Stock Code: 2600 (HKSE) ACH (US) 601600 (China)
2018Annual Report Contents
2
6
9
15
39
49
61
70
90
96
118
132
155
164
167
170
173
175
Corporate Profile
Corporate Information
Financial Summary
Directors, Supervisors, Senior Management and
Employees
Particulars and Changes of Shareholding
Structure, and Details of Substantial
Shareholders
Chairman’s Statement
Management’s Discussion and Analysis of
Financial Position and Results of Operations
Report of the Board
Report of the Supervisory Committee
Report on Corporate Governance and Internal
Control
Significant Events
Connected Transactions
Independent Auditors’ Report
Consolidated Statement of Financial Position
Consolidated Statement of Profit or Loss and
Other Comprehensive Income
Consolidated Statement of Changes in Equity
Consolidated Statement of Cash Flows
Notes to Financial Statements
Aluminum Corporation of China Limited (“Chalco” or the “Company”) is a joint stock limited
company established in the People’s Republic of China (the “PRC”); its shares are listed on The
Stock Exchange of Hong Kong Limited (the “Hong Kong Stock Exchange”), the New York Stock
Exchange and the Shanghai Stock Exchange, respectively.
The Company and its subsidiaries (collectively referred to as the “Group”) is the only large
manufacturer and operator in aluminum industry in China with integration of mining of bauxite, coal
and other resources; production, sales and technology research of alumina, primary aluminum and
aluminum alloy products; international trade; logistics business; thermal and new energy power
generation.
The Group is a leading enterprise in non-ferrous metal industry in the PRC. In terms of
comprehensive strength, we ranked among the top enterprises in global aluminum industry. The
core competitiveness of the Group is mainly reflected in:
•
its clear and pragmatic development strategy to build itself into a top-notch aluminum
company with global competitiveness in the world;
•
its ownership of stable and reliable supply of bauxite resources to ensure sustainable
development;
•
•
•
•
•
its complete industrial chain and distinct product competitive edge;
its advanced management concepts to ensure the realization of the operation objectives of
the Company;
its professional technician team to ensure a leading productivity of labour of the Company;
its excellent management team to build an efficient operation mode;
its sustainable scientific innovation capacity to strengthen the transformation of technological
achievements into economic benefits;
•
its direction led by, its overall operation guided by and its policy implementation guaranteed
by the Communist Party Committee to ensure the health development of the Company
through the combination of party building and operating management.
2
ALUMINUM CORPORATION OF CHINA LIMITEDCorporate Profile The Group is principally comprised of the following branches, subsidiaries, joint ventures and
associates:
Branches:
•
•
•
•
Guangxi branch (mainly engaged in producing alumina products);
Qinghai branch (mainly engaged in producing primary aluminum and alloy products);
Liancheng branch (mainly engaged in producing primary aluminum and alloy products);
Guizhou branch (mainly engaged in mining bauxite and selling aluminum ore);
Subsidiaries:
•
Chalco Shanxi New Material Co., Ltd.* (“Shanxi New Material”, “中鋁山西新材料有限公司”)
(mainly engaged in producing alumina products, primary aluminum and alloy products);
•
Shanxi Huasheng Aluminum Co., Ltd. (“Shanxi Huasheng”) (mainly engaged in producing
primary aluminum products);
•
Fushun Aluminum Co., Ltd. (“Fushun Aluminum”) (mainly engaged in producing carbon
products);
•
Zunyi Aluminum Co., Ltd. (“Zunyi Aluminum”) (mainly engaged in producing alumina products
and primary aluminum products);
•
Shandong Huayu Alloy Materials Co., Ltd. (“Shandong Huayu”) (mainly engaged in producing
alloy products);
•
Baotou Aluminum Co., Ltd. (“Baotou Aluminum”) (mainly engaged in producing primary
aluminum and alloy products);
•
Chalco Mining Co., Ltd. (“Chalco Mining”) (mainly engaged in mining bauxite and producing
alumina products);
•
Chalco Material Co., Ltd. (“Chalco Material”) (mainly engaged in sales of metal, coal and other
products);
3
2018 ANNUAL REPORTCorporate Profile (Continued) •
Chalco Zhongzhou Mining Co., Ltd. (“Zhongzhou Mining”) (mainly engaged in mining and
selling bauxite);
•
Guizhou Huaren New Material Co., Ltd. (“Guizhou Huaren”) (mainly engaged in producing and
selling primary aluminum);
•
Chinalco International Trading Group Co., Ltd. (mainly engaged in importing and exporting
goods and technologies);
•
China Aluminum International Trading Co., Ltd. (“Chalco Trading”) (mainly engaged in the
trading of non-ferrous metal products);
•
Chalco Hong Kong Ltd. (“Chalco Hong Kong”) (mainly engaged in developing overseas
projects);
•
Chalco Shandong Co., Ltd. (“Chalco Shandong”) (mainly engaged in producing alumina
products);
•
•
•
•
Chalco Zhongzhou Aluminum Co., Ltd. (“Zhongzhou Company”) (中鋁中州鋁業有限公司)
(mainly engaged in producing alumina products);
Chalco Zhengzhou Research Institute of Non-ferrous Metal (“Zhengzhou institute”) (中國鋁業
鄭州有色金屬研究院有限公司) (mainly engaged in research and development services);
Chalco Energy Co., Ltd. (“Chalco Energy”) (mainly engaged in energy development);
Chalco Ningxia Energy Group Co., Ltd. (“Ningxia Energy”) (mainly engaged in power
generation and coal resources development);
•
Guizhou Huajin Aluminum Co., Ltd. (“Guizhou Huajin”) (mainly engaged in producing alumina
products);
•
China Aluminum Logistics Group Corporation Co., Ltd (“Chalco Logistics”) (mainly engaged in
logistics transportation);
•
Chalco Shanghai Company Limited (“Chalco Shanghai”)(中鋁（上海）有限公司) (mainly engaged
in trading and engineering project management);
4
ALUMINUM CORPORATION OF CHINA LIMITEDCorporate Profile (Continued) •
Guangxi Huasheng New Material Co., Ltd. * (“Guangxi Huasheng”) (mainly engaged in
producing alumina products);
•
Shanxi Huaxing Alumina Co., Ltd.* (“Shanxi Huaxing”) (mainly engaged in producing alumina
products);
•
Shanxi Chalco China Resources Co., Ltd.* (“Shanxi Zhongrun”) (mainly engaged in producing
and selling primary aluminum);
•
Chinalco Shanxi Jiaokou Xinghua Technology Co., Ltd. (“Xinghua Technology”) (中鋁集團山西
交口興華科技股份有限公司) (mainly engaged in producing alumina products);
•
Gansu Hualu Aluminum Co., Ltd. (“Gansu Hualu”) (mainly engaged in producing carbon
products);
•
Lanzhou Aluminum Co., Ltd. (“Lanzhou Aluminum”) (mainly engaged in producing electrolytic
aluminum);
Joint Ventures and Associates:
•
Guangxi Huayin Aluminum Company Limited (“Guangxi Huayin”) (mainly engaged in
producing alumina products);
•
Chalco Steering Intelligent Technology Co., Ltd. (“Chalco Steering”) (mainly engaged in
provision of information technology services);
•
Hua Dian Ningxia Ling Wu Power Co., Ltd. (“Ling Wu Power”) (mainly engaged in coal and
energy power generation);
•
Guangxi Hualei New Materials Co., Ltd. (“Guangxi Hualei”) (mainly engaged in producing
electrolytic aluminum)
5
2018 ANNUAL REPORTCorporate Profile (Continued) 1.
Registered name
Abbreviation of Chinese name 中國鋁業
Name in English
中國鋁業股份有限公司
ALUMINUM CORPORATION OF CHINA LIMITED
Abbreviation of English name
CHALCO
2.
First registration date
10 September 2001
Registered address
No.62 North Xizhimen Street, Haidian District, Beijing, the
PRC (Postal code: 100082)
Place of business
No.62 North Xizhimen Street, Haidian District, Beijing, the
Principal place of business
in Hong Kong
9/F, The Center, 99 Queen’s Road Central, Central,
Hong Kong (Note 1)
PRC (Postal code: 100082)
3.
Legal representative
Company Secretary
Lu Dongliang (Note 2)
Wang Jun (Note 3)
(Secretary to the Board)
Telephone
Fax
E-mail
Address
+86(10) 8229 8322
+86(10) 8229 8158
IR@chalco.com.cn
No.62 North Xizhimen Street, Haidian District, Beijing, the
PRC (Postal Code: 100082)
Representative for the
Zhao Hongmei
Company’s securities related
affairs
Telephone
Fax
E-mail
Address
+86(10) 8229 8322
+86(10) 8229 8158
IR@chalco.com.cn
No.62 North Xizhimen Street, Haidian District, Beijing, the
PRC (Postal Code: 100082)
Department for corporate
Office to the Board
information and inquiry
Telephone for corporate
+86(10) 8229 8322
information and inquiry
6
ALUMINUM CORPORATION OF CHINA LIMITEDCorporate Information 4.
Share registrar and transfer office
H shares:
Hong Kong Registrars Limited
17M Floor, Hopewell Centre, 183 Queen’s Road East,
Wanchai, Hong Kong
A shares:
China Securities Depository and Clearing Corporation
Limited, Shanghai Branch
3/F, China Insurance Building,
No. 166, Lujiazui Road (East), Shanghai, the PRC
American Depositary Receipt:
The Bank of New York Corporate Trust Office
240 Greenwich Street, New York, NY 10286, USA(Note 4)
5.
Places of listing
The Stock Exchange of Hong Kong Limited
Shanghai Stock Exchange
New York Stock Exchange, Inc
Stock name
CHALCO
Stock codes
2600 (HK)
601600 (China)
ACH (US)
6.
Principal bankers
China Construction Bank
Industrial and Commercial Bank of China
7.
Unified social credit code for
911100007109288314
corporate legal person
8.
Independent auditors
Ernst & Young
Certified Public Accountants
22/F, CITIC Tower, 1 Tim Mei Avenue, Central, Hong Kong
Ernst & Young Hua Ming LLP
16/F, Ernst & Young Tower, Oriental Plaza, 1 East Chang’an
Avenue, Dongcheng District, Beijing, the PRC
Postal code:100738
7
2018 ANNUAL REPORTCorporate Information (Continued)
9.
Legal advisers
as to Hong Kong laws:
Baker & McKenzie
14/F, One Taikoo Place, 929 King’s Road, Quarry Bay,
Hong Kong(Note 5)
as to PRC laws:
Jincheng Tongda & Neal Law Firm(Note 6)
10/F, China World Trade Tower A,
1 Jianguomenwai Avenue, Chaoyang District,
Beijing, the PRC
Postal code:100004
as to United States laws:
Sullivan & Cromwell (Hong Kong) LLP
28th Floor
Nine Queen’s Road Central, Central,
Hong Kong
10.
Place for inspection of
Office of the Board of the Company
corporate information
Note 1： On 30 March 2018, the Company changed its principal place of business in Hong Kong, from 6th Floor, Nexxus
Building, 41 Connaught Road, Central, Hong Kong to 9/F, The Center, 99 Queen’s Road Central, Central, Hong
Kong.
Note 2： On 21 February 2019, Mr. Yu Dehui resigned as the Chairman and an executive Director of the Company with
effect from the same date. As elected at the 39th meeting of the 6th session of the Board of the Company
held on the same day, Mr. Lu Dongliang was elected as the Chairman of the Company. According to relevant
requirements of the Articles of Association of Aluminum Corporation of China Limited, the Company will change
its legal representative from Mr. Yu Dehui to Mr. Lu Dongliang, the Company is undergoing industrial and
commercial registration for the change at the moment.
Note 3： On 20 February 2019, Mr. Zhang Zhankui resigned as the chief financial officer and Company Secretary (Secretary
to the Board) of the Company with effect from the same date. As considered and approved at the 38th meeting
of the 6th session of the Board of the Company held on the same day, the Company engaged Mr. Wang Jun as
the chief financial officer and Company Secretary (Secretary to the Board) of the Company.
Note 4： On 16 July 2018, the address of the share registrar of American Depositary Receipt of the Company was changed
from 101 Barclay Street, New York 10286, USA to 240 Greenwich Street, New York, NY 10286, USA.
Note 5： From 18 March 2019, Baker & McKenzie, the legal adviser of the Company as to Hong Kong laws, changed its
office address to 14/F, One Taikoo Place, 929 King’s Road, Quarry Bay, Hong Kong.
Note 6：
In July 2018, the Company changed its legal adviser as to PRC laws, from Beijing DeHeng Law Offices to
Jincheng Tongda & Neal Law Firm, with a term from 1 July 2018 to 30 June 2019.
8
ALUMINUM CORPORATION OF CHINA LIMITEDCorporate Information (Continued) 1. FINANCIAL SUMMARY PREPARED IN ACCORDANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS
The revenue of the Group for the year ended 31 December 2018 amounted to RMB180,240
million, basically flat compared with the same period of last year. Profit attributable to
the owners of the parent for the year amounted to RMB746 million, and profit per share
attributable to the owners of the parent for the year amounted to RMB0.037.
The following is the summary of the consolidated statements of profit or loss and other
comprehensive income for the year 2018 and year 2014 to year 2017:
For the year ended 31 December
2018
2017
2016
2015
2014
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
(Restated)
(Restated)
(Restated)
(Restated)
Revenue
Cost of sales
180,240,154
181,020,428
144,854,582
123,922,795
142,419,555
(167,029,416)
(166,290,235)
(133,700,192)
(121,408,135)
(141,797,923)
Gross profit
13,210,738
14,730,193
11,154,390
2,514,660
621,632
Selling expenses
(2,496,933)
(2,372,966)
(2,111,787)
(1,798,154)
(1,772,525)
Administrative expenses
(3,958,067)
(4,549,206)
(3,336,095)
(2,386,950)
(4,874,342)
Research and development
expenses
(626,873)
(498,234)
(168,862)
(168,870)
(293,766)
Impairment losses on property,
plant and equipment
Other income
Impairment losses on financial
assets
Impairment losses on
investments in joint ventures
Other gains, net
Finance costs, net
Share of profits and losses of
(7,450)
135,367
(16,200)
89,873
(57,080)
155,576
(10,011)
(5,679,521)
1,787,774
832,239
(107,841)
(216,953)
921,904
–
–
–
–
–
–
–
–
319,382
169,143
5,027,661
362,407
(4,390,264)
(4,496,734)
(4,204,179)
(5,167,030)
(5,705,117)
joint ventures
(199,452)
8,151
(95,508)
23,238
89,510
Share of profits and losses of
associates
39,335
(165,249)
115,091
284,531
350,575
9
2018 ANNUAL REPORTFinancial Summary
1. FINANCIAL SUMMARY PREPARED IN ACCORDANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS
(CONTINUED)
For the year ended 31 December
2018
2017
2016
2015
2014
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
(Restated)
(Restated)
(Restated)
(Restated)
Profit/(loss) before income tax
2,303,511
3,049,010
1,620,689
106,849
(16,068,908)
Income tax (expense)/gain
(822,499)
(643,734)
(403,899)
226,220
(1,076,559)
Net profit/(loss) for the year
1,481,012
2,405,276
1,216,790
333,069
(17,145,467)
Profit/(loss) attributable to:
Owners of the Company
Non-controlling interests
Proposed final dividend for the
746,477
734,535
1,413,028
992,248
365,697
851,093
118,029
(16,308,391)
215,040
(837,076)
year
–
–
–
–
–
10
ALUMINUM CORPORATION OF CHINA LIMITEDFinancial Summary (Continued)
1. FINANCIAL SUMMARY PREPARED IN ACCORDANCE WITH
INTERNATIONAL FINANCIAL REPORTING STANDARDS
(CONTINUED)
The following is the summary of the consolidated total assets and total liabilities of the Group:
For the year ended 31 December
2018
2017
2016
2015
2014
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
(Restated)
(Restated)
(Restated)
(Restated)
Total assets
Total liabilities
200,876,114
199,816,799
191,227,877
192,937,332
195,639,867
133,206,912
134,074,203
135,335,246
140,893,830
154,177,166
Net assets
67,669,202
65,742,596
55,892,631
52,043,502
41,462,701
2. FINANCIAL SUMMARY PREPARED IN ACCORDANCE WITH
THE PRC ACCOUNTING STANDARDS FOR BUSINESS
ENTERPRISES
Item
Operating profit
Profit for the year
Profit attributable to owners of the parent
Profit attributable to owners of the parent after excluding gains or losses
from non-recurring items
Net cash flows generated from the operating activities
For the year
ended
31 December
2018
RMB’000
2,424,292
1,607,828
870,230
158,161
13,185,490
11
2018 ANNUAL REPORTFinancial Summary (Continued)
2. FINANCIAL SUMMARY PREPARED IN ACCORDANCE WITH
THE PRC ACCOUNTING STANDARDS FOR BUSINESS
ENTERPRISES (CONTINUED)
Gains or losses from non-recurring items
Gains from disposal of non-current assets
Government subsidies included in the gains and losses for the reporting
period (excluding government subsidies closely related to the ordinary
business of the Company and enjoyed according to certain standard
amount or quantity)
Profit of subsidiaries from the beginning of the year to the consolidation
date arising from business combination under common control
Except for the hedging business that is related to the ordinary business
of the Company, the gains or losses arising from fair value changes of
held-for-trading financial assets, held-for-trading financial liabilities and
investment income on disposal of held-for-trading financial assets, held-
for-trading financial liabilities, and equity investments designated at fair
value through other comprehensive income
Write back of the provision for impairment of receivables and contract
assets that are individually tested for impairment
Investment income on disposal of right of control over subsidiaries
Investment loss on disposal of interests in associates
Gain on previously held long-term equity interests re-measured at
acquisition-date fair value after stepwise acquisition of control over
subsidiaries
Other non-operating income and expenses other
than above items, net
Income tax effect
Non-controlling interests effect
Total
For the year
ended
31 December
2018
RMB’000
101,098
115,363
9,629
141,459
1,731
3,517
(1,904)
748,086
(53,450)
(245,588)
(107,872)
712,069
12
ALUMINUM CORPORATION OF CHINA LIMITEDFinancial Summary (Continued)
2. FINANCIAL SUMMARY PREPARED IN ACCORDANCE WITH
THE PRC ACCOUNTING STANDARDS FOR BUSINESS
ENTERPRISES (CONTINUED)
Principal accounting information and financial indicators for 2018 and 2017 of the Group:
2018
RMB’000
2017
RMB’000
(Restated)
180,240,154
2,430,327
181,020,428
3,049,010
Revenue
Profit before income tax
Profit attributable to owners of the
parent
870,230
1,413,028
Profit attributable to owners of the
parent after excluding gains from
non-recurring items
Basic earnings per share (RMB)
Diluted earnings per share (RMB)
Basic earnings per share after excluding
gains from non-recurring items (RMB)
158,161
0.044
0.044
814,530
0.087
0.087
0.002
0.047
Weighted average rate of return on net
assets (%)
1.89
3.62
Weighted average rate of return on net
assets after excluding gains from
non-recurring items (%)
Net cash flows generated from
0.34
2.10
Increase/
(decrease)
for the year
2018 over 2017
(%)
-0.43
-20.29
-38.41
-80.58
-49.69
-49.69
-95.74
Decreased by
1.73 percentage
points
Decreased by
1.76 percentage
points
operating activities
13,185,490
13,351,397
Net cash flows generated from
operating activities per share (RMB)
Total assets
Equity attributable to owners of the
0.78
200,876,114
0.90
199,816,799
parent
52,414,890
39,688,029
Equity attributable to owners of the
parent per share (RMB)
3.11
2.66
-1.24
-13.33
0.53
32.07
16.92
13
2018 ANNUAL REPORTFinancial Summary (Continued)
3. COMPARISON BETWEEN THE FINANCIAL INFORMATION
P R E P A R E D I N A C C O R D A N C E W I T H I N T E R N A T I O N A L
F I N A N C I A L R E P O R T I N G S T A N D A R D S A N D T H E P R C
ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES
Profit attributable
Equity attributable to
to owners of the parent for
owners of the parent
the year ended 31 December
as of 31 December
2018
RMB’000
2017
RMB’000
(Restated)
2018
RMB’000
2017
RMB’000
(Restated)
Prepared in accordance
with the PRC
Accounting Standards
for Business
Enterprises
Prepared in accordance
with International
Financial Reporting
Standards
870,230
1,413,028
52,414,890
39,688,029
746,477
1,413,028
52,414,890
39,688,029
14
ALUMINUM CORPORATION OF CHINA LIMITEDFinancial Summary (Continued)
1. P R O F I L E S O F D I R E C T O R S , S U P E R V I S O R S , S E N I O R
M A N A G E M E N T A T P R E S E N T A N D D U R I N G T H E
REPORTING PERIOD
Remuneration
before tax
Whether
received from
receiving
the Company
emolument
Name
Position (Note)
Gender
Age
her tenure
her tenure
reporting period
(RMB’000)
parties
Start date of his/
End date of his/
during the
from related
Yu Dehui Note 1
Chairman and Executive
Director (resigned)
Ao Hong Note 2
Non-executive Director
President (resigned)
Liu Caiming Note 3
Non-executive Director
(resigned)
Lu Dongliang Note 4
Chairman
Executive Director
President (resigned)
He Zhihui Note 5
Jiang Yinggang Note 6 Executive Director
President
Senior Vice President
Vice President (resigned)
Zhu Runzhou Note 7
Executive Director
Wang jun
Chen Lijie
Vice President
Non-executive Director
Independent non-executive
Director
M
M
M
M
M
M
M
M
F
Hu Shihai
Independent non-executive
M
Director
Lie-A-Cheong Tai
Independent non-executive
M
Chong, David
Liu Xiangmin Note 8
Director
Chairman of Supervisory
M
Committee (resigned)
59
57
56
45
56
55
54
53
64
64
59
56
2016.06.28
2019.02.21
2016.06.28
2015.11.20
2016.06.28
2019.02.21
2016.06.28
2018.02.13
2019.02.21
2016.06.28
2018.06.26
2007.05.18
2018.12.11
2018.05.25
2016.06.28
2016.06.28
2019.06.30
2018.02.13
2018.05.25
2019.06.30
2019.06.30
2019.02.21
2019.06.30
2018.06.26
2019.06.30
2019.06.30
2019.06.30
2016.06.28
2019.06.30
2016.06.28
2019.06.30
0 Yes
0 Yes
0 Yes
0 Yes
0 No
852.5 No
492.0 No
150.0 No
201.8 No
201.8 No
201.8 No
2016.06.28
2018.12.11
0 Yes
15
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees
Name
Position (Note)
Gender
Age
her tenure
her tenure
reporting period
parties
Start date of his/
End date of his/
during the
from related
Remuneration
before tax
Whether
received from
receiving
the Company
emolument
Ye Guohua Note 9
Chairman of Supervisory
Committee
Wangjun Note 10
Supervisor (resigned)
Chief Financial Officer,
Secretary to the Board
Supervisor
Wu Zuoming
Shan Shulan Note 11
Xu Bo Note 12
Zhang Zhankui Note 13 Chief Financial Officer
Vice President (resigned)
Supervisor
(resigned)
Secretary to the Board
(resigned)
Leng Zhengxu Note 14 Vice President (resigned)
Tian Yong Note 15
Wu Maosen Note 16
Total
Vice President
Vice President
/
M
M
M
F
M
M
M
M
M
/
50
48
52
47
54
60
58
59
55
/
2018.12.11
2019.06.30
2016.06.28
2019.02.20
2016.06.28
2019.02.20
2013.05.09
2015.11.13
2019.02.20
2019.06.30
2019.06.30
2018.06.06
2019.02.20
2016.03.17
2019.02.20
2017.01.20
2018.06.06
2019.03.21
/
2018.10.26
/
(RMB’000)
0 Yes
0 Yes
739.4 No
0 Yes
418.0 No
786.9 No
682.9 No
464.4 No
0 No
5,191.1 /
Note 1: On 21 February 2019. Mr. Yu Dehui resigned as the Chairman and the executive Director of the Company
and from all other positions in each of the special committees under the Board. The resignation of Mr. Yu
took effect on the same day.
Note 2:
On 13 February 2018, as considered and approved at the 20th meeting of the sixth session of the Board
of the Company, Mr. Ao Hong was dismissed from the position of the president of the Company, with
effect from the same day. Meanwhile, as Mr. Ao Hong no longer held any administrative position in the
Company, he was re-designated from an executive Director to a non-executive Director.
Note 3:
On 25 May 2018, Mr. Liu Caiming resigned as a non-executive Director of the Company，with effect from
the same day.
16
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued)
Note 4: On 13 February 2018, as considered and approved at the 20th meeting of the sixth session of the Board
of the Company, Mr. Lu Dongliang was appointed as the president of the Company and was dismissed
from the original position of senior vice president of the Company. On 21 February 2019. Mr. Lu Dongliang
tendered resignation as the president of the Company. At the 39th meeting of the sixth session of the
Board convened by the Company on the same day, the dismissal of Mr. Lu Dongliang from the position
of the president was approved and Mr. Lu Dongliang was elected as the Chairman of the sixth session of
the Board of the Company.
Note 5:
On 21 February 2019, as considered and approved at the 39th meeting of the sixth session of the Board
of the Company, Mr. He Zhihui was appointed as the president of the Company and nominated as a
candidate for an executive Director of the sixth session of the Board of the Company.
Note 6:
On 26 June 2018, as considered and approved at the 27th meeting of the sixth session of the Board,
Mr. Jiang Yinggang was appointed as the senior vice president of the Company and dismissed from the
position of vice president of the Company, with effect from the same day.
Note 7:
On 25 May 2018, as considered and approved at the 24th meeting of the sixth session of the Board of the
Company, Mr. Zhu Runzhou was appointed as the vice president of the Company. On 20 November 2018,
as considered and approved at the 34th meeting of the sixth session of the Board of the Company, Mr.
Zhu Runzhou was nominated as a candidate for an executive Director of the sixth session of the Board of
the Company. On 11 December 2018, Mr. Zhu Runzhou was elected as an executive Director of the sixth
session of the board of directors of the Company at the 2018 second extraordinary general meeting of the
Company.
Note 8:
On 20 November 2018. Mr. Liu Xiangmin tendered resignation as the chairman of the Supervisory
Committee and a Supervisor of the Company. Mr. Liu’s resignation took effect after a new Supervisor
was elected at the 2018 second extraordinary general meeting of the Company on 11 December 2018.
Note 9:
On 20 November 2018, as considered and approved at the 14th meeting of the sixth session of the
Supervisory Committee of the Company, Mr. Ye Guohua was nominated as a candidate for a shareholder
representative Supervisor of the sixth session of the Supervisory Committee of the Company. On 11
December 2018, Mr. Ye Guohua was elected as a shareholder representative Supervisor of the sixth
session of the Supervisory Committee of the Company at the 2018 second extraordinary general meeting
of the Company. On the same day, at the 15th meeting of the sixth session of the Supervisory Committee
of the Company, Mr. Ye Guohua was elected as the chairman of the sixth session of the Supervisory
Committee of the Company.
17
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued) Note 10: On 24 December 2018, Mr. Wang Jun tendered resignation as a Supervisor of the Company. Mr. Wang’s
resignation took effect after a new Supervisor of the sixth session of Supervisory Committee was elected
at the first extraordinary general meeting of the Company held on 20 February 2019. On 20 February
2019, as considered and approved at the 38th meeting of the sixth session of the Board, Mr. Wang Jun
was appointed as the chief financial officer and the Company Secretary (Secretary to the Board) of the
Company.
Note 11: On 24 December 2018, as considered and approved at the 16th meeting of the sixth session of the
Supervisory Committee of the Company, Ms. Shan Shulan was nominated as a candidate for a shareholder
representative Supervisor of the sixth session of the Supervisory Committee of the Company. On 20
February 2019, Ms. Shan Shulan was elected as a shareholder representative Supervisor of the sixth
session of the Supervisory Committee of the Company at the 2019 first extraordinary general meeting of
the Company.
Note 12: On 6 June 2018, as considered and approved at the 25th meeting of the sixth session of the Board, Mr.
Xu Bo was dismissed from the position of the vice president of the Company, with effect from the same
day.
Note 13: Mr. Zhang Zhankui resigned as the chief financial officer, and the Secretary to the Board (Company
Secretary) of the Company on 20 February 2019 due to reaching statutory retirement age.
Note 14: On 26 October 2018, as considered and approved at the 33rd meeting of the sixth session of the Board,
Mr. Leng Zhengxu was dismissed from the position of the vice president of the Company, with effect
from the same day.
Note 15: On 6 June 2018, as considered and approved at the 25th meeting of the sixth session of the Board of the
Company, Mr. Tian Yong was appointed as a vice president of the Company.
Note 16: On 21 March 2019, as considered and approved at the 40th meeting of the sixth session of the Board of
the Company, Mr. Wu Maosen was appointed as a vice president of the Company. Mr. Wu Maosen did
not receive any remuneration from the Company as he did not hold any positions in the Company in 2018.
18
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued) 2. DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT
AS AT THE DATE OF THIS ANNUAL REPORT
M a j o r w o r k i n g e x p e r i e n c e o f d i r e c t o r s ( “ D i r e c t o r s ” ) ,
supervisors (“Supervisors”) and senior management of the
Company as at the date of this annual report:
Executive Directors
Mr. Lu Dongliang, aged 45, is currently the Chairman of the Company. Mr. Lu graduated from
North China University of Technology majoring in accounting. He holds a bachelor’s degree
in economics and is an accountant. Mr. Lu has more than 20 years of work experience in
financial management and in non-ferrous metals industry. He had subsequently served as the
cadre in the audit department of China Nonferrous Metals Industry Corporation* (中國有色金
屬工業總公司), the officer-in-charge of the capital division of the finance department of China
Copper Lead & Zinc Group Corporation* (中國銅鉛鋅集團公司), the head of the accounting
division and the capital division of the finance department of Aluminum Corporation of China*
(中國鋁業公司), the deputy manager and manager of the treasure management division of
the finance department, the manager of the general management office, the deputy general
manager and general manager of the finance department of the Company, the chief financial
officer of Chalco Gansu Aluminum Electricity Co., Ltd.* (中國鋁業甘肅鋁電有限責任公司), the
assistant to the president of the Company and the general manager of Lanzhou Branch of the
Company, an executive director and president of Chalco Gansu Aluminum Electricity Co., Ltd.,
and an executive Director, a senior vice president and a president of the Company. Currently,
Mr. Lu also serves as the the deputy general manager of Aluminum Corporation of China
(“Chinalco”) (中國鋁業集團有限公司).
19
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued) Mr. He Zhihui, aged 56, is currently a president of the Company. Mr. He graduated from
Huazhong Institute of Technology* (華中工學院) with a master’s degree in engineering and
is a senior engineer with outstanding performance. Mr. He served as an engineer and a
deputy director of the power control office, the head of the electric automation institution
and the dean of the electric automation branch of Guiyang Aluminum Magnesium Design &
Research Institute* (貴陽鋁鎂設計研究院), the deputy dean and dean of Guiyang Aluminum
Magnesium Design & Research Institute*, the deputy general manager and general manager
of China Aluminum International Engineering Co., Ltd.* (中鋁國際工程有限責任公司), the
chairman of China Nonferrous Metals Processing Technology Co., Ltd.* (中色科技股份有限公
司), the secretary of the Communist Party Committee, chairman, executive director, president
and chairman of the labour union of China Aluminum International Engineering Corporation
Limited* (中鋁國際工程股份有限公司) and an assistant to the general manager of Chinalco.
Mr. Jiang Yinggang, aged 55, is currently an executive Director and a senior vice president
of the Company. Graduated from Central South University of Mining and Metallurgy majoring
in the metallurgy of nonferrous metals, Mr. Jiang holds a master degree in metallurgy
engineering of non-ferrous metals and is a professor-grade senior engineer. Mr. Jiang
has long been engaged in production operation and corporate management of production
enterprises and has extensive and professional experience. He formerly served as deputy
head and then head of Corporate Management Department of Qinghai Aluminum Plant; head
of Qinghai Aluminum Smelter; deputy manager and manager of Qinghai Aluminum Company
Limited, general manager of Qinghai branch of the Company and an executive Director and a
vice president of the Company.
20
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued) Mr. Zhu Runzhou, aged 54, is currently an executive Director and a vice president of the
Company. Mr. Zhu graduated from Wuhan University, majoring in software engineering,
with a master degree in engineering. He is a senior engineer of outstanding performance.
Mr. Zhu has extensive experience in energy, technologies on power plants and corporate
operation and management. He had successively served as the inspection director, operation
director and director of the fuel division of Gansu Jingyuan Power Plant* (甘肅靖遠發電廠),
the deputy chief engineer, director of the inspection department and director of the first
repairing department of Gansu Jingyuan Power Plant* as well as the manager of Huaming
Branch of Gansu Guangming Supervisory Engineering Company* (甘肅光明監理工程公司華
明分公司). Mr. Zhu also served as the chairman of the labour union, the standing director of
the employee stock holding committee and the deputy general manager of Gansu Jingyuan
First Power Co., Ltd.* (甘肅靖遠第一發電有限責任公司), the chairman of Baiyin Huadian Water
Supply Co., Ltd.* (白銀華電供水有限公司), head of Guodian Kaili Power Plant* (國電凱里發電
廠), director of the preparatory office of the technical transformation program of Guodian in
Duyun City, deputy general manager of Guodian Guizhou Branch, deputy general manager of
Guodian Yunnan Branch and general manager of Guodian Power Xuanwei Power Generation
Co., Ltd.* (國電電力宣威發電有限責任公司), deputy general manager and general manager of
Guodian Guangxi Branch, deputy general manager of the energy management department of
the Company and deputy general manager of Chalco Energy Co., Ltd.* (中鋁能源有限公司), a
director and the general manager of Chalco Ningxia Energy Group Co., Ltd.* (中鋁寧夏能源集
團有限公司), the general manager of Chalco Xinjiang Aluminum Power Co., Ltd.* (中鋁新疆鋁
電有限公司), the chairman of Chalco Ningxia Energy Group Co., Ltd.* and the general manager
of Chalco Xinjiang Aluminum Power Co., Ltd*.
21
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued) Non-executive Directors
Mr. Ao Hong, aged 57, is currently a non-executive Director of the Company. Mr. Ao
graduated from Central South University with a doctoral degree in management science and
engineering. He is a professor-grade senior engineer with over 30 years of work experience
in enterprises of non-ferrous metals industry. He successively served as the deputy dean
of Beijing General Research Institute for Non-ferrous Metals* (北京有色金屬研究總院) and
concurrently the chairman of GRINM Semiconductor Materials Co., Ltd.* (有研半導體硅材
料股份有限公司), the chairman of Guorui Electronics Co., Ltd.* (國瑞電子股份有限公司), the
chairman of Guo Jing Micro-electronic Holding, Limited* (國晶微電子控股公司) in Hong Kong,
a deputy general manager of Aluminum Corporation of China* (中國鋁業公司). During this
period, he also successively served as the chairman of the supervisory committee of the
Company, chairman of the Labour Union of Aluminum Corporation of China (中國鋁業公司),
the dean of Chinalco Research Institute of Science and Technology* (中鋁科學技術研究院) and
the chairman of China Rare Earth Co., Ltd.* (中國稀有稀土有限公司) and an executive Director
and the president of the Company. Mr. Ao is currently the full-time deputy secretary of the
Communist Party Committee of Chinalco.
Mr. Wang Jun, aged 53, is currently a non-executive Director of the Company. Graduated
from Huazhong Institute of Engineering with a degree of industrial and civil construction, and
he is an engineer. He has extensive experience in financial and corporate management. Mr.
Wang formerly served as the engineer in the engineering department of Babcock & Wilcox
Beijing Company Ltd.; deputy manager of the real estate development department of China
Yanxing Company; senior deputy manager of equity management department and senior
manager of business management department, senior manager, deputy general manager,
general manager of custody and settlement department in China Cinda Asset Management
Co., Ltd and general manager of the equity management department of China Cinda Asset
Management Co., Ltd. Mr. Wang currently serves as the business director of China Cinda
Asset Management Co., Ltd.
22
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued) Independent Non-executive Directors
Ms. Chen Lijie, aged 64, is currently an independent non-executive Director of the Company.
Ms. Chen graduated from Renmin University of China Law School and obtained a doctoral
degree in Laws. Ms. Chen Lijie has more than 30 years of experience in laws. She acted as
director and deputy director of Commercial Affairs of the Office of Legislative Affairs of the
State Council, deputy director of Department of Policies and Laws of the National Economic
and Trade Commission, patrol officer of Bureau of Policies, Laws and Regulations of SASAC
and chief legal consultant of China Mobile Communications Corporation.
Mr. Hu Shihai, aged 64, is currently an independent non-executive Director of the Company.
Mr. Hu graduated from Shanghai Jiao Tong University majoring in thermal energy engineering.
He is a professor-level senior engineer with more than 40 years of working experience in
power industry. Mr. Hu has extensive experience in corporate management and technical
management and successively served as the supervisor, director and deputy head of the
Huaneng Shanghai Shidongkou No. 2 Power Plant (華能上海石洞口第二發電廠), deputy
director of the preparatory office of the Shanghai Waigaoqiao No. 2 Power Plant (上海外高橋
第二電廠籌建處), manager of the production department and assistant to the general manager
of Huaneng Power International, Inc. (華能電力股份有限公司) and assistant to the general
manager and director of the safety production department, and chief engineer of China
Huaneng Group (中國華能集團公司).
Mr. Lie-A-Cheong Tai Chong, David, aged 58, honoured with the Silver Bauhinia Star
(SBS), Officier de l‘Ordre National du Merite and Justice of Peace. Mr. Lie is currently an
independent non-executive Director of the Company. Mr. Lie is the executive chairman of
Newpower International (Holdings) Co., Ltd. and China Concept Consulting Ltd. He was
selected as a member of the National Committee of the 8th, 9th, 10th and 11th Chinese
People’s Political Consultative Conference since 1993. From 2007 to 2013, he acted as a
panel convenor cum member of the Financial Reporting Review Panel of Hong Kong Special
Administrative Region (“HKSAR”). Mr. Lie is currently the honorary consul of the Hashemite
Kingdom of Jordan in the HKSAR, the chairman of the Hong Kong-Taiwan Economic and
Cultural Cooperation and Promotion Council, a member of the Commission on Strategic
Development of the HKSAR, a standing committee member of the China Overseas Friendship
Association, a standing director of China Council for the Promotion of Peaceful National
Reunification, and a member of the Hong Kong General Chamber of Commerce (HKGCC).
Currently, Mr. Lie is also an independent non-executive director of Herald Holdings Limited
and Harbour Centre Development Limited, both of which are listed companies in Hong Kong.
23
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued) Supervisors
Mr. Ye Guohua, aged 50, is currently the chairman of the Supervisory Committee of the
Company. Mr. Ye graduated from Shanghai University of Finance and Economics, majoring
in accounting, with a bachelor degree in economics and is a senior accountant. Mr. Ye has
extensive experience in financial management and accounting. He had successively served
as the director of accounting department of the refinery of Shanghai Gaoqiao Petrochemical
Company*(上海高橋石油化工公司), the deputy chief accountant and head of accounting
department of Sinopec Shanghai Gaoqiao Branch* (中國石化股份公司上海高橋分公司), the
chief financial officer, executive director, a member of the Party Committee, deputy general
manager of Sinopec Shanghai Petrochemical Company Limited* (上海石油化工股份有限公司),
the director of accounting department of China Petroleum & Chemical Group Corporation*
(中國石油化工集團公司), the chairman of Century Bright International Investment Company*
(盛駿國際投資有限公司), the chairman of Sinopec Insurance Limited* (中石化保險有限公司),
the vice chairman of Taiping & Sinopec Financial Leasing Co., Ltd.*(太平石化金融租賃有限責
任公司), a director of Sinopec Finance Co., Ltd.* (中石化財務有限責任公司), and a director of
Sinopec Oilfield Service Corporation* (中石化石油工程技術服務股份有限公司). Mr. Ye is also a
member of the Communist Party Committee and the chief accountant of Chinalco.
Ms. Shan Shulan, aged 47, is currently a Supervisor of the Company. Ms. Shan graduated
from Beijing Institute of Light Industry* (北京輕工業學院), majoring in industrial corporate
management, with a bachelor degree in engineering. She is a certified public accountant
and statistician. Ms. Shan has extensive experience in accounting, finance management and
other fields. She successively served as an economic analyst at the economic research office
of Beijing Glass Instruments Plant* (北京玻璃儀器廠), the financial manager of Beijing CEM-
FIL Glass Fiber Co. Ltd.* (北京賽姆菲爾玻璃纖維有限公司) under Saint-Gobain in China, the
financial manager for Beijing region of Carrefour (China) Co., Ltd.* (家樂福（中國）有限公司),
the financial manager for China region of Baker Hughes Centrilift, the financial manager for
China region of Microsoft Research Asia (China)* (微軟（中國）亞洲研究院), and the business
director and deputy head of budget division and the head of budget assessment division of
the finance department of Chinalco. Ms. Shan currently serves as the deputy director of the
finance department of Chinalco, she also concurrently serves as a supervisor of Chinalco
Innovative Development Investment Company Limited* (中鋁創新開發投資有限公司) and a
director of Aluminum Corporation of China Overseas Holdings Limited and China Aluminum
Insurance Broker (Beijing) Co., Ltd.* (中鋁保險經紀（北京）股份有限公司).
24
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued) Mr. Wu Zuoming, aged 52, is currently a Supervisor of the Company. Mr. Wu holds an MBA
degree from Renmin University of China. He is a senior engineer. Mr. Wu has extensive
experience in human resource management. He successively acted as the deputy manager of
Personnel Division, Human Resource Department of China Aluminum Corporation* (中國鋁業
集團公司); the person in charge of the Personnel Division, Human Resource Department for
the Preparatory Team of Aluminum Corporation of China* (中國鋁業公司); the deputy manager
of the Personnel Division(Training Division), Human Resource Department of Aluminum
Corporation of China*; the deputy manager of Assessment and Training Division, the manager
of Employee Management Division and the manager of General Division of the Company;
the senior manager of the Human Resource Department (Retired Cadres Department) and
the manager of the General Division of Aluminum Corporation of China*; the deputy general
manager and general manager of the Human Resource Department of the Company, and
the deputy secretary of the Communist Party Committee, deputy general manager and the
chairman of the labor union of Guangxi Branch of the Company. Mr. Wu currently serves as
the deputy secretary of the Communist Party Committee and a general manager of Chalco
Shanxi New Material Co., Ltd.* (中鋁山西新材料有限公司).
Other Senior Management
Mr. Tian Yong, aged 59, is currently a vice president of the Company. Mr. Tian graduated
from Kunming University of Science and Technology, majoring in metallurgical engineering,
with a master degree in engineering, and with a senior engineer of outstanding performance.
Mr. Tian has extensive experience in smelting and production of non-ferrous metals and
corporate management. He successively served as a technician and deputy director of the
smelting workshop, and the acting director of No. 2 smelting workshop of Yunnan Aluminium
Plant (雲南鋁廠), the chief dispatcher and the head of the dispatching office of Yunnan
Aluminium Plant (雲南鋁廠), the head of the fabrication factory, the deputy head and head
of the production department as well as the head of the production dispatching office, the
assistant to the head of the factory and chief dispatcher, and the head of the production
division of Yunnan Aluminium Plant (雲南鋁廠), the deputy head and head of Yunnan
Aluminium Plant (雲南鋁廠), the vice chairman and general manager of Yunnan Aluminium
Co., Ltd. (雲南鋁業股份有限公司), deputy general manager and general manager of Yunnan
Metallurgical Group Corporation (雲南冶金集團總公司) and the general manager and chairman
of Yunnan Metallurgical Group Co., Ltd. (雲南冶金集團股份有限公司).
25
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued) Mr. Wang Jun, aged 48, resigned as a Supervisor of the Company on 20 February 2019 and
was appointed as the chief financial officer and Secretary to the Board (Company Secretary)
on the same day. Mr. Wang obtained a master’s degree in business administration from
Tsinghua University. He is a senior accountant and a member of the Chartered Institute
of Management Accountants (CIMA). He has also been admitted to the National Training
Program for Accounting Leading Talent Backup. Mr. Wang has worked in grassroots units,
overseas companies, listed companies and various departments of the group, and has
extensive experience in financial accounting, fund management and capital operation. Mr.
Wang successively served as the deputy manager and manager of treasury management
division of finance department of Aluminum Corporation of China* (中國鋁業公司), the general
representative of the Peru office of Aluminum Corporation of China*, a director and senior
auditing manager of Minera Chinalco Perú S.A.* (中鋁秘魯礦業公司), the chief financial officer
and the manager of finance department of Chinalco Resources Corporation* (中鋁礦產資源有
限公司), the chief financial officer of China Aluminum International Engineering Co., Ltd.* (中
鋁國際工程有限責任公司), an executive director, the chief financial officer and the secretary to
the board of directors of China Aluminum International Engineering Corporation Limited* (中鋁
國際工程股份有限公司), the deputy chief accountant, general manager of finance department
and capital operating department of Chinalco* (中國鋁業公司（中國鋁業集團有限公司）) and a
supervisor of Aluminum Corporation of China Limited*. Mr. Wang is currently the chairman
of the supervisory committee of China Rare Earth Holdings Limited* (中國稀有稀土股份有限公
司) and a director of China Aluminum International Engineering Corporation Limited, Chinalco
Assets Operation and Management Co., Ltd.* (中鋁資產經營管理有限公司), Chinalco Capital
Holdings Co., Ltd.* (中鋁資本控股有限公司) and Chinalco Finance Co., Ltd.* (中鋁財務有限責
任公司). He is also a director and the president of Aluminum Corporation of China Overseas
Holdings Limited* (中鋁海外控股有限公司).
26
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued) Mr. Wu Maosen, aged 55, is currently a vice president of the Company. Mr. Wu graduated
from Dalian Railway College with a bachelor’s degree in engineering, majoring in welding
technology and equipment. He is a senior engineer with excellent performance. Mr. Wu has
extensive experience in corporate management. He had successively served as the deputy
head of the alumina branch, the deputy head of the overhauling branch and the director of
the transport department of Shanxi Aluminum Plant, the assistant to the general manager of
Shanxi Branch of Aluminum Corporation of China Limited, the deputy commander-in-chief of
the engineering and construction command department of Chalco Shanxi, a deputy general
manager of Shanxi Huaze Aluminum & Power Co., Ltd* (山西華澤鋁電有限公司), the deputy
head and head of Shanxi Aluminum Plant, a director, a general manager and the secretary of
the Party committee of Qinghai Huanghe Hydropower Regeneration Aluminum Co., Ltd.* (青
海黃河水電再生鋁業有限公司), the secretary of the Party committee, an executive director and
general manager of Chalco Asset Operation and Management Company* (中鋁資產經營管理
公司) and successively served as an executive director of Chalco Shanghai Company Limited*
(中鋁（上海）有限公司), an executive director and the general manager of Chalco Industrial
Development Co., Ltd.* (中鋁置業發展有限公司), the chairman of the board of Huaxi Aluminum
Company Limited* (華西鋁業有限責任公司), the chairman of the board and the general manger
of Chalco Investment and Development Co., Ltd.* (中鋁投資發展有限公司), the deputy team-
leader of the team aiming at making up deficits and shaking off dilemma, transforming and
upgrading of Shanxi Branch of Aluminum Corporation of China Limited and Shanxi Aluminum
Plant and the chairman of the board of Chinalco Research Institute of Science and Technology
Co., Ltd.* (中鋁科學技術研究院有限公司). Mr. Wu currently also serves as the chairman of the
board of Chalco Investment and Development Co., Ltd.* (中鋁投資發展有限公司), the deputy
team-leader of the team aiming at making up deficits and shaking off dilemma, transforming
and upgrading of Shanxi Branch of Aluminum Corporation of China Limited and Shanxi
Aluminum Plant and an executive director of Chinalco Research Institute of Science and
Technology Co., Ltd.* (中鋁科學技術研究院有限公司).
27
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued) 3. POSITIONS HELD IN SHAREHOLDER ENTITIES OF THE
COMPANY BY DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT AT PRESENT AND DURING THE YEAR
Positions in the Shareholders of the Company
Name
Name of Shareholder
Position(s) in
Shareholder entity
Date of
appointment
Yu Dehui (resigned)
Ao Hong
Aluminum Corporation of China
Aluminum Corporation of China
General Manager
Full-time Deputy Secretary
of the Communist Party
Committee
2016.01.08
2016.12.06
Liu Caiming (resigned)
Aluminum Corporation of China
Deputy General Manager
2007.01.25
Lu Dongliang Note
Wang Jun (Director)
Aluminum Corporation of China
China Cinda Asset Management
Deputy General Manager
Business Director
2016.04.22
2013.08.19
(resigned)
Liu Xiangmin (resigned) Aluminum Corporation of China
Deputy General Manager
2017.12.19
Co., Ltd
Wang Jun (Supervisor,
Aluminum Corporation of China
resigned)
Shan Shulan
(Supervisor)
Aluminum Corporation of China
(resigned)
Deputy Chief Accountant,
Director of the Finance
Department and Capital
Operation Department
(resigned)
Deputy Director of the
Finance Department
2015.11.13
2016.05.05
Yes
Whether
receiving
remuneration
or allowance
Yes
Yes
Yes
Yes
Yes
Yes
Yes
Note: As the deputy general manager of Aluminum Corporation of China, Mr. Lu is primarily responsible for the
production, operation and daily work of Aluminum Corporation of China Limited.
28
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued)
Positions in Other Entities
Name
Name of other entities
Position(s)
Whether
receiving
remuneration
or allowance
Date of
appointment
Liu Caiming (resigned)
Aluminum Corporation of
Non-executive
2013.04.25
Wang Jun (Director)
Lie-A-Cheong Tai Chong,
David
China Overseas Holdings
Limited*
China Nuclear Engineering &
Construction Corporation
Limited
Newpower International
(Holdings) Co., Ltd.
Director (resigned)
Director
2014.03.12
Executive Chairman
1992.01.30
China Concept Consulting Ltd.
Executive Chairman
1991.07.26
Herald Holdings Limited
Harbour Centre Development
Limited
Wang Jun (Supervisor,
China Rare Earth Holdings
resigned, currently a chief
financial officer and the
Company Secretary)
Limited*
China Aluminum International
Engineering Corporation
Limited*
2005.06.16
2018.12.01
2016.07.05
Independent
Director
Independent
Director
Chairman of
Supervisory
Committee
Director
2015.05.22
Chinalco Capital Holdings Co.,
Director
2015.12.30
Ltd.*
Chinalco Finance Co., Ltd.*
Aluminum Corporation of
Director
Director
2014.02.08
2015.11.13
China Overseas Holdings
Limited*
No
No
Yes
Yes
Yes
Yes
No
No
No
No
No
29
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued)
Positions in Other Entities (Continued)
Name
Name of other entities
Position(s)
Whether
receiving
remuneration
or allowance
Date of
appointment
Wu Maosen
Chinalco Investment
Development Co., Ltd.* (中鋁
投資發展有限公司)
Chairman
2015.12.31
Chinalco Research Institute
Executive Director
2018.11.19
No
No
of Science and Technology
Co., Ltd.* (中鋁科學技術研究
院有限公司),
Shan Shulan
Chinalco Innovative
Supervisor
2018.04.26
No
Development Investment
Company Limited*
Aluminum Corporation of
China Overseas Holdings
Limited*
China Aluminum Insurance
Broker (Beijing) Co., Ltd.*
Director
Director
2018.08.06
2016.10.26
No
No
30
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued)
4. D E C I S I O N M A K I N G P R O C E S S A N D B A S I S O F
DETERMINATION OF REMUNERATION OF DIRECTORS,
S U P E R V I S O R S A N D S E N I O R M A N A G E M E N T A N D
REMUNERATION
Based on the prevailing market standards and the remuneration strategy of the Company,
the human resources department of the Company would formulate proposals for the
remuneration of the Company’s Directors, Supervisors and senior management and submit
the proposals to the Board for consideration upon approval by the Remuneration Committee
of the Board of the Company. Particularly, remuneration of the senior management will be
considered and approved by the Board whereas those of the Directors and the Supervisors
will be submitted to the shareholders’ general meeting for consideration and approval upon
being approved by the Board.
The Company determined its remuneration for the Directors, Supervisors and senior
management based on its development strategy, corporate culture and remuneration
strategy, taking into account the remuneration standards of corresponding positions in
comparable enterprises in the market (in terms of scale, industry and nature etc.), as well as
the Company’s annual operating results, fulfilment of duties by the Directors and Supervisors
as well as the appraisal results for performance of senior management.
In 2018, the total pre-tax remunerations of the Directors, Supervisors and senior management
received from the Company amounted to RMB5.19 million (including the travelling expenses
of the independent non-executive Directors).
31
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued) 5. CHANGES IN DIRECTORS, SUPERVISORS AND SENIOR
MANAGEMENT AS AT THE DATE OF THIS ANNUAL
REPORT
Name
Position(s)
Status
Reason for the change
Yu Dehui
Chairman of the
Resigned
O n 21 F e b r u a r y 2019, M r. Y u D e h u i
Board and Executive
resigned as the Chairman of the Board
Director
a n d t h e e x e c u t i v e D i r e c t o r o f t h e
Company due to work engagements and
the reform.
Ao Hong
President
Dismissed
The dismissal of Mr. Ao Hong from the
position of the president of the Company
due to work engagements was approved
at the 20th meeting of the sixth session
of the Board held on 13 February 2018 by
the Company.
Executive Director
Re-designated
As Mr. Ao Hong no longer holds any
administrative position in the Company,
Mr. Ao Hong was re-designated from an
executive Director to a non-executive
Director on 13 February 2018.
Liu Caiming
Non-executive Director Resigned
O n 2 5 M a y 2 0 1 8 , M r . L i u C a i m i n g
resigned as a non-executive Director of
the Company due to job re-designation.
32
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued)
Name
Position(s)
Status
Reason for the change
Liu Xiangmin
Chairman of the
Resigned
On 20 November 2018, Mr. Liu Xiangmin
Supervisory
Committee
tendered resignation as the chairman
of the Supervisory Committee and a
Supervisor of the Company due to job
re-designation, which took effect after a
new Supervisor was elected at the 2018
second extraordinary general meeting of
the Company on 11 December 2018.
Lu Dongliang
Chairman of the Board Elected
On 21 February 2019, Mr. Lu Dongliang
was elected as the Chairman of the sixth
session of the Board of the Company at
the 39th meeting of the sixth session of
the Board.
Senior Vice President,
Dismissed
On 13 February 2018, the appointment of
President
Mr. Lu Dongliang as the president of the
Company and dismissal of Mr. Lu from
the position of the senior vice president of
the Company were approved at the 20th
meeting of the sixth session of the Board.
On 21 February 2019, Mr. Lu Dongliang
tendered resignation as the president of
the Company due to job engagement. The
dismissal of Mr. Lu Dongliang from the
position of the president was approved at
the 39th meeting of the sixth session of
the Board convened by the Company on
the same day.
33
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued)
Name
Position(s)
Status
Reason for the change
He Zhihui
President
Appointed
On 21 February 2019, the appointment
of Mr. He Zhihui as the president of
the Company was approved at the 39th
meeting of the sixth session of the Board.
Jiang Yinggang
Senior Vice President
Appointed
On 26 June 2018, the appointment of
Vice President
Dismissed
Mr. Jiang Yinggang as the senior vice
president of the Company and dismissal
of Mr. Jiang from the position of vice
president at the same time was approved
at the 27th meeting of the sixth session
of the Board of the Company.
Xu Bo
Vice President
Dismissed
The dismissal of Mr. Xu Bo from the
position of the vice president of the
Company due to job re-designation was
approved at the 25th meeting of the sixth
session of the Board held by the Company
on 6 June 2018.
Zhang Zhankui
Chief Financial Officer
Dismissed
A s a p p r o v e d a t t h e 38t h m e e t i n g o f
and Company
Secretary (Secretary
to the Board)
the sixth session of the Board held by
the Company on 20 February 2019, Mr.
Zhang Zhankui was dismissed from the
position of the chief financial officer and
the Company Secretary (Secretary to the
Board) of the Company due to reaching
statutory retirement age.
34
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued)
Name
Position(s)
Status
Reason for the change
Leng Zhengxu
Vice President
Dismissed
As approved at the 33rd meeting of the
sixth session of the Board held by the
Company on 26 October 2018, Mr. Leng
Zhengxu was dismissed from the position
of vice president of the Company due to
job re-designation.
Zhu Runzhou
Executive Director
Elected
The nomination of Mr. Zhu Runzhou as
a candidate for an executive Director
of the sixth session of the Board of the
C o m p a n y w a s a p p r o v e d a t t h e 34t h
meeting of the sixth session of the Board
held by the Company on 20 November
2018. Mr. Zhu Runzhou was elected as
an executive Director of the sixth session
of the Board of the Company at the 2018
second extraordinary general meeting of
the Company held on 11 December 2018.
Vice President
Appointed
On 25 May 2018, the appointment of Mr.
Zhu Runzhou as the vice president of
the Company was approved at the 24th
meeting of the sixth session of the Board
of the Company.
35
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued)
Name
Position(s)
Status
Reason for the change
Tian Yong
Vice President
Appointed
On 6 June 2018, the appointment of
Mr. Tian Yong as a vice president of
the Company was approved at the 25th
meeting of the sixth session of the Board
of the Company.
Wang Jun
Supervisor
Resigned
On 24 December 2018, Mr. Wang Jun
tendered resignation as a Supervisor of
the Company due to job re-designation,
which took effect after a new Supervisor
was elected at the 2019 first extraordinary
general meeting of the Company held on
20 February 2019.
Chief Financial Officer
Appointed
On 20 February 2019, the appointment of
and Secretary to the
Board (Company
Secretary)
Mr. Wang Jun as the chief financial officer
and the Secretary to the Board (Company
Secretary) of the Company was approved
at the 38th meeting of the sixth session
of the Board of the Company.
Wu Maosen
Vice President
Appointed
On 21 March 2019, the appointment
of Mr. Maosen as a vice president of
the Company was approved at the 40th
meeting of the sixth session of the Board
of the Company.
36
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued)
Name
Position(s)
Status
Reason for the change
Ye Guohua
Chairman of the
Elected
On 20 November 2018, the nomination
Supervisory
Committee
of Mr. Ye Guohua as a candidate for a
shareholder representative Supervisor
of the sixth session of the Supervisory
C o m m i t t e e o f t h e C o m p a n y w a s
approved at the 14th meeting of the sixth
session of the Supervisory Committee
o f t h e C o m p a n y . O n 1 1 D e c e m b e r
2018, Mr. Ye Guohua was elected as a
shareholder representative Supervisor
of the sixth session of the Supervisory
Committee of the Company at the 2018
second extraordinary general meeting
of the Company. At the 15th meeting
of the sixth session of the Supervisory
Committee held by the Company on the
same day, Mr. Ye Guohua was elected
a s t h e c h a i r m a n o f t h e S u p e r v i s o r y
Committee.
Shan Shulan
Supervisor
Elected
On 24 December 2018, the nomination
of Ms. Shan Shulan as a candidate for a
shareholder representative Supervisor
of the sixth session of the Supervisory
Committee of the Company was approved
at the 16th meeting of the sixth session
of the Supervisory Committee. On 20
February 2019, Ms. Shan Shulan was
elected as a shareholder representative
Supervisor of the sixth session of the
Supervisory Committee of the Company
at the 2019 first extraordinary general
meeting of the Company.
37
2018 ANNUAL REPORTDirectors, Supervisors, Senior Management and Employees (Continued)
6. EMPLOYEES OF THE COMPANY
As of 31 December 2018, the Group had 65,211 employees. The structure of employees is as
follows:
Composition by Function
Category
Headcounts
Production personnel
Sales personnel
Technology personnel
Finance personnel
Administration personnel
Total
By Education Background
54,796
483
3,261
1,454
5,217
65,211
Category
Headcounts
Post-graduates and above
University graduates
Technical institute graduates
Secondary/technical school graduates or below
Total
613
10,310
14,836
39,452
65,211
38
ALUMINUM CORPORATION OF CHINA LIMITEDDirectors, Supervisors, Senior Management and Employees (Continued)
1. SHARE CAPITAL STRUCTURE
Chinalco is the single largest shareholder of the Company, which directly held 33.89% equity
interest of the Company and together with its subsidiaries held an aggregate of 36.62%
equity interest of the Company as of 31 December 2018. As of 31 December 2018, Chinalco
was the Company’s ultimate holding company.
As of 31 December 2018, the share capital structure of the Company was as follows:
As of 31 December 2018
Percentage to
total issued
Number of
share capital
Shares
share capital
(In million)
(%)
10,959.83
3,943.97
73.54
26.46
Holders of A shares
Holders of H shares
Total
14,903.80
100
39
2018 ANNUAL REPORTParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders
On 25 February 2019, the registration procedure for the additional shares of the Company
in connection with the acquisition of assets by issuance of shares by the Company was
completed with Shanghai Branch of China Securities Depository and Clearing Corporation
Limited. With 2,118,874,715 additional A shares issued, the total share capital of the
Company was increased to 17,022,672,951 shares. Upon completion of the issuance of
additional shares, the Company’s share capital structure is as follows:
Holders of A shares
Holders of H shares
As of 25 February 2019
Percentage to
Number of
total issued
shares
share capital
(In million)
(%)
13,078.70
3,943.97
76.83
23.17
Total
17,022.67
100
According to the publicly available information and to the best knowledge of the Company’s
Directors, as of the date of this annual report, the share capital structure of the Company
can maintain a sufficient public float and is in compliance with the requirement of the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (“Hong
Kong Listing Rules”).
40
ALUMINUM CORPORATION OF CHINA LIMITEDParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued)
2. CHANGES IN SHAREHOLDING AND SHAREHOLDERS
In 2018, there were no changes in share capital of the Company. As of 31 December 2018,
the total share capital of the Company was 14,903,798,236 shares.
Particulars of Shareholding as of 31 December 2018
Share
Percentage
Shares subject to trading moratorium
Shares not subject to trading moratorium
(Number)
0
1.
2.
Renminbi ordinary shares
Overseas listed foreign invested shares
10,959,832,268
3,943,965,968
Total shares not subject to trading moratorium
14,903,798,236
Total shares
14,903,798,236
(%)
0
73.54
26.46
100
100
On 25 February 2019, the Company issued 2,118,874,715 additional A shares. Subject to
trading moratorium, the additional shares issued shall not be transferred within twelve
months of the lock-up period from the completion date of the issuance and can be traded on
the Shanghai Stock Exchange on the next trading day upon the expiry of the lock-up period (In
case of statutory holidays or rest days, the trading is postponed to the next working day). For
details, please refer to relevant announcements of the Company published on 26 February
2019.
41
2018 ANNUAL REPORTParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued)
Shares
Percentage
(Number)
(%)
Shares subject to trading moratorium
1.
RMB denominated ordinary shares
2,118,874,715
12.45
Total number of shares subject to trading moratorium
2,118,874,715
12.45
Tradable shares not subject to trading moratorium
1.
2.
RMB denominated ordinary shares
Overseas listed foreign shares
10,959,832,268
3,943,965,968
64.38
23.17
Total number of tradable shares not subject to trading
moratorium
14,903,798,236
87.55
Total number of shares
17,022,672,951
100
Approval of Changes in Shares
The Company received the Reply on Approving the Acquisition of Assets by Aluminum
Corporation of China Limited* by issuance of shares to Huarong Ruitong Equity Investment
Management Co., Ltd. and Certain Other Companies (關於核准中國鋁業股份有限公司向華融瑞
通股權投資管理有限公司等發行股份購買資產的批覆) (Zheng Jian Xu Ke [2018] No. 2064) issued
by China Securities Regulatory Commission on 18 December 2018, pursuant to which the
Company was approved to issue an aggregate of 2,118,874,715 A shares to 8 investors.
Transfer of Changes in Shareholding
In 2018, there was no transfer of changes in shareholding of the Company.
On 25 February 2019, the registration procedure for the additional A shares of the Company
arising from the acquisition of assets by issuance of shares was completed with Shanghai
Branch of China Securities Depository and Clearing Corporation Limited. The total shares of
the Company were increased from 14,903,798,236 shares to 17,022,672,951 shares.
42
ALUMINUM CORPORATION OF CHINA LIMITEDParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued)
3. SHARE ISSUANCE AND LISTING
(1) Share Issuance in the Past Three Years
From 2016 to 2018, no share was issued by the Company.
On 18 December 2018, the Company received the Reply on Approving the Acquisition
of Assets by Aluminum Corporation of China Limited* by issuance of shares to Huarong
Ruitong Equity Investment Management Co., Ltd. and Certain Other Companies (關於
核准中國鋁業股份有限公司向華融瑞通股權投資管理有限公司等發行股份購買資產的批覆)
(Zhen Jian Xu Ke [2018] No. 2064) issued by China Securities Regulatory Commission,
pursuant to which the Company was approved to issue an aggregate of 2,118,874,715
A shares to 8 investors, for the purpose of acquiring 25.6748% equity interests in
Baotou Aluminum Co., Ltd.* (包頭鋁業有限公司), 30.7954% equity interests in Chalco
Shandong Co., Ltd.* (中鋁山東有限公司), 81.1361% equity interests in Chalco Mining
Co., Ltd.* (中鋁礦業有限公司) and 36.8990% equity interests in Chalco Zhongzhou
Aluminum Co., Ltd.* (中鋁中州鋁業有限公司) jointly held by these 8 investors. The issue
price for the acquisition of assets by way of issuance of shares is fixed at RMB6.00
per share which is not less than 90% of the average trading price of the Shares of the
Company for the last 60 trading days prior to the pricing benchmark date, i.e. the date
of the announcement on resolutions passed at the 19th meeting of the sixth session of
the Board of the Company. The registration procedure regarding the additional shares
issued under the issuance of shares was completed with Shanghai Branch of China
Securities Depository and Clearing Corporation Limited on 25 February 2019.
(2) Changes in Total Number of Shares and the Shareholding
Structure of the Company
In 2018, there were no changes in total number of shares or the shareholding structure
of the Company.
43
2018 ANNUAL REPORTParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued) On 25 February 2019, the registration procedure for the additional shares of
the Company in connection with the acquisition of assets by issuance of shares
was completed, and the total share capital of the Company was increased from
14,903,798,236 shares to 17,022,672,951 shares. The change in the share capital
structure of the Company is as follows:
Class of shares
Before the issuance
A shares
H shares
Total
After the issuance
A shares
H shares
Total
Percentage
Number of
in total share
shares
(share)
capital
(%)
10,959,832,268
3,943,965,968
73.54
26.46
14,903,798,236
100
13,078,706,983
3,943,965,968
76.83
23.17
17,022,672,951
100
4. SUBSTANTIAL SHAREHOLDERS WITH SHAREHOLDING OF
5% OR MORE
So far as the Directors are aware, as of 31 December 2018, the following persons (other
than the Directors, Supervisors and Chief Executive of the Company) had interests or short
positions in the shares or underlying shares of the Company which would fall to be disclosed
under the provisions of Divisions 2 and 3 of Part XV of the Securities and Futures Ordinance
of Hong Kong (“SFO”), or which were recorded in the register required to be kept by the
Company pursuant to Section 336 of the SFO, or as otherwise notified to the Company and
the Hong Kong Stock Exchange.
44
ALUMINUM CORPORATION OF CHINA LIMITEDParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued)
Name of substantial shareholder
Class of
shares
Number of
shares held
Capacity
Percentage
in the relevant
Percentage
class of issued
in total issued
share capital
share capital
Aluminum Corporation of China
A shares
5,295,895,019(L)Note 1
Beneficial owner and interests
48.32%(L)
35.53%(L)
H shares
162,276,000(L) Note 1
Interests of controlled
4.11%(L)
1.09%(L)
of controlled corporation
corporation
BlackRock, Inc.
H shares
289,777,137(L) Note 2
Interests of controlled
7.35%(L)
1.94%(L)
corporation
1,906,000(S) Note 2
Interests of controlled
0.05%(S)
0.01%(S)
corporation
The Capital Group Companies, Inc.
H shares
275,175,500(L) Note 3
Interests of controlled
corporation
6.98%(L)
1.85%(L)
The letter (L) denotes a long position, the letter (S) denotes a short position, and the letter
(P) denotes a lending pool. The information of H shareholders is based on the disclosure of
interests system of the Hong Kong Stock Exchange.
Note 1： These interests included 5,050,376,970 A shares directly held by Aluminum Corporation of China, and
an aggregate interest of 245,518,049 A shares and 162,276,000 H shares held by various controlled
subsidiaries of Aluminum Corporation of China, comprising 238,377,795 A shares held by Baotou
Aluminum (Group) Co., Ltd., 7,140,254 A shares held by Chalco Shanxi Aluminum Co., Ltd.* (中鋁山西鋁業
有限公司) and 162,276,000 H shares held by Aluminum Corporation of China Overseas Holdings Limited*
(中鋁海外控股有限公司).
Note 2： These interests were held directly by various corporations controlled by BlackRock, Inc.. Among the
aggregate interests in the long position in H shares, 184,000 H shares were held as derivatives. Among
the aggregate interests in the short position in H shares, 1,580,000 H shares were held as derivatives.
Note 3:
These interests were held directly by Capital Research and Management Company which was controlled
by The Capital Group Companies, Inc..
Save as disclosed above and so far as the Directors are aware, as of 31 December 2018, no
other person (other than the Directors, Supervisors and Chief Executive of the Company) had
any interest or short position in the shares or underlying shares of the Company (as the case
may be) which would fall to be disclosed to the Company and the Hong Kong Stock Exchange
under the provisions of Divisions 2 and 3 of Part XV of the SFO and as recorded in the register
required to be kept under section 336 of the SFO, or was otherwise a substantial shareholder
of the Company.
45
2018 ANNUAL REPORTParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued)
5. NUMBER OF SHAREHOLDERS
Unit: Number of Shareholders
Total number of shareholders as of 31 December 2018
505,826
6. PARTICULARS OF SHAREHOLDINGS HELD BY TOP TEN
SHAREHOLDERS
Name (full name)
Number of
shares held at
the end of the
Nature of
period
shareholders
Percentage of
shareholding
Aluminum Corporation of China Note 1
Hong Kong Securities Clearing Company Limited (H shares)
5,050,376,970
A shares
3,931,329,193
H shares
Note 2, Note 3
China Securities Finance Corporation Limited
Baotou Aluminum (Group) Co., Ltd.
