CStone Pharmaceuticals - Annual Report 2019

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Annual Report

Important Notice

The Board, Supervisory Committee and the Directors, Supervisors and senior management of the Company warrant the authenticity, accuracy and completeness of the information contained in the annual report and there are no misrepresentations, misleading statements contained in or material omissions from the annual report for which they shall assume joint and several responsibilities.

The 2019 Annual Report of Yanzhou Coal Mining Company Limited has been approved by the thirty-third meeting of the seventh session of the Board. All eleven Directors of quorum attended the meeting.

SHINEWING (HK) CPA Limited issued the standard independent auditor report with unqualified opinion for the Company.

Mr. Li Xiyong, Chairman of the Board, Mr. Zhao Qingchun, Chief Financial Officer, and Mr. Xu Jian, head of Finance Management Department, hereby warrant the authenticity, accuracy and completeness of the financial statements contained in this annual report.

The Board of the Company proposed a dividend of RMB5.8 (including tax) per 10 share based on the number of shares on the dividend distribution record date. Based on the Company’s total share capital on 31 December 2019, the total amount of cash dividend is estimated to be RMB2.849 billion (including tax) in 2019.

The forward-looking statements contained in this annual report regarding the Company’s future plans do not constitute any substantive commitment to investors and investors are reminded of the investment risks.

There was no appropriation of funds of the Company by the Controlling Shareholder or its related parties for non-operational activities.

There were no guarantees granted to external parties by the Company without complying with the prescribed decision-making procedures.

The Company has disclosed the main risks faced by the Group, the influences and the countermeasures in this annual report. For details, please refer to the relevant content in “Chapter 5 Board of Directors’ Report”, to which the investors please pay attention.

Chapter	1	DEFINITIONS	2
Chapter	2	GROUP INFORMATION AND MAJOR FINANCIAL INDICATORS	5
Chapter	3	BUSINESS HIGHLIGHTS	10
Chapter	4	CHAIRMAN’S STATEMENT	12
Chapter	5	BOARD OF DIRECTORS’ REPORT	16
Chapter	6	SIGNIFICANT EVENTS	44
Chapter	7	CHANGES IN ORDINARY SHARES AND SHAREHOLDERS	112
Chapter	8	DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES	119
Chapter	9	CORPORATE GOVERNANCE	137
Chapter	10	CORPORATE BONDS	153
Chapter	11	INDEPENDENT AUDITOR’S REPORT	161
Chapter	12	CONSOLIDATED FINANCIAL STATEMENTS	167
Chapter	13	DOCUMENTS AVAILABLE FOR INSPECTION	312

Annual Report 2019

Chapter 01 Definitions

In this Annual Report, unless the context requires otherwise, the following terms have the following meanings:

“Yanzhou Coal”, “Company” or	Yanzhou Coal Mining Company Limited, a joint stock limited company incorporated
“the Company”	under the laws of the PRC in 1997 and the H Shares and A Shares of which are traded
	on the HKEX and the Shanghai Stock Exchange, respectively;
“Group” or “the Group”	The Company and its subsidiaries;
“Yankuang Group” or “the	Yankuang Group Company Limited, a company with limited liability reformed and
Controlling Shareholder”	established under the laws of the PRC in 1996, being the Controlling Shareholder of
	the Company directly and indirectly holding 53.79% of the total share capital of the
	Company as at the end of the reporting period;
“Yulin Neng Hua”	Yanzhou Coal Yulin Neng Hua Company Limited, a company with limited liability
	incorporated under the laws of the PRC in 2004 and a wholly-owned subsidiary
	of the Company, which is mainly engaged in the production and operation of the
	methanol project in Shaanxi Province;
“Heze Neng Hua”	Yanmei Heze Neng Hua Company Limited, a company with limited liability
	incorporated under the laws of the PRC in 2004 and a 98.33% owned subsidiary
	of the Company, which is mainly engaged in the development and operation of
	coal resources and electric power business in Juye coal field, Heze city, Shandong
	Province;
“Shanxi Neng Hua”	Yanzhou Coal Shanxi Neng Hua Company Limited, a company with limited liability
	incorporated under the laws of the PRC in 2002 and a wholly-owned subsidiary
	of the Company, which is mainly engaged in the management of the investment
	projects in Shanxi Province by the Company;
“Hua Ju Energy”	Shandong Hua Ju Energy Company Limited, a joint stock limited company
	incorporated under the laws of the PRC in 2002 and a 95.14% owned subsidiary of
	the Company, which is mainly engaged in the thermal power generation with gauge
	and slurry and heating supply business;
“Ordos Neng Hua”	Yanzhou Coal Ordos Neng Hua Company Limited, a company with limited liability
	incorporated under the laws of the PRC in 2009 and a wholly-owned subsidiary
	of the Company, which is mainly engaged in the development and operation of
	coal resources and coal chemical projects of the Company in the Inner Mongolia
	Autonomous Region;
“Haosheng Company”	Inner Mongolia Haosheng Coal Mining Company Limited, a company with limited
	liability incorporated under the laws of the PRC in 2010 and a 59.38% owned
	subsidiary of the Company, which is mainly engaged in the production and operation
	of Shilawusu coal mine in Ordos, Inner Mongolia Autonomous Region;

2 Yanzhou Coal Mining Company Limited

Definitions Chapter 01

“Donghua Heavy Industry” Yankuang Donghua Heavy Industry Company Limited, a company with limited liability incorporated under the laws of the PRC in 2013 and a wholly-owned subsidiary of the Company, which is mainly engaged in the design, manufacture, installation, repair and maintenance of mining equipment, electromechanical equipment and parts;

“Zhongyin Financial Leasing” Zhongyin Financial Leasing Company Limited, a company with limited liability incorporated under the laws of the PRC in 2014 and a wholly-owned subsidiary of the Company, which is mainly engaged in the financial leasing, leasing, leasing trade consultation and guarantees, commercial factoring related to its main business, etc.;
“Yankuang Finance Company” Yankuang Group Finance Co., Ltd., a company with limited liability incorporated under the laws of the PRC in September 2010 and a 95% owned subsidiary of the Company;
“Yancoal Australia” Yancoal Australia Limited, a company with limited liability incorporated under the laws of Australia in 2004 and a 62.26% owned subsidiary of the Company, the shares of which are traded on the Australian Securities Exchange and the Hong Kong Securities Exchange respectively;
“Yancoal International” Yancoal International (Holding) Company Limited, a company with limited liability incorporated under the laws of Hong Kong in 2011 and a wholly-owned subsidiary of the Company;
“Yancoal International Resources” Yancoal International Resources Development Company Limited, a company with limited liability incorporated under the laws of Hong Kong in 2011 and a whollyowned subsidiary of Yancoal International;
“C&A” Coal & Allied Industries Limited, a company with limited liability incorporated under the laws of Australia, and a wholly-owned subsidiary of Yancoal Australia;
“Railway Assets” The railway assets specifically used for coal transportation of the Company, which are located in Jining City, Shandong Province;
“H Shares” Overseas listed foreign invested shares in the ordinary share capital of the Company, with nominal value of RMB1.00 each, which are traded on the HKEX;
“A Shares” Domestic shares in the ordinary share capital of the Company, with nominal value of RMB1.00 each, which are traded on the Shanghai Stock Exchange;
“PRC” The People’s Republic of China; “Hong Kong” The Hong Kong Special Administrative Region of the PRC;

Annual Report 2019 3

Chapter 01 Definitions

“CASs” or “ASBEs”	Accounting Standards for Business Enterprises and the relevant regulations and
	explanations issued by the Ministry of Finance of the PRC;
“IFRS”	International Financial Reporting Standards issued by the International Accounting
	Standards Board;
“CSRC”	China Securities Regulatory Commission;
“Hong Kong Listing Rules”	The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong;
“HKEX” or “Hong Kong Stock	The Stock Exchange of Hong Kong;
Exchange”
“Shanghai Stock Exchange”	The Shanghai Stock Exchange;
“Company Law”	Company Law of the People’s Republic of China;
“Securities Law”	Securities Law of the People’s Republic of China;
“Articles”	the articles of association of the Company;
“JORC”	Joint Ore Reserves Committee of the Australasian Institute of Mining and
	Metallurgy, Australian Institute of Geoscientist and Minerals Council of Australia;
“JORC Code”	Australasian Code for Reporting of Exploration Results, Mineral Resources and Ore
	Reserves, 2012 Edition;
“Shareholders”	The shareholders of the Company;
“Directors”	The directors of the Company;
“Board”	The board of directors of the Company;
“Supervisors”	The supervisors of the Company;
“RMB”	Renminbi, the lawful currency of the PRC, unless otherwise specified;
“AUD”	Australian dollars, the lawful currency of Australia;
“USD”	United States dollars, the lawful currency of the United States;
“HKD”	Hong Kong dollars, the lawful currency of Hong Kong.

4 Yanzhou Coal Mining Company Limited

Chapter 02

Company Information and Major Financial Indicators

I. INFORMATION OF THE COMPANY

Statutory Chinese Name: Abbreviation of Chinese Name: Statutory English Name: Legal Representative: Authorized Representatives of HKEX:

兖州煤業股份有限公司兖州煤業 Yanzhou Coal Mining Company Limited Li Xiyong Zhao Qingchun, Jin Qingbin

II. CONTACT DETAILS

Secretary to the Board: Securities Representative of Shanghai Stock Exchange: Name Jin Qingbin Shang Xiaoyu Address Secretary Office to the Board, Secretary Office to the Board, 298 Fushan South Road, 298 Fushan South Road, Zoucheng City, Zoucheng City, Shandong Province, PRC Shandong Province, PRC Tel (86 537) 538 2319 (86 537) 538 4451 Fax (86 537) 538 3311 (86 537) 538 3311 E-mail [email protected] [email protected]

III. GENERAL INFORMATION

Registered Address:

Postal Code: Office Address:

Postal Code: Official Website: E-mail Address:

298 Fushan South Road, Zoucheng City, Shandong Province, PRC 273500 298 Fushan South Road, Zoucheng City , Shandong Province, PRC 273500 http://www.yanzhoucoal.com.cn [email protected]

Annual Report 2019 5

Chapter 02 Company Information and Major Financial Indicators

IV. INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION

Newspapers for information disclosure in the PRC: China Securities Journal, Shanghai Securities News, Securities Times Website designated by the CSRC for Website for publishing A shares annual report: publishing annual report: http://www.sse.com.cn Website for publishing H shares annual report: http://www.hkexnews.hk The annual reports are available at: Secretary Office to the Board, Yanzhou Coal Mining Company Limited, 298 Fushan South Road, Zoucheng City, Shandong, PRC.

V. CORPORATE STOCKS

Stock type Place of Listing Stock Abbreviation Stock Code A share The Shanghai Stock Exchange Yanzhou Mei Ye 600188 H share HKEX N/A 01171

VI. OTHER INFORMATION

Certified Public Accountants (Domestic)

Name: Shine Wing Certified Public Accountants (special general partnership) Office Address: 9/F, Block A, Fuhua Mansion, 8 Chaoyangmen Beidajie, Dongcheng District, Beijing, PRC Signing Auditor: Ji sheng, Ding Huichun

Certified Public Accountants (Overseas)

Name: SHINEWING (HK) CPA Limited Office Address: 43/F, Lee Garden One, 33 Hysan Avenue, Causeway Bay, Hong Kong Signing Auditor: Lau Kai Wong Domestic Legal Advisor

Name: King&Wood Mallesons, PRC Lawyers, Beijing Office Address: 18th Floor, East Tower, World Financial Center, 1 East 3rd Ring Middle Road, Chaoyang District, Beijing, PRC

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Company Information and Major Financial Indicators Chapter 02

Hong Kong Legal Advisor

Name: Office Address:

Baker & McKenzie 14th Floor, Block 1, Taikoo Place, 929 King’s Road, Quarry bay, Hong Kong

Shanghai Share Registrar

Name: Office Address:

China Securities Depository and Clearing Corporation Limited Shanghai Branch 3rd Floor China Insurance Tower, 166 Lujiazui East Road, Pudong, Shanghai, PRC

Hong Kong Share Registrar

Name: Office Address:

Hong Kong Registrars Limited Rooms 1712-1716, 17th Floor, Hopewell Center, 183 Queen’s Road East, Wanchai, Hong Kong

Liaison Office in Hong Kong

Office Address:

Contact Person: Tel: Fax:

40th Floor, Sunshine Centre, 248 Queen’s Road East, Wanchai, Hong Kong Leung Wing Han Sharon (852) 3912 0800 (852) 3912 0801

Annual Report 2019 7

Chapter 02 Company Information and Major Financial Indicators

VII. FINANCIAL HIGHLIGHTS OF THE LAST FIVE YEARS

(Prepared in accordance with the IFRS)

The financial highlights were prepared based on the financial information set out in the audited consolidated statement of profit or loss, consolidated statement of financial position and consolidated statement of cash flows of the Group from 2015 to 2019.

(I) Operating Results

					Unit: RMB’ 000
		Year	ended 31 December
	2019	2018	2017	2016	2015
Sales income	67,804,644	67,447,104	52,672,105	33,272,432	36,404,086
Gross profit	21,029,486	24,306,538	18,915,405	9,463,988	6,153,611
Finance cost	-2,751,234	-3,612,394	-3,255,404	-2,501,016	-2,484,411
Profit before tax	14,986,842	15,931,098	11,278,241	2,695,112	622,257
Net profit attributable to
Shareholders	9,388,645	8,582,556	7,362,675	1,649,391	164,459
Earnings per share	RMB1.91	RMB1.75	RMB1.50	RMB0.34	RMB0.03
Dividend per shareNote	RMB0.58	RMB0.54	RMB0.48	RMB0.12	RMB0.01

Note:

① In 2018, the Company consolidated the financial statements of Yankuang (Hainan) Intelligent Logistics Co., Ltd. In 2017, the Company consolidated the financial statements of Yanzhou Coal Blue Sky Clean Energy Co., Ltd., Yanzhou Coal Mining Engineering Co., Ltd., Wuxi Dingye Energy Co., Ltd. and Yankuang Finance Company. In 2016, the Company consolidated the financial statements of Shandong Yanmei Property Services Co., Ltd., Shandong Zhongyin International Trade Co., Ltd. and Duanxin Investment Holding (Shenzhen) Co., Ltd. In 2015, the Company consolidated the financial statements of Shandong Duanxin Supply Chain Co., Ltd., Donghua Heavy Industry and Qingdao Vast Lucky International Trade Co., Ltd. (“Qingdao Vast Lucky”).
② The dividend per share for the year 2019 is the recommended dividends to be declared. For details, please refer to the section headed Profit Distribution Plan for 2019 in this report.

8 Yanzhou Coal Mining Company Limited

Company Information and Major Financial Indicators Chapter 02

(II) Assets and Liabilities

Unit: RMB’000

					Unit: RMB’000
		Year	ended 31 December
	2019	2018	2017	2016	2015
Net current assets	-4,052,846	5,230,224	1,523,280	-9,872,437	6,754,770
Net value of property,
plant and equipment	44,995,450	45,296,120	46,267,729	31,023,022	28,659,378
Total assets	210,760,571	206,003,615	197,312,624	147,455,472	142,471,875
Total borrowings	65,375,491	68,677,923	70,360,694	65,577,791	69,479,805
Equity attributable to
Shareholders	54,119,800	52,077,360	47,410,866	37,138,676	35,369,901
Net asset value per share	RMB11.02	RMB10.60	RMB9.65	RMB7.56	RMB7.20
Return on net assets (%)	17.35	16.48	15.53	4.44	0.46

Note: The Group has adjusted items listed in “net value of property, plant and equipment” since 2016, and has made adjustments to the relevant items for year 2015.

(III) Summary of Cash Flow Statement

Unit: RMB’ 000

					Unit: RMB’ 000
		Year	ended 31 December
	2019	2018	2017	2016	2015
Net cash from operating
activities	16,411,202	18,243,311	12,161,766	11,220,674	3,849,356
Net increase (decrease) in cash
and cash equivalents	-4,885,829	6,180,131	4,900,230	-3,695,940	7,217,642
Net cash flow per share from
operating activities	RMB3.34	RMB3.71	RMB2.48	RMB2.28	RMB0.78

Note: The Group has adjusted items listed in cash flow statement since 2016, and has made adjustments to relevant items in 2015, which has no impact on net increase (decrease) in the cash and cash equivalents this year.

Annual Report 2019 9

Chapter 03 Business Highlights

I. MAIN BUSINESSES, BUSINESS MODEL AND INDUSTRY SITUATION OF THE COMPANY DURING THE REPORTING PERIOD

(I) Main Businesses and Business Model

1. Coal business

The Company is one of the main coal producers, suppliers and traders in China and Australia. The products of the Company mainly include thermal coal and PCI coal applicable to electric power, metallurgy and chemical industry, etc., which are mostly sold to East China, North China, South China, Northwest China and other regions of China as well as Japan, South Korea, Singapore, Australia and other countries.

2. Coal chemicals business

The Company’s coal chemicals business is concentrated in Shaanxi Province and Inner Mongolia Autonomous Region. The main product of methanol is mostly sold to North China, East China and Northwest China.

3. Mechanical and electrical equipment manufacturing business

The Company’s mechanical and electrical equipment manufacturing business is mainly engaged in manufacturing, sales, leasing, repair and maintenance of mechanical and electrical equipment including hydraulic supports, heading machines, shearers and others. The products are mostly sold to East China.

