Year 2016 has marked the beginning of the national economic "13th Five-year Plan" of China as various national reform measures moved forward. With a growth pick up for electricity demands, amidst challenges arising in industrial policies and the prevailing market conditions, the power industry has been under both a favorable and demanding situation. During the year, with the implementation of the strategy in "restructuring and development", the Group achieved set targets while facing challenges proactively, actively fulfilling the commitment to the value of shareholders and the social responsibility.
Business Review of 2016
During 2016, the Group delivered the following major performance:
Production and operating segments fared well amidst challenges - During the year under review, the Group recorded a net profit attributable to shareholders of approximately RMB2.366 billion with a stable gross power generation for the year in 2016, after putting great efforts in dealing with challenges. The Group has recorded a steady profit of the hydropower segment whereas the new operating solar power plants made outstanding results. 1 million kilowatts coal-fired power generating units achieved better earnings, which primarily support results of the coal-fired power.
More clean energy business covered in power structure portfolio - In 2016, the clean energy proportion in the Group has been one of the highest among traditional power generation enterprises as the attributable installed capacity of clean energy accounted for 22.01% of the total attributable installed capacity, representing an increase of 2.27 percent points as compared with that at the end of 2015. The Group actively promoted the ultra-low emission improvement of coal-fired power, with a significant decline in emission of pollutants per kilowatt hour as compared with the previous year. The Group continues to promote energy saving and emission reduction as net coal consumption rate reduced approximately 2.15g/KWh as compared with the previous year.
Remarkable results achieved in electricity sales and distribution and the integrated energy development - The Group has actively taken part in the field of electricity sales and distribution with the formation of seven electricity sales and distribution companies or integrated energy companies. During the year, the Group entered the local independent electricity sales and distribution business through investment in Gui’an New District (貴安新區), principally engaged in investment, planning, construction, operation and management of Guian New District direct power grid and the related electricity sales and distribution business, and acquisition of 12.17% interest in Sichuan Energy Investment (四川能投), principally engaged in development, construction and management of power grid and source of power, and production and sales of power products. The Group proactively developed the integrated energy services business in regions including Guangdong, Guangxi, Sichuan and Anhui, and other regions to develop multiple energy supply and multiple energy complementary of simultaneously providing generation of electricity, heat, cooling effect and industrial water supply for users in the integrated energy projects, among which the project to demonstrate complementary energy mix in Hefei Airport Economic Demonstration Zone* (合肥空港經濟示範區), which is one of the National Demonstration Projects in China.
Efficiency improved on fund management - The Group strives to strengthen fund management, diversify financing channels and optimize debt structure, mitigating risks borne in the future. Last year, the Company and CPI Financial entered into the financing service framework agreement, pursuant to which favorable terms in deposit, loans and settlement services were secured and credit facility was increased, thereby improved the fund management efficiency.
Technological innovation continues to progress - The Group understands that technological innovation is a vital driving force for future development. Therefore, we continue to strengthen scientific and technological innovation, carry out in-depth cooperation with relevant scientific research institutions, actively promote the development of integrated energy intelligence, and set up research centers to engage in the original research and development of the energy internet core technology.
In 2016, with the continuous support of all shareholders, the Group achieved respective development targets. On behalf of the Board of China Power and the employees of the Group, I express my most sincere gratitude for all shareholders.
Outlook for 2017
Year 2017 is a critical year in the implementation of "13th Five-year Plan" for China, as well as a year for the supply-side reform to move forward. The goal to ease overcapacity and adjust energy structure has been a priority for us. In view of power industry, competition among market players has become moderate as reforms in the industry deepen. The domestic coal-fired power sector may be in a predicament in the wake of persistently low utilization hours and high coal price. Against this backdrop, the Group is fully aware of the challenges facing in the power industry and will respond positively.
In 2017, the Group will strive to achieve steady results, accelerate the restructuring development and capture opportunities brought by the reforms, with an aim to become an integrated energy services enterprise while improving its competitive edges and development competencies. The Group will focus on the following major areas:
Achieving steady operating results - The Group will broaden the revenue source as well as tighten control on costs, intensify sales marketing of electricity, explore market of heat supply business, seek for the most favorable tariff, control the overall fuel costs, and secure profits in coal-fired power and the available cash flow. In addition, the Group continues to optimize power structure of wind and photovoltaic power, and strengthens the efforts at recovering in renewable energy subsidies so as to maximize profits from the clean energy business.
Expediting restructuring development - The Group aims to transit to the low carbon enterprise by pushing ahead development of clean energy and regulating coal-fired power business, to practically address global warming issues. Further, the Group will press ahead the integrated energy business for the transformation to the integrated energy service provider whereas expedite the development of smart energy sector to become a digitalized enterprise. In addition, the Group will further enhance its global presence in the hope of becoming a multinational corporation.
Optimizing and upgrading asset structure - With sustained and solid support from SPIC, our parent company, the Group strives to secure more quality assets injection and achieve the optimization and upgrade of asset structure.
At present, the Group is in a critical stage of restructuring. With care and support from all shareholders, as well as the unremitting efforts of the Board and all staff members, the Group will react to the changing landscapes for external circumstances prudently, overcome current predicament and challenge and expedite restructuring development, thereby continuing to create value and benefit our shareholders with outstanding returns.
Chairman of the Board
23 March 2017