CHINA COAL ENERGY COMPANY LIMITED CHINA COAL ENERGY COMPANY ADD : 1, HUANGSI DAJIE, CHAOYANG DISTRICT, BEIJING, CHINA POST CODE : 100120 TEL : (010) 82236028 FAX : (010) 82256484 www.chinacoalenergy.com 2015 Annual Report Annual Report 2 015 (A joint stock limited company incorporated in the People’s Republic of China with limited liability) Stock Code : 01898 Contents Overview of Key Financial Data 2 Overview of Business Data 5 Organisation Chart of the Company 8 Chairman’s Statement 10 Management Discussion and Analysis of Financial Conditions and Operating Results 13 Business Performance 36 Capital Expenditure 46 Technological Innovations 53 Investor Relations 55 Safety, Health, Environmental Protection and Social Responsibility 57 Directors, Supervisors, Senior Management and Employees 60 Directors’ Report 72 Supervisory Committee’s Report 89 Corporate Governance Report 93 Independent Auditor’s Report 109 Financial Summary for Recent Five Years 215 Company Profile 216 Definitions 218 Note: In this report, unless otherwise indicated, all financial indicators are presented in RMB. ANNUAL REPORT 2015 1 Overview of Key Financial Data SUMMARY OF CONSOLIDATED BALANCE SHEET Unit: RMB100 million As at As at Notes 31 December 31 December Percentage of to financial Items 2015 2014 Change (%) statements Assets 2,580.26 2,440.12 5.7 Of which: Property, plant and equipment 1,288.05 1,263.67 1.9 Note 6 Mining rights and exploration rights 328.44 331.68 -1.0 Note 8 Investments in associates 112.22 101.35 10.7 Note 10(b) Inventories 68.25 86.22 -20.8 Note 15 Trade and notes receivables 132.69 134.59 -1.4 Note 16 Term deposits with initial term of over three months 184.16 58.16 216.6 Note 18 Cash and cash equivalents 111.96 181.32 -38.3 Note 18 Equity 1,002.82 1,029.29 -2.6 Of which: Equity attributable to the equity holders of the Company 837.08 869.04 -3.7 Non-controlling interests 165.74 160.25 3.4 Liabilities 1,577.44 1,410.83 11.8 Of which: Long-term borrowings 544.80 510.16 6.8 Note 21 Long-term bonds 258.96 308.55 -16.1 Note 22 Provision for close down, restoration and environmental costs 13.32 12.45 7.0 Note 27 Trade and notes payables 206.66 234.21 -11.8 Note 24 Short-term borrowings 56.58 60.05 -5.8 Note 21 SUMMARY OF CONSOLIDATED INCOME STATEMENT Unit: RMB100 million For the For the year ended year ended Notes 31 December 31 December Percentage of to financial Items 2015 2014 Change (%) statements Revenue 592.71 706.64 -16.1 Note 5 Cost of sales 551.67 634.68 -13.1 Note 29 Gross profit 41.04 71.96 -43.0 Profit from operations 0.43 24.97 -98.3 (Loss)/Profit before income tax -35.76 6.79 -626.7 (Loss)/Profit for the year -28.28 4.88 -679.5 (Loss)/Profit attributable to the equity holders of the Company -32.67 1.41 -2,417.0 Basic (loss)/earnings per share attributable to the equity holders of the Company (RMB/Share) -0.25 0.01 -2,600.0 Note 33 2 CHINA COAL ENERGY COMPANY LIMITED Overview of Key Financial Data SUMMARY OF THE OPERATING RESULTS OF THE SEGMENTS (FOR THE YEAR ENDED 31 DECEMBER 2015 AND AS AT 31 DECEMBER 2015) Unit: RMB100 million Coal Coal mining Non- Coal chemical equipment Other operating Items Business business business business Segment Elimination Total Revenue 421.06 119.32 49.80 31.67 – -29.14 592.71 Of which: Revenue from external transactions 404.66 119.15 44.99 23.91 – – 592.71 Profit/(loss) from operations -21.85 24.57 1.21 -0.35 -3.23 0.08 0.43 Profit/(loss) before income tax -35.39 12.90 0.29 3.87 -17.36 -0.07 -35.76 Assets 1,296.75 556.47 178.59 238.12 335.99 -25.66 2,580.26 Liabilities 474.79 251.95 60.36 82.40 733.61 -25.67 1,577.44 SUMMARY OF CONSOLIDATED CASH FLOW STATEMENT Unit: RMB100 million For the For the year ended year ended 31 December 31 December Items 2015 2014 Net cash generated from operating activities 72.85 50.84 Net cash used in investing activities -263.22 -177.67 Net cash generated from financing activities 120.99 195.85 Net (decrease)/increase in cash and cash equivalents -69.38 69.02 Cash and cash equivalents at the beginning of the period 181.32 112.33 Net gain/(loss) in foreign exchange 0.02 -0.02 Cash and cash equivalents at the end of the period 111.96 181.32 ANNUAL REPORT 2015 3 Overview of Key Financial Data RECONCILIATION OF (LOSS)/PROFIT BEFORE INCOME TAX TO NET CASH GENERATED FROM OPERATIONS