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China Shenhua refutes speculation of pressure to declare special dividend

China Shenhua Energy Co. Ltd.'s dividend payment of 59.1 billion Chinese yuan for 2016, which was more than twice the size of its full-year profit of 24.91 billion yuan, was in response to requests from shareholders and fund managers over the past years, according to Ling Wen, vice chairman and president of the company.

The company's Hong Kong-listed shares rose by over 20% after the company announced a 41.1% year-over-year increase in net profit, as well as a final dividend of 46 fen per share and a special dividend of 2.51 yuan per share, the South China Morning Post reported March 20.

Ling told a media briefing on the same day in Hong Kong that "the decision to declare a special dividend is solely based on the company's conditions as we hope to maximize shareholder benefits."

"During shareholder meetings in the past years, we received requests from shareholders and fund managers, suggesting the company to increase the proportion of dividend sharing."

Ling also refuted Chinese media reports today, which claimed that the special dividend came following pressure from the State Asset Regulatory Commission, which holds over a 70% stake in the company and will receive about 43.14 billion yuan from the dividend payments.

"We are aware of such speculation but no government body or department has been involved in or offered any advice on the dividend payments," Ling said.

A March 20 report from Chinese newspaper Investment Express cited anonymous sources as saying the dividend decisions were made by commission and were expected to prepare China Shenhua for consolidation deals with either China General Nuclear Power Corp. or China Coal Energy Co. Ltd.

Chairman Zhang Yuzhuo, who was originally scheduled to attend the press conference, was absent, as he was called by the Chinese central government to a meeting in Beijing this morning among leaders of enterprises owned by the central government, according to Ling.

Ling said he was not authorized to comment on the purpose of the meeting and did not respond to questions regarding consolidation plans among state-owned enterprises.

Ling also said CapEx this year was expected to hit about 35 billion yuan. Of a first-phase spending plan of about 17 billion yuan, only 1.76 billion yuan has been budgeted for the coal business.

"It is no longer an era of rapid growth for the coal sector, that's why our CapEx for coal operations has been declining," he said. "The dividend payments will not affect our operation or finance condition and we expect cash flow to remain healthy in the future."

As of March 17, US$1 was equivalent to 6.91 Chinese yuan.