In 2023, the net profit (loss) of each operating segment was as follows:
As compared with 2022, the changes in net profit were mainly due to the following factors:
The revenue of the Group was primarily derived from the sales of electricity, and the provision of power generation and energy storage-related services. In 2023, the Group recorded a revenue of RMB44,261,767,000, representing an increase of 1.31% as compared to RMB43,689,129,000 of the previous year.
In 2023, the details of revenue of each operating segment are set out as follows:
Revenue from hydropower decreased by RMB1,632,232,000, which was attributable to the decrease in electricity sales of hydropower during the year.
Revenue from wind power and photovoltaic power increased by RMB5,206,731,000 in total due to the consolidation and commencement of commercial operation of various projects.
Revenue from thermal power decreased by RMB4,653,784,000, which was attributable to the effect of the Coal-fired Power Disposal. If the effect of the Coal-fired Power Disposal was excluded, the revenue from thermal power would increase year-on-year.
Revenue from energy storage increased by RMB1,651,923,000 as the Group consistently expanded its energy storage business in alignment with the rapid growth of the energy storage market.
Operating costs of the Group mainly consist of fuel costs, repairs and maintenance expenses for power generating units and facilities, depreciation and amortization, staff costs, subcontracting costs, cost of sales of energy storage equipment, consumables and other operating expenses. In 2023, the operating costs of the Group amounted to RMB38,544,960,000, representing a 2.04% decrease from RMB39,347,562,000 in the previous year. Despite the commencement of operation and consolidation of various clean energy projects, as well as the significant year-on-year increase in costs associated with the expansion of the business of energy storage equipment sales, the operating costs recorded a year-on-year decrease as a result of the Coal-fired Power Disposal and stabilization of fuel prices.
Total Fuel Costs
The total fuel costs decreased by RMB5,924,400,000 or 26.07%, mainly due to the significant decrease in fuel consumption after the Coal-fired Power Disposal.
Unit Fuel Cost
The average unit fuel cost of the Group’s coal-fired power business was RMB285.51/MWh, representing a decrease of 12.46% from that of RMB326.16/MWh of the previous year. It was mainly attributable to the improvement in supply given the ongoing release of domestic coal production capacity, combined with the substantial increase in imported coal. And to a lesser extent, the Group actively pushed forward the strategies in relation to joint operations between coal and power enterprises, and facilitated the fulfillment of long-term coal contracts. This, coupled with the implementation of policies such as zero tariff on coal imports, has aided the reduction of unit fuel cost.
Depreciation and Staff Costs
Depreciation of property, plant and equipment and the right-of-use assets and staff costs increased by RMB2,217,953,000 in aggregate as a result of business expansion and the large number of new power generating units that commenced commercial operation and being consolidated since the second half of 2022 and during the year.
Cost of Energy Storage Equipment Sales and Subcontracting Costs
The Group’s energy storage segment is principally engaged in sales of energy storage equipment and the provision of subcontracting services for the development and assembly of power stations integrated with energy storage. In 2023, the cost of energy storage equipment sales and subcontracting costs totaled RMB2,249,439,000, representing a significant increase of RMB1,495,488,000 or 198.35% as compared to the previous year, which was primarily attributable to the year-on-year increase in sales of energy storage equipment and the increase in raw material costs thereof during the year.
Other Operating Expenses
Other operating expenses increased by RMB1,304,474,000 or 45.92% year-on-year, mainly due to the increase in operating costs related to power generation and the increase in amortization of other intangible assets.
The net gains from other gains and losses decreased by RMB1,836,831,000 or 73.02% year-on-year, mainly due to the gain on recognition of negative goodwill recorded in the previous year, which did not occur this year.
In 2023, the Group’s operating profit was RMB8,715,187,000, representing an increase of 14.61% as compared with the operating profit of RMB7,604,262,000 of the previous year.