4. Power generation and heat business

The Company owns and operates seven power plants with a total installed capacity of 482 MW. In addition to the part for satisfying the demand of the Company itself, the rest of the generated electricity and heat are sold to the final customers through local power grids and Yankuang, respectively.

(II) Industry Situation Analysis

In 2019, the supply-side structural reform in coal industry was deepened. Advanced and efficient production capacity was unleashed simultaneously with cutting ineffective one, smart and intelligent coal mine construction was speeding up, and clean and effective utilization of coal was improved. The supply and demand in coal market remained basically balanced, coal price fluctuated at a medium and high level, and the profitability of coal industry was kept at a stable level even facing more strict management and supervision on security and environmental protection.

10 Yanzhou Coal Mining Company Limited

Business Highlights Chapter 03

II. STATEMENTS OF SIGNIFICANT CHANGES OF MAJOR ASSETS DURING THE REPORTING PERIOD

(All financial data in this section are prepared in accordance with CASs)

For the details of changes and cause analysis on assets of the Company during the reporting period, please refer to “Chapter 5 Board of Directors’ Report”.

Including: Overseas assets of RMB71.174 billion, representing 34.2% of total assets, with no significant change compared with that of the previous year. Since 2004, while relying mainly on Yancoal Australia and Yancoal International, the Company has set up related overseas investment management platforms through various ways, such as overseas assets or equity acquisition, company incorporation, stock swap and merger etc. For the details in relation to the production and operation of Yancoal Australia and Yancoal International, please refer to “Chapter 5 Board of Directors’ Report”.

III. CORE COMPETITIVENESS ANALYSIS DURING THE REPORTING PERIOD

In 2019, the Group, by seizing policy opportunities of supply-side structural reform and replacement of the old growth drives with new ones in coal industry, has continuously improved the vitality and core competitiveness in various ways, such as optimizing the industrial structure, strengthening lean management, and accelerating changes in operating mechanisms. The coal industry focused on an integrated growth with high efficiency and significant achievements on intelligent coal mine construction. A group of Smart Fully-Mechanized Caving Workfaces, advanced at home and abroad, was built and put into normal operations. The percentage of high value-added products had been increased continuously through devoting great energy to implementing the win by clean coal strategy. Through continuous improving operation quality and efficiency, the superior production capacity of major coal mines in the Australia base had been fully released, and it will be built into a world-class large-scale energy base with remarkable international competitiveness. The strength of coal resources in Shaanxi-Inner Mongolia base has been converted into economic strength at an accelerated speed, and the base showed a more powerful sustainable growth as its coalmine’s license approvals had been progressed significantly. The two Phase II high-end fine chemical projects in this base were successfully constructed and put into a trial production, which will add new cluster and scale effects on the chemical industry. In 2019, the Company invested RMB265 million as R&D funds and accomplished several science and technology innovations, and completed sixty projects on science and technology, nineteen of which were ranked as leading position internationally. With implement of the on-going big data project and digital management and control, the Company launched an all-sided digital transformation, and the whole process with shared data for the core businesses had been accomplished. Aim to a green and low carbon recycling growth, the key technology on civil coalfired clean heating process was reached an advanced international level, and the construction of a model project on ecological rehabilitation in the subsidence area was speed up, which set a leading trend in the industry.

Annual Report 2019 11

Chapter 04 Chairman’s Statement

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Mr. Li Xiyong Chairman

Respected Shareholders,

I, on behalf of the Board, would like to present the 2019 annual report of the Company and report our development plan for the year 2020 to all Shareholders.

In 2019, due to the ups and downs of international trade disputes, the world economy slowed down continuously. The Chinese government, with adherence to the general principle of pursuing growth while ensuring stability, has maintained steady development of the macro economy in China. The supply and demand of the coal market home and abroad basically kept balance and the coal price fluctuated in a medium-high range.

To resolve such complicated situation, the Company strived ahead despite pressure and obstacles, tackled tough issues and overcame difficulties by optimizing industry structure, intensifying funds management, exploiting internal potentials and innovating institutions and mechanisms, which delivered a good outcome for the general work with expanded business scale, increased growth rate, improved structure and higher profitability. During the reporting period, the Group produced 106.39 million tons of raw coal and 1.76 million tons of methanol; sold 116.12 million tons of salable coal and 1.75 million tons of methanol; recorded sales income of RMB67.805 billion, profit before tax RMB14.987 billion; net income attributable to shareholders RMB9.389 billion, with many economic indicators hitting a new historic record.

12 Yanzhou Coal Mining Company Limited

Chairman’s Statement Chapter 04

Took full advantages of pillar industries and attained promotions in both quantity and efficiency. The Company, focusing on global strategic layout, made its coal business better and stronger, and strived to be an international energy conglomerate. For coal business , a batch of intelligent mining and developing faces are launched and normally applied which took the lead and set the standards in the industry. The Headquarters base applied fine-grained mining, equipment upgrade, process optimization, that delivered stable production with high efficiency, thus continued functioning as the profit cornerstone. Concentrating superior resources, the Shaanxi-Inner Mongolia base , with all its strength, made every effort to get breakthroughs. The process for operation licenses and permits for Shilawusu coal mine made a significant progress, while the exploration permit and the project approval for Yingpanhao coal mine had been obtained, so the sustainable potential of the Group is further enhanced. The Australia base fully exerted the synergy effect of integration, accelerated the release of superior production capacity, its business size, growth quality and profitability had been promoted significantly. As for the coal chemicals industry , the existing running projects have realized the “safe, stable, long-term, full-load and high-quality” operation. The two Phase II high-end fine chemical projects in Ordos Neng Hua and Yulin Neng Hua were put into a trial production, which will amplify the cluster effect and scale effect of the industry.

Implemented intelligent marketing policies to achieve efficiency improvement and market expansion. With targets of “expanding market, increasing sales, guaranteeing stable production and improving efficiency” in mind, the Company scientifically studied and analyzed the market, actively grasped every opportunity, and had a significant achievement on intelligent marketing. Implement the “win by clean coal” strategy: The Company, always putting benefit first, devoted greater effort on CHPP technical upgrade to uplift its market share on clean coal. The clean coal accounted for 53.5% of the product mix across its coal mines within Shandong, and significant progress in generating revenue with clean coal is achieved. Implement “Long-term contract and direct supply to End-user” strategy: The sales for long-term contract clients in Headquarters base accounted for 74% over the same period last year, and the sales for direct-supply clients in Headquarter base accounted for more than 87%, which effectively resisted the downside risk of coal market. Implement the customized product strategy: Adhering to the market-oriented and value-leading principle, the Company tapped every potential in demand by carrying out the customized coal product and coal slurry reduction comprehensively in order to maximize product’s value-added.

Strengthened quality management and control to obtain improvements on lean management. To improve the profit and cost driven mechanism, and closed-loop management on “volume-cost-profit” applied, costs were reviewed regularly and early warnings were given if needed, through which the operation and control quality is fine-tuned and lifted. Tap internal potential: Deepen the overall budget management, the Company continuously carried out the benchmarking activities, such as material consumption, equipment energy consumption and equipment utilization rate and idle rate, and made achievements on expenditure-reducing and efficiency improvement. Plug expenditure loophole and cost control: Strengthening procurement management, the Company boosted activities of centralized procurement, transparent procurement and public bidding procurement so as to maximize expenditure reduction and cost control. Speed up growth and improve efficiency: With the aid of big data project, the Company took full advantage of the shared planform to realize an integrated, informationized and standardized resource management with continuous improved operational efficiency.

Performed social responsibilities and shouldered corporate responsibilities. Adhering the principle of putting people first, the Company improved the supporting and protection systems for safety, environment and livelihood, and created a favorable environment for reform and development. Aiming for a green and low carbon growth, a new round of “threeyear action plan” for environmental protection is launched, and a number of key environmental projects were progressed as scheduled. The key technology on coal-fired clean heating process reached an advanced international level, which brought a gradual released superposition effect to environmental protection. The Company planned and implemented a transformation development project in the industrialized subsidence area and a project on ecological protection and management. With contributing and sharing growth with everyone in mind and boosting return to Shareholders, the Company distributed an interim special cash dividend of RMB1 per share, jointly sharing development achievements with global investors. The Company actively implemented the national strategy of “precise poverty alleviation” with a cumulative contributed povertyalleviating funds of RMB 26 million, shouldering an SOE’s mission and responsibility during the battle against poverty.

Annual Report 2019 13

Chapter 04 Chairman’s Statement

In 2019, by virtue of the excellent operating results and standardized corporate governance, Yanzhou Coal earned its 11th evaluation as “A Class for Listed Company Information Disclosure” by Shanghai Stock Exchange, and ranked No. 58 among 2019 Fortune 500 China, and No. 35 among 2020 Top 50 Global Mining Company by market value, won various honors as well, including “Top 100 Enterprises in China” and the “Gold Roundtable Award for the Best Board of Directors among China Listed Companies”.

Looking ahead to 2020, economic globalization is advancing in the headwind, and the world structure is facing profound adjustments. Although the novel coronavirus epidemic has obviously affected the global economy, the Chinese economy has tremendous resilience and potential, and the long-term positive trend will not change. It is expected that the coal supply and demand relationship will maintain an overall balance in 2020, and coal prices will fluctuate in the green range.

In 2020, to face with the complex and severe domestic and international macroeconomic situation, Yanzhou coal will closely focus on the development requirements of “basing on the main business, optimizing stocks, increasing production and quality, and leapfrogging development”. The Company will accurately grasp the changes in the domestic and international economic situation, and implement accurate response measures in accordance with the current situation. The Company will ensure that the economic benefits and operating quality will continue unabated in 2020 and develop steadily. In order to ensure the steady growth and the overall improvement of the Group’s operations in 2020, after careful research, combined with the actual operation capacity, the 2020 business plan was formulated to sell 100 million tons of self-produced coal.

With regard to the operation of the year 2020, the Group will focus on the following measures.

Focus on optimization of main business structure. Adhering to the new development concept, the Company will carry out the “optimization of stocks and incremental leapfrogging”. Highlighting the main coal industry, the Company will choose timing to adjust to industries that do not conform to the strategic direction and do not have competitive advantages. Through the acquisition of 10% equity of Moolarben Coal Mine and the divestiture of some non-coal trading companies, the Company will make the leading industries to become better and stronger.

Focus on intensive and efficient production, tamp the incremental foundation of stable production. The Company will speed up the upgrading of industry modernization, consolidate its core competitiveness and sustainability strength, and secure a steady, sound and quality growth. The Company will make full play of coal industry as a core and leading role to create a sound source of benefits and profits. The Headquarters base is to speed up its mine construction in a safe, green, intelligent and efficient way (which is called “four-standard mines”), optimize the organization of continuous production, and ensure stable and efficient production. The Shaanxi and Inner Mongolia base plans to concentrate on regulatory approval obtainment, disaster prevention and control, environmental protection and treatment, strategic cooperation and other key areas to unleash the incremental production capacity to the maximum, increase production and efficiency, and improve quality and efficiency. The Australian base will fully expand the advanced capacity of pillar mines, optimize the allocation of human resources, strictly control the operation cost, and improve the operation quality and economic benefits. The coal chemical industry is to focusing on the development of high-end fine chemicals, strengthen the technology research and development, extend the industrial chain, increase the added value of products and the marginal profit, give full play to the advantage of the high-end fine chemical industry cluster, strive for the realization of full capacity and efficient production of the Phase II projects, and turn them into a new supporting point of profit.

14 Yanzhou Coal Mining Company Limited

Chairman’s Statement Chapter 04

Tap in-depth potential to improve quality, reduce cost accurately and enhance efficiency. Implement reversed cost management and dynamic control, make overall volume, cost and profit analysis, and maximumly tap potential possibility to reduce cost and increase efficiency. Reduce energy consumption: further implementing the “three major benchmarkings” program to reduce cost and save energy at the very sources, which is to promote the application of green and energy saving technologies and replacing energy-consuming equipment. Reduce material consumption: by adhering to the establishment of an open and transparent procurement system, promote the mode of supermarket consignment sales and manufacturer consigned storage, and strengthen efforts to inventory clearance, so as to realize the coordinated sharing and efficient utilization of goods and materials. Reduce marketing cost: accelerate the establishment of an “integrated” linkage mechanism incorporating production, preparation, marketing and trade, regularly analyze the profit of transportation flow, reasonably allocate resources of transportation flow, thus to reduce marketing cost. Reduce financial cost: optimize the capital structure, explore multiple channels for financing to deliver cost reduction, implement the dual control of asset-liability ratio and interest-bearing liability, and minimize financial expenses.

Strengthen intelligent marketing and promote synergies. The Company will take a market-and-customers oriented strategy, stringently focus on clean coal increment, market expansion and products customization to achieve the maximum of economic benefit. In terms of clean coal increment , we will adhere to the strategy of “winning by clean coal”, accelerate technical upgrading and transformation of intelligent coal handling and preparation plants, realize full washing of raw coal, and increase the proportion of clean coal products. In terms of market expansion , we will continue to underpin traditional markets for coal sales, and vigorously explore emerging markets such as gas-refined coal and chemical coal. We will thoroughly implement the strategy of “long-term plus direct-supply” to increase the percentage of direct selling and high-quality customers. In terms of products customization , we will, according to the market demand, give full play to the Company’s advantages of diversified products, strengthen the research and development of new types of coal, implement customized sales, meet the needs of different customers and improve the added value of products.

Corporate governance in a standard way to achieve efficient operation. The Company will accelerate the change of operation model to LEAN, fine and intensive management. Insist on talents marketization , we will optimize allocation of human resources, explore and implement professional manager system, and build a market-oriented, professional and globalized management team. Persist in corporate management in a scientific manner , we will carry out digital transformation and reform, share the fruits of big data development, and accelerate the restructuring of enterprise management processes. We will fully implement LEAN, market-oriented and the integration of the two so as to build a full value chain management system. Stick to risk prevention and control through various institutions , we will accelerate the integration of compliance operations and risk management systems into business processes, strictly control investment, capital, laws, contracts and other risks, and prevent systemic business risks.

Strive ahead in spite of whatever challenges in front and continue to write colorful chapters. In 2020, Yanzhou Coal will keep in mind our original mission, forge ahead against difficulties, focus on its main business without any distractions and spare no efforts to promote development. The management of the Company believes that as long as we maintain our determination, keep pace with the trend, innovate in pioneering spirit, grow our strength through “wisdom plus sweat”, and return to the society with “loyalty plus responsibility”, Yanzhou Coal will be able to ride the wind and waves, and reach far.

On behalf of the Board

Li Xiyong

Chairman

Zoucheng, PRC 22 April 2020

Annual Report 2019 15

Chapter 05 Board of Directors’ Report

I. MANAGEMENTDISCUSSION AND ANALYSIS

Main business by industries

					Increase/	Increase/
		Unit	2019	2018	Decrease	Decrease (%)
1.	Coal Business
	Raw coal production volume	kiloton	106,390	105,895	495	0.47
	Salable coal production volume	kiloton	94,469	95,101	-632	-0.66
	Salable coal sales volume	kiloton	116,119	113,942	2,177	1.91
2.	Railway Transportation Business
	Transportation volume	kiloton	19,256	19,879	-623	-3.13
3.	Coal Chemicals Business
	Methanol production volume	kiloton	1,762	1,656	106	6.40
	Methanol sales volume	kiloton	1,749	1,645	104	6.32
4.	Power Generation Business
	Power generation	10,000KWh	265,307	277,533	-12,226	-4.41
	Electricity sold	10,000KWh	161,339	171,197	-9,858	-5.76

Note: There were significant differences between production volumes and sales volumes of power generation business products in the above table, which was mainly due to the fact that related products of the Group are sold externally after satisfying its internal operating requirements.

In 2019, the Group sold 116.12 million tons of salable coal, including: 91.60 million tons of self-produced coal, accounting for 91.6% of annual self-produced coal sales plan.

16 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

II. MAIN BUSINESS DURING THE REPORTING PERIOD

(I) The Operation of Business Segments

1. Coal Business

(1) Coal Production

In 2019, the Group produced 106.39 million tons of raw coal, representing an increase of 0.5 million tons or 0.5% as compared with that of the previous year; produced salable coal of 94.47 million tons, representing a decrease of 0.63 million tons or 0.7% as compared with that of the previous year.

The following table sets out the coal production volume of the Group for the year 2019:

					Increase/	Increase/
			2019	2018	Decrease	Decrease
			(kiloton)	(kiloton)	(kiloton)	(%)
I.	Raw	Coal Production	106,390	105,895	495	0.47
	1.	The Company	31,189	32,482	-1,293	-3.98
	2.	Shanxi Neng Hua	1,722	1,730	-8	-0.46
	3.	Heze Neng Hua	2,733	3,267	-534	-16.35
	4.	Ordos Neng Hua	13,801	14,874	-1,073	-7.21
	5.	Haosheng Company	3,907	3,286	621	18.90
	6.	Yancoal Australia	46,544	43,784	2,760	6.30
	7.	Yancoal International	6,494	6,472	22	0.34
II.	Salable Coal Production		94,469	95,101	-632	-0.66
	1.	The Company	31,172	32,474	-1,302	-4.01
	2.	Shanxi Neng Hua	1,717	1,714	3	0.18
	3.	Heze Neng Hua	2,725	3,247	-522	-16.08
	4.	Ordos Neng Hua	13,784	14,851	-1,067	-7.18
	5.	Haosheng Company	3,907	3,286	621	18.90
	6.	Yancoal Australia	35,517	33,599	1,918	5.71
	7.	Yancoal International	5,647	5,930	-283	-4.77

Annual Report 2019 17

Chapter 05 Board of Directors’ Report

(2) Coal Prices and Marketing

In 2019, the Group sold a total of 116.12 million tons of coal, representing an increase of 2.18 million tons or 1.9% as compared with that of the previous year.

