
+China Shenhua Energy Company Limited
+368.04
+419.59
+188.72
+98.16
+Of which: Railway
+Transportation segments
+2,358
+2,325.37
+1.4
+Total selling, general and administrative, RMB100 million
+150
+137.27
+9.3
+research and development expenses
+and net finance costs
+Percentage change of unit production
+cost of the self-produced coal
+Cost of sales
+Year-on-year
+increase of
+decrease of 2.3%
+approximately 10%
+The above business targets are subject to factors including changes in scope of
+consolidated financial statements, risks, uncertainties and assumptions. The annual
+actual outcome may differ materially from the targets. Such statements do not
+constitute actual commitments to investors. Investors should be aware that undue
+reliance on or use of such information may lead to investment risks.
+2.
+Capital Expenditure Plan for 2024
+Unit: RMB100 million
+Plan for 2024
+Completion
+in 2023
+Coal segment
+Power generation segment
+Year-on-year
+68.21
+The Group attaches great emphasis on good relationships with stakeholders such as
+customers, suppliers and other business partners to achieve its long-term goals. For details,
+please refer to the 2023 Environmental, Social and Governance Report of the Company.
+(XI) Relationship with Stakeholders
+1.
+(VIII) Analysis on Major Holding and Associated Companies
+☐ Applicable ✓ Not applicable
+(VII) Disposal of Material Assets and Equity Interest
+Section IV Directors' Report (Continued)
+69
+2023 Annual Report
+Note: On December 13, 2023, China Energy Digital and Intelligent Technology and Development (Beijing)
+Co., Ltd. ("DITD", a holding subsidiary of the Company) received 16,386 shares (the "Transferred
+Shares") from Poten Environment Group Co., Ltd. (stock code: 603603, security abbreviation: *ST
+Botian, a client of DITD), which was used to offset DITD's accounts receivable from *ST Botian.
+DITD classified the Transferred Shares as "Financial assets held for trading" and recognised an
+initial cost of RMB45,880.80. As at the end of the Reporting Period, DITD recognised a loss from
+fair value change of RMB20,974.08 for this "Financial assets held for trading" with a year-end
+carrying amount of RMB24,906.72.
+Major Subsidiaries
+(267) 2,740
+119
+0
+2,888
+Total
+0
+0
+held for trading Note
+Financial assets
+0
+(248) 254
+Unit: RMB million
+Company
+Increase in repair costs
+previous year
+from the excess tax paid in the
+income tax was settled in the same
+period of the previous year, and the
+current income tax was deducted
+(46.2) Decrease in sales price of coal; the
+29,248
+15,747
+4,989 39,594 28,872
+No.
+Shendong Coal
+Main reasons for changes
+2022 Change
+%
+(Restated)
+assets assets Net profit attributable to the equity holders of the parent company
+As at 31 December 2023
+2023
+Net
+Total
+Registered
+capital
+1
+(19) 2,486
+502
+receivables
+Impairment purchase
+fair value
+changes
+beginning
+Amount of
+Amount
+of
+changes in
+value
+disposal/
+redemption
+At the
+from fair
+losses
+Unit: RMB million
+Gains and
+During the Reporting Period, the financial assets at fair value held by the Group were
+mainly the non-trading equity investments that have no significant impact on the
+investees and bank acceptance bills that are planned to be discounted or endorsed.
+Financial Assets at Fair Value
+3.
+☐ Applicable ✓ Not applicable
+Cumulative
+At the
+end of
+of the
+Financing
+119
+2,386
+instruments
+in equity
+Other investments
+period changes period
+period
+the period
+equity
+period
+period
+Category of assets
+the
+for the Other
+for the
+provided for
+included in
+for the
+23
+For details of remuneration and training of the Group's employees, please refer to the
+"Employees" section in this report.
+45
+Shuohuang Railway
+10
+policy
+on-year due to income tax preferential
+Decrease in income tax expenses year-
+59.6
+947
+945
+1,511
+Yulin Energy
+9,636
+Increase in loading volume on port
+4.9
+1,482
+1,555
+10,284
+13,141
+6,790
+Huanghua Harbour
+Administration
+Railway Equipment
+6,300 21,516
+9
+2,420 7,599
+8.7
+So far as the Board and management of the Company are aware, during the Reporting
+Period, the Group has fully complied in all material aspects with the relevant laws and
+regulations that are related to the business and operation of the Group, there was no
+material breach of or non-compliance with the applicable laws and regulations by the Group.
+(X) Compliance with Relevant Laws and Regulations
+Applicable ✓ Not applicable
+(IX) Structured Entities Controlled by the Company
+Section IV Directors' Report (Continued)
+China Shenhua Energy Company Limited
+70
+Please refer to the section headed "Material Related Party/Connected Transactions"
+of this report for details of the Finance Company.
+4,109 1,485 1,366
+Major Companies in Which the Company has Invested
+Shuohuang Railway recorded a revenue of RMB22,217 million and a profit from operations of
+RMB7,920 million in 2023.
+(3)
+Shendong Coal recorded a revenue of RMB86,682 million and a profit from operations of
+RMB18,525 million in 2023.
+(2)
+The financial information of the major subsidiaries in the above table was prepared in accordance
+with the China Accounting Standards for Business Enterprises.
+(1)
+Notes:
+Increase in sales volume of coal
+2.
+Increase in sales volume of coal
+6.4
+1,671
+3,217
+7,232
+13,882
+1,169
+in coal production cost
+Decrease in sales price of coal; increase
+(17.5)
+5,161
+3,258
+4,256
+3,802 18,113
+Baorixile Energy
+Jinjie Energy
+(8.1)
+6,507
+5,983
+44,099 29,695
+15,231
+15,857
+(1.3)
+Decrease in sales price of coal
+Zhunge'er Energy
+1,778
+13,671
+7,789 27,739
+Decrease in coal sales price
+(2.1)
+2,574
+2,520
+8,724
+14,461
+2,925
+Beidian Shengli
+Trading Group
+in coal production cost
+Decrease in sales price of coal; increase
+(30.0)
+3,731
+2,612
+43,952
+52,238
+7,102
+19
+(11.7) Decrease in vessel rental
+Material Investment in Non-equity Interest
+180
+Output
+Thousand
+cost
+RMB/
+Output
+Thousand
+2.
+Applicable ✓ Not applicable
+Material Investment in Equity Interest
+Section IV Directors' Report (Continued)
+production
+1.
+In 2023, the equity investments of the Company in subsidiaries and associated companies
+amounted to RMB9,028 million (2022: RMB27,124 million), representing a year-on-year
+decrease of 66.7%. Equity investments for 2023 were mainly used to increase capital in
+subsidiaries such as coal, power generation and financial leasing, as well as associated
+companies such as finance companies, in order to accelerate project construction and
+promote business development.