Hong Kong Securities Clearing Company Limited (A shares)
Central Huijin Investment Ltd. (中央匯金資產管理有限責任
公司)
448,284,993
A shares
238,377,795
A shares
167,895,228
A shares
137,295,400
A shares
China Cinda Asset Management Co., Ltd.(中國信達資產管理
133,385,331
A shares
股份有限公司)
China Construction Bank Corporation-Boshi Industry Mixed
Securities Investment Fund (LOF) (中國建設銀行股份有
限公司-博時主題行業混合型證券投資基金(LOF))
Guangdong Finance Trust Co., Ltd. (廣東粵財信託有限公司)
– Yuecai Trust •Yuezhong No. 3 Collective Fund Trust
Plan (粵財信託 • 粵中3號 集合資金信託計劃)
70,000,021
A shares
67,700,000
A shares
China Merchants Bank Co., Ltd.- Boshi CSI Tradable Open
54,044,707
A shares
Index Securities Investment Fund for State-owned
Enterprises Structure Adjustment (招商銀行股份有限公
司–博時中證央企結構調整交易型開放式指數證券投資基金)
(%)
33.89
26.38
3.01
1.60
1.13
0.92
0.89
0.47
0.45
0.36
46
ALUMINUM CORPORATION OF CHINA LIMITEDParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued)
Note 1： The number of shares held by Aluminum Corporation of China doesn’t include the A shares of the
Company indirectly held by it through its subsidiaries Baotou Aluminum (Group) Co., Ltd. and Chalco
Shanxi Aluminum Co., Ltd.* (中鋁山西鋁業有限公司) and the H shares of the Company indirectly held by
it through its subsidiary Aluminum Corporation of China Overseas Holdings Limited. As of 31 December
2018, Aluminum Corporation of China together with its subsidiaries held an aggregate of 5,458,171,019
shares, among which 5,295,895,019 shares were A shares and 162,276,000 shares were H shares, in the
Company, accounting for 36.62% of the total share capital of the Company.
Note 2： Hong Kong Securities Clearing Company Limited holds the 162,276,000 H shares of the Company
on behalf of Aluminum Corporation of China Overseas Holdings Limited, a subsidiary of Aluminum
Corporation of China.
Note 3： The 3,931,329,193 H shares of the Company held by Hong Kong Securities Clearing Company Limited
include 162,276,000 H shares it holds on behalf of Aluminum Corporation of China Overseas Holdings
Limited, a subsidiary of Aluminum Corporation of China.
7. PARTICULARS OF THE CONTROLLING SHAREHOLDER
(1) Particulars of the Controlling Shareholder
Name of the controlling
Aluminum Corporation of China
shareholder：
Legal representative:
Ge Honglin
Registered capital:
RMB25.2 billion
Date of incorporation:
21 February 2001
Principal operating or managing
activities:
Bauxite mining (limited to the bauxite mining
a t G u i z h o u M a o c h a n g M i n e); d e p l o y m e n t o f
personnel necessary for overseas engineering
projects commensurating with its capacity, scale
and performance. Operation and management
of state-owned assets and equities; production
and sales of aluminum, copper, rare earth and
related non-ferrous metals mineral products,
s m e l t e d p r o d u c t s , p r o c e s s e d p r o d u c t s a n d
carbon products; exploration design, general
project contracting, construction and installation;
e q u i p m e n t m a n u f a c t u r i n g ; t e c h n o l o g i c a l
development and technical service; import and
export businesses.
47
2018 ANNUAL REPORTParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued) (2) Diagram of the Direct Equity Interests and Controlling
Relationship between the Company and the Controlling
Shareholder
State-owned Assets Supervision and
Administration Commission of the State Council
100%
Aluminum Corporation of China
36.62%
Aluminum Corporation of China Limited
Note: The controlling shareholder of the Company is Aluminum Corporation of China, and the actual
controller of the Company is the State-owned Assets Supervision and Administration Commission
of the State Council. As at 31 December 2018, Aluminum Corporation of China directly holds
33.89% equity interest in the Company and holds 5,458,171,019 shares in the Company together
with its subsidiaries, including 238,377,795 A shares held by Baotou Aluminum (Group) Co.,
Ltd, 7,140,254 A shares held by Chalco Shanxi Aluminum Co., Ltd.* (中鋁山西鋁業有限公司) and
162,276,000 H shares held by Aluminum Corporation of China Overseas Holdings Limited* (中鋁海
外控股有限公司), accounting for 36.62% of the total share capital of the Company.
48
ALUMINUM CORPORATION OF CHINA LIMITEDParticulars and Changes of Shareholding Structure, and Details of Substantial Shareholders (Continued) Dear shareholders,
I hereby present the annual report of the Group for the financial year ended 31 December 2018 for
shareholders’ review. On behalf of the Board and all employees of the Company, I would like to
express our sincere gratitude to all shareholders for your care for and support for the Company.
PRODUCT MARKET REVIEWS
Alumina Market
Alumina was in short supply in the overseas market as affected by the US’s sanction imposed on
RUSAL, the output reduction of the Alunorte alumina plant of Hydro Aluminum in Brazil, the Alcoa
strike and other incidents; domestic supply of alumina was also tight due to the insufficient supply
of ores in Shanxi, Henan and other places resulted from the stricter environmental supervision in
the PRC. Consequently, alumina price in 2018 fluctuated at high levels.
In the international market, the overseas alumina price set a new historical record as stimulated
by the aforesaid contingent incidents. In 2018, the highest and lowest prices of alumina in the
international market were USD710 per tonne and USD357 per tonne, respectively, with the annual
average of USD473 per tonne, representing an increase of 33.6% as compared to 2017.
In the domestic market, China’s alumina export was increased due to the alumina supply shortage
caused by the international incidents. Besides, some manufacturers implemented flexible
production modes. Accordingly, the price of alumina fluctuated at a smaller range than that of 2017.
In 2018, the highest and lowest prices of alumina in the domestic market were RMB3,291 per tonne
and RMB2,691 per tonne, respectively, with the average of RMB2,992 per tonne, representing an
increase of 2.85% as compared to 2017.
According to the statistics, the respective global output and consumption of alumina for 2018 was
approximately 124.69 million tonnes and approximately 128.40 million tonnes, representing a year-
on-year decrease of 4.5% and 1.5%, respectively. The respective domestic output and consumption
of alumina were approximately 71.61 million tonnes and approximately 72.70 million tonnes,
representing a year-on-year increase of 1.9% and 0.3%, respectively, representing approximately
57.43% and 56.62% of global output and consumption, respectively. As of the end of December
2018, the alumina capacity utilization rate in the world (inclusive of the PRC) was approximately
79%, while that of the PRC was approximately 85%, 1.5 percentage points lower than that of the
previous year.
49
2018 ANNUAL REPORTChairman’s Statement Primary Aluminum Market
In 2018, under the complicated and fickle market environment, the supply and demand of aluminium
in the market was sluggish and fluctuated substantially with twists and turns, and the price went
downward consequently.
In the international market, as impacted by the US’s sanction on RUSAL, international aluminium
price fluctuated violently in the first half of the year and price of the three-month aluminium futures
at LME soared to USD2,718 per tonne in April, the peak in the year; in the second half of the year,
despite the impact of the sanction wearing off, Sino-US trade frictions escalated stepwise, sending
the aluminium price to decline continuously to USD1,830 per tonne at the end of December, the
lowest level in the year. In 2018, the average prices of spot aluminum and three-month aluminium
futures at LME were approximately USD2,108 per tonne and USD2,114 per tonne, respectively,
representing increases of 7.11% and 6.78% over 2017.
In the domestic market, the overall price of electrolytic aluminum was depressed and undulated
in a wide range in 2018. Affected by domestic economy and higher tariffs imposed by the US,
consumption growth declined as compared with the previous year, resulting in a general decline
in aluminum price. In the first half of the year, the international aluminum price rose sharply and
the domestic aluminum price also increased correspondingly. In the second half of the year, the
domestic aluminum price rose first and then fell following the track of alumina price. In 2018,
the average prices of spot aluminum and three-month aluminum futures at SHFE amounted to
RMB14,254 per tonne and RMB14,375 per tonne, respectively, representing decreases of 2.11%
and 2.42% from 2017.
According to the statistics, the global output and consumption of primary aluminum for 2018
were approximately 64.21 million tonnes and approximately 65.70 million tonnes, respectively,
representing a year-on-year increase of 1.5% and 3.32%, respectively. The domestic output and
consumption of primary aluminum were approximately 36.48 million tonnes and approximately
37.13 million tonnes, respectively, representing a year-on-year decrease of 0.5% and a year-on-
year increase of 4.89% respectively, representing approximately 56.81% and 56.51% of global
output and consumption respectively. As of the end of December 2018, the capacity utilization rate
of primary aluminum in the world (inclusive of the PRC) was 83.9%, while that of the PRC was
approximately 83.4%, 1.8 percentage points higher than that of the previous year.
50
ALUMINUM CORPORATION OF CHINA LIMITEDChairman’s Statement (Continued) BUSINESS REVIEW
In 2018, in accordance with the working principle of “low cost, high quality, optimal mechanism
and admirable performance”, the Company continued to implement the cost-oriented strategies,
proactively carried on with the missions in respect of safety, environmental protection and quality,
and exerted consistent efforts to improve competitiveness and profitability by shoring up weakness,
addressing inadequacies, enhancing strengths and building up the brand. As a result, transformation
and upgrading stepped into new stage, and new prospects were created in operation and
management. With resource guarantee, production of major products, proportion of mid-to-high end
products further improved, the Company’s costs for alumina and electrolytic aluminum were further
reduced and cost competitiveness was going up. The Company mainly carried out the following
tasks:
1.
Further optimised the appraisal mechanism with a primary focus on cost assessment.
Upholding the management philosophy of “reasoning out costs based on market conditions
and promoting reform with costs” adopted since 2016, the Company took dynamic cost
assessment as the main thrust and established the appraisal results-related “three-linkage”
mechanism, which required to arrive at the performance appraisal results after taking into
account the remuneration and qualification rating of the enterprise principals as well as the
staff payroll of an enterprise; in addition, it conducted process management and annual
evaluation using the assessment methods of “monthly monitoring and warning, quarterly
summary through conversation, semi-annual qualification rating, and annual comprehensive
evaluation”; moreover, it implemented the “quarterly appraisal and quarterly reward”
incentive mechanism to “reward the worthy and urge the laggard”, thereby effectively
arousing the working enthusiasm of the enterprises and their employees to drive down costs
and drive up efficiency.
51
2018 ANNUAL REPORTChairman’s Statement (Continued) 2.
Implemented comprehensive management and control to further improve management
standard. The Company continued with the “morning scheduling meeting + thematic
seminars” mode adopted in 2017 to relentlessly enhance the comprehensive management
and control capability of the Company. It effectuated output increase, consumption reduction
and quality improvement in respect of alumina in virtue of balanced and stable production
arrangements; boosted the continuous optimisation of electrolytic aluminum indicators by
intensifying key breakthroughs; and implemented the requirements under Company’s “Year
for Breakthroughs in Respect of Carbon Quality” aiming for the work objectives of “reasonable
layout, advantageous costs, top-notch quality, advanced indicators” and laid down the
Process Technology and Relevant Operation and Maintenance Guidance on Carbon Anodes
Moulding System, resulting in satisfactory results in tapping potentials and creating benefits;
besides, the Company also optimised and adjusted the top-level design plan on alloying and
arranged for screening and handling aluminum casting-specialised hidden hazards; in terms of
the “three quality control projects”, the Company classified the goals, tasks and requirements
into eight specific starting points, strived for upgrade in the five aspects comprising quality
indicators, quality systems, operation standards, operation practices and the equipment and
shored up weak points in respect of acute quality problems, quality breakthroughs and quality
brand construction, having resulted in remarkable achievements in solving quality problems.
3.
Carried forward the transformation and upgrade and implemented the industrial layout
covering “coastal and overseas” regions. The Company gained access to overseas bauxite
resources of 1,750 million tonnes, and commenced the construction of the Boffa bauxite
project in Guinea, port projects and the 2 million tonnes alumina and supporting projects of
Guangxi Huasheng, representing the Company’s concrete steps towards the international
development strategy; the production lines for near-end products of high added value such
as tabular corundum, fine molecular sieves and high-purity aluminium were completed and
put into operation, signaling new strides towards high-quality development; it also actively
developed clean energy business, and commenced the construction of a wind power project
in Alxa Left Banner; the carbon projects designed to support Lvliang and Qingzhen aluminum
industrial bases and meet the demand of Mengdong market were completed and put into
production one after another, indicating synergetic development reaching a new level; the
Company deepened the reform of investment mechanisms by clarifying the development
52
ALUMINUM CORPORATION OF CHINA LIMITEDChairman’s Statement (Continued) positioning of enterprises, classifying investment levels, amending the performance appraisal
system for investment projects, implementing centralized management of management of
bids and tenders and deepening the “pilot management reform”, thereby establishing an
all-round quality management system for investment projects, and achieving the goal of
“ensuring the success and profitability of every initiated project”.
4.
Continued to implement the innovative development concepts and enhanced the promotion
and application of scientific results, new products development and scientific technologies.
Thanks to the Company’s efforts in the promoting the construction of innovation platforms
and accelerating technological development and application, periodic success was made
in the development and research of two cutting-edge technologies, i.e., the single-piece
moulding technology for cathode from aluminum electrolysis and the technology for improving
seed crystal decomposition rate under the Bayer process; technological breakthroughs were
achieved in new product/technology development or trial expansion projects with regard to
flotation and desulphurisation of bauxite with very high sulphur content, dry sintering of low-
grade bauxite, boehmite used for DMO/MTO catalysts, aluminum nitride produced through
carbon-thermal reduction process, etc.; the technologies for hazard-free treatment of overhaul
residue generated from aluminium electrolysis, the intelligent crust breaking technology as
well as the electrolytic aluminum “FHEST” technology were generalised; major breakthroughs
were made in high-quality aluminum production technology, making it possible to substitute
imported products. In 2018, the Company organized and carried out 135 technological
research and development projects, including 46 projects undertaken by the Company itself
and 89 projects undertaken independently by subordinate enterprises, and made 122 new
patent applications. As at the end of December 2018, the Company had 1,267 valid patents,
with remarkable results achieved for demonstration and promotion projects concerning the
industrialization of technological achievements.
53
2018 ANNUAL REPORTChairman’s Statement (Continued) 5.
Established operation platforms for further implementing the strategy of scientific marketing,
concentrated procurement and integrated logistics. The Company put into practice the
“big marketing, procurement and logistics” strategy, progressively carried forward the
establishment of operation platforms to level up the operating capability of the Company
on a continuous basis. In virtue of its industry experience, the Company took initiative to
diminish the adverse impact of the sharp fluctuation of commodity prices caused by external
contingent incidents and the Sino-US trade frictions; it participated in the alumina spot
trading at Qianhai Exchange in Shenzhen so as to further standardise domestic spot alumina
transaction mechanism and bolster up the healthy development of the industry; meanwhile,
it enhanced strategic cooperation with suppliers by implementing cooperative projects and
cementing cooperative relations; enhanced market research for accurate judgement, adopted
and improved the concentrated procurement negotiations and separate contracting approach,
and seized opportunities to procure at low prices instead of the peak while guaranteeing
supply, which facilitated cost reduction in the aspect of procurement; further, it also advanced
the logistics classification and integration and strengthened business expansion and functional
construction, having improved the ability to create benefits from the logistics business.
6.
Innovated and replenished financing approaches and ensured capital security of the Company.
The Company obtained approval from the CSRC for the acquisition of assets by issuance of
shares, and the debtors of relevant subsidiaries of the Company, upon completion of the
acquisition, became institutional investors of the Company, which has optimised its capital
structure and further improved its corporate governance structure; it also obtained approval
from the CSRC for the issuance of “Little Mutual-Fund” debentures in the amount of RMB10
billion; meanwhile, the Company adjusted its financing channels and thereby obtained follow-
on funding at low cost; while capitalising on the window period for bonds issuance in the
market, it managed to safeguard the safety of overseas capital and ward off exchange control
risks; in addition, it commenced the operation of “notes pool” to speed up the circulation
of financial notes; and it activated the “capital pool” plan, which enabled efficient operation
of funds by integrating the account, cash, settlement, fundraising and operation to reduce
occupation of capital on hand, increase capital use efficiency effectively and scale down
interest-bearing liabilities and financing costs.
54
ALUMINUM CORPORATION OF CHINA LIMITEDChairman’s Statement (Continued) 7.
Enhanced internal control to further prevent and control operation risks. The Company
arranged a number of internal control-related interim self-evaluation, interactive B2B review
and independent supervision and inspection activities. It also urged the relevant departments
and subsidiaries to emphasize the rectifications of problems identified in the course of audit,
inspection and internal control evaluation, conduct persistent follow-ups on the progress
made in rectifying various problems and report the same termwise to the management on
a monthly basis, and escalate significant and contingent matters to the superiors promptly.
As a result, various risks in the operation and management were well anchored, internal
control work was further built up. All the enterprises were required to carry out internal
control self-evaluation and risk control, which placed the emphasis on the inspections over
key management aspects such as contract management, authorisation management and
reduction of funds occupied by receivables and inventories, and had effectively hedged risks
in contract management and authorisation management.
8.
Further upgraded the quality of Party construction and procured the close integration of
Party construction, operation and management so as to give play to the comprehensive
leading role of the Party committee of the Company. The Company made amendments to
and supplemented such normative documents as the Administrative Measures on Decision-
making Purview and Rules for Implementing the Decision-making Systems on “Three
Important Matters and One Big Concern”, clarified the terms of reference of each governing
entity, and earnestly followed through the requirements of preliminary research procedures of
the Party organisation, with the view to integrating the leadership of the Party into each aspect
of its corporate governance. The Party committee of the Company carried out studies on over
fifty material matters in regard of the operation and management of the Company throughout
the year; in the meantime, the Company furthered the “double-hundred” assessment giving
equal weight to Party construction and operation and included the implementing progress of
matters superintended by the Company into the assessment systems of Party construction;
besides, it also organised the “five-new” seminars painstakingly. At such seminars, 134
pieces of advice in fifteen aspects were put forward, consensus in nine perspectives were
reached, the working principle of “low cost, high quality, optimal mechanism and rewarding
benefits” was concluded, which have become the important source for solidifying all Party
members to accelerate the “three major renovations” and pursue high quality development.
Moreover, the Company thoroughly carried out the “two guidings and two makings” activities
and nailed down 132 projects on benefit making of Party members under the guidance of
Party organisation and 136 subjects in regard of innovation by the masses under the guidance
of Party members, which resulted in remarkable benefit-making achievements.
55
2018 ANNUAL REPORTChairman’s Statement (Continued) DIVIDENDS
As the Company’s profit for the year 2018 will be used to make up for the losses of previous
years, the Board did not propose any final dividend for the year ended 31 December 2018 and such
proposal is subject to approval of shareholders at the forthcoming 2018 annual general meeting.
The Company will publish an announcement after the arrangement of such general meeting.
RESULTS
For the year ended 31 December 2018, the Group recorded revenue of RMB180,200 million,
basically flat as compared to RMB181,000 million in 2017. Profit attributable to owners of the parent
and earnings per share attributable to owners of the parent was RMB746 million and RMB0.037
respectively.
BUSINESS OUTLOOK AND PROSPECTS
In 2019, the Company will, in accordance with the working principle of “low cost, high quality,
optimal mechanism and admirable performance”, uphold the new development philosophy to
deepen reform and innovation and accelerate the transformation and upgrading with the view to
optimising, strengthening and expanding the business of the Company and fully advancing the
Company’s high-quality development. In particular, it will continue to implement the cost-oriented
strategy to constantly improve the advantageous competitiveness of cost; optimise the industrial
layout and adjust the product portfolio to manufacture quality products with high technology and
build up the market image of “better aluminium, Chalco’s forte”; and drill down the management
reform in a comprehensive way to establish an operation mechanism that is fit for market
competition and full of business vitality. In 2019, the Company will focus on the following tasks:
56
ALUMINUM CORPORATION OF CHINA LIMITEDChairman’s Statement (Continued) 1.
Emphasizing cost assessment to enhance cost competitiveness. The Company will continue
to intensify the performance appraisal “three-linkage” incentive and constraint mechanism,
implement the cost-oriented strategy steadfastly and further carry out the cost reduction and
efficiency enhancement special actions. The Company will use dynamic cost assessment
for assessing alumina and electrolytic aluminum enterprises, with a focus on lowering the
costs of ores and electricity to solve the principal contradictions of key enterprises; continue
to carry out the promotion plan for the “FHEST technology”; encourage the application of
the anodic oxidative stability technology in the Company; and initiate the introduction of the
aluminum electrolysis technologies with lower energy consumption into the verification tests
of 400kA and 500kA electrolyzers and the industrial demonstration of full-automatic welding
systems for anodic guide rod sets, so as to reduce energy consumption and cost. In sum, the
Company will adopt multiple measures to lower costs and upgrade its ranking among industry
peers in terms of cost competitiveness, outperforming both the market and its peers.
2.
Further developing and improving technological innovation systems. The Company will level
up technology content and realise product upgrade in virtue of technological innovations.
In addition, the Company will speed up the progress of transforming itself into a material
production enterprise from a raw material manufacturer and pursue better and superior
product portfolio by optimising and strengthening refined alumina and developing aluminum
base alloys in a synergic manner. To this end, it will prioritise the development of products
with high added value such as micro powder grade aluminum hydroxide and tabular corundum
and set up worldwide leading alumina research, manufacturing and marketing platform;
continue with the research on the removal of organics from alumina and develop high-quality
alumina and fine aluminum ingots; and accelerate the company-wide popularisation and
application of ecological reclamation technology designed for red mud yards, the intelligent
crust technology and accurate aluminum generation technology, whereby technology support
for the Company’s cost reduction and efficiency enhancement is provided.
57
2018 ANNUAL REPORTChairman’s Statement (Continued) 3.
Further intensifying production management and opening up a new stage of green
development. The Company will pay special attention to the critical aspects in the production
segment, deepen the management of mines, improve the quality of mining rights and establish
green mines; it will optimise the main process to level up operation quality on a continuous
basis and strive for stable and efficient production of alumina; take great efforts to put
new electrolytic aluminum projects into operation and make such projects accomplish the
designed capacity, meet up with the standards and generate the expected profits as soon as
practicable; introduce the Quality Carbon Anodes Standards of Chalco to guide the upgrade of
carbon products; tap the frontier market of aluminium base alloys for better product portfolio
and stronger benefit-making capability; and roll out special projects for cost reduction in
respect of coal and electricity management as well as macro energy and implement the
electricity tariff policy. In addition, the Company will make full use of the morning scheduling
meeting to reinforce process management. It will also further consummate equipment
management systems by setting up the four sets of major standards comprising the
maintenance technology standards, the sequenced detection standards, the lubrication
standards and the maintenance operation standards so as to create a long-lasting mechanism
in this regard; under the guidance of the comprehensive and precise management philosophy,
the Company will establish a precise management and business system of the Company, and
keep normalising business outsourcing to specify the outsourcing scope and achieve standard
contractor management, contract management, statistics and accounting.
4.
Proceeding with the critical projects in relation to safety, environmental protection and quality
to cement the foundation of sustainable development and promote the green, healthy, safe
and sustainable development of the Company. The Company will reduce accident costs
and create a safe and healthy production environment through the four safety management
projects; make active response to the ultra-low emission appeal, avert losses arising from
production reduction and abeyance and carry forward the construction of green and low-
carbon enterprises through the three environment protection projects; and develop model
products in the industry, build up a brand image with stringent specifications and earn higher
customer approbation through the three quality management projects.
58
ALUMINUM CORPORATION OF CHINA LIMITEDChairman’s Statement (Continued) 5.
Launching second round of “larger, efficient, stronger and dynamic” initiative steadfastly to
ameliorate the industrial layout of the Company by branching out scientifically, obsoleting
redundancy resolutely and forging ahead or retreating as appropriate. The Company will move
its alumina and electrolytic aluminum businesses to regions abundant in coal resources,
superior in clean energy and with high environmental tolerance such as coastal ports
in an orderly manner. To be specific, it will proactively experiment on the management
and control mode adopted in Guinea Boffa Project to level up the international operation
standards; implement standard, intelligent and eco-friendly management for the alumina
project of Guangxi Huasheng; and strive to turn the Alxa Left Banner wind power project
into the Company’s largest and most profitable wind power base. Besides, it will phase out
electrolytic aluminum capacities that suffer from heavy electricity costs and are unlikely to
turn around with strong determination, and carry out capacity shift, enterprise transformation
and personnel transfer in close compliance with the “larger, efficient, stronger and dynamic”
principle.
6.
Consummating marketing management mechanism, making adjustments to and optimising
procurement strategies and exerting more efforts on classification and consolidation of
logistics resources. In addition to proceeding with market research and judgement work,
the Company will also optimise the marketing strategies, further improve the marketing
management mechanism, enhance risk control capability and pay attention to the pace of
sales, thereby achieving smooth sale of products, increasing the market influence of the
Company and strengthening the benefit making capability; besides, it will accelerate the
construction of the procurement platform, deeply promote the construction and application
of the e-commerce platform and perfect the procurement performance and supplier rating
systems to improve the Company’s procurement management standards and enhance
the price negotiation capability in a comprehensive manner. Moreover, it will carry out
classification and consolidation of logistics resources to exert the strengths of the logistics
platform, accelerate the expansion of logistics businesses and improve the guarantee capacity
of logistics and the profitability thereof.
59
2018 ANNUAL REPORTChairman’s Statement (Continued) 7.
Intensifying financial management and control to increase asset operation efficiency and
decrease financing costs. The Company will continue to reinforce concentrated fund
management and fully implement the “capital pool” and “notes pool” businesses to reduce
dormant budgetary funds and interest-bearing liabilities and lowering the financing costs
and leverage ratio; adopt dynamic measures to manage and scale down the Company’s
receivables and inventories; further the construction of regional or business-based accounting
centre and tentatively set up regional or business-based financial sharing centre so as to
provide strong support for the improvement of financial management and control standards;
and make full use of the capital market to energetically expand financing channels and
enhance capital cooperation to invigorate the Company’s assets in stock and achieve the
synergistic effects of capital and capital operation.
8.
Continuing to give priority to Party building to convert political advantages into competitive
advantages. The Company will continue to give the rein to the leading role of Party
organisation, thoroughly advance the “two guidings and two makings” activities and integrate
Party building into key and demanding tasks in relation to production and management,
reform and development as well as transformation and upgrading with the view to enhancing
the initiative and creativity of the crew and having powerful political guarantee in place for the
quality development of the Company.
Lu Dongliang
Chairman
Beijing, the PRC
28 March 2019
60
ALUMINUM CORPORATION OF CHINA LIMITEDChairman’s Statement (Continued) DEVELOPMENT STRATEGY AND MODEL
The Company is committed to sustaining its leadership in the domestic market and insists on
extending the front end of the industrial chain and developing the high-end of the value chain. It has
established the general direction of “scientifically consolidating upstream businesses, optimizing
and adjusting midstream businesses and expanding into downstream businesses.” Adhering to the
development idea featuring innovation, coordination, green, opening up and sharing, the survival
bottom-line thinking, progress amidst stabilization, and reform and innovation, the Company will
promote reform in terms of quality, efficiency and power. Centering on economic benefits in work,
the Company, with “quality and efficiency enhancement, reform and innovation, and transformation
and upgrading” as the main goal of work, will accelerate structural adjustment and promote
transformation and upgrading. In addition, the industrial chain will be constantly perfected and
reform and innovation will be deepened to quicken the high-quality development and transfer of
production capacity. The Company will increase international cooperation in production capacity
and enhance its operation capacity as a global player, actively promote the change of the Company
from extensive development to intensive development and from a domestic enterprise producing
basic raw materials to a global enterprise manufacturing high-tech materials, to solidly strengthen,
optimise and expand its business, thereby building itself into a top-notch enterprise in the aluminum
industry with international competitiveness in the world.
The following discussions should be read together with the financial information of the Group and
its notes included in this results report and other sections.
BUSINESS SEGMENTS
The Group principally engages in the mining of bauxite, coal and other resources; the production,
sales and technical development of alumina, primary aluminum and aluminum alloy products;
international trading, logistics services, as well as electricity generation from coal and new energy.
Business segments comprise:
Alumina segment consists of mining and purchasing bauxite and other raw materials, refining
bauxite into alumina, and selling alumina both internally to the Group’s aluminum enterprises and
trading enterprises and externally to customers outside the Group. This segment also includes the
production and sales of refined alumina and metal gallium.
61
2018 ANNUAL REPORTManagement’s Discussion and Analysis of Financial Position and Results of Operations Primary aluminum segment consists of procuring alumina, raw supplemental materials and
electricity power, smelting alumina to produce primary aluminum, and selling them internally to
the Group’s trading enterprises and externally to customers outside the Group. This segment also
includes the production and sales of carbon products, aluminum alloy products and other electrolytic
aluminum products.
Trading segment is mainly engaged in the trading and logistics of alumina, primary aluminum,
other nonferrous metal products, and crude fuels such as coal products, as well as supplemental
materials to the internal manufacture enterprises and external customers.
Energy segment consists of coal, electricity generation from coal, wind power, photovoltaic power
and new energy equipment production, etc. Among its major products, coals are sold to the internal
manufacturers of the Group and external customers outside the Group; and electricity power
generated by public power plants, wind power and photovoltaic power stations of the Group is sold
to local grid companies.
Corporate and other operating segments include corporate and other aluminum-related research
and development and other activities of the Group.
RESULTS OF OPERATIONS
The Group’s net profit attributable to owners of the parent for the year 2018 was RMB746 million,
representing a decrease of RMB667 million from RMB1,413 million for the previous year. This was
mainly attributable to the year-on-year decrease in price of aluminum in primary aluminum segment
and year-on-year increase in prices of raw materials.
REVENUE
The Group’s revenue for the year 2018 was RMB180,240 million, basically flat with RMB181,020
million for the same period of the previous year.
62
ALUMINUM CORPORATION OF CHINA LIMITEDManagement’s Discussion and Analysis of Financial Position and Results of Operations (Continued) COST OF SALES
The Group’s cost of sales for the year 2018 was RMB167,029 million, basically flat with
RMB166,290 million for the same period of the previous year.
EXPENSES FOR THE PERIOD
1.
Selling expenses: The Group’s selling expenses for the year 2018 amounted to RMB2,497
million, representing an increase of RMB124 million from RMB2,373 million for the same
period of the previous year, mainly due to the increase of freight charges arising from
increased sales.
2.
Administrative expenses: The Group’s administrative expenses for the year 2018 amounted
to RMB3,958 million, representing a decrease of RMB591 million from RMB4,549 million for
the same period of the previous year, mainly attributable to the large amount of provisions for
termination benefits made by the Company in 2017.
3.
Finance costs, net: The Group’s finance costs for the year 2018 amounted to RMB4,390
million, representing a decrease of RMB107 million from RMB4,497 million for the same
period of the previous year, mainly due to the decrease in interest-bearing loans and
borrowings.
RESEARCH AND DEVELOPMENT EXPENSES
The Group’s research and development expenses for 2018 amounted to RMB627 million,
representing an increase of RMB129 million from RMB498 million for the same period of the
previous year, mainly due to more research and development investments made by the Group
during the year.
OTHER GAINS, NET
In 2018, other gains of the Group amounted to RMB922 million, representing an increase of
RMB603 million from RMB319 million for the same period of the previous year, mainly due to the
gains realized in the acquisition of joint ventures and associates as subsidiaries in stages during the
year.
63
2018 ANNUAL REPORTManagement’s Discussion and Analysis of Financial Position and Results of Operations (Continued) INCOME TAX EXPENSES/BENEFITS
Income tax expenses for the year 2018 amounted to RMB822 million, representing an increase of
RMB178 million from RMB644 million for the same period of the previous year, mainly due to tax
losses on deferred income tax assets recognized at the end of the year and the increase in time
difference.
Alumina Segment
Revenue
The Group’s revenue from the alumina segment for the year 2018 was RMB44,151 million,
representing an increase of RMB5,154 million from RMB38,997 million for the same period of the
previous year, mainly attributable to the increase in the price and trading volume of alumina.
Segment Results
The Group’s profit before income tax in the alumina segment for the year 2018 was RMB3,496
million, representing an increase of RMB205 million from RMB3,291 million for the same period of
the previous year, mainly attributable to the rising price and increase in trading volume of alumina.
Primary Aluminum Segment
Revenue
The Group’s revenue from the primary aluminum segment for the year 2018 was RMB53,802
million, representing an increase of RMB6,556 million from RMB47,246 million for the same period
of the previous year mainly attributable to the increase in the trading volume of primary aluminum.
64
ALUMINUM CORPORATION OF CHINA LIMITEDManagement’s Discussion and Analysis of Financial Position and Results of Operations (Continued) Segment Results
The Group’s profit before income tax in the primary aluminum segment for the year 2018 was
RMB-929 million, representing a decrease of RMB1,756 million in profit from RMB827 million
for the same period of the previous year. This was mainly attributable to an increase in prices of
alumina and anode in the costs of primary aluminum and a decrease in prices of products.
Trading Segment
Revenue
The Group’s revenue from the trading segment for the year 2018 was RMB142,017 million,
representing a decrease of RMB4,838 million from RMB146,855 million for the same period of the
previous year, mainly attributable to the decrease in trading volume.
Segment Results
The Group’s profit before income tax in the trading segment for the year 2018 was RMB779 million,
representing an increase of RMB45 million from RMB734 million for the same period of last year.
Energy Segment
Revenue
The Group’s revenue from the energy segment for the year 2018 was RMB7,235 million,
representing an increase of RMB984 million from RMB6,251 million for the same period of the
previous year, mainly due to the increase in the prices of coal and electricity and in trading volume.
Segment Results
The Group’s profit before income tax in the energy segment for the year 2018 was RMB26 million,
representing an increase of RMB197 million in profit from the loss before income tax of RMB171
million for the same period of the previous year, mainly attributable to the increase in the prices of
coal and electricity and in trading volume.
65
2018 ANNUAL REPORTManagement’s Discussion and Analysis of Financial Position and Results of Operations (Continued) Corporate and Other Operating Segments
Revenue
The Group’s revenue from corporate and other operating segments for the year 2018 was RMB667
million, basically flat compared with RMB645 million for the same period of the previous year.
Segment Results
The Group’s loss before income tax from corporate and other operating segments for the year
2018 was RMB1,267 million, representing a decrease of RMB462 million in loss from the loss of
RMB1,729 million for the same period of the previous year, mainly due to revenue resulted from
stepwise acquisition of joint ventures and associates as subsidiaries during the year.
STRUCTURE OF ASSETS AND LIABILITIES
Current Assets and Liabilities
As of 31 December 2018, the Group’s current assets amounted to RMB58,895 million, representing
a decrease of RMB9,749 million from RMB68,644 million at the end of 2017, primarily due to that
the Group strengthened capital turnover and reduced monetary capital reserves.
As of 31 December 2018, the Group’s current liabilities amounted to RMB74,749 million,
representing a decrease of RMB15,588 million from RMB90,337 million as the end of 2017,
primarily due to decrease in short-term interest-bearing liabilities resulting from debt restructuring.
As of 31 December 2018, the current ratio of the Group was 0.79, representing an increase of 0.03
from 0.76 as of the end of 2017, and the quick ratio was 0.49, representing a decrease of 0.03 from
0.52 as at the end of 2017.
66
ALUMINUM CORPORATION OF CHINA LIMITEDManagement’s Discussion and Analysis of Financial Position and Results of Operations (Continued) Non-Current Liabilities
As of 31 December 2018, the Group’s non-current liabilities amounted to RMB58,458 million,
representing an increase of RMB14,721 million from RMB43,737 million as the end of 2017,
primarily due to the optimization of the debt structure by the Group and newly-added medium- and
long-term debts.
As of 31 December 2018, the debt to asset ratio of the Group was 66.3%, representing a decrease
of 0.8 percentage point from 67.1% as of the end of 2017, primarily due to decrease in liabilities.
MEASUREMENT OF FAIR VALUE
The Group strictly established the procedures for recognition, measurement and disclosure of fair
value in accordance with the requirements on fair value under the relevant accounting standards,
and took responsibility for the truthfulness of the measurement and disclosure of fair value. At
present, except that financial assets and liabilities at fair value through profit or loss and equity
and industrial fund investments in listed company classified as equity investments designated at
fair value through other comprehensive income are accounted at fair value, others are stated at
historical cost.
As of 31 December 2018, the Group’s financial assets at fair value through profit or loss increased
by RMB7 million as compared with the end of 2017, which was recognised as profit from fair value
changes. The Group’s financial liabilities at fair value through profit or loss decreased by RMB88
million as compared with the end of 2017, which was recognised as profit from fair value changes.
PROVISION FOR INVENTORY IMPAIRMENT
As of 31 December 2018, the Group assessed the net realizable value of its inventories. For the
inventory relevant to aluminum products, the assessment was made on the net realizable value of
its inventories on the basis of the estimated selling price of the finished goods available for sale
with comprehensive consideration of the coordination scheme of the production and sales between
alumina enterprises and electrolytic aluminum enterprises within the Group, and the factors
including the financial budget, turnover period of inventory, the purpose of the Company to hold the
inventory and the influence of events subsequent to the balance sheet date. For the inventory held
by the energy segment, the Group unanimously calculated with the most recent market price.
67
2018 ANNUAL REPORTManagement’s Discussion and Analysis of Financial Position and Results of Operations (Continued) As of 31 December 2018, the balance of provision for impairment of inventories held by the Group
was RMB811 million, representing an increase of RMB354 million as compared with RMB457
million as of the end of 2017.
The Company has always adopted the same approach to determine the net realizable value of
its inventories and the provision for inventory impairment on a consistent basis for the relevant
accounting policy.
CAPITAL EXPENDITURES, CAPITAL COMMITMENTS AND
INVESTMENT UNDERTAKINGS
As of 31 December 2018, the Group’s project investment expenditures (excluding equity
investments) amounted to RMB9,128 million, which mainly consisted of investments in energy
saving and consumption reduction, environmental governance, resources acquisition and
technological research and development.
As of 31 December 2018, the Group’s contracted but not provided capital commitment to fixed asset
investment amounted to RMB3,943 million.
As of 31 December 2018, the Group’s investment undertakings to joint ventures and associates
amounted to RMB543 million, mainly comprised of the capital contributions of RMB450 million to
Chinalco Overseas Development Co., Ltd. (中鋁海外發展有限公司).
CASH AND CASH EQUIVALENTS
As of 31 December 2018, the Group’s cash and cash equivalents amounted to RMB19,131 million.
CASH FLOWS FROM OPERATING ACTIVITIES
For the year 2018, the Group’s cash flows generated from operating activities were net cash
inflows amounting to RMB13,018 million, basically the same with RMB13,206 million of net cash
inflows for the same period last year.
68
ALUMINUM CORPORATION OF CHINA LIMITEDManagement’s Discussion and Analysis of Financial Position and Results of Operations (Continued) CASH FLOWS FROM INVESTING ACTIVITIES
For the year 2018, the Group’s cash flows generated from investing activities were net cash
outflows amounting to RMB5,528 million, basically the same with RMB5,597 million of net cash
outflows for the same period of last year.
CASH FLOWS FROM FINANCING ACTIVITIES
For the year 2018, the Group’s cash flows generated from financing activities were net cash
outflows amounting to RMB16,266 million, representing an increase of RMB12,867 million in net
cash outflows from RMB3,399 million of net cash outflows for the same period last year, mainly
attributable to the increase in repayment of debts by the Company in 2018.
69
2018 ANNUAL REPORTManagement’s Discussion and Analysis of Financial Position and Results of Operations (Continued) The Board hereby submits the Report of the Board together with the audited financial statements
for the year ended 31 December 2018.
PRINCIPAL ACTIVITIES
The Group is a leading enterprise in non-ferrous metal industry in China. In terms of comprehensive
strength, the Group ranked among the top enterprises in global aluminum industry. The Group is
currently the only large manufacturer and operator in aluminum industry in China with integration
of mining of bauxite, coal and other resources; production, sales and technical research of alumina,
primary aluminum and aluminum alloy products; international trading and logistics services, as well as
electricity generation from coal and new energy.
BUSINESS REVIEW
Statements about the business review and future business development of the Group are set out
in the section headed “Chairman’s Statement”. The section headed “Management’s Discussion
and Analysis of Financial Position and Results of Operations” gives an analysis of the financial
and operational conditions of the Group using financial key indicators. Details of compliance with
relevant laws and regulations that have a significant impact on the Group are set out in sections
headed “Report of the Board” and “Report on Corporate Governance and Internal Control”.
The Company will actively adopt various measures to avoid all types of operating risks in the course
of production and operations. However, risk factors associated with the changing competition,
market, economy and social environment at home and abroad may adversely affect the business,
financial position and operating results of the Company, which mainly include:
1. Market Price Risks: The bulk commodity market price witnessed unstable fluctuation. The
price of aluminum products and raw and auxiliary materials fluctuate sharply as affected
by the weakened domestic market demand and the China-U.S. trade conflicts, which have
material and potential impacts on the Company’s financial position and operating results.
70
ALUMINUM CORPORATION OF CHINA LIMITEDReport of the Board To cope with such risks, the Company will intensify research and judgment on the market,
closely follow policy and fundamental factors, adjust marketing and procurement policies in
a timely manner, fully bring about the effect of supervision and control over market price risk
and alert thereof, adjust its output against supply-demand relations and continuously improve
its risk control capability in market price; it will further enhance the analysis of supply-side
market, optimize purchase strategies, increase the centralization of the procurement for lower
cost and higher benefit; meanwhile, it will reasonably make use of financial derivatives and
enhances profitability from the interaction between futures and spot commodities.
2.
Safety and Environmental Risks: More stringent requirements in relation to safety production
and environmental protection ability for a company have been stipulated in the Production
Safety Law of People’s Republic of China, the Environmental Protection Law of People’s
Republic of China and Implementation Measures of Permits for Control over Pollutant
Discharge. As the Company’s production and operations cover coal and non-coal mines,
construction, chemicals and other activities, the Company may not discover potential
environmental hazards in a timely manner. Due to outdated environmental facilities in certain
enterprises, any safety or environmental accident will inflict huge losses on the reputation
and assets of the Company.
To cope with such risks, the Company established the Safety, Environmental Protection and
Health Department (Coal Power Safety Supervision Bureau) as a functional department. On
the one hand, it keeps improving management rules and assigning responsibilities in terms of
safety and environmental protection. On the other hand, it screens environmental problems
and actively advances environmental upgrading and transformation with investment and other
departments. Meanwhile, it established a zero reporting system and pays attention to the
trends in environmental protection every day.
3.
Cash Flow Risks: Due to higher demands for capital expenditure on transformation and
upgrading, cash flow is affected to certain extent. Besides, it may still fail to avoid a shortfall
in cash inflow due to the influence of the national monetary policy, which may materially
affect the Company’s financial position.
To cope with such risks, the Company tries to control the investment size and slow down in
investment progress. It formulates and strictly implements financial management measures
on investment. It will also strengthen budget management, manage funds from the source,
avoid large-amount or accidental expenditure out of the budget, expand financing channels,
innovate financing methods and ensure capital chain safety.
71
2018 ANNUAL REPORT Report of the Board (Continued) 4.
Interest Rate Risks: Changes in interest rates will increase uncertainties in the Company’s
financing costs, which may in turn affect the Company’s business objectives.
To cope with such risks, the Company will strengthen analysis and research in the trend of
interest rate, proactively expand low-cost financing channels, optimize debt structure and
reduce financial costs.
5.
Information Disclosure Risks: The information disclosure risks of the Company mainly include
the inaccurate, incomplete and untimely disclosure of the contents of information, which
are related to the failure to provide relevant information in a timely and complete manner
by business departments, the insufficient communication between business and disclosure
departments or no timely confirmation with domestic and oversea lawyers of the Company.
As a result, it may result in complaints from investors and inquiries and investigations by
relevant regulatory authorities as it fails to disclose detailed and accurate information in a
timely manner. It may require the Company to make further information disclosure, denounce
or punish the Company, which will have negative effects on the image of the Company in the
capital market.
To cope with such risks, the Company will organize leaders and departments of the Company
to attend trainings on information disclosure rules; maintain sufficient communication with
domestic and overseas legal consultants to guarantee that there are no mistakes in the
contents of the announcement. The information disclosure department will remind business
departments of the time for information disclosure to guarantee the timely releasing of
announcements.
6.
Operational Risks on Overseas Projects: They are mainly health risks of staff and exchange
risks. As the Company carries out its business in remote districts in Africa and Southeast
Asia where the economy and healthcare are underdeveloped, health risks of staff are rising.
Besides, uncertainties as to overseas project investment and operation springing from volatile
exchange rate may have negative implications on the Company’s business activities.
To cope with health risks of staff, the Company has formulated logistic guarantee plans on
the health and safety of overseas staff and prepared overseas safety and health systems.
To cope with exchange rate risks, the Company will formulate and improve the systems and
measures.
72
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued) SOCIAL RESPONSIBILITY AND ENVIRONMENT PROTECTION
While enjoying the development opportunities brought by the country and society, the Company
voluntarily integrates Corporate Social responsibilities (“CSR”) into management, integrates
sustainable development into its own long-term development goals, maintains competitiveness for
successful development of enterprise, and shoulders its responsibilities to employees, customers,
society, environment and other stakeholders. Guided by the responsibility concept with the
social responsibility view of “turning stone into gold and benefiting mankind”, the Company has
incorporated social responsibility into daily corporate management systems, making the relevant
departments accountable for results, and making such responsibilities part of performance appraisal
criteria.
The Company set up a leadership group for CSR with Chairman of the Board of Directors as the
group leader and the President as the representative of CSR management. With the guidance
by the leadership group for CSR, full-time agencies are set up at the department and branch
levels, making the relevant departments accountable for responsibility management in five fields:
company governance, the environment, employment and employee rights, operating practices and
community. In addition, management positions and liaisons for CSR are appointed to execute the
Company’s CSR policies in every section of operations.
The Company always fulfilled its social responsibilities in a proactive and voluntary manner,
and made huge efforts in guarantee of employees’ interests, environmental protection, poverty
alleviation and public welfare. The Company always regards employees as its most valuable
resources and assets. It is the Company’s belief that protecting employees’ interests and
enhancing employees’ well-being will pave the way for fulfilling its social responsibilities and
achieving sustainable development. Furthermore, the Company insists on people oriented concepts,
respecting the employees and providing them with opportunities to make achievements, and
creating a “sunny, honest, simple and inclusive” work atmosphere.
73
2018 ANNUAL REPORT Report of the Board (Continued) The Company always prioritizes employees’ safety and health, with the goal of achieving zero
accident and zero damage, in order to provide a safe platform for employees to progress with
dignity. We comply with the Production Safety Law of the People’s Republic of China, the Law of
the People’s Republic of China on the Prevention and Control of Occupational Diseases, the Coal
Mine Safety Administration Regulation, and other national production safety laws and regulations. In
addition to such compliance measures, based on the Company’s operation situation, we formulated
the Safety Production Management Measures of Aluminum Corporation of China Limited, the
Safety and Environmental Protection Responsibility Rules of Headquarters of Aluminum Corporation
of China Limited, and other safety and health management rules. As early as 2004, we passed
the accreditation ISO14004 environmental management system and the occupational health and
safety system of OHSAS18001. At the same time, the Company has established the system of
occupational health management and gradually carried out occupational health and safety measures
to guarantee employees’ physical health. Meanwhile, the Company provides regular physical
examinations for employees, sets up employee health files to ensure good occupational health
management. The Company also provides employees with safe and comfortable working conditions
and protective equipment. The Company pays close attention to the improvement of employees’
safety awareness and quality, and closely supervise our employees to strictly follow effective safety
and health management systems.
The Company always upholds the principle of respecting employees and equal employment. It
follows a non-discriminatory labor policy by treating all employees fairly and equally regardless
of their nationality, race, gender, religious beliefs and cultural background, and insists on equal
pay for equal work. The Company insists on ensuring equal employment opportunities to the
disabled, women and other disadvantaged groups. Moreover, the Company strives to create jobs
for the community, and aligns its development with the stability of employment and the protection
of employees’ interests. Through continuous improvement in labor employment and income
distribution systems, the Company aims to strengthen labor management, regulate employment
activities and determine reasonable distribution of income.
The Company emphasizes talents training and succession and is committed to the “talents oriented
“strategy, with a focus on career education and training. A training system that covers employees
according to their ranks and professional background has been set up, along with innovative ideas
of training and development and working mechanisms. The Company is determined to be a lifelong
learner, with efforts to build a learning team, to cultivate and create a well-structured, professional,
and innovative talent pool, thus contributing to the Company’s continuous and healthy growth.
74
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued) Dedicated to business development, the Company has also been making contributions to social
progress and fulfilling its social responsibilities by keeping close eyes on and providing supports to
public welfare programs. The Company has shown unwavering support for the national policy of
targeted poverty alleviation and made efforts to lift people out of poverty and to tackle hard issues.
Leveraging advantages particular to the Company, it formulates appropriate aid programs that fully
involve all departments and staff, to ensure the effective advance of poverty alleviation. It has
also established volunteer teams that constantly promote projects and activities to contribute to
community welfare, local development and to improve local livelihoods.
In accordance with the Management Methods for Charitable Donations of Aluminum Corporation
of China Limited, the Company adopted diverse approaches to poverty alleviation and applied the
innovative idea into the poverty alleviation, creating an intelligent poverty alleviation mode. The
Company helped people in poverty shrug off poverty and become rich through technical training,
field teaching and other ways. In 2018, the funds used in poverty alleviation and other donations
amounted to RMB23.684 million, representing an increase of RMB13.366 million from 2017. Details
are set out as follows:
Unit: 0’000 Currency: RMB
Poverty alleviation and donation targets
Nature
Form
Amount
Changdu City, Tibet Autonomous Region
Fixed-point assistance
Haiyan County, Qinghai Province
Yangxin County, Hubei Province
Fixed-point assistance
Fixed-point assistance
People’s Government of Qinqi Village,
Fixed-point poverty
Cash
Cash
Cash
Cash
Weiyuan County, Gansu Province
alleviation
1,440.00
410.00
90.00
12.00
Tiejiang Village, Qixian Town, Xiuwu County,
Fixed-point poverty
Cash
4.50
Jiaozuo City
alleviation
China-Mongolia Friendship Children’s Clinic of
Donation to medical and
Cash
100.00
Bayanzul District, Ulaanbaatar, Mongolia
healthcare causes
Others
Other donations
Cash
311.9
75
2018 ANNUAL REPORT Report of the Board (Continued)
With regard to environmental protection, as the Company operates in the non-ferrous metal
industry with high pollution and its business involves mining, production of alumina and electrolytic
aluminum, power generation, etc., its pollution discharge has been drawing close attention of the
environmental protection authorities. According to the list of key discharge units released by the
Ministry of Environmental Protection, a number of subordinate enterprises under the Company are
listed as the key monitoring entities for discharge in air, water and soil, among which 22 enterprises
were included in the key monitoring entities for discharge in atmosphere, 4 enterprises were
included in the key monitoring entities for discharge in water environment, 8 enterprises were
included in the key monitoring entities for soil environment pollution.
As a leading enterprise in the PRC non-ferrous metal industry and a state-controlled company
listed on the stock exchanges in China, Hong Kong and the USA, the Company puts great effort
into energy management and emission reduction, strictly complies with related national laws and
regulations, local policies as well as the internal rules and regulations, improves environmental
management systems, increases investment in environmental protection, carries out new-tech
transformation, strengthens management through eliminating hidden hazards in environmental
protection, recyclable use of water resources, construction of green mines as well as disposal of
hazardous wastes, and fully implements measures such as energy saving and emission reduction,
recyclable use, and ecology protection, so as to improve energy efficiency, facilitate clean
production, and minimize the environmental impact of the production process.
The Company carried out harmless and recycling treatment to the flue gas, waste water and wastes
of the aluminum industry by promoting and implementing the technical renovation projects for
environmental protection. Meanwhile, it tackled the production and technical problems based on
the actual production conditions of the Company.
With regard to waste gas treatment: sulfur dioxide, nitrogen oxides, and soot are the main waste
gasses produced in the production process of the Company. The Company has been committed to
reducing emission of waste gas through improving and innovating production process.
With regard to waste water reduction: the Company has continuously implemented circulating
utilization of water resources project in alumina enterprises and electrolytic aluminum enterprises,
building water circulating technological processes, including rectified circulating water, casting
circulating water, air compression station circulating water, carbon technology circulating water,
green anode circulating water, and alumina water. In this way, the Company has improved both
gradient utilization (step-wise utilization) of water and the reuse rate, and has achieved both
economic benefits and environmental benefits. The water that can’t be reused will be discharged
strictly according to national requirements for wastewater treatment.
76
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued) With regard to disposal of solid waste treatment: according to the related national laws and
regulations, the Company classifies solid waste and regularly treats the waste. Solid waste mainly
includes red mud produced in alumina production, waste in the aluminum electrolysis spent potline,
packing materials used in production and transportation, fly ash produced by power plants, and
domestic waste. The Company turns trash into treasure by doing research on red mud and fly ash as
well as recycling and reusing packing materials, not only improving resource use efficiency, but also
achieving safe treatment of solid wastes.
In 2018, the Company further carried out a comprehensive rectification of environmental protection.
The Company established two harmless production lines for aluminum electrolysis spent potline
through the construction of three major environmental protection projects, including the harmless
treatment project of hazardous waste, clean plant construction project and green and low-carbon
demonstration project; implemented rectification within a time limit and renovation under higher
standards to the industrial furnaces of 7 enterprises; implemented 5 ultra-low emission renovation
projects of thermal power boilers; carried out 4 rectification projects of raw fuels storage yards;
carried out 4 zero-discharge renovation projects of industrial waste water; implemented 3 rainwater
and sewage diversion projects, 3 comprehensive utilization projects of red mud, 1 green product
development project, and 4 green mine construction and reclamation projects. The construction of
these environmental protection facilities has greatly promoted the continuous improvement of the
Company’s ecological environment quality.
For further information on CSR and environmental protection of the Company, please refer to
the 2018 Social Responsibility and Environmental, Social and Governance Report of Aluminum
Corporation of China Limited separately disclosed by the Company.
FINANCIAL SUMMARY
The results of the Group for the year ended 31 December 2018 are set out in the consolidated
statement of profit or loss and other comprehensive income on pages 167 to 169. A five-year
financial summary of the Group is set out on pages 9 to 14.
77
2018 ANNUAL REPORT Report of the Board (Continued) DIVIDEND AND DIVIDEND POLICY
Dividend Policy
1.
The basic principles of profit distribution policy of the Company are as follows:
(1)
taking full account of return to investors and distributing dividend to shareholders in
proportion to the distributable dividend realized for the year concerned provided that
the earnings and accumulative undistributed dividends for the year are positive;
(2) maintaining the continuity and stability of the Company’s dividend distribution policy,
while at the same time take care of the interest of the Company in the long term, the
interest of the shareholders as a whole, as well as the sustainable development of the
Company;
(3)
giving priority to dividend distribution in cash.
2.
Dividend distribution policies of the Company are to be specified as follows:
(1)
dividend shall be distributed in the following manner: the Company may distribute
dividends in cash, in shares or in a combination of both cash and shares. The Company
shall give priority to dividend distribution in cash. Subject to conditions, interim profit
distribution may be made by the Company;
(2)
specific conditions and proportions of cash dividend of the Company: save in
exceptional circumstances, if the Company’s profit for the year and its cumulative
undistributed profit are positive, the Company may distribute dividend in cash and the
profit to be distributed in cash per annum will not be less than 10% of the distributable
profit realized for that year, or that the total profit to be distributed in cash in the past
three years will not be less than 30% of the average annual distributable profit realized
in the past three years;
As at the Reporting Period, if the Company’s distributable profit is positive, the Company has
distributed no less than 30% of the net profit of the parent company in the corresponding
year and all adopted dividend distribution in cash. In recent years, as the Company’s
cumulative undistributed profit are negative, the Company’s profit were used in making up
losses and conducted no dividend distribution in cash.
78
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued) DIVIDEND
The Board did not recommend any distribution or payment of final dividend for the year ended 31
December 2018. Total dividends paid during the preceding two years are as follows:
Total dividends paid: (RMB million)
Percentage to profits attributable to holders
of the interests of the Company: (%)
SHARE CAPITAL
2018
2017
Nil
Nil
Nil
Nil
The total share capital of the Company is 14,903,798,236 shares in 2018. The Company completed
the registration procedure for the additional shares in connection with acquisition of assets by
issuance of shares on 25 February 2019. The total share capital of the Company was changed to
17,022,672,951 shares.
CORPORATE BONDS
The corporate bonds issued by the Company as at the end of 2018 are as follows:
Unit: RMB in ‘00 million
Name
Abbreviation
Code
Issue date
Maturity date
Balance
Exchange
Rate
(%)
2016 Corporate Bonds (Tranche
16 Chalco 01
135890
2016.09.23
2019.09.23
4
4.30
Shanghai
1) privately issued by
Aluminum Corporation of
China Limited
Stock
Exchange
2018 Corporate Bonds (Tranche
18 Chalco 01
143804
2018.09.14
2021.09.18
11
4.55
Shanghai
1) (Type 1) publicly issued
by Aluminum Corporation of
China Limited
Stock
Exchange
79
2018 ANNUAL REPORT Report of the Board (Continued)
Name
Abbreviation
Code
Issue date
Maturity date
Balance
Exchange
Rate
(%)
2018 Corporate Bonds (Tranche
18 Chalco 02
143805
2018.09.14
2023.09.18
9
4.99
Shanghai
1) (Type 2) publicly issued
by Aluminum Corporation of
China Limited
Stock
Exchange
2018 Corporate Bonds (Tranche
18 Chalco 03
155032
2018.11.14
2021.11.16
14
4.19
Shanghai
2) (Type 1) publicly issued
by Aluminum Corporation of
China Limited
Stock
Exchange
2018 Corporate Bonds (Tranche
18 Chalco 04
155033
2018.11.14
2023.11.16
16
4.50
Shanghai
2) (Type 2) publicly issued
by Aluminum Corporation of
China Limited
RESERVES
Stock
Exchange
Movements in the reserves of the Group and of the Company during the year are set out in the
consolidated statement of changes in equity on page 170 to 172 and note 45 to the financial
statements, respectively.
PROPERTY, PLANT AND EQUIPMENT
Details of the movements in property, plant and equipment of the Group are set out in note 6 to the
financial statements.
80
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued)
DISTRIBUTABLE RESERVES
Pursuant to Article 189 of the articles of association of the Company (the “Articles of Association”),
where there are differences between the PRC accounting standards and the International Financial
Report Standards, the distributable reserves for the relevant period shall be the lesser of the
amounts shown in the two different financial statements. As such, as of 31 December 2018, the
Company had no distributable reserves.
USE OF PROCEEDS
The Company has no use of proceeds in 2018.
USE OF FUND OTHER THAN PROCEEDS
The 500,000-tonne aluminum alloy product structure adjustment, upgrade and technical innovation
project of Inner Mongolia Huayun New Materials (內蒙古華雲新材料50萬噸鋁合金產品結構調整升級
技術改造項目): Investment in project construction amounted to RMB6,450 million, and by the end of
2018, an aggregate of RMB5,640 million of capital expenditure had been incurred. The project has
been officially put into operation.
The 400,000-tonne light alloy material project of Guangxi Hualei New Material Co., Ltd. (廣西華磊
新材料有限公司40萬噸輕合金材料項目): Investment in project construction amounted to RMB5,939
million, and by the end of 2018, an aggregate of RMB5,000 million of capital expenditure had been
incurred. The project has been completed and put into operation with all of the 3 units connected to
the grid and started power generation by the end of 2018.
The Boffa bauxite project in Guinea with an annual capacity of 12 million tonnes: total investment in
project construction amounted to US$706 million, and by the end of 2018, an aggregate of US$64
million of capital expenditure had been incurred. The quarry is expected to be qualified for mining
by the end of 2019 and be completed and put into operation in end-March 2020.
The light alloy project of Shanxi China Huarun Co., Ltd. (山西中鋁華潤有限公司): total investment
of the project amounted to RMB3,909 million, and by the end of 2018, an aggregate of RMB2,660
million of capital expenditure had been incurred. As at the end of 2018, the project was largely
completed and put into operation.
81
2018 ANNUAL REPORT Report of the Board (Continued) The alumina project in Fangchenggang Guangxi with an annual capacity of 2 million tonnes:
Investment in project construction amounted to RMB5,805 million, and by the end of 2018, an
aggregate of RMB330 million of capital expenditure had been incurred. The thermoelectric and
finished products warehousing area, the decomposition and sedimentation area, the evaporation
and recycled water area and the fundamental civil engineering in front of plant are under
construction.
PRE-EMPTIVE RIGHTS
Pursuant to the Articles of Association and the PRC laws, there are no pre-emptive rights that
require the Company to offer new shares to its existing shareholders on a pro-rata basis.
DONATIONS
The Group had donated approximately RMB23,684,000 during the year (2017: approximately
RMB10,318,000).
LITIGATION AND CONTINGENT LIABILITIES
(a) Litigation
There was no significant litigation pending during the year which was required to be
disclosed.
(b) Contingent Liabilities
There were no significant contingent liabilities during the year which were required to be
disclosed.
82
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued) DIRECTORS AND SUPERVISORS
As of the date of this report, the Board and Supervisory Committee of the Company comprise:
Executive Directors
Lu Dongliang
Appointed on 28 June 2016
Jiang Yinggang
Re-appointed on 28 June 2016
Zhu Runzhou
Appointed on 11 December 2018
Non-executive Directors
Ao Hong
Re-appointed on 28 June 2016 (re-designated from executive Director to non-
executive Director on 13 February 2018)
Wang Jun
Re-appointed on 28 June 2016
Independent Non-executive Directors
Chen Lijie
Re-appointed on 28 June 2016
Hu Shihai
Re-appointed on 28 June 2016
Lie-A-Cheong
Re-appointed on 28 June 2016
Tai Chong, David
83
2018 ANNUAL REPORT Report of the Board (Continued) Supervisors
Ye Guohua
Appointed on 11 December 2018
Shan Shulan
Appointed on 20 February 2019
Wu Zuoming
Appointed on 28 June 2016
Profiles of the current Directors and Supervisors are set out on pages 15 to 38.
DIRECTORS’ AND SUPERVISORS’ SERVICE CONTRACTS AND
REMUNERATION
Pursuant to Articles 108 and 150 of the Articles of Association, the term of office for a Director or a
Supervisor is three years, subject to re-election. Each Director and Supervisor has therefore entered
into a service contract with the Company, but such service contracts are not terminable by the
Company within one year without payment of compensation (other than statutory compensation).
Details of the Directors’ and Supervisors’ remunerations and remunerations of the five highest
paid individuals are set out in note 30 to the financial statements. For the year ended 31 December
2018, there were no arrangements under which any Director or Supervisor of the Company had
waived or agreed to waive any remuneration.
PERMITTED INDEMNITY PROVISIONS
As at 31 December 2018, all Directors, Supervisors and other senior management of the Company
were covered under the liability insurance purchased by the Company for them.
84
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued) INTERESTS OF DIRECTORS, CHIEF EXECUTIVE AND
SUPERVISORS IN SHARES OF THE COMPANY AND ITS
ASSOCIATED CORPORATIONS
As of 31 December 2018, following Director and Supervisor of the Company were interested in the
Shares of the Company:
Position in
Number of
A Shares of the
Company held as
Percentage in
relevant class of
Percentage in
issued share
total issued
Name
the Company
personal interests
Capacity
capital
share capital
Jiang
Executive Director and
10,000
Beneficial
0.000091%
0.000067%
Yinggang
Senior Vice President
owner
Save as disclosed above, as of 31 December 2018, none of the Directors, Chief Executive,
Supervisors or their respective associates had any interests or short positions in the shares,
underlying shares or debentures of the Company or its associated corporations (within the meaning
of the SFO), which were (a) required to be notified to the Company and the Hong Kong Stock
Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO; or (b) required to be recorded in
the register kept by the Company pursuant to Section 352 of the SFO; (c) required to be notified
to the Company and the Hong Kong Stock Exchange pursuant to the Model Code for Securities
Transactions by Directors of Listed Issuers (the “Model Code”).
During the year ended 31 December 2018, none of the Directors, Chief Executive, Supervisors,
senior management or their respective spouses or children under the age of eighteen was granted
any right to acquire shares, underlying shares or debentures of the Company or any of its associated
corporations (within the meaning of the SFO).
INTERESTS OF DIRECTORS AND SUPERVISORS IN
TRANSACTIONS, ARRANGEMENTS OR CONTRACTS
For the year ended 31 December 2018, none of the Directors or Supervisors or entities connected
to such Directors or Supervisors was materially interested, either directly or indirectly, in any
transaction, arrangement or contract of significance to which the Company or any of its subsidiaries
was a party.
85
2018 ANNUAL REPORT Report of the Board (Continued)
EMPLOYEES AND PENSION SCHEMES
As of 31 December 2018, the Group had 65,211 employees. The remuneration of the employees
includes the salaries, bonuses, subsidies, allowances and medical care, housing subsidies,
maternity, unemployment, occupational injury, retirement pension and other benefits.
In accordance with applicable PRC regulations, the Company has currently enrolled in pension
schemes regulated by various provincial and municipal governments, under which each of the
Company’s subsidiaries are required to contribute a percentage of its employees’ salaries, bonuses
and various allowances to the retirement pension fund. The percentage of the contribution in the
employees’ salaries is around 20%.
The Company keeps in close touch with employees and provides them with fair working
environment. In addition, the Company emphasizes the professional development of employees and
provides them with various training opportunities including internal trainings and courses offered
by professional organizations, so as to keep them abreast of the latest development in the market,
industry and various businesses.
REPURCHASE, SALE AND REDEMPTION OF THE COMPANY’S
SHARES
The Company did not redeem any of its shares during 2018. Neither the Company nor any of its
subsidiaries purchased or sold any of its listed securities during 2018.
MANAGEMENT CONTRACTS
No contract concerning the management or administration of the whole or any substantial part of
the business of the Company was entered into or subsisted during the year.
86
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued) MAJOR CUSTOMERS AND SUPPLIERS
1. Major Customers
The Company always puts customers’ interests first, provides customers with products and
services of high quality. While improving the quality of our products, we also deepen our
communication with customers to learn more about market demands and provide customized
solution for customers, so as to create more value for them. The Company guarantees the
high quality of our reliable products through the quality management system that covers the
whole industrial line, including the procurement of materials, production and manufacturing,
sales and services. The Company has established various channels to communicate with
customers, adopted diversified online and offline communication channels to promote
our products, held regular summit forums with key customers to understand customers’
demands, took part in various industrial exhibitions to enhance our communication with
upstream and downstream customers and consolidate our cooperation. The Company has
set up a pre-sale, sale and after-sales service management system. In addition, we provide
consumers with well-established channels for complaints and feedback, investigate customer
satisfaction in the form of questionnaires in line with the ISO9001 management system and
constantly improve service levels; after deeply understanding the demands of customers, we
provide customers with comprehensive solutions including lowering the cost of procurement
and enhancing coordination capacity. As a result, we largely improve customers’ satisfaction.
The Company’s major customers are, in respect of alumina, domestic electrolytic aluminum
enterprises and in respect of primary aluminum, domestic aluminum fabrication enterprises
and distributors.
The Company sells alumina products to customers mainly through long-term sales
agreements and spot market sales. The Company sells self-produced alumina and certain
alumina products sourced from external suppliers under spot contracts signed with third
parties and long-term sales agreements with a term ranging from one to three years. Such
long-term sales agreements usually specify monthly or annual sales quantities, sales price,
pricing policies, payment terms, place of delivery and the delivery method for the alumina
sold. The selling prices for alumina sold on the spot market are determined by the Company
by taking into account (i) supply and demand of the upstream and downstream companies
at home and abroad; (ii) CIF price of imported alumina arrived at Chinese ports and import
related expenses; (iii) international and domestic transportation costs of alumina; (iv) the
impacts of national policy on the price of raw materials of alumina enterprises; and (v) the
Company’s short- and medium-term forecast for alumina prices.
87
2018 ANNUAL REPORT Report of the Board (Continued) The Company sells primary aluminum products to customers mainly through the following
ways: (i) sales agreements, which are entered into between the Company and its customers
that have longstanding business relationship with it, generally with a term of one year and
selling prices determined based on the prices quoted on the Shanghai Futures Exchange
and prevailing market prices; (ii) futures contracts ranging from one to twelve months on the
Shanghai Futures Exchange; and (iii) spot market sales, with selling prices determined by
reference to such factors as market spot prices and transportation costs.
In 2018, sales to the five largest customers of the Group amounted to RMB17,041 million and
accounted for 9.45% of the Group’s total annual sales, among which sales to related parties
were RMB3,143 million, accounting for 1.74% of the Group’s total annual sales.
2. Suppliers
The Company believes in a win-win philosophy and helps suppliers and contractors improve
their environmental, social and governance level, so as fulfill environmental and social
responsibilities while achieving economic benefits growth together, thereby building a
sustainable supply chain. The Company formulated the Regulation for Suppliers of Aluminum
Corporation of China Limited, strictly implemented access procedure for suppliers to ensure
the contract performance and after-sale service abilities of suppliers; the Company established
long-term and stable communication channels with suppliers, and strengthened the
relationship with suppliers by various ways such as holding annual meetings with suppliers,
summarizing procurement work and attending commodity fairs; the Company conducted
comprehensive appraisal on suppliers and continuously followed up their products and
performance, kept track of suppliers’ overall strength, share of supply, execution of contract
as well as awards and punishments, compiled list of excellent suppliers and removal list of
suppliers according to the annual comprehensive appraisal results, and streamlined suppliers
to promote effective management.
In 2018, the procurement amounts from the top five suppliers of the Group amounted to
RMB15,369 million, accounting for 8.59% of the total procurement amounts, among which
procurement from related parties were RMB4,226 million, accounting for 2.36% of the
Group’s total procurement amounts.