In 2019, the Group realized sales income of coal business of RMB63.778 billion, representing an increase of RMB1.35 billion or 2.2% as compared with that of the previous year.

The following table sets out the Group’s coal production and sales by coal types for the year 2019:


		Production Volume		Sales Volume	Sales Price	Sales Income	Production Volume		Sales Volume	Sales Price	Sales Income
			(kiloton)	(kiloton)	(RMB/ton)	(RMB’ 000,000)		(kiloton)	(kiloton)	(RMB/ton)	(RMB’ 000,000)
1.	The Company		31,172	31,082	625.33	19,437		32,474	32,260	599.36	19,335
	No. 1 clean coal		1,117	1,122	936.68	1,051		792	797	893.49	712
	No. 2 clean coal		9,382	9,469	866.53	8,205		8,626	8,684	843.44	7,325
	No. 3 clean coal		3,108	3,129	608.51	1,904		2,654	2,553	660.61	1,686
	Lump coal		2,117	2,112	722.41	1,527		2,225	2,230	717.51	1,600
	Sub-total of clean coal		15,724	15,832	801.29	12,687		14,297	14,264	793.83	11,323
	Screened raw coal		15,448	15,250	442.65	6,750		18,177	17,996	445.23	8,012
2.	Shanxi Neng Hua		1,717	1,681	322.56	542		1,714	1,727	341.28	589
	Screened raw coal		1,717	1,681	322.56	542		1,714	1,727	341.28	589
3.	Heze Neng Hua		2,725	2,385	1,010.20	2,409		3,247	2,880	981.70	2,828
	No. 2 clean coal		2,172	2,080	1,104.33	2,297		2,619	2,635	1,033.61	2,723
	Screened raw coal		553	305	367.21	112		628	245	424.42	105
4.	Ordos Neng Hua		13,784	11,546	256.11	2,957		14,851	13,776	259.98	3,582
	Screened raw coal		13,784	11,546	256.11	2,957		14,851	13,776	259.98	3,582
5.	Haosheng Company		3,907	3,849	300.73	1,157		3,286	3,302	300.87	993
	Screened raw coal		3,907	3,849	300.73	1,157		3,286	3,302	300.87	993
6.	Yancoal Australia		35,517	35,518	548.86	19,495		33,599	33,654	623.21	20,974
	Semi-hard coking coal		184	183	847.81	155		87	87	828.74	72
	Semi-soft coking coal		2,780	2,780	823.00	2,289		2,744	2,748	869.62	2,390
	PCI coal		2,385	2,386	844.98	2,016		2,416	2,420	866.71	2,097
	Thermal coal		30,168	30,169	498.37	15,035		28,352	28,399	578.00	16,415
7.	Yancoal International		5,647	5,534	376.24	2,083		5,930	6,026	405.95	2,446
	Thermal coal		5,647	5,534	376.24	2,083		5,930	6,026	405.95	2,446
8.	Traded coal		—	24,524	640.11	15,698		—	20,317	574.95	11,681
9.	Total for the Group		94,469	116,119	549.24	63,778		95,101	113,942	547.90	62,428

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Board of Directors’ Report Chapter 05

Factors affecting the changes in sales income of coal are analyzed in the following table:

	Impact of	Impact of
	Changes on	Changes on the
	Coal Sales Volume	Sales Price of Coal
	(RMB’000,000)	(RMB’000,000)
The Company	-705	807
Shanxi Neng Hua	-16	-31
Heze Neng Hua	-487	68
Ordos Neng Hua	-580	-45
Haosheng Company	165	-1
Yancoal Australia	1,162	-2,641
Yancoal International	-200	-164
Traded Coal	2,419	1,598

The Group’s coal products are mainly sold in markets such as China, Japan, South Korea, Singapore, Australia, etc.

The following table sets out the Group’s coal sales by geographical regions for the year 2019:

		2019	2019	2018	2018
		Sales Volume	Sales Income	Sales Volume	Sales Income
		(kiloton)	(RMB’ 000,000)	(kiloton)	(RMB’ 000,000)
1.	China	82,969	46,117	77,673	41,370
	East China	40,596	25,344	50,217	28,490
	South China	20,216	9,598	5,955	3,122
	North China	16,551	7,321	14,182	6,662
	Northwest China	3,056	2,041	4,704	1,383
	Other regions	2,550	1,813	2,615	1,713
2.	Japan	9,492	6,157	7,726	6,261
3.	South Korea	4,599	2,692	4,288	3,175
4.	Singapore	4,607	1,840	11,030	5,622
5.	Australia	7,477	2,554	10,518	4,724
6.	Others	6,975	4,418	2,707	1,276
7.	Total for the Group	116,119	63,778	113,942	62,428

Most of the Group’s coal products were sold to power, metallurgy, chemical industries, trade business, etc.

Annual Report 2019 19

Chapter 05 Board of Directors’ Report

The following table sets out the Group’s coal sales by industries for the year 2019:

		2019	2019	2018	2018
		Sales Volume	Sales Income	Sales Volume	Sales Income
		(kiloton)	(RMB’000,000)	(kiloton)	(RMB’000,000)
1.	Power	50,245	23,562	50,978	25,631
2.	Metallurgy	7,768	6,696	6,859	6,147
3.	Chemical	8,701	6,802	9,406	7,347
4.	Trade business	48,882	26,407	46,299	23,063
5.	Others	523	311	400	240
6.	Total for the Group	116,119	63,778	113,942	62,428

(3) The Cost of Coal Sales

In 2019, the Group’s cost of coal sales amounted to RMB40.00 billion, representing an increase of RMB3.998 billion or 11.1% as compared with that of the previous year.

The following table sets out the cost of coal sales by business entities:

					Increase/	Increase/
		Unit	2019	2018	Decrease	Decrease (%)
The Company	Total cost of sales	RMB million	8,961	8,752	209	2.39
	Cost of sales per ton	RMB/ton	287.04	270.07	16.97	6.28
Shanxi Neng Hua	Total cost of sales	RMB million	367	431	-64	-14.85
	Cost of sales per ton	RMB/ton	218.54	249.89	-31.35	-12.55
Heze Neng Hua	Total cost of sales	RMB million	1,394	1,523	-129	-8.47
	Cost of sales per ton	RMB/ton	529.94	466.38	63.56	13.63
Ordos Neng Hua	Total cost of sales	RMB million	2,228	2,648	-420	-15.86
	Cost of sales per ton	RMB/ton	193.00	192.24	0.76	0.40
Haosheng Company	Total cost of sales	RMB million	1,158	1,294	-136	-10.51
	Cost of sales per ton	RMB/ton	300.83	391.97	-91.14	-23.25
Yancoal Australia	Total cost of sales	RMB million	9,672	9,231	441	4.78
	Cost of sales per ton	RMB/ton	272.32	274.30	-1.98	-0.72
Yancoal International	Total cost of sales	RMB million	1,287	1,373	-86	-6.26
	Cost of sales per ton	RMB/ton	232.59	227.82	4.77	2.09
Traded coal	Total cost of sales	RMB million	15,180	11,107	4,073	36.67
	Cost of sales per ton	RMB/ton	618.99	546.71	72.28	13.22

The changes for Haosheng Company’s cost of coal sales per ton was mainly due to ① the decrease of RMB49.84 per ton in term of cost of coal sales per ton as compared with that of the previous year attributable to the increase of the sales volume of saleable coal; ② the decrease of RMB12.38 per ton in term of cost of coal sales per ton as compared with that of the previous year attributable to the reduction in raw materials and other controllable expenditures; ③the decrease of RMB18.65 per ton in term of cost of coal sales as compared with that of the previous year attributable to the optimization of the structure of employees and the reduction of labor expenses.

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Board of Directors’ Report Chapter 05

2. Railway Transportation Business

In 2019, the transportation volume of the Company’s Railway Assets was 19.26 million tons, decreased by 0.62 million tons or 3.1% as compared with that of the previous year. The income from railway transportation services was RMB383 million, representing a decrease of RMB37.757 million or 8.8% as compared with that of the previous year. The cost of railway transportation services was RMB177 million, representing an increase of RMB2,796 thousand or 1.6% as compared with that of the previous year.

3. Coal Chemicals Business

The following table sets out the Group’s methanol business for 2019:

	Methanol Production	Methanol Production	Methanol Production	Methanol Sales	Methanol Sales	Methanol Sales
	Volume (kiloton)			Volume (kiloton)
			Increase/			Increase/
			Decrease			Decrease
	2019	2018	(%)	2019	2018	(%)
1.Yulin Neng Hua	723	706	2.41	721	696	3.59
2.Ordos Neng Hua	1,039	950	9.37	1,028	949	8.32
	Sales Income (RMB’000)			Cost of Sales (RMB’000)
			Increase/			Increase/
			Decrease			Decrease
	2019	2018	(%)	2019	2018	(%)
1.Yulin Neng Hua	1,199,021	1,484,529	-19.23	963,059	1,004,898	-4.16
2.Ordos Neng Hua	1,664,417	2,010,362	-17.21	1,187,903	1,293,953	-8.20

4. Power Generation Business

The following table sets out the operation of the Group’s power business for the year 2019:

		Power Generation	Power Generation	Power Generation	Power Output Dispatch	Power Output Dispatch	Power Output Dispatch
		(10,000KWh)			(10,000KWh)
				Increase/			Increase/
				Decrease			Decrease
		2019	2018	(%)	2019	2018	(%)
1	Hua Ju Energy	82,236	88,502	-7.08	27,339	28,571	-4.31
2	Yulin Neng Hua	28,020	30,048	-6.75	1,599	2,720	-41.21
3	Heze Neng Hua	155,051	158,983	-2.47	132,401	139,906	-5.36

Annual Report 2019 21

Chapter 05 Board of Directors’ Report

		Sales Income (RMB’000)	Sales Income (RMB’000)	Sales Income (RMB’000)	Cost of Sales (RMB’000)	Cost of Sales (RMB’000)	Cost of Sales (RMB’000)
				Increase/			Increase/
				Decrease			Decrease
		2019	2018	(%)	2019	2018	(%)
1	Hua Ju Energy	118,252	112,929	4.71	111,246	109,904	1.22
2	Yulin Neng Hua	3,060	5,103	-40.04	7,229	11,210	-35.51
3	Heze Neng Hua	462,146	474,045	-2.51	379,588	424,493	-10.58

Note: During the reporting period, the sales volume, sales income and cost of sales of Yulin Neng Hua’s power products decreased significantly, mainly due to: the decrease in external sales of electricity as compared with that of the previous year.

5. Heat Business

Hua Ju Energy generated heat energy of 1,040 thousand steam tons and sold 200 thousand steam tons in 2019, realizing sales income of RMB32.859 million, with cost of sales at RMB20.452 million.

6. Electrical and Mechanical Equipment Manufacturing Business

The sales income from electrical and mechanical equipment manufacturing business for the year 2019 was RMB 165 million, with cost of sales at RMB165 million.

7. Equity Investment Business

The return from equity investment business for the year 2019 was RMB 1,575 million.

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Board of Directors’ Report Chapter 05

(II) Analysis of Main Business

1. Analysis of changes in consolidated income statement items and consolidated statement of cash flow items

Unit: RMB million

			Increase/
Items	2019	2018	Decrease (%)
Sales income	67,805	67,447	0.53
Sales cost	43,011	39,390	9.19
Selling, general and administrative expenses	8,777	10,660	-17.66
Net cash flow from operating activities	16,411	18,243	-10.04
Net cash flow from investment activities	-11,368	-10,172	–
Net cash flow from financing activities	-9,929	-1,891	–
Attributable results of the associated companies	1,710	1,296	31.94
Finance cost	2,751	3,612	-23.84
Income Tax	3,160	4,608	-31.42

2. Analysis on income and cost

The changes of sales income is due to: ① the fall of sales price of self-produced coal caused a decrease of RMB1.567 billion in sales income as compared with that of the previous year, and the decrease of sales volume of self-produced coal caused a decrease of RMB1,100 million in sales income as compared with that of the previous year; ② the sales income from traded coal increased by RMB4.017 billion as compared with that of the previous year; ③the sales income from coal chemicals decreased by RMB631 million as compared with that of the previous year; ④ the sales income from electrical and mechanical equipment decreased by RMB312 million as compared with that of the previous year.

Annual Report 2019

Chapter 05 Board of Directors’ Report

(1) Main business analysis by industries, products or regions

Unit: RMB million

Main business by industries

							Increase/		Increase/
							Decrease in		Decrease in
							sales income		cost of sales
							as compared		as compared	Increase/Decrease
						with that of the		with that of the		in gross profit as
							previous year		previous year	compared with that of
	By industries	Sales Income	Cost of Sales	Gross Profit (%)			(%)		(%)	the previous year
1.	Coal business	63,778	40,000		37.28		2.16		11.10	Decreased by 5.05
										percentage point
	Include: self-produced	48,080	24,820		48.38		-5.26		-0.30	Decreased by 1.76
	coal									percentage point
	Traded coal	15,698	15,180		3.30		34.39		36.67	Decreased by 1.61
										percentage point
2.	Railway transportation	383	177		53.79		-8.81		1.14	Decreased by 4.54
	business									percentage point
3.	Coal chemicals business	2,863	2,151		24.87		-18.08		-6.44	Decreased by 9.35
										percentage point
4.	Power generation	583	498		14.58		-1.52		-8.79	Increased by 6.81
	business									percentage point
5.	Heat business	33	20		39.39		-2.94		5.26	Decreased by 4.73
										percentage point
6.	Electrical and	165	165		0.00		-65.48		-52.72	Decreased by 26.99
	mechanical equipment									percentage point
	manufacturing

24 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

Main business by products

							Increase/		Increase/
							Decrease in		Decrease in
							sales income		cost of sales
							as compared		as compared	Increase/Decrease
						with that of the		with that of the		in gross profit as
	Main business						previous year		previous year	compared with that of
	by products	Sales Income	Cost of Sales	Gross Profit (%)			(%)		(%)	the previous year (%)
1.	Coal	63,778	40,000		37.28		2.16		11.10	Decreased by 5.05
										percentage point
	Include: self-produced	48,080	24,820		48.38		-5.26		-0.30	Decreased by 1.76
	coal									percentage point
	Traded coal	15,698	15,180		3.30		34.39		36.67	Decreased by 1.61
										percentage point
2.	Railway transportation	383	177		53.79		-8.81		1.14	Decreased by 4.54
										percentage point
3.	Coal chemicals	2,863	2,151		24.87		-18.08		-6.44	Decreased by 9.35
										percentage point
4.	Power generation	583	498		14.58		-1.52		-8.79	Increased by 6.81
										percentage point
5.	Heat business	33	20		39.39		-2.94		5.26	Decreased by 4.73
										percentage point
6.	Electrical and	165	165		0.00		-65.48		-52.72	Decreased by 26.99
	mechanical equipment									percentage point
	manufacturing

Main business by regions

				Increase/	Increase/
				Decrease in	Decrease in
				sales income	cost of sales
				as compared	as compared	Increase/Decrease in
				with that of the	with that of the	gross profit as compared
				previous year	previous year	with that of the previous
	Sales Income	Cost of Sales Gross Profit (%)		(%)	(%)	year (%)
Domestic	43,837	29,671	32.32	12.26	24.59	Decreased by 6.69
						percentage point
Overseas	23,968	13,340	44.34	-15.60	-14.35	Decreased by 0.81
						percentage point

Explanation on main business by industries, products or regions

For details of the sales of the above business segments, please refer to the Note “ Other Significant Matters-Segment Information ” to the financial statement prepared in accordance with the CASs.

Annual Report 2019

Chapter 05 Board of Directors’ Report

(2) Production and sales volume analysis

Unit: thousand tons

				Increase/
				Decrease in	Increase/
				production	Decrease in
				volume as	sales volume	Increase/Decrease
				compared with	as compared	in inventory
				that of the	with that of	as compared
	Production			previous year	the previous	with the beginning of
Main products	volume	Sales volume	Inventory	(%)	year (%)	the previous year (%)
Self-produced salable coal	94,469	91,595	6,849	-0.66	-2.17	38.90
Methanol	1,762	1,749	78	6.40	6.32	56.00

Explanation on production and sales volume

For details of the production and sales volume changes of main products, please refer to the section headed The Operation of Business Segments in this chapter.