In 2023, the finance costs of the Group amounted to RMB4,273,867,000 (2022: RMB4,260,961,000), representing an increase of RMB12,906,000 or 0.30% as compared with the previous year. The increase in finance costs was primarily attributable to the consolidation of certain clean energy projects acquired during the year. However, the Group’s proactive efforts to optimize the debt structure and replace high-interest borrowings, coupled with the impact of the Coal-fired Power Disposal, have substantially offset the increase in finance costs.
In 2023, the share of results of associates was a profit of RMB504,855,000, representing an increase in profits of RMB660,088,000 as compared to the losses of RMB155,233,000 in the previous year. The increase in profits was primarily driven by the year-on-year decrease in coal prices, which resulted in a substantial year-on-year profit growth of associates engaged in coal-fired power-related businesses.
In 2023, the share of results of joint ventures was a profit of RMB201,294,000, representing an increase of RMB198,919,000 as compared to RMB2,375,000 in the previous year. The increase in profits was primarily driven by the year-on-year decrease in coal prices, which resulted in a substantial year-on-year profit growth of joint ventures engaged in coal-fired power-related businesses.
In 2023, income tax expense of the Group was RMB892,635,000, representing an increase of 35.51% as compared with RMB658,729,000 in the previous year. The increase was mainly due to the return to profitability of the thermal power business and the continued increase in profit from clean energy projects, although losses in the hydropower segment partially offset the increase.
At the Board meeting held on 21 March 2024, the Board recommended the payment of a final dividend for the year ended 31 December 2023 of RMB0.132 (equivalent to HK$0.1455 at the exchange rate announced by the People’s Bank of China on 21 March 2024) per ordinary share (2022: RMB0.11 per ordinary share), totaling RMB1,632,860,000 (equivalent to HK$1,799,857,000) (2022: RMB1,360,717,000), which is based on 12,370,150,983 shares in issue on 21 March 2024.
As at 31 December 2023, the carrying amount of equity instruments at FVTOCI was RMB4,760,344,000, accounting for 1.56% of total assets, including listed equity securities of RMB3,073,452,000 and unlisted equity investments of RMB1,686,892,000.
Listed equity securities represent the equity interests in Shanghai Power held by the Group. As at 31 December 2023, the Group held 12.90% (31 December 2022: 12.90%) of the issued share capital of Shanghai Power, the A shares of which are listed on the Shanghai Stock Exchange. They were categorized as level 1 financial assets of fair value measurements, and their fair values decreased by 15.48% as compared with RMB3,636,555,000 as at 31 December 2022.
Unlisted equity investments represent the Group’s investment in equity of certain unlisted companies principally engaged in financial services, coal production and electricity trading services respectively. They were categorized as level 3 financial assets of fair value measurements, and their fair values increased by 240.71% from RMB495,112,000 as at 31 December 2022.
The valuation methods and key inputs used for measuring the fair values of the above level 3 financial assets were market approach, i.e. fair values of such equity instruments were estimated by calculating the appropriate value ratio based on market multiples derived from a set of comparable listed companies in the same or similar industries. Key inputs were (i) the market value of the said equity interests, (ii) price-to-book ratio (1.25–1.30) and price-earnings ratio (4.29–13.28) of the comparable companies, and (iii) the discount for lack of marketability (11.09%–23.28%).
The fair value loss on equity instruments at FVTOCI (net of tax) for the year ended 31 December 2023 of RMB413,328,000 (2022: RMB768,112,000) was recognized in the consolidated statement of comprehensive income.
In July 2023, the Group and SPIC entered into the sale and purchase agreement, pursuant to which the Group agreed to acquire, and SPIC agreed to sell the equity interests in four target companies. On the same day, the Group, SPIC Guangdong and CPCEC entered into another sale and purchase agreement, pursuant to which the Group agreed to acquire, and SPIC Guangdong and CPCEC agreed to sell the equity interests in another target company. The Clean Energy Acquisitions were completed on 30 September 2023 and were settled by cash for a final consideration of approximately RMB10,790,266,000.
