Cover Story "Clean Coal” and "Green Environment” are the themes for China Shenhua Energy Company Limited’s annual report this year. Today, coal has an important role in satisfying the world's growing appetite for energy. As a leader in the industry, we develop valuable coal energy and generate returns in a responsible and environmental friendly manner, and through which, we have established a leading example in the industry. Since the environment is important to us all, how coal is used is an important matter. Our goal is to contribute to a better future on basis of a safe and efficient production environment. Contents 4 Company Profile 7 Results Highlights 8 Group Structure Important notice The board of directors, supervisory committee and the directors, supervisors and senior management of China Shenhua Energy Company Limited (the “Company”) warrant that this report does not contain any misrepresentation, misleading statements or material omissions, and jointly and severally accept full responsibility for the authenticity, accuracy and completeness of the information contained in this report. All directors of the Company have attended meetings of the board of directors. KPMG Huazhen and KPMG have issued standard unqualified audit reports to the Company in accordance with China’s Auditing Standards and Hong Kong Standards on Auditing, respectively. Mr. Chen Biting, Chairman of the Company, Ms. Zhang Kehui, Chief Financial Officer and the person in charge of accounting affairs of the Company, and Mr. Hao Jianxin, General Manager of Accounting and the person in charge of the accounting department of the Company, warrant the authenticity and completeness of the financial statements in this annual report. 11 Chairman’s Statement 60 Directors’ Report 16 Major Financial Data and Indicators 111 Business Environment 20 Changes in Equity and Shareholders 118 Investor Relations 27 Directors, Supervisors, 123 Supervisory Committees’ Report Senior Management and Employees 126 Significant Events 38 Corporate Governance Structure 147 Financial Statements 59 General Meetings 318 Documents Available for Inspection Company Profile Results Highlights Group Structure Company Profile 1. Statutory Chinese Name: 中國神華能源股份有限公司 Abbreviation: 中國神華 English Name: China Shenhua Energy Company Limited Abbreviation: CSEC 2. Legal Representative: Chen Biting 3. The Secretary to the Board of Directors: Huang Qing Tel: (010) 5813 3399 Fax: (010) 8488 2107 E-mail: [email protected] Contact Address: 4th Floor, Zhouji Tower, 16 Ande Road, Dongcheng District, Beijing, China Representative of Securities Affairs: Chen Guangshui Tel: (010) 5813 3355 Fax: (010) 8488 2107 E-mail: [email protected] Contact Address: 4th Floor, Zhouji Tower, 16 Ande Road, Dongcheng District, Beijing, China 4. Registered Address: 22 Andingmen Xibinhe Road, Dongcheng District, Beijing, China Office Address: 4th Floor, Zhouji Tower, 16 Ande Road, Dongcheng District, Beijing, China Post Code: 100011 Website: http://www.csec.com or http://www.shenhuachina.com E-mail: [email protected] 5. Newspapers for Information Disclosed: China Securities Journal (A Shares) and Shanghai Securities News (A Shares) Internet website designated by China Securities Regulatory Commission for publishing A Shares annual report: http://www.sse.com.cn Internet website designated by The Stock Exchange of Hong Kong Limited for publishing H Shares annual report: http://www.hkex.com.hk Annual report available at: Investor Reception Room, 4th Floor, Zhouji Tower, 16 Ande Road, Dongcheng District, Beijing, China 4 Company Profile Results Highlights Group Structure 6. A Shares Listed in: Shanghai Stock Exchange Stock Short Name for A Shares: 中國神華 Stock Code for A Shares: 601088 Listing Date: 9 October 2007 H Shares listed in: The Stock Exchange of Hong Kong Limited Stock Short Name for H Shares: 中國神華 Stock Code for H Shares: 1088 Listing Date: 15 June 2005 7. Registration Number of Corporate Business License: 1000001003928 Tax Registration Number: Jing Guo Shui Dong Zi No. 110101710933024; Di Shui Jing Zi No. 110101710933024000 Organisation Code: 71093302-4 8. Other Information Date of first business registration: 8 November 2004 Location of first business registration: Beijing 9. PRC Auditor: KPMG Huazhen Office address of PRC Auditor: 8th Floor, Office Tower E2, Oriental Plaza, 1 East Chang An Avenue, Beijing International Auditor: KPMG Certified Public Accountants Office address of International Auditor: 8th Floor, Prince’s Building, 10 Chater Road, Central, Hong Kong 10. Joint Company Secretaries Huang Qing, Ng Chai Ngee (Hong Kong Practising Solicitor) 11. Authorised Representatives Ling Wen, Huang Qing 5 Company Profile Results Highlights Group Structure 12. Investor Contacts Investor Relations Department, China Shenhua Energy Company Limited Address: 4th Floor, Zhouji Tower, 16 Ande Road, Dongcheng District, Beijing, China Post code: 100011 Tel: (010) 5813 3399 or (010) 5813 3355 Fax: (010) 8488 2107 E-mail: [email protected] or [email protected] 13. Legal Advisers