88
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Board (Continued) CODE ON CORPORATE GOVERNANCE
The Articles of Association, the Rules of Procedures for the Shareholders’ Meeting, the Rules
of Procedures for the Board meeting, the Rules of Procedures for the Supervisory Committee
meeting, the detailed implementation rules for the special committees under the Board, the Code
of Conduct for Securities Dealings by Directors, Supervisors and Specific Employees and other
relevant systems of the Company constitute the framework for the codes on corporate governance
of the Company. The Board has reviewed its corporate governance documents and is of the view
that such documents have incorporated the principles and code provisions in the Code on Corporate
Governance (the “CG Code”) as set out in Appendix 14 of the Hong Kong Listing Rules and the
Guidelines of the Shanghai Stock Exchange for Internal Control of Listed Companies (the “Internal
Control Guidelines”).
AUDIT COMMITTEE
The written terms of reference in relation to the authorities and duties of the Audit Committee were
prepared and adopted in accordance with and with reference to “A Guide for the Formation of an
Audit Committee “published by the Hong Kong Institute of Certified Public Accountants and Rule
10A-3 of U.S. Securities and Exchange Commission.
The financial statements of the Company for the year ended 31 December 2018 have been
reviewed by the Audit Committee of the Company.
AUDITORS
The financial statements have been audited by Ernst & Young. Ernst & Young was the auditors of
the Company for its 2018 Hong Kong annual report, and it was also the auditors of the Company
for its 2012, 2013, 2014, 2015, 2016 and 2017 Hong Kong annual reports. For further details of
the auditors of the Company, please refer to the section headed “Auditors’ Remuneration” of the
“Report on Corporate Governance and Internal Control” in this Annual Report.
Lu Dongliang
Chairman
Beijing, the PRC
28 March 2019
89
2018 ANNUAL REPORT Report of the Board (Continued) Dear Shareholders,
In 2018, the Supervisory Committee of the Company proactively performed its powers and
duties as prescribed in the Article of Association and the Rules of Procedures for the Supervisory
Committee Meeting. Focusing on supervision of significant decisions, regular statements, behavior
of Directors, Supervisors and senior management as well as operation condition of the Company,
it continually standardized its supervision-related practices and improved supervision efficiency
through convening regular or irregular meetings, conducting physical investigation and other means.
Such measures facilitated the transparent and standard operation of the Company and built up a
positive image of the Company in the capital market. In addition, it also adopted effective measures
to safeguard the interests of investors, in particular, the minority investors. The specific works are
reported as follows:
I. CHANGE OF THE SUPERVISORS
The sixth session of the Supervisory Committee of the Company comprises of 3 Supervisors,
including 2 shareholders representative Supervisors and 1 employee representative
Supervisor. On 28 June 2016, Mr. Liu Xiangmin and Mr. Wang Jun were elected as
shareholders representative Supervisors of the sixth session of the Supervisory committee
of the Company at the general meeting, and Mr. Wu Zuoming was elected as an employee
representative Supervisor of the sixth session of the Supervisory committee of the Company
at the staff representative conference, among which Mr. Liu Xiangmin acts as the chairman
of the sixth session of the Supervisory Committee.
Due to work engagement, Mr. Liu Xiangmin tendered his resignation as a Supervisor (chairman
of the Supervisory Committee) on 20 November 2018. At the 2018 second extraordinary
general meeting of the Company convened on 11 December 2018, Mr. Ye Guohua was
elected as a shareholders representative Supervisor of the sixth session of the Supervisory
Committee and the resignation of Mr. Liu Xiangmin became effective at the same time.
On the same date, Mr. Ye Guohua was elected as the chairman of the sixth session of the
Supervisory Committee at the fifteenth meeting of the sixth session of the Supervisory
Committee.
90
ALUMINUM CORPORATION OF CHINA LIMITEDReport of the Supervisory Committee Due to work engagement, Mr. Wang Jun tendered his resignation as a Supervisor of the
Company on 24 December 2018. At the 2019 first extraordinary general meeting of the
Company convened on 20 February 2019, Ms. Shan Shulan was elected as a shareholders
representative Supervisor of the sixth session of the Supervisory Committee of the Company
and the resignation of Mr. Wang Jun became effective on the same date accordingly.
II. CONVENING OF MEETINGS
In 2018, 8 meetings were held by the Supervisory Committee of the Company, of which 3
were onsite meeting, and 5 were telecommunication meetings. The particulars of which are as
follows:
1.
The ninth meeting of the sixth session of the Supervisory Committee of the Company
was held on 22 March 2018, with all three Supervisors attending the meeting in
person. The meeting considered and approved a total of five proposals in respect of the
2017 Annual Results Announcement, the 2017 Report of the Supervisory Committee,
the 2017 Assessment Report on Internal Control, the 2017 Environmental, Social
and Governance Report and the 2017 Special Report on the Deposit and the Actual
Utilization of the Previously Raised Proceeds, etc.
2.
The tenth meeting of the sixth session of the Supervisory Committee of the Company
was held by means of telecommunications on 17 April 2018, with all three Supervisors
attending the meeting. The meeting considered and approved the 2018 First Quarterly
Report of the Company.
3.
The eleventh meeting of the sixth session of the Supervisory Committee of the
Company was held on 30 July 2018. Mr. Wang Jun and Mr. Wu Zuoming attended the
meeting while Mr. Liu Xiangmin appointed Mr. Wang Jun to vote on his behalf. The
meeting considered and approved three resolutions in relation to acquisition of assets
by issuance of shares by the Company.
91
2018 ANNUAL REPORT Report of the Supervisory Committee (Continued) 4.
The twelfth meeting of the sixth session of the Supervisory Committee of the
Company was held by means of telecommunications on 15 August 2018, with all three
Supervisors attending the meeting. The meeting considered and approved the 2018
Interim Results Announcement.
5.
The thirteenth meeting of the sixth session of the Supervisory Committee of the
Company was held by means of telecommunications on 25 October 2018, with all three
Supervisors attending the meeting. The meeting considered and approved the 2018
Third Quarterly Report of the Company.
6.
The fourteenth meeting of the sixth session of the Supervisory Committee of the
Company was held by means of telecommunications on 20 November 2018, with
all three Supervisors attending the meeting. The meeting considered and approved
the Resolution in Relation to Recommendation of Mr. Ye Guohua as a Candidate for
Shareholders Representative Supervisor of the Company.
7.
The fifteenth meeting of the sixth session of the Supervisory Committee of the
Company was held on 11 December 2018, with all three Supervisors attending the
meeting. The meeting considered and approved the Resolution in Relation to Election
of the Chairman of the Sixth Session of the Supervisory Committee of the Company.
8.
The sixteenth meeting of the sixth session of the Supervisory Committee of the
Company was held by means of telecommunications on 24 December 2018, with
all three Supervisors attending the meeting. The meeting considered and approved
the Resolution in Relation to Nomination of Ms. Shan Shulan as a Candidate for
Shareholders Representative Supervisor of the Company.
All of the above-mentioned meetings of the Supervisory Committee were in accordance with
the relevant provisions of the Company Law of the People’s Republic of China, the Articles
of Association of the Company and the Rules of Procedures for the Supervisory Committee
Meeting of the Company.
92
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Supervisory Committee (Continued) III. PERFORMANCE OF THE SUPERVISORY COMMITTEE
In 2018, each member of the Supervisory Committee of the Company effectively supervised
the Company’s financial management, related party transactions, capital operation, investing
and financing activities etc. by attending the general meeting and the Board meeting,
convening the Supervisory Committee meeting, launching on-site investigation and proposing
operation-related suggestion, enabling the Company to operate in a more standardized
and transparent manner and further optimizing the corporate governance structure for the
Company. The particulars are set out as below:
(I) Supervision of Implementation of Resolutions of the
General Meetings
Members of the Supervisory Committee attended the general meetings and Board
meetings as observers. No objection had been made to the reports and proposals
submitted by the Board to the general meetings for consideration after exercising
supervision on the relevant matters. Moreover, the Supervisory Committee exercised
supervision and inspection on implementation of the general meetings’ resolutions
by the Board, all Directors and the senior management. The Supervisory Committee
is of the opinion that the Directors and the senior management of the Company, in
exercising their duties and powers, have diligently discharged their responsibilities
in good faith and strictly fulfilled the resolutions passed at the general meetings in
compliance with the laws and regulations.
(II) Inspection of Legal Compliance of the Company’s
Operations
The Supervisory Committee exercised supervision in routine work over the legal
compliance and legality of the Company’s operation and management. It has also
exercised supervision over the work performance of the Company’s Directors and
senior management. The Supervisory Committee unanimously considers that the
Company’s operation and decision-making procedures, have complied with the relevant
provisions of laws and regulations including the Company Law of the People’s Republic
of China and the Articles of Association of the Company; the Directors and senior
management of the Company have discharged their duties according to the principle
of due diligence and good faith; and it has found no violation of the laws and regulation
and the Articles of Association of the Company, no authorization beyond prescribed
scope or damages to the interests of the Company and the shareholders.
93
2018 ANNUAL REPORT Report of the Supervisory Committee (Continued) (III) Inspection of the Company’s Financial Activities
The Supervisory Committee cautiously reviewed the financial statements of each
period, and supervised and inspected the Company’s implementation of relevant
financial policies and legislation as well as details on the Company’s assets, financial
income and expenditure and related party transactions. The Supervisory Committee
considered that the operating results achieved by the Company were true and all the
related party transactions were entered into on a fair basis. The financial reports of the
Company truly reflected the financial position and operating results of the Company.
The preparation and review procedures for the reports were in compliance with the
requirements of relevant laws and regulations, the Articles of Association of the
Company and the Company’s internal control system. Information on the all significant
events of the Company in 2018 has been disclosed under the principles of truthfulness,
timeliness, accuracy, completeness and fairness pursuant to relevant regulations. The
Supervisory Committee approved the 2018 annual audit report of the Company as issued
by Ernst & Young Hua Ming LLP and Ernst & Young.
(IV) Inspection of the Acquisitions and Disposals of the
Company’s Assets
During the reporting period, after reviewing the acquisitions and disposals of assets
of the Company during the year, the Supervisory Committee is of the opinion that, the
consideration for such acquisitions and disposals of assets conducted by the Company
was fair and reasonable, without insider dealings and acts impairing the interests of the
shareholders or leading to a loss in the Company’s assets.
(V) Inspection of Related Party Transactions of the Company
During the reporting period, the Supervisory Committee reviewed the related party
transactions conducted by the Company and its subsidiaries with its controlling
shareholder Aluminum Corporation of China (中國鋁業集團有限公司) and its subsidiaries,
and is of the opinion that, the procedures for entering into related party transactions
were in compliance with the requirements of relevant laws and regulations and
the Articles and Association of the Company and on fair and reasonable terms. The
information on related party transactions was timely and sufficiently disclosed, without
acts impairing the interests of the shareholders or the Company.
94
ALUMINUM CORPORATION OF CHINA LIMITED Report of the Supervisory Committee (Continued) (VI) Review of Self-assessment Report on Internal Control
During the reporting period, the Supervisory Committee listened to reporting in respect
of the Company’s internal control and examination and fully performed its role of
guidance and supervision. The Supervisory Committee reviewed “2018 Assessment
Report on Internal Control of the Company” and “Draft of Directors in respect of
Assessment of Internal Control of the Company”, and is of the opinion that the
Company has established and improved sound internal control systems applicable
to the Company covering all procedures in accordance with the requirements of
the “Guidelines on Internal Control for Listed Companies “and “Basic Principles of
Corporate Internal Control”, thereby ensuring that all business activities of the Company
are carried out in a standardized and orderly manner and guaranteeing the security and
integrity of the Company’s assets. The Supervisory Committee is of the view that the
self-assessment on the internal control of the Company is comprehensive, true and
accurate in reflecting the status quo therein.
In 2019, the Supervisory Committee will continue to diligently perform the duties
of the Company’s standing supervisory body in accordance with the powers and
responsibilities conferred by the Company Law of the People’s Republic of China
and other relevant laws and regulations as well as the Articles of Association of the
Company and the Rules of Procedures for the Supervisory Committee meeting. The
Supervisory Committee will perform the duty of supervising the Company in such
aspects as operation, information disclosure, related parties transactions, financial
report and so forth. The Supervisory Committee will also be responsible for the
supervision on the Board and its members and the senior management members of the
Company, so as to safeguard the legitimate interests of the shareholders, in particular,
the minority shareholders, and the Company and its staff.
By Order of the Supervisory Committee
Ye Guohua
Chairman of the Supervisory Committee
Beijing, the PRC
28 March 2019
95
2018 ANNUAL REPORT Report of the Supervisory Committee (Continued) CODE ON CORPORATE GOVERNANCE
The Articles of Association, the Rules of Procedures for the Shareholders’ Meeting, the Rules
of Procedures for the Board Meeting, the Rules of Procedures for the Supervisory Committee
Meeting, the detailed implementation rules for the special committees under the Board, the Code
of Conduct for Securities Dealings by Directors, Supervisors and Specific Employees and other
relevant systems of the Company constitute the framework for the code on corporate governance
of the Company. The Board believes that the internal corporate governance documents of the
Company are more stringent than the CG Code and the Internal Control Guidelines in the following
areas:
1.
In addition to the Audit Committee, the Remuneration Committee and the Nomination
Committee, the Company has also established the Development and Planning Committee and
Occupational Health and Safety and Environment Committee.
2.
All members of the Audit Committee are independent non-executive Directors, of whom
Mr. Lie-A-Cheong Tai Chong, David, the chairman of the Committee, possesses extensive
professional experience in finance, auditing and business operation and is the financial expert
of the Board of the Company.
The Board of the Company has reviewed its corporate governance documents and Internal Control
Guidelines, and is of the view that, the Company has complied with the code provisions in the CG
Code and Internal Control Guidelines for the year ended 31 December 2018.
SECURITIES DEALINGS BY THE DIRECTORS, SUPERVISORS
AND RELEVANT EMPLOYEES
The Board has formulated written guidelines on securities dealings by the Directors, Supervisors
and relevant employees of the Company, the terms of which are more stringent than the required
standards set out in the Model Code under Appendix 10 of the Hong Kong Listing Rules and
the Listing Rules of the Shanghai Stock Exchange. After a specific enquiry by the Company, all
Directors, Supervisors and relevant employees have confirmed their compliance with the required
standards set out in the written guidelines.
96
ALUMINUM CORPORATION OF CHINA LIMITEDReport on Corporate Governance and Internal Control THE BOARD
As at the date of this report, the sixth session of the Board of the Company consists of eight
Directors, with three executive Directors, namely Mr. Lu Dongliang, Mr. Jiang Yinggang and Mr.
Zhu Runzhou (appointed on 11 December 2018), two non-executive Directors, namely Mr. Ao Hong
(re-designated from an executive Director to a non-executive Director on 13 February 2018) and Mr.
Wang Jun, and three independent non-executive Directors, namely Ms. Chen Lijie, Mr. Hu Shihai
and Mr. Lie-A-Cheong Tai Chong, David. Mr. Lu Dongliang acts as the Chairman of the Board.
Mr. Yu Dehui, the former Chairman of the Company, resigned as the Chairman and an executive
Director of the Company on 21 February 2019, with effect from the same day. Mr. Liu Caiming,
a former non-executive Director of the Company, resigned as a non-executive Director of the
Company on 25 May 2018, with effect from the same day.
The terms of all Directors of the sixth session of the Board of the Company will end at the
conclusion of the 2018 annual general meeting of the Company. As at the date of this report, the
terms of the non-executive Directors are as follows:
Commencement date
Expiry date
term
Whether allowed to be re-
appointed upon expiry of the
Ao Hong
Wang Jun
Chen Lijie
Hu Shihai
Lie-A-Cheong
Tai Chong, David
28 June 2016
28 June 2016
28 June 2016
28 June 2016
28 June 2016
Date of the 2018 general meeting
Allowed to be re-appointed
Date of the 2018 general meeting
Allowed to be re-appointed
Date of the 2018 general meeting
Allowed to be re-appointed
Date of the 2018 general meeting
Allowed to be re-appointed
Date of the 2018 general meeting
Allowed to be re-appointed
The Board confirmed that it has received the annual written confirmation of independence from
each independent non-executive Director pursuant to Rule 3.13 of the Hong Kong Listing Rules, and
after due enquiry, considered that Ms. Chen Lijie, Mr. Hu Shihai and Mr. Lie-A-Cheong Tai Chong,
David were independent.
97
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued)
Each Director acted in the interests of the shareholders, and used his or her best endeavors to
perform the duties and obligations in accordance with all the applicable laws and regulations.
The duties of the Board include: deciding on the Company’s business plans and investment
proposals, formulating the Company’s profit distribution and loss recovery proposals; formulating
debt and finance policies, and the issue of bonds, etc.; determining plans for material acquisitions
or disposals as well as mergers, demergers and dissolution of the Company; determining the
Company’s capital operation proposals, and implementing shareholders’ resolutions, etc. Details of
the functions of the Board are set out in the Articles of Association of the Company. Please refer
to the “Articles of Association of Aluminum Corporation of China Limited” under “IPO Release” on
the page of “Investor Relations” on the website of the Company.
The management is responsible for the daily operations and implementation of strategies of the
Company. The major functions of the management include the management of the production and
operation of the Company, organization and implementation of the Board’s resolutions, formulation
of the Company’s development strategies, annual operation plans, investment plans and financial
budget, formulation, organization and implementation of result and performance assessment as
well as remuneration and incentives. The Board regularly reviewed the functions delegated to the
management and their performance to safeguard the Group’s overall interests. The management
of the Company reported the execution of the resolutions of the general meeting and of the Board
meetings, the signing and performance of major contracts of the Company as well as utilization of
capital and profit and loss to the Board or the Supervisory Committee.
The Chairman was responsible for ensuring that the Directors perform their requisite duties and
obligations, and maintaining effective operation of the Board, as well as ensuring timely discussion
and consideration of all significant matters of the Company needed to be reported to Directors or
submitted to the Board. The Chairman has separately discussed with the non-executive Directors
(including independent non-executive Directors), and fully understood their opinions and advices on
the operation of the Company and the work of the Board.
Pursuant to Rule 3.10(1) of the Hong Kong Listing Rules, every board of a listed issuer must
include at least three independent non-executive Directors. In 2018, the Board of the Company was
comprised of three independent non-executive Directors, namely Ms. Chen Lijie, Mr. Hu Shihai
and Mr. Lie-A-Cheong Tai Chong, David. The three existing independent non-executive Directors
of the Company are independent. They are professionals with profound knowledge and extensive
experience in the respective fields of legal, energy sources, business management, finance and
accounting. They have diligently provided the Company with professional advice with respect to the
steady operation and development of the Company to protect the interests of the Company and its
shareholders.
98
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) During the year, none of the independent non-executive Directors of the Company raised any
objection to the resolutions proposed at Board meetings or other matters which are not Board
resolutions. Other than their appointments in the Company, none of the Directors, Supervisors or
the senior management had any financial, business, family or other significant relationships with
each other. Other than their respective service contracts, none of the Directors or the Supervisors
had any significant personal interest, directly or indirectly, in any transaction, arrangement or
contract of significance entered into by the Company or any of its subsidiaries during 2018.
In 2018, 18 meetings were held by the Board of the Company with 79 resolutions being
considered and approved, of which 9 were physical meetings with 67 resolutions being considered
and approved and 9 were telecommunication meetings with 12 resolutions being considered
and approved. The resolutions cover regular reports of the Company, annual corporate social
responsibility report, assessment report on internal control for the year, proposal for making up loss
for the year, production plan and financial budget, issue of debt financing instruments, provision of
guarantees for subsidiaries, annual target remuneration for the Company’s Directors, Supervisors
and senior management, re-appointment of auditors, appointment and dismissal of senior
managements, connected transactions and acquisition and disposal of equity interests or assets
and other capital operation projects, etc.
The attendance of all Directors in the 18 Board meetings held in 2018 is as follows:
Required
attendance
at physical
Attendance
Required
Attendance
Required
Attendance
rate of
attendance at
rate of
Attendance
Actual
physical
telecommunication
Actual
Telecommunication
at general
Actual
rate of
general
Name of Director
meetings
attendance
meetings
Board meetings
attendance
meetings
meetings
attendance
meetings
Yu Dehui (resigned)
Ao Hong
Liu Caiming (resigned)
Lu Dongliang
Jiang Yinggang
Zhu Runzhou
Wang Jun
Chen Lijie
Hu Shihai
Lie-A-Cheong Tai Chong, David
9
9
2
9
9
2
9
9
9
9
5
8
0
9
7
2
9
8
7
9
55.56%
88.89%
0%
100%
77.78%
100%
100%
88.89%
77.78%
100%
9
9
3
9
9
0
9
9
9
9
9
9
3
9
9
0
9
9
9
9
100%
100%
100%
100%
100%
–
100%
100%
100%
100%
3
3
0
3
3
1
3
3
3
3
2
3
0
3
2
1
3
3
2
3
66.67%
100%
–
100%
66.67%
100%
100%
100%
66.67%
100%
99
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued)
Note 1:
Attendance by proxies hasn’t been accounted into the actual attendance and the attendance rate.
Note 2:
As the 2018 first extraordinary general meeting, the 2018 first A shareholders class meeting and the 2018 first H
shareholders class meeting were all held on 17 September 2018, such meetings were counted as one meeting.
Note 3:
As Mr. Liu Caiming resigned as a Director of the Company on 25 May 2018, he did not attend the general
meeting of the Company for 2018.
Note 4: Mr. Zhu Runzhou, as a candidate for the Director, attended the 2018 second extraordinary general meeting of the
Company held on 11 December 2018.
CHAIRMAN AND CHIEF EXECUTIVE PRESIDENT
In order to ensure a balance of power and authority and avoid undue concentration of power, the
Company set up two explicit defined positions of the Chairman and President with clear scope of
official duty, so as to improve independence, accountability and responsibility. From the beginning
of the reporting period to the date of this annual report, the position of Chairman has been assumed
by Mr. Yu Dehui (resigned on 21 February 2019) and Mr. Lu Dongliang (appointed on 21 February
2019), the position of President has been assumed by Mr. Ao Hong (resigned on 13 February 2018),
Mr. Lu Dongliang (appointed on 13 February 2018 and resigned on 21 February 2019) and Mr. He
Zhihui (appointed on 21 February 2019).
As a legal representative of the Company, the Chairman presides over the Board, aiming to ensure
that the Board is acting in the best interests of the Company, operates effectively, duly performs
its responsibilities and engages in discussions of significant and appropriate matters, as well as
Director’s access to accurate, timely and clear information. On the other hand, the President
heads the management and is responsible for the daily operation of the Company, including the
implementation of policies adopted by the Board and reporting to the Board in respect of the overall
operation of the Company.
IMPLEMENTATION OF SHAREHOLDERS’ RESOLUTIONS BY
DIRECTORS
During the year, all Board members of the Company implemented the shareholders’ resolutions
and completed all matters delegated by the general meetings in accordance with provisions of the
relevant laws and regulations and the Articles of Association of the Company.
100
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) The arrangements and agendas of the Board meetings were provided to all Directors in advance to
ensure that they had the opportunity to propose matters to be discussed at the meetings. For each
Board meeting, notice of the meeting and relevant documents about the proposals were given to
the Directors in accordance with the time stipulated in the Articles of Association, which gave them
sufficient time to review each of the proposals.
The Board shall supervise and review the implementation of resolutions of the Board meetings by
the Company’s management on a regular basis, and report any progress of material matters to all
Directors.
The total pretax remuneration received by Directors from the Company, including the basic salary,
performance-linked salary, incentive-linked salary and discretionary bonus of the Directors in 2018
amounted to RMB2.10 million, among which independent non-executive Directors are only entitled
to receive director’s fees but not other remuneration.
The remuneration of each Director for the year is set out in note 30 to the consolidated financial
statements. As of 31 December 2018, no stock appreciation rights scheme had been adopted by
the Company.
DIRECTOR’S RECEIPT OF THE COMPANY’S INFORMATION
AND TRAINING
The Company’s Board Office offered comprehensive services to the Directors and provided all
Directors with sufficient information in a timely manner to ensure that they are notified of the
Company’s and the industry’s affairs on a timely basis. It also maintained effective communications
with shareholders by appropriate means to ensure that their views reach the Board. The Board
Office sent Directors’ Newsletter (《董事通訊》) to the Directors every month to inform the Directors
about the latest information and brief of the current status and development of the industry and
the Company. The Board Office also checked the latest amendments of the laws, regulations
and regulatory rules of securities from time to time to ensure that the Directors, Supervisors and
senior management of the Company are able to fulfill their duties in accordance with laws and
regulations. In addition, all Directors have participated in or educated themselves about continuous
professional trainings with relevance to their roles and duties in 2018 to develop and refresh their
knowledge and skill to ensure that they continue to make relevant contribution to the Board with
comprehensive information.
101
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) The training received by each Director in 2018 is as follows:
Name of Director
Training (Note)
Yu Dehui (resigned)
Ao Hong
Liu Caiming (resigned)
Lu Dongliang
Zhu Runzhou
Jiang Yinggang
Wang Jun
Chen Lijie
Hu Shihai
B
B
B
B
B
B
B
B
B
Lie-A-Cheong Tai Chong, David
B, C
Note:
A.
B.
C.
Training for Directors, Supervisors and senior management organized by the Securities Regulatory Authorities
Self-study on the domestic and foreign securities laws and regulations
Participation in trainings organized by other domestic and foreign institutions
FUNCTIONS OF CORPORATE GOVERNANCE OF THE BOARD
The followings are corporate governance functions performed by the Board which were
implemented by the special committees thereof:
(a)
Formulation and review of the policies and practice on corporate governance of the Company;
(b)
Review and supervision on the training and continuous professional development of the
Directors and senior management;
(c)
Review and supervision on the policies and practice in compliance with laws and regulatory
requirements of the Company;
102
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued)
(d)
Formulation, review and supervision on the compliance of employees and Directors with
applicable Code of Conduct and Compliance Manual; and
(e)
Review of the compliance of the Company with the Corporate Governance Code and
Corporate Governance Report under Appendix 14 of the Hong Kong Listing Rules. The Board
had supervised and reviewed the implementation of the corporate governance policies of
the Company, updated and prepared documents related to the internal control of the Group
as well as analyzed the compliance of the Company with the CG Code in 2018. It convened
three general meetings and eighteen Board meetings, and completed the relevant trainings of
the Directors and Supervisors. The Board also supervised and inspected the implementation
of the Board’s resolutions by the management to further enhance initiatives such as the
management of the investor relations.
AUDIT COMMITTEE
The Audit Committee has been established under the Board, and the duties of which mainly include
reviewing the financial reports, audits of financial reports, internal control system, risk management,
corporate governance and financial position of the Company, considering the appointment of
independent auditors and approving audit and audit-related services, and supervise the Company’s
internal financial reporting procedures and management policies.
Pursuant to Rule 3.21 of the Hong Kong Listing Rules, the Audit Committee of the Company shall
comprise of at least three members. As at the date of this report, the Audit Committee of the Board
of the Company consists of three independent non-executive Directors, namely Ms. Chen Lijie,
Mr. Hu Shihai and Mr. Lie-A-Cheong Tai Chong, David, among which, Mr. Lie-A-Cheong Tai Chong,
David serves as the chairman of the Committee.
A total of 10 meetings were held by the Audit Committee of the Board of the Company in 2018.
Ms. Chen Lijie, Mr. Hu Shihai and Mr. Lie-A-Cheong Tai Chong, David had attended all the meetings
of the Audit Committee (including attendance by proxies). The validity of the meetings was in
compliance with the relevant requirements of the “Detailed Implementation Rules for the Audit
Committee under the Board of Aluminum Corporation of China Limited (《中國鋁業股份有限公司董事
會審核委員會工作細則》). The meetings considered various important issues of the Company such as
the periodic financial reports, internal control, risk management, internal and external auditing, anti-
fraud and related party transactions, etc.
103
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) Details of the Audit Committee meetings were recorded by a designated person with signatures of
all members as confirmation, and all resolutions passed at each meeting were recorded and filed
in accordance with relevant rules. Members of the committee performed their duties diligently
and seriously and provided opinions and recommendations in relation to the financial reports,
internal control, risk management, audit and related parties transactions of the Company from an
independent and impartial perspective.
The Company has established work procedures for the Audit Committee for the performance
of its supervisory role in auditing of the annual report. Before the external auditors commenced
their annual audit, the Audit Committee reviewed the Company’s financial position and negotiated
with the external auditors about audit timetable for the year. Throughout the audit by the external
auditors, the Audit Committee maintained communications with them and ensured completion of
audit within the designated timeframe. The Audit Committee further reviewed the financial report of
the Company after the external auditors issued their preliminary audit opinions and passed a written
resolution to submit the audited financial report to the Board of the Company for review.
The Audit Committee and the management discussed the risk management and internal control
systems of the Company, so as to make sure that effective risk management and internal control
systems have been established, which included considering whether or not the Company had
sufficient resources with qualified and experienced staff to perform accounting, internal auditing
and financial reporting duties, and whether or not relevant staff were well trained and the relevant
budget was sufficient. The Audit Committee is of the view that the Company had complied with the
requirements of the above corporate risk management and internal control systems during the year.
REMUNERATION COMMITTEE
During the reporting period, the Remuneration Committee of the Board of the Company consists of
two independent non-executive Directors namely Mr. Hu Shihai and Mr. Lie-A-Cheong Tai Chong,
David, and one non-executive Director, Mr. Liu Caiming (Mr. Liu Caiming resigned on 25 May 2018).
Mr. Hu Shihai serves as the chairman of the committee.
Duties of the Remuneration Committee include: to prepare the remuneration management
scheme and remuneration proposal for Directors, employee representative Supervisors and
senior management, and provide suggestions to the Board; to prepare measures on performance
evaluation of senior management, performance assessment procedures and relevant rewards
and punishments, and provide suggestions to the Board; to monitor the implementation of the
remuneration system of the Company; to review senior management’s fulfilment of duties and
conduct performance assessment; and other functions and authorities delegated by the Board.
104
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) In 2018, Remuneration Committee of the Board convened one meeting and all the members
of the Remuneration Committee attended the meeting. Two resolutions were considered and
approved at the above meeting, which were the “Proposal regarding the Formulation of the Target
Remuneration of the Directors and Supervisors of the Company in 2018” and “Proposal regarding
the Formulation of the Target Remuneration of Senior Management in 2018”. Both proposals were
approved and passed by way of resolutions at the meeting.
All members of the Remuneration Committee have carefully studied the remuneration plan
on Directors, Supervisors and senior management and are of view that the remuneration plan
made by the Company is in line with the remuneration policy of the Company with reference to
the remuneration for same positions of comparable enterprises (in terms of the size, industry
and nature). Meanwhile, it is also based on the annual operation results of the Company, the
performance of Directors and Supervisors and the performance appraisal results of senior
management and is fair and reasonable. They agreed to submit the remuneration plan on Directors,
employee representative Supervisors and senior management to the Board.
Minutes of each meeting of the Remuneration Committee were recorded by a designated person
and signed by all members of the committee, and all items passed at each meeting were recorded,
filed and kept in reserve in accordance with relevant rules.
NOMINATION COMMITTEE
During the reporting period, the Nomination Committee of the Board of the Company consists of
three independent non-executive Directors, namely Ms. Chen Lijie, Mr. Hu Shihai and Mr. Lie-A-
Cheong Tai Chong, David, one executive Director, Mr. Yu Dehui (resigned on 21 February 2019), and
one non-executive Director, Mr. Ao Hong. Mr. Yu Dehui serves as the chairman of the committee.
Duties of the Nomination Committee mainly include: to study the selection standards and
procedures for Directors, senior management and members of special committees under the
Board and provide suggestions to the Board; to review the qualification of candidates for Directors,
senior management and members of special committees under the Board and provide advices on
inspection and appointment; to assess the independence of independent non-executive Directors;
and other functions and authorities delegated by the Board.
105
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) The procedures for appointment of a new Director of the Company are: the Nomination
Committee of the Board nominates a Director candidate (For any Director candidate nominated
by the Supervisory Committee or shareholders separately or jointly holding 3 percent or more
of the Company’s shares carrying voting rights pursuant to the Articles of Association, the
Nomination Committee shall review the qualifications of such Director candidate) for consideration
and approval by the Board, which is then put forward for election at a general meeting. The
Nomination Committee adopted the policy of diversification for new members of the Board in
the Code on Corporate Governance, which took effect from 1 September 2013 when it selected
Director candidates. The Nomination Committee shall ensure the balance of skills, experience
and viewpoints in the Board, which is necessary for the need of the Company’s business. The
committee shall select candidates on the basis of a series of diversified criteria, including but not
limited to gender, age, cultural and educational background, profession and other experience, skills
and knowledge.
Five meetings were held in total by the Nomination Committee of the Board in 2018, and all the
members of the committee attended the said meeting. The meeting considered the Proposal
Regarding the Nomination of Candidates for Director and Senior Management, which was approved
and passed by way of resolution at the meeting.
Minutes of each meeting of the Nomination Committee were signed by all members of the
committee and filed and kept in reserve.
DEVELOPMENT AND PLANNING COMMITTEE
During the reporting period, the Development and Planning Committee of the Board of the
Company consists of one independent non-executive Director, Mr. Hu Shihai, two executive
Directors, namely Mr. Yu Dehui (resigned on 21 February 2019) and Mr. Jiang Yinggang, and one
non-executive Director, Mr. Ao Hong. Mr. Yu Dehui serves as the chairman of the committee.
Duties of the Development and Planning Committee include reviewing and evaluation of the
Company’s long-term development strategy, capital expenditure budget, investment, business
operation and strategic plan of annual investment returns.
Only one meeting was held by the Development and Planning Committee of the Board in 2018,
and all the members of the committee attended the said meeting. The meeting considered the
production guidance plan for 2018, the capital expenditure plan for 2018 and the operating plan for
2018.
106
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) OCCUPATIONAL HEALTH AND SAFETY AND ENVIRONMENT
COMMITTEE
During the reporting period, the Occupational Health and Safety and Environment Committee of
the Board of the Company consists of one non-executive Director, namely Mr. Wang Jun, and two
executive Directors, namely, Mr. Lu Dongliang and Mr. Jiang Yinggang. Mr. Jiang Yinggang serves as
the chairman of the committee.
Duties of the Occupational Health and Safety and Environment Committee include considering
of the Company’s annual planning on health, environmental protection and safety, supervision of
the Company’s effective implementation of the planning on health, environmental protection and
safety initiatives, inquiring into serious incidents and inspecting and supervising over the handling
of such incidents, as well as making recommendations to the Board on major decisions on health,
environmental protection and safety.
One meeting was held by the Occupational Health and Safety and Environment Committee in
2018, and all members of the Committee were present at the meeting, at which the safety and
environmental protection work plan for 2018 was considered and approved.
SUPERVISORY COMMITTEE
The Supervisory Committee is responsible for supervising the Board and its members and senior
management, in order to prevent them from abusing their authorities and violating the legitimate
interests of shareholders, the Company and its staff.
During the reporting period, the sixth session of the Supervisory Committee of the Company
consists of three Supervisors, including two shareholder representative Supervisors, namely Mr. Liu
Xiangmin (resigned on 11 December 2018 and Mr. Ye Guohua was appointed as a Supervisor of the
Company on the same day) and Mr. Wang Jun (resigned on 20 February 2019, and Ms. Shan Shulan
was appointed as a Supervisor of the Company on the same day), and one employee representative
Supervisor, namely Mr. Wu Zuoming. Mr. Liu Xiangmin served as the chairman of the Supervisory
Committee (after the resignation of Mr. Liu Xiangmin, Mr. Ye Guohua was elected as the chairman
of the Supervisory Committee).
107
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) A total of 9 meetings were held by the Supervisory Committee of the Company in 2018, of which
three were physical meetings and six were written ones, considered and approved fourteen
resolutions, including the regular reports of the Company, annual report of the supervisory
committee, annual report of internal control, annual corporate social responsibility report,
nomination of candidates for Supervisors, election of the chairman of the Supervisory Committee
and change of accounting policy, etc.
During this year, the Supervisory Committee performed its duties diligently with good faith in
accordance with the terms of reference prescribed by the Company Law of the People’s Republic
of China and other laws and regulations and the Articles of Association of Aluminum Corporation
of China Limited. It attended the general meetings and Board meetings as observers. Focusing on
finding ways to adapt to the changes arising from the continuous development of the Company,
enhance the Company’s operational transparency and standardization, build a credible image in
the capital market, in particular to adopt effective measures to protect the interests of investors,
especially the interests of minority investors, the Supervisory Committee received and considered
reports relating to the Company’s production, operation, investment and finance etc., supervised
the decision making process of the material decisions of the Company and strived to protect the
interests of shareholders and the Company.
GENERAL MEETING
General meeting is the highest authority of the Company. It provides a good opportunity for direct
communications and building a sound relationship between the Board and the shareholders of
the Company. Therefore, the Company attaches great importance to such meetings. During the
reporting period, the Company convened a total of three general meetings, one A shareholders
class meeting and one H shareholders class meeting, namely 2017 annual general meeting of
the Company held on 26 June 2018, 2018 first extraordinary general meeting of the Company,
2018 first A shareholders class meeting and 2018 first H shareholders class meeting held on 17
September 2018 and 2018 second extraordinary general meeting of the Company held on 11
December 2018. The meetings mentioned above were held in the Company’s conference room at
No. 62, North Xizhimen Street, Beijing.
108
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) A total of 41 resolutions were considered and approved at the above meetings, including the annual
report of the Board, the annual report of Supervisory Committee, the audited financial report,
annual proposal for making up loss, annual financing plan, issue of debt financing instruments,
re-appointment of auditors, provision of guarantees, acquisition of assets by issuance of shares,
connected transactions constituted by acquisition and disposal of assets, and election of Directors,
etc. The convening, holding and voting procedures for each general meeting are legal and valid, and
all the resolutions submitted at the general meetings were passed.
EXTRAORDINARY GENERAL MEETING
According to the Articles of Association, a single shareholder or any two or more shareholders
together holding more than 10% of the Company’s issued shares is (are) entitled to request an
extraordinary general meeting or class general meeting to be convened. Such requests must
specify the resolutions of the meeting in writing and must be submitted to the convener, the
contact information of whom is set out in the section entitled “Inquiry to the Board” in this chapter.
Shareholder should follow the Rules of Procedures for the Shareholders’ Meeting of Aluminum
Corporation of China Limited set out in the “IPO Release” under the section of “Investors
Relations” on the website of the Company.
PROPOSALS AT THE GENERAL MEETING
According to the Articles of Association, a single shareholder or any two or more shareholders
together holding more than 3% of the Company’s issued shares is (are) entitled to submit additional
proposals to the Company Secretary by written request ten working days prior to the relevant
general meeting. The contact information of the Company Secretary is set out in the section
entitled “Inquiry to the Board” in this chapter. Shareholder should follow the Rules of Procedures
for the Shareholders’ Meeting of Aluminum Corporation of China Limited as set out in the “IPO
Release” under the section of “Investors Relations” on the website of the Company.
109
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) INQUIRY TO THE BOARD
For any inquiry to the Board, please contact the Board Office at 12B/F, Chalco Building, No. 62
North Xizhimen Street, Haidian District, Beijing (email: IR@chalco.com.cn).
TRAININGS FOR THE COMPANY SECRETARY
Mr. Zhang Zhankui, the Company Secretary (Secretary to the Board) （resigned on 20 February
2019）, is a full-time staff of the Company. He is responsible for organizing and completing
procedures relating to Board meetings and general meetings, coordinating and arranging information
disclosure, dealing with investor relations and helping maintain smooth communications among
the management, Directors and shareholders. In 2018, Mr. Zhang Zhankui completed not less than
15 hours of relevant professional trainings, and completed the training of the strengthening and
continuous professional development courses provided by associated members of the Hong Kong
Institute of Chartered Secretaries (HKICS).
Mr. Zhang Zhankui resigned as the chief financial officer and the Company Secretary (Secretary
to the Board) on 20 February 2019, and Mr. Wang Jun was appointed by the Board as the chief
financial officer and the Company Secretary (Secretary to the Board) on the same day.
INVESTOR RELATIONS
The Company has established a designated department for investor relationship, which is
responsible for matters concerning investor relationship. The Company’s management maintains
close communications with investors, analysts and the media by various means including
roadshows, meetings, individual interviews, group visits to the Company and corporate research,
thereby further increasing their recognition of the Company.
110
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) Since 2018, facing the downward pressure from the capital market and aluminum industry stock
prices, the Company continued to strengthen communications with investors in all dimensions
through multiple channels. To fully maintain the capital market’s confidence in the Company, it
actively delivered positive information to the capital market, such as continuous improvement in the
Company’s operating results, constantly enhanced cost competitiveness, declining gearing ratio,
accelerating pace of transformation and upgrade, breakthroughs in high-quality development and
new chapter in overseas development. In 2018, the Company received 304 visits from 47 batches
of institutional investors and analysts, including the world’s leading investment banks, and held four
results presentations, attracting 353 investment institutions and 474 investors or analysts. In April
and August 2018, teams led by the senior management of the Company carried out roadshows in
Hong Kong, Singapore, Europe and major domestic cities, respectively, during which a total of 130
investor meetings were held with about 468 investors. Thanks to these efforts, the Company was
highly appraised by both domestic and overseas investors. Moreover, the Company also organized
investors to visit its subordinate enterprises, enabled them to directly and fully understand such
enterprises, and further enhanced their impression on the Company’s transformation and upgrade as
well as high-quality and diversified development, which deeply impressed investors. In the second
half of 2018, a number of domestic and foreign institutions gave a “Buy” rating on the Company.
In recent years, the Company gained recognition from both domestic and overseas capital markets
through adopting a series of measures to improve its operation and communication with domestic
and foreign investors in an open, transparent and efficient way. Chalco was honored as the “2018
All-Asia Most Honored Company on Corporate Governance” in the highly influential annual selection
in the international capital market organized by Institutional Investor, an international authoritative
finance magazine. It was also awarded the “Gold Wing Awards–Most Valuable Hong Kong Listed
Company under Stock Connect” by Securities Times. Besides, the Company’s chief financial officer
and the Secretary to the Board was granted the “Golden Bauhinia” – Best CFO of Listed Company
Award and ranked among the “Best CFO” list in Asian basic materials industry once again.
111
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) CORPORATE GOVERNANCE AND INTERNAL CONTROL
Information Disclosure
The Company has always been upholding the high sense of responsibility to investors and discloses
information in a true, accurate, complete, timely and fair manner in strict accordance with the listing
rules of the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the New York Stock
Exchange.
The Company attaches consistent importance to information disclosure and cautiously cope with
the proposed information disclosure, especially sensitive information that is likely to cause price and
market fluctuation. The Company has formulated Management Measures of Information Disclosure
of Aluminum Corporation of China Limited (《中國鋁業股份有限公司信息披露管理制度》) and Rules
Governing Inside Information and Persons with Knowledge Thereof of Aluminum Corporation of
China Limited (《中國鋁業股份有限公司內幕信息及知情人管理制度》), and such measures strictly
specify the process of information screening, review, release and usage, and the provisions
on persons with knowledge of information including registration and filing, confidentiality and
punishment.
The general approval flow of the proposed information disclosure of the Company are in due order
of Representative for the Company’s securities related affairs, Secretary to the Board, President,
Chairman and the Board (as authorized). Upon approval, the information manuscript will not
be disclosed until executed by Representative for the Company’s securities related affairs and
Secretary to the Board.
Chairman of the Company takes primary responsibility for information disclosure; the Board of the
Company is the management organ of information disclosure; Secretary to the Board (Company
Secretary) is in charge of work regarding information disclosure management in the ordinary course
of business of the Company; and Office of the Board is the routine executive organ of information
disclosure of the Company. The Supervisory Committee reviews and supervises the work of
information disclosure of the Company on a regular or occasional basis. The Board of the Company
conducts self-assessment on annul information disclosure and includes the assessment results in
the assessment report on internal control of the Company.
112
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) Meetings of the Management
The management is responsible for the implementation of the Board resolutions for the Company
and the organization of relevant operation and management activities. As and when required, the
management convened president meetings which are chaired by the president and attended by
the management personnel, and the presidential office meetings which are chaired by the senior
management with attendants including department heads from the Company’s headquarters. The
Company’s operation, implementation of investment projects and financial issues were considered
and determined at such meetings. The Company’s management including managers from branches,
subsidiaries, associated companies and department heads from the headquarters convened annual,
interim and monthly work meetings in order to summarize and arrange works on a yearly, half yearly
and monthly basis. The meetings have facilitated the organization, coordination, communication and
supervision on the commencement and implementation of the Company’s various operations.
Risk Management and Internal Control
The objectives of risk management and internal control are to give a reasonable assurance that the
Company’s management is lawful and compliant, that the assets are safe and that the financial
reporting and related information are true and complete; to improve the operational efficiency and
effectiveness; and to facilitate the achievement of the Company’s development strategy. Internal
control has its inherent limitations, so it only provides a reasonable guarantee for the achievement
of the above goals. In addition, given inapplicability of internal control due to contingent changes
or deterioration in the compliance of control policies and relevant procedures, projections on the
effectiveness of the internal control in the future over the assessment results of the internal control
are subject to certain risks.
113
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) The responsibilities of the Board of the Company include the establishment of complete risk
management and internal control and its effective implementation. As a special committee
established under the Board, Audit Committee of the Company has supervised and inspected the
comprehensiveness and implementation of the risk management and internal control system of
the Company, and regularly discussed with the management on the implementation of the risk
management and internal control in order to ensure that the Company has established an effective
risk management and internal control system. The Supervisory Committee conducts supervision
on the establishment and implementation of risk management and internal control by the Board.
The management is responsible for arrangement and leadership of the daily operation of the risk
management and internal control of the Company. The Internal Audit Department of the Company, a
functional department of the Company, is responsible for the risk management and internal control
of the Company and carries out the specific implementation work.
In 2018, the efforts made by the Company in respect of risk management and internal control
mainly include:
1.
The Company further improved the risk prevention systems (including internal control system)
of the head office and subsidiaries of the Company, implemented supervision and guidance
for companies with an incomplete system and improved the risk prevention and control
systems of enterprises, so as to proactively facilitate the full coverage of risk prevention and
control systems (including internal control system).
2.
The Internal Audit Department of the Company randomly carried out independent
unannounced inspection on internal control for the Company’s subsidiaries, arranged mutual
inspection on internal control for subsidiaries, and communicated with companies in terms
of internal control issues and defects discovered in the inspections and urged them to
proactively conduct rectification, guaranteeing the effectiveness of internal control.
3. While enhancing establishment of internal control institution and personnel training, the
Company streamlined the setting of internal control institution, personnel allocation and
concrete work implementation of the Internal Audit Department and affiliated enterprises of
the Company, supervised the self-assessment of internal control and implemented internal
control mentoring program.
4.
Further efforts were exerted to promote the inclusion of risk management into enterprise
operation management and innovation in respect of risk management thoughts and methods.
The Company further intensified the prevention and control of major risks including safety and
environmental risks, market price risks and cash flow risks, and prepared effective measures.
114
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) The Audit Committee conducts two reviews over the risk management and internal control of the
Company on an annual basis. On 13 March 2018, at the 12th meeting of the Audit Committee under
the sixth session of the Board of the Company, the Audit Committee reviewed the implementation
of risk management and internal control of the Company in 2017 and its results as well as the work
plan for 2018, approved resolutions including resolution in relation to the 2017 Internal Control Work
Report, the 2017 Assessment Report on Internal Control, the 2017 Auditing Report on Internal
Control and the 2018 Comprehensive Risk Management Report. On 10 August 2018, at the 16th
meeting of the Audit Committee under the sixth session of the Board of the Company, the Audit
Committee reviewed the progress of the assessment on internal control for the first half of 2018
and the work arrangement for the second half of the year. The Audit Committee under the Board
reported the abovementioned work to the Board. On 22 March 2018, at the 21st meeting of the
sixth session of the Board of the Company, the 2017 Assessment Report on Internal Control, the
2017 Auditing Report on Internal Control and the 2018 Comprehensive Risk Management Report
were considered and approved.
On 27 March 2019, at the 23rd meeting of the Audit Committee under the sixth session of the
Board of the Company, the Audit Committee considered and approved the 2018 Work Report
on Internal Control, the 2018 Assessment Report on Internal Control, the 2018 Auditing Report
on Internal Control and the 2019 Comprehensive Risk Management Report, which were also
considered and approved at the 41th meeting of the sixth session of the Board of the Company
held on 28 March 2019. According to such reports, there were no material or significant defects in
the internal control over the financial report and non-financial reports of the Company and Ernst &
Young Hua Ming LLP, auditor of the Company, also confirmed that the Company had maintained
effective internal control over financial report in all material aspects.
AUDITORS’ REMUNERATION
Upon the approval at the 2017 annual general meeting of the Company held on 26 June 2018, Ernst
& Young Hua Ming LLP and Ernst & Young (collectively “Ernst & Young”) were reappointed as the
2018 domestic and international auditors of the Company.
115
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) In 2018, Ernst & Young Hua Ming LLP and Ernst & Young received total emoluments of
RMB22,720,000 for audits under PRC and international standards as well as internal control audits,
and others payments amounting to RMB3,979,000 for other audit and non-audit services for other
projects.
Services provided by Ernst & Young in 2018 for other projects mainly include: the issuance of audit
reports in respect of internal equity transactions of the Company which involves its subsidiaries;
the audit on pro forma statements for the transaction in respect of the introduction of third-party
investors for capital contribution to certain affiliated enterprises and issuance of comfort letters
in respect of the indebtedness statement and income valuation set out in the circular for the
transaction; the issuance of comfort letters on the earnings estimates and indebtedness statement
set out in the circular for the Company’s Guinea investment project; the professional services
regarding the content of the circular concerning the public issuance of senior debentures by Chalco
Hong Kong; the issuance of comfort letters on the valuation method for the equity and assets of the
carbon enterprises acquired by the Company; tax advisory services for the Company’s investment.
DIRECTORS’ AND AUDITORS’ ACKNOWLEDGMENT
All Directors acknowledged their responsibility for preparing the accounts for the year ended 31
December 2018. Auditor’s reporting responsibilities are set out in the independent auditor’s report
on page 155 to 163.
COMPLIANCE AND EXEMPTION OF CORPORATE
GOVERNANCE OBLIGATIONS IMPOSED BY NEW YORK STOCK
EXCHANGE
Based on its listing rules, New York Stock Exchange (“NYSE”) imposed a series of corporate
governance standards for companies listed on the NYSE. However, NYSE has granted permission
to listed companies of foreign issuers to follow their respective “home country” practice and has
granted waivers for compliance with corporate governance standards under NYSE listing rules. One
of the conditions for such waiver is for the listed company to disclose in its annual report how the
corporate governance practices in its “home country” differ from those followed by companies
under NYSE listing standards.
The Company had compared the corporate governance standards generally adopted by the
companies incorporated in the PRC and the standards developed by NYSE, as follows:
116
ALUMINUM CORPORATION OF CHINA LIMITED Report on Corporate Governance and Internal Control (Continued) INDEPENDENT DIRECTORS CONSTITUTING THE MAJORITY
NYSE requires that the board of a listed company must comprise a majority of Independent
Directors. There is no identical corporate governance requirement in the PRC. The Board of the
Company currently comprises three independent Directors and five non-independent Directors,
which is in compliance with the requirement by the PRC securities regulatory authorities that the
board of a listed company shall comprise at least one-third of independent directors as at the date
of this report.
CORPORATE GOVERNANCE COMMITTEE
NYSE requires a listed company to establish a Corporate Governance Committee under the board
which comprises entirely of independent directors. The Corporate Governance Committee shall
be co-established with the Nomination Committee and have a written charter. The Corporate
Governance Committee is responsible (i) for recommending to the board a set of corporate
governance guidelines applicable to the corporation; and (ii) for supervising the operation of
the board and the management. The Corporate Governance Committee shall also be subject to
evaluation annually.
Like most of the other companies incorporated in the PRC, the Company believes that corporate
governance measures are of critical importance and should be implemented by the Board. The
Company accordingly does not separately maintain a Corporate Governance Committee.
117
2018 ANNUAL REPORT Report on Corporate Governance and Internal Control (Continued) 1. CORPORATE GOVERNANCE
The Company has strictly complied with the requirements of the Company Law of the
People’s Republic of China, the Securities Law of the People’s Republic of China, relevant
provisions of the CSRC, Rules Governing the Listing of Stocks on Shanghai Stock Exchange
(the “Shanghai Stock Exchange Listing Rules”) and Rules Governing the Listing of Securities
on The Stock Exchange of Hong Kong Limited (the “Hong Kong Listing Rules”) and seriously
performed its governance obligations in line with the relevant requirements of the CSRC. The
Company has also strictly complied with requirements on corporate governance under the
Hong Kong Listing Rules.
The Company will continue to strictly comply with the requirements of the relevant
regulatory bodies including the CSRC, Beijing Securities Regulatory Bureau, the Shanghai
Stock Exchange and the Hong Kong Stock Exchange. The Company will continue to enhance
its corporate governance measures in compliance with regulations and take initiatives to
further enhance the corporate governance and internal control system of the Company.
Aiming at protecting the interest of shareholders of the Company, the Company will maintain
consistent, stable and sound developments and contribute to the society and its shareholders
by means of its satisfactory performance results. The Company will also continue to comply
with the requirements on corporate governance under the Hong Kong Listing Rules.
Since its incorporation, the Company has completely separated its business, staff, assets,
organization and finance from its controlling shareholder. The Company has its independent
and complete business and its own operations.
2. ACQUISITIONS
In 2018, except as disclosed on page 122 note 10. EXPLANATION OF OTHER SIGNIFICANT
EVENTS, the Company had no material acquisition required to be disclosed.
3. TRUST ARRANGEMENT
In 2018, the Company had no trust arrangement required to be disclosed.
118
ALUMINUM CORPORATION OF CHINA LIMITEDSignificant Events 4. SUB-CONTRACTING
In 2018, the Company had no sub-contracting arrangement required to be disclosed.
5. CHARGE AND PLEDGES
As at 31 December 2018, the Group charged and pledged assets with a total amount of
RMB6,738 million, including property, plant and equipment, land use rights, intangible
assets, investment in associates, and trade and notes receivables for bank borrowings. In the
meantime, the Group also obtained certain bank borrowings by pledging its contractual rights
to charge users for electricity generated and investment in a subsidiary. For details, please
refer to note 24 to the financial statements.
6. GUARANTEES
As at 31 December 2018, the Company’s external guarantee balance (excluding guarantee
provided to subsidiaries) amounted to approximately RMB12 million and guarantee provided
to subsidiaries amounted to approximately RMB12,860 million, details of which are as
follows:
On 25 December 2006, Chalco Ningxia Energy Group Co., Ltd. (中鋁寧夏能源集團有限公司)
(hereinafter referred to as “Ningxia Energy”) entered into a guarantee contract with China
Construction Bank Yinchuan Xicheng Branch, providing a third-party joint and several liability
for RMB35 million out of RMB70 million, the aggregate amount of project loan of Ningxia Tian
Jing Shen Zhou Wind Power Co., Ltd. (寧夏天淨神州風力發電有限公司) ( 5 0 % o f i t s e q u i t y
interest was then held by Ningxia Energy, which was fully transferred to Ningxia Yinxing
Energy Co., Ltd. (寧夏銀星能源股份有限公司), a controlled subsidiary of Ningxia Energy in
2014) with a loan term of 14 years. As of 31 December 2018, the balance of the guarantee
provided by Ningxia Energy in proportion to its shareholding amounted to RMB12 million.
As of 31 December 2018, the balance of the guarantee provided between Ningxia Energy, a
controlled subsidiary of the Company and its subsidiaries mutually amounted to RMB2,870
million.
119
2018 ANNUAL REPORT Significant Events (Continued) In October 2016, Chalco Hong Kong Limited (hereinafter referred to as “Chalco Hong Kong”)
and its certain subsidiaries provided guarantee for senior perpetual bonds of USD500 million
issued by Chalco Hong Kong Investment Company Limited. In September 2018, Chalco Hong
Kong provided guarantee for senior perpetual bonds of USD400 million issued by Chalco Hong
Kong Investment Company Limited. As of 31 December 2018, Chalco Hong Kong Investment
Company Limited had outstanding senior perpetual bonds of USD900 million (equivalent to
approximately RMB6,120 million) which were guaranteed by Chalco Hong Kong and its certain
subsidiaries.
In February 2015, the Company entered into a guarantee contract with the Kunming Branch
of Ping An Bank, pursuant to which the Company would provide guarantee in respect of a
loan of up to RMB1,000 million in total in proportion to its 60% shareholding for its controlled
subsidiary Guizhou Huajin Aluminum Co., Ltd. (貴州華錦鋁業有限公司) (hereinafter referred
to as “Guizhou Huajin”). The guarantee period was two years from the date of expiry of the
term for repayment of each loan under the principal contract. As of 31 December 2018, the
balance of guarantee provided by the Company amounted to RMB6 million.
In April 2015, the Company entered into a guarantee contract with the JIC Leasing (Shanghai)
Co.,Ltd., pursuant to which the Company would provide guarantee in respect of its finance
lease of up to RMB500 million in total in proportion to its 60% shareholding for Guizhou
Huajin. The guarantee period was two years from the date of expiry of the term for repayment
of each loan under the principal contract. As of 31 December 2018, the balance of guarantee
provided by the Company in proportion to its shareholding amounted to RMB114 million.
In March 2017, Baotou Aluminum Co., Ltd. (hereinafter referred to as “Baotou Aluminum”)
entered into a maximum financial guarantee agreement (《最高額保證合同》) with Baotou
Branch of Shanghai Pudong Development Bank, pursuant to which Baotou Aluminum would
provide guarantee in respect of banking facilities up to RMB2,000 million in total for its
controlled subsidiary Inner Mongolia Huayun New Materials Co., Ltd.(內蒙古華雲新材料有限公
司) (hereinafter referred to as “Inner Mongolia Huayun”). The guarantee period was two years
from the date of expiry of the term for repayment of each loan under the principal contract.
As of 31 December 2018, the balance of guarantee provided by Baotou Aluminum to Inner
Mongolia Huayun amounted to RMB1,600 million.
120
ALUMINUM CORPORATION OF CHINA LIMITED Significant Events (Continued) In April 2018, Shandong Huayu Alloy Materials Co., Ltd. (hereinafter referred to as “Shandong
Huayu”) entered into a guarantee contract with Linyi Luozhuang Sub-branch of China
Minsheng Bank, pursuant to which Shandong Huayu would provide guarantee in respect of a
loan of RMB100 million for its controlled subsidiary Shandong Yixing Carbon New Materials
Co., Ltd. (山東沂興炭素新材料有限公司) (hereinafter referred to as “Yixing Carbon”). As of
31 December 2018, the balance of guarantee provided by Shandong Huayu to Yixing Carbon
amounted to RMB100 million.
In December 2018, Shandong Huayu entered into a guarantee contract with Jinan Branch of
the Bank of Beijing, pursuant to which Shandong Huayu would provide guarantee in respect
of a loan of RMB50 million for its controlled subsidiary Yixing Carbon. As of 31 December
2018, the balance of guarantee provided by Shandong Huayu to Yixing Carbon amounted to
RMB50 million.
In October 2018, China Aluminum Logistics Group Corporation Co., Ltd (hereinafter referred
to as “Chalco Logistics”) entered into a guarantee contract with the Shanghai Futures
Exchange, pursuant to which Chalco Logistics would provide guarantee of RMB1,000 million
for its controlled subsidiary Chalco Logistics Group Central International Port Co., Ltd. (中鋁物
流集團中部國際陸港有限公司) (hereinafter referred to as “Central Port”). As of 31 December
2018, the balance of guarantee provided by Chalco Logistics to Central Port amounted to
RMB1,000 million.
In August 2018, China Aluminum International Trading Co., Ltd. (hereinafter referred to as
“Chalco Trading”) entered into a guarantee contract with the Dalian Commodity Exchange,
pursuant to which Chalco Trading would provide guarantee of RMB1,000 million for its
controlled subsidiary Chalco Inner Mongolian International Trading Co., Ltd. (中鋁國際貿易有
限公司) (hereinafter referred to as “Inner Mongolian Trading”). As of 31 December 2018, the
balance of guarantee provided by Chalco Trading to Inner Mongolian Trading amounted to
RMB1,000 million.
7. ENTRUSTED ASSET MANAGEMENT AND SHORT-TERM
INVESTMENTS
Details of significant short-term investments of the Group for the year subject to disclosure
are set out in note 15 to the financial statements.
121
2018 ANNUAL REPORT Significant Events (Continued) 8. PERFORMANCE OF UNDERTAKINGS
In 2018, the Company had no undertaking required to be performed.
9. PUNISHMENTS AND RECTIFICATIONS INVOLVED
BY LISTED COMPANIES AND THEIR DIRECTORS,
SUPERVISORS, SENIOR MANAGEMENT, SHAREHOLDERS,
AND DE FACTO CONTROLLERS
In 2018, the Company and its Directors, Supervisors, senior management, shareholders, and
de facto controllers were not under any investigation, administrative punishment, and public
criticism from CSRC and public censures from stock exchanges.
10. EXPLANATION OF OTHER SIGNIFICANT EVENTS
Progress on the Acquisition of Assets by Issuance of Shares
and the Related-Party Transaction of the Company
As the Company was planning a material matter, the trading in the A shares of the Company
had been suspended with effect from 12 September 2017, and the Company started the
procedures for suspension of trading in respect of the material assets reorganization since
it related to assets acquisition by issuance of shares on 26 September 2017. On 31 January
2018, the Company convened the nineteenth meeting of the sixth session of the Board of
the Company, at which the Resolution in relation to ‘the Plan for the Acquisition of Assets
by Issuance of Shares and the Related-Party Transaction of Aluminum Corporation of China
Limited*’ and its Summary (《關於<中國鋁業股份有限公司發行股份購買資產暨關聯交易預案>及
其摘要的議案》) and other resolutions in relation to acquisition of assets by issuance of shares
were considered and approved, pursuant to which, the Company proposed to acquire 30.80%
equity interests in Chalco Shandong Co., Ltd.* (中鋁山東有限公司), 25.67% equity interests
in Baotou Aluminum Co., Ltd.* (包頭鋁業有限公司), 81.14% equity interests in Chalco Mining
122
ALUMINUM CORPORATION OF CHINA LIMITED Significant Events (Continued) Co., Ltd.*(中鋁礦業有限公司) and 36.90% equity interests in Chalco Zhongzhou Aluminum
Co., Ltd.* (中鋁中州鋁業有限公司) (collectively “Target Equity”) jointly held by Huarong
Ruitong Equity Investment Management Co., Ltd.* (華融瑞通股權投資管理有限公司), China
Life Insurance Company Limited* (中國人壽保險股份有限公司), Shenzhen Zhaoping Chalco
Investment Center LLP* (深圳市招平中鋁投資中心（有限合夥)), China Cinda Asset Management
Co., Ltd.*(中國信達資產管理股份有限公司), China Pacific Life Insurance Co., Ltd.* (中國太平
洋人壽保險股份有限公司), BOC Financial Asset Investment Co., Ltd.* (中銀金融資產投資有
限公司), ICBC Financial Asset Investment Co., Ltd.* (工銀金融資產投資有限公司) and ABC
Financial Asset Investment Company Limited* (農銀金融資產投資有限公司) (collectively
“Counterparties”) by issuance of ordinary A shares. The pricing benchmark date for the
acquisition of assets by issuance of shares was the announcement date of the Board (namely
the nineteenth meeting of the sixth session of the Board) resolution, on which the transaction
was considered by the Company for the first time. The issue price shall be no less than 90%
of the average transaction price of the shares during the 60 trading days prior to the date of
announcement of the first Board resolution, being RMB6.00 per share.
On 7 February 2018, the Company received the Letter of Inquiry Regarding Information
Disclosure of Issuance of Shares for Assets Acquisition and Related-Party Transaction Plan of
Aluminum Corporation of China Limited* (Shang Zheng Gong Han [2018] No. 0161) (《關於對
中國鋁業股份有限公司發行股份購買資產暨關聯交易預案信息披露的問詢函》(上證公函[2018]0161
號)) from the Shanghai Stock Exchange. On 24 February 2018, the Company disclosed
the Reply on ‘Letter of Inquiry Regarding Information Disclosure of Issuance of Shares for
Assets Acquisition and Related-Party Transaction Plan of Aluminum Corporation of China
Limited*’ from the Shanghai Stock Exchange by Aluminum Corporation of China Limited* and
Informative Announcement on Resumption of Trading (《中國鋁業股份有限公司關於上海證券交
易所<關於對中國鋁業股份有限公司發行股份購買資產暨關聯交易預案信息披露的問詢函>的回復
及股票複牌提示性公告》). Upon application to the Shanghai Stock Exchange, the trading of A
shares of the Company was resumed on 26 February 2018.
123
2018 ANNUAL REPORT Significant Events (Continued) On 30 July 2018, the Company convened the twenty-ninth meeting of the sixth session of
the Board, at which the Resolution in relation to the ‘Report on the Assets Acquisition by
Issuance of Shares and Related-Party Transaction of Aluminum Corporation of China Limited*
(Draft)’ and its Summary (《關於<中國鋁業股份有限公司發行股份購買資產暨關聯交易報告書（草
案)>及其摘要的議案》) and other resolutions in relation to acquisition of assets by issuance of
shares were considered and approved. According to the valuation result of the Target Equity,
the Company, upon calculation, determined to issue an additional 2,118,874,715 A shares to
8 Counterparties for acquisition of the Target Equity held by them. Set out below are details
of the number of shares to be issued to each of the Counterparties:
Counterparties
Huarong Ruitong Equity Investment Management Co., Ltd.*
China Life Insurance Company Limited*
Shenzhen Zhaoping Chalco Investment Center LLP*
China Cinda Asset Management Co., Ltd.*
China Pacific Life Insurance Co., Ltd.*
BOC Financial Asset Investment Co., Ltd.*
ICBC Financial Asset Investment Co., Ltd.*
ABC Financial Asset Investment Company Limited*
Total
Number of
shares
(0’000 shares)
84,160.0264
67,188.2629
25,239.2929
8,420.3869
8,398.3992
8,402.7974
6,718.7440
3,359.5618
211,887.4715
On 14 September 2018, the Company received the Reply on Matters Related to Assets
Restructuring of Aluminum Corporation of China Limited* (GZCQ [2018] No. 642) (《關於中國
鋁業股份有限公司資產重組有關問題的批復》(國資產權[2018]642號)) from the SASAC, pursuant
to which, the overall plan for the acquisition of assets by issuance of shares of the Company
was in principle approved.
124
ALUMINUM CORPORATION OF CHINA LIMITED Significant Events (Continued)
On 17 September 2018, the Company convened the 2018 first extraordinary general meeting,
the 2018 first A shareholders class meeting and the 2018 first H shareholders class meeting,
at which, the Resolution in relation to the Assets Acquisition by Issuance of Shares by the
Company and the Related-Party Transaction Plan (《關於公司發行股份購買資產暨關聯交易方案
的議案》), the Resolution in relation to the ‘Report on the Assets Acquisition by Issuance of
Shares and Related-Party Transaction of Aluminum Corporation of China Limited* (Draft) and
its Summary’ (《關於<中國鋁業股份有限公司發行股份購買資產暨關聯交易報告書（草案）及其摘要
>的議案》) and other resolutions in relation to acquisition of assets by issuance of shares were
considered and approved.
On 28 September 2018, the Company received the CSRC’s Acceptance Notice of the
Application for Administrative Permission (No. 181502) (《中國證監會行政許可申請受理通
知書》(181502號 )) issued by CSRC, and CSRC decided to accept the application for the
administrative permission in respect of the Application for Approval of Listed Company Assets
Acquisition by Issuance of Shares of Aluminum Corporation of China Limited* (《中國鋁業
股份有限公司上市公司發行股份購買資產核准》) submitted by the Company. On 25 October
2018, the Company received the Notice Regarding CSRC’s First Feedback on the Review of
Administrative Permission Items (No. 181502) (《中國證監會行政許可項目審查一次反饋意見通
知書》(181502號)) (the “Feedback”) issued by CSRC, in which the Company was required to
provide written statements and explanations on the relevant issues. On 8 November 2018,
the Company disclosed the Reply to the First Feedback on Acquisition of Assets by Issuance
of Shares and Related-party Transaction by Aluminum Corporation of China Limited* (《中國鋁
業股份有限公司關於發行股份購買資產暨關聯交易之一次反饋意見回復》) and submitted the reply
materials in respect of the Feedback to CSRC. On 20 November 2018, the Listed Company
Merger and Reorganization Vetting Committee of CSRC held the 59th working meeting of
the Merger and Reorganization Vetting Committee for 2018, at which the acquisition of
assets by issuance of shares and the related-party transaction of the Company was approved
unconditionally and the trading of A shares of the Company was suspended on that day. On
18 December 2018, the Company received the Reply on Approving the Acquisition of Assets
by Aluminum Corporation of China Limited* through Issuance of Shares to Huarong Ruitong
Equity Investment Management Co., Ltd. and Certain Other Companies (關於核准中國鋁業
股份有限公司向華融瑞通股權投資管理有限公司等發行股份購買資產的批覆) (Zhen Jian Xu Ke
[2018] No. 2064) issued by CSRC.
125
2018 ANNUAL REPORT Significant Events (Continued) On 20 February 2019, the transfer and the formalities concerning the industrial and
commercial registration for the changes of the Target Equity were completed. On 25 February
2019, the procedures for the registration of the new shares for acquisition of assets by
issuance of shares by the Company with Shanghai Branch of China Securities Depository
and Clearing Corporation Limited were completed. Accordingly, the acquisition of assets by
issuance of shares by the Company was completed.
For details of the aforesaid matters, please refer to the relevant announcements issued by
the Company.
Investment in Boffa Bauxite Project in Guinea by the Company
On 17 May 2018, the Resolution in relation to the Proposed Investment in the Construction of
Boffa Bauxite Project in Guinea by the Company and the Signing of ‘the Boffa Project Mining
Convention’ (《關於公司擬投資建設幾內亞Boffa 鋁土礦項目暨簽署 的議
案》) was considered and approved at the twenty-third meeting of the sixth session of the
Board of the Company, pursuant to which, the Board approved the Company to invest in the
construction of Boffa bauxite project in Guinea through Chalco Hong Kong, its wholly-owned
subsidiary. The total investment in the construction of the project is approximately US$706
million. It is estimated that the total capital to be contributed by the Company in cash will
be not more than US$163.8 million. On 8 June 2018, Chalco Hong Kong and Chalco Guinea
Company S.A. (“Mining Company”) entered into the mining convention with conditions
precedent with the Guinean Government. The aforesaid matter was considered and approved
at the 2017 annual general meeting of the Company convened on 26 June 2018.