+(VI) Analysis on Investments
+In 2023, the Group's overseas business operations are stable with normal progress in
+project construction. South Sumatra EMM in Indonesia achieved profitability by means
+of measures including adopting economic power generation strategies and reducing fuel
+costs. Benefiting from the stable coal supply, the Pembangkitan Jawa project was able to
+further increase its market share, with indexes of its generators ranking first successively
+among thermal power generators within the Indonesian power grid. Construction of the
+South Sumatra No. 1 Project is progressing steadily, with both generators expected to be
+commissioned in 2024. The Pennsylvania shale gas project in the United States is in good
+production and operation. The equity gas volume attributable to the Group in 2023 is 127
+million cubic meters. The construction of the Zashulanskoye project in Russia is advancing
+smoothly.
+The Group is mainly engaged in the production and sales of coal and power, railway, port
+and shipping transportation as well as coal-to-olefins businesses in the PRC. In 2023,
+the revenue from external transactions in domestic markets was RMB330,746 million,
+accounting for 96.4% of the Group's revenue. The revenue from external transactions in
+overseas markets was RMB12,328 million, accounting for 3.6% of the Group's revenue.
+Note: The revenue from external transactions is divided by the location of customers receiving services and
+purchasing products.
+(0.4)
+344,533
+343,074
+China Shenhua Energy Company Limited
+production
+production
+Unit
+6,379
+(4.4) Decrease in average sales
+price of polyolefin products
+Cost of sales
+RMB million
+(5,493)
+1.4
+Gross profit margin
+%
+8.7
+13.9 Decreased by 5.2
+Profit before income tax RMB million
+538
+percentage points
+(66.5)
+(3) Unit production cost of main products
+2023
+2022
+Change
+Unit
+Unit
+Total
+6,098
+0.4
+12,328
+tonnes
+tonne
+tonnes
+tonne
+%
+%
+Polyethylene
+Polypropylene
+362.4
+RMB/
+5,660
+5,812
+2.5
+340.5
+5,487
+340.3
+5,788
+0.1
+(2.6)
+353.4
+cost
+Output
+cost
+transactions in overseas markets
+Revenue from external
+(0.5)
+332,253
+330,746
+transactions in domestic markets
+Revenue from external
+Change
+%
+Unit: RMB million
+2022
+2023
+(V) Operations by Region
+Section IV Directors' Report (Continued)
+68
+2023 Annual Report 67
+In 2023, a total of 4.9 million tonnes of coal consumed by the coal chemical
+segment was all the coal sold within the Group (including self-produced coal
+and purchased coal of the Group).
+(5.2)
+25
+12
+12,280
+RMB million
+(5,569)
+%
+Decreased by
+4.8
+13.8
+9.0 percentage
+points
+Profit before income tax
+RMB million
+100
+706
+(85.8)
+In 2023, the unit transportation cost of the shipping segment was RMB0.028/
+tonne nautical mile (2022: RMB0.039/tonne nautical mile), representing a year-
+on-year decrease of 28.2%, mainly due to the decrease in vessel rental charges
+and fuel costs, and the increase in shipment freight turnover.
+2023 Annual Report
+65
+Section IV Directors' Report (Continued)
+6.
+Revenue
+(1)
+Production and operation
+The coal chemical segment of the Group comprises the coal-to-olefins project
+of Baotou Coal Chemical, the main products of which include polyethylene (with
+production capacity of approximately 300,000 tonnes/year), polypropylene (with
+production capacity of approximately 300,000 tonnes/year) and a small amount
+of by-products (including industrial sulphur, mixed C5, industrial propane,
+mixed C4, industrial methanol, fine methanol and others). In 2023, Baotou Coal
+Chemical Coal-to-Olefins Upgrading Demonstration Project commenced with
+additional production capacity of 750,000 tonnes/year. Upon completion, the
+project will further promote the development of the coal-based new material
+industry, which is conducive to the consolidation of the Group's integrated
+operation model.
+%
+In 2023, facilities of the coal-to-olefin project of Baotou Coal Chemical
+maintained a safe and smooth operation and achieved continuous and high
+production, with the output of polyolefin products totalling 702,900 tonnes,
+representing a year-on-year increase of 1.3%. The Group promoted the
+research and development of high-end coal-to-olefin products, broadened the
+product offerings, and developed new products such as high-transparency
+polypropylene resin and low-density polyethylene with high-load melt index,
+thus further enhancing its competitiveness in the market. The Group also
+optimised its technologies to effectively reduce energy and water consumption,
+with a year-on-year decrease of 3.0% and 8.6% in overall energy consumption
+and per-unit water consumption recorded throughout the year, respectively.
+Gross profit margin
+5.
+(4,602)
+RMB million
+Cost of sales
+shipping price
+(20.1) Decrease in average
+6,051
+4,836
+RMB million
+Revenue
+Change Main reasons for changes
+%
+2022
+2023
+The operation results of the shipping segment of the Group before eliminations
+on consolidation are as follows:
+Operation results
+(2)
+In 2023, the Group's shipping segment insisted on integrated operation
+with allocation of shipping capacity in scientific manner to ensure safe coal
+transportation, achieving an increase in the volume of imported and transit
+shipments. The shipping volume for the year was 152.9 million tonnes (2022:
+136.3 million tonnes), representing a year-on-year increase of 12.2% while
+shipment turnover amounted to 164.7 billion tonnes nautical miles (2022: 133.6
+billion tonnes nautical miles), representing a year-on-year increase of 23.3%.
+Due to the year-on-year decrease in the coastal shipping prices, revenue of
+the shipping segment decreased year on year.
+(1) Production and operation
+Shipping Segment
+Section IV Directors' Report (Continued)
+charges and fuel costs
+The sales of polyethylene and polypropylene products of the Group in 2023
+are as follows:
+Coal Chemical Segment
+2022
+6,765
+1.7
+(4.7)
+341.5
+2023
+340.6
+6,613
+0.3
+358.4
+3:3
+66 China Shenhua Energy Company Limited
+(2)
+Section IV Directors' Report (Continued)
+Operation results
+The operation results of the coal chemical segment of the Group before
+elimination on consolidation are as follows:
+2023
+2022
+Change Main reasons for changes
+(10.7)
+6,446
+5,908
+Polyethylene
+Polypropylene
+Change
+Sales
+Sales
+Sales
+364.4
+Price
+thousand
+RMB/
+volume
+thousand
+Price
+volume
+Price
+RMB/
+tonnes
+tonne
+tonnes
+tonne
+%
+%
+volume
+n0
+Note: The information of the above projects may change due to the progress of the projects in the future.