The Clean Energy Acquisitions will accelerate the progress of the Group’s strategy for rapid expansion of clean energy business and expand its clean energy bases in new regions of China. For details, please refer to the announcements of the Company dated 26 July and 31 October 2023 respectively, and the circular dated 18 August 2023.
In September 2023, the Group entered into five equity transfer agreements with SPIC Qingneng (a special purpose vehicle ultimately controlled by the Group) and the respective target companies, pursuant to which the Group agreed to sell and the special purpose vehicle agreed to acquire the respective equity interests of the target companies for an aggregate consideration of RMB3,412,467,708. For details, please refer to the announcement of the Company dated 3 October 2023.
Save as disclosed above, the Group did not have any other material acquisitions and disposals during the year under review.
The Company has completed the issuance of corporate bonds and received the proceeds therefrom on 14 March 2024. The corporate bonds were issued in a principal amount of RMB2,000,000,000, with a maturity period of three years. The unit face value is RMB100 and the interest rate is 2.67% per annum.
As at 31 December 2023, cash and cash equivalents of the Group were RMB5,738,815,000 (31 December 2022: RMB4,228,099,000). Current assets amounted to RMB45,642,151,000 (31 December 2022: RMB30,885,745,000), current liabilities amounted to RMB75,170,626,000 (31 December 2022: RMB45,925,034,000) and current ratio was 0.61 (31 December 2022: 0.67).
During the year under review, the Group recorded a net increase in cash and cash equivalents of RMB1,511,664,000 (2022: a net increase of RMB2,458,965,000). For the year ended 31 December 2023:
net cash generated from operating activities amounted to RMB9,903,018,000 (2022: RMB5,725,614,000). The significant increase in cash inflow was mainly attributable to the significant year-on-year increase in operating profit.
net cash used in investing activities amounted to RMB26,843,571,000 (2022: RMB20,075,107,000), which was mainly attributable to the cash outflow of capital expenditure on payments for property, plant and equipment, and right-of-use assets and prepayments for construction of power plants of the Group.
net cash generated from financing activities amounted to RMB18,452,217,000 (2022: RMB16,808,458,000). The increase in net cash inflow, as compared with the previous year, was mainly attributable to the year-on-year increase in the amount of drawdown of borrowings from related parties.
The financial resources of the Group were mainly derived from cash inflow generated from operating activities, debt instruments, borrowings from banks and related parties, and project financing.
As at 31 December 2023, total debts of the Group amounted to RMB168,714,840,000 (31 December 2022: RMB116,606,464,000). Over 99% of the Group’s total debts are denominated in RMB.
As at 31 December 2023, the Group’s gearing ratio, calculated as net debt (being total debts less cash and cash equivalents) divided by total capital (being total equity plus net debt), was approximately 63% (31 December 2022: approximately 62%). The Group’s gearing ratio remained stable.
As at 31 December 2023, the amount of borrowings granted by SPIC Financial was approximately RMB8.24 billion (31 December 2022: approximately RMB2.01 billion).
The details of the Group’s debt as at 31 December 2023 and 2022 are set out as follows:
The above debts are repayable as follows:
Among the above debts, approximately RMB48,169,746,000 (31 December 2022: approximately RMB43,065,624,000) are subject to fixed interest rates, and the remaining debts denominated in RMB are subject to adjustment based on the relevant rules of the People’s Bank of China and bearing interest rates ranged from 1.60% to 5.10% (2022: ranged from 1.25% to 5.39%) per annum.
When there is any indication of asset impairment, the Group will conduct an impairment test on the assets to assess whether an impairment has occurred.
In 2023, the Group recognized an impairment of RMB66,964,000, which was mainly attributable to an asset impairment of property, plant and equipment recognized for a photovoltaic power station.