PRC Legal Adviser King & Wood Address:31st Floor, Tower A, Jianwai SOHO, 39 Dongsanhuan Zhonglu, Chaoyang District, Beijing, China Hong Kong Legal Adviser Herbert Smith Address:23rd Floor, Gloucester Tower, 15 Queen’s Road, Central, Hong Kong 14. Hong Kong Representative Office Address: Unit B, 60th Floor, Bank of China Tower, 1 Garden Road, Central, Hong Kong 15. Domestic Share Registrar and Transfer Office China Securities Depository and Clearing Corporation Limited Shanghai Branch Address: 36th Floor, China Insurance Building, 166 Lu Jia Zui Dong Lu, Pudong New Area, Shanghai 16. Hong Kong Share Registrar and Transfer Office Computershare Hong Kong Investor Services Limited Address: Rooms 1712-1716, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong 17. Principal Bankers Industrial and Commercial Bank of China Limited, China Construction Bank Limited, Bank of China Limited and Bank of Communications Co., Ltd. 6 Company Profile Results Highlights Group Structure Results Highlights Operational Percentage change 2007 2006 % (restated) Commercial coal production (Million tonnes) 158.0 136.6 15.7 Coal sales (Million tonnes) 209.1 171.1 22.2 of which: Export (Million tonnes) 24.0 23.9 0.4 Turnover of coal transported by self-owned railways (Billion tonne km) 116.7 99.0 17.9 Seaborne coal (Million tonnes) 130.3 117.7 10.7 of which: Huanghua Port (Million tonnes) 81.2 79.2 2.5 Shenhua Tianjin Coal Dock (Million tonnes) 19.2 1.6 1100.0 Gross power generation (Billion kwh) 79.74 57.86 37.8 Total power output dispatch (Billion kwh) 74.35 53.91 37.9 As at 31 December Recoverable coal reserve (under PRC standard) (Million tonnes) 11,482 9,099 26.2 Marketable coal reserve (under JORC standard) (Million tonnes) 7,320 5,957 22.9 Financial (under International Financial Reporting Standards) Percentage change 2007 2006 % (restated) Per share (RMB) Earnings per share 1.110 0.975 13.8 Equity attributable to equity shareholders per share1 5.38 3.59 49.9 Final dividend for the year2 0.18 0.34 N/A For the year (RMB million) Revenues 82,107 65,186 26.0 Profit for the year 24,037 20,523 17.1 Profit attributable to equity shareholders of the Company 20,581 17,644 16.6 As at 31 December (RMB million) Total assets 239,038 172,360 38.7 Total liabilities 89,234 83,129 7.3 Total equity 149,804 89,231 67.9 of which: equity attributable to equity shareholders of the Company 129,788 69,784 86.0 Notes: (1) Equity attributable to equity shareholders per share was calculated on the basis of the average net assets attributable to equity shareholders of the Company and the weighted average number of shares of the Company in relevant years; (2) Refers to the final dividend for year 2006 and final dividend proposed by the board of directors for 2007 only, excluding the special dividend declared for 2007 in an aggregate amount of RMB22,544 million. In this report: • The “Group”, “Company”, “China Shenhua”, “we”, “us” or “our” means China Shenhua Energy Company Limited, a joint stock limited company established in the PRC on 8 November 2004, and unless otherwise specified in the context, includes its subsidiaries; • Coal production figures are quoted in tonnes of commercial coal, unless otherwise specified; • All prices are quoted exclusive of value-added tax, unless otherwise specified; • All financial indicators are denominated in RMB, unless otherwise specified; • The China Accounting Standards for Business Enterprises refer to the Accounting Standards for Business Enterprises (2006) issued by the Ministry of Finance of the Peoples’ Republic of China; and • This report is prepared in Chinese and English respectively. In case of discrepancies, the Chinese version shall prevail. 7 Company Profile Results Highlights Group Structure Group Structure 8 9 Chen Biting Chairman 10 Chairman’s Statement Major Financial Data and Indicators Changes in Equity and Shareholders Directors, Supervisors, Senior Management and Employees Corporate Governance Structure General Meetings Chairman’s Statement Dear Shareholders, If you held H shares of China Shenhua throughout 2007, you would be delighted to find that your investment generated returns of 149%, outperforming by more than 2.7 times the growth of the Hang Seng China Enterprises Index over the same period. In 2007 China Shenhua issued 1.8 billion A shares listed on Shanghai Stock Exchange. By the end of 2007, the market capitalization of the Company reached US$168.4 billion, an increase of 3.87 times more than that of 2006. In terms of market capitalization, the Company is ranked first among listed companies in the coal sector and second in the mining sector globally. I think this fully demonstrates the recognition by investors of the enterprise value and market position of China Shenhua as a prime blue chip company. I am deeply grateful for the long-term support from our shareholders to the Company. Behind such outstanding market performance, it is a moving story of an entire team at Shenhua dedicated to high quality management and pursuit of corporate aspiration.