(3) Cost analysis

Unit: RMB’000,000

						Percentage
						increased or
						decreased
						in current
						amount as
						compared with
			Percentage of	The amount	Percentage of	the amount of
			total cost in	of the previous	total cost in	the previous
Cost components	Current amount		2019 (%)	year	2018(%)	year (%)
I. Self-produced coal cost		24,820	100.00	24,895	100	-0.30
1. Materials		3,914	15.77	3,962	15.91	-1.21
2. Salary and employee welfare		6,636	26.74	6,288	25.26	5.53
3. Electricity		837	3.37	861	3.46	-2.79
4. Depreciation		2,996	12.07	2,793	11.22	7.27
5. Subsidence expense		1,256	5.06	1,266	5.09	-0.79
6. Amortization of mining rights		1,463	5.89	1,354	5.44	8.05
7. Sales taxes and sur-charges		2,031	8.18	2,288	9.19	-11.23
8. Others		5,687	22.92	6,083	24.43	-6.51
II. Traded coal cost		15,180	–	11,107	–	36.67
III. Total		40,000	–	36,002	–	11.10

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Board of Directors’ Report Chapter 05

Other explanations

① Reason for changes in sales cost: The sales of cost of traded coal increased by RMB4.073 billion as compared with that of the previous year.
② Cost of coal sales account for 93.0% of the Group’s total sales cost, and the cost component by industries listed in the table above only refers to the cost component of the Group’s coal sales during the reporting period.

(4) Major Customers and Suppliers

The sales revenue attributable to the biggest customer is RMB2,335 million, representing 3.4% over the annual sale revenue. The sales revenue attributable to the top five customers is RMB9,507 million, accounting for 14.0% of total annual sales revenue; the sales revenue attributable to connected parties among the top five customers is RMB1,687 million, accounting for 2.5% of the total annual sales revenue.

The amount of procurement attributable to the biggest supplier is RMB859 million, accounting for 4.6% of total annual purchase. The amount of procurement from the top five suppliers is RMB3,759 million, accounting for 20.2% of total annual purchases, including the procurement amount from connected parties among the top five suppliers is RMB0.00 yuan, accounting for 0% of the total annual procurement.

Other explanation

(i) The biggest customer, the top five customers, the biggest suppliers and the top five suppliers are mainly the customers and suppliers relating to the self-produced products of the Group.
(ii) The above customers and suppliers are domestic and overseas companies with stable operation which have maintained cooperative relations with the Group for many years. The Group has specialized entities to conduct qualification examination, credit management and other dynamic monitoring and control on customers and suppliers to protect itself from risks.

3. Expenses and Others

Causes for changes in attributable enterprise results from associated companies: During the reporting period, the Group’s income from attributable income from the associated companies on equity basis increased as compared with that of the previous year.

Explanation for changes in finance cost: The Group implemented deleveraging and reduced interest-bearing liabilities, and decreased the interests as compared with that of the previous year.

Explanation for changes in income tax: During the reporting period, Yancoal Australia confirmed the deferred tax resulting from the acquisition of C&A, which affected the decrease in income tax as compared with that of the previous year.

Annual Report 2019 27

Chapter 05 Board of Directors’ Report

4. Research and Development Expenditure

(1) Table on Research and Development Expenditure

		Unit: RMB million
Expensed research and development expenditure for 2019		265
Capitalized research and development expenditure for 2019		0
Total research and development expenditure		265
Percentage of total research and development expenditure to sales income (%)		0.65
Number of research and development staff		2,592
Percentage of research and development staff to the total employees		4.23
Percentage of capitalized expenditure of research and development (%)		0

(2) Explanation

The Group, with the objective to promote industry structure optimization, gave priority to the core technology breakthrough in pillar industries, adhered to the principle “open to cooperation based on the enterprise, persist in upgrading and innovation in combination with industry, seek key breakthrough and achieve leapfrog development”, proposed an innovation-oriented development strategy to realize the goals of production automation, high-end products, self-owned intellectual property of technology, informationized management, low-carbon development and business globalization. This serves to improve the Company’s capability in technology innovation and drive the company into an innovation-oriented one.

In 2019, the Company achieved 60 scientific and technological achievements, 19 of which reached the international advanced level, the Company was granted 126 technology patents and awarded 39 provincial and ministerial science and technology awards. By the end of the reporting period, the Group had 2,592 employees engaged in research and development.

28 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

5. Cash Flow

Causes for changes in net cash flow from operating activities: The fluctuation of the Company’s operating profit led to the decrease of the net operating cash inflow of the Company compared with that of the previous year.

Causes for changes in net cash flow from investing activities: ① The cash expenditure for purchasing intangible assets increased by RMB2,773 million as compared with that of the previous year; ② The expenditure of investment in associated companies decreased by RMB2,004 million as compared with that of the previous year; ③ The net cash outflow for additional purchase of equity interest in joint operations decreased by RMB1,984 million as compared with that of the previous year; ④ The net cash inflow from sale of joint operations decreased by RMB2,704 million as compared with that of the previous year.

Causes for changes in net cash flow from financing activities: An increase of RMB8,000 million in cash outflow attributed to the payments for acquisition of additional interests in non-controlling subsidiaries.

In 2019, the Group’s principal source of capital fund was operating income of cash, bonds issuance and bank loans. And the fund was mainly used for the payment of operating business, purchase of property, machinery and equipment, shareholders’ dividends, repayment of bank loans, consideration for assets and equity acquisition.

In 2019, the Group’s capital expenditure for the purchase of property, machinery and equipment was RMB11.391 billion, representing an increase of RMB582 million or 5.4% as compared that of the previous year.

(III) Elaboration of Significant Profit Changes in Non-Major Business

During the reporting period, the results of the associated companies attributable to the Group increased by RMB414 million compared with that of the previous year.

Annual Report 2019 29

Chapter 05 Board of Directors’ Report

(IV) Assets and Liabilities

1. Table for the analysis of changes in assets and liabilities items

Unit: RMB million

					Percentage
		Percentage		Percentage	of increase/
	Closing	to total	Closing	to total	decrease
	amount of	assets in	amount of	assets in	in closing
Items	2019	2019(%)	2018	2018(%)	amount (%)	Notes
Pledged fixed term	210	0.10	1,913	0.93	-89.02	The fixed term deposit was released from
deposit						mortgage.
Inventories	6,007	2.85	4,069	1.98	47.64	①Inventory of Shandong Zhongyin International
						trade Co., Ltd. (“Zhongyin International Trade”)
						increased by RMB585 million;②Inventory of
						Qingdao Vast Lucky increased by RMB538 million;
						③Inventory of Yankuang Hainan Intelligent
						Logistics Co., Ltd (“Intelligent Logistics”) increased
						by RMB421 million.
Construction in progress	16,288	7.73	10,896	5.29	49.49	①The Phase II coal chemical project of Ordos
						Neng Hua increased the construction in progress
						by RMB2.099 billion;②The Phase II coal chemical
						project of Yulin Neng Hua increased the
						construction in progress by RMB1.589 billion;
						③The mine construction of Wanfu Coal Mine
						increased the construction in progress by RMB756
						million.
Deferred tax asset	1,621	0.77	6,545	3.18	-75.23	The deferred tax asset of Yancoal Australia
						decreased by RMB4,981 million.
Notes payable and	19,117	9.07	12,514	6.07	52.76	The notes payable increased due the adjustments of
accounts payable						payment policy of the subsidiaries.

Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

					Percentage
		Percentage		Percentage	of increase/
	Closing	to total	Closing	to total	decrease
	amount of	assets in	amount of	assets in	in closing
Items	2019	2019(%)	2018	2018(%)	amount (%)	Notes
Other payables and	26,798	12.71	20,679	10.04	29.59	The margin deposits receivable from customers in
accrued expenses						financing business increased by RMB6.562 billion.
Deferred tax liabilities	3,414	1.62	8,008	3.89	-57.37	The deferred tax liabilities of Yancoal Australia
						decreased by RMB4,763 million.
Long-term payables due	2,416	1.15	130	0.06	1,764.67	This period confirms that the consideration of
over one year						mining rights payable of Haosheng Coal increased.
Non-controlling interests	17,500	8.30	21,234	10.31	-17.59	①Repayment of industry borrowing fund
						decreased the non-controlling interests by
						RMB8 billion;②Issuance of capital by Haosheng
						Company resulted in an increase in noncontrolling
						interests by RMB3.411 billion;③Share of operating
						results from Yancoal Australia increased the non-
						controlling interests of RMB1.33 billion.

Other explanation

(1) Debt on equity ratio

As at 31 December 2019, the equity attributable to Shareholders and the total borrowings amounted to RMB54.120 billion and RMB65.375 billion respectively, representing a debt to equity ratio of 120.8%.

For details of the borrowings, please refer to Note “ Borrowings ” to the financial statements prepared under the IFRS.

(2) Contingent liabilities

For details of the contingent liabilities, please refer to Note “ Contingent liabilities ” of the financial statements prepared under the IFRS.

Annual Report 2019 31

Chapter 05 Board of Directors’ Report

2. Major assets restrictions as at the end of reporting period

(Prepared under the CASs)

As at the end of 2019, the restricted assets of the Group were RMB57,942 million, mainly including the monetary fund, note receivable which were restricted for usage, and pledged asset for borrowings. For details, please refer to Note “ Notes to the Consolidated Financial Statement – Ownership or Usage Rights to the Restricted Asset ” to the financial statements prepared under the CASs.

3. Other explanations

Not applicable.

(V) Analysis of Industrial Business Information

1. Analysis of Coal Business

For details of the main situation of coal business for the year 2019, please refer to the section headed The Operation of Business Segments in this chapter.

2. Coal Reserves

						China National Standards①	China National Standards①	China National Standards①		JORC Standards②	JORC Standards②
						Retained				In-situ	Recoverable
						Resource				Resource	Reserves
Major coal mine	Location		Coal type		Reserves (Mt)		Reserves (Mt)		Reserves (Mt)		(Mt)
Coal mines of the Company	Jining city, Shandong		Thermal coal			3,217		459		762	290
		Province
Coal mines of Heze Neng Hua	Heze City, Shandong		1/3 coking coal			395		185		87	27
		Province
Coal mines of Shanxi Neng	Heshun County, Shanxi		Thermal coal			111		53		27	13
Hua		Province
Coal mines of Ordos Neng	Ordos, Inner Mongolia		Thermal coal			2,852		1,600		337	209
Hua③
Coal mines of Haosheng	Ordos, Inner Mongolia		Thermal coal			2,345		1,070		734	505
Company
Subtotal reserve of domestic	–		–			8,920		3,367		1,948	1,044
coal mines
Coal mines of Yancoal	Queensland and New		PCI coal, thermal coal,			/		/		9,720	1,765
Australia④		South Wales		semi-soft coking coal,
				semi-hard coking coal
Coal mines of Yancoal	Queensland and Western		PCI coal, thermal coal,			/		/		1,652	216
International		Australia
Subtotal of reserve of overseas	–		–			/		/		11,372	1,981
coal mines⑤
Total	–		–			8,920		3,367		13,320	3,025

32 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

Notes:

① According to the standard of Solid Mineral Resources/Reserves Classification (China’s National Standard GB/T 17766-1999), the retained resource reserves refer to the amount of the basic reserves and the amount of resources. Reserves refer to the recoverable amount of the basic reserves after deducting the loss of design part.
② As required by the Hong Kong Stock Exchange, the Group made assessment on the resources/reserves of its coal mines located in China in accordance with international standard of JORC.

The In-situ Resources and Recoverable Reserves of coal are estimated in accordance with 100% equity and JORC Code 2012 as at 31 December 2019, of which, In-situ Resources and Recoverable Reserves from China domestic coal mines are based upon the competent person’s report prepared by John T. Boyd Company in March 2020 and overseas In-situ Resources and Recoverable Reserves are based on the report prepared by competent persons appointed by overseas subsidiaries.

③ Resource assessment on Yingpanhao Coal Mine of Ordos Neng Hua was made in accordance with China National Standards GB/T 1776-1999 Solid Mineral Resources/Reserves Classification. As at 31 December 2019, its retained resource reserve and reserve was about 2,263 million tons and1,325 million tons, respectively. And the resources/ reserves assessment under international standard has not been made due to the ongoing approval procedures through administrative authorities.
④ The in-situ resources and recoverable reserves of the coal mines owned by Yancoal Australia were based on 100% equity, including relevant data on Middlemount and three coal mines owned by Watagan Mining Pty Ltd. Middlemount Coal Mine is a joint venture company established and operated by Yancoal Australia and a third party and was not consolidated into the consolidated financial statements of the Group. Watagan Mining Pty Ltd. is a special purpose company and was not consolidated into the consolidated financial statements of the Group.
⑤ The Group did not make assessment on the resources/reserves of the coal mines of Yancoal Australia and Yancoal International in accordance with China National Standard of Resource Reserve.

Annual Report 2019 33

Chapter 05 Board of Directors’ Report

3. Other Explanations

(1) The surrounding transportation of main mining areas

The coal produced by the Group’s mines located in Shandong Province are mainly transported to the users by truck or self-owned railway directly, or connected to the national railway through YanzhouShijiusuo Railway and Tianjin-Shanghai Railway, and meanwhile connected to riverside regions or coastal regions through Beijing-Hangzhou Grand Canal or Rizhao Port. In Shanxi Province, the Group supplied coal to the ports in Hebei province, Shandong Province and their surrounding area by Yangquan-Shexian railway, which passes through Tianchi Coal Mine of Shanxi Neng Hua. In Inner Mongolia Autonomous Region, the Group transported the coal to the surrounding users by truck, or to the users in west Inner Mongolia, east Ningxia, the coastal ports, North China, East China, Central China, Southwest China and other regions through Dongsheng-Wuhai Railway, BaotouXianzhangqiao Railway, Huaidong Railway and Haoji Railway.

Premier Coal Mine in Australia has entered into a long-term supply contract with Verve Energy Power Plant of the WA government. The coal from Premier Coal Mine is transported to the power plant through the belt conveyor, and to other users through railway. The coal from the mines located in eastern Australia is transported to Newcastle Port, Gladstone Port and other ports through railways of third parties, and then export to South Korea, Japan and other region by sea freight.

(2) Coal exploration, development and mining during the reporting period

In 2019, the coal exploration expenditure of the Group was RMB46.891 million, mainly including the MTW underground exploration and the Moolarben new underground mine exploration of Yancoal Australia; the capital expenditure for coal exploration and mining was RMB8,905 million, mainly including the investment in fixed assets of current coal mines and the development and mining expenses of Wanfu Coal Mine.

(3) Major mine construction project

As at the end of this reporting period, the progress of the Group’s major mine construction projects is as follows:

				Investment
				Amount as at
				the End of the
		Designed Capacity		Reporting Period
No.	Project	(10,000 tons/Year)		(RMB100 million)	Construction Progress
1	Wanfu Coal Mine		180	32.30	It is expected to be put into test
					production in 2021.
	Total		180	32.30	–

34 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

(VI) Analysis of Investment

(All financial data contained in this section are prepared under CASs)

1. Significant equity investment

Not applicable.

2. Major non-equity investment

Not applicable.

3. Financial assets measured at fair value

As at the end of the reporting period, the Group’s financial assets measured at fair value and recorded in current profit and loss mainly include the special right to earnings of Middlemount coal mine, equity investment and etc. The initial investment is RMB1,989 million and the balance as at the end of the reporting period is RMB1,331 million. The liabilities mainly are interests swap agreement and noncontingent royalties, and the initial investment is RMB1,477 million and the balance as at the end of the reporting period is RMB218 million.

As at the end of the reporting period, the Group’s financial assets measured at fair value and recorded in other comprehensive income mainly include the equity instrument investment. The initial investment is RMB5.058 million, and the balance as at the end of the reporting period is RMB4.624 million.

For details of the amount of the financial assets measured at fair value and its changes, please refer to the notes headed Tradable Financial Assets, Other Equity Instrument Investment, Other Non-current Financial Assets and Other Non-current Liabilities to the consolidated financial statements prepared in accordance with CASs.

Annual Report 2019 35

Chapter 05 Board of Directors’ Report

(VII) Disposal of Material Assets and Equity

Not applicable.

(VIII) Analysis of Major Controlled Companies and Invested Companies

(All financial data in this section are prepared under CASs)

1. Major controlled companies

The following table sets out the major controlled companies that have significant impact on the Group’s net profits attributable to the listed company.

Unit : RMB million

			31 December	2019	Net Profit for
Name of the Company	Registered Capital		Total Assets	Net Assets	the Year 2019
Yancoal Australia		AUD6,027 million	53,431	29,397	3,525
Yancoal International		USD689 million	17,742	5,881	590
Heze Neng Hua		3,000	9,844	6,754	760

Note: For more information about the main business, main financial indicators of the Group’s major controlled subsidiaries, please refer to the note “Interests in Other Entities-Interests in Subsidiaries” to the financial statement prepared under CASs.

Yancoal Australia

In 2019, the net profit of Yancoal Australia decreased to RMB 3,525 million from RMB 4,273 million in 2018, representing a decrease of RMB 748 million or 17.5%, which is mainly due to the fall of international coal price.

Yancoal International

The net profit of Yancoal International in 2019 is RMB590 million, while that of 2018 was RMB1,112 million, representing a decrease of RMB522 million or 46.9%, which is mainly due to the fall of international coal price.

For more information about the related operation of Yancoal Australia and Yancoal International, please refer to the section “Main Business During the Reporting Period” of this chapter.

36 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

2. Major invested companies

For more information about the main business and main financial indicators of the Group’s major invested companies, please refer to the note headed Interests in Other Entities-Interests in Joint Venture and Associated Companies to the financial statement prepared under CASs.

