In 2022, the net profit (loss) of each operating segment and their respective changes over the previous year were as follows:
As compared with 2021, the changes in net profit were mainly due to the following factors:
The revenue of the Group was mainly derived from the sales of electricity to regional and provincial power grid companies, and the provision of power generation and energy storage-related services. In 2022, the Group recorded a revenue of RMB43,689,129,000, representing an increase of 23.15% as compared with RMB35,476,703,000 (restated) of the previous year.
In 2022, the details of revenue of each operating segment are set out as follows:
Revenue from hydropower decreased by RMB662,516,000, which was mainly attributable to the decrease in electricity sales of hydropower as a result of decreased average rainfall in the river basins during the year where most of the Group’s hydropower plants are located.
Revenue from wind power and photovoltaic power increased by RMB2,145,790,000 in aggregate due to the commencement of commercial operation of a large number of new power generating units of wind power generation companies and photovoltaic power generation companies of the Group.
Revenue from thermal power increased by RMB6,412,496,000, which was mainly attributable to an increase in market trading prices as a result of the relaxation of the on-grid tariff price cap for coal-fired power generated, the year-on-year increase in electricity demand during the year, and the commencement of commercial operation and consolidation of various coal-fired, natural gas and environmental power generation projects.
Revenue from energy storage increased by RMB316,656,000, which was mainly due to the substantial increase in the sales of energy storage equipment business during the year under review.
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 2022, the operating costs of the Group amounted to RMB39,347,562,000, representing an increase of 23.58% as compared with RMB31,838,603,000 (restated) of the previous year. The increase in operating costs was mainly due to the significant increase in fuel costs and depreciation, as further explained below.
Total Fuel Costs
The total fuel costs increased by RMB4,671,670,000, mainly due to the year-on-year surge in coal prices and the corresponding increase in fuel consumption in tandem with the increase in coal-fired power generated.
Unit Fuel Cost
The average unit fuel cost of the Group’s coal-fired power business was RMB326.16/MWh, representing an increase of 17.41% as compared with RMB277.79/MWh (restated) of the previous year. Coal prices remained steadily high due to the continuous tight supply and demand of thermal coal. In response to this unfavourable situation, the Group adopted the principal strategy of “developing long-term contract and further enhancing mixed-combustion” to stabilize supply of thermal coal and has utilized over 80% of the long-term coal contracts. In addition, the Group formulated plans for accumulating coal reserve for consumption during peak seasons such as summer and winter periods, and actively placed accumulating coal reserve during low seasons into practice in an effort to curb the purchase prices of coal.
Depreciation and Staff Costs
Depreciation of property, plant and equipment and right-of-use assets and staff costs increased by RMB2,050,966,000, in aggregate, as a result of business expansion and the large number of new power generating units that commenced commercial operation during the year.
Cost of Energy Storage Equipment Sales and Subcontracting Costs
The Group’s energy storage business segment is principally engaged in sales of energy storage equipment and the provision of subcontracting services for developing and assembling power station integrated with energy storage. In 2022, the cost of energy storage equipment sales and subcontracting cost, being the operating costs of this business segment, totalled RMB753,951,000, representing an increase of RMB243,203,000 as compared with the previous year, which was mainly attributable to the year-on-year increase in sales of energy storage equipment during the year.
Other Operating Expenses
Other operating expenses increased by RMB309,553,000 year-on-year, mainly due to the increase in power and heat generation-related costs and the amortization of other intangible assets.
The net gains from other gains and losses increased by RMB1,561,573,000 year-on-year, mainly due to the recognition of negative goodwill of approximately RMB1,551,609,000 generated from the acquisition of 23 companies from CPNE and CPINE during the year.
In 2022, the Group’s operating profit was RMB7,604,262,000, representing an increase of 48.93% as compared with the operating profit of RMB5,105,944,000 (restated) of the previous year.
In 2022, the finance costs of the Group amounted to RMB4,260,961,000 (2021: RMB3,861,500,000), representing an increase of RMB399,461,000 or 10.34% as compared with the previous year. The increase in finance costs was mainly due to the increase in debt scale and the cessation of interest capitalization as certain power generating units commenced operation.
In 2022, the share of results of associates was a loss of RMB155,233,000, representing a decrease in loss of RMB58,291,000 as compared with the loss of RMB213,524,000 of the previous year. The decrease in losses was mainly due to the increase in return on investment in wind power projects, and the decrease in net losses of associates engaging in coal-fired power-related business as a result of the year-on-year increase in the average on-grid tariff of coal-fired power.