+The capital expenditure plans of the Group in 2024 are subject to the development of
+business plans (including potential acquisitions), progress of capital projects, market
+conditions, outlook for future operation environment and the obtaining of the requisite
+permissions and approval documents. Unless required by laws, the Company shall not
+assume any responsibilities for updating the data of its capital expenditure plans. The
+Company intends to finance its capital expenditures by cash generated from operating
+activities, short-term and long-term borrowings, and other debt and equity financing.
+2023 Annual Report
+77
+78
+1. Risk of Safety Production and Environmental Protection
+(IV) Major Risks and Countermeasures
+Investors should be aware that although the Company has reviewed and listed the major
+risks, and adopted relevant countermeasures, there is no absolute guarantee that all
+adverse impact could be eliminated due to the limitation of various factors.
+Although the Group has been sustaining stable performance in safety production for
+its coal mines, there are many safety risks intertwined and the landscape for energy
+supply remains challenging. Additionally, as national ecological and environmental
+protection requirements become increasingly stringent, the Group faces more
+constraints on energy-saving, emission reduction and environmental protection.
+100
+The Group has established the safety production target of preventing major or above
+safety production accidents to achieve "zero death". To cope with the risks of safety
+production, the Group adhere to a people-oriented approach and will continue to
+firmly establish the awareness of red lines by cementing the accountability for safety
+production, further improving the dual prevention mechanism for graded safety risk
+control, investigating and managing of hidden dangers. With in-depth improvement
+from the root in safety production, the Group will reinforce the development of
+emergency management system and safety production training, take effective
+approaches to improve emergency response ability, take advantage of information,
+develop new ways to formulate safety supervision mechanism, and comprehensively
+enhance the safety management standards.
+Section IV Directors' Report (Continued)
+14.0
+1. Xinjie No. 1 Mine in Taigemiao Area of Xinjie 8 million tonnes/year
+Mining Area
+750,000 tonnes/year
+1. Baotou Coal Chemical Coal-to-Olefin
+Upgrade Demonstration Project
+(IV) Coal chemical projects
+capacity of 17.50
+million tonnes
+Cargo Terminal Project
+55
+3.0
+70
+11.9
+19
+10
+2.0
+48
+To cope with the risks of environmental protection, the Group will fight the battle of
+the pollution prevention and control with in-depth efforts, continuously strengthen
+environmental monitoring, strictly adhere to the ecological red line, vigorously
+promote the construction of green mines, green smart heavy-haul railways, green
+ports and green shipping, and accelerate green and low-carbon transformation. The
+Group will keep strengthening the brand image by building of ultra-low emissions
+in coal power on an on-going basis. The Group will continue to further improve the
+environmental management system and strengthen the remediation of potential
+issues and environmental emergency management, actively adapt to requirements
+of "Dual Control" of total energy consumption and energy intensity in order to
+achieve energy-saving and emission reduction targets as well as to prevent severe
+environmental pollution incidents.
+171.5
+China Shenhua Energy Company Limited
+To cope with investment risks, the Group will intensify its research on industry
+layout, optimise its investment management system, strengthen the study and
+argument work in the early stage of projects, strictly control the investment decisions
+of projects, highlight the risk management and control of major projects, continue
+to focus on investment plans, expand effective investment, reasonably control the
+pace of project investment, and strengthen the investigation and supervision of the
+implementation of investment plans, actively, orderly and standardly carry out post-
+project evaluation work to improve the efficiency and benefits of investment.
+Section IV Directors' Report (Continued)
+23.4
+4. Guangdong Huizhou Thermal Power Phase II Installed capacity
+Gas-thermal Power Project
+2x1,000MW
+52
+24.0
+59.3
+Installed capacity
+3. Guangxi Beihai Power Plant Phase II
+Expansion Project
+2x1,000MW
+☐51
+24.0
+240
+71.7
+Installed capacity
+2. Guangdong Qingyuan Power Plant Phase II
+Expansion Project
+2x1,000MW
+100
+6.6
+80
+100
+2x400MW
+Shareholdings
+plan for
+2024
+investment
+of project
+Expected
+production capacity
+Name of project
+expenditure
+Expected total
+Capital
+28.0
+Section IV Directors' Report (Continued)
+2x100MW
+Distributed Energy Station Project
+100
+ㅎ..
+3.8
+12.1
+Installed capacity
+5. Guangdong Qingyuan Shijiao Natural Gas
+China Shenhua Energy Company Limited
+280
+73.7
+Installed capacity
+The capital expenditure of port segment will be mainly used for the construction
+of Huanghua Port (coal port area) Phase V Project, Huanghua Port (coal port
+area) Oil Products Terminal Project, Zhuhai Port Gaolan Port Area Guoneng
+Bulk Cargo Terminal Project and others.
+The capital expenditure of the coal chemical segment will be mainly used for
+coal-to-olefin upgrading demonstration project and others.
+2023 Annual Report
+75
+75
+7.0
+Section IV Directors' Report (Continued)
+The Group's capital expenditure plan for 2024 of major investment project is as
+follows:
+(5)
+Name of project
+Expected total
+investment
+of project
+Capital
+expenditure
+plan for
+2024
+Shareholdings
+of the Company
+RMB hundred million
+RMB hundred million
+%
+(1) Coal projects
+Expected
+production capacity
+of the Company
+(4)
+The capital expenditure of new energy business of RMB4.307 billion will be
+mainly used for the construction of photovoltaic power generation projects in
+Guangdong and Jiangxi, etc.
+1. Jiangxi Jiujiang Power Plant Phase I
+Expansion Project
+(II) Power generation projects
+60
+60
+40
+4.0
+146.8
+2. Xinjie No. 2 Mine in Taigemiao Area of Xinjie 8 million tonnes/year
+Mining Area
+The capital expenditure of the railway segment will be mainly used for the
+construction of special coal transportation lines for Dongyue railway, purchase
+of railway locomotives, railway capacity expansion and reconstruction projects
+and others.
+60
+Section IV Directors' Report (Continued)
+Total capital expenditure of the Group in 2023 amounted to RMB41.959 billion, which
+were mainly used for the acquisition of the mining rights and the purchase of coal
+mine production equipment; the power generation projects, such as Hunan Yueyang
+Power Plant and Guangdong Qingyuan power plant phase I; the construction for
+capacity expansion and renovation of railways, the construction for electrification
+renovation of railways and purchase of locomotives; and coal-to-olefin upgrading
+demonstration project.
+The Board of the Company approved a total planned capital expenditure of 2024 of
+RMB36.804 billion (excluding equity investment), including:
+(1)
+(2)
+Among the capital expenditure of the coal segment, RMB2.150 billion will
+be used in new construction as well as renovation and expansion projects
+(including the purchase of infrastructure related equipment); RMB2.274 billion
+will be used for equipment purchase; RMB5.392 billion will be used for other
+expenditure. The major investment projects include: purchasing of mining
+equipment for various mines in Shendong Mines, the construction of Xinjie
+No. 1 Mine and No. 2 Mine in Taigemiao Area of Xinjie Mining Area, etc.