3. Operation of Yankuang Finance Company

As at the end of the reporting period, the Company directly held 95% equity interests of Yankuang Finance Company.

(1) Governance of Yankuang Finance Company

Yankuang Finance Company has established complete corporate governance structure consisting of the meeting of shareholders, the board of directors, the supervisory committee and the senior management. The board of directors has set up five special committees, namely, Strategy Development & Planning Committee, Risk Management Committee, Auditing Compliance Committee, Investment Decision-Making Committee and Information Technology Committee. In line with their respective work scopes, the board of directors and these five committees performed their duties in a diligent and efficient manner, which ensured stable and compliant operation of the Yankuang Finance Company.

(2) Risk management and internal control

In adherence with a prudent risk appetite, Yankuang Finance Company has established a comprehensive risk management system based on corporate governance, which takes functional departments as main body and real-time evaluation, examination and audit as effective means, to implement risk management on credit, operation, liquidity, reputation, etc. in a thorough manner to continuously improve risk management capability.

The board of directors and the special committees of Yankuang Finance Company are responsible for the establishment, improvement and efficient implementation of the internal control of Yankuang Finance Company.

Annual Report 2019 37

Chapter 05 Board of Directors’ Report

(3) Deposits and loans during the reporting period

Unit: RMB million

	31 December	31 December	Increase/
	2019	2018	Decrease (%)
Deposit balance	21,510	21,623	–0.52
Loan balance	11,006	7,551	45.76

(4) Major operational indicators during the reporting period

Unit: RMB million

			Increase/
Major operational indicators	2019	2018	Decrease (%)
Operating income	500	467	7.07
Net profit	172	196	–12.24
	31 December	31 December	Increase/
	2019	2018	Decrease (%)
Net asset	3,149	1,488	111.63
Total asset	24,694	23,146	6.69

(IX) Entities Controlled by the Company

Watagan Mining Company Pty Ltd is a special purpose vehicle incorporated by Yancoal Australia for purpose of implementing asset securitization overseas. It implemented the asset securitization of three coal mines in New South Wales, Australia in 2016. For detailed information, please see the note headed “Oher Significant EventsMatter of Watagan” in the consolidated financial statements prepared in accordance with CASs.

38 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

III. DISCUSSION AND ANALYSIS ON FUTURE DEVELOPMENT OF THE COMPANY

(I) Industry Pattern and Development Tendency

For details of the industry competition pattern and development tendency of the Company, please refer to the section headed “ Chapter 4 Chairman’s Statement ”.

(II) Development Strategy of the Company

For details of the development strategy of the Group, please refer to the section headed “ Chapter 4 Chairman’s Statement” .

(III) Operating Plan

For details of operation plan of the Group, please refer to the section headed “ Chapter 4 Chairman’s Statement ”.

Relevant operation plan cannot be regarded as the Company’s performance commitments to investors. Investors are reminded to be risk-aware and understand the difference between operation plan and performance commitments.

(IV) Capital Expenditure Plan

The Group’s capital expenditure for the year 2020 is expected to be RMB9.904 billion, which is mainly sourced from the Group’s internal capital fund, bank loans, bond issue and other channels.

Annual Report 2019 39

Chapter 05 Board of Directors’ Report

The capital expenditure for the year 2019 and the estimated capital expenditure for the year 2020 of the Group (grouped by entity) are set out in the following table:

Unit: RMB0,000

	2020 (Estimated)	2019	Main Items
The Company	257,515	271,217	Maintenance of simple reproduction, safety and technical
			revamp input
Ordos Neng Hua	177,485	415,913	Investment for Phase II coal chemical project construction,
			investment for coal mine project, and specialized railway
			construction project.
Yulin Neng Hua	41,874	167,235	Investment for Phase II coal chemical project and investment in
			production safety and environmental protection.
Heze Neng Hua	140,692	89,334	Investment for mine construction, safety and environmental
			protection.
Hua Ju Energy	1,961	2,414	Maintenance of simple reproduction
Haosheng Company	53,454	13,264	Investment for coal mine construction.
Donghua Heavy Industry	32,489	22,960	Technical revamp input for products optimization and
			technology upgrading
Shanxi Neng Hua	3,573	1,714	Mine safety input
Yancoal Australia	264,419	122,972	Maintenance of simple reproduction, safety, environment
			protection, and exploration, etc.
Yancoal International	15,425	26,520	Maintenance of simple reproduction, safety, environment
			protection, and expenditures in Canadian potash project.
Others	1,543	5,507	Capital expenditure of other subsidiaries
Total	990,430	1,139,050

The table below sets out the capital expenditure of the Group in 2019 and the capital expenditure plan for 2020 (grouped by fund application purpose):

Unit: RMB0,000

	Plan for 2020	2019
Infrastructure Project	490,618	658,331
Coal mine infrastructure	307,643	257,897
Infrastructure for chemical projects	56,853	369,800
Infrastructure for logistics and warehouse	103,384	16,519
Infrastructure for machinery and equipment fabrication	4,156	5,226
Other infrastructures	18,582	8,889
Maintenance of simple reproduction	368,712	337,989
Safety production plan expenditure	86,172	52,660
Technology revamp plan	44,928	90,070
Total	990,430	1,139,050

The Group possesses relatively sufficient cash and financing facilities, which are expected to meet its operation and development requirements.

40 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

(V) Possible Risks

Risks arising from safety management

The three main business segments of the Company, namely coal mining, coal chemical and power generation, are all of high hazardous nature and of complex uncertainties, thus the risk of safety management can easily arise.

Counter measures: Improve the safety management and control system, specify tiered management and control responsibilities, and implement professional and regional synergetic management in an orderly manner; Accelerate the innovation-oriented development by integration of automation, intelligentization and informationization, upgrade the intelligent level of production system like coal mining and excavating; Implement special campaigns to address potential safety hazards; Implement strict evaluation of safety technology, including the formulation, review, supervision and acceptance of the relevant rectification plan; Strengthen safety assessment and accountability, and intensify investigation and accountability for accidents.

Risks arising from exchange rate

As a multinational company, the Company’s business, such as overseas investment, overseas financing, international trade and etc., are subject to the fluctuation of foreign exchange rate, which will in turn bring uncertainties to the operation results and strategic development of the Company.

Counter measures: Strengthen the study and analysis on the trend of foreign exchange, and take advantage of comprehensive financial derivative instruments to reduce the risks brought by the fluctuation of foreign exchange; Adopt hedging measures to lock in future exchange rates; Implement professionals training program to enhance the Company’s ability in exchange rate risks management and control.

Risks arising from creditability

Due to the slowdown of domestic economy, some of the Company’s business partners have suffered from insufficient liquidity, declined solvency and other problems, which will consequently impact the Company’s receivables collection.

Counter measures: Strengthen the pre-transaction management of business partners, carry out due diligence in advance, then prudently grant credit lines to them according to their nature, scale, and credit qualifications. Dynamically monitor the credit business in compliance with credit line and credit period constraint mechanism. In case of credit default, the response mechanism shall be launched in time, and legal means shall be used when necessary to safeguard the rights and interests of the Company.

Annual Report 2019 41

Chapter 05 Board of Directors’ Report

(VI) Others

1. The Impact of Exchange Rate Changes

The impacts of exchange rate fluctuations on the Group were mainly reflected in:

(1) The overseas coal sales income as the overseas coal sales of the Group are denominated in U.S. dollars and Australian dollars;
(2) The exchange gains and losses of the foreign currency deposits and borrowings;
(3) The cost of imported equipment and accessories of the Group.

Affected by the fluctuations in foreign exchange rates, the Group had exchange loss of RMB134 million during the reporting period.

To manage foreign currency risks arising from the expected sales income, Yancoal Australia has entered into foreign exchange hedging contracts with a bank. For details of the foreign exchange hedging contracts, please refer to Note Derivative Financial Instrument to the financial statements prepared under IFRS.

To hedge the exchange losses of USD debts arising from the fluctuation of foreign exchange, Yancoal Australia and Yancoal International have adopted foreign exchange hedging measures to such debts on the accounting basis, which effectively mitigated the impact of exchange loss on the current profit.

Save as disclosed above, the Group did not take foreign exchange hedging measures on other foreign currencies and did not further hedge the exchange rate between RMB and foreign currencies in the reporting period.

2. Taxation

In 2019, save as some domestic subsidiaries of the Company incorporated in the PRC that are subject to an income tax rate of 15% on their taxable profits under preferential income tax policy, the Company and the other subsidiaries incorporated in the PRC are subject to an income tax rate of 25% on their taxable profits. Yancoal Australia and Yancoal International are subject to a tax rate of 30% and 16.5%, respectively, on their taxable profits.

For details of the preferential income tax policies and tax rates for the domestic subsidiaries of the Company, please refer to the note Preferential Taxes to the consolidated financial statements prepared in accordance with CASs.

3. Employees’ Pension Scheme

For details of the employees’ pension scheme of the Company, please refer to Note Retirement Benefits to the consolidated financial statements prepared in accordance with the IFRS.

42 Yanzhou Coal Mining Company Limited

Board of Directors’ Report Chapter 05

4. Housing Scheme

According to the Provision of Labor and Services Agreement (which is referred to in the section headed Major Connected/Related Transaction under Chapter 6 Significant Events ), Yankuang Group is responsible for providing dormitories to its own employees and the employees of the Group. The Group and Yankuang Group share the sundry expenses relating to the provision of such dormitories on a pro-rata basis based on their respective numbers of employees and the amount negotiated by the parties. Such expenses amounted to RMB6.333 million and RMB137 million in 2019 and 2018, respectively.

Since 2002, the Group has been paying to its employees a housing allowance for the purchase of employee residences, which is based on a fixed percentage of the employees’ wages. In 2019, the employees’ housing allowances paid by the Group amounted to RMB421 million in total.

For details of the housing scheme, please refer to Note Housing Scheme to the consolidated financial statements prepared in accordance with the IFRS.

5. Donation

The Group made donations in an aggregate amount of RMB37.733 million in 2019.

6. Environmental policy and performance

Please refer to the section headed Social Responsibility and Environmental Information under Chapter 6 Significant Events .

7. Compliance with laws, regulations and rules

Please refer to the section headed Compliance with laws, regulations and rules under Chapter 6 Significant Events .

8. Significant Events after the reporting period

Please refer to the section headed Other Significant Events under Chapter 6 Significant Events .

IV. EXPLAINATIONS AND REASONS FOR FAILURE TO MAKE DISCLOSURE PURSUANT TO THE RELEVANT RULES OR NATIONAL OR BUSINESS SECRETS

Not applicable.

Annual Report 2019 43

Chapter 06 Significant Events

I. PROFIT DISTRIBUTION OF ORDINARY SHARES OR CAPITAL RESERVES TRANSFERRED TO SHARE CAPITAL PLAN

(I) Formulation, Implementation or Adjustment of Cash Dividend Policy

The cash dividend policy specified in the Articles is as follows: the basis of profit distribution after tax of the Company for an accounting year is the lower of the profit after tax in the financial statements prepared in accordance with the CASs, IFRS or overseas accounting standard. The dividends shall be paid in the form of cash, shares or a combination of cash and shares. In the event that conditions for distribution of cash dividend are met, cash dividend shall be distributed prior to share dividend. On the condition that the Company distributes profit after tax of that year, 10% of profit shall be withdrawn and recognized as statutory reserve. The Company may not withdraw statutory reserve when the accumulated statutory reserve reaches more than 50% of the registered capital of the Company. Final dividends shall be distributed and paid once a year with an ordinary resolution passed by the general meeting of shareholders authorizing the Board to distribute and pay such dividend. The Company may distribute interim cash dividends upon approval from the Board and the shareholders at general meeting. There should be at least a 6-month accounting period interval between the distributions of cash dividends. On the premise of securing the Company’s sustainable development and provided that the Company has recorded a profit in a particular year and that its accumulated undistributed profit is positive, the Company’s cash dividends shall account for approximately 35% of the Company’s net profit after withdrawing the statutory reserve for that particular year, unless the Company has scheduled significant investments or significant cash requirements. In the scenario that the Company is in sound operation and that the Board considers the distribution of share dividends is beneficial to the overall interest of all Shareholders of the Company due to a mismatch between the Company’s stock price and its scale of share capital and in other necessary circumstances, the Company may distribute dividends in the form of shares.

The 2018 annual general meeting of the Company held on 24 May 2019 approved the Company to distribute annual cash dividends for 2018 of RMB2,652.5 million (tax inclusive) to the Shareholders, i.e. RMB0.54 per share (tax inclusive). As at the date of this annual report, the 2018 cash dividends have been distributed to the Shareholders.

The second extraordinary general meeting of the Company held on 1 November 2019 approved the Company to distribute 2019 interim cash dividends of RMB4,912 million (tax inclusive) to the Shareholders, i.e., RMB1.00 per share (tax inclusive). As at the date of this annual report, the 2019 interim cash dividends have been distributed to the Shareholders.

The profit distribution plan of the Company, pursuant with the Articles, is formulated after debriefing and fully considering the opinions and demands of the Shareholders of the Company, especially Shareholders holding minor shares, and is executed upon approval by the independent Directors (independent non-executive Directors stipulated in the Hong Kong Listing Rules), the Board meeting and the general meeting.

44 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

(II) Cash Dividends Scheme or Plan, Capital Reserve Transferred to Share Capital Scheme or Proposal for the Past Three Years (including the reporting period)

Unit: RMB100 million

					Net Profit
					Attributable
					to the
					shareholders	Percentage
					of the	of Net Profit
					Company	Attributable
					in the	to the
		Amount			Consolidated	shareholders
	Amount	of Cash			Statements	of the
	of Share	Dividends	Shares	Amount	during	Company
	Dividends	per Every	Transferred	of Cash	the Cash	in the
	for Every	10 Shares	for Every	Dividend	Dividend	Consolidated
Annual Cash	10 Shares	(RMB) (tax	10 Shares	(tax	Distribution	Statements
Dividend	(shares)	inclusive)	(shares)	inclusive)	Year	(%)
2019	0	5.80	0	28.490②	86.679	32.87
2019 interim	0	10.00	0	49.120	53.609③	91.63④
2018	0	5.40	0	26.525	79.089	33.54
2017	0	4.80	0	23.578	67.706	34.82

Note: ① The above “Net Profit Attributable to the shareholders of the Company in the Consolidated Statements during the Cash Dividend Distribution Year” was prepared in accordance with CASs and the cash dividend policy of the Company.
② The amount of cash dividends of the year 2019 is estimated based on the number of ordinary shares of the Company as at 31 December 2019.
③ It is the net profit attributable to the shareholders of the Company based on the 2019 interim reporting data prepared in accordance with CASs.
④ It refers to the proportion of the amount of 2019 interim special cash dividends (tax-included) over the net profit attributable to the shareholders of the Company based on the 2019 interim reporting data prepared in accordance with CASs.

Annual Report 2019 45

Chapter 06 Significant Events

1. Annual Profit Distribution Plan for 2019

In return for the long-term support of the Shareholders, the Board proposed a dividend of RMB0.58 (including tax) per share based on the number of shares on the dividend distribution record, date. Based on the Company's total share capital on 31 December 2019, the total amount of cash dividend is estimated to be RMB2.849 billion (including tax) for the year 2019. This dividend distribution plan shall be submitted to the Shareholders for consideration at the 2019 annual general meeting and the dividend will be distributed to all the Shareholders within two months (if approved). The cash dividend for the year 2019 is expected to be distributed on 19 August 2020.

According to the Articles, cash dividends shall be calculated and announced in RMB.

2. Reserves

For details of the changes of reserves for 2019 and distributable reserves as at 31 December 2019, please refer to Notes “Shareholders’ Equity” and “Supplementary Information” to the consolidated financial statements prepared in accordance with the IFRS.

(III) The Recognition of the Repurchased Shares Offered in Cash into the Cash Dividends

Not applicable.

(IV) The Company Shall Disclose the Reasons, Purpose and Usage Plan for Undistributed Profits in Details in the Case of the Profitable Status and Positive Profit Distributed by the Parent Company for Ordinary Shareholders, but Without Distribution Scheme for Ordinary Share Cash Profit during the Reporting Period

Not applicable.

46 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

(V) Tax and Tax Exemption or Reduction

1. Withholding and payment of dividend income tax and tax deduction for investors of H Shares.

(1) Withholding and payment of enterprise income tax for overseas non-resident enterprise shareholders

According to the Enterprise Income Tax Law of the PRC and its implementation regulations which came into effect on 1 January 2008 and other relevant rules and regulations, the Company is required to withhold and pay enterprise income tax at a rate of 10% before distributing the 2019 final dividend to non-resident enterprise shareholders as shown on the H share register of members of the Company. Any shares registered in the name of non-individual registered shareholders, including HKSCC Nominees Limited, other nominees, trustees or other groups and organizations, will be treated as being held by non-resident enterprise shareholders and therefore will be subject to the withholding of the enterprise income tax.