For details of the aforesaid matter, please refer to the announcement dated 17 May 2018,
and the announcement and the supplemental circular dated 10 June 2018 of the Company.
126
ALUMINUM CORPORATION OF CHINA LIMITED Significant Events (Continued) Merger and Reorganization of Chalco Zunyi Alumina Co., Ltd.
and Zunyi Aluminum Co., Ltd.
On 21 June 2018, the Resolution in Relation to the Proposed Merger and Reorganization
of Chalco Zunyi Alumina Co., Ltd. and Zunyi Aluminum Co., Ltd. by the Company was
considered and approved at the twenty-sixth meeting of the sixth session of the Board
of the Company. To carry out the merger and reorganization, the Company would make a
capital contribution with the appraised net assets of Chalco Zunyi Alumina Co., Ltd. (“Zunyi
Alumina”) of approximately RMB2,311 million into Zunyi Aluminum. Upon the completion of
capital contribution, the shareholding of the Company in Zunyi Aluminum was increased to
67.445%. On 29 June 2018, the Company entered into the joint venture contract with the
other shareholders of Zunyi Aluminum.
For details of the aforesaid matter, please refer to the announcements of the Company dated
21 June 2018 and 29 June 2018, respectively.
Conversion of Lanzhou Branch of Aluminum Corporation of
China Limited into a Subsidiary
On 17 September 2018, the Resolution in Relation to the Proposed Conversion of Lanzhou
Branch of Aluminum Corporation of China Limited into a Subsidiary by the Company was
considered and approved at the thirty-first meeting of the sixth session of the Board of the
Company. To carry out the conversion, the Company would make a capital contribution
with the appraised net assets of Lanzhou Branch of Aluminum Corporation of China Limited
of RMB1,492,124,200 into Gansu Aluminum Electricity, a wholly-owned subsidiary of the
Company.
For details of the aforesaid matter, please refer to the announcement of the Company dated
17 September 2018.
127
2018 ANNUAL REPORT Significant Events (Continued) Conversion of Liancheng Branch of Aluminum Corporation of
China Limited into a Subsidiary
On 17 September 2018, the Resolution in Relation to the Proposed Conversion of Liancheng
Branch of Aluminum Corporation of China Limited into a Subsidiary by the Company was
considered and approved at the thirty-first meeting of the sixth session of the Board of the
Company. The Company would contribute the appraised net assets of Liancheng Branch of
Aluminum Corporation of China Limited of RMB1,490,619,400, to establish Gansu Liancheng,
a wholly-owned subsidiary.
For details of the aforesaid matter, please refer to the announcement of the Company dated
17 September 2018.
Investment in Construction of the 2,000,000-Tonne Alumina
Project in Fangchenggang, Guangxi
On 17 September 2019, the Resolutions in Relation to the Proposed Investment in
Construction of 2,000,000-tonne Alumina Project and the Proposed Capital Contribution to
Guangxi Huasheng New Materials Co., Ltd. by the Company were considered and approved
at the thirty-first meeting of the sixth session of the Board of the Company. The Company
would construct the 2,000,000-tonne alumina project in Fangchenggang, Guangxi with a
construction investment of RMB5,805 million. Guangxi Huasheng New Materials Co., Ltd.* (廣
西華昇新材料有限公司) was responsible for construction and operation of the project.
For details of the aforesaid matter, please refer to the announcement of the Company dated
17 September 2018.
128
ALUMINUM CORPORATION OF CHINA LIMITED Significant Events (Continued) Acquisition of 50% Equity Interests in Shanxi Huaxing Alumina
Co., Ltd.* (山西華興鋁業有限公司) by the Company
On 20 November 2018, the Resolution in Relation to the Proposed Acquisition of 50% Equity
Interests in Shanxi Huaxing Alumina Co., Ltd. by the Company was considered and approved
at the thirty-fourth meeting of the sixth session of the Board of the Company, pursuant to
which, the Board agreed the Company to participate in the bidding for 50% Equity Interests
in Shanxi Huaxing Alumina Co., Ltd. (“Shanxi Huaxing”) which were offered for public tender
by Baotou Transportation Investment Group Co., Ltd.* (包頭交通投資集團有限公司) (“Baotou
Transportation Investment”). On 6 December 2018, the Company was affirmed as the final
transferee of 50% Equity Interests in Shanxi Huaxing. On 11 December 2018, the Company
entered into the equity transfer agreement with Baotou Transportation Investment.
For details of the aforesaid matters, please refer to the announcements of the Company
dated 20 November 2018 and 11 December 2018, respectively.
Separation and Transfer of “Three Supplies and One Property
(三供一業)” and Other Social Functions Undertaken by
Enterprises by the Company and its Affiliated Enterprises
On 11 December 2018, the Resolution in Relation to the Proposed Separation and Transfer
of “Three Supplies and One Property(三供一業)” and Other Social Functions Undertaken by
the Company and its Affiliated Enterprises was considered and approved at the thirty-fifth
meeting of the sixth session of the Board of the Company, pursuant to which, the Board
agreed the Company and its affiliated enterprises to separate “Three Supplies and One
Property (三供一業)”and other social functions undertaken by enterprises and transfer the
same to local governments, other state-owned third party companies or carry out market-
oriented reforms. The net book value involved in the separation and transfer was not more
than RMB165,332,100. The Company will correspondingly write down related assets and
equity interest in compliance with the relevant national stipulations. The expenses of the
transfer and reforms undertaken by the Company and its affiliated enterprises in respect of
the separation and transfer did not exceed RMB153,600,000, which would be charged into
the profit or loss of the Company.
129
2018 ANNUAL REPORT Significant Events (Continued) In accordance with the requirements stated in the Notice of the Ministry of the Finance
Regarding the Issue of Enterprises Separation to Carry Out Social Functions Related to
Financial Management (《財政部關於企業分離辦社會職能有關財務管理問題的通知》), assets
involved in the separation and transfer shall be deducted in the order of undistributed
profit, surplus reserve and capital reserve under the Chinese Accounting Standards, and
are recognized in profit or loss for the current period under the International Accounting
Standards. The differences in the above accounting treatment resulted in a difference of
RMB123,753,000 between the net profit attributable to shareholders of the Company and net
assets under the Chinese Accounting Standards and the International Accounting Standards.
For details of the aforesaid matter, please refer to the announcement of the Company dated
11 December 2018.
Capital Contribution by Chinalco Environmental Protection and
Energy Conservation Co., Ltd.* (中鋁環保節能集團有限公司) to
Beijing Aluminum SPC Environment Protection Tech Co., Ltd.*
(北京鋁能清新環境技術有限公司)
At the thirty-fifth meeting of the sixth session of the Board convened by the Company on
11 December 2018, the Resolution in Relation to the Proposed Capital Contribution by
Chinalco Environmental Protection and Energy Conservation Co., Ltd. to Beijing Aluminum
SPC Environment Protection Tech Co., Ltd. was considered and approved, pursuant to
which, Chinalco Environmental Protection and Energy Conservation Co., Ltd. (“Chinalco
Environmental Protection”) (a subsidiary of Chinalco, the controlling shareholder of the
Company) would make a capital contribution in cash to Beijing Aluminum SPC Environment
Protection Tech Co., Ltd. (“Aluminum SPC”), a joint venture of the Company, for 38.30%
equity interests in Aluminum SPC. Upon the capital contribution, the shareholding of the
Company in Aluminum SPC was decreased to 24.68% from 40%. On 14 December 2018, the
related parties entered into the capital contribution agreement.
For details of the aforesaid matter, please refer to the announcements published by the
Company on 11 December 2018 and 14 December 2018, respectively.
130
ALUMINUM CORPORATION OF CHINA LIMITED Significant Events (Continued) Change of the Media Designated for Domestic Information
Disclosure by the Company
The newspaper designated for domestic information disclosure of the Company has been
changed from the Securities Times to the Securities Daily since 1 January 2019.
For details of the aforesaid matter, please refer to the announcement of the Company dated
28 December 2018.
11. SIGNIFICANT SUBSEQUENT EVENTS
For other significant events after the reporting period, please refer to relevant disclosures
made in note 43 to the financial statements.
131
2018 ANNUAL REPORT Significant Events (Continued) Details of significant related party transactions of the Group for the year ended 31 December 2018
are set out in note 35 to the financial statements. Certain related party transactions also constitute
connected transactions or continuing connected transactions under Chapter 14A of the Hong
Kong Listing Rules and the Company confirms that such related party transactions have complied
with applicable disclosure requirements in accordance with Chapter 14A of the Hong Kong Listing
Rules. The details of the non-exempted one-off connected transactions, major exempted one-off
connected transaction and non-exempted continuing connected transactions under Chapter 14A of
the Hong Kong Listing Rules undertaken by the Group during the reporting period are set out below.
NON-EXEMPTED CONTINUING CONNECTED TRANSACTIONS
Set out below are the annual caps for the continuing connected transactions and the actual
transaction amounts incurred by the Group in 2018. For the year ended 31 December 2018, the
continuing connected transactions of the Group were calculated on an aggregated basis as follows:
Aggregated
Percentage of
consideration
turnover (for the
(for the year ended
year ended
Annual cap for
31 December 2018)
31 December 2018)
the year 2018
(in RMB million)
(in RMB million)
Purchases of goods or services:
(A)
Comprehensive Social and Logistics Services Agreement
(Counterparty: Aluminum Corporation of China)
312
0.17%
550
(B)
General Agreement on Mutual Provision of Production
Supplies and Ancillary Services (Counterparty: Aluminum
Corporation of China)
4,495
2.49%
6,950
(C)
Mineral Supply Agreement (Counterparty: Aluminum
Corporation of China)
11
0.01%
360
132
ALUMINUM CORPORATION OF CHINA LIMITEDConnected Transactions
Aggregated
Percentage of
consideration
turnover (for the
(for the year ended
year ended
Annual cap for
31 December 2018)
31 December 2018)
the year 2018
(in RMB million)
(in RMB million)
(D)
Provision of Engineering, Construction and Supervisory
Services Agreement (Counterparty: Aluminum Corporation
of China)
1,993
1.11%
10,000
(E)
Land Use Rights Leasing Agreement (Counterparty: Aluminum
Corporation of China)
(F)
Fixed Assets Leases Framework Contract (Counterparty:
Aluminum Corporation of China)
(G)
Financial Services Agreement (Counterparty: Chinalco Finance
Co., Ltd.) Daily cap of deposit balance (including accrued
interests)
Daily cap of loan balance (including accrued interests)
Other financial services
412
34
0.23%
1,200
0.02%
110
9,102
5.05%
balance 12,000
Daily cap of deposit
3,775
–
Daily cap of loan
2.08%
balance 15,000
0%
50
(H)
Finance Lease Agreement (Counterparty: Chinalco Finance
Lease Co., Ltd.)
1,088
0.60%
10,000
(I)
Factoring Cooperation Agreement (Counterparty: Chinalco
Commercial Factoring (Tianjin) Co., Ltd.*(中鋁商業保理（天
津）有限公司))
(K)
Labor and Engineering Services Framework Agreement
(Counterparty: Chalco Steering Intelligent Technology Co.,
Ltd.* (中鋁視拓智能科技有限公司))
1,000
0.55%
1,300
2
0%
56
133
2018 ANNUAL REPORT Connected Transactions (Continued)
Aggregated
Percentage of
consideration
turnover (for the
(for the year ended
year ended
Annual cap for
31 December 2018)
31 December 2018)
the year 2018
(in RMB million)
(in RMB million)
Sales of goods or services:
(B)
General Agreement on Mutual Provision of Production
Supplies and Ancillary Services (Counterparty: Aluminum
Corporation of China)
11,867
6.58%
16,400
(F)
Fixed Assets Leases Framework Agreement (Counterparty:
Aluminum Corporation of China)
(J)
Labor Services and Engineering Services Agreement
(Counterparty: Aluminum Corporation of China)
32
6
0.02%
0%
100
500
1.
The Company has adopted effective internal control policies to closely monitor the continuing connected transactions
of the Group. The Audit Committee of the Company continuously conducts strict review on the continuing connected
transactions to ensure the completeness and effectiveness of the internal control measures regarding the continuing
connected transactions. The Independent Non-executive Directors of the Company have reviewed the above
transactions and confirmed:
(i)
the transactions have been entered into in the ordinary and usual course of business of the Group;
(ii)
the terms of the transactions are fair and reasonable, and are in the interest of the Company’s shareholders;
(iii)
the transactions have been entered into on normal commercial terms or, where there are not sufficient
comparable transactions to judge whether they are on normal commercial terms, they are on terms no less
favourable than those available to or offered to independent third parties; and
(iv)
the transactions have been undertaken in accordance with the terms of relevant agreements governing such
transactions.
134
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued)
2.
Pursuant to Rule 14A.56 of the Hong Kong Listing Rules, the Board engaged the auditor of the Company to conduct
a limited assurance engagement on the above continuing connected transactions in accordance with Hong Kong
Standard on Assurance Engagements 3000 “Assurance Engagements Other Than Audits or Reviews of Historical
Financial Information” and with reference to Practice Note 740 “Auditor’s Letter on Continuing Connected
Transactions under the Hong Kong Listing Rules” issued by the Hong Kong Institute of Certified Public Accountants.
The auditor has reported the results of their procedures to the Board stating that:
a.
b.
c.
d.
nothing has come to the auditor’s attention that causes the auditor to believe that the disclosed continuing
connected transactions have not been approved by the Company’s Board of Directors.
for transactions involving the provision of goods or services by the Group, nothing has come to the auditor’s
attention that causes the auditor to believe that the transactions were not, in all material respects, in
accordance with the pricing policies of the Company.
nothing has come to the auditor’s attention that causes the auditor to believe that the transactions were
not entered into, in all material respects, in accordance with the relevant agreements governing such
transactions.
with respect to the aggregate amount of each of the continuing connected transactions set out above,
nothing has come to the auditor’s attention that causes the auditor to believe that such continuing connected
transactions have exceeded the maximum aggregate annual cap made by the Company in respect of each of
the disclosed continuing connected transactions.
FURTHER INFORMATION ON THE CONTINUING CONNECTED
TRANSACTIONS OF THIS YEAR
1. Continuing Connected Transactions
(A) Comprehensive Social and Logistics Services Agreement
Date of initial agreement:
5 November 2001
Date of supplemental
28 April 2015
agreement:
Parties:
Aluminum Corporation of China as provider (for itself and
on behalf of its subsidiaries)
The Company as recipient (for itself and on behalf of its
subsidiaries)
135
2018 ANNUAL REPORT Connected Transactions (Continued) Term:
Three years from 1 January 2016 to 31 December 2018
Nature of transaction:
(i)
Social services: public security and firefighting
s e r v i c e s , e d u c a t i o n a n d t r a i n i n g , s c h o o l s ,
hospitals and health facilities, cultural and sports
u n d e r t a k i n g s , n e w s p a p e r s a n d m a g a z i n e s ,
broadcasting, printing and other relevant or similar
services;
(ii)
L o g i s t i c s s e r v i c e s : p r o p e r t y m a n a g e m e n t ,
environmental and hygiene service, greenery,
nurseries, kindergartens, sanatoriums, canteens,
hotels, hostels, offices, public transportation,
retirement management and other relevant or
similar services
Price determination:
The prices in respect of services are determined with
r e f e r e n c e t o c o m p a r a b l e l o c a l m a r k e t p r i c e s. T h e
comparable local market prices refer to the reference
made to the prices charged or quoted by at least two
i n d e p e n d e n t t h i r d p a r t i e s p r o v i d i n g s e r v i c e s w i t h
comparable scale in areas where such services were
provided under normal trading conditions around that
time.
Payment term:
Monthly payment
For more detailed information on this continuing connected transaction, please refer to
the announcements dated 28 April 2015 and 8 May 2015 of the Company.
136
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) (B) General Agreement on Mutual Provision of Production Supplies and
Ancillary Services
Date of initial agreement:
5 November 2001
Date of supplemental
28 April 2015
agreement:
Parties:
Aluminum Corporation of China as provider and recipient
(for itself and on behalf of its subsidiaries)
The Company as provider and recipient (for itself and on
behalf of its subsidiaries)
Term:
Three years from 1 January 2016 to 31 December 2018
Nature of transaction:
(a) Production supplies and ancillary services provided by
Aluminum Corporation of China to the Company
(i) Supplies: carbon ring, carbon products, cement,
coal, oxygen, bottled water, steam, fire brick,
aluminum fluoride, cryolite, lubricant, resin, clinker,
aluminum profiles and other relevant or similar
supplies and services;
(ii) S t o r a g e a n d t r a n s p o r t a t i o n s e r v i c e s: v e h i c l e
transportation, loading, railway transportation and
other relevant or similar services;
(iii) Ancillary production services: communications,
testing, processing and fabrication, engineering
design, repair, environmental protection, road
maintenance and other relevant or similar services
137
2018 ANNUAL REPORT Connected Transactions (Continued) (b) Production supplies and ancillary services provided by
the Company to Aluminum Corporation of China
(i) P r o d u c t s : e l e c t r o l y t i c a l u m i n u m p r o d u c t s
(aluminum ingots) and alumina products, primary
aluminum, slag, petroleum coke other relevant or
similar supplies;
(ii) S u p p o r t i n g s e r v i c e s a n d a n c i l l a r y p r o d u c t i o n
services: water, electricity, gas and heat supply,
m e a s u r e m e n t , s p a r e p a r t s , r e p a i r , t e s t i n g ,
transportation, steam and other relevant or similar
services
Price determination:
(1) Production supplies and ancillary services provided by
Aluminum Corporation of China to the Company:
(a) Supplies: the price is determined with reference
t o t h e c o m p a r a b l e l o c a l m a r k e t p r i c e s . T h e
c o m p a r a b l e l o c a l m a r k e t p r i c e s r e f e r t o t h e
reference made to the prices charged or quoted
by at least two independent third parties providing
products or services with comparable scale in
areas where such products or services were
provided under normal trading conditions;
(b) Storage and transportation services: the price is
determined with reference to the contractual price,
which refers to a mutually agreed price set by all
relevant parties for the provision of services. Such
price is equivalent to reasonable costs incurred
in providing such services plus reasonable profit.
S u c h r e a s o n a b l e p r o f i t r e f e r s t o a p r o f i t n o t
more than 5% of such costs. Such profit margin
is considered reasonable as determined with
reference to the current market practice in relevant
industries;
138
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) (c) A n c i l l a r y p r o d u c t i o n s e r v i c e s : t h e p r i c e i s
determined with reference to the contractual price,
which refers to a mutually agreed price set by all
relevant parties for the provision of services. Such
price is equivalent to reasonable costs incurred
in providing such services plus reasonable profit.
S u c h r e a s o n a b l e p r o f i t r e f e r s t o a p r o f i t n o t
more than 5% of such costs. Such profit margin
is considered reasonable as determined with
reference to the current market practice in relevant
industries.
(2) Production supplies and ancillary services provided by
the Company to Aluminum Corporation of China:
(a) Products:
(i) A l u m i n a p r o d u c t s : t h e s e l l i n g p r i c e i s
determined according to a method where both
the alumina spot market price and the weighted
average price of settlement price for three-
month aluminum ingot futures on the Shanghai
Futures Exchange weighted in proportion.
The Company will consider the geographical
location of the customers, the seasonality
demands, the transportation costs, and other
relevant factors to determine the proportion
of weight to be allocated to aforementioned
alumina spot market price and the weighted
average price of settlement price for three-
month aluminum ingot futures on the Shanghai
Futures Exchange;
(ii) Electrolytic aluminum products (aluminum
i n g o t s ) : t h e t r a d i n g p r i c e i s d e t e r m i n e d
according to the prices of futures in the current
month, the weekly or monthly average spot
market prices quoted on the Shanghai Futures
Exchange;
139
2018 ANNUAL REPORT Connected Transactions (Continued) (iii) Other products: the price is determined with
reference to the contractual price, which refers
to a mutually agreed price set by all relevant
parties for the provision of products. Such
price is equivalent to reasonable costs incurred
in providing such products plus reasonable
profit. Such reasonable profit refers to a profit
not more than 5% of such costs. Such profit
margin is considered reasonable as determined
with reference to the current market practice in
relevant industries.
(b) S u p p o r t i n g s e r v i c e s a n d a n c i l l a r y p r o d u c t i o n
services:
(i) Electricity supply: the price is determined with
reference to the government-prescribed price,
which refers to the on-grid electricity prices and
electricity sales prices proposed to be executed
by enterprises set out in the notices issued by
the bureau of commodity price in each province
published on their websites from time to time;
(ii) Gas, heat and water supply, measurement,
spare parts, repair, testing, transportation,
steam: the price is determined with reference
to the contractual price, which refers to a
mutually agreed price set by all relevant parties
for the provision of services. Such price is
equivalent to reasonable costs incurred in
providing such services plus reasonable profit.
Such reasonable profit refers to a profit not
m o r e t h a n 5% o f s u c h c o s t s. S u c h p r o f i t
margin is considered reasonable as determined
with reference to the current market practice in
relevant industries;
140
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) (iii) Other services: the price is determined with
reference to the comparable local market
prices, which refer to the reference made to
the prices charged or quoted by at least two
independent third parties providing services
with comparable scale in areas where such
services were provided under normal trading
conditions.
Payment term:
Cash on delivery
For more detailed information on this continuing connected transaction, please refer to
the announcements dated 28 April 2015 and 8 May 2015 and the circular dated 2 June
2015 of the Company.
(C) Mineral Supply Agreement
Date of initial agreement： 5 November 2001
Date of supplemental
agreement：
28 April 2015
Parties：
Aluminum Corporation of China as supplier (for itself and
on behalf of its subsidiaries)
The Company as recipient (for itself and on behalf of its
subsidiaries)
Term：
Three years from 1 January 2016 to 31 December 2018
Nature of transaction:
S u p p l y o f b a u x i t e a n d l i m e s t o n e t o t h e C o m p a n y
by Aluminum Corporation of China; before meeting
the Company’s bauxite and limestone requirements,
Aluminum Corporation of China is not entitled to provide
bauxite and limestone to any third parties
141
2018 ANNUAL REPORT Connected Transactions (Continued) Price determination：
(i) F o r t h e s u p p l i e s o f b a u x i t e a n d l i m e s t o n e f r o m
A l u m i n u m C o r p o r a t i o n o f C h i n a o w n m i n i n g
operations, at reasonable costs incurred in providing
the same, plus not more than 5% of such reasonable
costs (a buffer for surges in the price level and labor
costs); and
(ii) For the supplies of bauxite and limestone from jointly
operated mines, at contractual price paid by Aluminum
Corporation of China to such third parties
Payment term：
Cash on delivery
For more detailed information on this continuing connected transaction, please refer to
the announcement of the Company dated 28 April 2015.
(D) Provision of Engineering, Construction and Supervisory Services
Agreement
Date of initial agreement:
5 November 2001
Date of supplemental
28 April 2015
agreement:
Parties:
Aluminum Corporation of China as provider and recipient
(for itself and on behalf of its subsidiaries)
The Company as provider and recipient (for itself and on
behalf of its subsidiaries)
Term:
Three years from 1 January 2016 to 31 December 2018
142
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) Nature of Transaction:
Services provided by Aluminum Corporation of China to
the Company include engineering design, construction
and supervisory services as well as relevant research
and development operations. Services provided by the
Company to Aluminum Corporation of China include
engineering design services
Price determination:
Services are provided according to government guidance
price; and if there is none, the market price
Payment term:
10–20% before service; a maximum of 70% during
provision of service; and 10 to 20% upon successful
provision of service
For more detailed information on this continuing connected transaction, please refer to
the announcement of the Company dated 28 April 2015 and the circular dated 2 June
2015.
(E) Land Use Rights Leasing Agreement
Date of initial agreement： 5 November 2001
Parties:
Aluminum Corporation of China as landlord (for itself and
on behalf of its subsidiaries)
The Company as tenant (for itself and on behalf of its
subsidiaries)
143
2018 ANNUAL REPORT Connected Transactions (Continued) Term:
50 years expiring on 30 June 2051
As previously disclosed in the letter dated 27 December
2006 from Taifook Capital Limited (“Taifook Letter”), the
then independent financial adviser to the Independent
Board Committee and independent shareholders in
relation to certain continuing connected transactions, it
is in the interests of the Company and the independent
shareholders to have a longer lease term of the land
to minimize the disruption of the Group’s production
and business operations arising from relocation. Given
that (i) the size of the leased land and the facilities
erected thereon; and (ii) the consideration resources to
be expended in establishing new production plants and
related facilities, such relocation may be deemed difficult
and infeasible. The Directors are of the view that it is
normal business practice for contracts of this type to be
of such duration.
Properties:
470 pieces or parcels of land covering an aggregate area
of approximately 61.22 million square meters, all of which
are located in the PRC
Price determination:
The rent shall be negotiated every three years at a rate
not higher than prevailing market rent as confirmed by an
independent valuer
Payment term:
Monthly payment
For more detailed information on this continuing connected transaction, please refer to
the announcement of the Company dated 28 April 2015.
144
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) (F) Fixed Assets Lease Framework Agreement
Date of agreement:
28 April 2015
Parties:
Aluminum Corporation of China as landlord and tenant (for
itself and on behalf of its subsidiaries)
The Company as landlord and tenant (for itself and on
behalf of its subsidiaries)
Term:
Three years from 1 January 2016 to 31 December 2018
Fixed assets:
B u i l d i n g s , c o n s t r u c t i o n s , m a c h i n e r y , a p p a r a t u s ,
transportation facilities as well as equipment, appliance
or tools and other fixed assets owned by either party in
relation to the production and operation
Price determination:
The rent shall be adjusted every two years and shall not
be higher than prevailing market rent as confirmed by an
independent valuer
Payment term:
Monthly payment
For more detailed information on this continuing connected transaction, please refer to
the announcement of the Company dated 28 April 2015.
145
2018 ANNUAL REPORT Connected Transactions (Continued) (G) Financial Services Agreement
Date of initial agreement： 26 August 2011
Date of renewed agreement：26 October 2017Note
Parties:
The Company as recipient
Chinalco Finance Co., Ltd. (“Chinalco Finance”) as
provider, a subsidiary of Aluminum Corporation of China*
(中國鋁業集團有限公司), the controlling shareholder of the
Company
Term:
Three years from 26 October 2017 to 25 October 2020
Nature of Transaction:
Chinalco Finance agreed to provide deposit services,
settlement services, credit services and miscellaneous
financial services to the Group in accordance with the
provisions and terms and conditions set out in the
renewed financial services agreement. Within the validity
period of the renewed financial services agreement,
the maximum daily deposit balance (including accrued
interests) of the Group on the settlement account in
Chinalco Finance shall not exceed RMB12.0 billion; the
maximum daily loan balance (including accrued interests)
provided by Chinalco Finance to the Group shall not
exceed RMB15.0 billion; the annual service fees charged
by Chinalco Finance for miscellaneous financial services
provided to the Group shall not exceed RMB50 million
and Chinalco Finance will provide the Company with
settlement services for free
For more detailed information on this continuing connected transaction, please refer to
the announcement dated 26 October 2017 and the circular dated 5 December 2017 of
the Company.
146
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) Note: The Company and Chinalco Finance renewed the Financial Services Agreement (the “Original
Agreement”) on 28 April 2015 for a term from 26 August 2015 to 25 August 2018. During the validity
period of the Original Agreement, the maximum daily deposit balance (including accrued interests)
of the Group on the settlement account in Chinalco Finance shall not exceed RMB8.0 billion; the
maximum daily loan balance (including accrued interests) provided by Chinalco Finance to the Group
shall not exceed RMB10.0 billion; the annual service fees charged by Chinalco Finance for other
financial services provided to the Group shall not exceed RMB50 million and Chinalco Finance will
provide the Company with settlement services for free. As the transaction caps of the Original
Agreement failed to meet the current demand, as considered and resolved at the 16th meeting of
the sixth session of the Board held on 26 October 2017 and the 2017 second extraordinary general
meeting held on 20 December 2017 that the Company and Chinalco Finance re-entered into the
Financial Services Agreement to increase the caps for deposit and loan transactions to RMB12.0
billion (including accrued interests) and RMB15.0 billion (including accrued interests), respectively.
The transaction caps for the Company and Chinalco Finance would still be subject to the Original
Agreement before approval of the new agreement at the general meeting on 20 December 2017.
(H) Finance Lease Agreement
Date of initial agreement:
27 August 2015
Date of renewed agreement: 13 November 2015
Parties:
The Company as lessee (for itself and on behalf of its
subsidiaries)
Chinalco Finance Lease Co., Ltd.* (中鋁融資租賃有限公司)
(“Chinalco Lease”) as lessor, a subsidiary of Aluminum
C o r p o r a t i o n o f C h i n a * ( 中 國 鋁 業 集 團 有 限 公 司) , t h e
controlling shareholder of the Company
Term:
Three years from 1 January 2016 to 31 December 2018
Nature of Transaction:
Pursuant to the finance lease framework agreement,
Chinalco Lease will provide finance lease services to the
Group, and at any time within the period from 1 January
2016 t o 13 D e c e m b e r 2018, t h e f i n a n c i n g b a l a n c e
acquired by the Group from Chinalco Lease shall not
exceed RMB10 billion
For more detailed information on this continuing connected transaction, please refer
to the announcements of the Company dated 27 August 2015, 8 September 2015
and 13 November 2015 and the circular of the Company dated 14 December 2015,
respectively.
147
2018 ANNUAL REPORT Connected Transactions (Continued) (I)
Factoring Cooperation Agreement
Date of agreement:
27 September 2017
Parties:
The Company as recipient (for itself and on behalf of its
subsidiaries)
Chinalco Commercial Factoring (Tianjin) Co., Ltd.*(中鋁商
業保理（天津）有限公司) (“Chinalco Factoring”) as provider,
a subsidiary of Aluminum Corporation of China* (中國
鋁業集團有限公司), the controlling shareholder of the
Company
Term:
From 27 September 2017 to 31 December 2018
Nature of Transaction:
Pursuant to the Factoring Cooperation Agreement,
Chinalco Factoring shall provide factoring financing
services to the Company and the cap for the transactions
between the Company and Chinalco Factoring for both
2017 and 2018 is RMB1.3 billion within the term of the
agreement
Price determination:
The financing costs for the services to be provided by
Chinalco Factoring to the Company shall be determined
based on fair and reasonable market prices and normal
commercial terms, and shall not be higher than those
charged by third-party factoring companies in the PRC for
similar services.
For more detailed information on this continuing connected transaction, please refer to
the announcements of the Company dated 17 August 2017 and 27 September 2017.
148
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) (J) Labor Services and Engineering Services Agreement
Date of initial agreement:
13 November 2015
Date of renewed agreement: 28 June 2016
Parties:
The Company, as provider (for itself and on behalf of its
subsidiaries)
Aluminum Corporation of China, as recipient (for itself
and on behalf of its subsidiaries)
Term:
Three years from 1 January 2016 to 31 December 2018
Nature of Transaction:
The Company provided engineering services such as
engine er ing design, engineer ing co ns tr uc tion, a nd
laboring services such as equipment repairs, logistics
management services, etc. to Aluminum Corporation of
China
Price determination:
The price is determined with reference to the comparable
local market prices, which refer to the reference made to
the prices charged or quoted by at least two independent
third parties providing services with comparable scale in
areas where such services were provided under normal
trading conditions
Payment:
Aluminum Corporation of China shall make payment
within three months upon the rendering of services by
the Company and the settlement thereof
For more detailed information on this continuing connected transaction, please refer to
the announcement of the Company dated 28 June 2016.
149
2018 ANNUAL REPORT Connected Transactions (Continued) (K) Labor and Engineering Services Framework Agreement
Date of agreement:
17 September 2018
Parties:
The Company as recipient (for itself and on behalf of its
subsidiaries)
Chalco Steering Intelligent Technology Co., Ltd.* (中鋁視
拓智能科技有限公司) (“Chalco Steering”) as provider, an
associate of Aluminum Corporation of China* (中國鋁業集
團有限公司), the controlling shareholder of the Company
Term:
From 1 January 2018 to 31 December 2020
Nature of Transaction:
Pursuant to the agreement, Chalco Steering shall provide
the Group with engineering services and labor services
such as equipment repairs, intelligent industrial design
and maintenance, etc. The annual cap of transactions
between the Group and Chalco Steering for the three
years from 2018 to 2020 was RMB56 million, RMB100
million and RMB200 million, respectively
Price determination:
The price is determined based on the comparable local
market prices, which means the prices arrived at with
reference to the prices charged or quoted by at least
two independent third parties providing services with
comparable scale in areas where such services were
provided under normal trading conditions
For more detailed information on this continuing connected transaction, please refer to
the announcement of the Company dated 17 September 2018.
150
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) ONE-OFF CONNECTED TRANSACTIONS (NON-EXEMPTED)
RELATED TO ACQUISITION AND DISPOSAL OF ASSETS
Acquisition of Assets by Issuance of Shares and the Related-party
Transaction of the Company
The Company issued 2,118,874,715 A shares to Huarong Ruitong Equity Investment Management
Co., Ltd.* (華融瑞通股權投資管理有限公司), China Life Insurance Company Limited* ( 中國人壽保
險股份有限公司), Shenzhen Zhaoping Chalco Investment Center LLP* (深圳市招平中鋁投資中心（有
限合夥)), China Pacific Life Insurance Co., Ltd.* (中國太平洋人壽保險股份有限公司), China Cinda
Asset Management Co., Ltd.* (中國信達資產管理股份有限公司), BOC Financial Asset Investment
Co., Ltd.* (中銀金融資產投資有限公司), ICBC Financial Asset Investment Co., Ltd.* (工銀金融資產
投資有限公司) and ABC Financial Asset Investment Company Limited* (農銀金融資產投資有限公司)
to acquire 30.7954% equity interests in Chalco Shandong Co., Ltd.* (中鋁山東有限公司), 36.8990%
equity interests in Chalco Zhongzhou Aluminum Co., Ltd.* (中鋁中州鋁業有限公司), 25.6748%
equity interests in Baotou Aluminum Co., Ltd.* (包頭鋁業有限公司) and 81.1361% equity interests
in Chalco Mining Co., Ltd.* (中鋁礦業有限公司) jointly held by the above eight investors.
As China Life is a substantial shareholder of Chalco Shandong and Baotou Aluminum, it is a
connected person of the Company under Chapter 14A of the Hong Kong Listing Rules. Therefore,
the Company’s acquisition of the equity interests in the Target Companies held by China Life by the
issuance of consideration shares to China Life constitutes a connected transaction of the Company
under Chapter 14A of the Hong Kong Listing Rules. As the highest applicable percentage ratio of
the transaction is higher than 5%, it shall be subject to reporting, announcement and independent
shareholders’ approval requirements.
For the details of the Company’s acquisition of assets by issuance of shares, please refer to certain
contents of “Progress on the Acquisition of Assets by Issuance of Shares and the Related-Party
Transaction of the Company” under “10. EXPLANATION OF OTHER SIGNIFICANT EVENTS” as set
out in the section “Significant Events” in this report and the relevant announcement published by
the Company.
151
2018 ANNUAL REPORT Connected Transactions (Continued) Acquisition of Carbon Assets and Equity Interests of Certain
Affiliated Enterprises of Chinalco Assets Operation and
Management Co., Ltd* (中鋁資產經營管理有限公司) by the
Company
At the twenty-eighth meeting of the sixth session of the Board convened by the Company on 18
July 2018, the Resolution in Relation to the Proposed Acquisition of Carbon Assets and Equity
Interests of Certain Affiliated Enterprises of Chinalco Assets Operation and Management Co., Ltd
by the Company was considered and approved, pursuant to which, the Board approved certain
affiliated enterprises of the Company to acquire carbon assets and equity interests of certain
affiliated enterprises of Chinalco Assets Operation and Management Co., Ltd (“Chinalco Assets”) (a
subsidiary of Chinalco, the controlling shareholder of the Company), at a transaction consideration
of approximately RMB736 million. On 30 August 2018, certain affiliated enterprises of the Company
entered into assets transfer agreements or equity transfer agreements with certain affiliated
enterprises of Chinalco Assets, respectively.
For details of the aforesaid matter, please refer to the announcements published by the Company
on 18 July 2018 and 30 August 2018, respectively.
Acquisition of 51% equity interests in Harbin Dongqing Longhua
Logistics Company Limited* (哈爾濱東輕龍華物流有限公司) by
Chalco Logistics Group Co., Ltd.* (中鋁物流集團有限公司)
At the thirty-first meeting of the sixth session of the Board convened by the Company on 17
September 2018, the Resolution in Relation to the Proposed Acquisition of 51% equity interests
in Harbin Dongqing Longhua Logistics Company Limited by Chalco Logistics Group Co., Ltd. was
considered and approved, pursuant to which, the Board approved Chalco Logistics Group Co., Ltd.
(“Chalco Logistics”), a wholly-own subsidiary of the Company, to acquire 51% equity interests
in Harbin Dongqing Longhua Logistics Company Limited (“Longhua Logistics”) (a subsidiary
of Chinalco, the controlling shareholder of the Company), at a transaction consideration of
RMB3,303,600. On the same day, Chalco Logistics entered into the equity transfer agreement with
Longhua Logistics.
152
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) For details of the aforesaid matter, please refer to the announcement published by the Company on
17 September 2018.
Acquisition of Certain Assets of China Great Wall Aluminum
Corporation* (中國長城鋁業有限公司) and its Subsidiaries by
Chalco Mining Co., Ltd.* (中鋁礦業有限公司)
At the thirty-fourth meeting of the sixth session of the Board convened by the Company on 20
November 2018, the Resolution in Relation to the Proposed Acquisition of Certain Assets of China
Great Wall Aluminum Corporation and its Subsidiaries by Chalco Mining Co., Ltd. was considered
and approved, pursuant to which, the Board approved Chalco Mining Co., Ltd.* (中鋁礦業有限公
司) (“Chalco Mining”), a controlled subsidiary of the Company, to acquire certain assets of China
Great Wall Aluminum Corporation* (中國長城鋁業有限公司) (“Great Wall Aluminum”) (a subsidiary
of Chinalco, the controlling shareholder of the Company) and its subsidiaries, at a transaction
consideration of RMB100,062,674. On the same day, Chalco Mining entered into the assets transfer
agreement with Great Wall Aluminum and its subsidiaries. The Company has published relevant
announcement in respect of the above matter.
For details of the aforesaid matter, please refer to the announcement published by the Company on
20 November 2018.
Establishment of Chinalco Overseas Development Co., Ltd.* (中鋁
海外發展有限公司) through Joint Contribution by the Company and
Aluminum Corporation of China
At the twenty-sixth meeting of the sixth session of the Board convened by the Company on 21 June
2018, the Resolution in Relation to the Proposed Establishment of Chinalco Overseas Development
Co., Ltd. through Joint Contribution by the Company and Aluminum Corporation of China was
considered and approved, pursuant to which, each of the Company and Aluminum Corporation
of China would contribute RMB500 million in cash for 50% equity interests in Chinalco Overseas
Development Co., Ltd., respectively. On the same day, the Company entered into the joint venture
contract with Aluminum Corporation of China.
For details of the aforesaid matter, please refer to the announcement published by the Company on
21 June 2018.
153
2018 ANNUAL REPORT Connected Transactions (Continued) ONE-OFF CONNECTED TRANSACTIONS (EXEMPTED)
RELATED TO ACQUISITION AND DISPOSAL OF ASSETS
Transfer of Certain Fixed Assets by Guizhou Branch of Aluminum
Corporation of China Limited to Guizhou Aluminum Plant Co.,
Ltd.* (貴州鋁廠有限責任公司)
At the nineteenth meeting of the sixth session of the Board convened by the Company on 31
January 2018, the Resolution in Relation to the Proposed Transfer of Certain Fixed Assets of the
Guizhou Branch of Aluminum Corporation of China Limited by the Company to Guizhou Aluminum
Plant Co., Ltd. was considered and approved, pursuant to which, the Board approved the Company
to transfer the aboveground constructions and structures and other fixed assets of the previous
project engineering department under Guizhou Branch of Aluminum Corporation of China Limited
(“Guizhou Branch”) to Guizhou Aluminum Plant Co., Ltd. (“Guizhou Aluminum Plant”), at a
transaction consideration of RMB5,813,466. On the same day, Guizhou Branch entered into the
assets transfer agreement with Guizhou Aluminum Plant.
For details of the aforesaid matter, please refer to the announcement published by the Company on
31 January 2018.
154
ALUMINUM CORPORATION OF CHINA LIMITED Connected Transactions (Continued) To the shareholders of Aluminum Corporation of China Limited
(Established in the People’s Republic of China with limited liability)
OPINION
We have audited the consolidated financial statements of Aluminum Corporation of China Limited
(the “Company”) and its subsidiaries (the “Group”) set out on pages 164 to 428, which comprise
the consolidated statement of financial position as at 31 December 2018, and the consolidated
statement of profit or loss and other comprehensive income, the consolidated statement of
changes in equity and the consolidated statement of cash flows for the year then ended, and notes
to the consolidated financial statements, including a summary of significant accounting policies.
In our opinion, the consolidated financial statements give a true and fair view of the consolidated
financial position of the Group as at 31 December 2018, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with
International Financial Reporting Standards (“IFRSs”) issued by the International Accounting
Standards Board (“IASB”) and have been properly prepared in compliance with the disclosure
requirements of the Hong Kong Companies Ordinance.
155
2018 ANNUAL REPORTIndependent Auditor’s Report BASIS FOR OPINION
We conducted our auditing in accordance with International Standards on Auditing (“ISAs”) issued
by the International Auditing and Assurance Standards Board (“IAASB”). Our responsibilities
under those standards are further described in the Auditor’s responsibilities for the audit of the
consolidated financial statements section of our report. We are independent of the Group in
accordance with the Code of Ethics for Professional Accountants (the “Code”) issued by the Hong
Kong Institute of Certified Public Accountants, and we have fulfilled our other ethical responsibilities
in accordance with the Code. We believe that the audit evidence we have obtained is sufficient and
appropriate to provide a basis for our opinion.
KEY AUDIT MATTERS
Key audit matters are those matters that, in our professional judgement, were of most significance
in our audit of the consolidated financial statements of the current period. These matters were
addressed in the context of our audit of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a separate opinion on these matters. For each
matter below, our description of how our audit addressed the matter is provided in that context.
We have fulfilled the responsibilities described in the Auditor’s responsibilities for the audit of
the consolidated financial statements section of our report, including in relation to these matters.
Accordingly, our audit included the performance of procedures designed to respond to our
assessment of the risks of material misstatement of the consolidated financial statements. The
results of our audit procedures, including the procedures performed to address the matters below,
provide the basis for our audit opinion on the accompanying consolidated financial statements.
156
ALUMINUM CORPORATION OF CHINA LIMITEDIndependent Auditor’s Report (Continued) KEY AUDIT MATTERS (CONTINUED)
Key audit matter
How our audit addressed the key audit matter
Impairment of property, plant and equipment
I n c l u d e d o n t h e c o n s o l i d a t e d s t a t e m e n t
of financial position is property, plant and
equipment (“PPE”) balance of RMB106,193
million as of 31 December 2018.
We obtained an understanding, evaluated the
design, and tested the operating effectiveness of
management’s key controls over the impairment
assessment process.
T h e G r o u p i s r e q u i r e d t o r e v i e w P P E f o r
i m p a i r m e n t w h e n e v e r e v e n t s o r c h a n g e s
i n c i r c u m s t a n c e s i n d i c a t e t h a t t h e i r
carrying amounts may not be recoverable.
T h e m a n a g e m e n t p e r f o r m e d i m p a i r m e n t
assessment on such PPE by determining the
recoverable amounts of the cash generating
units (“CGUs”) that the PPE are allocated to.
As a result of the impairment assessment,
impairment provision of RMB7 million was
made for the year ended 31 December 2018.
We focused on this area as the assessments
made by management involved estimation of
future cash flows which required significant
estimates and judgments, including future
price of aluminum and alumina, production
c o s t s , o p e r a t i n g e x p e n s e s a n d d i s c o u n t
rate applied to these forecasted future cash
flows. These estimates and judgments may
be affected by unexpected changes in future
market or economic conditions or discount rate
applied.
The Group’s accounting policies and estimation
of PPE impairment are disclosed in notes 2.12
and 3, and details of the Group’s impairment
testing of PPE are disclosed in note 6 to the
consolidated financial statements.
We compared the methodology used (recoverable
amount calculations based on future discounted
cash flows) by the Group to market and industry
guidelines.
We also assessed the reasonableness of key
assumptions used in the calculations, comprising
future price of aluminium and alumina, production
costs, operating expenses and discount rate.
When assessing these key assumptions, we
discussed them with management to understand
and evaluate management’s basis for determining
the assumptions, and compared them to external
i n d u s t r y o u t l o o k r e p o r t s f r o m a n u m b e r o f
sources. We also involved our valuation experts
to assist us in assessing the reasonableness of
the discount rate used by management.
We evaluated management’s sensitivity analysis
around the key assumptions, to ascertain that
selected adverse changes to key assumptions,
both individually and in aggregate, would not
cause the carrying amount of PPE to exceed the
recoverable amount of the CGU.
We also assessed the adequacy of the Group’s
disclosures included in note 6 to the consolidated
f i n a n c i a l s t a t e m e n t s r e g a r d i n g t h e k e y
assumptions of impairment testing.
157
2018 ANNUAL REPORTIndependent Auditor’s Report (Continued) KEY AUDIT MATTERS (CONTINUED)
Key audit matter
How our audit addressed the key audit matter
Impairment of goodwill
Included on the consolidated statement of
financial position is a goodwill balance of
RMB3,511 million as of 31 December 2018.
We obtained an understanding, evaluated the
design, and tested the operating effectiveness of
management’s key controls over the impairment
assessment process.
The Group is required to, at least annually,
perform impairment assessments of goodwill.
For the purpose of performing impairment
assessments, goodwill has been allocated to
CGUs. The impairment testing was performed
by comparing the recoverable amount of the
CGU and the carrying amount of the CGU.
The determination of the recoverable amount
of the underlying CGUs involved estimates
a n d j u d g m e n t s, i n c l u d i n g f u t u r e p r i c e o f
aluminum and alumina, production costs,
operating expenses, the growth rate used to
estimate future cash flows and discount rate
applied to these forecasted future cash flows
of the underlying CGUs. These estimates and
judgments may be affected by unexpected
c h a n g e s i n f u t u r e m a r k e t o r e c o n o m i c
conditions or discount rates applied.
The Group’s accounting policies and estimation
o f g o o d w i l l i m p a i r m e n t a r e d i s c l o s e d i n
notes 2.12 and 3, and details of the Group’s
impairment testing of goodwill are disclosed
i n n o t e 5 t o t h e c o n s o l i d a t e d f i n a n c i a l
statements.
We compared the methodology used (recoverable
amount calculations based on future discounted
cash flows) by the Group to market and industry
guidelines.
W e a l s o a s s e s s e d t h e r e a s o n a b l e n e s s o f
k e y a s s u m p t i o n s u s e d i n t h e c a l c u l a t i o n s ,
c o m p r i s i n g f u t u r e p r i c e o f a l u m i n u m a n d
alumina, production costs, operating expenses,
growth rate and discount rate. When assessing
these key assumptions, we discussed them
with management to understand and evaluate
m a n a g e m e n t ’ s b a s i s f o r d e t e r m i n i n g t h e
assumptions, and compared them to external
i n d u s t r y o u t l o o k r e p o r t s f r o m a n u m b e r o f
sources. We also involved our valuation experts
to assist us in assessing the reasonableness of
the discount rate used by management.
We evaluated management’s sensitivity analysis
around the key assumptions, to ascertain that
selected adverse changes to key assumptions,
both individually and in aggregate, would not
cause the carrying amount of the CGU to exceed
the recoverable amount of CGU.
We also assessed the adequacy of the Group’s
disclosures included in note 5 to the consolidated
f i n a n c i a l s t a t e m e n t s r e g a r d i n g t h e k e y
assumptions of impairment testing.
158
ALUMINUM CORPORATION OF CHINA LIMITEDIndependent Auditor’s Report (Continued) KEY AUDIT MATTERS (CONTINUED)
Key audit matter
How our audit addressed the key audit matter
Recognition of deferred tax assets
A s a t 31 D e c e m b e r 2018, t h e G r o u p h a d
deferred tax assets on deductible temporary
differences and tax losses carried forward
of RMB1,543 million. The Group recognised
these deferred tax assets to the extent that
it is probable that future taxable profits will
be available to utilise the deferred tax assets.
The recognition of the deferred tax assets was
significant to our audit because the amounts
are material, and the estimation of future
taxable profits is complex and judgmental and
is based on assumptions that are affected
by unexpected changes in future market or
economic conditions.
T h e G r o u p ’ s a c c o u n t i n g p o l i c i e s a n d
e s t i m a t i o n s o n d e f e r r e d t a x a s s e t s a r e
disclosed in notes 2.25 and 3, and details of
deferred tax assets are disclosed in note 11 to
the consolidated financial statements.
We obtained an understanding, evaluated the
design, and tested the operating effectiveness of
management’s key controls over the recognition
and recoverability assessment of deferred tax
assets.
We compared the key assumptions used in the
forecast with the legal framework (in particular
tax rates and the possible utilisation of loss carry
forwards).
We evaluated management’s assumptions in
determining the future available taxable profits,
specifically the future price of aluminum and
alumina by comparing the forecast prices with
the market trend forecasted by external industry
analysts. We involved our tax specialists to assist
us in evaluating the technical merits from a tax
perspective of management’s analysis.
W e a l s o a s s e s s e d t h e a d e q u a c y o f t h e
Group’s disclosures included in note 11 to the
consolidated financial statements regarding
deferred tax assets.
159
2018 ANNUAL REPORTIndependent Auditor’s Report (Continued) OTHER INFORMATION INCLUDED IN THE ANNUAL REPORT
The directors of the Company are responsible for the other information. The other information
comprises the information included in the Annual Report, other than the consolidated financial
statements and our auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we
do not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to
read the other information and, in doing so, consider whether the other information is materially
inconsistent with the consolidated financial statements or our knowledge obtained in the audit
or otherwise appears to be materially misstated. If, based on the work we have performed, we
conclude that there is a material misstatement of this other information, we are required to report
that fact. We have nothing to report in this regard.
R E S P O N S I B I L I T I E S O F T H E D I R E C T O R S F O R T H E
CONSOLIDATED FINANCIAL STATEMENTS
The directors of the Company are responsible for the preparation of the consolidated financial
statements that give a true and fair view in accordance with IFRSs issued by the IASB and the
disclosure requirements of the Hong Kong Companies Ordinance, and for such internal control as
the directors determine is necessary to enable the preparation of consolidated financial statements
that are free from material misstatement, whether due to fraud or error.
In preparing the consolidated financial statements, the directors of the Company are responsible
for assessing the Group’s ability to continue as a going concern, disclosing, as applicable, matters
related to going concern and using the going concern basis of accounting unless the directors of the
Company either intend to liquidate the Group or to cease operations or have no realistic alternative
but to do so.
The directors of the Company are assisted by the Audit Committee in discharging their
responsibilities for overseeing the Group’s financial reporting process.
160
ALUMINUM CORPORATION OF CHINA LIMITEDIndependent Auditor’s Report (Continued) AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and
to issue an auditor’s report that includes our opinion. Our report is made solely to you, as a body,
and for no other purpose. We do not assume responsibility towards or accept liability to any other
person for the contents of this report.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted
in accordance with ISAs will always detect a material misstatement when it exists. Misstatements
can arise from fraud or error and are considered material if, individually or in the aggregate, they
could reasonably be expected to influence the economic decisions of users taken on the basis of
these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgement and maintain
professional scepticism throughout the audit. We also:
•
Identify and assess the risks of material misstatement of the consolidated financial
statements, whether due to fraud or error, design and perform audit procedures responsive
to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis
for our opinion. The risk of not detecting a material misstatement resulting from fraud is
higher than for one resulting from error, as fraud may involve collusion, forgery, intentional
omissions, misrepresentations, or the override of internal control.
•
Obtain an understanding of internal control relevant to the audit in order to design audit
procedures that are appropriate in the circumstances, but not for the purpose of expressing
an opinion on the effectiveness of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies used and the reasonableness of
accounting estimates and related disclosures made by the directors.
161
2018 ANNUAL REPORTIndependent Auditor’s Report (Continued) AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
•
Conclude on the appropriateness of the directors’ use of the going concern basis of
accounting and, based on the audit evidence obtained, whether a material uncertainty exists
related to events or conditions that may cast significant doubt on the Group’s ability to
continue as a going concern. If we conclude that a material uncertainty exists, we are required
to draw attention in our auditor’s report to the related disclosures in the consolidated financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are
based on the audit evidence obtained up to the date of our auditor’s report. However, future
events or conditions may cause the Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content of the consolidated financial
statements, including the disclosures, and whether the consolidated financial statements
represent the underlying transactions and events in a manner that achieves fair presentation.
•
Obtain sufficient appropriate audit evidence regarding the financial information of the entities
or business activities within the Group to express an opinion on the consolidated financial
statements. We are responsible for the direction, supervision and performance of the group
audit. We remain solely responsible for our audit opinion.
We communicate with the Audit Committee regarding, among other matters, the planned scope
and timing of the audit and significant audit findings, including any significant deficiencies in internal
control that we identify during our audit.
We also provide the Audit Committee with a statement that we have complied with relevant ethical
requirements regarding independence and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
162
ALUMINUM CORPORATION OF CHINA LIMITEDIndependent Auditor’s Report (Continued) AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE
CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
From the matters communicated with the Audit Committee, we determine those matters that were
of most significance in the audit of the consolidated financial statements of the current period and
are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances,
we determine that a matter should not be communicated in our report because the adverse
consequences of doing so would reasonably be expected to outweigh the public interest benefits
of such communication.
The engagement partner on the audit resulting in this independent auditor’s report is Mr. Cheong
Ming Yik.
Ernst & Young
Certified Public Accountants
22/F CITIC Tower
1 Tim Mei Avenue
Central, Hong Kong
28 March 2019
163
2018 ANNUAL REPORTIndependent Auditor’s Report (Continued) 31 December
31 December
Notes
2018
2017
(restated)
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Investment properties
Land use rights
Investments in joint ventures
Investments in associates
Available-for-sale investments
Equity investments designated at fair value
through other comprehensive income
Deferred tax assets
Other non-current assets
Total non-current assets
Current assets
Inventories
Trade and notes receivables
Other current assets
5
6
7
8
9 (a)
9 (b)
10
10
11
12
13
14
15
Financial assets at fair value through profit
or loss
Restricted cash
Cash and cash equivalents
36.1, 36.2
16
16
12,879,365
106,193,369
1,156,006
4,280,291
3,393,349
6,363,462
–
1,729,825
1,542,569
4,442,644
10,637,633
95,627,577
1,332,370
3,577,012
6,007,624
6,935,030
1,928,201
–
1,606,150
3,520,892
141,980,880
131,172,489
20,459,668
8,100,532
9,022,953
16,141
2,165,288
19,130,652
20,547,556
8,008,937
10,074,225
9,534
2,168,192
27,835,866
Total current assets
58,895,234
68,644,310
Total assets
200,876,114
199,816,799
164
ALUMINUM CORPORATION OF CHINA LIMITEDCONSOLIDATED STATEMENT OF FINANCIAL POSITION31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)
EQUITY AND LIABILITIES
EQUITY
Equity attributable to owners of the parent
Share capital
Other reserves
Accumulated losses
Non-controlling interests
Total equity
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings
Other non-current liabilities
Deferred tax liabilities
31 December
31 December
Notes
2018
2017
(restated)
17
18
19
21
11
14,903,798
40,327,573
14,903,798
28,116,602
(2,816,481)
(3,332,371)
52,414,890
39,688,029
15,254,312
26,054,567
67,669,202
65,742,596
54,207,386
2,438,164
1,812,805
40,289,703
2,453,660
993,742
Total non-current liabilities
58,458,355
43,737,105
165
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
Current liabilities
Trade and notes payables
Other payables and accrued liabilities
Contract liabilities
Financial liabilities at fair value through profit
31 December
31 December
Notes
2018
2017
(restated)
23
22
14,007,600
11,532,504
1,579,322
12,360,441
14,692,899
–
or loss
Income tax payable
36.1, 36.2
1,766
113,783
89,426
213,262
Interest-bearing loans and borrowings
19
47,513,582
62,981,070
Total current liabilities
74,748,557
90,337,098
Total liabilities
133,206,912
134,074,203
Total equity and liabilities
200,876,114
199,816,799
Net current liabilities
15,853,323
21,692,788
Total assets less current liabilities
126,127,557
109,479,701
The accompanying notes are an integral part of these financial statements.
Lu Dongliang
Director
Wang Jun
Chief Financial Officer
166
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)CONSOLIDATED STATEMENT OF FINANCIAL POSITION (CONTINUED)
Revenue
Cost of sales
Gross profit
Selling and distribution expenses
General and administrative expenses
Research and development expenses
Impairment losses on property, plant and
equipment
Impairment losses on financial assets
Impairment losses on investments in joint ventures
Other income
Other gains, net
Finance income
Finance costs
Share of profits and losses of:
Joint ventures
Associates
Profit before income tax
Income tax expense
Profit for the year
Profit attributable to:
Owners of the parent
Non-controlling interests
Notes
2018
2017
(restated)
4
180,240,154
(167,029,416)
181,020,428
(166,290,235)
6
26
27
28
28
9 (a)
9 (b)
25
31
13,210,738
14,730,193
(2,496,933)
(3,958,067)
(626,873)
(7,450)
(107,841)
(216,953)
135,367
921,904
492,232
(4,882,496)
(2,372,966)
(4,549,206)
(498,234)
(16,200)
–
–
89,873
319,382
706,690
(5,203,424)
(199,452)
39,335
8,151
(165,249)
2,303,511
3,049,010
(822,499)
(643,734)
1,481,012
2,405,276
746,477
734,535
1,413,028
992,248
1,481,012
2,405,276
Basic and diluted earnings per share attributable
to ordinary equity holders of the parent
(expressed in RMB per share)
32
0.037
0.087
167
2018 ANNUAL REPORTCONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOMEYear ended 31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)
Profit for the year
1,481,012
2,405,276
2018
2017
(restated)
Other comprehensive income, net of tax:
Other comprehensive income that may be
reclassified to profit or loss in subsequent
periods:
Available-for-sale investments:
Changes in fair value
Reclassification adjustments for gains
included in profit or loss
– Gain on disposal
Income tax effect
–
–
–
(5,206)
(45,039)
11,180
Exchange differences on translation of foreign
operations
(120,756)
(634,793)
Net other comprehensive income that may be
reclassified to profit or loss in
subsequent periods
Other comprehensive income that will not be
reclassified to profit or loss in subsequent
periods
Equity investments designated at fair value
through other comprehensive income:
Changes in fair value
Income tax effect
Net other comprehensive income that will not
be reclassified to profit or loss in subsequent
periods
(120,756)
(673,858)
(15,491)
3,769
(11,722)
–
–
–
168
ALUMINUM CORPORATION OF CHINA LIMITEDYear ended 31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONTINUED)
Total other comprehensive income, net of tax
(132,478)
(673,858)
Total comprehensive income for the year
1,348,534
1,731,418
2018
2017
(restated)
Total comprehensive income for the year
attributable to:
Owners of the parent
Non-controlling interests
614,638
733,896
739,170
992,248
1,348,534
1,731,418
Details of the dividends payable and proposed for the year are disclosed in note 33 to the financial
statements.
The accompanying notes are an integral part of these financial statements.
169
2018 ANNUAL REPORTYear ended 31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME (CONTINUED)
Attributable to owners of the parent
Capital reserves
Gain on
available-
for-sale
financial
Foreign
Other
Statutory
assets/fair
Other
currency
Share
Share
capital
capital
premium
reserves
surplus
reserve
Special
reserve
(note 17)
value
equity
translation
Accumulated
reserve
instruments
reserve
losses
Total
interests
Non-
controlling
Total
equity
At 31 December 2017
14,903,798
18,616,551
952,878
5,867,557
144,361
6,836
2,019,288
335,276
(3,368,095)
39,478,450
26,035,429
65,513,879
Adjustment due to business combinations under
common control (note 38)
Effect of adoption of IFRS 9 (note 2.2)
–
–
171,282
–
–
–
–
–
2,573
–
–
10,835
–
–
–
–
35,724
209,579
19,138
228,717
(133,346)
(122,511)
(16,925)
(139,436)
At 1 January 2018 (restated)
14,903,798
18,787,833
952,878
5,867,557
146,934
17,671
2,019,288
335,276
(3,465,717)
39,565,518
26,037,642
65,603,160
Profit for the year
Other comprehensive income for the year
Changes in fair value of equity investments
at fair value through other comprehensive
income, net of tax
Exchange differences on translation of foreign
operations
Total comprehensive income for the year
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(11,083)
–
(11,083)
–
–
–
–
–
–
(120,756)
746,477
746,477
734,535
1,481,012
–
–
(11,083)
(639)
(11,722)
(120,756)
–
(120,756)
(120,756)
746,477
614,638
733,896
1,348,534
170
ALUMINUM CORPORATION OF CHINA LIMITEDCONSOLIDATED STATEMENT OF CHANGES IN EQUITYYear ended 31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)
Attributable to owners of the parent
Capital reserves
Gain on
available-
for-sale
financial
Foreign
Other
Statutory
assets/fair
Other
currency
Share
Share
capital
capital
premium
reserves
surplus
reserve
Special
reserve
(note 17)
value
equity
translation
Accumulated
reserve
instruments
reserve
losses
Total
interests
Non-
controlling
Total
equity
Business combinations under common control
(note 38)
Capital injection from non-controlling
shareholders
Capital injection from the parent company
Acquisition of non-controlling interests
Restructure of subsidiaries
Disposal of subsidiaries
Issuance of senior perpetual securities
Release of deferred government subsidies
Equity exchange arrangement (note 18 (b))
Other appropriations
Share of reserves of joint ventures and
associates
Other equity instruments’ distribution
Dividends distribution before business
combinations under common control
Dividends distributed by subsidiaries to non-
controlling shareholders
Acquisition of subsidiaries
Repayment of senior perpetual securities
by a subsidiary
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(443,582)
78,271
69,885
(218)
(77,511)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,200
10,735,214
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
8,119
2,051
–
–
–
(11,166)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1,988,000
–
–
–
–
(19,288)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(443,582)
–
(443,582)
78,271
759,350
837,621
69,885
–
69,885
(218)
(3,547)
(3,765)
(77,511)
77,511
–
–
(1,160)
(1,160)
1,988,000
2,200
–
–
10,735,214
(10,735,214)
8,119
(1,514)
1,988,000
2,200
–
6,605
2,051
–
2,051
(90,722)
(110,010)
(300,538)
(410,548)
(6,519)
(6,519)
–
(6,519)
–
–
–
–
(605,416)
(605,416)
(11,166)
1,468,435
1,457,269
–
(2,175,133)
(2,175,133)
At 31 December 2018
14,903,798
18,414,678*
11,690,292*
5,867,557*
145,938*
6,588*
3,988,000*
214,520*
(2,816,481)
52,414,890
15,254,312
67,669,202
171
2018 ANNUAL REPORTYear ended 31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Attributable to owners of the parent
Capital reserves
Other
capital
Share
premium
reserves
Statutory
surplus
reserve
Special
reserve
Share
capital
(note 17)
Gain on
available-
for-sale
financial
Foreign
currency
translation
Accumulated
Other
equity
Non-
controlling
assets
instruments
reserve
losses
Total
interests
Total
equity
At 1 January 2017
14,903,798
17,913,827
952,878
5,867,557
131,510
45,901
2,019,288
970,069
(4,636,530)
38,168,298
17,618,510
55,786,808
Adjustment due to business combinations
under common control (note 38)
–
169,242
–
–
692
–
–
–
1,911
171,845
10,535
182,380
At 1 January 2017 (restated)
14,903,798
18,083,069
952,878
5,867,557
132,202
45,901
2,019,288
970,069
(4,634,619） 38,340,143
17,629,045
55,969,188
Profit for the year
Other comprehensive income for the year
Changes in fair value of available-for-sale
financial assets, net of tax
Disposal of available-for-sale financial assets,
net of tax
Exchange differences on translation of foreign
operations
Total comprehensive income for the year
Business combinations under common control
Disposal of subsidiaries
Disposal of equity interest in subsidiaries
without loss of control
Deemed disposal of a subsidiary
Capital injection from non-controlling
shareholders
Capital injection from the parent company
Acquisition of non-controlling interests
Acquisition of a subsidiary
Other appropriations
Share of reserves of joint ventures and
associates
Repayment of senior perpetual securities
Other equity instruments’ distribution
Dividends distributed by subsidiaries to non-
controlling shareholders
Dividends distribution before business under
common control
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(242,564)
–
38,189
–
1,887,824
2,040
(980,725)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(6,149)
–
–
–
–
–
–
24,577
(3,696)
–
–
–
–
–
(4,758)
(34,307)
–
(39,065)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(634,793)
1,413,028
1,413,028
992,248
2,405,276
–
–
–
(4,758)
(34,307)
(634,793)
–
–
–
(4,758)
(34,307)
(634,793)
(634,793)
1,413,028
739,170
992,248
1,731,418
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(242,564)
(6,149)
38,189
–
–
(242,564)
6,929
(38,189)
(96,568)
780
–
(96,568)
1,887,824
10,831,897
12,719,721
2,040
–
2,040
(980,725)
(432,564)
(1,413,289)
–
24,577
416,353
34,166
416,353
58,743
(3,696)
–
(3,696)
–
(2,584,682)
(2,584,682)
(110,000)
(110,000)
(391,933)
(501,933)
–
–
(312,135)
(312,135)
(780)
(780)
–
(780)
At 31 December 2017
14,903,798
18,787,833
952,878
5,867,557
146,934
6,836
2,019,288
335,276
(3,332,371)
39,688,029
26,054,567
65,742,596
*
These reserves accounts comprise the consolidated other reserves of RMB40,328 million (31 December
2017(restated): RMB28,117 million) in the consolidated statement of financial position.
The accompanying notes are an integral part of these financial statements.
172
ALUMINUM CORPORATION OF CHINA LIMITEDYear ended 31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (CONTINUED)
Net cash flows from operating activities
34
13,018,176
13,205,572
Notes
2018
2017
(restated)
Investing activities
Purchases of intangible assets
Purchases of property, plant and equipment
Purchases of land use rights
Proceeds from disposal of property, plant and
equipment
Proceeds from disposal of intangible assets
Proceeds from disposal of land use rights
Proceeds from disposal of an associate
Acquisition of subsidiaries
Proceeds from disposal and deemed disposal of
subsidiaries and business, net of cash
Interest received from unpaid disposal proceeds
Interest received from loans and borrowings to
others
Investments in joint ventures
Investments in associates
Return of investment from/(purchase of) equity
38
(103,304)
(6,745,880)
(2,838)
(418,203)
(8,891,794)
(59,215)
564,791
–
–
30,816
255,650
460,982
11,730
5,824
–
255,152
6,558
–
5,631,298
117,586
–
(90,000)
(266,300)
118,015
(15,414)
(857,317)
investments
10
198,000
(1,848,000)
Proceeds from dividends and disposal of equity
investments
Dividend received
Decrease in time deposits
Cash paid for settlement of futures, options and
forward contracts
Loans to related parties
Loans repaid by related parties
Asset-related government grants received
35
109,914
327,983
–
(13,288)
–
32,215
167,314
124,536
44,960
72,700
93,677
(1,600,000)
1,010,169
145,825
Net cash flows used in investing activities
(5,528,369)
(5,597,489)
173
2018 ANNUAL REPORTCONSOLIDATED STATEMENT OF CASH FLOWYear ended 31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)
Financing activities
Proceeds from gold leasing arrangements
Repayments of gold leasing arrangements
Purchase of non-controlling interests
Proceeds from issuance of bonds and notes, net of
issuance costs
Repayments of senior perpetual securities
Proceeds from issuance of perpetual securities, net
of issuance costs
Repayments of bonds and notes
Senior perpetual securities’ distribution paid
Drawdown of short-term and long-term loans
Repayments of short-term and long-term loans
Cash consideration paid for business combination
Notes
2018
2017
(restated)
2,323,105
(7,519,283)
(3,765)
7,804,083
(4,000,000)
(1,413,289)
13,185,034
3,478,550
(2,417,758)
(2,895,910)
1,988,000
–
(21,815,000)
(16,300,000)
(410,548)
(501,933)
76,899,591
83,758,749
(70,546,537)
(78,866,459)
under common control
(373,495)
(176,848)
Proceeds from sale and leaseback finance leases,
net of deposit and transaction costs
1,204,843
1,000,036
Capital injection from the parent company to the
entity acquired under common control
Finance lease installment paid
Capital injection from non-controlling shareholders
Dividends paid by subsidiaries to non-controlling
shareholders
Interest paid
69,885
–
(3,915,404)
(2,462,250)
837,621
12,718,761
(327,645)
(309,465)
(5,445,120)
(5,233,019)
Net cash flows used in financing activities
(16,266,476)
(3,398,994)
Net (decrease)/increase in cash and cash
equivalents
Cash and cash equivalents at beginning of year
Effect of foreign exchange rate changes, net
(8,776,669)
27,835,866
4,209,089
23,848,344
71,455
(221,567)
Cash and cash equivalents at 31 December
16
19,130,652
27,835,866
The accompanying notes are an integral part of these financial statements.
174
ALUMINUM CORPORATION OF CHINA LIMITEDYear ended 31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)CONSOLIDATED STATEMENT OF CASH FLOW (CONTINUED)
1. GENERAL INFORMATION
Aluminum Corporation of China Limited (the “Company”) (中國鋁業股份有限公司) and
its subsidiaries (together the “Group”) are principally engaged in the manufacture and
distribution of alumina, primary aluminum and energy products. The Group is also engaged
in the development of bauxite-related resources, the production, fabrication and distribution
of bauxite, carbon and relevant non-ferrous metal products and the trading and logistics and
transport services of non-ferrous metal products and coal products.
The Company is a joint stock company which is domiciled and was established on 10
September 2001 in the People’s Republic of China (the “PRC”) with limited liability. The
address of its registered office is No. 62 North Xizhimen Street, Haidian District, Beijing, the
PRC.
