CHINA SHENHUA ENERGY COMPANY LIMITED Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
(Stock Code: 01088)This announcement is made pursuant to Rule 13.09(2) of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited and the Inside Information Provisions under Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).
On 29 January 2016, the Resolution in Relation to the Proposed Provision for Impairment of Assets of China Shenhua was considered and approved at the 14th meeting of the third session of the board of directors and the 7th meeting of the third session of the supervisory committee of China Shenhua Energy Company Limited (the "Company").
In 2015, the Company continued to spend extra efforts on the upgrade and transformation of the energy conservation and environmental protection of coal-fired generators; there have been sustained losses in certain coal mines, coal selection plants and coal chemical enterprises of the Company as the prices of coal and coal chemical products further decreased in the second half of the year. In order to reveal the objective and impartial view of the assets conditions of the Company, in accordance with the principle of prudence, the Company has conducted impairment tests on the fixed assets, constructions in progress and inventories (spare parts) which had indication of impairment at the end of 2015 based on China Accounting Standards for Business Enterprises ("CASs") and International Accounting Standards ("IASs") and proposed to make corresponding provision for impairment based on the results of the impairment tests.
BASIC INFORMATION ON THE PROPOSED PROVISION FOR IMPAIRMENT OF ASSETS
The Company proposed to make provision for impairment of assets amounting to RMB4.809 billion, including RMB3.929 billion for the provision for impairment of fixed assets and constructions in progress and RMB880 million for the provision for impairment of inventories (spare parts). Details are as follows:
Certain power plants of the Company
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11 power plants including Hebei Guohua Dingzhou Power Generation Co., Ltd.
Reasons for and basis of the provision for impairment
In 2015, 11 power plants including Hebei Guohua Dingzhou Power Generation Co., Ltd. commenced upgrading the techniques of energy conservation and environmental protection. Indication of impairment occurred to the fixed assets and unusable spare parts which had been demolished or were necessary to be demolished including machineries and equipment due to technical transformation.
Pursuant to the requirements of CAS No. 1 - Inventories, CAS No. 8 - Asset Impairment and IAS 36 - Impairment of Assets, if an asset has or will become idle, its usage has been terminated or disposed of ahead of schedule, it indicates that the asset may have been impaired; the recoverable amount shall be estimated as the net amount of the fair value of the asset minus the costs to disposal of the asset and the provision for impairment shall be made if the carrying amount is higher than the recoverable amount; if the inventory cost is higher than the net realizable value, provision for inventory impairment shall be made.
(2) Amount of the provision for impairment
According to the results of the asset impairment tests, Hebei Guohua Dingzhou Power Generation Co., Ltd. proposed to make an impairment provision for long-term assets of RMB234 million and an impairment provision for inventories (spare parts) of RMB6 million; Hebei Guohua Cangdong Power Co., Ltd. proposed to make an impairment provision for long-term assets of RMB193 million; Guangdong Guohua Yuedian Taishan Power Co., Ltd. proposed to make an impairment provision for long-term assets of RMB169 million and an impairment provision for inventories (spare parts) of RMB17 million; Zhejiang Guohua Zheneng Power Co., Ltd. proposed to make an impairment provision for long- term assets of RMB132 million; Tianjin Guohua Panshan Power Generation Co., Ltd. proposed to make an impairment provision for long-term assets of RMB83 million; Sanhe Power Co., Ltd. proposed to make an impairment provision for long-term assets of RMB69 million; Guohua Taicang Power Generation Co., Ltd. proposed to make an impairment provision for long-term assets of RMB47 million and an impairment provision for inventories (spare parts) of RMB3 million; Jiangsu Guohua Chenjiagang Power Co., Ltd. proposed to make an impairment provision for long-term assets of RMB25 million; Guohua Huizhou Thermal Power Branch of the Company proposed to make an impairment provision for long-term assets of RMB20 million; Shenhua Guohua Mengjin Power Generation Co., Ltd. proposed to make an impairment provision for long-term assets of RMB13 million and an impairment provision for inventories (spare parts) of RMB6 million; Suizhong Power Co., Ltd. proposed to make an impairment provision for inventories (spare parts) of RMB10 million.
- Guohua Beijing Thermal Power Plant
Reasons for and basis of the provision for impairment
Pursuant to the requirements of the Notice in Relation to the Closure of Coal-fired Generators at the Guohua Beijing Thermal Power Plant (Jing Fa Gai [2015] No. 510) issued by the Beijing Municipal Commission of Development and Reform, the coal- fired generators at Guohua Beijing Thermal Power Plant are closed from 20 March 2015.
Pursuant to the requirements of CAS No. 1 - Inventories, CAS No. 8 - Asset Impairment and IAS 36 - Impairment of Assets, if an asset has or will become idle, its usage has been terminated or disposed of ahead of schedule, it indicates that the asset may have been impaired; the recoverable amount shall be estimated as the net amount of the fair value of the asset minus the costs to disposal of the asset and the provision for impairment shall be made if the carrying amount is higher than the recoverable amount; if the inventory cost is higher than the net realizable value, provision for inventory impairment shall be made.
Amount of the provision for impairment
According to the result of the asset impairment test at the end of 2015, Guohua Beijing Thermal Power Plant proposed to make an impairment provision for long-term assets of RMB195 million and an impairment provision for inventories (spare parts) of RMB29 million.
CSEC - China Shenhua Energy Company Ltd. issued this content on 29 January 2016 and is solely responsible for the information contained herein. Distributed by Public, unedited and unaltered, on 29 January 2016 15:08:17 UTC
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