(2) Withholding and payment of individual income tax for individual foreign shareholders

The Company will implement the following arrangements in relation to the withholding and payment of individual income tax for the individual H Shareholders:

① For individual H Shareholders who are Hong Kong or Macao residents or whose country (or region) of domicile is a country (or region) which has entered into a tax treaty with the PRC stipulating a dividends tax rate of 10%, the Company will withhold and pay individual income tax at the rate of 10% on behalf of the individual H Shareholders in the distribution of final dividend.
② For individual H Shareholders whose country (region) of domicile is a country (region) which has entered into a tax treaty with the PRC stipulating a dividends tax rate of less than 10%, the Company will temporarily withhold and pay individual income tax at the rate of 10% on behalf of the individual H Shareholders in the distribution of final dividend. If the applicable tax rate of the country (region) of domicile of individual holders as appeared on the Company’s register of members of H Shares are less than 10% under tax treaty, such individual holders must submit to the H Share Register a written authorization and relevant application documents. The Company will forward such application documents to the applicable tax authorities for approval. After receiving such approval, the Company will, for and on behalf of such individual holders, effect the preferential treatments in accordance with the relevant tax treaty and pursuant to the relevant regulations promulgated by the PRC tax authorities.
③ For individual H Shareholders whose country (region) of domicile is a country (or region) which has entered into a tax treaty with the PRC stipulating a dividends tax rate of more than 10% but less than 20%, the Company will withhold and pay individual income tax at the effective tax rate stipulated in the relevant tax treaty in the distribution of final dividend.

Annual Report 2019 47

Chapter 06 Significant Events

④ For individual H Shareholders whose country (region) of domicile is a country (region) which has entered into a tax treaty with the PRC stipulating a tax rate of 20%, or a country (region) which has not entered into any tax treaties with the PRC, or under any other circumstances, the Company will withhold and pay individual income tax at the rate of 20% on behalf of the individual H Shareholders in the distribution of final dividend.

(3) Withholding and payment of individual income tax for investors of Southbound Trading

Pursuant to the relevant regulations under the “Notice on the Tax Policies Related to the Pilot Program of the Shanghai-Hong Kong Stock Connect” (Caishui [2014] No. 81) and the “Notice on the Tax Policies Related to the Pilot Program of the Shenzhen-Hong Kong Stock Connect” (Caishui [2016] No. 127) jointly issued by the Ministry of Finance, State Administration of Taxation and China Securities Regulatory Commission, for dividends to be paid to the individual investors in the PRC from investing in H shares listed on the Hong Kong Stock Exchange through ShanghaiHong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, the Company shall withhold and pay individual income tax at the rate of 20% on behalf of the investors. For dividends to be paid to securities investment funds in the PRC from investing in shares listed on the Hong Kong Stock Exchange through Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, the tax payable shall be the same as that for individual investors. The Company will not withhold and pay the income tax of dividends for enterprise investors in the PRC and those domestic enterprise investors shall report and pay the relevant tax themselves.

2. For the details of withholding and payment of dividend income tax and tax deduction for investors of A Shares, please see the Company’s Announcement of 2018 Annual Equity Interests Distribution Implementation of Yanzhou Coal Mining Company Limited dated 3 June 2019. This announcement was posted on the websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the Company and/or China Securities Journal, Shanghai Securities News and Securities Times.

48 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

II. PERFORMANCE OF THE UNDERTAKINGS

(I) Undertakings of the Actual Controller of the Company, the Shareholders, the Related Parties, the Buyer, the Company and Other Related Parties During the Reporting Period or Extended to the Reporting Period

								Measures
					With		Reasons for	in Case of
					Performance	Perform	Failure of	Failure of
				Date and Term of	Deadline or	Timely and	Performance	Performance
Background	Type	Undertaker	Undertakings	Undertakings	Not	Strictly or Not	Timely	Timely
Undertakings	Resolve	Yankuang Group	Avoidance of horizontal competition: Yankuang Group	Year 1997	None	Yes	Under normal	None
Related to IPO	horizontal		and the Company entered into the Restructuring	Long-term effective			performance
	competition		Agreement when the Company was carrying out the
			restructure in 1997, pursuant to which, Yankuang Group
			undertook that it would take various effective measures to
			avoid horizontal competition with the Company.
Other	Other	Yankuang Group	Undertaking made as to increase shareholding of the	From 11 July 2018	Yes	Yes	Completed	None
Undertakings		and Yankuang	H shares of the Company: Except that the approved	to
		Group (Hong	exchangeable corporate bonds issued by Yankuang Group	11 January 2019
		Kong) Limited,	may affect the Yankuang Group’s shareholding of the
		the person acting	Company, undertook not to decrease shareholding of the
		in concert	Company on its own accord before the announcement
			in relation to completing the increase of shareholding or
			relevant statutory period.

Annual Report 2019 49

Chapter 06 Significant Events

									Measures
						With		Reasons for	in Case of
						Performance	Perform	Failure of	Failure of
					Date and Term of	Deadline or	Timely and	Performance	Performance
Background	Type	Undertaker	Undertakings		Undertakings	Not	Strictly or Not	Timely	Timely
	Other	Yankuang Group	Yankuang Group made undertakings in relation to finance		27 July 2018	No	Yes	Under normal	None
			business	with Yankuang Finance Company as followings.	Long-term effective			performance
			1)	In view of the independence of Yanzhou
				Coal in assets, business, personnel, finance
				and other aspects from Yankuang Group,
				Yankuang Group will continue to maintain
				the independence of Yanzhou Coal and fully
				respect its right of management; while Yanzhou
				Coal and its subsidiary Yankuang Finance
				Company will decide on the financial business
				between Yankuang Finance Company and
				Yankuang Group on its own accord based on
				the requirements of business development in
				compliance with relevant supervisory regulations
				and the rules of procedures for decision-making
				as stipulated in the Articles and the Articles of
				Yankuang Group Finance Company Limited;
			2)	To ensure the safety of the Company’s fund
				managed by Yankuang Finance Company,
				Yankuang Group and its controlled companies
				undertook to carry out financial business with
				Yankuang Finance Company in accordance with
				laws and regulations, and will not appropriate
				the Company’s fund through Yankuang Finance
				Company in any other forms.
			3)	In case Yankuang Group or its controlled
				companies misappropriated any capital fund
				of Yanzhou Coal through Yankuang Finance
				Company and caused any loss, Yankuang Group
				and its controlled companies will make full
				amount compensation in cash.
			4)	Yankuang Group undertook to strictly abide
				by the relevant rules and regulations of CSRC,
				Shanghai Stock Exchange and the Articles,
				exercise the shareholder’s rights and perform
				the shareholder’s obligations as equally as other
				shareholders, and neither seek unfair interest by
				use of the position as the controlling shareholder,
				nor impair the legal interests of Yanzhou Coal
				and other public shareholders.

50 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

								Measures
					With		Reasons for	in Case of
					Performance	Perform	Failure of	Failure of
				Date and Term of	Deadline or	Timely and	Performance	Performance
Background	Type	Undertaker	Undertakings	Undertakings	Not	Strictly or Not	Timely	Timely
	Other	Yankuang Group	The Company made following undertakings in relation to	From 6 December	Yes	Yes	Completed	None
		and Yanzhou Coal	sale or pledge of its equity shares in Yancoal Australia to	2018 to
			the HKEX within twelve months commencing from the	6 December 2019
			listing of Yancoal Australia in HKEX:
			1. not to sell or pledge its equity shares in Yancoal
			Australia stipulated in the listing documents in
			any form unless the specific prerequisites are
			satisfied.
			2. Yanzhou Coal shall instantly inform Yancoal
			Australia when Yanzhou Coal pledged its equity
			shares in Yancoal Australia to any institute
			confirmed by HKEX, or the sale of the pledged
			shares by the person with pledging rights.
Other	Other	Yankuang Group	Undertakings made as to increase shareholding of the	From 30 July 2019	Yes	Yes	Completed	None
undertakings		and Yankuang	H shares of the Company: Except that the approved	to 30 January 2020
		Group (Hong	exchangeable corporate bonds issued by Yankuang Group
		Kong) Limited,	may affect the Yankuang Group’s shareholding of the
		the person acting	Company, undertook not to decrease shareholding of the
		in concert	Company on its own accord before the announcement
			in relation to completing the increase of shareholding or
			relevant statutory period.

(II) Explanation on Whether the Earning Forecasts Expected and Extended to the Current Reporting Period for the Assets or Projects of the Company can be Achieved or Not

Not applicable

(III) Whether the Undertakings of Company Performance can be Achieved or Not and its Influence to the Goodwill Impairment Test

Not applicable.

Annual Report 2019 51

Chapter 06 Significant Events

III. FUNDS APPROPRIATIONS AND CLEARING PROGRESS

Not applicable.

IV. EXPLANATION ON “NON-STANDARD ADVICE OF AUDITOR’S REPORTS” OF CERTIFIED PUBLIC ACCOUNTANTS BY THE COMPANY

Not applicable.

V. ANALYSIS AND EXPLANATION ON ACCOUNTING POLICIES, ACCOUNTING ESTIMATE CHANGES OR CAUSES AND EFFECTS OF CORRECTION OF SIGNIFICANT ACCOUNTING ERRORS
(I) Analysis and Elaboration on Reasons and Influence of Accounting Policies and Accounting Estimate Changes

In the current year, the Group has applied the new and amendments to International Financial Reporting Standards issued by the International Accounting Standards Board. For details please refer to APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS in the Consolidated Financial Statements.

(II) Analysis and Elaboration on Reasons and Influence of Correction of Significant Accounting Errors

Not applicable.

(III) Communications with Former Auditors

Not applicable.

(IV) Other Explanation

Not applicable.

52 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

VI. APPOINTMENT AND DISMISSAL OF AUDITORS

Unit: RMB 0,000

Current Appointment

Name of the Certified Public Accountants (Domestic)	Name of the Certified Public Accountants (Domestic)	Shine Wing Certified Public Accountants
		(special general partnership)
Remuneration of the Certified Public Accountants (Domestic)		660 (including internal control auditing)
Audit Service Term of the Certified Public Accountants (Domestic)		Since June 2008
Name of the Certified Public Accountants (Overseas)		SHINEWING (HK) CPA Limited
Remuneration of the Certified Public Accountants (Overseas)		200
Audit Service Term of the Certified Public Accountants (Overseas)		Since March 2017
	Name	Remuneration
Internal Control Auditors	Shine Wing Certified Public Accountants 165
	(special general partnership)

The explanation on the appointment and dismissal of accountants

As reviewed and approved by the 2018 annual general meeting held on 24 May 2019, the Company engaged Shine Wing Certified Public Accountants (special general partnership) and SHINEWING (HK) CPA Limited as its domestic and overseas accountants, respectively, with an engagement term from the conclusion date of the 2018 annual general meeting to the conclusion date of the 2019 annual general meeting, which is responsible for the financial statements auditing, examination and internal control audit evaluation of the Company for the year 2019.

The Company shall pay RMB8.6 million for the domestic and overseas audit services of 2019, including RMB6.6 million for domestic service to Shine Wing Certified Public Accountants (special general partnership) (including internal control audit fees) and RMB2 million for overseas service to SHINEWING (HK) CPA Limited. Except the accountants’ on-site accommodation and meal expenses during their working in the Company, the Company borne no other related expenses such as traveling expenses. The Board was authorized to decide the payment for increased follow-up audit, internal control audit and other services due to the Company’s new subsidiaries or changes of regulations.

The Board considered that except the annual financial audit service fees (including domestic and overseas audit services), other service expenses paid to the accountants by the Company would not have impact on accountant’s independent opinions.

According to the Financial Reporting Council Ordinance of Chapter 588 of the Laws of Hong Kong (effective from 1 October 2019), the Company's 2019 accountant SHINEWING (HK) CPA Limited is a registered public interest entity auditor.

The explanation on the change of auditors during the auditing period

Not applicable.

Annual Report 2019 53

Chapter 06 Significant Events

VII. CIRCUMSTANCES ON FACING THE RISK OF SUSPENSION OF LISTING

(I) Causes for Suspension of Listing

Not applicable.

(II) Countermeasures for Suspension of Listing

Not applicable.

VIII. CIRCUMSTANCES AND REASONS ON FACING THE TERMINATION OF LISTING

Not applicable.

IX. RELATED MATTERS ON BANKRUPTCY AND REORGANIZATION

Not applicable.

54 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

X. SIGNIFICANT LITIGATION AND ARBITRATION EVENTS

(I) Litigation and Arbitration Events Disclosed in the Extraordinary Announcements and with No Subsequent Progress

Item Overview

Query index

Arbitration involving Inner Mongolia New Changjiang Mining & Investment Co., Ltd. (“New Changjiang”) and Yanzhou coal

In April 2018, New Changjiang submitted an arbitration application to China International Economic and Trade Arbitration Commission (“CIETAC”) for the violation of the relevant equity transfer agreements by Yanzhou Coal and requested Yanzhou Coal to pay a total of approximately RMB1.435 billion, comprising the consideration for the equity transfer of RMB749 million, liquidated damages of RMB656 million, and the legal fees, arbitration fees and preservation fees involved in this case.

For details, please refer to the arbitration announcement dated 9 April 2019. The above announcement was also posted on the websites of the Shanghai Stock Exchange, the HKEX and the Company and/or China Securities Journal, Shanghai Securities News and Securities Times.

CIETAC held two hearings on the case in October 2018 and December 2018, respectively, and no ruling was issued.

In April 2019, New Changjiang changed its arbitration request to the termination of the equity transfer agreement and obtained the permission of CIETAC.

CIETAC held the third and fourth hearings on the case in August 2019 and December 2019 respectively.

Currently, there is no ruling issued yet.

As the case is undergoing the arbitration procedure, the Company is unable to accurately estimate the impact of the arbitration on the current profit and future profit.

Annual Report 2019 55

Chapter 06 Significant Events

(II) Litigation and Arbitration not disclosed in Extraordinary Announcements or with Subsequent Progress

During the reporting period:

Joint and several Plaintiff (applicant) Respondent liable party Type Background Shanxi Neng Hua Shanxi Jinhui No Arbitration As Shanxi Jinhui unilaterally terminated to fulfill the Coking Raw and Auxiliary Material Supply Agreement and Chemical Co., suspended the gas supply, Shanxi Tianhao Chemicals Ltd (“Shanxi Co., Ltd. (“Tianhao Chemicals”), a controlled company Jinhui”) of Shanxi Neng Hua, ceased full production of methanol in April 2012. In September 2013, Shanxi Neng Hua submitted the arbitration request to Beijing Arbitration Commission, requesting Shanxi Jinhui to make compensation for the loss in accordance with the contracts.

	Estimated
Amount	liabilities and		Judgment and	Judgment
involved	amount	Progress	impact	execution
RMB	No	Concluded	The case has	Implementing
341			concluded. The
million			lawsuit will not
			adversely affect
			the Company’s
			subsequent
			profit.

After full consideration, Shanxi Neng Hua applied to Beijing Arbitration Commission for withdrawal of the request for arbitration in August 2015 and got approval. The Company made provision for impairment of assets for Tianhao Chemicals in 2012.

The Company decided to restart the arbitration procedure to safeguard the interests of the Company and the Shareholders in July 2017. Shanxi Neng Hua and Tianhao Chemicals jointly lodged arbitration to Beijing Arbitration Commission, requiring Shanxi Jinhui to make compensation of RMB341 million in total to Shanxi Neng Hua and Tianhao Chemicals.

In April 2019, the Beijing Arbitration Commission ruled that Shanxi Jinhui make the compensation of RMB72.664 million in total to Shanxi Neng Hua and Tianhao Chemicals.

In June 2019, Shanxi Neng Hua applied to Lvliang Intermediate People’s Court in Shanxi Province (“Lvliang Intermediate Court”) for compulsory execution.

56 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

						Estimated
		Joint and several			Amount	liabilities and		Judgment and	Judgment
Plaintiff (applicant)	Respondent	liable party	Type	Background	involved	amount	Progress	impact	execution
Jinan Railway	Yanzhou Coal	No	Litigation	In October 2015, citing the sales contract dispute,	RMB	No	Concluded	The case	Completed
Coal Trade Group				Jinan Railway Trade suited Yanzhou Coal in Jinan	19.9498			has been
Co., LTD. (“Jinan				Railway Transportation Court, requiring Yanzhou	million			concluded.
Railway Trade”)				Coal to repay goods payment of RMB19.9498				According
				million. According to the investigation and				to the court’s
				verification of the Company, the Company never				judgment, the
				signed sales contract involved in the case with Jinan				Company has
				Railway Trade. The Company opposed the cause of				paid the money
				action of Jinan Railway Trade.				involved in the
								case to Jinan
				In October 2017, the Company lost the first-instance				Railway Trade.
				lawsuit and Jinan Railway Transportation Court
				ruled that the Company shall bear responsibility of
				compensation.

In November 2017, the Company lodged an appeal to Jinan Railway Transportation Intermediate Court (“Railway Intermediate Court”).

Railway Intermediate Court ruled the Company should bear responsibility of compensation at the second instance in March 2019.

Weihai Yanzhou Coal Shandong Litigation In October 2015, citing the financial loan contract Commercial Bank Hengfeng dispute, Weihai Commercial Bank filed a case Co., Ltd (“Weihai Power Fuel in Jining Intermediate People’s Court (“Jining Commercial Co., Ltd. Intermediate Court”) against 8 defendants including Bank”) (“Hengfeng Hengfeng and Yanzhou Coal, requiring Hengfeng Company”) and Company to repay the loan principal of RMB99.119 7 other persons million and corresponding interest. Because with joint Hengfeng Company made a pledge to the plaintiff and several through its account receivables of RMB103.42 liabilities million by Yanzhou Coal (suspect of counterfeit), Weihai Commercial Bank required Yanzhou Coal bear the liability of repayment within the amount of the account receivables.