In 2022, the share of results of joint ventures was a profit of RMB2,375,000, representing an increase in profit of RMB121,655,000 as compared with the loss of RMB119,280,000 of the previous year. The increase in profits was mainly due to the increase in return on investment in wind power projects, and the increase in net profits of joint ventures engaging in coal-fired power-related business as a result of the year-on-year increase in the average on-grid tariff of coal-fired power.
In 2022, income tax expense of the Group was RMB658,729,000, representing an increase of RMB296,782,000 as compared with RMB361,947,000 of the previous year. The increase was mainly due to the year-on-year decrease in losses of the thermal power segment.
At the Board meeting held on 23 March 2023, the Board recommended the payment of a final dividend for the year ended 31 December 2022 of RMB0.11 (equivalent to HK$0.1256 at the exchange rate announced by the People’s Bank of China on 23 March 2023) per ordinary share (2021: RMB0.05 per ordinary share), totaling RMB1,360,717,000 (equivalent to HK$1,553,691,000) (2021: RMB541,669,000), which is based on 12,370,150,983 shares in issue on 23 March 2023.
As at 31 December 2022, the carrying amount of equity instruments at FVTOCI was RMB4,131,667,000, accounting for 1.95% of total assets, including listed equity securities of RMB3,636,555,000 and unlisted equity investments of RMB495,112,000.
Listed equity securities represent the equity interests in Shanghai Power held by the Group. As at 31 December 2022, the Group held 12.90% (2021: 13.88%) of the issued share capital of Shanghai Power, the A shares of which are listed on the Shanghai Stock Exchange. It was categorized as level 1 financial assets of fair value measurements, and its fair value decreased by 21.92% as compared with RMB4,657,406,000 as at 31 December 2021.
Unlisted equity investments represent the Group’s equity investment in 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. As at 31 December 2022, the aggregate fair value of unlisted equity investments owned by the Group was RMB495,112,000, representing a decrease of 14.43% from RMB578,589,000 as at 31 December 2021.
The valuation technique and key inputs used for measuring the fair value of the above level 3 financial assets were market approach, i.e. fair value of such equity instruments is 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 (1.39) and price-earning ratio (3.44) of the comparable companies, and (iii) the marketability discount (12.83%-31.77%).
The fair value loss on equity instruments at FVTOCI for the year ended 31 December 2022 of RMB768,112,000 (net of tax) (2021: gain of RMB1,608,081,000) was recognized in the consolidated statement of comprehensive income.
In June 2022, the Company and CPNE entered into a sale and purchase agreement, pursuant to which the Company conditionally agreed to acquire, and CPNE conditionally agreed to sell, equity interests in 16 target companies at an adjusted consideration of RMB5,790,593,419.82, of which RMB5,782,593,419.82 was settled by the issue of 1,536,764,662 consideration shares of the Company. On the same day, the Company and CPINE entered into another sale and purchase agreement, pursuant to which the Company conditionally agreed to acquire, and CPINE conditionally agreed to sell, equity interests in 10 target companies at a consideration of RMB1,670,098,862.61, which was settled by cash.
The aforementioned target companies are mainly engaged in clean energy power generation, including wind power, photovoltaic power and environmental power. The acquisitions will accelerate the strategic progress of the expedited development of clean energy business of the Company and expand its clean energy bases in new regions of China. For details, please refer to the announcements of the Company dated 30 June, 26 September and 26 October 2022, respectively, and the circular dated 28 July 2022.
In December 2022, the Company entered into an equity transfer agreement and a supplemental agreement with China Coal Power Co., Ltd.*, an independent third party, to sell 60% equity interest in Xinyuan Ronghe, an investment holding company engaged in power generation, power transmission, power distribution, power generation technological services and emerging energy technology research and development, at a consideration of RMB1,264,735,140. For details, please refer to the announcement of the Company dated 28 December 2022.
In December 2022, Guangxi Nanning Lvdong New Energy Investment Co., Ltd.*, an indirect wholly-owned subsidiary of the Company, entered into an equity transfer agreement with Guangxi SPIC Overseas Energy Investment Limited*, to acquire 79.67% equity interest in SPIC Guangxi Jinzishan Wind Power Limited*, a company engaged in wind power generation, at an adjusted consideration of RMB547,131,500. For details, please refer to the announcements of the Company dated 3 January and 5 January 2023.
Save as disclosed above, the Group did not have any other material acquisitions and disposals during the year under review.