+Among the capital expenditure of the power generation segment, RMB10.159
+billion will be used in new construction projects (including the purchase of
+related equipment); RMB0.655 billion will be used in technical renovation in
+environmental protection; RMB1.821 billion will be used in technical renovation
+in non-environmental protection, and RMB236 million will be used for other
+expenditure. The major investment projects include: Jiangxi Jiujiang Power
+Plant Phase II Expansion Project, Guangdong Qingyuan Power Plant Phase II
+Expansion Project and Guangxi Beihai Power Plant Phase II Expansion Project,
+etc.
+(3)
+60
+2.
+RMB hundred million
+%
+Section IV Directors' Report (Continued)
+6.
+Compliance Risk
+7.
+The Group is large in asset size and has a long industrial chain. It is difficult to identify
+and prevent risks, which may trigger events such as contract disputes and regulatory
+penalties. Changes in the international political and economic situation may lead to
+the legal compliance risks in the construction and operation of overseas projects.
+To cope with the compliance risk, the Group will optimise the legal compliance risk
+prevention system on a continuous basis, carry out compliance risk identification,
+early warning and response and disposal in different levels and categories, and use
+information technology to improve the effectiveness of compliance management. The
+Group will promote the "standardisation of main business contracts", proceed the
+"layered listing supervision" mechanism for major cases, and improve the prevention
+and response capabilities for major legal cases. The Group will strengthen the
+compliance management of coal-fired power projects, such as project approval and
+licensing, and standardise the construction and operation of projects. The Group will
+enhance the follow-up research on legal systems of the countries where the projects
+are located, monitor overseas compliance risks that overseas projects may face in a
+regular manner, and implement risk prevention and control measures.
+Policy Risk
+The business activities of the Group are affected by the national industrial control
+policies. The goal of "carbon peak and carbon neutrality" has put forward new and
+higher requirements for the high quality development of the energy industry. The
+national proposal for accelerating the building of a new energy system to undergo
+profound changes in energy supply and demand, structure, and technology will
+objectively affect the Company's industrial layout, the approval of new and expansion
+projects, and the reform of operation and management mode.
+To cope with the policy risks, the Group will strengthen the research on the latest
+national industrial policies and regulations, enhance policy coordination, seize the
+resource continuation policies window period, promote resource continuity, increase
+in reserves and production, license application and the increase of authorised
+production capacity. It will also focus on its principal business, and prudently advance
+the goal of carbon peak and carbon neutrality. The gradual withdrawal from traditional
+energy should be based on the safe and reliable replacement of new energy. The
+Group will reasonably match the investment scale of each segment, and firmly
+promote the clean and efficient utilisation of coal by adhering to the direction of
+green, clean and low-carbon development, accelerating the industrial arrangement
+of renewable energy, and pushing forward industrial upgrading and green and low-
+carbon transformation. The Group will also refine carbon emission standards of all
+segments, and strengthen the management of carbon assets, so as to promote the
+green electricity and green certificate trading in a well-coordinated way.
+82 China Shenhua Energy Company Limited
+8.
+Section IV Directors' Report (Continued)
+Risks of International Operations
+As the world enters a new era of turbulence and revolution, the global political and
+economic landscape will undergo profound changes in the future due to the influence
+of various factors such as the relationships among major powers, the slowdown of
+global economic recovery, geopolitical tensions, climate changes and the overlapping
+of different risks and challenges, and the acceleration of energy transformation and
+emission reduction initiatives across different countries will lead to more intensified
+competition in the energy market, which may pose uncertainties on the Group's
+international operations.
+To cope with the risk of international operations, the Group will continue to enhance
+its study and judgement on international situation, especially on the Russia-Ukraine
+situation, changes in investment policies of host countries, new energy markets
+and public security risks, and will further carry out resource evaluation, operation
+performance evaluation and technology assessment for overseas projects based
+on sound information collection, analysis and research prior to making any decision
+on overseas projects investment so as to ensure economic and technological
+feasibility. The Group will strengthen overseas risk screening, regularly monitor the
+overseas legal compliance risks, and take multiple measures to prevent and resolve
+risks. Furthermore, the Group will strengthen the cultivation and introduction of
+interdisciplinary talents, actively and steadily implement the "Going Global" strategy
+in accordance with the requirements of coordinating the overall domestic and
+international situations.
+The exchange rate risk confronted by the Group mainly comes from overseas
+operations and recognised assets and liabilities that are denominated in foreign
+currencies. The major foreign currencies are US dollars, Indonesian rupees etc. For
+details, please refer to information in Note "Financial Risk Management Objectives
+and Policies" to the financial statements of this report. The Group actively monitors
+exchange rate changes to strike a balance between capital and currencies, reducing
+the risk of exchange rate fluctuations.
+No material change has occurred to the nature and severity of the above significant
+risks, particularly those environmental, social and governance-related risks, as
+compared to the previous reporting period, and the Group will further improve its
+risk assessment and control mechanism, enhance its risk prediction, assessment and
+control capabilities, and effectively mitigate the influence of such risks.
+81
+2023 Annual Report
+To cope with the risk of integrated operations, the Group will continue to strengthen
+its core advantage of integrated operations. The Group will take an array of measures
+based on safety production, including focusing on the comprehensive coordination
+and balance of integrated operations, optimising the layout of coal and power
+industries, strengthening scientific scheduling and plan management, improving
+railway collection and distribution system, strengthening the coordination of power
+grid, and strengthening the production and operation management. Additionally, the
+Group will actively develop new energy sources, expand the coverage of integrated
+operations as much as possible, and optimise the allocation of resources across
+the entire industry and multiple factors, with the aim to continuously enhance the
+resilience of integrated industrial chain, value chain and supply chain.
+The Group's advantages in integrated operation of coal, power, transportation and
+coal chemical come along with the risks arising from the interruption of individual
+parts of the entire integrated chain. In case of poor organisation or coordination or a
+discontinuation of any part, the balance and high efficiency of integrated operations
+will be affected and the impact may adversely affect the Group's business results.
+Risk of Market Competition
+As the domestic coal production capacity continues to unwind and the international
+energy market tends to ease, the price of coal faces increased uncertainty. With
+the speed-up of reform in power market and the establishment of new energy
+system and new power system, the landscape of market competition is evolving at
+a faster pace, and the scale and price of transactions are uncertain. The country has
+increased the construction of cross-provincial and cross-region coal transportation
+railway channels. The coal transportation capacity will be gradually released, and the
+structure of transportation tends to be diversified.