RMB No In the second Since the case — 99.1190 instance in the progress million of the retrial of the second instance, it’s unable for the Company to estimate the impact of the litigation on its current profit and future profit currently.

In October 2018, the Company received the firstinstance judgement and lost the case. The Company lodged an appeal to Shandong Higher People’s Court (“Shandong High Court”). In May 2019, it was the ruling of the second instance of the Shandong High Court that the case shall be reheard in Jining Intermediate Court for retrial.

In January 2020, Jining Intermediate Court rejudged and rejected the lawsuit of Weihai Commercial Bank at the first instance. Then, Weihai Commercial Bank appealed to Shandong High Court.

Currently, Shandong High Court has made no ruling yet.

Annual Report 2019 57

Chapter 06 Significant Events

						Estimated
		Joint and several			Amount	liabilities and		Judgment and	Judgment
Plaintiff (applicant)	Respondent	liable party	Type	Background	involved	amount	Progress	impact	execution
Zhonghuixintong	Yanzhou Coal	Hengfeng	Litigation	In November 2015, citing the factoring business	RMB	No	Settled	Zhonghui	—
Business		Company		contract dispute, Zhonghui Xintong appealed	145			Xintong
Factoring Co.,				to Beijing No.3 Intermediate People’s Court	million			withdrew the
LTD. (“Zhonghui				(“Beijing No.3 Intermediate Court”) against				lawsuit and the
Xintong”)				Hengfeng Company and the Company, requiring				Company was
				Hengfeng Company to repay factorage financing				exempted from
				of RMB159.9770 million and related interests. As				the liability.
				Hengfeng Company had transferred its accounts				The lawsuit will
				receivable of RMB145 million by Yanzhou Coal				not make any
				(counterfeited) to Zhonghui Xintong, Zhonghui				impact on the
				Xintong required the Company to bear the liability				current profit
				of repayment within the amount of the accounts				and future
				receivable. The Company applied for judicial				profit of the
				authentication of the seals and signatures of the				Company.
				relevant evidence by Beijing No.3 Intermediate
				Court. The judicial authentication verified the seals
				and signatures were all forged.
				In November 2018, Beijing No.3 Intermediate
				Court hold a hearing on the case, Zhonghui Xintong
				withdrew the lawsuit at the court.
				In February 2019, the Company received the
				judgment given by Beijing No.3 Intermediate Court,
				which ruling that Yanzhou Coal was exempted from
				the liability.
China	Yanzhou Coal	Chai Tao and	Litigation	In November 2015, CCB Jining Dongcheng Sub-	RMB	No	In the retrial	The case is	—
Construction		other 4 persons		branch sued 7 defendants, including Hengfeng and	59.669		Procedure	currently in
Bank Jining		with several		Yanzhou Coal, to Jining Intermediate People’s Court	million		at the first	the progress
Dongcheng Sub-		and joint		(“Jining Intermediate Court”) on the grounds of			instance	of retrial
branch (“CCB		liability		financial loan contract disputes, requesting Hengfeng				procedure
Jining Dongcheng				to repay the loan principal of RMB59.669 million				at the first
Sub-branch”)				and corresponding interest. As Hengfeng pledged its				instance, and
				account receivables by Yanzhou Coal of RMB79.1312				it’s unable for
				million (suspected for counterfeiting) to CCB Jining				the Company
				Dongcheng Sub-branch, CCB Jining Dongcheng				to estimate
				Sub-branch requested Yanzhou Coal to repay as				the impact of
				per the pledged accounts receivable of RMB79.1312				the suit on its
				million.				current profit
								and future
				In April 2018, Jining Intermediate Court ruled that				profit.
				Yanzhou Coal should bear the priority liability
				of repayment in an amount within the pledged
				accounts receivable of RMB79.1312 million. The
				Company lodged an appeal to Shandong High Court.

In December 2019, Shandong High Court ruled at the second instance that the case shall be reheard by Jining Intermediate Court. In May 2019, Jining Intermediate Court heard the case and no ruling is given yet.

58 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

						Estimated
		Joint and several			Amount	liabilities and		Judgment and	Judgment
Plaintiff (applicant)	Respondent	liable party	Type	Background	involved	amount	Progress	impact	execution
Yanzhou Coal	Jinan Railway	No	Litigation	In April 2016, the Company, as the plaintiff, brought	RMB	No	Settled	The case has	—
	Trade			a civil litigation against Jinan Railway Trade at Jining	80			been settled.
				Intermediate Court, suing Jinan Railway Trade to	million			The Company
				refund a goods loan of RMB80 million and related				has made
				interests accrued to the Company.				impairment
								provision for
				In July 2017, Jining Intermediate Court ruled that				the full amount
				Jinan Railway Trade repay the loan of RMB80				involved in
				million and related interests accrued to the				the case in
				Company. Jinan Railway Trade lodged an appeal				the previous
				against the first judgment at Shandong High Court.				period, and this
								lawsuit will not
				In February 2018, Shandong High Court ruled at				adversely affect
				the second instance of the case to be reheard by				the Company’s
				Jining Intermediate Court. In March 2019, Jining				profit after the
				Intermediate Court ruled that the Company’s appeal				period.
				was rejected and the Company has lodged an appeal
				to Shandong High Court.
				In December 2019, Shandong High Court ruled that
				the Company’s appeal was rejected.
Yanzhou Coal	Rizhao	No	Litigation	In November 2016, citing Shanneng International	RMB	No	In the retrial	The case is	—
	Shanneng			breaching the Coal Sales Contract, the Company	80		procedure	currently in
	International			appealed to Rizhao Intermediate Court, requesting	million		at the first	the progress
	Logistics			Shanneng International repay RMB80 million to			instance	of retrial
	Co., Ltd.			the Company as goods payment and corresponding				procedure
	(“Shanneng			interest.				at the first
	International”)							instance. The
				In November 2018, the Company received the				Company
				judgment of Rizhao Intermediate Court at the first				has made
				trial that Yanzhou Coal won the suit. Shanneng				impairment
				International lodged an appeal at Shandong High				provision for
				Court.				the full amount
								involved in
				In June 2019, Shandong High Court ruled at the				the case in
				second instance of the case to be reheard by Rizhao				the previous
				Intermediate Court.				period, and this
								lawsuit will not
				Currently, Rizhao Intermediate Court has made no				adversely affect
				ruling yet.				the Company’s
								profit after the
								period.

Annual Report 2019 59

Chapter 06 Significant Events

Estimated Joint and several Amount liabilities and Judgment and Judgment Plaintiff (applicant) Respondent liable party Type Background involved amount Progress impact execution Shandong Yanmei Wuxi City Wuxi City Litigation In November 2016, citing the coal mines sales RMB No Settled The case has In the execution Rizhao Port Shengluda Xinan Fuel contract dispute, Rizhao Coal Storage and Blending 27.8274 been settled. procedure Coal Storage and Power Fuel Co., Co., Ltd. and 5 sued Rizhao Intermediate Court against Wuxi million The Company Blending Co., Ltd. (“Wuxi natural persons Shengluda to repay RMB27.8274 million of goods has made Ltd. (“Rizhao Shengluda”) with joint payment and corresponding interest. impairment Coal Storage and and several provision for Blending”) liabilities In February 2019, Rizhao Intermediate Court ruled the full amount at the first instance that Rizhao Coal Storage and involved in Blending won the suit. the case in the previous In April 2019, Rizhao Coal Storage and Blending period, and this applied to Rizhao Intermediate Court for lawsuit will not compulsory execution. adversely affect the Company’s profit after the period.

Rizhao Coal Rizhao Tengtu Shandong Storage and Investment Yabin Energy Blending Company Co., Ltd. and Limited other 8 joint (“Tengtu guarantors Company”) with joint and several liability

Litigation In February 2017, citing the sales contract dispute, Rizhao Coal Storage and Blending, as the plaintiff, brought a civil litigation against Tengtu Company and other 8 joint guarantors including Shandong Yabin Energy Co., Ltd. at Rizhao Intermediate Court, requesting Tengtu Company to repay a goods payment of RMB37.4251 million and the related interests, and 9 joint guarantors to bear the joint and several liabilities.

In December 2018, Rizhao Coal Storage and Blending received the judgement at the first trial and Rizhao Coal Storage and Blending won the suit. Tengtu Company lodged an appeal at Shandong High Court.

RMB No Settled The case has In the execution 37.4251 been settled. procedure million The Company has made impairment provision for the full amount involved in the case in the previous period, and this lawsuit will not adversely affect the Company’s profit after the period.

In May 2019, Shandong High Court made the judgement at the second instance that Rizhao Coal Storage and Blending won the case.

In July 2019, Rizhao Coal Storage and Blending applied to Rizhao Intermediate Court for compulsory execution.

60 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

Joint and several Plaintiff (applicant) Respondent liable party Type Background

China Yanzhou Coal Jining Liaoyuan Litigation Construction Trade Co., Bank Jining Ltd. (“Jining Guhuailu Liaoyuan”) and Branch (“CCB other 6 persons Jining Guhuailu with joint and Branch”) several liability

In June 2017, citing the financial loan contract dispute, CCB Jining Guhuailu Branch, as the plaintiff, sued against 8 defendants including Jining Liaoyuan and Yanzhou Coal to Jining Intermediate Court, requiring Jining Liaoyuan to repay loan principal of RMB95.8596 million and corresponding interest. Since Jining Liaoyuan pledged accounts receivables of RMB90.52 million by Yanzhou Coal (suspect of counterfeit) to CCB Jining Guhuailu Branch, CCB Jining Guhuailu Branch requiring the Company to make repayment within scope of the accounts receivable.

Estimated Amount liabilities and Judgment and Judgment involved amount Progress impact execution RMB No Retrial of the As the case is in — 90.52 first instance the retrial of the million first instance, it’s unable for the Company to accurately estimate the impact of the litigation on its current profit and future profit currently.

In January 2018, Jining Intermediate Court heard the case. The Company applied for judicial authentication of the seals and signatures in relevant evidences at the court. The judicial authentication verified that the signatures are real and the seals are forged.

In November 2018, the Company lost the suit at the first trial and the Company lodged an appeal to Shandong High Court.

In August 2019, Shandong High Court ruled the case to be reheard by Jining Intermediate Court and no ruling has been given by Jining Intermediate Court yet.

Annual Report 2019 61

Chapter 06 Significant Events

Plaintiff (applicant) Respondent Xiamen Xinda Zhongyin Logistics

Joint and several liable party Type Background Yanzhou Coal Litigation Case 1:

In March 2017, citing the sales contract dispute, Xiamen Xinda appealed against Zhongyin Logistics and the Company to Xiamen Intermediate People’s Court (“Xiamen Intermediate Court”) in three cases, legally requiring Zhongyin Logistics to return goods principal of RMB164 million and corresponding interest and requiring the Company to bear joint liability.

Estimated Amount liabilities and Judgment and Judgment involved amount Progress impact execution RMB No Withdrawal The other party — 102.50 in this case has million withdrawn. The lawsuit will not adversely affect the Company’s post-period profit.

In June 2017, the Company appealed to the Higher People’s Court of Fujian Province (“Fujian High Court”) on the jurisdictional objection. Fujian High Court ruled that two of the three cases tried by the Xiamen Intermediate Court were combined into one (RMB102.5 million) was tried by Fujian High Court, and the remaining one was merged with Case 2 by Xiamen Intermediate Court.

In July 2018, the case heard by Fujian High Court was heard in the first instance. The two parties jointly applied to the court for a delay in the trial. The court agreed to suspend the trial and the court time will be notified separately. In the case of Xiamen Intermediate Court, Xiamen Intermediate Court organized the parties to participate in the pretrial cross-examination, after the cross-examination, Xiamen Intermediate Court suspended the case.

In accordance with the investigation and verification of the Company, among the relevant evidences provided by the plaintiff, the seals of the Company and Zhongyin Logistics were forged. The third party and related persons involving the case were suspected to forge seals to carry out contract fraud. The Company has reported to public security organs and the case was placed on file.

In October 2019, Xiamen Xinda filed an application for cancellation of the lawsuit with Xiamen High Court and obtained permission.

62 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

						Estimated
		Joint and several			Amount	liabilities and		Judgment and	Judgment
Plaintiff (applicant)	Respondent	liable party	Type	Background	involved	amount	Progress	impact	execution
				Case 2:	RMB	No	Withdrawal	The other party	—
					91.10			in this case has
				In June 2017, citing the sales contract dispute, Xiamen	million			withdrawn. The
				Xinda appealed against Zhongyin Logistics and the				lawsuit will not
				Company to Xiamen Municipal Huli District People’s				adversely affect
				Court in three cases, legally requiring Zhongyin				the Company’s
				Logistics to return goods principal of RMB31.7116				post-period
				million and corresponding interest and requiring the				profit.
				Company to bear joint liability. The Company filed a
				jurisdictional objection to the court. The court ruled
				that the three cases in the case were merged with one
				case in Case 1, and the total amount involved in the
				case was RMB91.10 million, which was tried by Xiamen
				Intermediate Court.

In July 2018, Xiamen Intermediate Court heard the case, and no ruling has been given yet.

In September 2019, Xiamen Xinda filed an application for cancellation of the lawsuit with Xiamen Intermediate Court and obtained permission.

Xiamen Xinda Zhongyin Yanzhou Coal Litigation In March 2020, citing the sales contract dispute, Logistics Xiamen Xinda sued against Zhongyin Logistics and Yanzhou Coal to Xiamen Intermediate Court, requiring Zhongyin Logistics to return goods principals of RMB233 million and corresponding interest and requiring the Company to bear joint liability. Currently, Xiamen Intermediate Court has not ruled yet.

RMB	In the first	The case is
232.6609	instance	currently
million		undergoing the
		first instance
		proceedings,
		and it is not
		yet possible
		to judge the
		impact of this
		lawsuit on the
		Company’s
		post-period
		profits.

Annual Report 2019 63

Chapter 06 Significant Events

Plaintiff (applicant) Respondent Luxing Property Yanzhou Coal Co., LTD. (“Luxing Property”)

Joint and several liable party Type Hengfeng Litigation Company and relate companies

Background

In July 2017, citing the equity transfer agreement dispute, Luxing Property appealed 7 cases against Hengfeng Company and related companies to Jining Intermediate Court (4 cases) and Jining Rencheng District People’s Court (“Rencheng Court”) (3 cases), alleging Hengfeng Company and its related companies repay principle of RMB277.09 million and related interests. In view that Hengfeng Company and its related companies transferred accounts receivable of RMB352.78 million payable by Yanzhou Coal (suspect of counterfeit) to Luxing Property, Luxing Property required the Company to bear the liability of payment within the amount of the accounts receivable and related interests.

Estimated Amount liabilities and Judgment and Judgment involved amount Progress impact execution RMB No Settled The case has — 277.09 been settled. million This lawsuit will not adversely affect the Company’s profit after the period.

The Company applied to Jining Intermediate Court for judicial authentication of the seals of the relevant evidence. And the authentication verified that the seals are forged.

In November 2018, the Company received the firstinstance judgment from Jining Intermediate Court in relation to the 4 cases, Yanzhou Coal won the suits.

In March 2019, the Company received the first-instance judgment from Rencheng District Court in relation to the 3 cases, Yanzhou Coal won the suits.

–

64 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

						Estimated
		Joint and several			Amount	liabilities and		Judgment and	Judgment
Plaintiff (applicant)	Respondent	liable party	Type	Background	involved	amount	Progress	impact	execution
Qingdao Yanmei	Shanghai	Zhenjiang	Litigation	In August 2017, Yanmei Dongqi, a wholly-owned	RMB	No	Settled	The case has	—
Dongqi Energy	Greenland	Tianyun		subsidiary of Rizhao Coal Storage and Blending (a	82.2062			been settled.
Co., Ltd. (“Yanmei	Linggang Power	Trade Co., Ltd		controlled subsidiary of the Company), as the plaintiff,	million			The Company
Dongqi”)	Fuel Co., Ltd.	(“Zhenjiang		brought a civil litigation against Greenland Linggang,				has made
	(“Greenland	Tianyun”) and		Zhenjiang Tianyun and Jiangsu Jicao to Shanghai				impairment
	Linggang”)	Jiangsu Jicao		Municipal No.1 Intermediate People’s Court (“Shanghai				provision for
		Biological		Intermediate Court”), requiring Greenland Linggang				the full amount
		Science Co., Ltd		to repay goods payment of RMB82.2062 million and				involved in
		(“Jiangsu Jicao”)		related interest, and Zhejiang Tianyu and Jiangsu Jicao				the case in
				shall bear joint and several liabilities.				the previous
								period, and this
				In June 2018, Shanghai Intermediate Court gave the				lawsuit will not
				first-instance judgement that Yanmei Dongqi won				adversely affect
				the case. In view that the judgement did not satisfy				the Company’s
				the purpose of the lawsuit, Yanmei Dongqi lodged an				profit after the
				appeal to Shanghai High People’s Court.				period.

In June 2018, Shanghai Intermediate Court gave the first-instance judgement that Yanmei Dongqi won the case. In view that the judgement did not satisfy the purpose of the lawsuit, Yanmei Dongqi lodged an appeal to Shanghai High People’s Court.

In December 2018, Shanghai High People’s Court rejected Yanmei Dongqi’s appeal at the second instance.