The Company’s shares have been listed on the Main Board of the Hong Kong Stock Exchange
and the New York Stock Exchange since 2001. The Company also listed its A shares on the
Shanghai Stock Exchange in 2007.
In the opinion of the directors, the ultimate holding company and the parent of the Company is
Aluminum Corporation of China (“Chinalco”) (中國鋁業集團有限公司), a company incorporated
and domiciled in the PRC and wholly owned by the State-owned Assets Supervision and
Administration Commission of the State Council.
175
2018 ANNUAL REPORTNOTES TO FINANCIAL STATEMENTS31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated) 1. GENERAL INFORMATION (CONTINUED)
Information about subsidiaries
Particulars of the Company’s principal subsidiaries are as follows:
Name
Place of registration
and business
Registered
capital
Principal activities
Percentage of equity
attributable to
the Company
Direct
Indirect
Shanxi Huaxing Aluminum Co. Ltd.
(“Shanxi Huaxing”) (山西華興鋁
業有限公司)
PRC/Mainland China
1,850,000 Manufacture and distribution of
60.00%
40.00%
alumina
Baotou Aluminum Co., Ltd.
PRC/Mainland China
(“Baotou Aluminum”) (包頭鋁業
有限公司)
China Aluminum International
Trading Co., Ltd. (“Chalco
Trading”) (中鋁國際貿易有限公
司)
Shanxi Huasheng Aluminum Co.,
Ltd. (“Shanxi Huasheng”) (山西
華聖鋁業有限公司)
Chalco Shanxi New Material Co.,
Ltd. (“Shanxi New Material”) (中
鋁山西新材料有限公司)
2,245,510 Manufacture and distribution of
primary aluminum, aluminum
alloy and related fabricated
products and carbon products
74.33%
PRC/Mainland China
1,731,111
Import and export activities
100.00%
PRC/Mainland China
1,000,000 Manufacture and distribution of
primary aluminum, aluminum
alloy and carbon-related
products
51.00%
PRC/Mainland China
4,279,601 Manufacture and distribution of
85.98%
Zunyi Aluminum Co., Ltd. (遵義鋁
PRC/Mainland China
業股份有限公司)
Shandong Huayu Alloy Materials
Co., Ltd. (“Shandong Huayu”)
(山東華宇合金材料有限公司)
Chalco Hong Kong Ltd. (“Chalco
Hong Kong”) (中國鋁業香港有限
公司)
Chalco Mining Co., Ltd. (“Chalco
Mining”) (中鋁礦業有限公司)
PRC/Mainland China
Hong Kong
PRC/Mainland China
alumina, primary aluminum
and anode carbon products
and electricity generation and
supply
3,204,899 Manufacture and distribution of
primary aluminum and alumina
1,627,697 Manufacture and distribution of
aluminum alloy
67.445%
55.00%
Overseas investments and
100.00%
HKD849,940
in thousand
alumina import and export
activities
4,028,859 Manufacture, acquisition and
distribution of bauxite mines,
limestone ore, manufacturing
and distribution of alumina and
carbon products
Thermoelectric supply and
investment management
18.86%
100.00%
–
–
–
–
–
–
–
–
–
Chalco Energy Co., Ltd. (中鋁能源
PRC/Mainland China
819,993
有限公司)
176
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
1. GENERAL INFORMATION (CONTINUED)
Information about subsidiaries (Continued)
Name
Place of registration
and business
Registered
capital
Principal activities
Percentage of equity
attributable to
the Company
Direct
Indirect
China Aluminum Ningxia Energy
Group Co., Ltd. (“Ningxia
Energy”) (中鋁寧夏能源集團)
Guizhou Huajin Aluminum Co., Ltd.
(“Guizhou Huajin”) (貴州華錦鋁
業有限公司)
PRC/Mainland China
5,025,800
Thermal power, wind power and
solar power generation, coal
mining, and power-related
equipment manufacturing
70.82%
PRC/Mainland China
1,000,000 Manufacture and distribution of
60.00%
alumina
Chalco Zhengzhou Research
PRC/Mainland China
214,858
Research and development
100.00%
Institute of Non-ferrous Metal
Co., Ltd. (中國鋁業鄭州有色金屬
研究院有限公司)
services
Chalco Shandong Co., Ltd.
PRC/Mainland China
3,808,995 Manufacture and distribution of
69.20%
alumina
PRC/Mainland China
5,071,235 Manufacture and distribution of
63.10%
alumina
PRC/Mainland China
558,752
Logistic transportation
100.00%
–
–
–
–
–
–
PRC/Mainland China
270,000 Manufacture and distribution of
primary aluminum
33.00%
33.00%
(“Chalco Shandong”) (中鋁山東
有限公司)
Chalco Zhongzhou Aluminum Co.,
Ltd. (“Zhongzhou Aluminum”)
(中鋁中州鋁業有限公司)
China Aluminum Logistics Group
Corporation Co., Ltd. (中鋁物流
集團有限公司)
Chinalco Shanxi Jiaokou Xinghua
Technology Ltd. (“Xinghua
Technology”) (中鋁集團山西交口
興華科技股份有限公司)
Chalco Shanghai Company Limited
(“Chalco Shanghai”) (中鋁（上海）
有限公司)
PRC/Mainland China
968,300
Trading and engineering project
100.00%
management
Shanxi China Huarun Co., Ltd.
PRC/Mainland China
1,641,750 Manufacture and distribution of
40.00%
(“Shanxi Zhongrun”) (山西中鋁華
潤有限公司)
Guizhou Huaren New Material Co.,
Ltd. (“Guizhou Huaren”) (貴州華
仁新材料有限公司)
primary aluminum
PRC/Mainland China
1,200,000 Manufacture and distribution of
40.00%
primary aluminum
China Aluminum International
PRC/Mainland China
1,030,000
Import and export activities
100.00%
Trading Group Co. Ltd. (中鋁國際
貿易集團有限公司)
Chalco Materials Co. Ltd.(中鋁物資
PRC/Mainland China
1,000,000
Purchase materials
100.00%
有限公司)
–
–
–
–
–
177
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
1. GENERAL INFORMATION (CONTINUED)
Information about subsidiaries (Continued)
The above table lists the subsidiaries of the Company which, in the opinion of the directors,
principally affected the results of the year or formed a substantial part of the net assets of the
Group. To give details of the other subsidiaries would, in the opinion of the directors, result in
particulars of excessive length.
The English names represent the best effort made by management of the Group in translating
the subsidiaries’ Chinese name as they do not have any official English names.
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES
The principal accounting policies applied in the preparation of these financial statements
are set out below. These policies have been consistently applied to all the years presented,
unless otherwise stated.
2.1 Basis of preparation
The consolidated financial statements have been prepared in accordance with
International Financial Reporting Standards (“IFRSs”) issued by the International
Accounting Standards Board (the “IASB”) and the disclosure requirements of the
Hong Kong Companies Ordinance. They have been prepared under the historical cost
convention, except for equity investments at fair value through other comprehensive
income and financial assets and liabilities at fair value through profit or loss which have
been measured at fair value.
These financial statements are presented in thousands of Chinese Renminbi (“RMB”)
unless otherwise stated.
178
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.1 Basis of preparation (Continued)
Going concern
As at 31 December 2018, the Group’s current liabilities exceeded its current assets by
approximately RMB15,853 million (31 December 2017 (restated): RMB21,693 million).
The directors of the Company have considered the Group’s available sources of funds as
follows:
•
•
The Group’s expected net cash inflows from operating activities in 2019;
Unutilised banking facilities of approximately RMB121,518 million as at 31
December 2018, of which amounts totalling RMB92,582 million will be subject to
renewal during the next 12 months. The directors of the Company are confident
that these banking facilities could be renewed upon expiration based on the
Group’s past experience and good credit standing; and
•
Other available sources of financing from banks and other financial institutions
given the Group’s credit history.
The directors of the Company believe that the Group has adequate resources to
continue operations for the foreseeable future of not less than 12 months from 31
December 2018. The directors of the Company therefore are of the opinion that it is
appropriate to adopt the going concern basis in preparing the consolidated financial
statements.
179
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.1 Basis of preparation (Continued)
Consolidation
The consolidated financial statements comprise the financial statements of the
Company and all of its subsidiaries for the year ended 31 December 2018. Control
is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through its
power over the investee. Specifically, the Group controls an investee if and only if the
Group has:
•
Power over the investee (i.e, existing rights that give it the current ability to direct
the relevant activities of the investee);
•
Exposure, or rights, to variable returns from its involvement with the investee;
and
•
The ability to use its power over the investee to affect its returns.
Generally, there is a presumption that a majority of voting rights result in control. To
support this presumption and when the Group has less than a majority of the voting or
similar rights of an investee, the Group considers all relevant facts and circumstances in
assessing whether it has power over an investee, including:
•
•
•
The contractual arrangement with the other vote holders of the investee;
Rights arising from other contractual arrangements; and
The Group’s voting rights and potential voting rights.
180
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.1 Basis of preparation (Continued)
Consolidation (Continued)
The Group reassesses whether or not it controls an investee if facts and circumstances
indicate that there are changes to one or more of the three elements of control.
Consolidation of a subsidiary begins when the Group obtains control over the subsidiary
and ceases when the Group loses control of the subsidiary. The financial statements
of the subsidiaries are prepared for the same reporting period as the Company using
consistent accounting policies. Assets, liabilities, income and expenses of a subsidiary
acquired or disposed of during the year are included in the consolidated statement of
financial position and consolidated statement of profit or loss and other comprehensive
income from the date the Group gains control or until the date the Group ceases to
control the subsidiary.
Profit or loss and each component of other comprehensive income (“OCI”) are
attributed to the equity holders of the parent of the Group and to the non-controlling
interests, even if this results in the non-controlling interests having a deficit balance. All
intra-group assets and liabilities, equity, income, expenses and cash flows relating to
transactions between members of the Group are eliminated in full on consolidation.
A change in the ownership interest of a subsidiary, without a loss of control, is
accounted for as an equity transaction. If the Group loses control over a subsidiary, it:
•
•
•
•
•
•
•
Derecognises the assets (including goodwill) and liabilities of the subsidiary;
Derecognises the carrying amount of any non-controlling interests;
Derecognises the cumulative translation differences recorded in equity;
Recognises the fair value of the consideration received;
Recognises the fair value of any investment retained;
Recognises any surplus or deficit in profit or loss; and
Reclassifies the parent’s share of components previously recognised in OCI to
profit or loss or retained earnings, as appropriate, as would be required if the
Group had directly disposed of the related assets or liabilities.
181
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.1 Basis of preparation (Continued)
Consolidation (Continued)
(a) Merger accounting for business combinations under common control
The consolidated financial statements incorporate the financial statements of
the combining entities or businesses in business combinations under common
control as if they had been combined from the date when the combining entities
or businesses first came under the control of the ultimate holding company.
The net assets of the combining entities or businesses are consolidated using the
carrying amount from the ultimate holding company’s perspective. No amount is
recognised for goodwill or the excess of the Group’s interest in the book value of
the net assets over cost at the time of the common control combination, to the
extent of the continuation of the ultimate holding company’s interest.
The consolidated statement of profit or loss and other comprehensive income
includes the results of each of the combining entities or businesses from
the earliest date presented or since the date when the combining entities or
businesses first came under common control, where this is a shorter period,
regardless of the date of the common control combination.
The comparative financial data have been restated to reflect the business
combinations under common control which occurred during this year as disclosed
in note 38.
Transaction costs, including professional fees, registration fees, costs of
furnishing information to shareholders, costs or losses incurred in combining
operations of the previously separate businesses and other costs incurred in
relation to the common control combination that is to be accounted for by using
the merger accounting method are recognised as expenses in the period in which
they are incurred.
182
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.1 Basis of preparation (Continued)
Consolidation (Continued)
(b) Acquisition method of accounting for other business combinations
The acquisition method of accounting is used to account for the acquisition
of subsidiaries by the Group, other than common control combinations. The
considerations transferred for the acquisition of a subsidiary are the fair values
of the assets transferred, the liabilities incurred to the former owners of the
acquiree and the equity interests issued by the Group. The consideration
transferred includes the fair value of any asset or liability resulting from a
contingent consideration arrangement. Acquisition-related costs are expensed
as incurred. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at
the acquisition date. On an acquisition-by-acquisition basis, the Group recognises
any non-controlling interest in the acquiree at the non-controlling interest’s
proportionate share of the recognised amounts of the acquiree’s identifiable net
assets. The excess of the consideration transferred, the amount recognised for
non-controlling interest in the acquiree and the acquisition-date fair value of any
previous equity interest in the acquiree over the fair value of the identifiable net
assets acquired is recorded as goodwill.
For each business combination, the Group elects whether to measure the
non-controlling interests in the acquiree that are present ownership interests
and entitle their holders to a proportionate share of net assets in the event of
liquidation at fair value or at the proportionate share of the acquiree’s identifiable
net assets. All other components of non-controlling interests are measured at fair
value. Acquisition-related costs are expensed as incurred.
When the Group acquires a business, it assesses the financial assets and
liabilities assumed for appropriate classification and designation in accordance
with the contractual terms, economic circumstances and pertinent conditions as
at the acquisition date. This includes the separation of embedded derivatives in
host contracts of the acquiree.
183
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.1 Basis of preparation (Continued)
Consolidation (Continued)
(b) Acquisition method of accounting for other business combinations
(Continued)
If the business combination is achieved in stages, the previously held equity
interest is remeasured at its acquisition date fair value and any resulting gain or
loss is recognised in profit or loss.
Any contingent consideration to be transferred by the acquirer is recognised at
fair value at the acquisition date. Contingent consideration classified as an asset
or liability is measured at fair value with changes in fair value recognised in profit
or loss. Contingent consideration that is classified as equity is not remeasured
and subsequent settlement is accounted for within equity.
(c) Subsidiaries
A subsidiary is an entity, directly or indirectly, controlled by the Company. Control
is achieved when the Group is exposed, or has rights, to variable returns from its
involvement with the investee and has the ability to affect those returns through
its power over the investee (i.e., existing rights that give the Group the current
ability to direct the relevant activities of the investee).
When the Company has, directly or indirectly, less than a majority of the voting
or similar rights of an investee, the Group considers all relevant facts and
circumstances in assessing whether it has power over an investee, including:
(a)
the contractual arrangement with the other vote holders of the investee;
(b)
rights arising from other contractual arrangements; and
(c)
the Group’s voting rights and potential voting rights.
184
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.1 Basis of preparation (Continued)
Consolidation (Continued)
(c) Subsidiaries (Continued)
Subsidiaries are fully consolidated from the date on which control is transferred
to the Group. They are de-consolidated from the date that control ceases.
Inter-company transactions, balances, income and expenses on transactions
between group companies are eliminated. Profits and losses resulting from
inter-company transactions that are recognised in assets are also eliminated.
Amounts reported by subsidiaries have been adjusted where necessary in the
consolidated financial statements to conform with the policies adopted by the
Group.
In the Company’s statement of financial position, as permitted under IFRS 1, the
investments in subsidiaries acquired prior to 1 January 2008, being the date of
transition to IFRS, are stated at deemed cost as required under the previously
adopted accounting standards. Subsidiaries acquired after that date that are not
classified as held for sale in accordance with IFRS 5 Non-current Assets Held for
Sale and Discontinued Operations are stated at cost less provision for impairment
losses. The results of subsidiaries are accounted for by the Company on the basis
of dividends received and receivable.
185
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures
The Group has adopted the following new and revised IFRSs for the first time for the
current year’s financial statements.
Amendments to IFRS 2
Classification and Measurement of Share-based
Payment Transactions
Amendments to IFRS 4
Applying IFRS 9 Financial Instruments with IFRS 4
IFRS 9
IFRS 15
Insurance Contracts
Financial Instruments
Revenue from Contracts with Customers
Amendments to IFRS 15
Clarifications to IFRS 15 Revenue from Contracts
with Customers
Amendments to IAS 40
Transfers of Investment Property
IFRIC 22
Foreign Currency Transactions and Advance
Consideration
Annual Improvements
Amendments to IFRS 1 and IAS 28
2014–2016 Cycle
Except for the amendments to IFRS 4 and Annual Improvements 2014–2016 Cycle,
which are not relevant to the preparation of the Group’s financial statements, the nature
and the impact of the new and revised IFRSs are described below:
186
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(a) Amendments to IFRS 2 address three main areas: the effects of vesting
conditions on the measurement of a cash-settled share-based payment
transaction; the classification of a share-based payment transaction with
net settlement features for withholding a certain amount in order to meet
an employee’s tax obligation associated with the share-based payment; and
accounting where a modification to the terms and conditions of a share-based
payment transaction changes its classification from cash-settled to equity-settled.
T h e a m e n d m e n t s c l a r i f y t h a t t h e a p p r o a c h u s e d t o a c c o u n t f o r v e s t i n g
conditions when measuring equity-settled share-based payments also applies to
cash-settled share-based payments. The amendments introduce an exception
so that a share-based payment transaction with net share settlement features
for withholding a certain amount in order to meet the employee’s tax obligation
is classified in its entirety as an equity-settled share-based payment transaction
when certain conditions are met. Furthermore, the amendments clarify that if
the terms and conditions of a cash-settled share-based payment transaction are
modified, with the result that it becomes an equity-settled share-based payment
transaction, the transaction is accounted for as an equity-settled transaction
from the date of the modification. The amendments have had no impact on the
financial position or performance of the Group as the Group does not have any
cash-settled share-based payment transactions and has no share-based payment
transactions with net settlement features for withholding tax.
(b)
IFRS 9 Financial Instruments replaces IAS 39 Financial Instruments: Recognition
and Measurement for annual periods beginning on or after 1 January 2018,
bringing together all three aspects of the accounting for financial instruments:
classification and measurement, impairment and hedge accounting.
The Group has recognised the transition adjustments against the applicable
opening balances in equity at 1 January 2018. Therefore, the comparative
information was not restated and continues to be reported under IAS 39.
Classification and measurement
The following information sets out the impacts of adopting IFRS 9 on the
consolidated statement of financial position, including the effect of replacing
IAS 39’s incurred credit loss calculations with IFRS 9’s expected credit losses
(“ECLs”).
187
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(b)
(Continued)
Classification and measurement (continued)
A reconciliation between the carrying amounts under IAS 39 and the balances
reported under IFRS 9 as at 1 January 2018 is as follows:
IAS 39
measurement
IFRS 9
measurement
Re-
Fair value
Category
Amount
classification
ECL
adjustment
Amount
Category
Notes
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
Assets
Financial assets
Trade and notes
receivables
Other current assets
Other non-current assets
Financial assets at fair
value through profit
and loss
Cash and cash equivalents
Restricted cash
Available-for-sale financial
investments
Equity investments
designated at fair
value through other
comprehensive
income
L&R
L&R
L&R
8,008,937
6,487,548
261,156
FVPL
L&R
L&R
9,534
27,835,866
2,168,192
–
–
–
–
–
–
(i)
AFS
1,928,201
(1,928,201)
(i)
N/A
–
1,928,201
(112,407)
(38,502)
–
–
–
–
–
–
–
–
–
–
–
–
–
7,896,530
6,449,046
261,156
9,534
27,835,866
2,168,192
AC
AC
AC
FVPL
AC
AC
–
N/A
15,114
1,943,315
FVOCI
(Equity)
188
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(b)
(Continued)
Classification and measurement (continued)
IAS 39
measurement
IFRS 9
measurement
Re-
Fair value
Category
Amount
classification
ECL
adjustment
Amount
Category
Notes
RMB’000
RMB’000
RMB’000
RMB’000
RMB’000
Total assets
Liabilities
Other liabilities
Deferred tax liabilities
Total Liabilities
46,699,434
199,816,799
993,742
134,074,203
–
–
–
–
(150,909)
15,114
46,563,639
–
(150,909)
15,114
199,681,004
–
–
3,641
997,383
3,641
134,077,844
L&R: Loans and receivables
AC: Financial assets or financial liabilities at amortised cost
FVPL: Financial assets at fair value through profit or loss
AFS: Available-for-sale investments
FVOCI: Financial assets at fair value through other comprehensive income
Notes:
The Group has elected the option to irrevocably designate certain of its previous available-for-sale
equity investments as equity investments at fair value through other comprehensive income.
189
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(b)
(Continued)
Impairment
The following table reconciles the aggregate opening impairment allowances
under IAS 39 to the ECL allowances under IFRS 9. Re-measurement equals to the
effect of adoption of IFRS 9 in note 14 and note 15.
Impairment
allowances
under IAS 39
ECL
allowances
under IFRS 9
at 31 December
Re-
at 1 January
2017
measurement
2018
(restated)
(note 14/note 15)
RMB’000
RMB’000
RMB’000
Trade receivables
Other current assets
546,102
1,673,122
112,407
38,502
658,509
1,711,624
2,219,224
150,909
2,370,133
190
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(b)
(Continued)
Impact on reserves and accumulated losses
The impact of transition to IFRS 9 on reserves and accumulated losses is as
follows:
Fair value reserve under IFRS 9 (gain on available-for-sale
financial assets under IAS 39)
Balance as at 31 December 2017 under IAS 39
Remeasurement of equity investments designated at fair value
through other comprehensive income previously measured at
cost under IAS 39
Deferred tax in relation to the above
Balance as at 1 January 2018 under IFRS 9
Reserves and
accumulated
losses
RMB’000
6,836
14,263
(3,428)
17,671
Accumulated losses
Balance as at 31 December 2017 under IAS 39
(3,368,095)
Adjustment due to business combinations under common
control (note 38)
Recognition of expected credit losses for trade receivables
under IFRS 9
Recognition of expected credit losses for current financial assets
at amortised cost under IFRS 9
35,724
(94,844)
(38,502)
Balance as at 1 January 2018 under IFRS 9
(3,465,717)
191
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(b)
(Continued)
Impact on reserves and accumulated losses (continued)
Reserves and
accumulated
losses
RMB’000
Non-controlling interests
Balance as at 31 December 2017 under IAS 39
26,035,429
Adjustment due to business combinations under common
control (note 38)
Remeasurement of equity investments designated at fair value
through other comprehensive income previously measured at
cost under IAS 39
Recognition of expected credit losses for trade receivables
under IFRS 9
Deferred tax in relation to the above
19,138
851
(17,563)
(213)
Balance as at 1 January 2018 under IFRS 9
26,037,642
192
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(c)
IFRS 15 and its amendments replace IAS 11 Construction Contracts, IAS 18
Revenue and related interpretations and it applies, with limited exceptions, to
all revenue arising from contracts with customers. IFRS 15 establishes a new
five-step model to account for revenue arising from contracts with customers.
Under IFRS 15, revenue is recognised at an amount that reflects the consideration
to which an entity expects to be entitled in exchange for transferring goods or
services to a customer. The principles in IFRS 15 provide a more structured
approach for measuring and recognising revenue. The standard also introduces
extensive qualitative and quantitative disclosure requirements, including
disaggregation of total revenue, information about performance obligations,
changes in contract asset and liability account balances between periods and key
judgements and estimates. The disclosures are included in note 4 to the financial
statements. As a result of the application of IFRS 15, the Group has changed the
accounting policy with respect to revenue recognition in note 2.27 to the financial
statements.
The Group has adopted IFRS 15 using the modified retrospective method of
adoption. The Group applied IFRS 15 to contracts that are initiated after the
effective date and contracts that had remaining obligations as of the effective
date. In respect of the prior periods, the Group retained prior period’s figures
as reported under the previous standards, recognising the cumulative effect
of applying IFRS 15 as an adjustment to the opening balance of equity as at 1
January 2018. The Group concluded that the transitional adjustment to be made
on 1 January 2018 to accumulated losses upon initial adoption of IFRS 15 is nil.
It is because the Group recognises revenue upon the transfer of significant risks
and rewards, which coincides with the fulfilment of performance obligations.
Additionally, the Group’s contracts with customers generally has only one
performance obligation.
193
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(c)
(Continued)
The nature of the adjustments as at 1 January 2018 and the reasons for the
significant changes in the consolidated statement of financial position as at 31
December 2018 are described below:
Consideration received from customers in advance
Before the adoption of IFRS 15, the Group recognised consideration received
from customers in advance as other payables. Under IFRS 15, the amount is
classified as contract liabilities.
Therefore, upon adoption of IFRS 15, the Group reclassified RMB1,372 million
from other payables to contract liabilities as at 1 January 2018 in relation to the
consideration received from customers in advance as at 1 January 2018.
As at 31 December 2018, under IFRS 15, RMB1,579 million was recorded as
contract liabilities in relation to the consideration received from customers in
advance for the sale of industrial products.
(d) Voluntary change in accounting policies for government grants
In 2018, the management of the Group performed an analysis on the nature of
the Group’s government grants. After reassessing the gross vs. net presentation
policy, management considered that presenting government grants in the net
method can provide reliable and more relevant information about the effects
of transactions to the users of the financial statements. As such, the Company
proposed a voluntary change in the accounting policy.
Up to the year of 2017, the Group recognised and measured government grants
according to the gross method:
194
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (Continued)
2.2 Changes in accounting policies and disclosures (Continued)
(d) Voluntary change in accounting policies for government grants
(Continued)
Asset-related government grants are recognised when the government document
designates that the government grants are used for constructing or forming
long-term assets. Asset-related government grants are recognised as deferred
income and are amortised evenly in profit or loss over the useful lives of the
related assets. Income-related government grants that are used to compensate
subsequent related expenses or losses of the Group are recognised as deferred
income and recorded in profit or loss when the related expenses or losses are
incurred. When the grants are used to compensate expenses or losses that were
already incurred, they are directly recognised in profit or loss for the current
period.
After the voluntary change in the accounting policy, the Group recognised
government grants according to the net method. For asset related government
grants, had the asset already existed upon receiving the government grant, the
Group directly deducted the grant amount from the book value of the assets
related to the government grant instead of recording the government grants as
deferred income. For government grants related to expenses already incurred
by the Group, which are specific to compensate certain cost and expenses, the
Group would directly offset the grant amount against the related cost or expense.
195
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(d) Voluntary change in accounting policies for government grants
(Continued)
The main effects of retrospective adjustments caused by the above accounting
policy change on financial statements are as follows:
Consolidated statement
of financial position
Assets:
Property, plant and equipment
Land use rights
Intangible assets
Other non-current assets
Before
change in
accounting
policy
31 December
2018
Reclassification
on change in
accounting
policy
After
change in
accounting
policy change
31 December
2018
107,066,073
4,484,055
12,881,804
4,446,938
(872,704)
(203,764)
(2,439)
(4,294)
106,193,369
4,280,291
12,879,365
4,442,644
128,878,870
(1,083,201)
127,795,669
Total assets
201,959,315
(1,083,201)
200,876,114
Liabilities:
Other non-current liabilities
3,521,365
(1,083,201)
2,438,164
Total liabilities
134,290,113
(1,083,201)
133,206,912
196
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(d) Voluntary change in accounting policies for government grants
(Continued)
Consolidated statement
of profit or loss and other
comprehensive income
Cost of sales
General and administration
Before
change in
accounting
policy
2018
Reclassification
on change in
accounting
policy
After
change in
accounting
policy 2018
(167,254,868)
225,452
(167,029,416)
expenses
(4,540,590)
582,523
(3,958,067)
Research and development
expenses
Selling and distribution expenses
Other income
(630,815)
(2,496,977)
947,328
3,942
44
(811,961)
(626,873)
(2,496,933)
135,367
(173,975,922)
Profit before tax
2,303,511
–
–
(173,975,922)
2,303,511
197
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(d) Voluntary change in accounting policies for government grants
(Continued)
Consolidated statement
of financial position
Assets:
Property, plant and equipment
Land use rights
Intangible asset
Before
change in
accounting
policy
31 December
2017
(restated)
Reclassification
on change
in accounting
policy
After
change in
accounting
policy
31 December
2017
(restated)
96,430,815
3,746,602
10,653,175
(803,238)
(169,590)
(15,542)
95,627,577
3,577,012
10,637,633
110,830,592
(988,370)
109,842,222
Total assets
200,805,169
(988,370)
199,816,799
Liabilities:
Other non-current liabilities
3,442,030
(988,370)
2,453,660
Total liabilities
135,062,573
(988,370)
134,074,203
198
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(d) Voluntary change in accounting policies for government grants
(Continued)
Consolidated statement
of profit or loss and other
comprehensive income
Before
change in
accounting
policy
2017
(restated)
Reclassification
on change
in accounting
policy
After
change in
accounting
policy
2017
(restated)
Cost of sales
(166,494,842)
204,607
(166,290,235)
General and administration
expenses
Other income
(4,604,055)
54,849
(4,549,206)
349,329
(259,456)
89,873
(170,749,568)
Profit before tax
3,049,010
–
–
(170,749,568)
3,049,010
199
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.2 Changes in accounting policies and disclosures (Continued)
(e) Amendments to IAS 40 clarify when an entity should transfer property, including
property under construction or development, into or out of investment property.
The amendments state that a change in use occurs when the property meets, or
ceases to meet, the definition of investment property and there is evidence of
the change in use. A mere change in management’s intentions for the use of a
property does not provide evidence of a change in use. The amendments have
had no impact on the financial position or performance of the Group.
(f)
IFRIC 22 provides guidance on how to determine the date of the transaction
when applying IAS 21 to the situation where an entity receives or pays advance
consideration in a foreign currency and recognises a non-monetary asset or
liability. The interpretation clarifies that the date of the transaction for the purpose
of determining the exchange rate to use on initial recognition of the related
asset, expense or income (or part of it) is the date on which an entity initially
recognises the non-monetary asset (such as a prepayment) or non-monetary
liability (such as deferred income) arising from the payment or receipt of the
advance consideration. If there are multiple payments or receipts in advance of
recognising the related item, the entity must determine the transaction date for
each payment or receipt of the advance consideration. The interpretation has
had no impact on the Group’s financial statements as the Group’s accounting
policy for the determination of the exchange rate applied for initial recognition of
non-monetary assets or non-monetary liabilities is consistent with the guidance
provided in the interpretation.
200
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.3 Issued but not ye t e ffectiv e In te rn ati o n a l F i n a n cial
Reporting Standards
The Group has not applied the following new and revised IFRSs that have been issued
but are not yet effective, in these financial statements.
Amendments to IFRS 3
Definition of a Business2
Amendments to IFRS 9
Prepayment Features with Negative Compensation1
Amendments to IFRS 10 and
Sale or Contribution of Assets between an Investor
IAS 28
IFRS 16
IFRS 17
and its Associate or Joint Venture4
Leases1
Insurance Contracts3
Amendments to IAS 1 and IAS
Definition of Material2
8
Amendments to IAS 19
Plan Amendment, Curtailment or Settlement1
Amendments to IAS 28
Long-term Interests in Associates and Joint Ventures1
IFRIC 23
Uncertainty over Income Tax Treatments1
Annual Improvements
Amendments to IFRS 3, IFRS 11, IAS 12 and IAS 231
2015–2017 Cycle
1
2
3
4
Effective for annual periods beginning on or after 1 January 2019
Effective for annual periods beginning on or after 1 January 2020
Effective for annual periods beginning on or after 1 January 2021
No mandatory effective date yet determined but available for adoption
201
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.3 Issued but not yet effective International Financial
Reporting Standards (Continued)
Further information about those IFRSs that are expected to be applicable to the Group is
described below.
Amendments to IFRS 3 clarify and provide additional guidance on the definition of a
business. The amendments clarify that for an integrated set of activities and assets to
be considered a business, it must include, at a minimum, an input and a substantive
process that together significantly contribute to the ability to create output. A business
can exist without including all of the inputs and processes needed to create outputs.
The amendments remove the assessment of whether market participants are capable
of acquiring the business and continue to produce outputs. Instead, the focus is on
whether acquired inputs and acquired substantive processes together significantly
contribute to the ability to create outputs. The amendments have also narrowed the
definition of outputs to focus on goods or services provided to customers, investment
income or other income from ordinary activities. Furthermore, the amendments provide
guidance to assess whether an acquired process is substantive and introduce an
optional fair value concentration test to permit a simplified assessment of whether an
acquired set of activities and assets is not a business. The Group expects to adopt the
amendments prospectively from 1 January 2020.
A m e n d m e n t s t o I F R S 10 a n d I A S 28 a d d r e s s a n i n c o n s i s t e n c y b e t w e e n t h e
requirements in IFRS 10 and in IAS 28 in dealing with the sale or contribution of assets
between an investor and its associate or joint venture. The amendments require a
full recognition of a gain or loss when the sale or contribution of assets between an
investor and its associate or joint venture constitutes a business. For a transaction
involving assets that do not constitute a business, a gain or loss resulting from the
transaction is recognised in the investor’s profit or loss only to the extent of the
unrelated investor’s interest in that associate or joint venture. The amendments are
to be applied prospectively. The previous mandatory effective date of amendments to
IFRS 10 and IAS 28 was removed by the IASB in January 2016 and a new mandatory
effective date will be determined after the completion of a broader review of accounting
for associates and joint ventures. However, the amendments are available for adoption
now.
202
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.3 Issued but not yet effective International Financial
Reporting Standards (Continued)
IFRS 16 replaces IAS 17 Leases, IFRIC Interpretation 4 Determining whether an
Arrangement contains a Lease, SIC-15 Operating Leases – Incentives and SIC-27
Evaluating the Substance of Transactions Involving the Legal Form of a Lease. The
standard sets out the principles for the recognition, measurement, presentation and
disclosure of leases and requires lessees to recognise assets and liabilities for most
leases. The standard includes two elective recognition exemptions for lessees – leases
of low-value assets and short-term leases. At the commencement date of a lease,
a lessee will recognise a liability to make lease payments and an asset representing
the right to use the underlying asset during the lease term. The right-of-use asset is
subsequently measured at cost less accumulated depreciation and any impairment
losses unless the right-of-use asset meets the definition of investment property in
IAS 40, or relates to a class of property, plant and equipment to which the revaluation
model is applied. The lease liability is subsequently increased to reflect the interest
on the lease liability and reduced for the lease payments. Lessees will be required to
separately recognise the interest expense on the lease liability and the depreciation
expense on the right-of-use asset. Lessees will also be required to remeasure the
lease liability upon the occurrence of certain events, such as change in the lease term
and change in future lease payments resulting from a change in an index or rate used
to determine those payments. Lessees will generally recognise the amount of the
remeasurement of the lease liability as an adjustment to the right-of-use asset. Lessor
accounting under IFRS 16 is substantially unchanged from the accounting under IAS
17. Lessors will continue to classify all leases using the same classification principle
as in IAS 17 and distinguish between operating leases and finance leases. IFRS 16
requires lessees and lessors to make more extensive disclosures than under IAS 17.
Lessees can choose to apply the standard using either a full retrospective or a modified
203
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.3 Issued but not yet effective International Financial
Reporting Standards (Continued)
retrospective approach. The Group will adopt IFRS 16 from 1 January 2019. The Group
plans to adopt the transitional provisions in IFRS 16 to recognise the cumulative effect
of initial adoption as an adjustment to the opening balance of accumulated losses at
1 January 2019 and will not restate the comparatives. In addition, the Group plans
to apply the new requirements to contracts that were previously identified as leases
applying IAS 17 and measure the lease liability at the present value of the remaining
lease payments, discounted using the Group’s incremental borrowing rate at the date
of initial application. The right-of-use asset will be measured at the amount of the lease
liability, adjusted by the amount of any prepaid or accrued lease payments relating to
the lease recognised in the statement of financial position immediately before the date
of initial application. The Group plans to use the exemptions allowed by the standard
on lease contracts whose lease terms end within 12 months as of the date of initial
application. During 2018, the Group has performed a detailed assessment on the impact
of adoption of IFRS 16. The Group has preliminarily estimated that right-of-use assets
of RMB6,929 million and lease liabilities of RMB6,929 million will be recognised at 1
January 2019.
Amendments to IAS 1 and IAS 8 provide a new definition of material. The new
definition states that information is material if omitting, misstating or obscuring it could
reasonably be expected to influence decisions that the primary users of general purpose
financial statements make on the basis of those financial statements. The amendments
clarify that materiality will depend on the nature or magnitude of information. A
misstatement of information is material if it could reasonably be expected to influence
decisions made by the primary users. The Group expects to adopt the amendments
prospectively from 1 January 2020. The amendments are not expected to have any
significant impact on the Group’s financial statements.
204
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.3 Issued but not yet effective International Financial
Reporting Standards (Continued)
Amendments to IAS 28 clarify that the scope exclusion of IFRS 9 only includes
interests in an associate or joint venture to which the equity method is applied and
does not include long-term interests that in substance form part of the net investment
in the associate or joint venture, to which the equity method has not been applied.
Therefore, an entity applies IFRS 9, rather than IAS 28, including the impairment
requirements under IFRS 9, in accounting for such long-term interests. IAS 28 is
then applied to the net investment, which includes the long-term interests, only in
the context of recognising losses of an associate or joint venture and impairment of
the net investment in the associate or joint venture. The Group expects to adopt the
amendments on 1 January 2019 and will assess its business model for such long-term
interests based on the facts and circumstances that exist on 1 January 2019 using
the transitional requirements in the amendments. The Group also intends to apply the
relief from restating comparative information for prior periods upon adoption of the
amendments.
IFRIC-Int 23 addresses the accounting for income taxes (current and deferred) when tax
treatments involve uncertainty that affects the application of IAS 12 (often referred to as
“uncertain tax positions”). The interpretation does not apply to taxes or levies outside
the scope of IAS 12, nor does it specifically include requirements relating to interest
and penalties associated with uncertain tax treatments. The interpretation specifically
addresses (i) whether an entity considers uncertain tax treatments separately; (ii) the
assumptions an entity makes about the examination of tax treatments by taxation
authorities; (iii) how an entity determines taxable profits or tax losses, tax bases,
unused tax losses, unused tax credits and tax rates; and (iv) how an entity considers
changes in facts and circumstances. The interpretation is to be applied retrospectively,
either fully retrospectively without the use of hindsight or retrospectively with the
cumulative effect of application as an adjustment to the opening equity at the date
of initial application, without the restatement of comparative information. The Group
expects to adopt the interpretation from 1 January 2019. The interpretation is not
expected to have any significant impact on the Group’s financial statements.
205
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.4 Investments in joint ventures and associates
A joint venture is a type of joint arrangement whereby the parties that have joint control
of the arrangement have rights to the net assets of the joint venture. Joint control is
the contractually agreed sharing of control of an arrangement, which exists only when
decisions about the relevant activities require unanimous consent of the parties sharing
control.
An associate is an entity over which the Group has significant influence. Significant
influence is the power to participate in the financial and operating policy decisions of
the investee, but is not control or joint control over those policies.
The Group’s investments in associates and joint ventures are accounted for using the
equity method, less any impairment losses.
Under the equity method, the investment in an associate or a joint venture is initially
recognised at cost. The carrying amount of the investment is adjusted to recognise
changes in the Group’s share of net assets of the associate or joint venture since the
acquisition date. Goodwill relating to the associate or joint venture is included in the
carrying amount of the investment, and tested for impairment when any indicators of
impairment are identified.
The consolidated statement of profit or loss and other comprehensive income includes
the Group’s share of the results of operations of the associate or joint venture. Any
change in OCI of those investees is presented as part of the Group’s OCI. In addition,
when there has been a change recognised directly in the equity of the associate or
joint venture, the Group recognises its share of any changes, when applicable, in the
consolidated statement of changes in equity. Unrealised gains and losses resulting from
transactions between the Group and the associate or joint venture are eliminated to the
extent of the interest in the associate or joint venture.
The aggregate of the Group’s share of profit or loss of an associate and a joint venture is
shown in the consolidated statement of profit or loss and other comprehensive income
and represents profit or loss after tax and non-controlling interests in the subsidiaries of
the associate or joint venture.
206
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.4 Investments in joint ventures and associates (Continued)
The financial statements of the associate or joint venture are prepared for the same
reporting period as the Group. When necessary, adjustments are made to bring the
accounting policies in line with those of the Group.
After application of the equity method, the Group determines whether it is necessary
to recognise an impairment loss on its investment in its associate or joint venture. At
each reporting date, the Group determines whether there is objective evidence that the
investment in the associate or joint venture is impaired. If there is such evidence, the
Group calculates the amount of impairment as the difference between the recoverable
amount of the associate or joint venture and its carrying value, then recognises the loss
in profit or loss.
If an investment in an associate becomes an investment in a joint venture or vice
versa, the retained interest is not remeasured. Instead, the investment continues to
be accounted for under the equity method. In all other cases, upon loss of significant
influence over the associate or joint control over the joint venture, the Group measures
and recognises any retained investment at its fair value. Any difference between the
carrying amount of the associate or joint venture upon loss of significant influence
or joint control and the fair value of the retained investment and the proceeds from
disposal is recognised in profit or loss.
When an investment in an associate or a joint venture is classified as held for sale,
it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and
Discontinued Operations.
207
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.5 Segment reporting
Operating segments are reported in a manner consistent with the internal reporting
provided to the chief operating decision-makers. The chief operating decision-makers,
who are responsible for allocating resources and assessing the performance of the
operating segments, have been identified as the presidents of the Company that make
strategic decisions.
2.6 Related parties
A party is considered to be related to the Group if:
(a)
the party is a person or a close member of that person’s family and that person:
(i)
has control or joint control over the Group;
(ii)
has a significant influence over the Group; or
(iii)
is a member of the key management personnel of the Group or of a parent
of the Group.
or
(b)
the party is an entity where any of the following conditions applies:
(i)
the entity and the Group are members of the same group;
(ii)
one entity is an associate or joint venture of the other entity (or of a parent,
subsidiary or fellow subsidiary of the other entity);
(iii)
the entity and the Group are joint ventures of the same third party;
(iv)
one entity is a joint venture of a third entity and the other entity is an
associate of the third entity;
208
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.6 Related parties (Continued)
(b)
the party is an entity where any of the following conditions applies: (Continued)
(v)
the entity is a post-employment benefit plan for the benefit of employees
of either the Group or an entity related to the Group;
(vi)
the entity is controlled or jointly controlled by a person identified in (a);
(vii) a person identified in (a) (i) has significant influence over the entity or is a
member of the key management personnel of the entity (or of a parent of
the entity); and
(viii)
the entity, or any member of a group of which it is a part, provides key
management personnel services to the Group or to the parent of the Group.
2.7 Fair value measurement
The Group measures its futures, options and forward contracts and equity investments
at fair value at the end of each reporting period. Also, the fair values of financial
instruments measured at amortised cost are disclosed in note 36.
Fair value is the price that would be received to sell an asset or paid to transfer a
liability in an orderly transaction between market participants at the measurement date.
The fair value measurement is based on the presumption that the transaction to sell the
asset or transfer the liability takes place either:
•
•
In the principal market for the asset or liability; or
In the absence of a principal market, in the most advantageous market for the
asset or liability.
209
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.7 Fair value measurement (Continued)
The principal or the most advantageous market must be accessible by the Group.
The fair value of an asset or a liability is measured using the assumptions that market
participants would use when pricing the asset or liability, assuming that market
participants act in their economic best interest.
A fair value measurement of a non-financial asset takes into account a market
participant’s ability to generate economic benefits by using the asset in its highest and
best use or by selling it to another market participant that would use the asset in its
highest and best use.
The Group uses valuation techniques that are appropriate in the circumstances and for
which sufficient data are available to measure fair value, maximising the use of relevant
observable inputs and minimising the use of unobservable inputs.
All assets and liabilities for which fair value is measured or disclosed in the financial
statements are categorised within the fair value hierarchy, described as follows, based
on the lowest level input that is significant to the fair value measurement as a whole:
Level 1
– Based on quoted (unadjusted) prices in active markets for identical assets
or liabilities
Level 2
– Based on valuation techniques for which the lowest level input that
is significant to the fair value measurement is directly or indirectly
observable
Level 3
– Based on valuation techniques for which the lowest level input that is
significant to the fair value measurement is unobservable
For assets and liabilities that are recognised in the financial statements on a recurring
basis, the Group determines whether transfers have occurred between levels in
the hierarchy by re-assessing categorisation (based on the lowest level input that is
significant to the fair value measurement as a whole) at the end of each reporting
period.
210
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.8 Foreign currency translation
Functional and presentation currency
Items included in the financial statements of each of the Group’s entities are measured
using the currency of the primary economic environment in which the entity operates
(the “functional currency”). The consolidated financial statements are presented
in RMB, which is the Company’s functional currency and the Group’s presentation
currency.
Transactions and balances
Foreign currency transactions recorded by the entities in the Group are initially
recorded using their respective functional currency rates prevailing at the dates of
the transactions. Monetary assets and liabilities denominated in foreign currencies
are translated at the functional currency rates of exchange ruling at the end of the
reporting period. Differences arising on settlement or translation of monetary items are
recognised in profit or loss.
Non-monetary items that are measured in terms of historical cost in a foreign currency
are translated using the exchange rates at the dates of the initial transactions.
Non-monetary items measured at fair value in a foreign currency are translated using
the exchange rates at the date when the fair value was measured. The gain or loss
arising on translation of a non-monetary item measured at fair value is treated in line
with the recognition of the gain or loss on change in fair value of the item.
In determining the exchange rate on initial recognition of the related asset, expense or
income on the derecognition of a non-monetary asset or non-monetary liability relating
to an advance consideration, the date of initial transaction is the date on which the
Group initially recognises the non-monetary asset or non-monetary liability arising from
the advance consideration. If there are multiple payments or receipts in advance, the
Group determines the transaction date for each payment or receipt of the advance
consideration.
211
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.8 Foreign currency translation (Continued)
Group companies
The results and financial positions of all the group entities (none of which has the
currency of a hyper-inflationary economy) that has a functional currency different from
the presentation currency are translated into the presentation currency as follows:
(i)
assets and liabilities in each statement of financial position presented are
translated at the closing rates at the end of the reporting period;
(ii)
income and expenses in each statement of profit or loss and other comprehensive
income are translated at average exchange rates (unless this average is not a
reasonable approximation of the cumulative effect of the rates prevailing on the
transaction dates, in which case income and expenses are translated at the rates
at the dates of the transactions); and
(iii)
all resulting exchange differences are recognised in other comprehensive income.
Upon disposal of a foreign operation, the other comprehensive income related to
the foreign operation is reclassified to profit or loss.
Goodwill and fair value adjustments to the carrying amounts of assets and liabilities
arising on the acquisition of a foreign entity are treated as assets and liabilities of
the foreign entity and translated at the closing rate. Exchange differences arising are
recognised in other comprehensive income.
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ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.9 Property, plant and equipment
Property, plant and equipment, other than construction in progress, are stated at cost
less accumulated depreciation and any impairment losses. When an item of property,
plant and equipment is classified as held for sale or when it is part of a disposal group
classified as held for sale, it is not depreciated and is accounted for in accordance with
IFRS 5. The cost of an item of property, plant and equipment comprises its purchase
price and any directly attributable costs of bringing the asset to its working condition
and location for its intended use.
Expenditure incurred after items of property, plant and equipment have been put into
operation, such as repairs and maintenance, is normally charged to profit or loss in the
period in which it is incurred. In situations where the recognition criteria are satisfied,
the expenditure for a major inspection is capitalised in the carrying amount of the asset
as a replacement. Where significant parts of property, plant and equipment are required
to be replaced at intervals, the Group recognises such parts as individual assets with
specific useful lives and depreciates them accordingly.
Depreciation is calculated on the straight-line basis to write off the cost of each item
of property, plant and equipment to its residual value over its estimated useful life. The
principal annual rates used for this purpose are as follows:
Buildings
Machinery
Transportation facilities
Office and other equipment
8–45 years
3–30 years
6–10 years
3–10 years
The depreciation method, residual values and useful lives are reviewed and adjusted,
if appropriate, at the end of each reporting period. An item of property, plant and
equipment including any significant part initially recognised is derecognised upon
disposal or when no future economic benefits are expected from its use or disposal.
Any gain or loss on disposal or retirement recognised in profit or loss in the year
the asset is derecognised is the difference between the net sales proceeds and the
carrying amount of the relevant asset.
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2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.9 Property, plant and equipment (Continued)
Construction in progress (“CIP”) represents buildings under construction, and plant and
equipment pending for installation, and is stated at cost less any impairment losses.
Cost comprises construction expenditures, other expenditures necessary for the
purpose of preparing the CIP for its intended use and those borrowing costs incurred
before the asset is ready for its intended use that is eligible for capitalisation. CIP is
transferred to property, plant and equipment when the CIP is ready for its intended use.
2.10 Intangible assets
(a) Goodwill
Goodwill is initially measured at cost, being the excess of the aggregate of the
consideration transferred, the amount recognised for non-controlling interests
and any fair value of the Group’s previously held equity interests in the acquiree
over the identifiable net assets acquired and liabilities assumed. If the sum of
this consideration and other items is lower than the fair value of the net assets
acquired, the difference is, after reassessment, recognised in profit or loss as a
gain on bargain purchase.
After initial recognition, goodwill is measured at cost less any accumulated
impairment losses. Goodwill is tested for impairment annually or more frequently
if events or changes in circumstances indicate that the carrying value may be
impaired. The Group performs its annual impairment test of goodwill as at 31
December. For the purpose of impairment testing, goodwill acquired in a business
combination is, from the acquisition date, allocated to each of the Group’s
cash-generating units, or groups of cash-generating units, that are expected to
benefit from the synergies of the combination, irrespective of whether other
assets or liabilities of the Group are assigned to those units or groups of units.
214
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.10 Intangible assets (Continued)
(a) Goodwill (Continued)
For the purpose of impairment testing, goodwill acquired in a business
combination is allocated to each of the cash-generating units, or groups of
cash-generating units, that is expected to benefit from the synergies of the
combination. Each unit or group of units to which the goodwill is allocated
represents the lowest level within the entity at which the goodwill is monitored
for internal management purposes. Goodwill is monitored at the operating
segment level.
Goodwill impairment reviews are undertaken annually or more frequently if
events or changes in circumstances indicate a potential impairment. Impairment
is determined by assessing the recoverable amount of the cash-generating unit to
which the goodwill relates. Where the recoverable amount of the cash-generating
unit is less than the carrying amount, an impairment loss is recognised. An
impairment loss recognised for goodwill is not reversed in a subsequent period.
Any impairment is recognised immediately as an expense and is not subsequently
reversed.
Where goodwill has been allocated to a cash-generating unit (or group of
cash-generating units) and part of the operation within that unit is disposed of,
the goodwill associated with the operation disposed of is included in the carrying
amount of the operation when determining the gain or loss on the disposal.
Goodwill disposed of in these circumstances is measured based on the relative
value of the operation disposed of and the portion of the cash-generating unit
retained.
(b) Mining rights and mineral exploration rights
The Group’s mineral exploration rights and mining rights relate to coal, bauxite
and other mines.
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2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.10 Intangible assets (Continued)
(b) Mining rights and mineral exploration rights (Continued)
(i) Recognition
Mineral exploration rights and mining rights are initially recorded at cost
which includes the acquisition consideration, qualifying exploration and
other direct costs. The mineral exploration rights are stated at cost less any
impairment, and the mining rights are stated at cost less any amortisation
and impairment.
(ii) Reclassification
Mineral exploration rights are converted to mining rights when technical
feasibility and commercial viability of extracting a mineral resource are
demonstrable, and are subject to amortisation when commercial production
has commenced.
The Group assesses the stage of each mine under construction to
determine when a mine moves into the production stage. The criteria used
to assess the start date are determined based on the unique nature of each
mine construction project. The Group considers various relevant criteria,
such as completion of a reasonable period of testing of the mine and
equipment, ability to produce in saleable form (within specifications) and
ability to sustain ongoing production to assess when a mine is substantially
complete and ready for its intended use.
216
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.10 Intangible assets (Continued)
(b) Mining rights and mineral exploration rights (Continued)
(iii) Amortisation
Amortisation of bauxite and other mining rights (except for coal mining
rights) is provided on a straight-line basis according to the shorter of the
expiration date of the mining certificate and the mineable period of natural
resources. Estimated mineable periods of the majority of the mining rights
range from 3 to 30 years.
Coal mining rights are amortised on a unit-of-production basis over the
economically recoverable reserves evaluated based on the reserves
estimated in accordance with the standards in the Solid Mineral Resource/
R e s e r v e C l a s s i f i c a t i o n o f t h e P R C (G B/T17766–1999) o f t h e m i n e
concerned.
(iv) Impairment
An impairment review is performed when there are indicators that the
carrying amount of the mineral exploration rights and mining rights may
exceed their recoverable amounts. To the extent that this occurs, the
excess is fully provided as an impairment loss.
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2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.10 Intangible assets (Continued)
(c) Computer software
Acquired computer software licences are capitalised on the basis of the costs
incurred to acquire and bring to use specific software. These costs are amortised
over their estimated useful lives, which do not exceed 10 years. Costs associated
with maintaining computer software programmes are recognised as an expense as
incurred.
(d) Primary aluminium production quota
Primary aluminium production quota are initially recorded at purchased costs
incurred to acquire the quota. Amortisation is calculated on the straight-line basis
over the expected production period.
(e) Other intangible assets
Other intangible assets mainly include profit-sharing rights of Maochang mine,
which are initially recorded at costs incurred to acquire the specific right.
Amortisation is calculated on the straight-line basis over its estimated useful life.
The estimated useful live of profit-sharing rights of Maochang mine is 22.5 years.
(f) Periodic review of the useful lives and amortisation method
For intangible assets with finite useful lives, the estimated useful lives and
amortisation method are reviewed annually at the end of each reporting period
and adjusted when necessary.
218
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.11 Research and development costs
Research and development expenditures are classified as research expenditures and
development expenditures according to the nature of the expenditures and whether
there is significant uncertainty of development activities transforming to assets.
Research expenditures are recognised in profit or loss for the current period.
Development expenditures are recognised as assets when all of the following criteria
are met:
(i)
it is technically feasible to complete the asset so that it will be available for use or
sale;
(ii) management intends to complete the asset and intends and has the ability to use
or sell it;
(iii)
it can be demonstrated that the asset will generate probable future economic
benefits;
(iv)
there are adequate technical, financial and other resources to complete the
development of the asset and management has the ability to use or sell the asset;
and
(v)
the expenditure attributable to the asset during its development phase can be
reliably measured.
Development expenditures that do not meet the criteria above are recorded in profit
or loss for the current period as incurred. Development expenditures that have been
recorded in profit or loss in previous periods will be not recognised as assets in
subsequent periods. The Group has not had any development expenditure capitalised.
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2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.12 Impairment of non-financial assets
Where an indication of impairment exists, or when annual impairment testing for an
asset is required (other than inventories, for example, goodwill or intangible assets
with an indefinite useful life), the asset’s recoverable amount is estimated. An asset’s
recoverable amount is the higher of the asset’s or cash-generating unit’s value in use
and its fair value less costs of disposal, and is determined for an individual asset, unless
the asset does not generate cash inflows that are largely independent of those from
other assets or groups of assets, in which case the recoverable amount is determined
for the cash-generating unit to which the asset belongs.
An impairment loss is recognised only if the carrying amount of an asset exceeds its
recoverable amount. In assessing value in use, the estimated future cash flows are
discounted to their present value using a pre-tax discount rate that reflects current
market assessments of the time value of money and the risks specific to the asset. An
impairment loss is charged to profit or loss in the period in which it arises.
An assessment is made at the end of each reporting period as to whether there is an
indication that previously recognised impairment losses may no longer exist or may
have decreased. If such an indication exists, the recoverable amount is estimated. A
previously recognised impairment loss of an asset other than goodwill is reversed only
if there has been a change in the estimates used to determine the recoverable amount
of that asset, but not to an amount higher than the carrying amount that would have
been determined (net of any depreciation/amortisation) had no impairment loss been
recognised for the asset in prior years. A reversal of such an impairment loss is credited
to profit or loss in the period in which it arises.
220
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.13 Investment properties
Investment properties are interests in land and buildings (including the leasehold
interest under an operating lease for a property which would otherwise meet the
definition of an investment property) held to earn rental income and/or for capital
appreciation, rather than for use in the production or supply of goods or services or for
administrative purposes; or for sale in the ordinary course of business. Such properties
are measured initially at cost, including transaction costs. After initial recognition, the
Group uses the cost model to measure all of its investment properties.
Depreciation is calculated on the straight-line basis to write off the cost to investment
property’s residual value over its estimated useful life. The estimated useful lives are as
follows:
Buildings
Land use rights
50 years
40–70 years
The carrying amounts of investment properties measured using the cost method are
reviewed for impairment when events or changes in circumstances indicate that the
carrying amounts may not be recoverable.
Any gains or losses on the retirement or disposal of an investment property are
recognised in profit or loss in the year of the retirement or disposal.
221
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.14 Non-current assets and disposal groups held for sale
Non-current assets and disposal groups are classified as held for sale if their carrying
amounts will be recovered principally through a sales transaction rather than through
continuing use. For this to be the case, the asset or disposal group must be available
for immediate sale in its present condition subject only to terms that are usual and
customary for the sale of such assets or disposal groups and its sale must be highly
probable. All assets and liabilities of a subsidiary classified as a disposal group are
reclassified as held for sale regardless of whether the Group retains a non-controlling
interest in its former subsidiary after the sale.
Non-current assets and disposal groups (other than financial assets) classified as held
for sale are measured at the lower of their carrying amounts and fair values less costs
to sell. Property, plant and equipment and intangible assets classified as held for sale
are not depreciated or amortised.
222
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets
Policies under IFRS 9 applicable from 1 January 2018
Initial recognition and measurement
Financial assets are classified, at initial recognition, as subsequently measured at
amortised cost, fair value through other comprehensive income, and fair value through
profit or loss.
The classification of financial assets at initial recognition depends on the financial asset’s
contractual cash flow characteristics and the Group’s business model for managing
them. With the exception of trade receivables that do not contain a significant financing
component or for which the Group has applied the practical expedient of not adjusting
the effect of a significant financing component, the Group initially measures a financial
asset at its fair value, plus in the case of a financial asset not at fair value through profit
or loss, transaction costs. Trade receivables that do not contain a significant financing
component or for which the Group has applied the practical expedient are measured at
the transaction price determined under IFRS 15 in accordance with the policies set out
for “Revenue recognition (applicable from 1 January 2018)” below.
In order for a financial asset to be classified and measured at amortised cost or fair
value through other comprehensive income, it needs to give rise to cash flows that are
solely payments of principal and interest (“SPPI”) on the principal amount outstanding.
223
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 applicable from 1 January 2018 (Continued)
Initial recognition and measurement (Continued)
The Group’s business model for managing financial assets refers to how it manages
its financial assets in order to generate cash flows. The business model determines
whether cash flows will result from collecting contractual cash flows, selling the
financial assets, or both.
All regular way purchases and sales of financial assets are recognised on the trade
date, that is, the date that the Group commits to purchase or sell the asset. Regular
way purchases or sales are purchases or sales of financial assets that require delivery
of assets within the period generally established by regulation or convention in the
marketplace.
Subsequent measurement
The subsequent measurement of financial assets depends on their classification as
follows:
224
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 applicable from 1 January 2018 (Continued)
Financial assets at amortised cost (debt instruments)
The Group measures financial assets at amortised cost if both of the following
conditions are met:
•
Financial asset is held within a business model with the objective to hold financial
assets in order to collect contractual cash flows.
•
Contractual terms of the financial asset give rise on specified dates to cash
flows that are solely payments of principal and interest on the principal amount
outstanding.
Financial assets at amortised cost are subsequently measured using the effective
interest method and are subject to impairment. Gains and losses are recognised in
profit or loss when the asset is derecognised, modified or impaired.
225
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 applicable from 1 January 2018 (Continued)
Financial assets designated at fair value through other comprehensive income
(equity investments)
Upon initial recognition, the Group can elect to classify irrevocably its equity
i n v e s t m e n t s a s e q u i t y i n v e s t m e n t s d e s i g n a t e d a t f a i r v a l u e t h r o u g h o t h e r
comprehensive income when they meet the definition of equity under IAS 32 Financial
Instruments: Presentation and are not held for trading. The classification is determined
on an instrument-by-instrument basis.
Gains and losses on these financial assets are never recycled to profit or loss.
Dividends are recognised as other gains in profit or loss when the right of payment has
been established, it is probable that the economic benefits associated with the dividend
will flow to the Group and the amount of the dividend can be measured reliably, except
when the Group benefits from such proceeds as a recovery of part of the cost of the
financial asset, in which case, such gains are recorded in other comprehensive income.
Equity investments designated at fair value through other comprehensive income are
not subject to impairment assessment.
226
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 applicable from 1 January 2018 (Continued)
Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held for
trading, financial assets designated upon initial recognition at fair value through profit
or loss, or financial assets mandatorily required to be measured at fair value. Financial
assets are classified as held for trading if they are acquired for the purpose of selling or
repurchasing in the near term. Derivatives, including separated embedded derivatives,
are also classified as held for trading unless they are designated as effective hedging
instruments. Financial assets with cash flows that are not solely payments of principal
and interest are classified and measured at fair value through profit or loss, irrespective
of the business model. Notwithstanding the criteria for debt instruments to be classified
at amortised cost or at fair value through other comprehensive income, as described
above, debt instruments may be designated at fair value through profit or loss on initial
recognition if doing so eliminates, or significantly reduces, an accounting mismatch.
227
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 applicable from 1 January 2018 (Continued)
Financial assets at fair value through profit or loss (Continued)
Financial assets at fair value through profit or loss are carried in the statement of
financial position at fair value with net changes in fair value recognised in profit or loss.
This category includes derivative instruments and equity investments which the Group
had not irrevocably elected to classify at fair value through other comprehensive
income. Dividends on equity investments classified as financial assets at fair value
through profit or loss are also recognised as other gains in profit or loss when the right
of payment has been established, it is probable that the economic benefits associated
with the dividend will flow to the Group and the amount of the dividend can be
measured reliably.
A derivative embedded in a hybrid contract, with a financial liability or non-financial host,
is separated from the host and accounted for as a separate derivative if the economic
characteristics and risks are not closely related to the host; a separate instrument with
the same terms as the embedded derivative would meet the definition of a derivative;
and the hybrid contract is not measured at fair value through profit or loss. Embedded
derivatives are measured at fair value with changes in fair value recognised in profit or
loss. Reassessment only occurs if there is either a change in the terms of the contract
that significantly modifies the cash flows that would otherwise be required or a
reclassification of a financial asset out of the fair value through profit or loss category.
A derivative embedded within a hybrid contract containing a financial asset host is
not accounted for separately. The financial asset host together with the embedded
derivative is required to be classified in its entirety as a financial asset at fair value
through profit or loss.
228
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 applicable from 1 January 2018 (Continued)
Impairment of financial assets
The Group recognises an allowance for ECLs for all debt instruments not held at fair
value through profit or loss. ECLs are based on the difference between the contractual
cash flows due in accordance with the contract and all the cash flows that the Group
expects to receive, discounted at an approximation of the original effective interest
rate. The expected cash flows will include cash flows from the sale of collateral held or
other credit enhancements that are integral to the contractual terms.
General approach
ECLs are recognised in two stages. For credit exposures for which there has not been
a significant increase in credit risk since initial recognition, ECLs are provided for credit
losses that result from default events that are possible within the next 12 months
(a 12-month ECL). For those credit exposures for which there has been a significant
increase in credit risk since initial recognition, a loss allowance is required for credit
losses expected over the remaining life of the exposure, irrespective of the timing of
the default (a lifetime ECL).
At each reporting date, the Group assesses whether the credit risk on a financial
instrument has increased significantly since initial recognition. When making the
assessment, the Group compares the risk of a default occurring on the financial
instrument as at the reporting date with the risk of a default occurring on the financial
instrument as at the date of initial recognition and considers reasonable and supportable
information that is available without undue cost or effort, including historical and
forward-looking information.
229
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 applicable from 1 January 2018 (Continued)
Impairment of financial assets (Continued)
General approach (Continued)
The Group considers a financial asset to be in default when internal or external
information indicates that the Group is unlikely to receive the outstanding contractual
amounts in full before taking into account any credit enhancements held by the Group.
A financial asset is written off when there is no reasonable expectation of recovering
the contractual cash flows.
Debt investments at fair value through other comprehensive income and financial assets
at amortised cost are subject to impairment under the general approach and they
are classified within the following stages for measurement of ECLs except for trade
receivables and contract assets which apply the simplified approach as detailed below.
230
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 applicable from 1 January 2018 (Continued)
Impairment of financial assets (Continued)
General approach (Continued)
Stage 1
–
Financial instruments for which credit risk has not increased significantly
since initial recognition and for which the loss allowance is measured at
an amount equal to 12-month ECLs
Stage 2
–
Financial instruments for which credit risk has increased significantly
since initial recognition but that are not credit-impaired financial assets
and for which the loss allowance is measured at an amount equal to
lifetime ECLs
Stage 3
–
Financial assets that are credit-impaired at the reporting date (but that
are not purchased or originated credit-impaired) and for which the loss
allowance is measured at an amount equal to lifetime ECLs
Simplified approach
For trade receivables and contract assets that do not contain a significant financing
component or when the Group applies the practical expedient of not adjusting the
effect of a significant financing component, the Group applies the simplified approach
in calculating ECLs. Under the simplified approach, the Group does not track changes
in credit risk, but instead recognises a loss allowance based on lifetime ECLs at each
reporting date. The Group has established a provision matrix that is based on its
historical credit loss experience, adjusted for forward-looking factors specific to the
debtors and the economic environment.
For trade receivables and contract assets that contain a significant financial component
and lease receivable, the Group chooses as its accounting policy to adopt the simplified
approach in calculating ECLs with policies as described above.
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2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IAS 39 applicable before 1 January 2018
Classification
The Group classifies its financial assets in the following categories: financial assets at
fair value through profit or loss, loans and receivables and available-for-sale financial
investments. The classification depends on the purpose for which the financial assets
were acquired. Management determines the classification of its financial assets at
initial recognition.
(i) Financial assets at fair value through profit or loss
Financial assets at fair value through profit or loss include financial assets held
for trading and financial assets designated upon initial recognition as at fair value
through profit or loss. Financial assets are classified as held for trading if they
are acquired for the purposes of sale in the near term. Derivatives, including
separated embedded derivatives, are also classified as held for trading unless
they are designated as effective hedging instruments as defined by IAS 39.
Financial assets at fair value through profit or loss are carried in the consolidated
statement of financial position at fair value with positive net changes in fair value
presented as other income and gains and negative net changes in fair value
presented as finance costs in profit or loss. These net fair value changes do not
include any dividends or interest earned on these financial assets, which are
recognised in accordance with the policies set out for “Revenue recognition”
(applicable before 1 January 2018) below.
Financial assets designated upon initial recognition as at fair value through profit
or loss are designated at the date of initial recognition and only if the criteria in
IAS 39 are satisfied.
232
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IAS 39 applicable before 1 January 2018 (Continued)
Classification (Continued)
(i) Financial assets at fair value through profit or loss (Continued)
Derivatives embedded in host contracts are accounted for as separate derivatives
and recorded at fair value if their economic characteristics and risks are not
closely related to those of the host contracts and the host contracts are not held
for trading or designated as at fair value through profit or loss. These embedded
derivatives are measured at fair value with changes in fair value recognised in
profit or loss. Reassessment only occurs if there is either a change in the terms
of the contract that significantly modifies the cash flows that would otherwise be
required or a reclassification of a financial asset out of the fair value through profit
or loss category.
(ii) Loans and receivables
L o a n s a n d r e c e i v a b l e s a r e n o n-d e r i v a t i v e f i n a n c i a l a s s e t s w i t h f i x e d o r
determinable payments that are not quoted in an active market. After initial
measurement, such assets are subsequently measured at amortised cost using
the effective interest rate method less any allowance for impairment. Amortised
cost is calculated by taking into account any discount or premium on acquisition
and includes fees or costs that are an integral part of the effective interest rate.
The effective interest rate amortisation is included in other income and gains
in profit or loss. The loss arising from impairment is recognised in profit or
loss in finance costs for loans and in impairment losses of financial assets for
receivables.
233
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IAS 39 applicable before 1 January 2018 (Continued)
Classification (Continued)
(iii) Available-for-sale financial investments
Available-for-sale financial investments are non-derivative financial assets in listed
and unlisted equity investments and debt securities. Equity investments classified
as available for sale are those which are neither classified as held for trading nor
designated as at fair value through profit or loss. Debt securities in this category
are those which are intended to be held for an indefinite period of time and which
may be sold in response to needs for liquidity or in response to changes in market
conditions.
After initial recognition, available-for-sale financial investments are subsequently
measured at fair value, with unrealised gains or losses recognised as other
comprehensive income in the available-for-sale investment revaluation reserve
until the investment is derecognised, at which time the cumulative gain or
loss is recognised in profit or loss in other income, or until the investment is
determined to be impaired, when the cumulative gain or loss is reclassified from
the available-for-sale investment revaluation reserve to profit or loss in other
gains. Interest and dividends earned whilst holding the available-for-sale financial
investments are reported as interest income and dividend income, respectively
and are recognised in profit or loss as other gains in accordance with the policies
set out for “Interest income” and “Dividend income” below.
234
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IAS 39 applicable before 1 January 2018 (Continued)
Classification (Continued)
(iii) Available-for-sale financial investments (Continued)
When the fair value of unlisted equity investments cannot be reliably measured
because (a) the variability in the range of reasonable fair value estimates is
significant for that investment or (b) the probabilities of the various estimates
within the range cannot be reasonably assessed and used in estimating fair value,
such investments are stated at cost less any impairment losses.
The Group evaluates whether the ability and intention to sell its available-for-sale
financial assets in the near term are still appropriate. When, in rare circumstances,
the Group is unable to trade these financial assets due to inactive markets, the
Group may elect to reclassify these financial assets if management has the ability
and intention to hold the assets for the foreseeable future or until maturity.
For a financial asset reclassified from the available-for-sale category, the fair value
carrying amount at the date of reclassification becomes its new amortised cost
and any previous gain or loss on that asset that has been recognised in equity
is amortised to profit or loss over the remaining life of the investment using the
effective interest rate. Any difference between the new amortised cost and the
maturity amount is also amortised over the remaining life of the asset using the
effective interest rate. If the asset is subsequently determined to be impaired,
then the amount recorded in equity is reclassified to profit or loss.
235
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IAS 39 applicable before 1 January 2018 (Continued)
Recognition and measurement
All regular purchases and sales of financial assets are recognised on the trade date,
that is the date that the Group commits to purchase or sell the asset. Regular way
purchases or sales are purchases or sales of financial assets that require delivery
of assets within the period generally established by regulation or convention in the
marketplace. Investments are initially recognised at fair value plus transaction costs,
except in the case of financial assets recorded at fair value through profit or loss.