+In response to the risks of market competition, the Group will strengthen the research
+on the macroeconomic situation and improve the accuracy of the pre-judgment to
+coal market, formulate coal purchase and sale mechanism and price policy in different
+areas and at different times, optimise the structure of coal products, increase brand
+advantage on an ongoing basis, strengthen the development of new markets and
+the maintenance of existing markets, take coordinated measures to ensure product
+and production capacity reserve, focus on coal transfer and consumption markets,
+take active and prudent approaches to design coal reserve bases and deepen the
+comprehensive coordination of production, transportation, sales, storage and use of
+coal. The Group will step up efforts to increase revenue and efficiency of the power
+market and power business and conduct risk prevention and control to ensure safety
+production. The Group will continue to increase the collection and distribution capacity
+of self-owned railways, promote the construction of dedicated railway lines for coal
+core areas, accelerate the transformation of capacity expansion of railway lines and
+further expand "Large-scale Logistics" business to increase the transportation volume
+of non-coal goods. The Group will also deepen synergy and efficiency improvement,
+promote model innovation, enhance customer service capabilities, further strengthen
+and increase market share, and further consolidate integration advantages.
+2023 Annual Report
+79
+Section IV Directors' Report (Continued)
+3.
+Risk of Project Management
+2023 Annual Report
+The overall progress of the Group's existing projects is stable. However, there are
+certain uncertainties in the construction of specific projects. For example, insufficient
+project risk prediction, insufficient capacity of the design unit and other factors, which
+may lead to the risks of prolonging construction period, delaying construction time
+and increase in investment. The failure to fully implement safety responsibility, weak
+safety awareness of part of the construction workers, failure to effectively implement
+the project safety management system may lead to the risk of safety accidents.
+80 China Shenhua Energy Company Limited
+Section IV Directors' Report (Continued)
+4.
+5.
+Investment Risk
+The ecological and environmental constraints are tightening, and the policy of
+carbon peak and carbon neutrality are forcing deep energy conservation and clean
+and low-carbon development. New energy will usher in extraordinary and leapfrog
+development, and investment efforts and scale will continue to increase. There are
+uncertainties in market and policy and other factors, which may affect the investment
+returns of the projects.
+150.5
+Risk of Integrated Operations
+To cope with the risk of project management, the Group will further improve its
+infrastructure management system and carry out management work at key steps,
+such as project design, commencement of construction, implementation, completion
+and acceptance, and handover and commissioning of projects, in a graded manner.
+The Group will continue to strengthen the unified management of the construction
+plan, technology, technical economics, safety and quality of projects, improve the
+functional management of construction, project early management and construction
+team management and strictly control project design, budget and settlement. It will
+also enhance the project cost control, track and monitor project construction in real
+time, and timely formulate effective measures to reduce or eliminate the impact of
+extension of time. The Group will strengthen its construction safety management,
+establish and improve the management mechanism of the project safety committees
+covering all participating construction units and the safety control mechanism for
+the entire lifecycle of projects, strengthen the remediation of hidden safety risks
+and hazards of construction projects, enforce its administration in safety emergency
+plans and eliminate major and more severe safety incidents. The Group will also put
+in practice the quality supervision system for projects under construction, strengthen
+the supervision and management of the quality behaviours of the participating
+construction units and the quality of the project entities, and properly carry out the
+in-process supervision of project quality as well as the quality accreditation work
+for individual units and constructions, so as to avoid the risk of construction quality
+accidents.
+83
+Section IV Directors' Report (Continued)
+VII. CASES AND REASONS OF FAILURE OF DISCLOSURE IN ACCORDANCE WITH
+GUIDELINES BY THE COMPANY DUE TO NON-APPLICABLE GUIDELINES OR
+SPECIAL REASONS
+Railway of 270
+80
+100
+2.5
+24
+12.4
+tonnes per year
+Total length of Xinshuo
+2. The 300 Million-tonne Capacity Expansion
+and Transformation Project for Shenshuo
+Railway
+kilometers with an
+volume of 65.80 million
+line; the near-to-
+kilometres of main
+65
+8.0
+156.6
+Total length of 128.655
+1. Dongyue Railway (Dongshengdong to
+Taigemiao Railway Project)
+(III) Transportation projects
+forward shipment
+RMB hundred million
+estimated annual
+3. Huanghua Port (coal port area) Phase V
+☐ Applicable ✓ Not applicable
+VIII. PERFORMANCE OF THE BOARD AND ITS SPECIAL COMMITTEES
+Please refer to the section headed "Corporate Governance and Corporate Governance Report"
+IX. OTHERS
+Please see the section headed "Significant Events" for management contracts; please see
+the section headed "Corporate Governance and Corporate Governance Report" for permitted
+indemnity provision, interests of directors and supervisors in significant transactions, arrangements
+or contracts and dividends; please see the section headed "Changes in Shares and Particulars of
+Shareholders" for issuance and listing of securities, and repurchase of listed securities.
+84
+China Shenhua Energy Company Limited
+4.8
+freight volume of 300
+70
+49.6
+46
+5. Zhuhai Port Gaolan Port Area Guoneng Bulk Designed annual port
+capacity of 6.06 million
+tonnes
+4. Huanghua Port (coal port area) Oil Products Designed annual port
+Terminal Project
+capacity of 53 million
+tonnes
+Project
+million tonnes
+Designed annual port
+3.0
+76
+Notes:
+Prior to the foregoing, Mr. Xu had served in various
+capacities, including the chief of political work office, a
+member and a deputy secretary to the Party Committee
+directly under former China Guodian, the secretary
+to the board of directors, the assistant to the general
+Imanager and the head of general office of former
+China Guodian, the director of people work division
+of the Departmental Party Committee of the State
+Bureau of Coal Industry, the deputy director of labour
+union working division, deputy director of general
+division of people work department and a director-level
+investigator and researcher of the Central Enterprise
+Working Committee, the director of news division and
+assistant inspector of the bureau of publicity under the
+State-owned Assets Supervision and Administration
+Commission of the State Council, a deputy secretary of
+prefectural committee in Tacheng, Xinjiang, and a deputy
+inspector of the bureau of publicity under the SASAC.