In 2023, the Company was approved by the National Association of Financial Market Institutional Investors (中國銀行間市場交易商協會) to extend the effective registration period of issuing debt financing instruments (“DFI”) for another two years from September 2023. During the effective registration period, the Company is permitted to issue multi-type of DFIs, including but not limited to super & short-term commercial papers, short-term commercial papers, medium-term notes, perpetual notes, asset-backed notes and green debt financing instruments in one or multiple tranches.
Under the DFI registration, the Company issued in November and December 2023, (i) the first tranche of perpetual mediumterm notes in a principal amount of RMB1.5 billion at the interest rate of 3.58% per annum and an initial maturity period of three years; (ii) the second tranche of perpetual medium-term notes in a principal amount of RMB1.5 billion at the interest rate of 3.30% per annum and an initial maturity period of three years; and (iii) the first tranche of super & short-term commercial papers in a principal amount of RMB2 billion at the interest rate of 2.75% per annum and a maturity period of 90 days, respectively.
Through SPIC, the ultimate controlling shareholder of the Company, the Group has been allocated up to an aggregate amount of approximately RMB11.268 billion of funding in the form of perpetual debt instruments as of 31 December 2023, and has received the funding in full as of 31 December 2023 (of which certain subsidiaries and an associate of the Group have received approximately RMB5.208 billion and RMB6.06 billion in 2023 and 2022, respectively by entering into the perpetual debt investment contracts). The perpetual trust funds under the perpetual debt investment contracts helped the Group to expand its financing channels, enhance its cash flow adequacy and optimize its asset-liability structure, thus optimizing its financial position.
The proceeds from the above debt instruments have been fully applied towards the repayment of the existing borrowings and/or replenishment of the working capital of the Group.
The Company adopted the Share Incentive Scheme upon the approval by its shareholders at an extraordinary general meeting held on 15 June 2022. Under the Share Incentive Scheme, the Company granted a total of 103,180,000 share options in two tranches in July 2022. All the aforesaid grantees are employees of the Company or its controlled subsidiaries. Since 15 grantees left the Group in 2023, 10,120,000 share options had lapsed. As of 31 December 2023, the Company had 93,060,000 shares available for issuance in relation to share options granted but not yet lapsed or cancelled under the Share Incentive Scheme. As a result of the leaving of grantees and based on the revised estimates of the number of lapsed share options in the future, the Company recognized share-based payment expenses of RMB7,422,000 (2022: RMB28,802,000) during the year under review.
In 2023, the capital expenditure of the Group was RMB30,313,575,000 (2022: RMB20,332,484,000). In particular, the capital expenditure for clean energy segments (hydropower, wind power, photovoltaic power and energy storage) was RMB24,677,137,000 (2022: RMB18,082,070,000), which was mainly applied for the engineering construction of new power plants and power stations, and the asset purchases related to the energy storage business; whereas the capital expenditure for thermal power segment was RMB4,636,413,000 (2022: RMB1,880,414,000), which was mainly applied for the engineering construction of new thermal power generating units and technical upgrade for the existing power generating units. These expenditures were mainly funded by project financing, debt instruments, funds generated from business operations and borrowings from related parties.
As at 31 December 2023, certain bank borrowings and other borrowings (31 December 2022: certain bank borrowings) totaling RMB1,235,982,000 (31 December 2022: RMB741,473,000) were secured by certain property, plant and equipment with a net book value of RMB2,235,221,000 (31 December 2022: RMB1,849,800,000). In addition, certain bank borrowings, other borrowings and lease liabilities (31 December 2022: certain bank borrowings and lease liabilities) totaling RMB33,517,642,000 (31 December 2022: RMB26,120,745,000) were secured by the rights on certain accounts receivable amounted to RMB7,530,108,000 (31 December 2022: RMB3,467,887,000).
As at 31 December 2023, the Group had no material contingent liabilities.
| Address | Suite 6301, 63/F, Central Plaza, 18 Harbour Road, Wanchai, Hong Kong |
| Phone | (852) 2802-3861 |
| Fax | (852) 2802-3922 |
| ir@chinapower.hk |