On 31 December 2022, the Company and Xinyuan Green Power, a wholly-owned subsidiary of the Company, entered into a capital injection agreement and a cooperation agreement with CCB Investment, pursuant to which CCB Investment agreed to inject an aggregate amount of RMB2,000,000,000 into Xinyuan Green Power. Upon completion, Xinyuan Green Power will be held as to 54.56% by the Company and 45.44% by CCB Investment, and Xinyuan Green Power shall remain as a subsidiary of the Company. For details, please refer to the announcement of the Company dated 3 January 2023.
As at 31 December 2022, cash and cash equivalents of the Group were RMB4,228,099,000 (31 December 2021: RMB1,766,632,000). Current assets amounted to RMB30,885,745,000 (31 December 2021: RMB18,570,390,000), current liabilities amounted to RMB45,925,034,000 (31 December 2021: RMB45,535,822,000) and current ratio was 0.67 (31 December 2021: 0.41).
In April 2019, the Company entered into the financial services framework agreement with SPIC Financial for a term of three years, pursuant to which SPIC Financial has agreed to provide the Group with deposit services, settlement services, loan services and other financial services approved by the CBIRC on a non-exclusive basis. The annual cap in respect of the maximum daily balance of deposit (including accrued interests) placed by the Group with SPIC Financial shall not exceed RMB4.2 billion during the term of this framework agreement. This framework agreement officially came into effect on 7 June 2019 and expired on 6 June 2022.
In May 2022, the Company and SPIC Financial renewed the financial services framework agreement for a term of three years, pursuant to which SPIC Financial has agreed to continue to provide the Group with deposit services, settlement services, loan services and other financial services approved by the CBIRC on a non-exclusive basis upon expiry of the previous framework agreement. During the term of this framework agreement, the annual cap in respect of the maximum daily balance of deposit (including accrued interests) placed by the Group with SPIC Financial shall not exceed RMB5.5 billion. This framework agreement has officially come into effect on 7 June 2022. For details, please refer to the announcement of the Company dated 6 May 2022.
For the period between 1 January 2022 and 6 June 2022 and the period between 7 June 2022 and 31 December 2022, the maximum daily balance of deposit (including accrued interests) placed by the Group with SPIC Financial was approximately RMB4.13 billion and RMB5.45 billion, respectively (31 December 2021: RMB3.27 billion).
Pursuant to the aforementioned financial services framework agreement, SPIC Financial provides an internal treasury management platform, a cross-border fund allocation platform and other financial services to the Group through its own financial resources, such as the business information system and cross-border fund allocation channels. Such platforms enable real-time monitoring of account balances as well as income and expenditure, thereby safeguarding against funding risks. At the same time, they facilitate flexible and efficient fund allocation across borders, which gives rise to more flexible capital flow at home and abroad, broadens financing channels for domestic subsidiaries and reduces uncertainties in inbound and outbound capital flows due to changes in foreign exchange regulatory policies.
During the year under review, the Group recorded a net increase in cash and cash equivalents of RMB2,458,965,000 (2021: a net increase of RMB435,245,000 (including cash and cash equivalents as part of the disposal groups classified as held for sale)). For the year ended 31 December 2022:
net cash generated from operating activities amounted to RMB5,725,614,000 (2021 (restated): RMB1,547,926,000). Significant increase in cash inflow was mainly attributable to the year-on-year surge in operating profit.
net cash used in investing activities amounted to RMB20,075,107,000 (2021 (restated): RMB18,721,137,000), which mainly represented the cash outflow of capital expenditure on the Group’s payments for property, plant and equipment and prepayments for construction of power plants. The increase in cash used was mainly attributable to increased investment in new energy projects to expand our new energy assets portfolio.
net cash generated from financing activities amounted to RMB16,808,458,000 (2021: RMB17,608,456,000). The decrease in net cash generated, as compared with the previous year, was mainly attributable to the year-on-year decrease in the amount of drawdown of bank borrowings.
The financial resources of the Group were mainly derived from cash inflow generated from operating activities, borrowings from banks and related parties, and project financing.
As at 31 December 2022, total debts of the Group amounted to RMB116,606,464,000 (31 December 2021: RMB105,921,101,000). All debts of the Group are denominated in RMB, Japanese Yen (“JPY”) or United States Dollars (“USD”).
As at 31 December 2022, 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 62% (31 December 2021: approximately 67%). The Group’s gearing ratio remained stable.
As at 31 December 2022, the amount of borrowings granted by SPIC Financial was approximately RMB2.01 billion (31 December 2021: approximately RMB4.93 billion).