+Party Committee
+Xu Mingjun
+Executive Director
+Male 60
+29 May 2020
+Until the expiration
+111.48
+20.24
+131.72 No
+of the term of the
+current session of
+the Board
+Executive Vice President
+Secretary of the Party
+29 November 2018
+7 September 2018 17 November 2023
+Committee
+Jia Jinzhong
+Non-executive Director
+Male 60
+29 May 2020
+-
+29 December 2021
+Chief Executive Officer and
+Deputy Secretary of the
+current session of
+the Board
+monetary
+Reporting parties of the
+Name
+Position
+Gender Age appointment date)
+term of office
+office)
+Company
+income
+Until the expiration
+Period Company
+Executive Director
+Male
+59
+24 June 2022
+Until the expiration
+123.48
+23.93
+147.41 No
+of the term of the
+Lv Zhiren
+90
+90
+of the term of the
+60
+60
+29 May 2020
+Until the expiration
+30.00
+30.00 No
+of the term of the
+current session of
+the Board
+Male
+China Shenhua Energy Company Limited
+Unit: RMB ten thousand
+Pre-tax
+remuneration
+received in the
+Date of
+appointment
+(from the first
+remuneration and corporate
+Scheduled
+paid for
+annuities
+Company during
+the Reporting
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+paid by the
+Independent Non-executive
+Director
+the Board
+current session of
+the Board
+Yes
+Yang Rongming
+Non-executive Director
+Male
+58
+25 June 2021
+Until the expiration
+Yes
+Bai Chong-En
+of the term of the
+the Board
+Yuen Kwok Keung Independent Non-executive Male 59
+29 May 2020
+Until the expiration
+30.00
+30.00 No
+Director
+of the term of the
+current session of
+current session of
+the 2022 term of
+expiration of
+(from the first
+Date of disclosure
+of the poll results
+The designated
+website for publishing
+the poll results
+Date
+(III) Convening of General Meetings during the Reporting Period
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+The Company has formulated an effective shareholder communication policy. The Company
+has formulated the Measures on the Administration of Investor Relations of China Shenhua
+Energy Company Limited to clarify the shareholder communication methods and the
+organisation and implementation of investor relations activities; the shareholders are
+provided with channels to express their opinions through telephone calls, online results
+briefings, on-site meetings and other means. For details, please refer to the "Investor
+Relations" section of this report. The Company has reviewed the implementation and
+effectiveness of the shareholder communication policy and considers that the Company
+has established an effective channel of communication with its shareholders.
+In 2023, the Company did not amend the Articles of Association.
+(II) Investor Relations
+Resolutions
+Pursuant to Articles 66, 69 and 75 of the Articles of Association, the shareholders may
+submit written request to the Board for the convening of extraordinary general meetings or
+class meetings and submit proposals to the Company at shareholders' general meetings.
+Upon providing the Company with written evidence of the class and number of shares
+of the Company held by the shareholders, and following verification of the shareholders'
+identity by the Company, the shareholders are entitled to inspect the relevant information of
+the Company or obtain the Articles of Association, the register of shareholders, minutes of
+shareholders' general meetings, resolutions of meetings of the Board and the Supervisory
+Committee, regular reports and financial and accounting reports, etc.
+Shareholders' Rights
+(I)
+III. GENERAL MEETINGS
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+88
+2023 Annual Report 87
+The Company, as an integration platform of the coal business of China Energy Group, will
+discretionally exercise the options and the pre-emptive rights to any business opportunities
+and assets which may constitute potential competition, thereby gradually reducing peer
+competition, pursuant to the agreements set out in the Non-competition Agreement and
+its relevant supplemental agreements.
+In 2023, the Company commenced the acquisition of 100% equity interest in Dayan Mining
+and 100% equity interest in Hangjin Energy held by China Energy, which are still in progress
+as at the end of the Reporting Period. For details, please refer to the H share announcement
+of the Company dated 25 June 2023 and the A share announcement of the Company dated
+26 June 2023.
+On 16 June 2023, the Supplemental Agreement II to the Existing Non-Competition
+Agreement entered into between the Company and China Energy was approved at the 2022
+annual general meeting of the Company, pursuant to which, the period for the Company to
+seize the opportune moment to exercise the options and pre-emptive rights to acquire the
+assets involved in the retained businesses was extended to 27 August 2028. For details,
+please refer to the H share announcement of the Company dated 28 April 2023 and the A
+share announcement of the Company dated 29 April 2023.
+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.
+Being the parent company subsequent to the restructuring, China Energy merged with
+China Guodian by the way of absorption. As approved by the 2018 first extraordinary
+general meeting of the Company, the Company entered into the Supplemental Agreement
+to the Existing Non-Competition Agreement with China Energy. It is agreed by both
+parties that other than the amendments in the Supplemental Agreement to the Existing
+Non-competition Agreement, the clauses of the Existing Non-competition Agreement will
+continue to be performed. Pursuant to the Supplemental Agreement to the Existing Non-
+competition Agreement, within five years after the completion of China Energy merging
+with China Guodian by the way of absorption, the Company will discretionally exercise the
+options and the preemptive rights to acquire the assets within the retained businesses, and
+will no longer implement the 2014 Non-competition Undertakings. The retained businesses
+refer to (1) original undertaking assets (excluding the acquisition of three equity assets by
+the Company completed in 2015) other than the assets of conventional power generation
+business, and (2) the unlisted businesses held by China Guodian which directly or indirectly
+compete with the main businesses of the Company (excluding the relevant assets that
+China Guodian undertook to inject into its subsidiary, Inner Mongolia Pingzhuang Energy
+Co., Ltd., in 2007). For details, please refer to the H share announcement of the Company
+dated 1 March 2018 and the A share announcement of the Company dated 2 March 2018.
+Meetings
+2023 First A Shareholders
+Class Meeting
+Pre-tax
+1. Directors, Supervisors and Senior Management in office as at the end of the
+Reporting Period
+Changes in Shareholding and Remuneration of Directors, Supervisors and
+Senior Management
+(1)
+IV. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+89
+2023 Annual Report
+The Company's shareholders' representative, supervisors' representative, witness lawyers
+and the representative of Computershare Hong Kong Investor Services Limited acted as
+scrutineers at the general meetings. The PRC legal advisor of the Company issued the legal
+opinion. Representatives of the auditors attended the annual general meeting.
+2022 Annual General Meeting
+The Company accepted registration of shareholders' attendance, and arranged a special
+session for the shareholders' effective consideration of proposals at the meeting.
+Shareholders actively participated in the meeting and were entitled to exercise their various
+rights, such as the right to know, the right of speech, the right to question and the right
+to vote. Directors, supervisors and senior management of the Company attended the
+meeting. Shareholders interacted with the management through special Q&A sessions at
+the meetings.
+Mandate to Repurchase H Shares was
+considered and approved at the 2023 First
+H Shareholders Class Meeting by way of
+on-site voting by poll.
+Resolution on Granting the Board the General
+internet voting.
+approved at the 2022 Annual General
+Meeting by a combination of on-site voting
+by poll and internet voting.
+Resolution on Granting the Board the General
+Mandate to Repurchase H Shares was
+considered and approved at the 2023
+First A Shareholders Class Meeting by a
+combination of on-site voting by poll and
+All the 12 resolutions were considered and
+17 June 2023
+16 June 2023
+The website of the SSE
+The website of the HKEX
+16 June 2023
+2023 First H Shareholders
+Class Meeting
+All the resolutions tabled at the shareholders' general meeting above were passed.