Financial assets carried at fair value through profit or loss are initially recognised at
fair value and transaction costs are expensed in profit or loss. Financial assets are
derecognised when the rights to receive cash flows from the investments have expired
or have been transferred and the Group has transferred substantially all risks and
rewards of ownership. Available-for-sale financial investments and financial assets
at fair value through profit or loss are subsequently carried at fair value. Loans and
receivables are subsequently carried at amortised cost using the effective interest
method.
Impairment of financial assets
The Group assesses at the end of each reporting period whether there is objective
evidence that a financial asset or a group of financial assets is impaired. An impairment
exists if one or more events that occurred after the initial recognition of the asset
have an impact on the estimated future cash flows of the financial asset or the group
of financial assets that can be reliably estimated. Evidence of impairment may include
indications that a debtor or a group of debtors is experiencing significant financial
difficulty, default or delinquency in interest or principal payments, the probability
that they will enter bankruptcy or other financial reorganisation and observable data
indicating that there is a measurable decrease in the estimated future cash flows, such
as changes in arrears or economic conditions that correlate with defaults.
236
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IAS 39 applicable before 1 January 2018
Impairment of financial assets (Continued)
Financial assets carried at amortised cost
For financial assets carried at amortised cost, the Group assesses whether impairment
exists individually for financial assets.
The amount of any impairment loss identified is measured as the difference between
the asset’s carrying amount and the present value of estimated future cash flows
(excluding future credit losses that have not yet been incurred). The present value of
the estimated future cash flows is discounted at the financial asset’s original effective
interest rate (i.e., the effective interest rate computed at initial recognition).
The carrying amount of the asset is reduced through the use of an allowance account
and the loss is recognised in profit or loss. Interest income continues to be accrued
on the reduced carrying amount using the rate of interest used to discount the future
cash flows for the purpose of measuring the impairment loss. Loans and receivables
together with any associated allowance are written off when there is no realistic
prospect of future recovery and all collateral has been realised or has been transferred
to the Group.
If, in a subsequent period, the amount of the estimated impairment loss increases
or decreases because of an event occurring after the impairment was recognised,
the previously recognised impairment loss is increased or reduced by adjusting the
allowance account. If a write-off is later recovered, the recovery is credited to other
gains in profit or loss.
237
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IAS 39 applicable before 1 January 2018
Impairment of financial assets (Continued)
Available-for-sale financial investments
For available-for-sale financial investments, the Group assesses at the end of each
reporting period whether there is objective evidence that an investment or a group of
investments is impaired.
If an available-for-sale asset is impaired, an amount comprising the difference between
its cost (net of any principal payment and amortisation) and its current fair value, less
any impairment loss previously recognised in profit or loss, is removed from other
comprehensive income and recognised in profit or loss.
In the case of equity investments classified as available-for-sale financial investments,
a significant or prolonged decline in the fair value of the security below its cost is
considered as an indicator that the securities are impaired. If any such evidence exists
for available-for-sale financial investments, the cumulative loss – measured as the
difference between the acquisition cost and the current fair value, less any impairment
loss on that financial asset previously recognised in other comprehensive income – is
removed from other comprehensive income and recognised in profit or loss. Impairment
losses recognised in profit or loss on equity instruments are not reversed through profit
or loss.
238
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IAS 39 applicable before 1 January 2018 (Continued)
Impairment of financial assets (Continued)
Available-for-sale financial investments (Continued)
The determination of what is “significant” or “prolonged” requires judgement. In
making this judgement, the Group evaluates, among other factors, the duration or
extent to which the fair value of an investment is less than its cost.
In the case of debt instruments classified as available for sale, impairment is assessed
based on the same criteria as financial assets carried at amortised cost. However, the
amount recorded for impairment is the cumulative loss measured as the difference
between the amortised cost and the current fair value, less any impairment loss on that
investment previously recognised in profit or loss. Future interest income continues to
be accrued based on the reduced carrying amount of the asset and is accrued using the
rate of interest used to discount the future cash flows for the purpose of measuring the
impairment loss. The interest income is recorded as part of finance income. Impairment
losses on debt instruments are reversed through profit or loss if the subsequent
increase in fair value of the instruments can be objectively related to an event occurring
after the impairment loss was recognised in profit or loss.
239
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.15 Financial assets (Continued)
Policies under IFRS 9 from 1 January 2018 and policies under IAS 39
applicable before 1 January 2018
Derecognition of financial assets
A financial asset (or, where applicable, a part of a financial asset or part of a group
of similar financial assets) is primarily derecognised (i.e. removed from the Group’s
consolidated statement of financial position) when:
•
•
the rights to receive cash flows from the asset have expired; or
the Group has transferred its rights to receive cash flows from the asset or has
assumed an obligation to pay the received cash flows in full without material
delay to a third party under a “pass-through” arrangement; and either (a) the
Group has transferred substantially all the risks and rewards of the asset, or
(b) the Group has neither transferred nor retained substantially all the risks and
rewards of the asset, but has transferred control of the asset.
When the Group has transferred its rights to receive cash flows from an asset or has
entered into a pass-through arrangement, it evaluates if, and to what extent, it has
retained the risk and rewards of ownership of the asset. When it has neither transferred
nor retained substantially all the risks and rewards of the asset nor transferred control
of the asset, the Group continues to recognise the transferred asset to the extent of the
Group’s continuing involvement. In that case, the Group also recognises an associated
liability. The transferred asset and the associated liability are measured on a basis that
reflects the rights and obligations that the Group has retained.
Continuing involvement that takes the form of a guarantee over the transferred asset
is measured at the lower of the original carrying amount of the asset and the maximum
amount of consideration that the Group could be required to repay.
240
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.16 Financial liabilities
Policies under IFRS 9 from 1 January 2018 and policies under IAS 39
applicable before 1 January 2018
Initial recognition and measurement
Financial liabilities are classified, at initial recognition, as financial liabilities at fair value
through profit or loss, loans and borrowings, payables, or as derivatives designated as
hedging instruments in an effective hedge, as appropriate.
All financial liabilities are recognised initially at fair value and, in the case of loans and
borrowings and payables, net of directly attributable transaction costs.
The Group’s financial liabilities include financial liabilities at fair value through profit or
loss, loans and borrowings, trade and notes payables and other financial liabilities.
Subsequent measurement
The subsequent measurement of financial liabilities depends on their classification as
follows:
Loans and borrowings
After initial recognition, interest-bearing loans and borrowings are subsequently
measured at amortised cost, using the effective interest rate method unless the
effect of discounting would be immaterial, in which case they are stated at cost. Gains
and losses are recognised in the consolidated statement of profit or loss and other
comprehensive income when the liabilities are derecognised as well as through the
effective interest rate amortisation process.
Amortised cost is calculated by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the effective interest rate. The
effective interest rate amortisation is included in finance costs in profit or loss.
241
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.16 Financial liabilities (Continued)
Policies under IFRS 9 from 1 January 2018 and policies under IAS 39 applicable
before 1 January 2018 (Continued)
Subsequent measurement (Continued)
Financial liabilities at fair value through profit or loss (policies under IFRS 9 applicable
from 1 January 2018)
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and financial liabilities designated upon initial recognition as at fair value through
profit or loss.
Financial liabilities are classified as held for trading if they are incurred for the purpose
of repurchasing in the near term. This category also includes derivative financial
instruments entered into by the Group that are not designated as hedging instruments
in hedge relationships as defined by IFRS 9. Separated embedded derivatives are
also classified as held for trading unless they are designated as effective hedging
instruments. Gains or losses on liabilities held for trading are recognised in profit or
loss. The net fair value gain or loss recognised in profit or loss does not include any
interest charged on these financial liabilities.
Financial liabilities designated upon initial recognition as at fair value through profit or
loss are designated at the initial date of recognition, and only if the criteria in IFRS 9 are
satisfied. Gains or losses on liabilities designated at fair value through profit or loss are
recognised in profit or loss, except for the gains or losses arising from the Group’s own
credit risk which are presented in other comprehensive income with no subsequent
reclassification to profit or loss. The net fair value gain or loss recognised in profit or
loss does not include any interest charged on these financial liabilities.
242
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.16 Financial liabilities (Continued)
Policies under IFRS 9 from 1 January 2018 and policies under IAS 39 applicable
before 1 January 2018 (Continued)
Subsequent measurement (Continued)
Financial liabilities at fair value through profit or loss (policies under IAS 39 applicable
before 1 January 2018)
Financial liabilities at fair value through profit or loss include financial liabilities held for
trading and financial liabilities designated upon initial recognition as at fair value through
profit or loss.
Financial liabilities are classified as held for trading if they are acquired for the purpose
of repurchasing in the near term. This category includes derivative financial instruments
entered into by the Group that are not designated as hedging instruments in hedge
relationships as defined by IAS 39. Separated embedded derivatives are also classified
as held for trading unless they are designated as effective hedging instruments. Gains
or losses on liabilities held for trading are recognised in profit or loss. The net fair value
gain or loss recognised into profit or loss does not include any interest charged on
these financial liabilities.
Financial liabilities designated upon initial recognition as at fair value through profit or
loss are designated at the date of initial recognition and only if the criteria in IAS 39 are
satisfied.
243
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.16 Financial liabilities (Continued)
Policies under IFRS 9 from 1 January 2018 and policies under IAS 39 applicable
before 1 January 2018 (Continued)
Subsequent measurement (Continued)
Financial guarantee contracts (policies under IFRS 9 applicable from 1 January 2018)
Financial guarantee contracts issued by the Group are those contracts that require a
payment to be made to reimburse the holder for a loss it incurs because the specified
debtor fails to make a payment when due in accordance with the terms of a debt
instrument. A financial guarantee contract is recognised initially as a liability at its fair
value, adjusted for transaction costs that are directly attributable to the issuance of
the guarantee. Subsequent to initial recognition, the Group measures the financial
guarantee contracts at the higher of: (i) the ECL allowance determined in accordance
with the policy as set out in “Impairment of financial assets (policies under IFRS 9
applicable from 1 January 2018)”; and (ii) the amount initially recognised less, when
appropriate, the cumulative amount of income recognised.
Financial guarantee contracts (policies under IAS 39 applicable before 1 January 2018)
A financial guarantee contract is recognised initially as a liability at its fair value, adjusted
for transaction costs that are directly attributable to the issuance of the guarantee.
Subsequent to initial recognition, the Group measures the financial guarantee contract
at the higher of (i) the amount of the best estimate of the expenditure required to settle
the present obligation at the end of the reporting period; and (ii) the amount initially
recognised less, when appropriate, cumulative amortisation.
244
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.16 Financial liabilities (Continued)
Derecognition of financial liabilities (policies under IFRS 9 applicable from 1
January 2018 and IAS 39 applicable before 1 January 2018)
A financial liability is derecognised when the obligation under the liability is discharged
or cancelled, or expires.
When an existing financial liability is replaced by another from the same lender on
substantially different terms, or the terms of an existing liability are substantially
modified, such an exchange or modification is treated as a derecognition of the original
liability and a recognition of a new liability, and the difference between the respective
carrying amounts is recognised in profit or loss.
2.17 Offsetting financial instruments
Policies under IFRS 9 from 1 January 2018 and policies under IAS 39
applicable before 1 January 2018
Financial assets and liabilities are offset and the net amount reported in the
consolidated statement of financial position when there is a legally enforceable right
to offset the recognised amounts and there is an intention to settle on a net basis or
realise the asset and settle the liability simultaneously.
245
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.18 Derivative financial instruments
Policies under IFRS 9 from 1 January 2018 and policies under IAS 39
applicable before 1 January 2018
Initial recognition and subsequent measurement
The Group uses derivative financial instruments, such as futures and option contracts,
to reduce its exposure to fluctuation in the price of primary aluminium and other
products, to hedge its foreign currency risk and interest rate risk, respectively. Such
derivative financial instruments are initially recognised at fair value on the date on which
a derivative contract is entered into and are subsequently remeasured at fair value.
Derivatives are carried as assets when the fair value is positive and as liabilities when
the fair value is negative.
Any gains or losses arising from changes in fair value of derivatives are taken directly to
profit or loss.
2.19 Inventories
Inventories comprise raw materials, work-in-progress, finished goods, spare parts and
packaging materials and others, and are stated at the lower of cost and net realisable
amount. Cost is determined using the weighted average method. Work-in-progress and
finished goods comprise materials, direct labour and an appropriate proportion of all
production overhead expenditure (based on the normal operating capacity). Borrowing
costs are excluded.
Provision for impairment of inventories is usually determined by the excess of cost
over the net realisable amount and recorded in profit or loss. Net realisable amounts
are determined based on the estimated selling price less estimated conversion costs,
selling expenses and related taxes in the ordinary course of business. The provision for
or the reversal of provision for impairment of inventories is recognised within “Cost of
sales” in profit or loss.
246
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.20 Trade and notes receivables
Trade and notes receivables are amounts due from customers for merchandise sold or
services performed in the ordinary course of business. If collection of these receivables
is expected in one year or less (or in the normal operating cycle of the business if
longer), they are classified as current assets.
Trade and notes receivables are recognised initially at fair value and subsequently
measured at amortised cost using the effective interest method, less provision for
impairment.
2.21 Cash and cash equivalents
For the purpose of the consolidated statement of cash flows, cash and cash equivalents
comprise cash on hand and demand deposits, and short term highly liquid investments
that are readily convertible into known amounts of cash, are subject to an insignificant
risk of changes in value, and have a short maturity of generally within three months
when acquired, less bank overdrafts which are repayable on demand and form an
integral part of the Group’s cash management.
For the purpose of the consolidated statement of financial position, cash and cash
equivalents comprise cash on hand and at banks, including term deposits, and assets
similar in nature to cash, which are not restricted as to use.
2.22 Government grants
Government grants are recognised when the Group fulfils the conditions attached
to them and there is reasonable assurance that the grant will be received. When the
government grant is in the form of monetary assets, it is measured at the actual amount
received. When the government grant is in the form of non-monetary assets, the grant is
recorded at the fair value of the non-monetary assets.
247
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.22 Government grants (Continued)
Asset-related government grants are recognised when the government document
designates that the government grants are used for constructing or forming long-term
assets. If the government document is inexplicit, the Group should make a judgement
based on the basic conditions to obtain the government grants, and recognises them as
asset-related government grants if the conditions are to construct or to form long-term
assets. Otherwise, the government grants should be income-related.
As described in note 2.2 (d), the Group has voluntarily changed the accounting policy
for government grants on the presentation in the consolidated statement of financial
position and the consolidated statement of profit or loss and other comprehensive
income. The revised accounting policies are as follows:
For asset-related government grants that are related to non-current assets that already
exist at the time of recognising the government grant, the grant is deducted from the
carrying amount of the asset. If the asset is not yet purchased or constructed at the
time of recognising the government grant, the grant is recognised as deferred income
and will be deducted from the cost of the asset once the asset is recognised.
Income-related government grants that are specific to compensate expenses or costs
that have already incurred are directly recognised in profit or loss for the current period
as deduction of the related expenses or costs. If the income-related government grants
are specific to compensate future expenses or costs of the Group, they are recognised
as deferred income and will be deducted from the related expenses or costs when the
related expenses or costs are incurred.
248
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.23 Trade and notes payables and other payables
Trade and notes payables and other payables are mainly obligations to pay for goods,
equipment or services that have been acquired in the ordinary course of business from
suppliers and service providers. These payables are classified as current liabilities if
they are due within one year or less (or in the normal operating cycle of the business if
longer).
2.24 Employee benefits
Employee benefits mainly include salaries, bonuses, allowances and subsidies,
pension insurance, social insurance and housing funds, labour union fees, employees’
education fees and other expenses related to the employees for their services. The
Group recognises employee benefits as liabilities during the accounting period when
employees rendered the services and allocates the related cost of assets and expenses
based on different beneficiaries.
(a) Bonus plans
The expected cost of bonus plans is recognised as a liability when the Group
has a present legal or constructive obligation as a result of services rendered by
employees and a reliable estimate of the obligation can be made.
(b) Retirement benefit obligations
The Group primarily pays contributions on a monthly basis to participate in a
pension plan organised by the relevant municipal and provincial governments
in the PRC. In 2018, the Group made monthly contributions at the rate of 20%
(2017: 20%) of the qualified employees’ salaries. The municipal and provincial
governments undertake to assume the retirement benefit obligations of all
existing and future retired employees payable under these plans. The Group has
no legal or constructive obligations for further contributions if the fund does not
hold sufficient assets to pay all employees the benefit relating to their current and
past services.
249
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.24 Employee benefits (Continued)
(c) Other social insurance and housing funds
The Group provides other social insurance and housing funds to the qualified
employees in the PRC based on certain percentages of their salaries. These
percentages are not to exceed the upper limits of the percentages prescribed
by the Ministry of Human Resources and Social Security of the PRC. These
benefits are paid to social security organisations and the amounts are expensed
as incurred. The Group has no legal or constructive obligations for further
contributions if the fund does not hold sufficient assets to pay all employees the
benefit relating to their current and past services.
(d) Termination benefit obligations and early retirement benefit
obligations
T e r m i n a t i o n a n d e a r l y r e t i r e m e n t b e n e f i t o b l i g a t i o n s a r e p a y a b l e w h e n
employment is terminated by the Group before the normal retirement date, or
whenever an employee accepts voluntary redundancy and/or early retirement
in exchange for these benefits. The Group recognises termination and early
retirement benefit obligations when it is demonstrably committed to either:
terminating the employment of current employees according to a detailed formal
plan without the possibility of withdrawal; or providing termination benefits
as a result of an offer made to encourage voluntary redundancy and/or early
retirement. The specific terms vary among the terminated and early retired
employees depending on various factors, including the position, length of service
and district of the employees concerned. Benefits falling due for more than 12
months after the end of the reporting period are discounted to their present
values.
250
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.25 Current and deferred income tax
Income tax comprises current and deferred tax. Income tax relating to items recognised
outside profit or loss is recognised outside profit or loss, either in other comprehensive
income or directly in equity.
Current tax assets and liabilities are measured at the amount expected to be recovered
from or paid to the taxation authorities, based on tax rates (and tax laws) that have
been enacted or substantively enacted by the end of the reporting period, taking into
consideration interpretations and practices prevailing in the countries in which the
Group operates.
Deferred tax is provided, using the liability method, on all temporary differences at the
end of the reporting period between the tax bases of assets and liabilities and their
carrying amounts for financial reporting purposes.
Deferred tax liabilities are recognised for all taxable temporary differences, except:
•
when the deferred tax liability arises from the initial recognition of goodwill or an
asset or liability in a transaction that is not a business combination and, at the
time of the transaction, affects neither the accounting profit nor taxable profit or
loss; and
•
in respect of taxable temporary differences associated with investments in
subsidiaries, associates and joint ventures, when the timing of the reversal of
the temporary differences can be controlled and it is probable that the temporary
differences will not reverse in the foreseeable future.
Deferred tax assets are recognised for all deductible temporary differences, the
carryforward of unused tax credits and any unused tax losses. Deferred tax assets are
recognised to the extent that it is probable that taxable profit will be available against
which the deductible temporary differences, the carryforward of unused tax credits and
unused tax losses can be utilised, except:
251
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.25 Current and deferred income tax (Continued)
•
when the deferred tax asset relating to the deductible temporary differences
arises from the initial recognition of an asset or liability in a transaction that is not
a business combination and, at the time of the transaction, affects neither the
accounting profit nor taxable profit or loss; and
•
in respect of deductible temporary differences associated with investments
in subsidiaries, associates and joint ventures, deferred tax assets are only
recognised to the extent that it is probable that the temporary differences will
reverse in the foreseeable future and taxable profit will be available against which
the temporary differences can be utilised.
The carrying amount of deferred tax assets is reviewed at the end of each reporting
period and reduced to the extent that it is no longer probable that sufficient taxable
profit will be available to allow all or part of the deferred tax asset to be utilised.
Unrecognised deferred tax assets are reassessed at the end of each reporting period
and are recognised to the extent that it has become probable that sufficient taxable
profit will be available to allow all or part of the deferred tax asset to be recovered.
Deferred tax assets and liabilities are measured at the tax rates that are expected to
apply to the period when the asset is realised or the liability is settled, based on tax
rates (and tax laws) that have been enacted or substantively enacted by the end of the
reporting period.
Deferred tax assets and deferred tax liabilities are offset if and only if the Group has a
legally enforceable right to set off current tax assets and current tax liabilities and the
deferred tax assets and deferred tax liabilities relate to income taxes levied by the same
taxation authority on either the same taxable entity or different taxable entities which
intend either to settle current tax liabilities and assets on a net basis, or to realise the
assets and settle the liabilities simultaneously, in each future period in which significant
amounts of deferred tax liabilities or assets are expected to be settled or recovered.
252
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.26 Perpetual securities
Perpetual securities are classified as equity if they are non-redeemable, or redeemable
only at the issuer’s option, and any interest and distributions are discretionary.
Interest and distributions on perpetual securities classified as equity are recognised as
distributions within equity.
The perpetual securities issued by the Company are recognised as other equity
instruments, and the perpetual securities issued by a subsidiary of the Company are
recognised as non-controlling interests.
2.27 Revenue recognition
Applicable from 1 January 2018
Revenue from contracts with customers
Revenue from contracts with customers is recognised when control of goods or
services is transferred to the customers at an amount that reflects the consideration to
which the Group expects to be entitled in exchange for those goods or services.
(a) Revenue from the sales (including sales of scrap and other materials)
Revenue from the sale of industrial products or scrap and other materials is
recognised at the point in time when control of the asset is transferred to the
customer, generally on delivery of the industrial products.
(b) Rendering of services
Revenue from services is recognised over time, using an input method to
measure progress towards complete satisfaction of the service, because the
customer simultaneously receives and consumes the benefits provided by the
Group. Revenue is recognized on a straight-line basis because the entity’s inputs
are expended evenly throughout the performance period.
253
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.28 Contract liabilities
Applicable from 1 January 2018
A contract liability is the obligation to transfer goods or services to a customer for which
the Group has received a consideration (or an amount of consideration that is due) from
the customer. If a customer pays the consideration before the Group transfers goods or
services to the customer, a contract liability is recognised when the payment is made or
the payment is due (whichever is earlier). Contract liabilities are recognised as revenue
when the Group performs under the contract.
2.29 Interest income
Applicable from 1 January 2018
Interest income is recognised on an accrual basis using the effective interest method
by applying the rate that exactly discounts the estimated future cash receipts over the
expected life of the financial instrument or a shorter period, when appropriate, to the
net carrying amount of the financial asset.
2.30 Dividend income
Applicable from 1 January 2018
Dividend income is recognised when the shareholders’ right to receive payment has
been established, it is probable that the economic benefits associated with the dividend
will flow to the Group and the amount of the dividend can be measured reliably.
254
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.31 Revenue recognition
Applicable before 1 January 2018
The Group recognises revenue when the amount of revenue can be reliably measured,
it is probable that future economic benefits will flow to the Group and when specific
criteria have been met for each of the Group’s activities (see descriptions below).
(a) Sales of goods
Revenue from the sales of goods is recognised when the significant risks and
rewards of ownership have been transferred to the buyer, provided that the
Group maintains neither managerial involvement to the degree usually associated
with ownership, nor effective control over the goods sold.
(b) Rendering of services
The Group provides machinery processing, transportation and packaging services
and other services to third party customers. These services are recognised in the
period when the related services are provided.
2.32 Interest income
Applicable before 1 January 2018
Interest income is recognised using the effective interest method. When a loan or
receivable is impaired, the Group reduces the carrying amount to its recoverable
amount, being the estimated future cash flows discounted at the original effective
interest rate of the instrument, and continues unwinding the discount as interest
income. Interest income on impaired loans and receivables is recognised using the
original effective interest rate.
255
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.33 Dividend income
Applicable before 1 January 2018
Dividend income is recognised when the right to receive payment is established.
2.34 Leases
Leases that transfer substantially all the rewards and risks of ownership of assets to
the Group, other than legal title, are accounted for as finance leases. At the inception
of a finance lease, the cost of the leased asset is capitalised at the present value of
the minimum lease payments and recorded together with the obligation, excluding the
interest element, to reflect the purchase and financing. Assets held under capitalised
finance leases, including prepaid land lease payments under finance leases, are
included in property, plant and equipment, and depreciated over the shorter of the lease
terms and the estimated useful lives of the assets. The finance costs of such leases
are charged to the statement of profit or loss and other comprehensive income so as to
provide a constant periodic rate of charge over the lease terms.
Assets acquired through hire purchase contracts of a financing nature are accounted for
as finance leases, but are depreciated over their estimated useful lives.
Leases where substantially all the rewards and risks of ownership of assets remain
with the lessor are accounted for as operating leases. Where the Group is the lessor,
assets leased by the Group under operating leases are included in non-current assets,
and rentals receivable under the operating leases are credited to the statement of profit
or loss and other comprehensive income on the straight-line basis over the lease terms.
Where the Group is the lessee, rentals payable under operating leases net of any
incentives received from the lessor are charged to the statement of profit or loss and
other comprehensive income on the straight-line basis over the lease terms.
Prepaid land lease payments under operating leases are initially stated at cost and
subsequently recognised on the straight-line basis over the lease terms.
When the lease payments cannot be allocated reliably between the land and buildings
elements, the entire lease payments are included in the cost of the land and buildings as
a finance lease in property, plant and equipment.
256
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 2. BASIS OF PREPARATION AND SIGNIFICANT ACCOUNTING
POLICIES (CONTINUED)
2.35 Borrowing costs
General and specific borrowing costs directly attributable to the acquisition, construction
or production of qualifying assets, which are assets that necessarily take a substantial
period of time to get ready for their intended use or sale, are added to the cost of those
assets, until such time as the assets are substantially ready for their intended use or
sale.
Investment income earned on the temporary investment of specific borrowings pending
their expenditure on qualifying assets is deducted from the borrowing costs eligible for
capitalisation.
All other borrowing costs are recognised in profit or loss in the period in which they are
incurred. Borrowing costs consist of interest and other costs that an entity incurs in
connection with the borrowing of funds.
2.36 Dividend distribution
Dividend distribution to the Company’s shareholders is recognised as a liability in the
Group’s and Company’s financial statements in the period in which the dividends are
approved by the Company’s shareholders.
2.37 Provisions
A provision is recognised when a present obligation (legal or constructive) has arisen
as a result of a past event and it is probable that a future outflow of resources will be
required to settle the obligation, provided that a reliable estimate can be made of the
amount of the obligation.
Provisions are measured at the present value of the expenditures expected to be
required to settle the obligation using a pre-tax rate that reflects current market
assessments of the time value of money and the risks specific to the obligation. The
increase in the provision due to the passage of time is recognised as finance costs.
257
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS
The preparation of the Group’s consolidated financial statements requires management to
make judgements, estimates and assumptions that affect the reported amounts of revenues,
expenses, assets and liabilities, and the accompanying disclosures, and the disclosure of
contingent liabilities. Uncertainty about these judgements, assumptions and estimates could
result in outcomes that require a material adjustment to the carrying amounts of assets or
liabilities affected in future periods.
Judgements
In the process of applying the Group’s accounting policies and preparing the Group’s
consolidated financial statements, management has made the following judgements, apart
from those involving estimates, which have a significant effect on the amounts recognised in
the consolidated financial statements.
(a) Significant influence over an entity in which the Group holds less than
20% of voting rights
At 31 December 2018, the Group owned a 6.68% equity interest in Chalco Mineral
Resources Co.,Ltd.* (“Chalco Resources”) (中鋁礦產資源有限公司). The Group
considers that it has significant influence over Chalco Resources even though it owns
less than 20% of the voting rights, on the grounds that the Group can appoint one out
of the five directors of the board of directors of Chalco Resources.
At 31 December 2018, the Group owned a 14.62% equity interest in China Rare Earth
Co., Ltd. * (“China Rare Earth”) (中國稀有稀土股份有限公司). The Group considers that
it has significant influence over China Rare Earth even though it owns less than 20%
of the voting rights, on the grounds that the Group can appoint one out of the seven
directors of the board of directors of China Rare Earth.
At 31 December 2018, the Group owned 17.7% of the voting right of Chinalco Capital
Holdings Co., Ltd.* (“Chinalco Capital”) (中鋁資本控股有限公司). The Group considers
that it has significant influence over Chinalco Capital since it can appoint one out of
three directors of the board of directors of Chinalco Capital.
258
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Judgements (continued)
(a) Significant influence over an entity in which the Group holds less than
20% of voting rights (continued)
At 31 December 2018, the Group owned a 16% equity interest in Baise New Aluminum
Power Co., Ltd. * (“New Aluminum Power”) (百色新鋁電力有限公司). The Group
considers that the Group has significant influence over New Aluminum Power even
though it owns less than 20% of the voting rights, on the grounds that the Group can
appoint one out of the nine directors of the board of directors of New Aluminum Power.
At 31 December 2018, the Group owned a 14.29% equity interest in Inner Mongolia
Geliugou Co., Ltd.* (“Inner Mongolia Qiliugou”) (內蒙古圪柳溝能源有限公司). The Group
considers that it has significant influence over Inner Mongolia Qiliugou even though it
owns less than 20% of the voting rights, on the grounds that the Group can appoint
one out of the seven directors of the board of directors of Inner Mongolia Qiliugou.
(b) Consolidation of entities in which the Group holds less than a majority
of voting rights
At 31 December 2018, the Group owned a 40.23% equity interest in Ningxia Yinxing
Energy Co., Ltd. * (“Yinxing Energy”) (寧夏銀星能源股份有限公司). Since the remaining
59.77% of the equity shares in Yinxing Energy are held by a large number of individual
shareholders, in opinion of the directors of the Company, the Group has control over
Yinxing Energy, and Yinxing Energy continues to be included in the consolidation scope.
As disclosed in note 38, the Company holds a 40% equity interest in Guizhou Huaren
New Materials Co., Ltd.* (“Guizhou Huaren”)(貴州華仁新材料有限公司). In accordance
with the acting-in-concert agreement signed between the Company and Hangzhou
Jinjiang Group Co., Ltd.* (“Hangzhou Jinjiang”)(杭州錦江集團有限公司), Hangzhou
Jinjiang would exercise the shareholders’ and board of directors’ votes in concert with
the Group. Therefore, the directors of the Company believe that the Company has
control over Guizhou Huaren and consolidated Guizhou Huaren’s financial statements
from the date the Group obtained control.
259
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Judgements (continued)
(b) Consolidation of entities in which the Group holds less than a majority
of voting rights (continued)
As disclosed in note 38, the Company holds 40% of the shares of Shanxi China
Aluminum China Resources Co., Ltd.* (“Shanxi Zhongrun”)(山西中鋁華潤有限公司). In
accordance with the acting-in-concert agreement signed between the Company and
China Resources Coal Industry Group Co., Ltd. (“China Resources Coal Industry”),
China Resources Coal Industry would exercise the shareholders’ and board of directors’
votes in concert with the Group. Therefore, the directors of the Company believe that
the Company has control over Shanxi Zhongrun and consolidated Shanxi Zhongrun’s
financial statements from the date the Group obtained control.
(c) Determination of control over structured entities
As disclosed in note 10, in 2017, the Company initiated the establishment of Beijing
Chalco Bocom Size Industry Investment Fund Management Partnership (Limited
Partnership)* (“Size Industry Investment Fund”) (北京中鋁交銀四則產業投資基金管
理合夥企業（有限合夥)). Pursuant to the Investment Agreements, the directors of the
Company are of the opinion that as a limited partner, the Company neither had control
over or joint control over nor significant influence over Size Industry Investment Fund.
Therefore, the Company’s investment in Size Industry Investment Fund was accounted
for as equity investment designated at fair value through other comprehensive income.
(d) Lease classification
As disclosed in note 20, the Group has entered into several sales and lease back
agreements with third party leasing companies and related party leasing companies.
The Group assessed the terms in the agreements and considered that the Group had
substantially all the risks and rewards of ownership and treated them as finance leases.
*
The English name represents the best effort made by management of the Group
in translating its Chinese name as it does not have any official English names.
260
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Estimates and assumptions
The key assumptions concerning the future and other key sources of estimation uncertainty at
the reporting date, that have a significant risk of causing a material adjustment to the carrying
amounts of assets and liabilities within the next financial year, are described below. The
Group’s assumptions and estimates are based on parameters available when the consolidated
financial statements were prepared. Existing circumstances and assumptions about future
developments, however, may change due to market changes or circumstances arising beyond
the control of the Group. Such changes are reflected in the assumptions when they occur.
(a) Property, plant and equipment and intangible assets – recoverable
amount
In accordance with the Group’s accounting policy, each asset or cash-generating unit
is evaluated in every reporting period to determine whether there are any indications
of impairment. If any such indication exists, an estimate of the net recoverable amount
is performed and an impairment loss is recognised to the extent that the carrying
amount exceeds the recoverable amount. The recoverable amount of an asset or cash-
generating unit of assets is measured at the higher of fair value less costs of disposal
and value in use.
A fair value measurement of a non-financial asset takes into account a market
participant’s ability to generate economic benefits by using the asset in its highest and
best use or by selling it to another market participant that would use the asset in its
highest and best use.
261
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Estimates and assumptions (continued)
(a) Property, plant and equipment and intangible assets – recoverable
amount (continued)
Value in use is generally determined as the present value of the estimated future cash
flows of those expected to arise from the continued use of the asset in its present form
and its eventual disposal. Present values are determined using a risk-adjusted pre-tax
discount rate appropriate to the risks inherent in the asset. Future cash flow estimates
are based on expected production and sales volumes, selling prices (considering current
and historical prices, price trends and related factors) and operating costs. This policy
requires management to make these estimates and assumptions which are subject to
risk and uncertainty; hence, there is a possibility that changes in circumstances will
alter these projections, which may impact on the net recoverable amounts of the assets.
In such circumstances, some or all of the carrying value of the assets may be impaired
and the impairment would be charged against profit or loss.
(b) Property, plant and equipment and intangible assets – estimated useful
lives and residual values
The Group’s management determines the estimated useful lives and residual values
(if applicable) and consequently the related depreciation/amortisation charges
for its property, plant and equipment and intangible assets (excluding goodwill).
These estimates are based on the historical experience of the actual useful lives of
property, plant and equipment of similar nature and functions, or based on value-
in-use calculations or market valuations according to the estimated periods that the
Group intends to derive future economic benefits from the use of intangible assets.
Management will increase the depreciation/amortisation charge where useful lives are
less than previously estimated, and it will write off or write down technically obsolete
or non-strategic assets that have been abandoned or sold.
262
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Estimates and assumptions (continued)
(b) Property, plant and equipment and intangible assets – estimated useful
lives and residual values (continued)
Actual economic lives may differ from estimated useful lives and actual residual values
may differ from estimated residual values. Periodic review could result in change in
depreciable lives and residual values and therefore change in depreciation/amortisation
expense in future periods.
(c) Provision for expected credit losses on trade receivables
The Group uses a provision matrix to calculate ECLs for trade receivables. The provision
rates are based on days past due for groupings of various customer segments that have
similar loss patterns (i.e., by product type, customer type, and coverage by letters of
credit and other forms of credit insurance).
The provision matrix is initially based on the Group’s historical observed default rates.
The Group will calibrate the matrix to adjust the historical credit loss experience with
forward-looking information. For instance, if forecast economic conditions (i.e., gross
domestic products) are expected to deteriorate over the next year which can lead to an
increased number of defaults in the manufacturing sector, the historical default rates
are adjusted. At each reporting date, the historical observed default rates are updated
and changes in the forward-looking estimates are analysed.
The assessment of the correlation among historical observed default rates, forecast
economic conditions and ECLs is a significant estimate. The amount of ECLs is
sensitive to changes in circumstances and forecast economic conditions. The Group’s
historical credit loss experience and forecast of economic conditions may also not be
representative of the customer’s actual default in the future. The information about
the ECLs on the Group’s trade receivables is disclosed in note 14 to the financial
statements.
263
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Estimates and assumptions (continued)
(d) Estimated impairment of inventories
In accordance with the Group’s accounting policy, the Group’s management tests
whether inventories suffered any impairment based on the estimates of the net
realisable amount of the inventories. For different types of inventories, it requires the
estimation on selling prices, costs of conversion, selling expenses and the related tax
expense to calculate the net realisable amount of inventories. For inventories held for
executed sales contracts, management estimates the net realisable amount based
on the contracted price; for other inventories, management estimates the realisable
future price based on the actual prices during the period from the end of the reporting
period to the date that these financial statements were approved for issue by the
board of directors of the Company and takes into account the nature and balance of
inventories and future estimated price trends. For raw materials and work-in-progress,
management has established a model in estimating the net realisable amount at which
the inventories can be realised in the normal course of business after considering the
Group’s manufacturing cycles, production capacity and forecasts, estimated future
conversion costs and selling prices. Management also takes into account the price
or cost fluctuations and other related matters occurring after the end of the reporting
period which reflect conditions that existed at the end of the reporting period.
It is reasonably possible that if there is a significant change in circumstances, including
the Group’s business and the external environment, outcomes within the next financial
year would be significantly affected.
264
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Estimates and assumptions (continued)
(e) Coal reserve estimates and units-of-production amortisation for coal
mining rights
External qualified valuation professionals evaluate “economically recoverable reserves”
based on the reserves estimated by external qualified exploration engineers in
accordance with the PRC standards. The estimates of coal reserves are inherently
imprecise and represent only the approximate amounts of the coal reserves because
of the subjective judgements involved in developing such information. Economically
recoverable reserve estimates are evaluated on a regular basis and have taken into
account recent production and technical information about each mine.
(f)
Income tax
The Group estimates its income tax provision and deferred taxation in accordance
with the prevailing tax rules and regulations, taking into account any special approvals
obtained from the relevant tax authorities and any preferential tax treatment to which it
is entitled in each location or jurisdiction in which the Group operates. There are many
transactions and calculations for which the ultimate tax determination is uncertain
during the ordinary course of business. The Group recognises liabilities for anticipated
tax audit issues based on the estimates of whether additional taxes will be due. Where
the final tax outcome of these matters is different from the amounts that were initially
recorded, the differences will impact on the income tax and deferred tax provisions in
the period in which the determination is made.
265
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Estimates and assumptions (continued)
(f)
Income tax (continued)
Deferred tax assets are recognised for unused tax losses and deductible temporary
differences, such as the provision for impairment of receivables, inventories and
property, plant and equipment and accruals of expenses not yet deductible for tax
purposes, to the extent that it is probable that taxable profits will be available against
which the losses and deductible temporary difference can be utilised. Significant
management judgement is required to determine the amount of deferred tax assets
that can be recognised, based upon the likely timing and level of future taxable profits
together with future tax planning strategies.
An entity shall recognise a deferred tax liability for all taxable temporary differences
associated with investments in subsidiaries, associates and joint ventures, except to
the extent that both of the following conditions are satisfied:
•
the parent, investor or joint venturer is able to control the timing of the reversal
of the temporary difference; and
•
it is probable that the temporary difference will not reverse in the foreseeable
future.
The Group considers that it has recorded adequate current tax provision and deferred
taxes based on the prevailing tax rules and regulations and its current best estimates
and assumptions. In the event that future tax rules and regulations or related
circumstances change, adjustments to current and deferred taxation may be necessary
which would impact on the Group’s results or financial position.
266
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Estimates and assumptions (continued)
(g) Goodwill – recoverable amount
In accordance with the Group’s accounting policy, goodwill is allocated to the Group’s
cash generating units as it represents the lowest level within the Group at which the
goodwill is monitored for internal management purposes and is tested for impairment
annually by preparing a formal estimate of the recoverable amount. The recoverable
amount is the higher of value in use and the fair value less costs of disposal. Similar
considerations to those described above in respect of assessing the recoverable
amount of property, plant and equipment also apply to goodwill.
(h)
Investments in joint ventures and associates – recoverable amount
In accordance with the Group’s accounting policy, each investment in a joint venture
and an associate is evaluated in every reporting period to determine whether there
are any indicators of impairment. If any such indicators exists, an estimate of the
recoverable amount is performed and an impairment loss is recognised to the extent
that the carrying amount exceeds the recoverable amount. The recoverable amount
of the investment in a joint venture and an associate is measured at the higher of fair
value less costs of disposal and value in use.
A fair value measurement of a non-financial asset takes into account a market
participant’s ability to generate economic benefits by using the asset in its highest and
best use or by selling it to another market participant that would use the asset in its
highest and best use.
267
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 3. S I G N I F I C A N T A C C O U N T I N G E S T I M A T E S A N D
JUDGEMENTS (CONTINUED)
Estimates and assumptions (continued)
(h)
Investments in joint ventures and associates – recoverable amount
Value in use is also generally determined as the present value of the estimated future
cash flows of those expected to arise from the continued use of the asset in its present
form and its eventual disposal. Present values are determined using a risk-adjusted
pre-tax discount rate appropriate to the risks inherent in the asset. Future cash flow
estimates are based on expected production and sales volumes, commodity prices
(considering current and historical prices, price trends and related factors) and operating
costs. This policy requires management to make these estimates and assumptions
which are subject to risk and uncertainty; hence there is a possibility that changes
in circumstances will alter these projections, which may impact on the recoverable
amounts of the investments. In such circumstances, some or all of the carrying value of
the investments may be impaired and the impairment would be charged against profit
or loss.
268
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 4. REVENUE AND SEGMENT INFORMATION
(a) Revenue
Revenue recognised during the year is as follows:
Sales of goods (net of value-added tax)
Rendering of services
Rental income
2018
2017
(restated)
179,784,444
215,557
240,153
180,704,153
163,732
152,543
180,240,154
181,020,428
Other revenue primarily includes revenue from the sale of scrap and other materials,
the supply of heat and water and the provision of machinery processing, transportation
and packaging and other services.
Revenue from contracts with customers
(i) Disaggregated revenue information
For the year ended 31 December 2018
Primary
Aluminum
segment
Alumina
segment
Energy
Segment
Trading
Corporate
and other
operating
segments
Inter-
segment
elimination
Total
Type of goods or services
Sales of goods
Rendering of services
43,979,059
–
53,771,379
–
7,019,716 141,979,219
–
215,557
667,095
–
(67,632,024) 179,784,444
215,557
–
Total revenue
43,979,059
53,771,379
7,235,273 141,979,219
667,095
(67,632,024) 180,000,001
Geographical markets
Mainland China
Outside of mainland China
43,979,059
–
53,771,379
–
7,235,273 132,762,660
9,216,559
–
667,095
–
(67,632,024) 170,783,442
9,216,559
–
Total revenue
43,979,059
53,771,379
7,235,273 141,979,219
667,095
(67,632,024) 180,000,001
269
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(a) Revenue (continued)
(i) Disaggregated revenue information (continued)
For the year ended 31 December 2018
Primary
Aluminum
segment
Alumina
segment
Energy
Segment
Trading
Corporate
and other
operating
segments
Inter-
segment
elimination
Total
Timing of revenue recognition
Goods transferred at a point in time
Services transferred over time
43,979,059
–
53,771,379
–
7,019,716 141,979,219
–
215,557
667,095
–
(67,632,024) 179,784,444
215,557
–
Total revenue
43,979,059
53,771,379
7,235,273 141,979,219
667,095
(67,632,024) 180,000,001
Revenue from contracts with
customers
External customers
Intersegment sales
Intersegment adjustments and
14,586,564
29,392,495
41,313,516
12,457,863
7,036,936 116,608,916
25,370,303
198,337
454,069
213,026
– 180,000,001
67,632,024
–
43,979,059
53,771,379
7,235,273 141,979,219
667,095
– 247,632,025
eliminations
(29,392,495)
(12,457,863)
(198,337)
(25,370,303)
(213,026)
–
(67,632,024)
Total revenue
14,586,564
41,313,516
7,036,936 116,608,916
454,069
– 180,000,001
270
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(a) Revenue (continued)
(i) Disaggregated revenue information (continued)
The following table shows the amounts of revenue recognised in the current
reporting period that were included in the contract liabilities at the beginning of
the reporting period and recognised from performance obligations satisfied in
previous periods:
Revenue recognised that was included in contract liabilities at
the beginning of the reporting period:
– Sales of goods
– Others
2018
1,277,125
32,947
1,310,072
(ii) Performance obligations
Information about the Group’s performance obligations is summarised below:
Revenue from sales of products (including sales of and other materials)
The performance obligation is satisfied upon delivery of the industrial products
and payment is generally due with in 30 to 90 days from delivery, except for new
customers, where payment in advance is normally required.
Sales of goods were made in a short period of time and the performance
obligation was mostly satisfied in one year or less at the end of each year.
271
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(a) Revenue (continued)
(ii) Performance obligations (continued)
Rendering of services
The performance obligation is satisfied over time as services are rendered and
payment is generally due upon completion of the relevant services.
The transaction prices allocated to the remaining performance obligations
(unsatisfied or partially unsatisfied) as at 31 December 2018 are as follows:
Within one year
More than one year
1,579,322
132,844
1,712,166
The remaining performance obligations expected to be recognised in more than
one year relate to rendering of services that are to be satisfied within 1–10 years.
All the other remaining performance obligations are satisfied in one year or less at
the end of each year.
272
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information
The presidents of the Company have been identified as the chief operating decision-
makers. They are responsible for the review of internal reports in order to allocate
resources to operating segments and assess their performance of these operating
segments.
The presidents monitor the business from a product perspective comprising alumina,
primary aluminum and energy products which are identified as separate reportable
operating segments. In addition, the Group’s trading business is identified as a separate
reportable operating segment. The Group’s operating segments also include corporate
and other operating activities.
The presidents assess the performance of operating segments based on profit or loss
before income tax in related periods. Unless otherwise stated below, the manner of
assessment used by the presidents is consistent with that applied in these financial
statements. Management has determined the operating segments based on the reports
reviewed by the presidents that are used to make strategic decisions.
273
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
The Group’s five reportable operating segments are summarised as follows:
•
The alumina segment, which consists of the mining and purchase of bauxite and
other raw materials, the refining of bauxite into alumina, and the sale of alumina
both internally to the Group’s aluminum enterprises and trading enterprises
and externally to customers outside the Group. This segment also includes the
production and sale of chemical alumina and metal gallium.
•
The primary aluminum segment, which consists of the procurement of alumina
and other raw materials, supplemental materials and electricity power, and the
smelting of alumina to produce primary aluminum which is sold to internal trading
enterprises and external customers, including Chinalco and its subsidiaries. This
segment also includes the production and sale of carbon products and aluminum
alloy and other aluminum products.
•
The energy segment, which consists of the research and development,
production and operation of energy products, mainly includes coal mining,
electricity generation by thermal power, wind power and solar power, and the
new energy-related equipment manufacturing business. Sales of coals are mainly
made to the Group’s internal and external coal consuming customers; electricity is
sold to regional power grid corporations.
274
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
•
The trading segment, which consists of the trading of alumina, primary aluminum,
aluminum fabrication products, other non-ferrous metal products, coal products,
raw materials and supplemental materials and logistics and transport services
to internal manufacturing plants and external customers in the PRC. The
products are sourced from fellow subsidiaries of the Group, international and
domestic suppliers of the Group. Sales of products manufactured by the Group’s
manufacturing business are included in the total revenue of the trading segment
and are eliminated with the segment revenue of the respective segments which
supply the products to the trading segment.
•
Corporate and other operating segments, which mainly include corporate
management, research and development activities and others.
Prepaid current income tax and deferred tax assets are excluded from segment assets,
and income tax payable and deferred tax liabilities are excluded from segment liabilities.
All sales among the operating segments were conducted on terms mutually agreed
among group companies, and have been eliminated on consolidation.
275
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
Year ended 31 December 2018
Primary
Corporate
and other
Inter-
operating
segment
Alumina
aluminum
Energy
Trading
segments
eliminations
Total
Total revenue
44,150,937
53,802,172
7,235,273
142,016,561
667,235
(67,632,024) 180,240,154
Inter-segment revenue
(29,392,495) (12,457,863)
(198,337)
(25,370,303)
(213,026)
67,632,024
–
Sales of self-produced
products (Note (i))
Sales of products sourced
from external suppliers
and rental income
Revenue from continuing
34,453,683
82,192,575
operations
14,758,442
41,344,309
7,036,936
116,646,258
454,209
–
180,240,154
Segment profit/(loss) before
income tax
3,496,381
(929,298)
26,020
779,451
(1,267,146)
198,103
2,303,511
Income tax expense
Profit for the year
(822,499)
1,481,012
276
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
Year ended 31 December 2018
Corporate
and other
operating
Inter-
segment
Energy
Trading
segments
eliminations
Total
Primary
aluminum
Alumina
Other items
Finance income
Finance costs
Share of profits and losses of
100,125
54,458
15,744
136,513
185,392
(399,344)
(1,131,622)
(1,047,285)
(366,807)
(1,937,438)
joint ventures
37,377
8
(225,377)
9,010
(20,470)
Share of profits and losses of
associates
Amortisation of land use rights
Depreciation and amortisation
(excluding the amortisation
(1,141)
(39,027)
17,102
(41,175)
(52,368)
(9,335)
19,375
(18,000)
56,367
–
of land use rights)
(2,846,051)
(2,954,801)
(1,962,081)
(101,705)
(82,962)
Gain/(loss) on disposal
of property, plant and
equipment and land use
rights
53,116
15,211
24,780
20,036
(12,045)
Realised (loss)/gain on
futures, forward and option
contracts, net
(716)
Impairment of property, plant
and equipment
Unrealised gain on futures,
forward and option
contracts, net
Gain/ (loss) on disposal of
–
–
subsidiaries
7,671
–
–
–
–
2,855
47,601
(9,248)
(7,450)
–
–
–
100,967
–
–
–
(4,154)
–
–
–
–
–
–
–
–
–
–
–
492,232
(4,882,496)
(199,452)
39,335
(107,537)
(7,947,600)
101,098
40,492
(7,450)
100,967
3,517
277
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
Year ended 31 December 2018
Primary
Alumina
aluminum
Energy
Trading
Corporate
and other
Inter-
operating
segments
segment
eliminations
Total
Changes for impairment of
inventories
(54,463)
(273,796)
(7,884)
(17,802)
–
Reversal of/(provision for)
impairment of receivables,
net of bad debts recovered
19,320
(9,406)
(23,327)
(84,807)
(9,621)
Dividends of equity
investments at fair
value through other
comprehensive income
Loss on disposal of associates
Gain on previously held equity
interest remeasured at
acquisition-date fair value
–
–
–
–
–
–
Investments in associates
Investments in joint ventures
89,734
989,840
558,759
–
1,000
(1,904)
(3,177)
2,064,425
435,867
–
–
–
131,691
77,211
108,914
–
751,263
3,518,853
1,890,431
Additions during the period:
Intangible assets
Land use rights
Property, plant and
99,089
2,786
753
–
2,754
–
514
52
194
–
equipment (Note (ii))
2,564,003
4,602,580
1,610,442
101,360
143,839
–
–
–
–
–
–
–
–
–
–
(353,945)
(107,841)
109,914
(1,904)
748,086
6,363,462
3,393,349
103,304
2,838
9,022,224
Note:
(i)
The sales of self-produced products include sales of self-produced alumina amounting to RMB 16,561
million (2017: RMB13,187 million), sales of self-produced primary aluminium amounting RMB13,517
million (2017: RMB6,680 million), and sales of self-produced other products amounting to RMB4,376
million (2017: RMB3,292 million).
(ii)
The additions to property, plant and equipment under sale and leaseback contracts (note 20) are not
included.
278
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
Year ended 31 December 2017 (restated)
Primary
Corporate
and other
operating
Inter-
segment
Alumina
aluminum
Energy
Trading
segments
eliminations
Total
Total revenue
38,997,261
47,245,646
6,250,966
146,854,723
645,314
(58,973,482) 181,020,428
Inter-segment revenue
(24,431,939)
(10,693,678)
(517,269)
(23,159,115)
(171,481)
58,973,482
–
Sales of self-produced
products (Note (i))
Sales of products sourced
from external suppliers
Revenue from external
23,158,952
100,536,656
customers
14,565,322
36,551,968
5,733,697
123,695,608
473,833
–
181,020,428
Segment profit/(loss)
before income tax
3,290,945
826,632
(171,310)
733,731
(1,728,563)
97,575
3,049,010
Income tax expense
Profit for the year
(643,734)
2,405,276
279
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
Year ended 31 December 2017 (restated)
Primary
Corporate
and other
operating
Inter-
segment
Alumina
aluminum
Energy
Trading
segments
eliminations
Total
Other items
Finance income
Finance costs
Share of profits and losses of
233,016
83,996
44,015
192,327
153,336
(708,655)
(1,212,249)
(1,000,767)
(467,090)
(1,814,663)
joint ventures
82,619
–
(383,263)
1,885
306,910
Share of profits and losses of
associates
–
Amortisation of land use rights
(42,768)
(16,887)
(25,120)
(181,667)
(15)
9,463
(6,376)
23,842
(17,300)
Depreciation and amortisation
(excluding the amortisation
of land use rights)
(2,781,350)
(2,516,058)
(1,510,218)
(78,724)
(86,200)
Gain on disposal of property,
plant and equipment and
land use rights
Realised gain/(loss) on
futures, forward and option
47,243
40,106
(12,826)
1,673
543
contracts, net
3,398
(47,730)
1,585
(24,953)
43,749
Impairment of property, plant
–
–
–
–
–
–
–
–
706,690
(5,203,424)
8,151
(165,249)
(91,579)
(6,972,550)
76,739
(23,951)
and equipment
(568)
–
(15,632)
–
–
–
(16,200)
Unrealised gain/(loss) on
futures, forward and option
contracts, net
Gain on deemed disposal and
disposal of subsidiaries
–
–
(17,033)
–
(92,719)
(21,321)
–
38,397
54,599
232,026
–
–
(131,073)
325,022
280
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
Year ended 31 December 2017 (restated)
Primary
Corporate
and other
operating
Inter-
segment
Alumina
aluminum
Energy
Trading
segments
eliminations
Total
Changes for impairment of
inventories
79,063
64,734
4,488
722
5,287
Reversal of/(provision for)
impairment of receivables,
net of bad debts recovered
(17,453)
269
(25,119)
(18,396)
–
Gain on disposal and dividends
of available for sale
Gain on previously held equity
interest remeasured at
acquisition-date fair value
–
–
2,792
–
–
117,640
–
–
76,616
–
Investments in associates
90,875
296,357
2,170,178
184,149
4,193,471
Investments in joint ventures
2,809,758
–
878,196
28,865
2,290,805
Additions during the period:
Intangible assets
Land use rights
Property, plant and
–
–
197
–
284,509
27,956
372
25,199
89
6,060
equipment (Note (ii))
2,642,350
5,533,168
1,268,051
64,005
256,093
–
–
–
–
–
–
–
–
–
154,294
(60,699)
79,408
117,640
6,935,030
6,007,624
285,167
59,215
9,763,667
281
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
Primary
Corporate
and other
operating
Alumina
aluminum
Energy
Trading
segments
Total
82,677,250
57,712,842
39,458,086
20,129,355
33,577,526 233,555,059
(34,228,334)
(155,283)
1,542,569
162,103
200,876,114
As at 31 December 2018
Segment assets
Reconciliation:
Elimination of inter-segment
receivables
Other eliminations
Corporate and other
unallocated assets:
Deferred tax assets
Prepaid income tax
Total assets
Segment liabilities
38,817,030
34,492,538
27,265,031
14,442,010
50,492,049 165,508,658
Reconciliation:
Elimination of inter-segment
payables
Corporate and other
unallocated liabilities:
Deferred tax liabilities
Income tax payable
Total liabilities
282
(34,228,334)
1,812,805
113,783
133,206,912
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
Primary
Corporate
and other
operating
Alumina
aluminum
Energy
Trading
segments
Total
As at 31 December 2017
(restated)
Segment assets
Reconciliation:
Elimination of inter-segment
receivables
Other eliminations
Corporate and other
unallocated assets:
Deferred tax assets
Prepaid income tax
Total assets
69,810,387
51,736,716
40,113,747
18,586,406
48,264,166 228,511,422
(30,170,567)
(194,763)
1,606,150
64,557
199,816,799
Segment liabilities
33,037,329
29,552,176
27,368,026
13,067,384
60,012,851 163,037,766
Reconciliation:
Elimination of inter-segment
payables
Corporate and other
unallocated liabilities:
Deferred tax liabilities
Income tax payable
Total liabilities
(30,170,567)
993,742
213,262
134,074,203
283
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
4. REVENUE AND SEGMENT INFORMATION (CONTINUED)
(b) Segment information (continued)
The Group mainly operates in Mainland China. Operating segment information by
geographical location as follows:
Segment revenue from external customers
– Mainland China
– Outside Mainland China
Non-current assets (excluding financial assets and
deferred tax assets)
– Mainland China
– Outside Mainland China
2018
2017
(restated)
171,023,595
171,954,097
9,216,559
9,066,331
180,240,154
181,020,428
2018
2017
(restated)
137,857,441
126,992,893
646,327
384,089
138,503,768
127,376,982
For the year ended 31 December 2018, revenues of approximately RMB32,852 million
(2017: RMB39,759 million) were derived from entities directly or indirectly owned
or controlled by the PRC government including Chinalco. These revenues are mainly
attributable to the alumina, primary aluminum, energy and trading segments. There
were no other individual customers from which the Group has derived revenue of 10%
or more of the Group’s revenue during the years ended 31 December 2018 and 2017.
284
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
5.
INTANGIBLE ASSETS
Computer
Software,
Mining
Mineral
production
rights and
exploration
quota and
Goodwill
others
rights
others
Total
2,345,930
7,066,428
1,111,586
113,689
10,637,633
98,995
728,066
7,072
–
(265,108)
41,148
5,782
–
–
(7,072)
–
–
–
9,445
4,309
1,285
–
(168)
103,304
1,893,300
–
(168)
(30,793)
(295,901)
484,068
–
525,216
15,981
Year ended 31 December 2018
Opening net carrying amount
(restated)
Additions
–
Acquisition of subsidiaries
1,163,949
Reclassification
Disposals
Amortisation
Transfer from property, plant and
equipment (note 6)
–
–
–
–
Currency translation differences
754
Closing net carrying amount
3,510,633
7,682,383
1,113,959
572,390
12,879,365
As at 31 December 2018
Cost
Accumulated amortisation and
3,510,633
9,430,183
1,113,959
888,975
14,943,750
impairment
–
(1,747,800)
–
(316,585)
(2,064,385)
Net carrying amount
3,510,633
7,682,383
1,113,959
572,390
12,879,365
285
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
5.
INTANGIBLE ASSETS (CONTINUED)
Computer
Software,
Mining
Mineral
production
rights and
exploration
quota and
(Restated)
Goodwill
others
rights
others
Total
Year ended 31 December 2017
Opening net carrying amount
2,346,853
6,981,217
1,123,639
140,540
10,592,249
Additions
Acquisition of a subsidiary
Disposals
Disposal of subsidiaries
Amortisation
Transfer from property,
plant and equipment
(note 6)
Impairment losses
–
–
–
–
–
–
–
280,340
–
–
–
(241,261)
53,565
–
–
–
–
–
–
–
–
Currency translation differences
(923)
(7,433)
(12,053)
4,827
188
(11,168)
(562)
(34,616)
22,614
(8,134)
–
285,167
188
(11,168)
(562)
(275,877)
76,179
(8,134)
(20,409)
Closing net carrying amount
2,345,930
7,066,428
1,111,586
113,689
10,637,633
As at 31 December 2017
Cost
Accumulated amortisation and
2,345,930
8,546,343
1,111,586
399,532
12,403,391
impairment
–
(1,479,915)
–
(285,843)
(1,765,758)
Net carrying amount
2,345,930
7,066,428
1,111,586
113,689
10,637,633
286
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
5.
INTANGIBLE ASSETS (CONTINUED)
For the year ended 31 December 2018, the amortisation expenses of intangible assets
recognised in profit or loss were analysed as follows:
Cost of sales
General and administrative expenses
2018
2017
(restated)
265,108
30,793
241,261
34,616
295,901
275,877
As at 31 December 2018, the Group has pledged intangible assets with a net carrying value
amounting to RMB773 million (31 December 2017: RMB1,112 million) for bank and other
borrowings as set out in note 24 to the financial statements.
As at 31 December 2018, the Group was in the process of applying for the certificates
of mining rights with a carrying value amounting to RMB626 million (31 December 2017:
RMB1,680 million). There have been no litigations, claims or assessments against the Group
for compensation with respect to the use of these rights to date. As at 31 December 2018,
the carrying value of these rights only represented approximately 0.31% of the total asset
value of the Group (31 December 2017: approximately 0.84%). Management considers that it
is probable that the Group can obtain the relevant ownership certificates from the appropriate
authorities. The directors of the Company are of the opinion that the Group legally owns and
has the rights to use the above mining rights, and that there is no material adverse impact on
the overall financial position of the Group.
287
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
5.
INTANGIBLE ASSETS (CONTINUED)
Impairment testing of goodwill
The lowest level within the Group at which goodwill is monitored for internal management
purposes is the operating segment level. Therefore, goodwill is allocated to the Group’s cash-
generating units (“CGUs”) and groups of CGUs according to operating segments. A summary
of goodwill allocated to each segment is presented below:
31 December 2018
31 December 2017
Primary
Primary
Alumina
aluminum
Alumina
aluminum
Qinghai Branch
Guangxi Branch
Lanzhou Branch
PT. Nusapati Prima
(“PTNP”)
Shanxi Huaxing
–
217,267
–
217,267
189,419
–
189,419
–
–
1,924,259
–
1,924,259
15,739
1,163,949
–
–
14,985
–
–
–
1,369,107
2,141,526
204,404
2,141,526
The recoverable amount of a CGU is determined based on value-in-use calculations.
These calculations use pre-tax cash flow projections based on financial budgets approved
by management covering a five-year period. Cash flows beyond the 5-year period are
extrapolated using the estimated growth rate of 2% (2017: 2%) not exceeding the long-
term average growth rate for the businesses in which the CGU operates. Other key
assumptions applied in the impairment testing include the expected product price, demand
for the products, product costs and related expenses. Management determined these key
assumptions based on past performance and their expectations on market development.
Furthermore, the Group adopts a pre-tax rate of 12.62% (2017: 12.62%) that reflects specific
risks related to CGUs and groups of CGUs as the discount rate. The assumptions above are
used in analysing the recoverable amounts of CGUs and groups of CGUs within operating
segments.
The directors of the Company are of the view that, based on their assessment, there was no
impairment of goodwill as at 31 December 2018 (31 December 2017: no impairment).
288
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
6. PROPERTY, PLANT AND EQUIPMENT
Office
Transportation
and other
Construction
Buildings
Machinery
facilities
equipment
in progress
Total
Year ended 31 December 2018
Opening net carrying amount (restated)
Reclassifications and internal transfers
Government grants
Transfer to intangible assets (note 5)
Transfer to land use rights (note 8)
Transfer to investment properties (note 7)
Transfer from investment properties (note 7)
Additions
Acquisition of subsidiaries
Disposal of subsidiaries
Disposals
Depreciation
Impairment losses
Currency translation differences
32,288,223
3,204,611
52,784,696
3,600,371
(468)
(113,481)
–
–
(11,039)
21,773
230,243
4,633,728
–
(251,212)
(1,266,607)
–
99
–
–
–
–
1,998,717
4,026,062
(472)
(2,505,158)
(6,087,890)
(7,061)
146
541,908
75,277
129,625
5,149
–
–
–
–
–
31,668
17,443
(101)
(39,827)
(116,807)
–
34
–
–
–
–
–
48,912
5,937
(53)
(3,347)
(28,018)
–
27
9,883,125
95,627,577
(6,885,408)
–
(525,216)
(382,242)
–
–
8,025,615
3,149,060
(8,893)
(275,391)
–
(389)
–
–
(113,949)
(525,216)
(382,242)
(11,039)
21,773
10,335,155
11,832,230
(9,519)
(3,074,935)
(7,499,322)
(7,450)
306
Closing net carrying amount
38,849,351
53,695,930
509,595
158,232
12,980,261
106,193,369
As at 31 December 2018
Cost
56,620,994
103,608,492
2,538,835
Accumulated depreciation and impairment
(17,771,643)
(49,912,562)
(2,029,240)
603,593
(445,361)
13,092,648
176,464,562
(112,387)
(70,271,193)
Net carrying amount
38,849,351
53,695,930
509,595
158,232
12,980,261
106,193,369
289
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
6. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
(Restated)
Buildings
Machinery
facilities
equipment
in progress
Total
Office
Transportation
and other
Construction
Year ended 31 December 2017
Opening net carrying amount
27,918,175
45,522,495
Reclassifications and internal transfers
5,334,951
9,722,364
Transfer to intangible assets (note 5)
Transfer to land use rights (note 8)
Transfer to investment properties (note 7)
Additions
Acquisition of subsidiaries
Disposal of subsidiaries
Disposals
Government grants
Depreciation
Impairment losses
Currency translation differences
–
–
(157,150)
8,941
889,597
(86,945)
(37,678)
(3,585)
–
–
–
1,068,129
2,600,315
(62,814)
(1,140,096)
(105,979)
656,467
9,064
–
–
–
36,667
3,410
(5,269)
(13,084)
–
100,202
16,174,232
90,371,571
11,439
(15,077,818)
–
–
–
47,804
1,714
(2,114)
(1,123)
–
(76,179)
(396,398)
–
–
(76,179)
(396,398)
(157,150)
9,602,162
10,763,703
99,934
3,594,970
(108,479)
(334,329)
–
–
–
–
(265,621)
(1,526,310)
(109,564)
(6,554,775)
(16,200)
(470)
(1,577,363)
(4,803,886)
(145,287)
(28,239)
(564)
(156)
(15,636)
(196)
–
(60)
–
(58)
Closing net carrying amount
32,288,223
52,784,696
541,908
129,625
9,883,125
95,627,577
As at 31 December 2017
Cost
48,990,555
101,005,277
2,873,825
Accumulated depreciation and impairment
(16,702,332)
(48,220,581)
(2,331,917)
561,597
(431,972)
9,995,123
163,426,377
(111,998)
(67,798,800)
Net carrying amount
32,288,223
52,784,696
541,908
129,625
9,883,125
95,627,577
290
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
6. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
For the year ended 31 December 2018, depreciation expenses recognised in profit or loss are
analysed as follows:
Cost of sales
General and administrative expenses
Selling and distribution expenses
2018
2017
(restated)
7,291,380
6,387,773
201,337
6,605
160,076
6,926
7,499,322
6,554,775
As at 31 December 2018, the Group was in the process of applying for the ownership
certificates of buildings with a net carrying value of RMB5,639 million (31 December 2017:
RMB6,942 million). There have been no litigations, claims or assessments against the Group
for compensation with respect to the use of these buildings as at the date of approval of
these financial statements.
As at 31 December 2018, the carrying value of these buildings only represented approximately
2.81% of the Group’s total asset value (31 December 2017: 3.47%). Management considers
that it is probable that the Group can obtain the relevant ownership certificates from the
appropriate authorities. The directors of the Company are of the opinion that the Group legally
owns and has the rights to use the above buildings, and that there is no material adverse
impact on the overall financial position of the Group.
For the year ended 31 December 2018, interest expenses of RMB518 million (2017: RMB344
million) (note 28) arising from borrowings attributable to the construction of property, plant
and equipment during the year were capitalised at an annual rate ranging from 4.54% to 7.00%
(2017: 4.41% to 8.00%) (note 28), and were included in additions to property, plant and
equipment.
As at 31 December 2018, the Group has pledged property, plant and equipment at a net
carrying value amounting to RMB4,168 million (31 December 2017: RMB5,799 million) for
bank and other borrowings as set out in note 24 to the financial statements.
291
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
6. PROPERTY, PLANT AND EQUIPMENT (CONTINUED)
As at 31 December 2018, the carrying value of temporarily idle property, plant and equipment
of the Group was RMB675 million (31 December 2017: RMB2,530 million).
The cost of the Group’s fixed assets held under finance leases included in the total amounts
of the machinery and construction in progress at 31 December 2018 were RMB10,678 million
(2017: RMB9,955 million) and RMB112 million (2017: RMB100 million), respectively. The
accumulated depreciation of the Group’s fixed assets held under finance leases amounted to
RMB2,011 million (2017: RMB1,908 million).
Impairment testing for property, plant and equipment
When any indicators of impairment are identified, property, plant and equipment are reviewed
for impairment based on each CGU. The CGU is an individual plant or entity. The carrying
values of these individual plants or entities were compared to the recoverable amounts of
the CGUs, which were based predominantly on value in use. Value-in-use calculations use
pre-tax cash flow projections based on financial budgets approved by management covering
a five-year period. Cash flows beyond the five-year period are extrapolated using the same
cash flow projections of the fifth year. Other key assumptions applied in the impairment
testing include the expected product price, demand for the products, product cost and related
expenses. Management determined these key assumptions based on past performance and
their expectations on market development. Further, the Group adopts a pre-tax and non-
inflation rate of 10.16% (2017: 10.16%) that reflects specific risks related to the CGUs as
discount rates. The assumptions above are used in analysing the recoverable amounts of the
CGUs within operating segments.
For the CGUs with indicators of impairment identified, the assets were not further impaired
during the current year based on the impairment testing (2017: Nil).
In addition to the CGUs for which impairment was tested based on value in use, the Group
also assessed the recoverable amounts for property, plant and equipment about to be
disposed or abandoned, and impairment losses of RMB7 million were provided during the
year ended 31 December 2018 (2017: RMB16 million).
292
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 7.
INVESTMENT PROPERTIES
Year ended 31 December 2018
Opening net carrying amount
Transfer from property, plant and
equipment (note 6)
Transfer to property, plant and
equipment (note 6)
Disposal
Depreciation
Buildings Land use rights
Total
254,061
1,078,309
1,332,370
11,039
(21,773)
–
(7,353)
–
–
(143,401)
(14,876)
11,039
(21,773)
(143,401)
(22,229)
Closing net carrying amount
235,974
920,032
1,156,006
As at 31 December 2018
Cost
Accumulated depreciation
251,626
(15,652)
939,015
(18,983)
1,190,641
(34,635)
Net carrying amount
235,974
920,032
1,156,006
293
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
7.