The details of the Group’s debt as at 31 December 2022 and 2021 are set out as follows:
The above debts are repayable as follows:
Among the above debts, approximately RMB43,065,624,000 (31 December 2021: approximately RMB39,092,805,000) 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 1.25% to 5.39% (2021: ranged from 1.30% to 5.30%) per annum.
When there is any indication of impairment, the Group will conduct an impairment test on assets such as property, plant and equipment and right-of-use assets to assess whether an impairment has occurred.
In 2022, the Group recognized impairment of RMB265,047,000 in total, which mainly included an impairment of goodwill of RMB250,905,000 recognized for two hydropower plants and a coal-fired power plant.
In March 2022, Wu Ling Power issued the fifth tranche of super & short-term commercial papers in the PRC in a principal amount of RMB1 billion at the interest rate of 2.10% per annum and a maturity period of 180 days. The proceeds have been fully applied towards the repayment of existing bank borrowings. Such super & short-term commercial papers can be issued in tranches on a revolving basis with an aggregate principal amount of up to RMB2 billion within the effective term of two years commencing from July 2020.
In August 2021, the Company obtained approval for its application for issuing debt financing instruments (“DFI”) in the interbank bond market in the PRC with an effective registration period of two years commencing from August 2021. Within the effective registration period, the Company is permitted to issue multi-type of DFI, 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 June, July and September 2022, (i) the first tranche of medium-term notes in a principal amount of RMB2 billion at the interest rate of 3.00% per annum and a maturity period of three years; (ii) the first tranche of super & short-term commercial papers (rural revitalization) in a principal amount of RMB1 billion at the interest rate of 2.10% per annum and a maturity period of 270 days; (iii) the second tranche of medium-term notes in a principal amount of RMB2 billion at the interest rate of 2.99% per annum and a maturity period of three years; (iv) the third tranche of medium-term notes in a principal amount of RMB2 billion at the interest rate of 2.87% per annum and a maturity period of three years; (v) the second tranche of super & short-term commercial papers (old district revitalization) in a principal amount of RMB1 billion at the interest rate of 1.75% per annum and a maturity period of 180 days; and (vi) the fourth tranche of medium-term notes in a principal amount of RMB2 billion at the interest rate of 2.71% per annum and a maturity period of three years, respectively.
In August 2022, the Central Government adopted a series of follow-up policies for stabilizing the economy as part of its intensified efforts to strengthen the foundation for economic recovery and growth according to the decision made at the executive meeting of the State Council. Among them, it encouraged power generation enterprises to issue energy supply assurance special bonds to enhance the financial strength of these enterprises, promote their reform and transformation, improve their ability to ensure stable energy supply, and thus promote the overall economic recovery and development. 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. The perpetual trust funds under the perpetual debt investment contracts enables the Group to expand its financing channels, enhance its cash flow adequacy, and optimize its asset-liability structure and thus its financial position. In 2022, certain subsidiaries and an associate of the Group have received a total of approximately RMB6.06 billion by entering into the perpetual debt investment contracts.
The proceeds from all of 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 and/or rural and old district revitalization projects.
The Company adopted a new share option incentive scheme which was approved 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. For details, please refer to the announcements of the Company dated 5 and 20 July 2022, respectively.
In 2022, the capital expenditure of the Group was RMB20,332,484,000 (2021 (restated): RMB18,223,972,000). In particular, the capital expenditure for clean energy segments (hydropower, wind power, photovoltaic power and energy storage) was RMB18,082,070,000 (2021 (restated): RMB15,456,991,000), which was mainly applied for the project 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 RMB1,880,414,000 (2021 (restated): RMB2,447,551,000), which was mainly applied for the project construction of new thermal power generating units and technological upgrade for the existing power generating units. These expenditures were mainly funded by project financing, funds generated from business operations and borrowings from related parties.
As at 31 December 2022, the Group pledged certain property, plant and equipment with a net book value of RMB1,849,800,000 (31 December 2021: RMB386,243,000) to certain banks to secure bank borrowings in the amount of RMB741,473,000 (31 December 2021: RMB114,620,000). In addition, certain bank borrowings, borrowings from related parties and lease liabilities totaling RMB26,120,745,000 (31 December 2021: RMB21,242,398,000) were secured by the rights on accounts receivable of the Group. The accounts receivable secured under these borrowings amounted to RMB3,467,887,000 (31 December 2021: RMB2,568,225,000).
As at 31 December 2022, 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 |