Unit: RMB100 million For the For the year ended year ended 31 December 31 December Items 2015 2014 (Loss)/profit before income tax -35.76 6.79 Adjustments for Depreciation and amortisation 70.36 54.53 Net losses on disposal of property, plant and equipment, land use rights and intangible assets 0.40 0.64 Provision for impairment of receivables, inventories and property, plant and equipment 3.24 5.07 Share of profits of in associates and joint ventures -3.62 -1.34 Net foreign exchange gains -0.20 -0.21 Net gains on disposal of subsidiaries -0.47 – Net (gains)/losses on disposal of investments -0.04 0.05 Dividend income, interest income on term deposits with initial terms of over three months and loans receivable -6.29 -5.94 Interest expense 49.56 27.33 Changes in working capital 3.54 -23.56 Provision of employee benefits -0.18 -0.42 Provision for close down, restoration and environmental costs 0.68 0.04 Net cash inflow from operating activities 81.22 62.98 4 CHINA COAL ENERGY COMPANY LIMITED Overview of Business Data Item 2015 2014 (restated) Change (%) I. Coal Operations (10 thousand tonnes) 1. Production volume of commercial coal 9,547 11,184 -14.6 2. Sales volume of commercial coal 13,772 15,689 -12.2 Of which: Sales volume of self-produced commercial coal 9,754 10,609 -8.1 II. Coal Chemical Operations (10 thousand tonnes) (I) Olefin 1. Production volume of polyethylene 35.3 9.7 263.9 Sales volume 35.3 8.9 296.6 2. Production volume of polypropylene 33.0 7.7 328.6 Sales volume 32.3 6.8 375.0 (II) Urea 1. Production volume 196.3 105.6 85.9 2. Sales volume 175.4 85.8 104.4 (III) Methanol 1. Production volume 78.6 57.7 36.2 2. Sales volume 79.6 58.6 35.8 (IV) Coke 1. Production volume 195.7 194.4 0.7 2. Sales volume 208.2 252.2 -17.4 Of which: Sales volume of self-produced coke 193.2 200.4 -3.6 III. Coal mining equipment operations 1. Production value of coal mining equipment (RMB100 million) 43.1 55.6 -22.5 2. Sales volume of coal mining equipment (10 thousand tonnes) 23.1 25.1 -8.0 Notes: 1. The production volume of commercial coal for the reporting period and the corresponding period of 2014 did not include the volume of commercial coal produced by Hecaogou Coal Mine of Shaanxi. 2. The methanol sales volume of the Company includes sales of all proprietary methanol products produced by Heilongjiang Coal Chemical Group, a subsidiary of China Coal Group. 3. The sales volumes of olefin, urea and methanol for 2014 comprised those for the trial production period. Production volume of commercial coal (10 thousand tonnes) 2015 2014 (restated) Change (%) Total 9,547 11,184 -14.6 Of which: Pingshuo Company 6,648 8,459 -21.4 Shanghai Energy Company 813 808 0.6 China Coal Huajin Company 995 697 42.8 ANNUAL REPORT 2015 5 Overview of Business Data Sales volume of commercial coal (10 thousand tonnes) 2015 2014 Change (%) (1) Domestic sales of self-produced coal 9,723 10,557 -7.9 By region: North China 3,015 5,347 -43.6 East China 4,754 3,433 38.5 South China 1,383 1,553 -10.9 Others 571 224 154.9 By coal type: Thermal coal 8,831 9,939 -11.1 Coking coal 892 618 44.3 (2) Self-produced coal export 31 52 -40.4 By region: Taiwan, China 31 52 -40.4 By coal type: Thermal coal 31 52 -40.4 (3) Proprietary trading 3,609 4,634 -22.1 Of which: Domestic resale 3,417 4,416 -22.6 Import trading 177 215 -17.7 Self-operated exports 15 3 406.7 (4) Agency 409 446 -8.3 Of which: Import agency 10 66 -84.8 Export agency 206 214 -3.7 Domestic agency 193 166 16.3 Total 13,772 15,689 -12.2 Production value of coal mining equipment (RMB100 million) 2015 2014 Change (%) Conveyor equipment 18.9 23.1 -18.2 Support equipment 12.1 16.5 -26.7 Road header 3.9 5.1 -23.5 Shearer 4.3 5.6 -23.2 Electric mining motor 3.9 5.3 -26.4 Total 43.1 55.6 -22.5 6 CHINA COAL ENERGY COMPANY LIMITED Overview of Business Data As of the end of Coal resource reserve (100 million tonnes) 2015 Percentage (%) By base: Shanxi 79.45 41.9 Inner Mongolia-Shaanxi 92.89 49.0 Jiangsu 7.77 4.0 Xinjiang 6.56 3.5 Heilongjiang 3.08 1.6 Total 189.75 100.0 By coal type: Thermal coal 158.80 83.7 Coking coal 30.95 16.3 Total 189.75 100.0 Note: In 2015, the Company verified to increase resource reserve 297.5 million tonnes, verified to decrease resource reserve 56 million tonnes, and utilized resource reserve 236.5 million tonnes.