INVESTMENT PROPERTIES (CONTINUED)
Buildings
Land use right
Total
Year ended 31 December 2017
Opening net carrying amount
Transfer from property, plant and
equipment and land use rights (note
6) (note 8)
Disposal
Depreciation
99,655
1,156,120
1,255,775
157,150
–
(2,744)
6,896
(73,346)
(11,361)
164,046
(73,346)
(14,105)
Closing net carrying amount
254,061
1,078,309
1,332,370
As at 31 December 2017
Cost
Accumulated depreciation
263,066
(9,005)
1,107,411
(29,102)
1,370,477
(38,107)
Net carrying amount
254,061
1,078,309
1,332,370
The Group’s investment properties consist of land use rights held for capital appreciation and
buildings leased to third parties under operating leases.
As at 31 December 2018, the Group was in the process of applying for the ownership
certificates of investment properties with a net carrying value of RMB68 million (31 December
2017: RMB147 million). There have been no litigations, claims or assessments against the
Group for compensation with respect to the use of these rights to date. As at 31 December
2018, the carrying value of these investment properties only represented approximately 0.03%
of the total asset value of the Group (31 December 2017: 0.07%). Management considers
that it is probable that the Group can obtain the relevant ownership certificates from the
appropriate authorities. The directors of the Company are of the opinion that the Group legally
owns and has the rights to use the above investment properties, and that there is no material
adverse impact on the overall financial position of the Group.
As at 31 December 2018, the fair value of the buildings was approximately RMB781 million
(31 December 2017: RMB1,208 million), which was estimated based on the market price of
comparable buildings in the nearby area. The directors of the Company estimated that the fair
value of the land use right is likely to be RMB1,287 million (31 December 2017: RMB1,182
million), which was determined based on the transaction prices for similar lands nearby.
294
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
8. LAND USE RIGHTS
Details of land use rights are as follows:
Operating leases:
In the Mainland China, held on:
Leases less than 10 years
Leases between 10 and 50 years
Leases over 50 years
31 December
31 December
2018
2017
(restated)
768,153
3,393,547
118,591
127,516
3,331,557
117,939
4,280,291
3,577,012
295
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
8. LAND USE RIGHTS (CONTINUED)
Operating lease prepayments
As at 1 January
Additions
Acquisition of subsidiaries
Transfer from property, plant and equipment (note 6)
Disposals
Government grants
Disposal of subsidiaries
Transfer to investment properties
Amortisation
2018
2017
(restated)
3,577,012
3,198,047
2,838
460,638
382,242
–
(34,174)
(728)
–
(107,537)
59,215
31,833
396,398
(6,712)
–
(3,294)
(6,896)
(91,579)
As at 31 December
4,280,291
3,577,012
As at 31 December 2018, the Group was in the process of applying for the certificates of land
use rights with a carrying amount of RMB687 million (31 December 2017: RMB516 million).
There have been no litigations, claims or assessments against the Group for compensation
with respect to the use of land parcels to date. As at 31 December 2018, the carrying value
of these land parcels only represented approximately 0.34% of the total asset value of the
Group (31 December 2017: 0.26%). Management considers that it is probable that the Group
can obtain the relevant ownership certificates from the appropriate authorities. The directors
of the Company are of the opinion that the Group legally owns and has the right to use the
above land, and that there is no material adverse impact on the overall financial position of
the Group.
For the year ended 31 December 2018, the amortisation expenses of land use rights were
recognised in “general and administrative expenses” in profit or loss amounting to RMB108
million (31 December 2017: RMB92 million (restated)).
As at 31 December 2018, the Group has pledged land use rights at a net carrying value
amounting to RMB328 million (31 December 2017: RMB177 million) for bank and other
borrowings as set out in note 24 to the financial statements.
296
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
9.
INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
(a) Investments in joint ventures
Movements in investments in joint ventures are as follows:
As at 1 January
Capital injections
A joint venture changed into a subsidiary
(note 38 (c))
A subsidiary changed into a joint venture
Share of profits and losses for the year
Share of changes in reserves
Cash dividends declared
Impairment
2018
2017
6,007,624
90,000
6,240,200
201,864
(2,048,780)
–
(199,452)
(2,837)
(236,253)
(216,953)
(315,706)
11,980
8,151
(6,105)
(132,760)
–
As at 31 December
3,393,349
6,007,624
As at 31 December 2018, all joint ventures of the Group were unlisted.
No joint venture was individually material to the Group.
297
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
9.
INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
(CONTINUED)
(a) Investments in joint ventures (continued)
The following table illustrates the aggregate financial information of the Group’s joint
ventures that are not individually material:
2018
2017
Share of the joint ventures’ profits and losses for
the year
(199,452)
8,151
Share of the joint ventures’ total comprehensive
income
(199,452)
8,151
Aggregate carrying amount of the Group’s
investments in joint ventures
3,393,349
6,007,624
As at 31 December 2018, there were no proportionate interests of the Group in the
joint ventures’ capital commitments (31 December 2017: Nil).
There were no material contingent liabilities relating to the Group’s interests in the joint
ventures and the joint ventures themselves.
298
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
9.
INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
(CONTINUED)
(b) Investments in associates
Movements in investments in associates are as follows:
As at 1 January
Capital injections
Deemed disposal of a subsidiary
A subsidiary changed into an associate
Associates changed into subsidiaries
Disposal
Share of profits and losses for the year
Cash dividends declared
Share of changes in reserves
2018
2017
6,935,030
315,300
–
–
(862,214)
(32,720)
39,335
(36,157)
4,888
5,926,533
857,317
100,092
240,258
–
–
(165,249)
(26,330)
2,409
As at 31 December
6,363,462
6,935,030
As at 31 December 2018, all associates of the Group were unlisted.
No associate was individually material to the Group.
As at 31 December 2018, the Group has pledged investment in an associate amounting
to RMB536 million (31 December 2017:nil) for bank and other borrowings as set out in
note 24 to the financial statements.
299
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
9.
INVESTMENTS IN JOINT VENTURES AND ASSOCIATES
(CONTINUED)
(b) Investments in associates (continued)
The following table illustrates the aggregate financial information of the Group’s
associates that are not individually material:
2018
2017
Share of the associates’ profits and losses
39,335
(165,249)
Share of the associates’ total comprehensive
income
39,335
(165,249)
Aggregate carrying amount of the Group’s
investments in the associates
6,363,462
6,935,030
There were no material contingent liabilities relating to the Group’s interests in the
associates and the associates themselves.
300
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
10. EQUITY INVESTMENTS DESIGNATED AT FAIR VALUE
THROUGH OTHER COMPREHENSIVE INCOME/AVAILABLE-
FOR-SALE INVESTMENTS
Equity investments designated at fair value
through other comprehensive income
Stated at fair value
Listed equity investments
Unlisted investments (Note)
Available-for-sale investments
Non current portion
Stated at fair value
Listed equity investments
Unlisted investments (Note)
Stated at cost
Unlisted equity investments
Less: provision for impairment
31 December
31 December
2018
2017
6,441
1,723,384
1,729,825
–
–
–
–
–
–
–
–
–
9,701
1,848,000
1,857,701
73,211
(2,711)
70,500
1,729,825
1,928,201
The above equity investments were irrevocably designated at fair value through other
comprehensive income as the Group considers these investments to be strategic in nature.
301
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
10. EQUITY INVESTMENTS DESIGNATED AT FAIR VALUE
THROUGH OTHER COMPREHENSIVE INCOME/AVAILABLE-
FOR-SALE INVESTMENTS (CONTINUED)
Note:
In 2017, the Company entered into a series of agreements with Bank of Communications International Trust Co., Ltd.
(“BOCOMMTRUST”) (交銀國際信託有限公司), Bocommtrust Asset Management Co., Ltd.* (“Bocommtrust Asset”)
(交銀國信資產管理有限公司), a subsidiary of BOCOMMTRUST, and Chinalco Jianxin Investment Fund Management
(Beijing) Company Limited* (“Chinalco Jianxin”) (中鋁建信投資基金管理（北京）有限公司) to establish Size Industry
Investment Fund. According to these agreements, BOCOMMTRUST acted as the prioritised limited partner and the
Company as the secondary limited partner of Size Industry Investment Fund, with the maximum amount of capital
contribution of RMB6,700 million and RMB3,300 million, respectively. Bocommtrust Asset and Chinalco Jianxin are
the general partner and the manager of Size Industry Investment Fund, respectively. The purpose of Size Industry
Investment Fund is to invest in the Company’s subsidiaries, associates or joint ventures in the form of debt financing.
As of 31 December 2017, the Company has made investment of RMB1,848 million to the fund.
As at 31 December 2018, Size Industry Investment Fund made four investments in three of the Company’s
subsidiaries and one of the Company’s joint venture amounting to RMB5,000 million in the form of debt. The
Company and BOCOMMTRUST contributed capital of RMB1,650 million and RMB3,350 million to Size Industry
Investment Fund, respectively.
Because the variable return of Size Industry Investment Fund depends on the selection of investment targets, the
timing and size of the investment fund and the rate of return, which are all determined by BOCOMMTRUST under
its full authority, the directors of the Company are of the opinion that the Company did not have control or joint
control over, or significant influence over Size Industry Investment Fund. Therefore, the Company’s investment in
Size Industry Investment Fund was accounted for as an equity investment designated at fair value through other
comprehensive income.
*
The English names represent the best effort made by management of the Group in translating the Chinese
names of the Companies as the companies do not have any official English names.
302
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 11. DEFERRED TAX
Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset
current income tax assets against current income tax liabilities and when the deferred taxes
relate to the same tax authority.
The movements in deferred tax assets and liabilities during the year ended 31 December
2018 without taking into consideration the offsetting of balances within the same tax
jurisdiction are as follows:
Movements in deferred tax assets:
Provision for
Accrued
Unrealised
profit at
impairment
expenses
Tax losses
consolidation
Others
Total
As at 1 January 2017
(restated)
553,716
207,651
636,197
169,113
120,830
1,687,507
(Charged)/credited to profit
or loss
Disposal of subsidiaries
As at 31 December 2017
(28,334)
–
59,664
(3,106)
(94,978)
(1,320)
(3,070)
47,817
–
–
(18,901)
(4,426)
(restated)
525,382
264,209
539,899
166,043
168,647
1,664,180
As at 1 January 2018
(restated)
525,382
264,209
539,899
166,043
168,647
1,664,180
Acquisition of subsidiaries
360
–
–
–
7,734
8,094
(Charged)/credited to profit
or loss
(139,985)
(21,839)
76,338
3,833
5,989
(75,664)
As at 31 December 2018
385,757
242,370
616,237
169,876
182,370
1,596,610
303
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
11. DEFERRED TAX (CONTINUED)
Movements in deferred tax liabilities:
Fair value
changes of
financial
assets
Depreciation
and
amortisation
Fair value
adjustments
arising from
acquisition of
subsidiaries
Interest
capitalisation
Investment in
a subsidiary
Investment in
an associate
As at 1 January 2017
Exchange realignment
Credited to other comprehensive
income
Acquisition of subsidiaries
(Credited)/charged to profit or loss
As at 31 December 2017
Changes in accounting policies
As at 1 January 2018
Exchange realignment
Credited to other comprehensive
income
Acquisition of subsidiaries
(Credited)/ charged to profit or loss
61,166
–
–
–
(8,232)
52,934
–
52,934
–
–
–
(9,102)
14,925
–
(11,180)
–
(1,414)
2,331
3,641
5,972
–
(3,769)
–
3,403
7,474
–
–
–
185
977,342
(1,830)
–
40,706
(27,370)
183,232
–
–
–
(183,232)
7,659
988,848
–
7,659
–
–
–
24,830
–
988,848
1,353
–
822,229
(27,511)
–
–
–
–
–
–
–
–
As at 31 December 2018
43,832
5,606
32,489
1,784,919
Total
1,244,139
(1,830)
(11,180)
40,706
(220,063)
1,051,772
3,641
1,055,413
1,353
(3,769)
822,229
(8,380)
1,866,846
–
–
–
–
–
–
–
–
–
–
–
–
–
For presentation purposes, certain deferred tax assets and liabilities have been offset in the
consolidated statement of financial position. The following is an analysis of the deferred tax
balances of the Group for financial reporting purposes:
31 December
31 December
2018
2017
(restated)
Net deferred tax assets
1,542,569
1,606,150
Net deferred tax liabilities
1,812,805
993,742
304
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
11. DEFERRED TAX (CONTINUED)
As at 31 December 2018, the Group has not recognised deferred tax assets of RMB2,634
million (31 December 2017: RMB4,337 million) in respect of accumulated tax losses
amounting to RMB11,387 million (31 December 2017: RMB18,214 million) arising in Mainland
China and deferred tax assets of RMB1,660 million (31 December 2017: RMB1,434 million)
in respect of deductible temporary differences amounting to RMB7,992 million (31 December
2017: RMB6,235 million) as it was considered not probable that those assets would be
realised. The above tax losses will expire in one to five years if not utilised.
As at 31 December 2018, the expiry profile of these unprovided tax losses was analysed as
follows:
Expiring in
2018
2019
2020
2021
2022
2023
31 December
31 December
2018
2017
–
6,753,096
711,878
975,081
1,211,002
1,736,412
7,689,663
7,650,084
711,878
975,081
1,186,914
–
11,387,469
18,213,620
305
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
12. OTHER NON-CURRENT ASSETS
Financial assets
– Other long-term receivables
Prepayment for mining rights
Long-term prepaid expenses
Deferred losses for sale and leaseback transactions (Note)
Others
31 December
31 December
2018
2017
204,718
261,156
808,736
667,772
1,164,782
1,596,636
801,657
484,536
1,234,376
739,167
4,237,926
3,259,736
4,442,644
3,520,892
Note: As disclosed in note 20, the Group entered into several sale and leaseback agreements which constitute
finance leases during the year. The deferred losses resulted from the sale are classified as other non-current
assets and were amortised over the useful lives of the assets leased back.
As at 31 December 2018 and 31 December 2017, all amounts were denominated in RMB.
As at 31 December 2018 and 31 December 2017, all amounts in other non-current assets
were non-interest-bearing.
306
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
13. INVENTORIES
Raw materials
Work-in-progress
Finished goods
Spare parts
Packaging materials and others
31 December
31 December
2018
8,362,697
8,684,506
3,280,641
879,794
63,227
2017
(restated)
7,619,265
8,193,656
4,417,202
731,621
43,064
21,270,865
21,004,808
Less: provision for impairment of inventories
(811,197)
(457,252)
20,459,668
20,547,556
Movements in the provision for impairment of inventories are as follows:
As at 1 January
Provision for impairment of inventories
Reversal arising from increase in net realisable value
Written off upon sales of inventories
Disposal of subsidiaries
2018
457,252
2,413,098
(165,510)
(1,893,643)
–
2017
(restated)
719,560
194,588
(89,318)
(259,564)
(108,014)
As at 31 December
811,197
457,252
As at 31 December 2018 and 31 December 2017, the Group had not pledged inventories for
bank and other borrowings.
307
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
14. TRADE AND NOTES RECEIVABLES
Trade receivables
Less: impairment
31 December
31 December
2018
2017
(restated)
5,865,311
(659,261)
4,832,177
(546,102)
5,206,050
4,286,075
Notes receivable
2,894,482
3,722,862
8,100,532
8,008,937
As at 31 December 2018, except for trade and notes receivables of the Group amounting to
RMB1,403 million (31 December 2017: RMB1,094 million) which were denominated in USD,
all trade and notes receivables were denominated in RMB.
Included in the Group’s trade and notes receivables are amounts due from the Group’s joint
ventures and associates of RMB820 million (31 December 2017: RMB591 million) and RMB7
million (31 December 2017: RMB97 million), respectively, which are repayable on credit terms
similar to those offered to the major customers of the Group.
As at 31 December 2018, the Group had pledged notes receivable amounting to RMB934
million (31 December 2017: trade receivables amounting to RMB22 million and notes
receivable amounting to RMB82 million) as set out in note 24 to the financial statements.
308
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
14. TRADE AND NOTES RECEIVABLES (CONTINUED)
Trade receivables are non-interest-bearing and are generally on terms of 3 to 12 months.
Certain of the Group’s sales were on advance payments or documents against payment. In
some cases, these terms are extended for qualifying long term customers that have met
specific credit requirements. As at 31 December 2018, the ageing analysis of trade and notes
receivables was as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
31 December
31 December
2018
2017
(restated)
6,212,537
6,289,931
906,302
158,162
516,359
338,334
1,482,792
1,410,415
8,759,793
8,555,039
Less: loss allowance for impairment
(659,261)
(546,102)
8,100,532
8,008,937
309
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
14. TRADE AND NOTES RECEIVABLES (CONTINUED)
Impairment under IFRS 9 for the year ended 31 December
2018
An impairment analysis is performed at each reporting date using a provision matrix to
measure expected credit losses. The provision rates are based on days past due for groupings
of various customer segments with similar loss patterns (i.e., by geographical region, product
type, customer type and rating, and coverage by letters of credit or other forms of credit
insurance). The calculation reflects the probability-weighted outcome, the time value of
money and reasonable and supportable information that is available at the reporting date
about past events, current conditions and forecasts of future economic conditions.
Set out below is the information about the credit risk exposure on the Group’s trade
receivables using a provision matrix:
Alumina and primary aluminum
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
Trading
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
31 December 2018
Gross carrying
Expected credit
Expected credit
amount
losses
loss rate(%)
401,691
55,766
16,546
379,213
3,696
6,179
14,893
359,759
0.92
11.08
90.01
94.87
853,216
384,527
/
473,153
4,146
74
19,422
662
70
3
3,787
0.14
1.69
4.05
19.50
496,795
4,522
/
310
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
14. TRADE AND NOTES RECEIVABLES (CONTINUED)
Impairment under IFRS 9 for the year ended 31 December
2018 (continued)
31 December 2018
Gross carrying
Expected credit
Expected credit
amount
losses
loss rate(%)
Energy
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
Corporate and other operating
segments
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
88,462
3,217
15,417
12,710
3,388
685
3,688
6,216
3.83
21.29
23.92
48.91
119,806
13,977
/
108,627
10,974
4,026
25,800
6,539
7,767
3,823
25,142
6.02
70.78
94.96
97.45
149,427
43,271
/
Individually assessed trade receivables
4,246,067
212,964
5,865,311
659,261
311
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
14. TRADE AND NOTES RECEIVABLES (CONTINUED)
Impairment under IAS 39 for the year ended 31 December
2017
The ageing analysis of the trade receivables as at 31 December 2017 that were not
individually nor collectively considered to be impaired under IAS 39 is as follows:
Past due for 1 year
Past due for 1 to 2 years
Past due for over 2 years
Not past due
31 December
2017
(restated)
470,008
298,008
781,832
1,549,848
2,384,268
3,934,116
The credit quality of trade and notes receivables that are neither past due nor impaired was
assessed by reference to the counterparties’ default history.
312
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
14. TRADE AND NOTES RECEIVABLES (CONTINUED)
Impairment under IAS 39 for the year ended 31 December
2017 (continued)
As at 31 December 2017, trade and notes receivables of RMB898 million of the Group were
impaired and provisions of RMB546 million were made. The individually impaired receivables
mainly relate to customers which are in unexpected difficult economic situations and it was
expected that only a portion of these receivables would be recovered. The ageing analysis of
these trade receivables is as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
Loss allowance for impairment
31 December
2017
(restated)
182,801
46,351
40,325
628,584
898,061
(546,102)
351,959
313
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
14. TRADE AND NOTES RECEIVABLES (CONTINUED)
Impairment under IAS 39 for the year ended 31 December
2017 (continued)
Movements in the loss allowance for impairment of trade and notes receivables are as
follows:
At beginning of year
Effect of adoption of IFRS 9
At beginning of year (restated)
Impairment loss
Written off
Reversal
Others
2018
2017
(restated)
546,102
112,407
658,509
64,544
(33,469)
(20,466)
(9,857)
507,593
–
507,593
47,953
(15,341)
(7,206)
13,103
As at 31 December
659,261
546,102
As at 31 December 2018, the Group has derecognised notes receivable that have been
discounted or endorsed but not yet due with a carrying amount in aggregate of RMB29,273
million (31 December 2017: RMB24,474 million). In addition, as at 31 December 2018, the
Group has not derecognised notes receivable that have been discounted or endorsed but not
yet due with a carrying amount of RMB444 million (31 December 2017: RMB227 million).
314
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
14. TRADE AND NOTES RECEIVABLES (CONTINUED)
Impairment under IAS 39 for the year ended 31 December
2017 (continued)
The derecognised notes receivable had a maturity of one to six months at the end of the
reporting period. In accordance with the Law of Negotiable Instruments in the PRC, the
holders of the derecognised notes receivable have a right of recourse against the Group if
the PRC banks default (the “Continuing Involvement”). In the opinion of the directors, the
Group has transferred substantially all risks and rewards relating to the derecognised notes
receivable. Accordingly, it has derecognised the full carrying amounts of the derecognised
notes receivable and the associated trade payables. The maximum exposure to loss from the
Group’s Continuing Involvement in the derecognised notes receivable and the undiscounted
cash flows to repurchase these derecognised notes receivable is equal to their carrying
amounts. In the opinion of the directors, the fair values of the Group’s Continuing Involvement
in the derecognised notes receivable are not significant.
During the year ended 31 December 2018, the Group has not recognised any gain or loss on
the date of transfer of the derecognised notes receivable. No gains or losses were recognised
from the Continuing Involvement, both during the year or cumulatively. The endorsement has
been made evenly throughout the year.
315
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 15. OTHER CURRENT ASSETS
Financial assets
– Deposits paid to suppliers
– Dividends receivable
– Receivables from other revenue
– Entrusted loans and loans receivable from third parties
– Entrusted loans and loans receivable from related parties
– Receivables from disposal of properties
– Interest receivables
– Recoverable reimbursement for freight charges
– Other financial assets
31 December
2018
31 December
2017
(restated)
317,946
47,167
693,039
1,645,205
1,297,892
1,881,513
40,936
185,866
530,029
756,748
267,331
575,650
1,615,429
2,459,883
1,320,488
144,473
13,944
1,006,723
6,639,593
8,160,669
Less: impairment allowance
(1,764,068)
(1,673,122)
Receivable of governments grants
Receivable of value-added tax refund
Advances to employees
Deductible input value added tax receivables
Prepaid income tax
Prepayments to related parties for purchases
Prepayments to suppliers for purchases and others
Others
4,875,525
6,487,547
58,455
–
23,744
2,187,202
162,103
586,312
963,870
169,881
–
1,063
46,890
2,411,495
64,557
62,724
890,958
113,146
4,151,567
3,590,833
Less: impairment allowance
(4,139)
(4,155)
Total other current assets
9,022,953
10,074,225
4,147,428
3,586,678
316
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
15. OTHER CURRENT ASSETS (CONTINUED)
As at 31 December 2018, except for an amount included in other receivables amounting to
RMB48 million and RMB 0.10 million, which were denominated in USD and HKD, respectively
(31 December 2017: other receivables amounting to RMB161 million denominated in USD),
amounts in other current assets were denominated in RMB.
As at 31 December 2018, except for entrusted loans and loans receivable (31 December
2017: except for entrusted loans and loans receivable) which were interest-bearing assets,
all amounts in other current assets were non-interest-bearing (31 December 2017: all non-
interest-bearing).
As at 31 December 2018, the ageing analysis of financial assets included in other current
assets was as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
31 December
31 December
2018
1,114,811
1,653,822
449,003
3,421,957
2017
(restated)
2,582,172
1,016,290
1,689,050
2,873,157
6,639,593
8,160,669
Less: provision for impairment
(1,764,068)
(1,673,122)
4,875,525
6,487,547
317
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
15. OTHER CURRENT ASSETS (CONTINUED)
Movements in the provision for impairment of other current assets are as follows:
At beginning of year
Effect of adoption of IFRS 9
At beginning of year (restated)
Impairment loss
Write off
Reversal
Others
31 December
31 December
2018
1,677,277
38,502
1,715,779
65,494
(6,117)
(1,731)
(5,218)
2017
(restated)
1,672,316
–
1,672,316
29,483
(10,926)
(9,531)
(4,065)
As at 31 December
1,768,207
1,677,277
318
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
15. OTHER CURRENT ASSETS (CONTINUED)
Impairment under IFRS 9 for the year ended 31 December
2018
Financial assets included in other current assets at amortised cost are subject to impairment
under the general approach and they are classified within the following stages for
measurement of ECLs.
As at 31 December 2018
Stage 1 – 12 months expected credit loss
Stage 2 – life time expected credit loss
Stage 3 – life time expected credit loss with credit-
Gross carrying
Expected credit
amount
losses
1,098,455
3,744,612
–
88,974
impaired
1,796,526
1,675,094
6,639,593
1,764,068
319
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
15. OTHER CURRENT ASSETS (CONTINUED)
Impairment under IAS 39 for the year ended 31 December
2017
As at 31 December 2017, the ageing analysis of financial assets that are not impaired and
included in other current assets was as follows:
Past due for 1 year
Past due for 1 to 2 years
Past due for over 2 years
Not past due
31 December
2017
(restated)
1,214,515
364,953
1,073,261
2,652,729
3,695,813
6,348,542
The credit quality of other current assets that are neither past due nor impaired is assessed
by reference to the counterparties’ default history. As at 31 December 2017, there was no
history of default of these customers.
The credit quality of other current assets that were not impaired is assessed by reference to
the counterparties’ default history. Based on past experience, the directors of the Company
are of the opinion that no provision for impairment is necessary in respect of these balances as
there has not been a significant change in credit quality and the balances are still considered
recoverable.
Included in the Group’s financial assets that are past due but not impaired are amounts due
from the Group’s related parties of RMB1,545 million on 31 December 2017.
320
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
16. CASH AND CASH EQUIVALENTS AND RESTRICTED CASH
Restricted cash
Cash and cash equivalents
31 December
2018
31 December
2017
(restated)
2,165,288
19,130,652
2,168,192
27,835,866
21,295,940
30,004,058
Restricted cash mainly represented deposits held for use in issued notes payable and letters
of credit.
As at 31 December 2018, bank balances and cash on hand of the Group were denominated in
the following currencies:
RMB
USD
HKD
EUR
AUD
IDR
31 December
2018
31 December
2017
(restated)
18,026,082
3,256,625
8,321
371
2,552
1,989
26,949,057
3,045,228
7,029
56
2,688
–
21,295,940
30,004,058
Cash at banks earns interest at floating rates based on daily bank deposit rates. The bank
balances and restricted cash are deposited with creditworthy banks with no recent history of
default.
321
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
17. SHARE CAPITAL
As at 31 December 2017 and 2018, all issued shares were registered and fully paid. Both A
shares and H shares rank pari passu with each other.
The number of the Company’s authorised ordinary shares was 14,903,798,236 at par value of
RMB1.00 per share as at 31 December 2017 and 2018. There were 14,903,798,236 ordinary
shares issued and outstanding as at 31 December 2017 and 2018, respectively.
18. OTHER RESERVES
The amounts of the Group’s reserves and the movements therein for the current and prior
years are presented in the consolidated statement of changes in equity of the financial
statements.
(a)
As disclosed in note 38(d), note 38(e), note 38(f) and note 38(g), the acquisitions of the
carbon business of Shandong Aluminum Co., Ltd. (“Shandong Aluminum”) (山東鋁業
有限公司), the carbon business of Pingguo Aluminum Co., Ltd. (“Pingguo Aluminum”)
(平果鋁業有限公司), a 77.65% equity interest of Chibi Great Wall Carbon Co., Ltd.
(“Chibi Great Wall Carbon”) (赤壁長城碳素有限公司) and a 51% equity interest of Harbin
Dongqing Longhua Logistics Co., Ltd. (“Longhua Logistics”) (哈爾濱東輕龍華物流有
限公司) were considered to be business combinations under common control, which
resulted in the decrease of share premium amounting to RMB444 million in total.
322
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 18. RESERVES (CONTINUED)
(b) On 31 January 2018, the Company and eight investors, including Huarong Ruitong
Equity Investment Management Co., Ltd. (華融瑞通股權投資管理有限公司), China
Life Insurance Co., Ltd. (中國人壽保險股份有限公司), Shenzhen Zhao Ping Aluminum
Investment Center (limited partnership) (深圳市招平中鋁投資有限（有限合夥)), China
Pacific Life Insurance Co., Ltd. (中國太平洋人壽保險股份有限公司), China Cinda
Asset Management Co., Ltd. (中國信達資產管理股份有限公司), BOC Financial Asset
Investment Co, Ltd. (中銀金融資產投資有限公司), ICBC Financial Asset Investment
Co., Ltd. (工銀金融資產投資有限公司) and ABC Financial Asset Investment Co., Ltd.
(農銀金融資產投資有限公司) (collectively called “Transferors”) entered into the equity
acquisition agreements, pursuant to which, the Company agreed to acquire and the
Transferors agreed to sell their non-controlling equity interests in Chalco Shandong,
Zhongzhou Aluminum, Baotou Aluminum and Chalco Mining (collectively called the
“Target Companies”), at a consideration of approximately 2.1 billion ordinary shares of
the Company, which was determined at the fair value of the non-controlling interests
in the Target Companies of approximately RMB12.7 billion. Upon signing the equity
acquisition agreements, together with the investment agreements and debt to equity
swap agreements signed in 2017, the Transferors effectively surrendered their non-
controlling interests in the Target Companies, which included the rights to profit or
loss, voting rights and other shareholder rights of the Target Companies to the Group.
Consequently the carrying values of the Transferors’ non-controlling interests in the
Target Companies of RMB10.7 billion were derecognised, and were transferred to the
capital reserve of the Group.
On 25 February 2019, the Company has completed the issuance of ordinary shares to
these Transferors, and the total number of shares issued was 2,118,874,715.
323
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 19. INTEREST-BEARING LOANS AND BORROWINGS
Long-term loans and borrowings
Finance lease payables (note 20)
Bank and other loans (Note (a))
– Secured (Note (f))
– Guaranteed (Note (e))
– Unsecured
31 December
31 December
2018
2017
(restated)
4,081,270
5,607,570
12,608,727
3,040,400
30,491,613
14,716,175
3,191,277
22,597,382
46,140,740
40,504,834
Medium-term notes and bonds and private placement
notes (Note (b))
– Unsecured
10,094,861
15,696,961
Total long-term loans and borrowings
60,316,871
61,809,365
Current portion of finance lease payables (note 20)
(2,328,358)
(2,115,644)
Current portion of medium-term bonds and long-term bonds
(396,727)
(12,492,378)
Current portion of long-term bank and other loans
(3,384,400)
(6,911,640)
Non-current portion of long-term loans and borrowings
54,207,386
40,289,703
324
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
19. I N T E R E S T - B E A R I N G L O A N S A N D B O R R O W I N G S
(CONTINUED)
Short-term loans and borrowings
Bank and other loans (Note (c))
– Secured (Note (f))
– Guaranteed (Note (e))
– Unsecured
Short-term bonds, unsecured (Note (d))
Gold leasing arrangements (Note (g))
Current portion of finance lease payables (note 20)
Current portion of medium-term notes
Current portion of long-term bank and other loans
31 December
31 December
2018
2017
(restated)
1,220,680
240,000
1,362,000
150,000
37,835,512
29,529,442
39,296,192
31,041,442
500,000
1,607,905
2,328,358
396,727
3,384,400
3,601,573
6,818,393
2,115,644
12,492,378
6,911,640
Total short-term borrowings and
current portion of long-term loans and borrowings
47,513,582
62,981,070
As at 31 December 2018, except for loans and borrowings of the Group amounting to RMB19
million (31 December 2017: RMB21 million) and RMB3,984 million (31 December 2017:
RMB1,860 million), which were denominated in JPY and USD, respectively, all loans and
borrowings were denominated in RMB.
As at 31 December 2018, included in the Group’s interest-bearing loans and borrowings are
due to subsidiaries of Chinalco of RMB4,373 million (31 December 2017: RMB3,330 million
are due to subsidiaries of Chinalco and RMB190 million are due to a joint venture), as set out
in note 35(b).
325
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
19. I N T E R E S T - B E A R I N G L O A N S A N D B O R R O W I N G S
(CONTINUED)
Note:
(a)
Long-term bank and other loans
(i)
The maturity of long-term bank and other loans is set out below：
Loans from banks and other
financial institutions
31 December
2018
31 December
2017
(restated)
Other loans
Total of long-term bank and
other loans
31 December
2018
31 December
2017
31 December
2018
31 December
2017
(restated)
Within 1 year
Between 1 and 2 years
Between 2 and 5 years
Over 5 years
3,382,325
7,375,557
16,586,390
18,777,275
6,905,000
5,171,738
8,666,967
19,736,283
2,075
2,399
7,197
7,522
6,640
2,277
6,827
9,102
3,384,400
7,377,956
16,593,587
18,784,797
6,911,640
5,174,015
8,673,794
19,745,385
46,121,547
40,479,988
19,193
24,846
46,140,740
40,504,834
(ii)
Other loans were provided by local bureaus of the Ministry of Finance to the Group. The weighted
average annual interest rate of long-term bank and other loans for the year ended 31 December 2018
was 4.78% (2017: 4.97%).
(b)
Medium-term notes and bonds and long-term bonds and private placement notes
Outstanding medium-term bonds & private placement notes of the Group as at 31 December 2018 are
summarised as follows:
Face value
(RMB)/maturity
Effective
interest rate
31 December
2018
31 December
2017
2015 medium-term notes
2015 medium-term notes
2013 medium-term bonds
2015 medium-term bonds
2015 medium-term bonds
2016 private placement notes
2018 medium-term notes
2018 medium-term bonds
2018 medium-term bonds
2018 medium-term bonds
2018 medium-term bonds
2018 US dollar medium-term
bonds
3,000,000/2018
1,500,000/2018
3,000,000/2018
3,000,000/2018
2,000,000/2018
3,215,000/2019
2,000,000/2021
1,100,000/2021
900,000/2023
1,400,000/2021
1,600,000/2023
2,785,840/2021
5.53%
5.01%
5.99%
6.11%
6.08%
5.12%
5.84%
4.66%
5.06%
4.30%
4.57%
5.25%
–
–
–
–
–
396,727
1,986,418
1,097,003
897,820
1,395,970
1,595,311
2,725,612
2,999,030
1,496,503
2,999,211
2,999,359
1,998,275
3,204,583
–
–
–
–
–
–
10,094,861
15,696,961
326
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
19. I N T E R E S T - B E A R I N G L O A N S A N D B O R R O W I N G S
(CONTINUED)
Note: (continued)
(c)
Short-term bank and other loans
Other loans were entrusted loans provided by state-owned companies to the Group.
The weighted average annual interest rate of short-term bank and other loans for the year ended 31
December 2018 was 4.52% (2017: 4.43%).
(d)
Short-term bonds
Outstanding short-term bonds as at 31 December 2018 are summarised as follows:
Face value/
maturity
Effective
interest rate
31 December
2018
31 December
2017
2017 short-term bonds
2017 short-term bonds
2018 Ningxia short-term bonds
3,000,000/2018
500,000/2018
500,000/2019
4.30%
4.90%
5.00%
–
–
500,000
3,101,573
500,000
–
500,000
3,601,573
All the above short-term bonds were issued for working capital needs.
327
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
19. I N T E R E S T - B E A R I N G L O A N S A N D B O R R O W I N G S
(CONTINUED)
Note: (continued)
(e)
Guaranteed interest-bearing loans and borrowings
Details of the interest-bearing loans and borrowings in which the Group received guarantees are set out as
follows:
Guarantors
Long-term loans
Lanzhou Aluminum Factory*(蘭州鋁廠) (Note (i))
Ningxia Energy (Note (ii))
Yinxing Energy (Note (ii))
Baotou Aluminum and Baotou Communications Investment Group Limited
Company* (“Baotou Communications Investment”)
(包頭交通投資集團有限公司) (Note (iii))
The Company and Hangzhou Jinjiang (Note (iv))
Qingzhen Industrial Investment Co., Ltd.* (“Qingzhen Investment”) (清鎮市工業投
資有限公司) (Note (v))
Guizhou Industrial Investment Group Co., Ltd. * (“Guizhou Investment”) (貴州產業
投資（集團）有限責任公司) (Note (v))
Short-term loans
Ningxia Energy (Note (ii))
Chalco Shandong (Note (ii))
China Great Wall Aluminum Co., Ltd.*(“China Great Wall Aluminum”)
(中國長城鋁業有限公司) (Note(i))
Hangzhou Jinjiang, Qingzhen Investment and Guizhou Investment
Note:
(i)
The guarantor is a subsidiary of Chinalco.
(ii)
The guarantor is a subsidiary of the Group.
31 December
2018
31 December
2017
(restated)
–
892,400
70,000
1,600,000
246,000
116,000
116,000
4,000
1,020,400
91,000
1,600,000
475,877
–
–
3,040,400
3,191,277
–
–
40,000
200,000
240,000
70,000
80,000
–
–
150,000
(iii)
The guarantors are a subsidiary of the Company and a third party respectively.
(iv)
The guarantors are the Company and a third party respectively.
(v)
The guarantor is a third party.
*
The English names represent the best effort by management of the Group in translating the Chinese
names of the Companies as they do not have any official English names.
328
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
19. I N T E R E S T - B E A R I N G L O A N S A N D B O R R O W I N G S
(CONTINUED)
Note: (continued)
(f)
Secured interest-bearing loans and borrowings
The assets pledged for bank and other borrowings were set out in note 24 to the financial statements.
(g)
Gold leasing arrangements
In 2017 and 2018, the Company entered into several gold leasing master framework agreements, individual
gold leasing agreements and general hedging agreements with Bank of Communications and Agriculture Bank
of China, (collectively, “the Banks”). According to the gold leasing master framework agreements and gold
leasing agreements, the Company leased standard gold with fineness of Au 99.99 for 6 to 12 months from
the Banks, with annual interest rates ranging from 4.10% to 4.50%. In 2018, the Company entrusted the
Banks to sell all leased gold and received cash of RMB2,323 million from the sale (2017: RMB7,804 million).
Upon the expiry of the gold leasing agreements, the Company shall purchase the standard gold (with same
quality and value according to the general hedging agreements entered into simultaneously with the leasing
agreements) to return to the Banks.
The directors of the Company are of the view that the Company is free from the assumption of risk of gold
price fluctuations due to the fixed repurchase price under the general hedging agreements, and therefore,
this arrangement should be accounted for as short-term loans with fixed interest rates (ranging from 4.10%
to 4.50%), net of the Banks’ charges.
329
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 20. FINANCE LEASE PAYABLES
As disclosed in note 6, the Group leased certain machineries and construction in progress
under finance leases with lease terms ranging from one to six years. At 31 December 2018,
the total future minimum lease payments under finance leases and their present values are as
follows:
Present value of
Minimum lease payments
minimum lease payments
31 December
31 December
31 December
31 December
2018
2017
2018
2017
2,518,653
1,161,490
707,716
13,238
2,371,917
1,762,618
1,890,329
73,603
2,328,358
1,075,050
664,889
12,973
2,115,644
1,606,571
1,817,506
67,849
Amounts payable:
Within one year
In the second year
In the third to fifth years, inclusive
After five years
Total minimum finance lease
payments
4,401,097
6,098,467
4,081,270
5,607,570
Future finance charges
(319,827)
(490,897)
Total net finance lease payables (note
19)
4,081,270
5,607,570
Portion classified as current liabilities
(note 19)
(2,328,358)
(2,115,644)
Non-current portion
1,752,912
3,491,926
330
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
20. FINANCE LEASE PAYABLES (CONTINUED)
During the year ended 31 December 2018 and 2017, the Group entered into various sale and
leaseback agreements with Pingan International Financial Leasing Co., Ltd. (平安國際融資租
賃有限公司), Tianjin Far East Hongxin Finance Leasing Co., Ltd. (“遠東宏信（天津）融資租賃有
限公司」)，China Aviation International Leasing Co., Ltd. (「中航國際租賃有限公司」), Zhaoyin
Leasing Co., Ltd.(「招銀租賃有限公司」) and Chalco Financial Leasing Co., Ltd.*(「中鋁融資租
賃有限公司”), which is a related party of the Group, respectively, under which the Group
sold machineries and construction in progress and leased them back. The lease terms range
from one to six years and the lease rentals are payable by installments which bear interest at
prevailing lending rates.
During the year ended 31 December 2018, the Group entered into sales and leaseback
arrangements and incurred losses of RMB254 million (2017: RMB102 million), which were
amortised over their respective useful lives of the assets. The Group entered into sales and
leaseback arrangements and incurred a gain of RMB115 million (2017: Nil). The internal rate
of return (IRR) of the sales and finance leaseback arrangements range from 4.35% to 9.74%
(2017: from 4.35% to 6.20%).
*
The English names represent the best effort made by the management of the Group in translating the
Chinese name of the companies as they do not have any official English names.
331
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 21. OTHER NON-CURRENT LIABILITIES
Financial liabilities
– Long-term payables for mining rights
– Other financial liabilities
Obligations in relation to early retirement schemes (Note (i))
Deferred government grants (Note (ii))
Deferred gain relating to sales and leaseback agreements
Contract liabilities
Provision for rehabilitation
Others
31 December
31 December
2018
2017
(restated)
788,133
52,926
749,761
19,300
841,059
769,061
777,305
314,045
240,661
132,844
121,033
11,217
900,924
373,447
176,774
–
113,672
119,782
1,597,105
1,684,599
2,438,164
2,453,660
332
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
21. OTHER NON-CURRENT LIABILITIES (CONTINUED)
Notes:
(i)
Obligations in relation to early retirement schemes
From 2014, certain subsidiaries and branches implemented certain early retirement benefit schemes which
allow qualified employees to early retire on a voluntary basis. The Group undertakes the obligations to pay
the early retired employees’ living expenses for no more than five years in the future on a monthly basis
according to the early retirement benefit schemes, together with social insurance and housing fund pursuant
to the regulation of the local Social Security Office. Living expenses, social insurance and the housing fund
are together referred to as “the Payments”. The Payments are discounted by the treasury bond rate of
31 December 2018. As at 31 December 2018, the current portion of the Payments within one year was
reclassified to “Other payables and accrued liabilities”.
As at 31 December 2018, obligations in relation to retirement benefits under the Group’s early retirement
schemes are as follows:
As at 1 January
Provision made during the year (note 29)
Interest costs
Payment during the year
As at 31 December
Non-current
Current (note 22)
2018
2017
1,438,440
447,660
62,801
(655,060)
996,598
767,632
17,618
(343,408)
1,293,841
1,438,440
777,305
516,536
900,924
537,516
1,293,841
1,438,440
(ii)
As described on note 2.2 (d), in order to provide more reliable and more relevant information about the
government grants, from 1 January 2018, the Group voluntarily changed the accounting policy in relation to
government grants. For an asset-related government grant, had the asset already existed upon receiving the
government grant, the Group directly deducted the grant amount from the book value of the asset related
to the government grant instead of recording the government grant as deferred income. For a government
grants related to income and expenses already incurred by the Group, which are specific to compensate
certain cost and expenses, the Group would directly offset the grant amount against the related cost or
expense. Government grants for assets yet to be acquired and expenses yet to be incurred are included in
deferred government grants and other income.
333
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
22. OTHER PAYABLES AND ACCRUED LIABILITIES
Financial liabilities
– Payable for capital expenditures
– Accrued interest
– Payables withheld as guarantees and deposits
– Dividends payable by subsidiaries to non-controlling
shareholders
– Consideration payable for investment projects
– Current portion of payables for mining rights
– Others
Sales and other deposits from customers (note 2.2(c))
Taxes other than income taxes payable (Note)
Accrued payroll and bonus
Staff welfare payables
Current portion of obligations in relation to early retirement
schemes (note 21)
Contribution payable for pension insurance
Output value-added tax to be realised
Others
31 December
2018
31 December
2017
(restated)
5,694,632
396,286
1,101,456
543,207
280,856
210,325
1,025,163
6,283,484
827,367
1,494,367
223,942
170,494
300,970
2,062,612
9,251,925
11,363,236
–
831,040
220,851
391,824
516,536
30,145
252,691
37,492
1,605,374
818,979
76,683
262,077
537,516
27,248
–
1,786
2,280,579
3,329,663
11,532,504
14,692,899
Note: Taxes other than income taxes payable mainly comprise accruals for value-added tax, resource tax, city
construction tax and education surcharge.
334
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
22. O T H E R P A Y A B L E S A N D A C C R U E D L I A B I L I T I E S
(CONTINUED)
As at 31 December 2018, except for other payables and accrued liabilities of the Group
amounting to RMB240 million and RMB0.27 million, which were denominated in USD
and HKD, respectively (31 December 2017: RMB331 million and RMB0.32 million which
were denominated in USD and HKD, respectively), all payables and accrued liabilities were
denominated in RMB.
23. TRADE AND NOTES PAYABLES
Trade payables
Notes payable
31 December
31 December
2018
2018
(restated)
8,568,438
5,439,162
7,767,482
4,592,959
14,007,600
12,360,441
As at 31 December 2018, except for trade and notes payables of the Group amounting to
RMB213 million (31 December 2017: RMB56 million) which were denominated in USD, all
trade and notes payables were denominated in RMB.
335
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
23. TRADE AND NOTES PAYABLES (CONTINUED)
The ageing analysis of trade and notes payables is as follows:
Within 1 year
Between 1 and 2 years
Between 2 and 3 years
Over 3 years
31 December
31 December
2018
2017
(restated)
13,598,040
11,748,228
140,517
47,111
221,932
199,889
200,191
212,133
14,007,600
12,360,441
The trade and notes payables are non-interest-bearing and are normally settled within one
year.
336
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
24. PLEDGE OF ASSETS
The Group has pledged various assets as collateral against certain secured borrowings as set
out in note 19. As at 31 December 2018, a summary of these pledged assets was as follows:
Property, plant and equipment (note 6)
Land use rights (note 8)
Intangible assets (note 5)
Notes receivable (note 14)
Trade receivables (note 14)
Investments in associates
31 December
31 December
2018
2017
4,168,239
328,116
772,597
933,551
–
535,610
5,799,013
176,914
1,111,705
82,125
22,000
–
6,738,113
7,191,757
As at 31 December 2018, in addition to the loans and borrowings which were secured
by the above assets, the current portion of long-term loans and borrowings amounting to
RMB1,354 million and the non-current portion of long-term loans and borrowings amounting
to RMB10,155 million were secured by the contractual right to charge users for electricity
generated in the future (31 December 2017: the current portion of long-term loans and
borrowings amounting to RMB1,007 million and the non-current portion of long-term loans
and borrowings amounting to RMB12,582 million were secured by the contractual right to
charge users for electricity generated in the future and 70.82% equity interests in a subsidiary
of the Company, Ningxia Energy).
337
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
25. PROFIT BEFORE INCOME TAX
An analysis of profit before income tax is as follows:
2018
2017
(restated)
Purchase of inventories in relation to trading activities
85,443,397
98,282,714
Raw materials and consumables used, and changes in
work-in-progress and finished goods
Power and utilities
Depreciation and amortisation
Employee benefit expenses (note 29)
Repairs and maintenance
Transportation expenses
Logistic cost
Taxes other than income tax expense (Note (i))
Rental expenses for land use rights and buildings
Packaging expenses
Research and development expenses
Auditors’ remuneration expense (Note (ii))
43,197,855
17,650,214
8,055,137
7,433,027
1,750,194
1,893,659
2,794,733
936,546
649,640
261,626
626,873
30,847
34,550,042
17,274,948
7,064,129
6,975,281
1,716,940
1,768,604
1,894,061
858,344
497,356
267,547
498,234
31,815
Note:
(i)
(ii)
Taxes other than income tax expense mainly comprise surcharges, land use tax, property tax and stamp
duties.
During the year ended 31 December 2018, auditors’ remuneration included audit and non-audit services
provided by Ernst & Young, including Ernst & Young, Hong Kong and Ernst & Young Hua Ming LLP, amounting
to RMB26.7 million (2017: RMB23.1 million), and services provided by other auditors.
338
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
26. OTHER INCOME
For the year ended 31 December 2018, government grants amounting to RMB135 million
(2017: RMB90 million (restated)) were recognised as income for the year to facilitate the
Group’s development. There are no unfulfilled conditions or contingencies attached to the
grants.
27. OTHER GAINS, NET
Gain on deemed disposal and disposal of subsidiaries
Gain on disposal and dividends of equity investments
Realised gains/(losses) on futures, forward and option
2018
3,517
109,914
2017
(restated)
325,022
79,408
contracts, net (Note)
40,492
(23,951)
Unrealised gains/(losses) on futures, forward and option
contracts, net (Note)
100,967
(131,073)
Gain on disposal of property, plant and equipment and land
use rights, net
101,098
76,739
Gain on previously held equity interests remeasured at
acquisition-date fair value
Loss on disposal of investments in an associate
Others
748,086
(1,904)
(180,266)
117,640
–
(124,403)
921,904
319,382
Note: None of these futures, forward and option contracts was designated for hedge accounting.
339
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
28. FINANCE INCOME/FINANCE COSTS
An analysis of finance income/finance costs is as follows:
2018
2017
(restated)
Finance income – interest income
(492,232)
(706,690)
Interest expense
5,202,639
5,175,156
Less: interest expense capitalised in property, plant and
equipment (note 6)
(517,589)
(344,452)
Interest expense, net of capitalised interest
4,685,050
4,830,704
Amortisation of unrecognised finance expenses
Exchange (gains)/losses, net
205,335
(7,889)
241,099
131,621
Finance costs
4,882,496
5,203,424
Capitalisation rate during the year (note 6)
4.54% to 7.00% 4.41% to 8.00%
340
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
29. EMPLOYEE BENEFIT EXPENSES
An analysis of employee benefit expenses is as follows:
Salaries and bonuses
Housing fund
Staff welfare and other expenses (Note)
Employment expense in relation to early retirement
schemes (note 21)
Employment expenses in relation to termination benefits
2018
4,636,972
414,440
1,896,365
447,660
37,590
2017
(restated)
4,205,361
395,489
1,576,552
767,632
30,247
7,433,027
6,975,281
Note: Staff welfare and other expenses include staff welfare, staff union expenses, staff education expenses,
unemployment insurance expenses, pension insurance expenses, etc.
Employee benefit expenses include remuneration payables to directors, supervisors and
senior management as set out in note 30.
341
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
30. DIRECTORS’ AND SUPERVISORS’ REMUNERATION
(a) Directors’ and supervisors’ remuneration
Directors’ and supervisors’ remuneration for the year, disclosed pursuant to the Listing
Rules, section 383(1)(a), (b), (c) and (f) of the Hong Kong Companies Ordinance and Part
2 of the Companies Regulation (Disclosure of Information about Benefits of Directors), is
as follows:
Fees
Basic salaries, housing fund, other allowances and
benefits in kind
Pension costs
2018
2017
756
1,849
234
768
1,370
166
2,839
2,304
342
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
30. D I R E C T O R S ’ A N D S U P E R V I S O R S ’ R E M U N E R A T I O N
(CONTINUED)
(a) Directors’ and supervisors’ remuneration (continued)
The remuneration of each director and supervisor of the Company for the year ended
31 December 2018 is set out below:
Names of directors
and supervisors
Fees
Salaries
Discretionary
bonuses
Pension
costs
–
–
–
–
–
–
150
202
202
202
756
–
–
–
–
–
–
762
438
1,200
–
–
–
–
–
–
–
–
649
649
756
1,849
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
total
–
–
852
492
–
–
90
54
144
1,344
–
–
–
–
–
–
–
–
90
90
–
150
202
202
202
756
–
–
739
739
234
2,839
Executive Directors:
Yu Dehui (Note (i))
Lu Dongliang (Note (i))
Jiang Yinggang
Zhu Runzhou
Non-executive Directors:
Ao Hong
Wang Jun (Note (ii))
Chen Lijie
Lie-A-Cheong Tai-Chong,
David
Hu Shihai
Supervisors:
Ye Guohua
Wang Jun
Wu Zuoming
Total
Note:
(i)
(ii)
On 21 February 2019, Mr. Yu Dehui resigned as the chairman and an executive Director of the
Company, and Mr. Lu Dongliang was elected as the chairman of the sixth session of the Board of the
Company at the 39th meeting of the sixth session of the Board.
On 20 February 2019, the appointment of Mr. Wang Jun as the chief financial officer and the
Secretary to the Board (Company Secretary) of the Company was approved at the 38th meeting of the
sixth session of the Board of the Company.
343
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
30. D I R E C T O R S ’ A N D S U P E R V I S O R S ’ R E M U N E R A T I O N
(CONTINUED)
(a) Directors’ and supervisors’ remuneration (continued)
The remuneration of each director and supervisor of the Company for the year ended
31 December 2017 is set out below:
Names of directors
and supervisors
Fees
Salaries
Discretionary
bonuses
Pension
costs
total
Executive Directors:
Yu Dehui
Lu Dongliang
Jiang Yinggang
Non-executive Directors:
Ao Hong
Liu Caiming
Wang Jun
Chen Lijie
Lie-A-Cheong Tai-
Chong, David
Hu Shihai
Supervisors:
Liu Xiangmin
Wang Jun
Wu Zuoming
–
–
–
–
–
–
150
206
206
206
768
–
–
–
–
–
–
822
822
–
–
–
–
–
–
–
–
–
548
548
Total
768
1,370
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
83
83
–
–
–
–
–
–
–
–
–
83
83
–
–
905
905
–
–
150
206
206
206
768
–
–
631
631
166
2,304
344
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
30. D I R E C T O R S ’ A N D S U P E R V I S O R S ’ R E M U N E R A T I O N
(CONTINUED)
(a) Directors’ and supervisors’ remuneration (continued)
The remuneration of the directors and supervisors of the Company fell within the
following band:
Nil to RMB1,000,000
Number of individuals
2018
12
2017
12
During the year, no options were granted to the directors or the supervisors of the
Company (2017: Nil).
During the year, no emoluments were paid to the directors or the supervisors of the
Company (among which included the five highest paid employees) as an inducement to
join or upon joining the Company or as compensation for loss of office (2017: Nil).
No directors or supervisors of the Company waived any remuneration during the years
2018 and 2017.
345
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
30. D I R E C T O R S ’ A N D S U P E R V I S O R S ’ R E M U N E R A T I O N
(CONTINUED)
(b) Five highest paid individuals
During the year ended 31 December 2018, the five highest paid employees of the
Group include two director and one supervisor (2017: one director and one supervisor)
whose remuneration is reflected in the analysis presented above. The remuneration
payable to the remaining two individuals during 2018 (2017: three) is as follows:
Basic salaries, housing fund, other allowances and
benefits in kind
Discretionary bonuses
Pension costs
2018
2017
1,305
–
165
1,470
2,460
–
249
2,709
The number of the remaining two highest paid individuals during 2018 (2017: three)
whose remuneration fell within the following band is as follows:
Nil to RMB1,000,000
Number of individuals
2018
2
2017
3
346
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
31. INCOME TAX EXPENSE
Current income tax expense:
– PRC corporate income tax
Deferred tax expense/(benefit)
2018
2017
(restated)
755,215
67,284
844,896
(201,162)
822,499
643,734
In general, the Group’s PRC entities are subject to PRC corporate income tax at the standard
rate of 25% (2017: 25%) on their respective estimated assessable profits for the year. Certain
branches and subsidiaries of the Company located in the western regions of the PRC are
granted tax concessions including a preferential tax rate of 15% (2017: 15%).
347
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
31. INCOME TAX EXPENSE (CONTINUED)
A reconciliation of the tax expense applicable to profit before tax at the statutory rates for the
countries in which the Company and the majority of its subsidiaries are domiciled to the tax
expense at the effective tax rates, and a reconciliation of the applicable rates to the effective
tax rates are as follows:
2018
2017
(restated)
Profit before income tax
2,303,511
3,049,010
Tax expense calculated at the statutory tax rate of 25%
(2017: 25%)
Tax effects of:
Preferential income tax rates applicable to certain
branches and subsidiaries
Impact of change in income tax rate
Tax losses with no deferred tax assets recognised
Deductible temporary differences with no deferred tax
assets recognised
Utilisation of previously unrecognised tax losses and
deductible temporary differences
Tax incentive in relation to deduction of certain expenses
Non-taxable income
Expenses not deductible for tax purposes
Write-off of unrecoverable deferred tax assets previously
recognised
Return on equity investments measured by the equity
method
Recognition of deferred tax assets related to deductible
temporary differences and tax losses previously not
recognised
True-up adjustments in respect of prior year’s annual
575,878
762,253
(268,665)
23,425
434,103
(287,081)
98,150
296,728
382,503
308,657
(52,962)
(62,172)
(254,337)
46,758
(212,240)
(43,846)
(126,101)
10,290
183,195
49,808
40,029
39,274
(233,940)
(274,726)
income tax filings and others
8,684
22,568
Income tax expense
Effective tax rate
822,499
643,734
36%
21%
Share of income tax expense of associates and joint ventures of RMB106 million (2017:
RMB86 million) and RMB48 million (2017: RMB11 million) is included in “Share of profits and
losses of associates” and “Share of profits and losses of joint ventures”, respectively.
348
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
32. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY
EQUITY HOLDERS OF THE PARENT
(a) Basic
The basic earnings per share amount is calculated by dividing the earnings attributable
to ordinary equity holders of the parent by the weighted average number of shares in
issue during the year.
For the purpose of calculating basic earnings per share, the Group adjusted (i) the profit
attributable to owners of the parent for the after-tax amounts of cumulative distribution
reserved for the period of other equity instruments, which were issued by the Group
and classified as equity instruments, and (ii) the weighted average effect of the shares
to be issued as a consideration to acquire the non-controlling interests as disclosed in
note 18(b).
2018
2017
(restated)
Profit attributable to ordinary equity holders of
the parent (RMB)
746,477,441
1,413,028,383
Other equity instruments’ distribution reserved
(RMB)
(129,282,192)
(110,000,000)
617,195,249
1,303,028,383
Weighted average number of ordinary shares in
issue
14,903,798,236
14,903,798,236
Effect of equity exchange arrangement
(Note 18(b))
1,938,915,502
–
Basic earnings per share (RMB)
0.037
0.087
16,842,713,738
14,903,798,236
349
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
32. EARNINGS PER SHARE ATTRIBUTABLE TO ORDINARY
EQUITY HOLDERS OF THE PARENT
(b) Diluted
The diluted earnings per share amounts for the years ended 31 December 2018 and
2017 are the same as the basic earnings per share amounts as there were no dilutive
potential shares during those years.
33. DIVIDENDS
According to the articles of association of the Company, the Company considers that the
maximum limit of profit appropriation to its shareholders is the lowest of:
(i)
the sum of the net profit and the opening retained earnings for the current period in
accordance with IFRSs;
(ii)
the sum of the net profit and the opening retained earnings for the current period in
accordance with the PRC Accounting Standards for Business Enterprises; and
(iii)
the amount limited by the Company Law of the PRC.
According to the resolution of the board of directors dated 28 March 2019, the directors did
not propose any final dividend for the year ended 31 December 2018, which is to be approved
by the shareholders.
350
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH
FLOWS
(a) Reconciliation of profit before taxation to cash generated
from operations
Notes
2018
2017
(restated)
Cash flows generated from operating
activities
Profit before income tax
Adjustments for:
Share of profits and losses of joint
ventures
Share of profits and losses of
associates
Depreciation of property, plant and
equipment
Depreciation of investment properties
Gain on disposal of other property,
plant and equipment and land use
rights, net
Impairment losses on property, plant
and equipment
Impairment losses of intangible assets
Amortisation of intangible assets
Amortisation of land use rights
Amortisation of prepaid expenses
9 (a)
9 (b)
6
7
27
6
5
5
8
2,303,511
3,049,010
199,452
(8,151)
(39,335)
165,249
7,499,322
22,229
6,554,775
14,105
(101,098)
(76,739)
7,450
–
295,629
107,809
16,200
8,134
275,877
91,579
included in other non-current assets
130,148
127,793
351
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH
FLOWS
(a) Reconciliation of profit before taxation to cash generated
from operations
Notes
2018
2017
(restated)
Cash flows generated from operating
activities (Continued)
Realised and unrealised
(gains)/losses on futures,
option and forward contracts
Gain on previously held equity
interest remeasured at acquisition-
date fair value
Gain on disposals and deemed
disposals of subsidiaries
Loss on disposal of investments in
an associate
Gain on disposal of and dividends
from equity investments
Receipt of government subsidies
Interest income
Finance costs
Change in special reserve
Others
27
27
27
27
27
28
(141,459)
155,024
(748,086)
(117,640)
(3,517)
(325,022)
1,904
–
(109,914)
(158,109)
–
(79,408)
(202,359)
(183,015)
4,882,496
5,203,422
6,605
75,380
58,743
(16,950)
14,230,417
14,710,627
352
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH
FLOWS (CONTINUED)
(a) Reconciliation of profit before taxation to cash generated
from operations (continued)
Cash flows generated from operating activities
(continued)
Changes in working capital:
Decrease/(increase) in inventories
Increase in trade and notes receivables
Decrease in other current assets
Decrease/(increase) in restricted cash
Decrease/(increase) in other non-current assets
(Decrease)/increase in trade and notes payables
(Decrease)/increase in other payables and accrued
liabilities
Increase in other non-current liabilities
2018
2017
(restated)
1,194,454
(2,486,201)
916,681
530,284
425,768
(5,660)
(2,662,507)
(1,961,968)
1,275,535
(137,745)
(422,845)
1,599,294
(945,270)
105,386
1,672,658
81,878
Cash generated from operations
13,965,859
14,154,927
PRC corporate income taxes paid
(947,683)
(949,355)
Net cash generated from operating activities
13,018,176
13,205,572
Non-cash transactions of investing activities
and financing activities
Capital injection to an associate and joint ventures
by non-cash assets
Equity exchange arrangement (note 18(b))
Endorsement of notes receivables accepted from
the sale of goods or services for purchase of
property, plant and equipment
Acquisition of businesses at non-cash consideration
Finance lease
–
10,735,214
186,450
–
2,384,046
70,087
113,305
372,816
50,058
44,342
353
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH
FLOWS (CONTINUED)
(b) Reconciliation of liabilities arising from financing activities
The table below details changes in the Group’s liabilities from financing activities,
including both cash and non-cash changes. Liabilities arising from financing activities
are liabilities for which cash flows were, or future cash flows will be, classified in the
Group’s consolidated statement of cash flows as cash flows from financing activities.
Financial
liabilities at
fair value
through
profit or loss
Trade
and notes
payables
Financial
liabilities
included in
other current
payables
and accrued
expenses
Financial
liabilities
included
in other
non-current
liabilities
Interest
bearing
loans and
borrowings
Total
As at 1 January 2018 (Restated)
89,426
12,360,441
11,363,236
769,061
103,270,773
127,852,937
Net cash generated from
operating activities
Net cash flows from/(used in)
–
(5,660)
(669,353)
investing activities
(87,660)
1,646,299
(193,345)
Payment of upfront interest of gold
leasing arrangement
Proceeds from issuance of short-
term bonds and medium-term
notes, net of issuance costs
Repayments of medium-term
notes and short-term bonds
Repayments of gold leasing
arrangement
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(675,013)
7,197,213
8,562,507
2,323,105
2,323,105
13,185,034
13,185,034
(21,815,000)
(21,815,000)
(7,519,283)
(7,519,283)
354
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH
FLOWS (CONTINUED)
(b) Reconciliation of liabilities arising from financing activities
(continued)
Financial
liabilities at
fair value
through
profit or loss
Trade
and notes
payables
Financial
liabilities
included in
other current
payables
and accrued
expenses
Financial
liabilities
included
in other
non-current
liabilities
Interest
bearing
loans and
borrowings
Total
Drawdown of short-term and long-
term bank and other loans
Repayments of short-term and long-
term bank and other loans
Proceeds from finance lease, net of
deposit and transaction costs
Capital elements of finance lease
rental payment
Dividends paid by subsidiaries to
non-controlling shareholders
Amortisation of unrecognised
finance expenses and interest
expense
Interest paid
Reclassification
Net cash (used in)/generated
from financing activities
Net foreign exchange differences
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(1,000,000)
–
–
277,771
–
–
–
–
–
76,899,591
76,899,591
(69,546,537)
(70,546,537)
1,204,843
1,204,843
(3,915,404)
(3,915,404)
–
277,771
–
(449,835)
(90,644)
6,090
(24,736)
90,644
521,295
(85,579)
–
527,385
(560,150)
–
(1,262,708)
71,998
(8,747,935)
(9,938,645)
6,520
14,095
–
917
21,532
As at 31 December 2018
1,766
14,007,600
9,251,925
841,059
101,720,968
125,823,318
355
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH
FLOWS (CONTINUED)
(b) Reconciliation of liabilities arising from financing activities
(continued)
Financial
liabilities at
fair value
through
profit or loss
Trade
and notes
payables
Financial
liabilities
included in
other current
payables
and accrued
expenses
Financial
liabilities
included
in other
non-current
liabilities
Interest
bearing
loans and
borrowings
Total
As at 1 January 2017 (Restated)
3,575
11,532,163
9,793,534
789,720
105,968,641
128,087,633
Net cash generated from operating
activities
–
1,361,087
1,253,220
–
–
2,614,307
Net cash flows from/(used in)
investing activities
85,851
(530,457)
640,157
(73,701)
2,400,464
2,522,314
Proceeds from gold leasing
arrangement
Proceeds from issuance of short-
term bonds and medium-term
notes, net of issuance costs
Repayments of medium-term
notes and short-term bonds
Repayments of gold leasing
arrangement
Drawdown of short-term and long-
term bank and other loans
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
7,804,083
7,804,083
3,478,550
3,478,550
(16,300,000)
(16,300,000)
(4,000,000)
(4,000,000)
83,758,749
83,758,749
356
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
34. NOTES TO THE CONSOLIDATED STATEMENT OF CASH
FLOWS (CONTINUED)
(b) Reconciliation of liabilities arising from financing activities
(continued)
Financial
liabilities at
fair value
through
profit or loss
Trade
and notes
payables
Financial
liabilities
included in
other current
payables
and accrued
expenses
Financial
liabilities
included
in other
non-current
liabilities
Interest
bearing
loans and
borrowings
Total
Repayments of short-term and long-
term bank and other loans
Proceeds from finance lease, net of
deposit and transaction costs
Capital elements of finance lease
rental payment
Dividends paid by subsidiaries to
non-controlling shareholders
Amortisation of unrecognised
finance expenses and interest
expense
Interest paid
Reclassification
Net cash (used in)/generated from
financing activities
Net foreign exchange differences
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
2,446
–
–
–
–
(78,866,459)
(78,866,459)
1,000,036
1,000,036
(2,462,250)
(2,462,250)
–
2,446
–
16,352
398,371
(278,084)
(36,690)
–
36,690
–
–
414,723
(278,084)
–
(312,328)
53,042
(5,188,920)
(5,448,206)
(2,352)
(11,347)
–
90,588
76,889
As at 31 December 2017
89,426
12,360,441
11,363,236
769,061
103,270,773
127,852,937
357
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS
The Company is controlled by Chinalco, the parent company and a state-owned enterprise
established in Mainland China. Chinalco itself is controlled by the PRC government, which
also owns a significant portion of the productive assets in Mainland China. In accordance with
IAS 24 Related Party Disclosures, government-related entities and their subsidiaries, directly
or indirectly controlled, jointly controlled or significantly influenced by the PRC government,
are defined as related parties of the Group. On that basis, related parties include Chinalco
and its subsidiaries (other than the Group), other government-related entities and their
subsidiaries (“other state-owned enterprises”), other entities and corporations over which the
Company is able to control or exercise significant influence and key management personnel
of the Company and Chinalco as well as their close family members.
For the purposes of the related party transaction disclosures, the directors of the Company
consider that meaningful information in respect of related party transactions has been
adequately disclosed.
In addition to the related party information and transactions disclosed elsewhere in the
consolidated financial statements, the following is a summary of significant related party
transactions in the ordinary course of business between the Group and its related parties
during the year.
358
ALUMINUM CORPORATION OF CHINA LIMITEDNotes to Financial Statements31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated) 35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(a) Significant related party transactions
Notes
2018
2017
(restated)
Sales of goods and services
rendered:
Sales of materials and finished goods to:
Chinalco and its subsidiaries
Associates of Chinalco
Joint ventures
Associates
Provision of engineering, construction
and supervisory services to:
Chinalco and its subsidiaries
Joint ventures
Associates
Provision of utility services to:
Chinalco and its subsidiaries
Associates of Chinalco
Joint ventures
Associates
(i)
(ix)
(iii)
(ix)
(ii)
(ix)
11,248,625
10,658,507
897,642
4,462,670
2,626,780
682,992
2,031,159
724,658
19,235,717
14,097,316
5,981
–
1,725
77,095
2,046
–
7,706
79,141
620,552
15,719
186,672
24,309
581,566
8,776
118,280
1,122
847,252
709,744
359
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(a) Significant related party transactions (continued)
Notes
2018
2017
(restated)
Sales of goods and services
rendered: (continued)
Rental revenue of land use rights and
buildings from:
Chinalco and its subsidiaries
(vi)
(ix)
Joint ventures
Associates
Purchases of goods and services:
Purchases of engineering,
construction and supervisory
services from:
Chinalco and its subsidiaries
Joint ventures
Associates
Purchases of key and auxiliary
materials, equipment and finished
goods from:
Chinalco and its subsidiaries
Associates of Chinalco
Joint ventures
Associates
(iii)
(ix)
(iv)
(ix)
31,551
1,545
1,511
40,875
426
–
34,607
41,301
2,088,338
1,071,283
2,100
405,993
–
134,072
2,496,431
1,205,355
3,513,420
18,917
8,182,251
2,108,072
3,850,073
–
6,516,087
1,175
13,822,660
10,367,335
360
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(a) Significant related party transactions (continued)
Notes
2018
2017
(restated)
Purchases of goods and services:
(continued)
Provision of social services and
logistics services by:
Chinalco and its subsidiaries
Provision of utility services by:
Chinalco and its subsidiaries
Associates of Chinalco
Joint ventures
Associates
(v)
(ix)
(ii)
(ix)
312,062
326,830
992,827
96,510
26,269
77,432
1,412,722
–
19,537
–
1,193,038
1,432,259
Provision of other services by:
A joint venture
226,280
269,204
Rental expenses for buildings and
land use rights charged by:
Chinalco and its subsidiaries
(vi)
(ix)
501,866
509,848
361
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(a) Significant related party transactions (continued)
Notes
2018
2017
(restated)
Other significant related party
transactions:
Borrowing from subsidiaries of
Chinalco
(viii), (ix)
6,525,000
4,010,000
Interest expense on borrowings,
discounted notes and factoring
arrangement from subsidiaries of
Chinalco
Entrusted loans and other borrowings to:
Joint ventures
Associates
Interest income on entrusted loans
and other borrowings:
Joint ventures
An associate
Interest income from the unpaid
disposal proceeds from:
Chinalco and its subsidiaries
143,415
225,934
–
–
–
–
–
–
–
500,000
1,100,000
1,600,000
41,005
24,425
65,430
117,587
362
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(a) Significant related party transactions (continued)
Notes
2018
2017
(restated)
Disposal of assets under a sale and
leaseback contract to a subsidiary
of Chinalco
(xi)
224,000
600,000
Finance lease under a sale and
leaseback contract from a
subsidiary of Chinalco
(xi), (ix)
224,000
600,036
Trade receivable factoring arrangement
from a subsidiary of Chinalco
(ix)
470,101
1,570,000
Discounted notes receivable to a
subsidiary of Chinalco
(viii)
756,000
523,253
Provision of financial guarantees to:
A joint venture
(x)
12,450
18,350
Financial guarantees provided by:
A subsidiary of Chinalco
–
4,000
363
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(a) Significant related party transactions (continued)
All transactions with related parties were conducted at prices and on terms mutually
agreed by the parties involved, which are determined as follows:
(i)
Sales of materials and finished goods comprised sales of alumina, primary
aluminum, copper and scrap materials. Transactions entered into are covered by
general agreements on a mutual provision of production supplies and ancillary
services. The pricing policy is summarised below:
1.