+Period (including the
+Corporate Governance Report (Continued)
+China Shenhua Energy Company Limited
+received in the
+Company during
+Unit: RMB ten thousand
+Date of
+appointment
+remuneration and corporate
+Scheduled
+paid for
+annuities
+remuneration
+the Reporting
+Social
+insurance,
+performance-based housing funds
+Total pre-tax
+remuneration Whether
+received in to receive
+the Company compensation
+during the from related
+Other
+Period (including the
+Section V Corporate Governance and
+Section V Corporate Governance and
+Corporate Governance Report
+CORPORATE GOVERNANCE
+The Resolution on the Performance of Non-competition Undertaking was approved at the
+45th meeting of the second session of the Board on 27 June 2014 and the Announcement
+on the Performance of Non-competition Undertaking was disclosed to public. The Company
+disclosed that it will gradually commence the acquisition of 14 assets of the former
+Shenhua Group Corporation Limited and its subsidiaries as planned ("Original Undertaking
+Assets") (For details, please refer to the H share announcement of the Company dated
+27 June 2014 and the A share announcement of the Company dated 28 June 2014). The
+Company completed acquisitions of 100% equity of Ningdong Power, 100% equity of
+Xuzhou Power and 51% equity of Zhoushan Power in 2015.
+There are potential peer competitions between the coal business and other business
+of China Energy Group and the main business of the Company. On 24 May 2005, the
+former Shenhua Group Corporation Limited entered into the Agreement on Avoidance of
+Competition with the Company.
+(II) Avoidance of Competition
+Save as disclosed above, China Shenhua has a relatively independent and complete
+business system from its controlling shareholders, as well as a market-oriented self-
+operation capability. The Company is independent from its controlling shareholder in terms
+of business, personnel, assets, organisation, finance and other aspects.
+China Energy Group, the controlling shareholder of the Company, complies with the
+principles of honesty and credibility, exercises the rights and obligations of shareholders in
+accordance with the law. When China Energy Group nominates candidates for directors or
+supervisors, it shall follow the conditions and procedures stipulated in laws and regulations
+and the Articles of Association. In the event of consideration of the related transactions
+with controlling shareholders at the Board and shareholders' general meeting, the related
+directors and controlling shareholders shall abstain from voting. The Company owns an
+independent, complete integrated industrial chain. There are potential peer competitions
+between the coal business and other business of China Energy Group and the major
+business of the Company, and China Energy Group has taken measures to avoid peer
+competitions. For more information, please refer to "Avoidance of Competition" below.
+Measures of Ensurance of Independence of Listed Company by Controlling
+Shareholders
+(1)
+ENSURANCE OF INDEPENDENCE OF LISTED COMPANY BY CONTROLLING
+SHAREHOLDERS
+Save as stated above, the Company has been in full compliance with the provisions of various
+principles and Corporate Governance Code and most of the recommended best practices as
+specified therein during the year ended 31 December 2023. For the terms of functions and
+powers of the Board and the Board committees under the Corporate Governance Code, please
+refer to the Articles of Association, rules of procedure of the Board and the Board committees,
+which have been published on the websites of the stock exchanges where the Company is listed
+and on the Company's website.
+I.
+II.
+Section V Corporate Governance and
+86
+85
+2023 Annual Report
+On 11 January 2023, Mr. Huang Qing resigned as the secretary to the Board and company
+secretary of the Company. On 28 April 2023, Mr. Song Jinggang was appointed as the secretary
+to the Board of the Company. Following the resignation of Mr. Huang Qing, Mr. Lv Zhiren, the
+authorised representative of the Company, and Mr. Song Jinggang, the secretary to the Board,
+proactively fulfilled the corresponding responsibilities of the company secretary stipulated under
+the Hong Kong Listing Rules so as to ensure compliance of the Company's governance practices
+with the code provisions to the fullest extent possible. The secretary to the Board, Mr. Song
+Jinggang, received more than 15 hours of training as required in 2023. On 22 March 2024, the
+27th meeting of the fifth session of the Board of the Company approved the appointment of Mr.
+Song Jinggang and Mr. Zhuang Yuan as joint company secretaries of the Company for a term of
+three years from the date of approval by the Board, and they can be re-appointed upon expiration
+of their terms of office.
+On 31 July 2022, Mr. Wang Xiangxi resigned as the chairman and executive director of the
+Company. Upon the recommendation of the incumbent directors, Mr. Lv Zhiren, the executive
+director and chief executive officer, would convene the meetings of the Board. was an interim
+arrangement made in accordance with the relevant requirements of the Company that the Board
+would be convened by Mr. Lv Zhiren. And all major decisions falling into the scope of the Board's
+powers were still made after collective consultations and consideration by each member of
+the Board. The Company has been actively conducting relevant work to fill the vacancy of the
+chairman of the Board as soon as practicable.
+The convening, voting and disclosure procedures of Board meetings of the Company, rules
+of procedure of the Board and procedures for nomination and appointment of directors are in
+compliance with relevant requirements. Being a standing decision-making body of the Company,
+the Board is accountable to the shareholders' general meeting, and exercises function and power
+in accordance with the requirements of Article 136 of the Articles of Association and relevant
+applicable regulatory requirements. Being a standing executive body of the Company, operating
+management comprising senior management including the chief executive officer, is accountable
+to the Board and exercises function and power in accordance with the requirements of Article
+156 of the Articles of Association and relevant applicable regulatory requirements. The Articles
+of Association sets out in details the respective duties of the chairman of the Board and the
+chief executive officer. The chairman of the Board and the chief executive officer are held by
+different personnel.
+The Board is responsible for implementing good corporate governance of the Company. The
+Company has been in compliance with the requirements of corporate governance policies under
+the corporate governance code as set out in Appendix C1 of the Hong Kong Listing Rules (the
+"Corporate Governance Code") to establish its own system of corporate governance.
+The Company has established a relatively sound corporate governance structure and a smooth
+operating mechanism, and there are no material differences from the laws, administrative
+regulations and requirements of China Securities Regulatory Commission ("CSRC") regarding to
+the governance of listed companies.