The price prescribed by the PRC government (“the state-prescribed price”)
is adopted;
2.
If there is no state-prescribed price, the state-guidance price is adopted;
3.
If there is neither a state-prescribed price nor state-guidance price, then the
market price (being price charged to and from independent third parties) is
adopted; and
4.
If none of the above is available, then a contractual price (being reasonable
costs incurred in providing the relevant services plus not more than 5% of
such costs) is adopted.
(ii)
Utility services, including electricity, gas, heat and water, are provided at the
state-prescribed price.
(iii) Engineering, project construction and supervisory services were provided
for construction projects. The state-guidance price or prevailing market price
(including the tender price where by way of tender) is adopted for pricing
purposes.
364
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(a) Significant related party transactions (continued)
All transactions with related parties are conducted at prices and terms mutually agreed
by the parties involved, which are determined as follows: (continued)
(iv)
The pricing policy for purchases of key and auxiliary materials (including bauxite,
limestone, carbon, cement and coal) is the same as that set out in (i) above.
(v)
Social services and logistics services provided by Chinalco Group cover public
security, fire services, education and training, school and hospital services,
cultural and physical education, newspaper and magazines, broadcasting and
printing as well as property management, environmental and hygiene, greenery,
nurseries and kindergartens, sanatoriums, canteens and offices, public transport
and retirement management and other services. Provisions of these services are
covered by the Comprehensive Social and Logistics Services Agreement. The
pricing policy is the same as that set out in (i) above.
(vi) Pursuant to the Land Use Rights Lease Agreements entered into between the
Group and Chinalco Group, operating leases for industrial or commercial land are
charged at the market rent rate. The Group also entered into a building rental
agreement with Chinalco Group and paid rent based on the market rate for its
lease of buildings owned by Chinalco.
(vii) The pricing policy for product processing services is the same as that set out in (i)
above.
(viii) C h i n a l c o F i n a n c e C o m p a n y L i m i t e d (“C h i n a l c o F i n a n c e”)* (中鋁財務有限
責任公司), a wholly-owned subsidiary of Chinalco and a non-bank financial
institution established in the PRC, provides deposit services, credit services and
miscellaneous financial services to the Group. The terms for the provision of
financial services to the Group are no less favourable than those of the same type
of financial services provided by Chinalco Finance to Chinalco and other members
of its group or those of the same type of financial services that may be provided
to the Group by other financial institutions.
365
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(a) Significant related party transactions (continued)
All transactions with related parties are conducted at prices and terms mutually agreed
by the parties involved, which are determined as follows: (continued)
(ix)
These related party transactions also constitute connected transactions or
continuing connected transactions as defined in Chapter 14A of the Listing Rules.
(x)
In December 2006, Ningxia Energy, a subsidiary of the Company, entered into a
financial guarantee contract with China Construction Bank providing a financial
guarantee to Tian Jing Shen Zhou Wind Power Co., Ltd, a joint venture of the
Company, for its 14-year bank loan amounting to RMB35 million. As at 31
December 2018, the outstanding amount of the guarantee was RMB12 million.
(xi) As disclosed in note 20, the Group has entered into several sales and leaseback
contracts with CFL.
(xii) As disclosed in note 38 (f) and 38 (g), the Group acquired 57.69% and 19.96%
equity interest in Chibi Great Wall Carbon from China Great Wall Aluminum and
Henan Great Wall Zhongxin Industrial Co., Ltd. (“Henan Great Wall Zhongxin”) (河
南長城眾鑫) respectively; and acquired 51% equity interest in East Light Logistics
from Northeast Light Alloy Co., Ltd. (“Northeast Light Alloy”) (東北輕合金有限公
司); which constituted related party transactions.
(xiii) As disclosed in note 38 (d) and 38 (e), the Group acquired Shandong Aluminum
Plant (山東鋁廠碳素廠) and Pingguo Aluminum Plant ( 平果鋁業碳素廠) from
Pingguo Aluminum and Shandong Aluminum, which also constituted related party
transactions.
366
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(b) Balances with related parties
Other than those disclosed elsewhere in the consolidated financial statements, the
outstanding balances with related parties at the year end are as follows:
31 December
31 December
2018
2017
(restated)
Cash and cash equivalents deposited with
A subsidiary of Chinalco (Note)
9,101,541
7,679,806
Trade and notes receivables
Chinalco and its subsidiaries
Associates of Chinalco
Joint ventures
Associates
1,278,715
1,483,984
18,655
819,878
6,615
2,000
591,488
96,574
2,123,863
2,174,046
Provision for impairment of receivables
(77,657)
(78,388)
2,046,206
2,095,658
Note: On 26 August 2011, the Company entered into an agreement with Chinalco Finance, pursuant to
which, Chinalco Finance agreed to provide deposit services, credit services and other financial
services to the Group. On 24 August 2012, 28 April 2015 and 26 October 2017, the Company renewed
the financial service agreement with Chinalco Finance with a validation term of three years ending on
26 October 2020.
367
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(b) Balances with related parties (continued)
Other current assets
Chinalco and its subsidiaries
Joint ventures
Associates
Provision for impairment of other current assets
Other non-current assets
A joint venture
Associates
Borrowings and finance lease payables
Subsidiaries of Chinalco
A joint venture
Trade and notes payables
Chinalco and its subsidiaries
Joint ventures
Associates
Associates of Chinalco
31 December
2018
31 December
2017
(restated)
830,615
1,424,678
29,701
623,254
1,737,644
1,132,138
2,284,994
(40,830)
3,493,036
(48,166)
2,244,164
3,444,870
–
111,845
97,103
111,845
111,845
208,948
4,373,033
–
3,329,807
190,000
4,373,033
3,519,807
404,278
631,570
13,033
4,012
332,701
413,533
7,222
–
1,052,893
753,456
368
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(b) Balances with related parties (continued)
Other payables and accrued liabilities
Chinalco and its subsidiaries
Associates of Chinalco
Associates
Joint ventures
Contract Liabilities
Chinalco and its subsidiaries
Associates of Chinalco
Associates
Joint ventures
31 December
2018
31 December
2017
(restated)
1,887,010
17,128
148,978
8,860
2,652,249
5,030
218,560
101,828
2,061,976
2,977,667
31 December
2018
31 December
2017
22,307
20
12,451
94,367
129,145
–
–
–
–
–
As at 31 December 2018, included in long-term loans and borrowings and short-term
loans and borrowings were from other state-owned enterprises amounting to
RMB42,553 million (31 December 2017: RMB33,575 million) and RMB41,189 million (31
December 2017: RMB42,648 million).
The terms of all balances with the exception of the entrusted loans were unsecured and
were in accordance with terms as set out in the respective agreements or as mutually
agreed between the parties concerned.
369
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
35. SIGNIFICANT RELATED PARTY BALANCES AND
TRANSACTIONS (CONTINUED)
(c) Compensation of key management personnel
Fees
Basic salaries, housing fund, other allowances and
benefits in kind
Pension costs
2018
756
3,953
482
5,191
2017
768
3,830
415
5,013
Details of directors’ remuneration are included in note 30 to the financial statements.
(d) Commitments with related parties
As at 31 December 2018 and 2017, except for the other capital commitments disclosed
in note 42(c) to these financial statements, the Group had no significant commitments
with related parties.
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
36.1 Financial risk management
The Group’s activities expose it to a variety of financial risks, including market risk
(including foreign currency risk, interest rate risk and commodity price risk), credit
risk and liquidity risk. The Group’s overall risk management program focuses on the
unpredictability of financial markets and seeks to minimise the potential adverse effects
on the Group’s financial performance.
Risk management is carried out by the treasury management department (the “Group
Treasury”) under policies approved by the board of directors of the Company. The Group
Treasury identifies, evaluates and hedges financial risks through close co-operation with
the Group’s operating units.
370
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
36.1 Financial risk management (Continued)
(a) Market risk
(i) Foreign currency risk
Foreign currency risk primarily arises from certain significant foreign
c u r r e n c y d e p o s i t s, t r a d e a n d n o t e s r e c e i v a b l e s, t r a d e a n d n o t e s
payables, advances paid to suppliers, and short-term and long-term loans
denominated in United States dollars (“USD”), Australian dollars (“AUD”),
Euro (“EUR”), Japanese yen (“JPY”), and Hong Kong dollars (“HKD”).
Related exposures are disclosed in notes 14, 15, 16, 19, 22, 23 and 40 to
the financial statements, respectively. The Group Treasury closely monitors
the international foreign currency market on the change of exchange rates
and takes these into consideration when investing in foreign currency
deposits and borrowing loans. As at 31 December 2018, the Group only had
significant exposure to USD.
As at 31 December 2018, if RMB had weakened/strengthened by 5%
against USD with all other variables held constant, the total comprehensive
income for the year would have been approximately RMB10 million higher/
lower (2017: RMB21 million lower/higher), mainly as a result of foreign
exchange gains and losses arising from the translation of USD-denominated
borrowings, cash and receivables. Profit was more sensitive to the
fluctuation in the RMB/USD exchange rates in 2018 than in 2017, mainly
due to the increase in the USD denominated cash and receivables.
As the assets and liabilities denominated in other foreign currencies other
than USD were relatively minimal to the total assets and liabilities of the
Group, the directors of the Company are of the opinion that the Group
was not exposed to any significant foreign currency risk arising from these
foreign currency denominated assets and liabilities as at 31 December 2018
and 2017.
371
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (Continued)
(a) Market risk (continued)
(ii) Interest rate risk
As at 31 December 2018, as the Group had no significant interest-bearing
assets except for bank deposits (note 16) and entrusted loans (note 15), the
Group’s income and operating cash flows are substantially independent of
changes in market interest rates.
Most of the bank deposits are maintained in savings and time deposit
accounts in the PRC. The interest rates are regulated by the People’s Bank
of China and the Group Treasury closely monitors the fluctuation on such
rates periodically. The interest rates of entrusted loans are fixed. As the
interest rates applied to the entrusted loans were fixed, the directors of
the Company are of the opinion that the Group was not exposed to any
significant interest rate risk for its financial assets held as at 31 December
2018 and 2017.
The interest rate risk for the Group’s financial liabilities primarily arises from
interest-bearing loans. Loans borrowed at floating interest rates expose the
Group to cash flow interest rate risk. The Group enters into debt obligations
to support general corporate purposes including capital expenditures
and working capital needs. The Group Treasury closely monitors market
interest rates and maintains a balance between variable rate and fixed
rate borrowings in order to reduce the exposures to the interest rate risk
described above.
As at 31 December 2018, if interest rates had been 100 basis points (31
December 2017: 100 basis points) higher/lower for bank and other loans
borrowed at floating interest rates with all other variables held constant, the
total comprehensive income for the year would have been RMB641 million
lower/higher (2017: RMB537 million (restated)), respectively, mainly as a
result of the higher/lower interest expense on floating rate borrowings.
372
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(a) Market risk (continued)
(ii) Interest rate risk (continued)
The interest rate risk of the Group mainly arises from medium-term notes
and short-term bonds issued at fixed rates. As the fluctuation of comparable
interest rates of corporate bonds with similar terms was relatively low, the
directors of the Company are of the opinion that the Group is not exposed
to any significant fair value interest rate risk for its fixed interest rate
borrowings held as at 31 December 2018 and 2017.
(iii) Commodity price risk
The Group uses futures and option contracts to reduce its exposure to
fluctuations in the price of primary aluminum and other products. The
Group uses the futures contract for hedging other than speculation. With
reference to the hedging of primary aluminum, production company hedges
the output of primary aluminum and trading company hedges the quantities
of buyout and self-supporting.
The Group uses mainly futures contracts and option contracts traded on
the Shanghai Futures Exchange and London Metal Exchange (“LME”) to
hedge against fluctuations in primary aluminum prices. As at 31 December
2018, the fair values of the outstanding futures contracts amounting to
RMB16 million (31 December 2017: RMB10 million) and RMB2 million (31
December 2017: RMB89 million) were recognised in financial assets and
financial liabilities at fair value through profit or loss, respectively. As at
31 December 2018, the Company did not hold any option contracts (31
December 2017: the Company did not hold any option contracts).
373
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(a) Market risk (continued)
(iii) Commodity price risk (continued)
As at 31 December 2018, if the commodity futures prices had increased/
decreased by 3% (31 December 2017: 3%) and all other variables were
held constant, the profit for the year would have changed by the amounts
shown below:
2018
2017
Primary aluminum
Decrease/increase
Decrease/increase
Copper
Increase/decrease
Increase/decrease
RMB14 million
RMB46 million
Zinc
Coal
RMB0.9 million
RMB0.3 million
Decrease/increase
Decrease/increase
RMB1.0 million
RMB7 million
Decrease/increase
Decrease/increase
RMB2.7 million
RMB0.2 million
374
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(b) Credit risk
Credit risk arises from balances with banks and financial institutions, trade and
notes receivables, other current and non-current receivables as well as credit
exposures of customers, including outstanding receivables and committed
transactions.
The Group maintains substantially all of its bank balances and cash and short-term
investments in several major state-owned banks in the PRC. With strong support
from the PRC government to these state-owned banks, the directors of the
Company are of the opinion that there is no significant credit risk on such assets
being exposed to losses.
The Group applies the simplified approach to most of its trade receivables to
provide for expected credit losses prescribed by IFRS 9, which permits the use
of the lifetime expected loss provision for trade receivables. The Group has made
individual assessment for trade receivables from clients with top rating and those
receivables with pledged assets separately and impairment provisions are made.
To measure the expected credit losses of trade receivables excluding individually
assessed and impaired receivables, trade receivables have been grouped based
on shared credit risk characteristics and the days past due. The expected credit
loss model also incorporates forward-looking information.
375
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(b) Credit risk (continued)
The Group has performed historical analysis and identified the key economic
variables impacting credit risk and expected credit losses. It considers available
reasonable and supportive forwarding-looking information. Especially the following
indicators are incorporated:
•
•
•
internal credit rating
external credit rating
actual or expected significant adverse changes in business, financial or
economic conditions that are expected to cause a significant change to the
borrower’s ability to meet its obligations
•
actual or expected significant changes in the operating results of individual
clients
•
significant changes in the expected performance and behaviour of the
clients
The Group measures expected credit loss rates on the basis of a loss rate
approach by segmenting its portfolio into appropriate groupings based on shared
credit risk characteristics. At the end of each year, the Group updates its historical
loss information with forward-looking information. As the historical credit loss
rates were comparatively stable and no significant changes were expected to the
forward-looking information after the consideration of reasonable and supportable
forecasts of comparatively stable customer relationship and customers’ credit
ratings, the expected credit loss rates remained consistent during 2018.
376
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(b) Credit risk (continued)
Maximum exposure and year-end staging as at 31 December 2018
The table below shows the credit quality and the maximum exposure to credit
risk based on the Group’s credit policy, which is mainly based on past due
information unless other information is available without undue cost or effort, and
year-end staging classification as at 31 December 2018. The amounts presented
are carrying amounts for financial assets and the exposure to credit risk for the
financial guarantee contracts.
12-month
ECLs
Lifetime ECLs
Stage 1
Stage 2
Stage 3
Simplified
Total
–
–
–
5,206,050
5,206,050
Trade receivables*
Financial assets in other
current assets
Notes receivable
Restricted cash
1,098,455
2,894,482
2,165,288
Cash and cash equivalents
19,130,652
Financial assets in other
non-current assets
204,718
Financial guarantees
– not yet past due
12,450
3,655,638
121,432
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
4,875,525
2,894,482
2,165,288
19,130,652
204,718
12,450
Total
*
25,506,045
3,655,638
121,432
5,206,050
34,489,165
For trade receivables to which the Group applies the simplified approach for impairment,
information based on the provision matrix is disclosed in notes 14 to the consolidated financial
statements.
377
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(b) Credit risk (continued)
Maximum exposure as at 31 December 2017
The carrying amounts of short-term investments and these receivables included
in notes 10, 12, 14, and 15 represent the Group’s maximum exposure to credit
risk in relation to its financial assets. The Group also provided financial guarantees
to certain subsidiaries and a joint venture. The guarantees to the joint venture
mentioned in note 35 represented the Group’s maximum exposure to credit risk
in relation to its guarantees to the joint venture.
For the year ended 31 December 2018, revenues of approximately RMB32,852
million (2017: RMB39,759 million) were derived from entities directly or indirectly
owned or controlled by the PRC government including Chinalco. There were no
other individual customers from whom the Group has derived revenue of more
than 10% of the Group’s revenue during the years ended 31 December 2018 and
2017. Thus, the directors of the Company are of the opinion that the Group was
not exposed to any significant concentration of credit risk as at 31 December
2018 and 2017.
(c) Liquidity risk
Cash flow forecast is performed in the operating entities of the Group and
aggregated by the Group Treasury. The Group Treasury monitors rolling forecasts
of the Group’s liquidity requirements to ensure that it has sufficient cash to
meet operational needs while maintaining sufficient headroom on its undrawn
committed borrowing facilities at all times so that the Group does not breach
borrowing limits or covenants (where applicable) on any of its borrowing facilities.
This forecast takes into consideration the Group’s debt financing plans, covenant
compliance, compliance with internal balance sheet ratio targets and, if applicable,
external regulatory or legal requirements, for example, currency restrictions.
378
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(c) Liquidity risk (continued)
As at 31 December 2018, the Group had total banking facilities of approximately
RMB183,129 million of which the amounts totalling RMB61,611 million have been
utilised as at 31 December 2018. Banking facilities of approximately RMB92,582
million will be subject to renewal during the next 12 months. The directors of
the Company are confident that such banking facilities can be renewed upon
expiration based on their past experience and good credit standing.
In addition, as at 31 December 2018, the Group had credit facilities through its
futures agent at the LME amounting to USD12 million (equivalent to RMB82
million) (31 December 2017: USD20 million (equivalent to RMB131 million)), of
which USD1 million (equivalent to RMB7 million) (31 December 2017: USD2
million (equivalent to RMB13 million)) has been utilised. The futures agent has the
right to adjust the related credit facilities.
Management also monitors rolling forecasts of the Group’s liquidity reserve on
the basis of the expected cash flows.
379
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(c) Liquidity risk (continued)
The table below analyses the maturity profile of the Group’s financial liabilities
as at the end of the reporting period. The amounts disclosed in the table are the
contractual undiscounted cash flows.
Within
1 year
1 to
2 years
2 to
5 years
Over
5 years
Total
As at 31 December 2018
Finance lease payables,
including current portion
2,518,653
1,161,490
707,716
13,238
4,401,097
Long-term bank and other loans,
including current portion
Medium-term notes and
bonds, including current
portion
Short-term bonds
Gold leasing arrangement
Short-term bank and other
loans
Interest payables for
borrowings
3,384,400
7,377,956
16,593,587
18,784,797
46,140,740
400,000
500,000
1,607,905
39,296,192
–
–
–
–
9,785,840
–
–
–
–
–
–
–
10,185,840
500,000
1,607,905
39,296,192
4,848,968
2,602,751
4,197,364
898,786
12,547,869
Financial liabilities at fair value
through profit or loss
1,766
Financial liabilities included in
other payables and accrued
liabilities, excluding accrued
interest
Financial liabilities included in
other non-current liabilities
(note)
Trade and notes payables
8,855,639
–
–
–
–
–
–
1,766
8,855,639
–
14,007,600
108,896
–
333,354
–
420,258
–
862,508
14,007,600
75,421,123
11,251,093
31,617,861
20,117,079 138,407,156
Note: As disclosed in note 21, as at 31 December 2018, the carrying value of financial liabilities
included in other non-current liabilities was RMB841 million (31 December 2017: RMB769
million).
380
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.1 Financial risk management (continued)
(c) Liquidity risk (continued)
Within
1 year
1 to
2 years
2 to
5 years
Over
5 years
Total
As at 31 December 2017
(restated)
Finance lease payables,
including current portion
Long-term bank and other
loans, including current
portion
Medium-term notes and
bonds, including current
portion
Short-term bonds
Gold leasing arrangement
Short-term bank and other
loans
Interest payables for
borrowings
2,371,917
1,762,618
1,890,329
73,603
6,098,467
6,911,640
5,174,015
8,673,794
19,745,385
40,504,834
12,500,000
3,500,000
6,818,393
3,215,000
–
–
31,041,442
–
–
–
–
–
–
–
–
–
15,715,000
3,500,000
6,818,393
31,041,442
5,502,360
2,123,149
4,106,037
1,048,728
12,780,274
Financial liabilities at fair value
through profit or loss
89,426
Financial liabilities included in
other payables and accrued
liabilities, excluding accrued
interest
Financial liabilities included in
other non-current liabilities
(Note)
Trade and notes payables
10,535,869
–
–
–
–
–
89,426
–
10,535,869
–
12,360,441
107,785
–
108,896
–
587,668
–
804,349
12,360,441
91,631,488
12,382,567
14,779,056
21,455,384 140,248,495
381
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments
(a) Financial instruments by category
The carrying amounts of each of the categories of financial instruments of the
Group as at the end of the reporting period are as follows:
Financial assets
Group
31 December 2018
Financial assets at
fair value through
profit or loss
Designated as
such upon
initial
recognition
Financial
assets at
amortised
cost
Held for
trading
Equity
investments
designated
at fair value
through other
comprehensive
income
–
8,100,532
16,141
–
–
–
–
2,165,288
19,130,652
4,875,525
16,141
34,271,997
–
–
–
–
–
–
Total
8,100,532
16,141
2,165,288
19,130,652
4,875,525
34,288,138
–
–
–
–
204,718
1,729,825
–
1,729,825
204,718
204,718
1,729,825
1,934,543
16,141
34,476,715
1,729,825
36,222,681
Current
Trade and notes receivables
Financial assets at fair value through
profit or loss
Restricted cash
Cash and cash equivalents
Financial assets included in other current assets
Subtotal
Non-current
Equity investments designated at fair value
through other comprehensive income
Other non-current assets
Subtotal
Total
–
–
–
–
–
–
–
–
–
–
382
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(a) Financial instruments by category (continued)
Financial liabilities
Group
31 December 2018
Financial liabilities at fair value
through profit or loss
Designated as
such upon initial
recognition
Financial
liabilities at
amortised cost
Held for
trading
Current
Financial liabilities at fair value through profit or loss
Interest-bearing loans and borrowings
Financial liabilities included in other payables and
accrued liabilities (note 22)
Trade and notes payables
Subtotal
Non-current
Financial liabilities included in other non-current
liabilities (note 21)
Interest-bearing loans and borrowings
Subtotal
Total
–
–
–
–
–
–
–
–
–
Total
1,766
47,513,582
9,251,925
14,007,600
1,766
–
–
–
–
47,513,582
9,251,925
14,007,600
1,766
70,773,107
70,774,873
–
–
–
841,059
54,207,386
841,059
54,207,386
55,048,445
55,048,445
1,766
125,821,552
125,823,318
383
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(a) Financial instruments by category (continued)
Financial assets
31 December 2017 (restated)
Financial
assets at fair
Available-for-
value through
Loans and
sale financial
profit or loss
receivables
investments
Total
Current
Trade and notes receivables
Financial assets at fair value
–
8,008,937
through profit or loss
9,534
–
Restricted cash
Cash and cash equivalents
Financial assets included in other
current assets
–
–
–
2,168,192
27,835,866
6,487,547
Subtotal
9,534
44,500,542
–
–
–
–
–
–
8,008,937
9,534
2,168,192
27,835,866
6,487,547
44,510,076
Non-current
Available-for-sale financial
investments
Financial assets included in other
non-current assets
Subtotal
Total
–
–
–
–
1,928,201
1,928,201
261,156
–
261,156
261,156
1,928,201
2,189,357
9,534
44,761,698
1,928,201
46,699,433
384
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(a) Financial instruments by category (continued)
Financial liabilities
31 December 2017 (restated)
Financial
Financial
liabilities at fair
liabilities at
value through
amortised
profit or loss
cost
Total
Current
Financial liabilities at fair value
through profit or loss
89,426
–
89,426
Interest-bearing loans and
borrowings
Financial liabilities included in
other payables and accrued
liabilities
Trade and notes payables
–
–
–
62,981,070
62,981,070
11,363,236
11,363,236
12,360,441
12,360,441
Subtotal
89,426
86,704,747
86,794,173
Non-current
Financial liabilities included in
other non-current liabilities
Interest-bearing loans and
borrowings
Subtotal
Total
–
–
–
769,061
769,061
40,289,703
40,289,703
41,058,764
41,058,764
89,426
127,763,511
127,852,937
385
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(b) Fair value and fair value hierarchy
Fair value
The carrying amounts and fair values of the Group’s financial instruments, other
than those with carrying amounts that reasonably approximate to fair values and
those carried at fair value, are as follows:
Carrying amounts
Fair values
31 December
31 December
31 December
31 December
2018
2017
2018
2017
Financial assets
Other non-current assets (note 12)
204,718
261,156
182,132
242,567
Carrying amounts
Fair values
31 December
31 December
31 December
31 December
2018
2017
2018
2017
Financial liabilities
Financial liabilities included in other
non-current liabilities (note 21)
841,059
769,061
816,529
660,688
Long-term interest-bearing loans
and borrowings (note 19)
54,207,386
40,289,703
53,207,052
39,475,392
55,048,445
41,058,764
54,023,581
40,136,080
386
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(b) Fair value and fair value hierarchy (continued)
Fair value (continued)
Management has assessed that the fair values of cash and cash equivalents,
restricted cash, trade and notes receivables, financial assets included in other
current assets, entrusted loans, trade and notes payables, financial liabilities
included in other payables and accrued liabilities, short-term and the current
portion of interest-bearing loans and borrowings, interest payable and the current
portion of long-term payables approximate to their carrying amounts largely due
to the short term maturities of these instruments.
The fair values of the financial assets and liabilities are included at the amount
at which the instrument could be exchanged in a current transaction between
willing parties, other than in a forced or liquidation sale. The following methods
and assumptions were used to estimate the fair values:
•
The fair values of the financial assets included in other non-current
assets and financial liabilities included in other non-current liabilities and
long-term interest-bearing loans and borrowings have been calculated by
discounting the expected future cash flows using rates currently available
for instruments with similar terms, credit risk and remaining maturities.
The Group’s own non-performance risk for financial liabilities included in other
non-current liabilities and long-term interest-bearing loans and borrowings as at
31 December 2018 was assessed to be insignificant.
387
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(b) Fair value and fair value hierarchy (continued)
Fair value hierarchy
The following tables illustrate the fair value measurement hierarchy of the
Group’s financial instruments:
Assets measured at fair value:
As at 31 December 2018
Fair value measurement using
Quoted prices
Significant
Significant
in active
observable
unobservable
markets
(Level 1)
inputs
inputs
(Level 2)
(Level 3)
Total
Financial assets at fair value
through profit or loss:
Futures contracts
Equity investments designated
at fair value through other
comprehensive income:
Listed equity investments
Other unlisted investment
16,141
6,441
–
22,582
–
–
–
–
–
16,141
–
1,723,384
6,441
1,723,384
1,723,384
1,745,966
388
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(b) Fair value and fair value hierarchy (continued)
Fair value hierarchy (continued)
Assets measured at fair value: (continued)
As at 31 December 2017
Fair value measurement using
Quoted prices
Significant
Significant
in active
markets
(Level 1)
observable
unobservable
inputs
(Level 2)
inputs
(Level 3)
Financial assets at fair value
through profit or loss:
Futures contracts
Available-for-sale financial
investments:
Listed equity investments
Other unlisted investment
9,534
9,701
–
19,235
–
–
–
–
Total
9,534
9,701
–
–
1,848,000
1,848,000
1,848,000
1,867,235
389
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(b) Fair value and fair value hierarchy (continued)
Fair value hierarchy (continued)
Liabilities measured at fair value:
As at 31 December 2018
Fair value measurement using
Quoted prices
Significant
Significant
in active
observable
unobservable
markets
(Level 1)
inputs
inputs
(Level 2)
(Level 3)
Total
Financial liabilities at fair value
through profit or loss:
Futures contracts
1,766
1,766
–
–
–
–
1,766
1,766
As at 31 December 2017
Fair value measurement using
Quoted prices
Significant
Significant
in active
observable
unobservable
markets
(Level 1)
inputs
inputs
(Level 2)
(Level 3)
Total
Financial liabilities at fair value
through profit or loss:
Futures contracts
89,426
89,426
–
–
–
–
89,426
89,426
390
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(b) Fair value and fair value hierarchy (continued)
Fair value hierarchy (continued)
Assets for which fair values are disclosed
As at 31 December 2018
Fair value measurement using
Quoted prices
Significant
Significant
in active
observable
unobservable
markets
(Level 1)
inputs
inputs
(Level 2)
(Level 3)
Total
Financial assets at amortised
cost:
Financial assets included in other
non-current assets
–
182,132
–
182,132
As at 31 December 2017
Fair value measurement using
Quoted prices
Significant
Significant
in active
markets
(Level 1)
observable
unobservable
inputs
(Level 2)
inputs
(Level 3)
Total
Loans and receivables:
Financial assets included in other
non-current assets
–
242,567
–
242,567
391
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(b) Fair value and fair value hierarchy (continued)
Fair value hierarchy (continued)
Liabilities for which fair values are disclosed
As at 31 December 2018
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Total
Financial liabilities at amortised
cost:
Financial liabilities included in other
non-current liabilities
Long-term interest-bearing loans
and borrowings
–
–
–
816,529
53,207,052
54,023,581
–
–
–
816,529
53,207,052
54,023,581
As at 31 December 2017
Fair value measurement using
Quoted prices
in active
markets
(Level 1)
Significant
observable
inputs
(Level 2)
Significant
unobservable
inputs
(Level 3)
Total
Financial liabilities at amortised
cost:
Financial liabilities included in other
non-current liabilities
Long-term interest-bearing loans
and borrowings
–
–
–
–
660,688
39,475,392
40,136,080
–
–
–
660,688
39,475,392
40,136,080
During the year ended 31 December 2018, the Group had no transfers of fair
value measurements between Level 1 and Level 2 and no transfers into or out of
Level 3 for both financial assets and financial liabilities (2017：Nil).
392
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.2 Financial instruments (continued)
(b) Fair value and fair value hierarchy (continued)
Fair value hierarchy (continued)
Liabilities for which fair values are disclosed (continued)
Below is a summary of significant unobservable inputs to the valuation of financial
instruments as at 31 December 2018 and 2017:
Valuation
Technique
Significant
unobservable
input
Range
Equity investments
in Size Industry
Investment Fund
31 December 2018
Net Assets Method
Net Assets
31 December 2017
Net Assets Method
Net Assets
5,000,000
5,600,000
36.3 Capital risk management
The Group’s capital management objectives are to safeguard the Group’s ability to
continue as a going concern in order to provide returns for shareholders and benefits
for other stakeholders, and to maintain an optimal capital structure to reduce the cost
of capital.
In order to maintain or adjust the capital structure, the Group may adjust the amount of
dividends paid to shareholders, issue new shares or sell assets to reduce debts.
393
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
36. FINANCIAL AND CAPITAL RISK MANAGEMENT
(CONTINUED)
36.3 Capital risk management (continued)
Consistent with other entities in the industry, the Group monitors capital on the basis
of its gearing ratio. This ratio is calculated as net debt divided by total capital. Net debt
is calculated as total liabilities (excluding deferred tax liabilities, income tax payable
and deferred government grants) less restricted cash, and cash and cash equivalents.
Total capital is calculated as equity, as shown in the consolidated statement of financial
position, plus net debt less non-controlling interests.
The gearing ratio as at 31 December 2018 is as follows:
Total liabilities (excluding deferred tax liabilities,
income tax payable and deferred government
grants)
Less: restricted cash and cash and cash
31 December
2018
31 December
2017
(restated)
130,966,279
132,493,752
equivalents
(21,295,940)
(30,004,058)
Net debt
109,670,339
102,489,694
Total equity
Add: net debt
Less: non-controlling interests
67,669,202
109,670,339
(15,254,312)
65,742,596
102,489,694
(26,054,567)
Total capital attributable to owners of the parent
162,085,229
142,177,723
Gearing ratio
68%
72%
394
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
37. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS
Other than the senior perpetual securities issued by a subsidiary of the Group, which is
disclosed in note 40, details of the Group’s subsidiaries that have material non-controlling
interests are set out below:
Percentage of equity interest held by non-controlling
interests
Ningxia Energy
Guizhou Huajin
Guizhou Huaren
Inner Mongolia Huayun New Material Co., Ltd.
(“Huayun”) (Note)
Profit/(loss) for the year allocated to non-controlling
interests
Ningxia Energy
Guizhou Huajin
Guizhou Huaren
Huayun
Dividends distributed to non-controlling interests
Ningxia Energy
Guizhou Huajin
Guizhou Huaren
Huayun
Accumulated balances of non-controlling interests at the
reporting dates
Ningxia Energy
Guizhou Huajin
Guizhou Huaren
Huayun
Note:
the Group owned 51% of the voting right of Huayun.
2018
2017
29.18%
40.00%
60.00%
29.18%
40.00%
N/A
50.00%
50.00%
214,479
291,009
20,783
186,945
351,979
200,000
–
–
(5,670)
410,023
N/A
72,903
3,264
–
–
–
4,757,014
782,176
820,675
959,847
4,914,902
695,251
N/A
776,418
395
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
37. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS (CONTINUED)
The following tables illustrate the summarised financial information of the above subsidiaries.
The amounts disclosed are before any inter-company eliminations:
2018
Revenue
Total expenses
Profit for the year
Total comprehensive income for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows from financing activities
Effect of foreign exchange rate changes, net
Net increase in cash and cash equivalents
Ningxia Energy
6,714,040
6,555,933
158,107
158,107
5,036,413
32,677,977
8,723,922
18,367,979
2,755,612
(1,616,513)
(991,998)
–
147,101
396
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
37. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS (CONTINUED)
The following tables illustrate the summarised financial information of the above subsidiaries.
The amounts disclosed are before any inter-company eliminations: (Continued)
2017
Revenue
Total expenses
Loss for the year
Total comprehensive income for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows from financing activities
Effect of foreign exchange rate changes, net
Net decrease in cash and cash equivalents
Ningxia Energy
5,624,059
5,691,240
(67,181)
(67,181)
4,538,735
33,716,269
7,944,491
19,488,716
2,110,801
(3,933,743)
1,350,275
–
(472,667)
397
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
37. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS (CONTINUED)
The following tables illustrate the summarised financial information of the above subsidiaries.
The amounts disclosed are before any inter-company eliminations: (Continued)
2018
Revenue
Total expenses
Profit for the year
Total comprehensive income for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
Effect of foreign exchange rate changes, net
Net decrease in cash and cash equivalents
Guizhou Huajin
4,018,682
3,291,160
727,522
727,522
1,495,922
2,752,815
1,875,227
418,070
1,104,759
(75,066)
(1,075,311)
–
(45,618)
398
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
37. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS (CONTINUED)
The following tables illustrate the summarised financial information of the above subsidiaries.
The amounts disclosed are before any inter-company eliminations: (Continued)
2017
Revenue
Total expenses
Profit for the year
Total comprehensive income for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
Effect of foreign exchange rate changes, net
Net increase in cash and cash equivalents
Guizhou Huajin
4,123,352
3,098,295
1,025,057
1,025,057
1,820,262
2,841,975
1,958,230
965,880
1,162,069
(7,437,104)
(1,835,878)
(221,567)
(8,332,480)
399
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
37. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS (CONTINUED)
The following tables illustrate the summarised financial information of the above subsidiaries.
The amounts disclosed are before any inter-company eliminations: (Continued)
2018
Revenue
Total expenses
Profit for the year
Total comprehensive income for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
Effect of foreign exchange rate changes, net
Net decrease in cash and cash equivalents
Guizhou Huaren
4,282,882
4,248,243
34,639
34,639
1,169,453
3,038,875
1,381,541
1,458,995
134,781
(510,243)
(115,222)
–
(490,684)
400
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
37. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS (CONTINUED)
The following tables illustrate the summarised financial information of the above subsidiaries.
The amounts disclosed are before any inter-company eliminations: (Continued)
2018
Revenue
Total expenses
Profit for the year
Total comprehensive income for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
Effect of foreign exchange rate changes, net
Net decrease in cash and cash equivalents
Huayun
8,099,579
7,725,689
373,890
373,890
2,372,120
8,338,220
4,342,807
3,947,839
1,448,853
(2,097,536)
614,418
–
(34,265)
401
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
37. PARTLY-OWNED SUBSIDIARIES WITH MATERIAL
NON-CONTROLLING INTERESTS (CONTINUED)
The following tables illustrate the summarised financial information of the above subsidiaries.
The amounts disclosed are before any inter-company eliminations: (Continued)
2017
Revenue
Total expenses
Profit for the year
Total comprehensive income for the year
Current assets
Non-current assets
Current liabilities
Non-current liabilities
Net cash flows from operating activities
Net cash flows used in investing activities
Net cash flows used in financing activities
Effect of foreign exchange rate changes, net
Net increase in cash and cash equivalents
Huayun
3,085,361
2,939,556
145,805
145,805
2,151,021
7,549,859
3,525,808
4,122,238
263,559
(4,408,396)
4,308,874
–
164,037
402
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS
(a) Acquisition of Guizhou Huaren
In May 2017, the Company, together with Hangzhou Jinjiang, Guizhou Investment
and Qingzhen Investment jointly established Guizhou Huaren. The registered capital
of Guizhou Huaren is RMB1,200 million, of which the Company holds 40% of equity
interest in Guizhou Huaren, Hangzhou Jinjiang holds 30%, while each of the other
two shareholders holds 15% equity interest, respectively. According to the article
of association of Guizhou Huaren, the directors of the Company considered that the
Company had significant influence over Guizhou Huaren, which was accounted for as
an associate.
I n D e c e m b e r 2 0 1 7 , t h e C o m p a n y a n d H a n g z h o u J i n j i a n g e n t e r e d i n t o a n
acting-in-concert agreement which became effective on 1 January 2018. According
to the acting-in-concert agreement, Hangzhou Jinjiang agreed to exercise the board
members’ and shareholder’s vote in concert with the Company. Accordingly, the
directors of the Company considered that the Company obtains control over Guizhou
Huaren and has consolidated Guizhou Huaren’s financial position and performance into
the Group’s consolidated financial statements since 1 January 2018.
403
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 38. BUSINESS COMBINATIONS (CONTINUED)
(a) Acquisition of Guizhou Huaren (continued)
The fair value of identifiable assets and liabilities of Guizhou Huaren at the acquisition
date are as follows:
Assets
Property, plant and equipment
Intangible assets
Land use rights
Other current assets
Inventories
Trade and notes receivables
Restricted cash
Cash and cash equivalents
Liabilities
Deferred tax liabilities
Interest-bearing loans and borrowings
Contract liabilities
Other payables and accrued expenses
Trade and notes payables
Net assets
Non-controlling interests
Share of net assets acquired
Goodwill
Satisfied by:
Cash
Fair value of previously held equity interest
404
1 January 2018
Fair value
2,194,095
137
109,320
353,655
220,718
250
324,030
673,587
(58,299)
(1,680,000)
(2,562)
(345,562)
(464,454)
1,324,915
794,949
529,966
–
–
529,966
529,966
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(a) Acquisition of Guizhou Huaren (continued)
Details of the 40% equity interest held by the Company before the acquisition of
Guizhou Huaren and the profit from the investment are as follows:
Initial investment cost
Share of loss accumulated under the equity method
Book value of the investment in 40% equity of Guizhou Huaren on
the acquisition date
Fair value of the investment in 40% equity of Guizhou Huaren on
the acquisition date (Note)
Gain on previously held equity interest remeasured at acquisition-
date fair value
1 January 2018
480,000
(18,347)
461,653
529,966
68,313
Note: The fair value was determined by the valuation report issued by an independent qualified valuer.
An analysis of the cash flows in respect of the acquisition of Guizhou Huaren is as
follows:
Cash consideration
Cash and bank balances acquired
Net inflow of cash and cash equivalents included in cash flows
from investing activities
RMB’000
–
673,587
673,587
405
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(a) Acquisition of Guizhou Huaren (continued)
The operating results and cash flows of Guizhou Huaren since the acquisition date to 31
December 2018 are as follows:
Revenue
Profit for the period
Net cash out flows
(b) Acquisition of Shanxi Zhongrun
RMB’000
4,282,882
34,639
(490,684)
In February 2017, the Company entered into a capital injection and enlargement
agreement on Shanxi Zhongrun with Huarun (Coal) Group Co., Ltd.* (“Huarun (Coal)
Group”) (華潤（煤業）集團有限公司), Shanxi Xishan Coal and Electricity Power Co., Ltd.*
(“Xishan Coal Electricity”) (山西西山煤電股份有限公司) and Jin Energy Power Group Co.,
Ltd.* (“Jin Energy Power”) (晉能電力集團有限公司). After the capital contribution, the
registered capital of Shanxi Zhongrun is RMB500 million, of which the Company holds
40% of equity interest in Shanxi Zhongrun while each of the other three shareholders
holds a 20% equity interest, respectively. The Company can appoint two out of the
five directors of the board of directors. According to the article of association of Shanxi
Zhongrun and the agreement, the directors of the Company considered that the
Company had significant influence over Shanxi Zhongrun, which was accounted for as
an associate.
I n D e c e m b e r 2 0 1 7 , t h e C o m p a n y a n d H u a r u n ( C o a l ) G r o u p e n t e r e d i n t o a n
acting-in-concert agreement which was effective on 1 January 2018. According to
the acting-in-concert agreement, Huarun (Coal) Group agreed to exercise the board
members’ and shareholder’s vote in concert with the Company. Accordingly, the
directors of the Company considered that the Company obtains control over Shanxi
Zhongrun and has consolidated Shanxi Zhongrun’s financial position and performance
into the Group’s consolidated financial statements since 1 January 2018.
406
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(b) Acquisition of Shanxi Zhongrun (continued)
The fair value of identifiable assets and liabilities of Shanxi Zhongrun at the acquisition
date are as follows:
Assets
Property, plant and equipment
Intangible assets
Other current assets
Inventories
Trade and notes receivables
Cash and cash equivalents
Liabilities
Deferred tax liabilities
Interest-bearing loans and borrowings
Other payables and accrued expenses
Trade and notes payables
Net assets
Non-controlling interests
Share of net assets acquired
Goodwill
Satisfied by:
Cash
Fair value of previously held equity interest
1 January 2018
Fair value
2,292,483
749
215,575
15,473
4,135
2,173,062
(41,581)
(3,485,852)
(37,789)
(13,778)
1,122,477
673,486
448,991
–
–
448,991
448,991
407
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(b) Acquisition of Shanxi Zhongrun (continued)
Details of the 40% equity interest held by the Company before the acquisition of Shanxi
Zhongrun and the profit from the investment are as follows:
Initial investment cost
Share of loss accumulated under the equity method
Book value of the investment in 40% equity of Shanxi Zhongrun
on the acquisition date
Fair value of the investment in 40% equity of Shanxi Zhongrun on
the acquisition date (Note)
Gain on previously held equity interest remeasured at acquisition-
date fair value
1 January 2018
400,184
(6,553)
393,631
448,991
55,360
Note: The fair value was determined by the valuation report issued by an independent qualified valuer.
An analysis of the cash flows in respect of the acquisition of Shanxi Zhongrun is as
follows:
Cash consideration
Cash and bank balances acquired
Net inflow of cash and cash equivalents included in cash flows
from investing activities
RMB’000
–
2,173,062
2,173,062
408
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(b) Acquisition of Shanxi Zhongrun (continued)
The operating results and cash flows of Shanxi Zhongrun since the acquisition date to
31 December 2018 are as follows:
Revenue
Profit for the period
Net cash out flows
RMB’000
645,214
817
(2,137,166)
*
The English names represent the best effort made by management of the Group in translating their
Chinese names as the companies do not have any official English names.
(c) Acquisition of Shanxi Huaxing
On 31 December 2017, the Company, Chalco Hong Kong and Baotou Communication
Investment held 10%, 40% and 50% of the shares of Shanxi Huaxing, respectively.
According to the articles of association of Shanxi Huaxing, the Group can exercise joint
control over Shanxi Huaxing and therefore, which was accounted for as a joint venture
accordingly.
In December 2018, the Company entered into an equity transfer agreement with Baotou
Communication Investment. According to the agreement, the Company acquired 50%
of Shanxi Huaxing’s equity with a consideration at RMB2,665 million in cash. Upon
completion of the transaction, the Group held a total of 100% of Shanxi Huaxing’s
shares. The directors of the Company considered that the Company obtains control
over Shanxi Huaxing and has consolidated Shanxi Huaxing’s financial position and
performance into the Group’s consolidated financial statements since the acquisition
date of 6 December 2018.
409
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(c) Acquisition of Shanxi Huaxing (Continued)
The fair value of identifiable assets and liabilities of Shanxi Huaxing at the acquisition
date are as follows:
6 December 2018
Fair value
Assets
Property, plant and equipment
Intangible assets
Land use right
Deferred tax assets
Other non-current assets
Other current assets
Inventories
Trade and notes receivables
Restricted cash
Cash and cash equivalents
Liabilities
Deferred tax liabilities
Interest-bearing loans and borrowings
Other non-current liabilities
Contract liabilities
Other payables and accrued expenses
Trade and notes payables
Net assets
Non-controlling interests
Share of net assets acquired
Goodwill
Satisfied by:
Cash
Fair value of previously held equity interest
410
7,327,807
728,067
348,901
8,094
60,336
102,396
865,418
44,706
203,350
81,344
(722,349)
(1,743,036)
(239,998)
(617,827)
(686,024)
(1,594,724)
4,166,461
–
4,166,461
1,163,949
2,665,205
2,665,205
5,330,410
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(c) Acquisition of Shanxi Huaxing (Continued)
Details of the 50% equity interest held by the Group before the acquisition of Shanxi
Huaxing and the profit from the investment are as follows:
Initial investment cost
Share of loss accumulated under the equity method
Share of changes in reserves under the equity method
Cash dividends declared
Book value of the investment in 50% equity of Shanxi Huaxing on
the acquisition date
Fair value of the investment in 50% equity of Shanxi Huaxing on
the acquisition date (Note)
Gain on previously held equity interest remeasured at acquisition-
date fair value
6 December 2018
2,351,479
(77,309)
11,166
(236,556)
2,048,780
2,665,205
616,425
Note: The fair value was determined by the valuation report issued by an independent qualified valuer.
An analysis of the cash flows in respect of the acquisition of Shanxi Huaxing is as
follows:
Cash consideration
Cash and bank balances acquired
Net outflow of cash and cash equivalents included in cash flows
from investing activities
RMB’000
(2,665,205)
81,344
(2,583,861)
411
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(c) Acquisition of Shanxi Huaxing (Continued)
The operating results and cash flows of Shanxi Huaxing since the acquisition date to 31
December 2018 are as follows:
Revenue
Profit for the period
Net cash out flows
RMB’000
415,509
110,917
(434)
*
The English names represent the best effort made by management of the Group in translating their
Chinese names as the companies do not have any official English names.
(d) Acquisition of Shandong Aluminum Carbon Plant
On 31 August 2018, Chalco Shandong, a subsidiary of the Company, entered into an
asset transfer agreement with Shandong Aluminum Plant, pursuant to which, Chalco
Shandong acquired Shandong Aluminum Carbon Plant from Shandong Aluminum at a
total consideration of RMB146 million. The consideration was determined based on the
appraisal report issued by an independent qualified valuer. Chalco Shandong has paid all
consideration as of 31 December 2018. In the opinion of the directors of the Company,
Shandong Aluminum Carbon Plant constitutes a business. Before and after the
acquisition, Chalco Shandong and Shandong Aluminum were controlled by Chinalco, and
the control was not temporary. As such, the acquisition is considered to be a business
combination under common control. The acquisition date was 31 August 2018, which is
determined by the date of transfer of the assets.
412
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(d) Acquisition of Shandong Aluminum Carbon Plant
(Continued)
The carrying amounts of the assets and liabilities of Shandong Aluminum Carbon Plant as
at the transaction date and the comparative financial figures were as follows:
Assets
Property, plant and equipment
Inventories
Other current assets
Trade and notes receivables
Cash and cash equivalents
Liabilities
Trade and notes payables
Contract liabilities
Other payables and accrued expensed
31 August
31 December
2018
2017
23,845
46,150
411
44,522
–
24,393
51,104
418
23,052
34,354
(24,011)
(1,432)
(1,542)
(12,235)
–
(38,415)
Net assets
87,943
82,671
Difference recognised in equity
Total purchase consideration
58,319
146,262
413
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(e) Acquisition of Pingguo Aluminum Carbon Plant
On 30 August 2018, Guangxi Branch of the Company entered into an asset transfer
agreement with Pingguo Aluminum, pursuant to which, Guangxi Branch of the
Company acquired Pingguo Aluminum Carbon Plant from Pingguo Aluminum at a
total consideration of RMB92 million. The consideration was determined based on
the appraisal report issued by an independent qualified valuer. Guangxi Branch of the
Company has paid all consideration as of 31 December 2018. In the opinion of the
directors of the Company, the Pingguo Aluminum Carbon Plant constitutes a business.
Before and after the acquisition, Guangxi Branch and Pingguo Aluminum were
controlled by Chinalco, and the control was not temporary. As such, the acquisition is
considered to be a business combination under common control. The acquisition date
was 30 August 2018, which is determined by the date of transfer of the assets.
414
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 38. BUSINESS COMBINATIONS (CONTINUED)
(e) Acquisition of Pingguo Aluminum Carbon Plant (Continued)
The carrying amounts of the assets and liabilities of Pingguo Aluminum Carbon Plant at
the transaction date and the comparative financial figures were as follows:
Assets
Property, plant and equipment
Trade and notes receivables
Inventories
Liabilities
30 August
31 December
2018
2017
127,315
–
71,264
35,201
12,143
90,581
Trade and notes payables
(117,749)
(69,521)
Net assets
Difference recognised in equity
Total purchase consideration
68,404
80,830
11,218
92,048
(f) Acquisition of Chibi Great Wall Carbon
On 30 August 2018, Chalco Mining, a subsidiary of the Company, entered into an equity
transfer agreement with China Great Wall Aluminum and Henan Great Wall Zhongxin,
pursuant to which, Chalco Mining acquired 57.69% and 19.96% equity interest in Red
Chibi Great Wall from China Great Wall Aluminum and Henan Great Wall Zhongxin,
respectively. The consideration for the acquisition was RMB202 million, which was
determined based on the appraisal value of the 77.65% equity interest in Chibi Great
Wall Carbon. As at 31 December 2018, Chalco Mining has paid the consideration in
receivables amounting to RMB70 million and cash amounting to RMB132 million,
respectively. The transaction date was 30 August 2018, which was the date that the
Group obtained control of Chibi Great Wall Carbon. Before and after the acquisition,
both Chibi Great Wall Carbon and Chalco Mining were controlled by Chinalco, and the
control was not temporary. Thus, the acquisition of the 77.65% equity interest in Chibi
Great Wall Carbon is considered to be a business combination under common control.
415
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(f) Acquisition of Chibi Great Wall Carbon (Continued)
The carrying amounts of the assets and liabilities of Chibi Great Wall Carbon as at the
transaction date and the comparative financial figures were as follows:
30 August
2018
31 December
2017
Assets
Property, plant and equipment
379,618
271,604
Land use rights
Deferred tax assets
Inventories
Other current assets
Trade and notes receivables
Restricted Cash
Cash and cash equivalents
Liabilities
25,731
3,325
65,440
18,608
53,392
–
16,258
26,124
3,325
59,035
11,095
32,880
15,700
50,545
Interest-bearing loans and borrowings
(233,000)
(228,500)
Contract liabilities
Trade and notes payables
Other payables and accrued expenses
Income tax payable
Other non-current liabilities
Net assets
Non-controlling interests
Difference recognised in equity
Total purchase consideration
–
(46,702)
(51,595)
(2,927)
(69,640)
70,944
(15,856)
(1,816)
(56,970)
(52,114)
–
(65,901)
152,571
(34,100)
83,497
201,968
416
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
38. BUSINESS COMBINATIONS (CONTINUED)
(g) Acquisition of Longhua Logistics
On 17 September 2018, China Aluminum Logistics Group Corporation Co., Ltd.* (“China
Aluminum Logistics Group”) (中鋁物流集團有限公司), a subsidiary of the Company,
entered into an equity transfer agreement with Northeast Light Alloy, pursuant to
which, Chalco Aluminum Logistics acquired a 51% equity interest in Longhua Logistics
from Northeast Light Alloy. The consideration for the acquisition was RMB3 million,
which was determined based on the appraisal value of the 51% equity interest in
Longhua Logistics and China Aluminum Logistics Group has paid all consideration as of
31 December 2018. The transaction date was 17 September 2018, which was the date
that the Group obtained control of Longhua Logistics. Before and after the acquisition,
both Longhua Logistics and China Aluminum Logistics Group were controlled by
Chinalco, and the control was not temporary. As such, the acquisition of the 51%
equity interest in Longhua Logistics is considered to be a business combination under
common control.
417
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 38. BUSINESS COMBINATIONS (CONTINUED)
(g) Acquisition of Longhua Logistics (Continued)
The carrying amount of the assets and liabilities of Longhua Logistics as at the
transaction date and the comparative financial figures were as follows:
Assets
Property, plant and equipment
Inventories
Other current assets
Trade and notes receivables
Cash and cash equivalents
Liabilities
Trade and notes payables
Contract liabilities
Income tax payable
Other payables and accrued expenses
17 September
31 December
2018
2017
3,839
2,207
608
6,828
403
(4,647)
(1,504)
–
(2,065)
2,901
127
200
6,704
281
(2,062)
–
(130)
(1,323)
Net assets
5,669
6,698
Non-controlling interests
(2,778)
(3,281)
Net assets acquired
Difference recognised in equity
Total purchase consideration
2,891
413
3,304
418
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
39. DISPOSAL OF BUSINESSES
(a) Bankruptcy liquidation of Shanxi Huatai Carbon Co., Ltd.
In March 2018, Shanxi Jiexiu People’s Court accepted the liquidation petition filed by
the Group’s subsidiary, Shanxi Huatai Carbon Co., Ltd.* (“Huatai Carbon”) (山西華泰碳
素有限責任公司). Upon the liquidation, administrators took control over Huatai Carbon
and the directors of the Company considered that the Company lost control over Huatai
Carbon and therefore, ceased to consolidate Huatai Carbon since then. The Group
recognised a loss of RMB2 million for lost control over Huatai Carbon.
(b) Bankruptcy liquidation of Hedong Carbon Co., Ltd.
In June 2018, Shanxi Hejin People’s Court accepted the liquidation petition filed by
the Group’s subsidiary, Hedong Carbon Co., Ltd.* (“Hedong Carbon”) (河東碳素有限
責任公司). Upon the liquidation, administrators took control over Hedong Carbon and
the directors of the Company considered that the Company lost control over Hedong
Carbon and therefore, ceased to consolidate Hedong Carbon since then. The Group
recognised a loss of RMB2 million for lost control over Hedong Carbon.
*
The English name represents the best effort made by management of the Group in translating its
Chinese name as it does not have any official English names.
419
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 40. OTHER EQUITY INSTRUMENTS
On 22 October 2013, a subsidiary of the Company, Chalco Hong Kong Investment Company
Limited (“Chalco Hong Kong Investment”, or the “Issuer”) issued USD350 million senior
perpetual securities at an initial distribution rate of 6.625% (the “2013 Senior Perpetual
Securities”). The proceeds from the issuance of the 2013 Senior Perpetual Securities after
the issuance costs amounted to USD347 million (equivalent to RMB2,123 million). The
proceeds were on-lent to the Company and any of its subsidiaries for general corporate use.
Coupon payments at 6.625% per annum on the 2013 Senior Perpetual Securities have been
made semi-annually in arrears from 29 October 2013 and may be deferred at the discretion of
the Group. The 2013 Senior Perpetual Securities have no fixed maturity dates and are callable
only at the Group’s option on or after 29 October 2018 at their principal amounts together
with any accrued, unpaid or deferred coupon distribution payments. After 29 October 2018,
the coupon distribution rate will be reset to a percentage per annum equal to the sum of (a)
the initial spread of 5.312 percent, (b) the U.S. Treasury Rate, and (c) a margin of 5.00 percent
per annum. While any coupon distribution payments are unpaid or deferred, the Company
and Chalco Hong Kong as guarantors, and the Issuer cannot declare or pay dividends or
make distributions or similar discretionary payments in respect of, or repurchase, redeem or
otherwise acquire any securities of lower or equal rank.
On 31 October 2018, the Group redeemed the senior perpetual security, and paid $373 million
in principal and interest, approximately RMB2,592 million.
On 27 October 2015, the Company issued RMB2,000 million perpetual medium-term notes
with an initial distribution rate at 5.50% (the “2015 Perpetual Medium-term Notes”). The
proceeds from the issuance of the 2015 Perpetual Medium-term Notes were RMB2,000
million. The proceeds were used for the repayment of interest-bearing loans and borrowings.
Coupon payments at 5.50% per annum on the 2015 Perpetual Medium-term Notes have
been made annually in arrears from 29 October 2015 and may be deferred at the discretion
of the Company. The 2015 Perpetual Medium-term Notes have no fixed maturity date and are
callable only at the Group’s option on 29 October 2020 or any coupon distribution date after
29 October 2020 at their principal amounts together with any accrued, unpaid or deferred
coupon distribution payments. The coupon distribution rate will be reset to a percentage
per annum equal to the sum of (a) the initial spread of 2.61 percent, (b) the China Treasury
Rate, and (c) a margin of maximum 300 Bps every five years after 29 October 2020. While
any coupon distribution payments are unpaid or deferred, the Company cannot declare or
pay dividends to shareholders or decrease the share capital, or make material fixed asset
investments.
420
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 40. OTHER EQUITY INSTRUMENTS (CONTINUED)
On 31 October 2016, Chalco Hong Kong Investment issued USD500 million senior perpetual
securities with an initial distribution rate at 4.25% (the “2016 Senior Perpetual Securities”).
The proceeds from the issuance of the 2016 Senior Perpetual Securities after the issuance
costs were USD498 million (equivalent to RMB3,374 million). The proceeds were on-lent
to the Company and any of its subsidiaries for general corporate use. Coupon payments at
4.25% per annum on the 2016 Senior Perpetual Securities have been made semi-annually
on 29 April and 29 October in arrears from 7 November 2016 and may be deferred at the
discretion of the Group. The first coupon payment date was 29 April 2017. The 2016 Senior
Perpetual Securities have no fixed maturity date and are callable only at the Group’s option
on or after 7 November 2021 at their principal amounts together with any accrued, unpaid
or deferred coupon distribution payments. After 7 November 2021, the coupon distribution
rate will be reset to a percentage per annum equal to the sum of (a) the initial spread of
2.931 percent, (b) the U.S. Treasury Rate, and (c) a margin of 5.00 percent per annum. While
any coupon distribution payments are unpaid or deferred, the Company and Chalco Hong
Kong as guarantors, and the Issuer cannot declare or pay dividends or make distributions or
similar discretionary payments in respect of, or repurchase, redeem or otherwise acquire any
securities of lower or equal rank.
On 19 October 2018, the Company issued RMB2,000 million Senior Perpetual Securities
with an initial distribution rate at 5.10% (the “2018 Senior Perpetual Securities”). The
proceeds from the issuance of the 2018 Senior Perpetual Securities were RMB2,000 million.
The proceeds were used for the repayment of interest-bearing loans and borrowings.
Coupon payments of 5.10% per annum on the 2018 Senior Perpetual Securities have been
made annually in arrears from 19 October 2018 and may be deferred at the discretion of
the Company. The 2018 Senior Perpetual Securities have no fixed maturity date and are
callable only at the Group’s option on 23 October 2021 or any coupon distribution date after
23 October 2021 at their principal amounts together with any accrued, unpaid or deferred
coupon distribution payments. The coupon distribution rate will be reset to a percentage
per annum equal to the sum of (a) the initial spread of 1.90 percent, (b) the China Treasury
Rate, and (c) a margin of 500 Bps every three years after 23 October 2021. While any coupon
distribution payments are unpaid or deferred, the Company cannot declare or pay dividends to
shareholders or decrease the share capital, or make material fixed asset investments.
421
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 40. OTHER EQUITY INSTRUMENTS (CONTINUED)
Pursuant to the terms and conditions of the 2013 Senior Perpetual Securities, the 2015
Perpetual Medium-term Notes, the 2016 Senior Perpetual Securities and the 2018 Senior
Perpetual Securities, the Group has no contractual obligations to repay their principal or to
pay any coupon distributions. Thus, in the opinion of the directors of the Company, they
do not meet the definition of financial liabilities according to IAS 32 Financial Instruments:
Presentation, and are classified as equity and subsequent distributions declared will be
treated as distributions to equity owners.
41. CONTINGENT LIABILITIES
As at 31 December 2018 and 2017, the Group had no significant contingent liabilities.
42. COMMITMENTS
(a) Capital commitments on property, plant and equipment
31 December
2018
31 December
2017
Contracted, but not provided for
3,942,933
2,967,541
(b) Commitments under operating leases
The future aggregate minimum lease payments as at 31 December 2018 pursuant
to non-cancellable lease agreements entered into by the Group are summarised as
follows:
Within one year
In the second to fifth years, inclusive
After five years
31 December
2018
31 December
2017
541,541
1,880,058
10,567,925
658,574
2,112,800
12,544,108
12,989,524
15,315,482
422
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
42. COMMITMENTS (CONTINUED)
(c) Other capital commitments
As at 31 December 2018, the commitments to make capital contributions to the
Group’s joint ventures and associates were as follows:
Associates
Joint ventures
31 December
31 December
2018
2017
82,800
460,000
374,800
–
542,800
374,800
43. EVENTS AFTER THE REPORTING PERIOD
(a) On 16 January 2019, the Group completed an issuance of short-term bonds with a total
face value of RMB2 billion at par value of RMB100.00 per unit which will mature in
March 2019 for working capital needs. The fixed annual coupon interest rate of these
bonds is 2.99%.
(b) On 22 January 2019, the Group completed an issuance of corporate bonds with a total
face value of RMB2 billion at par value of RMB100.00 per unit which will mature in
January 2022 for working capital needs and repayment of bank borrowings. The fixed
annual coupon interest rate of these bonds is 3.80%.
(c) On 14 March 2019, the Group completed an issuance of short-term bonds with a total
face value of RMB1 billion at par value of RMB100.00 per unit which will mature in
September 2019 for working capital needs. The fixed annual coupon interest rate of
these bonds is 2.64%.
(d) On 15 March 2019, the Group completed an issuance of short-term bonds with a total
face value of RMB2 billion at par value of RMB100.00 per unit which will mature in May
2019 for working capital needs. The fixed annual coupon interest rate of these bonds is
2.90%.
423
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
43. EVENTS AFTER THE REPORTING PERIOD (CONTINUED)
(e) On 20 March 2019, the Group completed an issuance of short-term bonds with a total
face value of RMB3 billion at par value of RMB100.00 per unit which will mature in
September 2019 for working capital needs. The fixed annual coupon interest rate of
these bonds is 2.98%.
44. COMPARATIVE AMOUNTS
Certain comparative amounts have been restated as a result of the business combinations
under common control and voluntary changes in the accounting policy as disclosed in note 38
and note 2.2(d).
The comparative consolidated statement of cash flows for the year ended 31 December 2017
have been revised to reclassify the cash outflows for the purchase of non-controlling interests
and business combination under common control from investing activities to financing
activities in accordance with IAS 7. This change did not impact the consolidated statement of
financial position or consolidated statement of profit or loss and other comprehensive income
for the prior periods.
424
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued) 45. STATEMENT OF FINANCIAL POSITION OF THE COMPANY
Information about the statement of financial position of the Company at the end of the
reporting period is as follows:
ASSETS
Non-current assets
Intangible assets
Property, plant and equipment
Land use rights
Investments in subsidiaries
Investments in joint ventures
Investments in associates
Equity investments designed at fair value through other
comprehensive income
Available-for-sale investments
Deferred tax assets
Other non-current assets
31 December
31 December
2018
2017
(restated)
2,847,450
17,376,731
550,005
2,897,881
19,458,175
542,107
57,559,298
38,510,249
1,421,924
3,436,268
1,665,441
–
656,317
8,023,750
1,556,924
4,169,770
–
1,862,701
653,794
2,848,755
Total non-current assets
93,537,184
72,500,356
Current assets
Inventories
Trade and notes receivables
Other current assets
Financial assets at fair value through profit or loss
Restricted cash
Cash and cash equivalents
3,062,042
1,098,718
3,728,568
1,257,867
15,417,130
19,518,022
–
127,588
4,357,656
6,581
157,217
16,320,277
Total current assets
24,063,134
40,988,532
Total assets
117,600,318
113,488,888
425
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
45. STATEMENT OF FINANCIAL POSITION OF THE COMPANY
(CONTINUED)
EQUITY AND LIABILITIES
EQUITY
Equity attributable to owners of the parent
Share capital
Other reserves
Accumulated losses
31 December
31 December
2018
2017
(restated)
14,903,798
42,680,053
14,903,798
27,973,226
(7,176,832)
(7,648,158)
Total equity
50,407,019
35,228,866
LIABILITIES
Non-current liabilities
Interest-bearing loans and borrowings
Other non-current liabilities
27,877,479
18,620,383
674,105
775,919
Total non-current liabilities
28,551,584
19,396,302
426
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
45. STATEMENT OF FINANCIAL POSITION OF THE COMPANY
(CONTINUED)
EQUITY AND LIABILITIES
LIABILITIES
Current liabilities
Interest-bearing loans and borrowings
Other payables and accrued liabilities
Contract liabilities
Trade and notes payables
31 December
31 December
2018
2017
(restated)
27,801,492
10,133,854
110,154
596,215
46,936,113
10,739,439
–
1,188,168
Total current liabilities
38,641,715
58,863,720
Total liabilities
67,193,299
78,260,022
Total equity and liabilities
117,600,318
113,488,888
Net current liabilities
14,578,581
17,875,188
Total assets less current liabilities
78,958,603
54,625,168
Lu Dongliang
Director
Wang Jun
Chief Financial Officer
427
2018 ANNUAL REPORT31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
45. STATEMENT OF FINANCIAL POSITION OF THE COMPANY
(CONTINUED)
Note：
A summary of the Company’s reserves is as follows:
Share
premium
Other
capital
reserves
Statutory
surplus
reserve
Available-for-
sale
reserve
Other
equity
instruments
Special
reserve
Accumulated
losses
Total
19,206,999
–
873,215
–
5,867,557
–
38,580
–
45,901
–
2,019,288
–
(8,682,802)
1,144,644
19,368,738
1,144,644
–
–
–
–
19,191,612
–
19,191,612
–
–
11,527
–
–
–
–
–
–
–
–
–
–
–
–
873,215
–
873,215
–
5,867,557
–
5,867,557
–
–
–
–
–
–
–
–
2,200
–
–
–
12,713,248
–
–
–
–
–
–
–
–
(4,758)
–
–
–
–
–
–
2,019,288
–
2,019,288
–
1,988,000
–
–
–
–
–
–
(4,758)
(34,307)
(3,571)
(20,291)
–
(110,000)
(15,387)
(110,000)
(7,648,158)
20,325,068
(11,364)
(7,659,522)
573,412
(4,895)
20,320,173
573,412
–
–
–
1,988,000
11,527
2,200
(34,307)
–
–
–
–
6,836
6,469
13,305
–
–
–
–
(5,880)
–
–
–
–
–
(19,288)
–
–
–
(90,722)
–
(5,880)
10,551
(110,010)
12,713,248
–
(3,571)
(20,291)
–
–
14,718
–
14,718
–
–
–
–
–
10,551
–
–
Balance at 1 January 2017
Profit for the year
Changes in fair value of available-for-
sale financial assets, net of tax
Transfer out due to disposal of
available-for-sale financial assets,
net of tax
Other appropriation
Release of deferred government
subsidies
Business combinations under
common control
Other equity instruments’ distribution
(15,387)
–
Balance at 31 December 2017
Change in accounting policy
At 1 January 2018 (restated)
Profit for the year
Issuance of senior perpetual
securities
Business combinations under
common control
Release of deferred government
subsidies
Changes in fair value of available-for-
sale financial assets, net of tax
Other appropriation
Other equity instruments’ distribution
Equity exchange arrangement
At 31 December 2018
19,203,139
13,588,663
5,867,557
25,269
7,425
3,988,000
(7,176,832)
35,503,221
46. APPROVAL OF THE FINANCIAL STATEMENTS
The financial statements were approved and authorised for issue by the board of directors on
28 March 2019.
428
ALUMINUM CORPORATION OF CHINA LIMITED31 December 2018(Amounts expressed in thousands of RMB unless otherwise stated)Notes to Financial Statements (Continued)
No. 62 North Xizhimen Street, Haidian District, Beijing, the People's Republic of China (100082)
Tel: 8610 - 8229 8332
Fax: 8610 - 8229 8158
Web: www.chalco.com.cn
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