+Corporate Governance Report (Continued)
+Social
+insurance,
+performance-based housing funds
+Committee and General
+Counsel
+(1)
+(2)
+Date of
+appointment
+of directors,
+supervisors
+and senior
+management
+(from the first
+Scheduled
+Unit: RMB ten thousand
+Board, Member of the Party
+Pre-tax
+received in the
+Company during
+the Reporting
+Period
+Social
+insurance,
+(including the housing funds
+performance-based and corporate
+remuneration annuities
+remuneration
+Total pre-tax
+Huang Qing Former Secretary to the
+Name
+Total
+Committee
+Secretary to the Board
+28 April 2023
+773.83
+154.30
+928.13
+2023 Annual Report
+91
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Positions
+Notes:
+(2)
+(3)
+The remuneration received by personnels mentioned above from the Company covers the year of
+2023 or the period during their terms of 2023. Except for the remuneration stated above, during
+the Reporting Period, the total incentive income during the terms of 2021-2022 of RMB632,800
+(before tax) was further paid by the Company to certain directors in accordance with relevant
+regulations, including Lv Zhiren of RMB228,900, Xu Mingjun of RMB403,900; and the total incentive
+income of RMB774,500 (before tax) during the terms of 2021-2022 was paid by the Company to
+the senior management, including Wang Xingzhong of RMB352,900, Li Zhiming of RMB325,700,
+Song Jinggang of RMB95,900. The remuneration package of directors and supervisors for 2023
+is subject to approval by the annual general meeting of the Company; the remuneration package
+of the senior management was approved by the Board of the Company.
+None of the personnels mentioned above held or traded any shares in the Company during the
+term of service in 2023.
+It is approved by the 2019 annual general meeting of the Company that the term of service of the
+fifth session of the Board and the Supervisory Committee shall be three years (29 May 2020 to 28
+May 2023). The terms of office in the above table are identical to the dates of appointment by the
+shareholders' general meeting or the Board. According to the Articles of Association, a director or
+supervisor whose term of office expires shall continue to perform his/her duties if such position
+is not yet re-elected.
+The ages were calculated as at 31 December 2023.
+Directors, Supervisors and Senior Management Resigned During the Reporting
+Period
+(4)
+2.
+(1)
+Member of the Party
+received in to receive
+during the from related
+Reporting parties of the
+Period Company
+1.
+Brief Biography
+(1) Directors in office as at the end of the Reporting Period
+Name
+Lv Zhiren
+Executive Director,
+Chief Executive
+Officer and Deputy
+Secretary of the
+Party Committee
+Biographical details
+Born in November 1964, male, Chinese, a member
+of the Communist Party and a senior engineer.
+Mr. Lv has extensive work experience in corporate
+management in strategy, operation, risk, ESG and other
+fields. He graduated from the School of Economics
+and Management of Beijing Union University in 1987,
+majoring in National Economic Management and
+obtained an EMBA degree from Shanghai University of
+Finance and Economics in 2005.
+(II) Details of Current Directors, Supervisors and Members of Senior Management
+of the Company, and Those Who Resigned during the Reporting Period
+Mr. Lv has served as the executive director of the
+fifth session of the Board of the Company since June
+2022, the chief executive officer of the Company since
+December 2021, and deputy secretary of the Party
+Committee of the Company since November 2021.
+Mr. Lv served as secretary to the Party Committee of
+Guodian Power Development Co., Ltd. from September
+2018 to November 2021, deputy general manager of
+Guodian Power Development Co., Ltd. from September
+2018 to December 2021, director of Guodian Power
+Development Co., Ltd. from February 2020 to December
+2021, director, secretary to the Party Committee and
+deputy general manager of Beijing GD Power Co.,
+Ltd. from February 2019 to December 2021, and
+deputy president of the Company from March 2017 to
+September 2018.
+2023 Annual Report
+93
+Section V Corporate Governance and
+Corporate Governance Report (Continued)
+Name
+Xu Mingjun
+Executive Director,
+Executive Vice
+President
+Biographical details
+Born in October 1963, male, Chinese, a member of the
+Communist Party of China, a graduate of postgraduate
+program and a senior political engineer. Mr. Xu has
+extensive experience in corporate management.
+Mr. Xu has served as the executive director of the fifth
+session of the Board of the Company since May 2020,
+and the executive vice president of the Company since
+November 2018. Mr. Xu has served as the secretary of
+the Party Committee of the Company from September
+2018 to November 2023, the assistant to the general
+manager of China Energy concurrently from May 2018
+to October 2019, and assistant to general manager of
+former China Guodian, secretary to the Leading Party
+Group, secretary to the Party Committee and executive
+vice president of GD Power, assistant to chief executive
+officer of the China Energy and secretary to the Party
+Committee and executive vice President of GD Power
+from May 2016 to September 2018.
+Prior to the foregoing, Mr. Lv had served as the general
+Imanager of the Strategic Planning Department of the
+former Shenhua Group Corporation Limited and the
+Company.
+the Company compensation
+Corporate Governance Report (Continued)
+92 China Shenhua Energy Company Limited
+Other
+Gender Age
+appointment
+date)
+expiration of
+term of office
+paid for the 2022
+paid by the
+monetary
+term of office)
+Company
+Section V Corporate Governance and
+income
+58
+6 November 2004 11 January 2023
+48.60
+48.60 No
+Except for the remuneration stated above, during the Reporting Period, the total incentive income
+during the terms of 2021-2022 of RMB363,500 (before tax) was further paid by the Company to
+Mr. Huang Qing in accordance with relevant regulations. The remuneration package of the senior
+management was approved by the Board of the Company.
+The above-mentioned person did not hold or trade any shares in the Company during the term of
+service in 2023.
+(3)
+The age was calculated as at 31 December 2023.
+92
+Male
+94 China Shenhua Energy Company Limited
+106.54 No
+83.83
+30.00
+30.00 No
+of the term of the
+current session of
+the Board
+Liu Xiaolei
+Employee Director
+Female 49
+5 July 2022
+Until the expiration
+Until the expiration
+20.63
+98.14 No
+of the term of the
+current session of
+the Board
+Tang Chaoxiong
+Chairman of the Supervisory Male
+Committee
+55
+24 June 2022
+77.51
+Until the expiration
+29 May 2020
+Independent Non-executive
+Director
+Total pre-tax
+remuneration Whether
+received in to receive
+the Company compensation
+during the from related
+Other
+Name
+Position
+Gender Age
+Male 55
+appointment date)
+the 2022 term of
+paid by the
+monetary
+Reporting parties of the
+office)
+Company
+income
+Period Company
+Chen Hanwen
+expiration of
+term of office
+22.71
+Yes
+Supervisor
+23.17
+126.39 No
+Male
+and Member of the Party
+Committee
+Li Zhiming
+Executive Vice President
+Male
+55
+103.22
+26 March 2021
+22.72
+128.14 No
+and Member of the Party
+Committee
+Song Jinggang
+Chief Financial Officer and
+Male
+49
+26 August 2022
+105.42
+Zhou Dayu
+30 December 2019
+Wang Xingzhong Executive Vice President
+Male
+58
+17 June 2016
+of the term of the
+current session of
+the Supervisory
+Committee
+Until the expiration
+Yes
+of the term of the
+current session of
+the Supervisory
+Committee
+59
+Zhang Feng
+Male 48
+5 July 2022
+Until the expiration
+78.89
+20.90
+99.79 No
+of the term of the
+current session of
+the Supervisory
+Committee
+Employee Supervisor
+remuneration Whether