In April 2019, Yanmei Dongqi made an appeal to Supreme People’s Court for retrial.

In August 2019, the Supreme People’s Court ruled to reject the retrial appeal.

Rizhao Coal Zoucheng City Zoucheng City Litigation In November 2018, alleging coal sales contract dispute, RMB No Settled The case has — Storage and Pengxiang Wangsheng Rizhao Coal Storage and Blending sued against 35.15 been settled. Blending Industry and Real Estate Zoucheng Pengxiang at Rizhao Intermediate Court, million The Company Trade Co., Ltd Development requiring Zoucheng Pengxiang refund RMB35.15 has made (“Zoucheng Co., Ltd million of goods payment and related interests. impairment Pengxiang”) provision for In May 2019, both parties signed Repayment the full amount Agreement and the case was settled through involved in reconciliation. the case in the previous period, and this lawsuit will not adversely affect the Company’s profit after the period. Yanzhou Coal Shandong Wang Fuen and Litigation In December 2018, citing the coal sales contract RMB No In the second The case is — Changjinhao other 2 persons dispute, the Company appealed to Jining Intermediate 56.3893 instance currently Coal Mining with joint and Court against Changjinhao, alleging Changjinhao pay million undergoing the Co., Ltd. several liabilities RMB56.3893 million of goods payment and related second instance (“Changjinhao”) interests, while Wang Fuen, Ji Jianyong and Wu proceedings, Zhaobin shall bear joint and several liabilities. and it is not yet possible to judge The case was heard in Jining Intermediate Court twice the impact of in May 2019 and June 2019 respectively. this lawsuit on the company’s In September 2019, Jining Intermediate Court ruled at post-period the first instance that the Company won the lawsuit. As profits.

In September 2019, Jining Intermediate Court ruled at the first instance that the Company won the lawsuit. As the ruling result of the first instance did not meet the Company’s requirements, the Company appealed to the Shandong High Court.

No judgement has been given yet.

Annual Report 2019 65

Chapter 06 Significant Events

						Estimated
		Joint and several			Amount	liabilities and		Judgment and	Judgment
Plaintiff (applicant)	Respondent	liable party	Type	Background	involved	amount	Progress	impact	execution
Shanghai Jiaorun	Qingdao	Zhongyuan	Litigation	In December 2018, alleging coal sales contract dispute,	RMB	No	In the second	The case has	—
International	Zhongyan	Huijin Logistics		Shanghai Jiaorun brought a lawsuit to Qingdao	80		instance	now entered the
Trade Co., Ltd	Trading Co.,	(Tianjin)		Intermediate People’s Court (“Qingdao Intermediate	million			second instance
(“Shanghai	Ltd. (“Qingdao	Co., Ltd		Court”) against Qingdao Zhongyan, a wholly-owned				proceedings,
Jiaorun”)	Zhongyan”)	(“Zhongyuan		subsidiary of the Company and Zhongyuan Huijin,				and it is not yet
		Huijin”)		who was requested to bear joint and several liabilities,				possible to judge
				requiring Qingdao Zhongyan and Zhongyuan Huijin				the impact of
				refund RMB80 million of goods payment, contract				this lawsuit on
				breach fines and related loses accrued.				the Company’s
								post-period
				In November 2019, Qingdao Intermediate Court of the				profits.
				first instance rejected Shanghai Jiaorun’s lawsuit against
				Qingdao Zhongyan, and Qingdao Zhongyan dismissed
				it. Shanghai Jiaorun appealed to Shandong High Court.
				Currently, no judgement has been given by Shandong
				High Court.
Yanzhou Coal	Bill debtors	Bill debtors	Litigation	In January 2019, citing the bills dispute, the Company	RMB	No	Related cases are	As of the end	—
	including Baota	including Baota		appealed in 89 cases against related bills debtors to	272.1		being heard	of the reporting
	Shenghua	Petrochemical		Liangshan People’s Court, requiring the Company	million			period, the
	Trading Group	Group Finance		exercise its rights of recourse to the bills. The Company				Company
	Co., Ltd, Inner	Co., Ltd		holds 150 pieces of acceptance bills made by Baota				has made
	Mongolia	(“Baota Finance		Finance Company as the payer, with a total amount of				impairment
	Yanmeng Coal	Company”),		RMB272.1 million. As Baota Finance Company cannot				provision for
	Transportation	Baota		meet the due payment, the Company exercises the				the full amount
	and Sales Co.,	Petrochemical		right of recourse to safeguard the legitimate rights and				involved in this
	Ltd.	Group Co., Ltd.		interests. Currently, the Company has recovered RMB3				case, and this
				million in two case, which was settled; the remaining 87				lawsuit will not
				cases have been transferred to Yinchuan Intermediate				adversely affect
				Court and no judgement is given yet.				the Company’s
								profit after the
								period.
CRRC	Yanzhou Coal	Beijing Baota	Litigation	From December 2018, citing the bill dispute, the holders	RMB	No	Related cases are	The Company	—
Shijiazhuang		International		of the acceptance bill of exchange of Baota Finance	41.9		being heard	has paid
Vehicle Co., Ltd,		Economic		Company sued Yanzhou Coal in 30 cases respectively,	million			RMB6.4 million
Shijiazhuang		and Technical		demanding to exercise the right of recourse for bills,				according to
Gongbei Heavy		Cooperation		involving a total amount of RMB41.9 million. Up				the court’s
Machinery Co.,		Co., Ltd., Baota		to present, the Company has lost five cases and paid				judgment, and
Ltd. and other		Finance Co.,		RMB6.4 million. Other cases are still under trial and no				it is not yet
holders		Ltd. and other		judgement has yet been given.				possible to judge
		debtors of						the impact of
		commercial						this lawsuit on
		instrument						the Company’s
								after-term
								profit.

66 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

						Estimated
		Joint and several			Amount	liabilities and		Judgment and	Judgment
Plaintiff (applicant)	Respondent	liable party	Type	Background	involved	amount	Progress	impact	execution
Shandong	Yanzhou Coal	No	Litigation	In May 2019, citing the sales contract dispute,	RMB	No	Settled	The case has	—
Zikuang Coal				Zikuang Transport and Marketing Company sued	33.956			been settled.
Transport and				against Yanzhou Coal to Jining Intermediate Court,	million			This lawsuit
Marketing Co.,				requiring Yanzhou Coal to repay RMB25.478 million				will not
Ltd. (“Zikuang				of coal prepayment, RMB7.042 million of interest				adversely affect
Transport and				loss, RMB0.936 million of the loss of anticipated				the Company’s
Marketing				benefits and RMB0.5 million of realization of				profit after the
Company”)				expense of credit, adding up to RMB33.956 million.				period.
				In October 2019, Jining Intermediate Court ruled
				to reject the appeal of Zikuang Transport and
				Marketing Company, and Yanzhou Coal won the
				lawsuit. Zikuang Transport and Marketing appealed
				to Shandong High Court.
				In March 2020, Shandong High Court ruled the
				Company won the lawsuit.
Shanxi Jinhui	Tianhao	No	Litigation	In May 2019, Shanxi Jinhui, as the plaintiff, citing the	RMB	No	Settled	The case has	—
	Chemicals			sales contract dispute, brought a lawsuit to Lvliang	142.8698			been settled.
				Intermediate Court against Tianhao Chemicals,	million			This lawsuit
				requiring Tianhao Chemicals to pay RMB136.278				will not
				million as the compensation of breaching the				adversely affect
				contract, RMB6.5918 million for the gas and				the Company’s
				electricity fees, adding up to a total of RMB142.8698				profit after the
				million.				period.
				Tianhao Chemicals filed an objection to jurisdiction
				with Shanxi Higher People’s Court (“Shanxi High
				Court”). Shanxi High Court ruled that the case was
				transferred to the court’s jurisdiction.
				In December 2019, Shanxi High Court ruled to reject
				Shanxi Jinhui’s appeal.

(III) Other Explanation

Not applicable.

XI. PUNISHMENT AND RECTIFICATION ON THE LISTED COMPANY, ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, CONTROLLING SHAREHOLDER, ACTUAL CONTROLLER AND BUYER

Not applicable.

During the reporting period, the Company and its directors, supervisors, senior management, controlling shareholder and actual controller were not subject to investigation by competent authorities or transferred to judicial organs or being given criminal sanctions. None of compulsory measures were taken by judicial discipline inspection departments. There are no circumstances such as being inspected by CSRC, being given administrative penalties imposed by CSRC, being prohibited from entry into the securities market, being given a notice of criticism, being identified as inappropriate candidates, being given major administrative penalties by other administrative departments and being condemned by stock exchanges publicly.

Annual Report 2019 67

Chapter 06 Significant Events

XII. THE EXPLANATION ON THE CREDIT CONDITIONS OF THE COMPANY, CONTROLLING SHAREHOLDER AND ACTUAL CONTROLLER

Not applicable.

During the reporting period, the Company, its controlling shareholder and actual controller do not have any dishonest behaviors, such as failure to perform the effective judgement of the court and the large amount of debt due but unliquidated.

XIII. CIRCUMSTANCE AND IMPACT OF THE SHARE INCENTIVE SCHEME AND EMPLOYEE STOCK OWNERSHIP PLAN OR OTHER INCENTIVE SCHEME TO EMPLOYEES

(I) Share Incentive Scheme Disclosed in Extraordinary Announcement with no Progress or Changes

Overview

Inquiry Index

As reviewed and approved at the 2019 first extraordinary general meeting, the 2019 first class meeting of holders of A Shares and the 2019 first class meeting of holders of H Shares on 12 February 2019, the Company implemented the 2018 A Share Option Scheme (the “Share Option Scheme”). On the same day, as reviewed and approved at the twenty-third meeting of the seventh session of the Board, the Company adjusted the grantees under the 2018 A Share Option Scheme and granted 46.32 million share options to 499 eligible participants. On 21 February 2019, the Company completed the granting registration of the share options for the Share Incentive Scheme.

For details, please refer to the announcements dated 12 February 2019 in relation to resolutions passed at the 2019 first extraordinary general meeting, the 2019 first class meeting of holders of A Shares, the 2019 first class meeting of holders of H Shares and the twenty-third meeting of the seventh session of the Board, and in relation to the adjustment and granting of the Share Options Scheme: the announcement in relation to the completion of the granting registration of the Share Option Scheme on 21 February 2019. The above announcements were also posted on the websites of the Shanghai Stock Exchange, the HKEX and the Company and/or China Securities Journal, Shanghai Securities News and Securities Times.

Abstract of the Share Option Scheme

The purpose of the Share Option Scheme

The Share Option Scheme is to further establish and improve the long-term incentive mechanism of the Company, attract and retain talents, fully motivate the Directors, senior management, mid-level management and core employees of the Company, effectively align the interests of Shareholders, the interest of the Company and the personal interests of the management, and enable all parties to take interest in the long-term development of the Company.

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Significant Events Chapter 06

The scope of participants of the Share Option Scheme (the “Participants”)

The Participants include the Directors, senior management, mid-level management and core employees of the Company, excluding external Directors (including independent Directors), Supervisors, Shareholders or actual controllers that individually or jointly hold 5% or above shares of the Company and their spouses, parents and children.

The number of underlying shares to be granted under the Share Option Scheme

The number of A share options to be granted under the Share Option Scheme is 46.68 million, representing approximately 0.95% of the total issued share capital of the Company (i.e. 4,912,016 million shares). The Board then adjusted the number to 46.32 million, representing approximately 0.94% of the total share capital of the Company as at the date of this report.

The maximum amount of share options for each Participant under the Share Option Scheme

There is no Participant to whom the aggregate number of A Shares to be issued upon exercise of the share options may exceed 1% of the Company’s total share capital as at the date of consideration and approval of the Share Option Scheme at the extraordinary general mecting, and shall not exceed 1% of the Company’s total number of issued A Shares on the same day.

The vesting period of the share options granted under the Share Option Scheme

The vesting period will be the period between the date of granting the share options and the exercise date of the share options. The share options will have vesting periods of 24 months, 36 months and 48 months commencing from the date of granting the share options respectively.

The date of exercise under the Share Option Scheme

The share options granted under the Share Option Scheme, can be exercised on any trading day, except during the following periods, upon expiry of after 24 months from the date of grant.

(I) Within thirty (30) days before the announcement of periodic report, or from thirty (30) days before the scheduled date of announcement of periodic report to the day before actual date of periodic report in case of postponed announcement due to certain reasons;
(II) Within ten (10) days before the announcement of the Company’s results forecast and performance news;
(III) A period commencing from the date of significant events occurred or proposed for review and approval, which may have severe impacts on the trading price of the shares and its derivatives of the Company, till two (2) trading days after the announcement disclosed in pursuant to relevant laws.
(IV) Any other period as stipulated by CSRC and Shanghai Stock Exchange.

Annual Report 2019 69

Chapter 06 Significant Events

The “significant events”, “significant matters” or “significant events may have severe impacts on share price” are matters or other significant events shall be disclosed in accordance with Rules Governing the Listing of Stocks of the Shanghai Stock Exchange.

The exercise period of the options granted under the Share Option Scheme and its arrangement are shown in the following table.

		Proportion of
		exercisable Share
		Options to the total
Arrangement for		number of granted
the exercise	Exercise Period	Share Options
First Exercise Period	Commencing from the first trading day after the	33%
	expiry of the 24th month from the date of grant, and
	ending on the last trading day of the 36th month
	from the date of granting the share options
Second Exercise Period	Commencing from the first trading day after the	33%
	expiry of the 36th month from the date of grant, and
	ending on the last trading day of the 48th month
	from the date of granting the share options
Third Exercise Period	Commencing from the first trading day after the	34%
	expiry of the 48th month period from the date of
	grant, and ending on the last trading day of the 60th
	month period from the date of granting the share
	options

The Participants must exercise their share options during the validity period of the share options. If preconditions for exercising are not fulfilled, the share options for the corresponding period shall not be exercised. If the preconditions for exercising are all fulfilled, the options not exercised during the corresponding period shall be cancelled by the Company.

The exercise price of the share options granted under the Share Option Scheme

The exercise price of each option granted under the Share Option Scheme is RMB9.64. During the period commencing from the date of announcement of the Share Option Scheme to the expiry of the exercise period of the Participants, the exercise price shall be subject to adjustment in the event of capitalization of capital reserves, bonus issue, share subdivision, right issue or dividend distribution of the Company.

The basis of determination of exercise price of the share options granted under the Share Option Scheme

The Exercise Price shall not be less than the nominal value of the Company’s A Shares or the higher of:

(1) the average trading price of A Shares quoted on the trading day immediately preceding the date of announcement of the Share Option Scheme, being RMB8.92 per A Share;
(2) the average trading price of A Shares for the 20 trading days immediately preceding the date of announcement of the Share Option Scheme, being RMB9.58 per A Share;

70 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

(3) the closing price of A Shares on the trading day immediately preceding the date of announcement of the Share Option Scheme, being RMB8.75 per A Share; and
(4) the average closing price of A Shares for the 30 trading days immediately preceding the date of announcement of the Share Option Scheme, being RMB9.64 per A Share.
The validity period of the Share Option Scheme

The Share Option Scheme comes into effect since approval by the 2019 first extraordingary general meeting, the 2019 first class meeting of holders of A shares and the 2019 first class meeting of holders of H shares on 12 February 2019. The validity period of the share options granted under the Share Option Scheme shall not exceed 60 months commencing from the date of granting the share options.

Exercise of share options during the reporting period

All of the share options granted under the Share Option Scheme were in the vesting period and have not entered the exercise period. None of the Participants has exercised the share options yet.

Long-term Incentive Scheme of Yancoal Australia

In order to attract and retain the talents, combined the compensation of the management with the shareholders’ interests to ensure that employees focus on creating the middle and long-term goals of Yancoal Australia, as approved at the Yancoal Australia 2018 annual general meeting, Yancoal Australia implemented a long-term incentive scheme in 2018.

For details, please refer to the resolution announcement of Yancoal Australia 2018 Annual General Meeting dated 30 May 2018, the performance announcement of the year ended 31 December 2018 dated 25 February 2019 and the announcement of the rights to issuing performance shares dated 4 March 2019. The above announcements were also posted on the websites of Yancoal Australia, the Australia Stock Exchange and/or the HKEX.

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(II) Share Option Incentives not Disclosed in Extraordinary Announcements or with Subsequent Progress

Share Option Incentive Schemes

Not applicable.

Other Explanation

Not applicable.

Employee Shareholding Scheme

Not applicable.

Other Incentive Schemes

Not applicable.

XIV. MAJOR CONNECTED/RELATED TRANSACTIONS

(The data below in this section are calculated in accordance with the CASs)

The Group’s connected/related transactions were mainly continuing connected/related transactions entered into with the Controlling Shareholder of the Company, i.e., Yankuang Group and its subsidiaries except the Group, Qingdao Century Ruifeng Group Co., Ltd (“Century Ruifeng”), Glencore Coal Pty Ltd (“Glencore”) and its subsidiaries, Sojitz Corporation (“Sojitz”) and its subsidiaries.

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Significant Events Chapter 06

(I) Connected/Related Transactions Performance in relation to Daily Operation

1. Matters disclosed in extraordinary announcements but without subsequent progress or change

Summary of Matters

Query Index

Continuing connected/related transactions of financial services

As reviewed and approved at the 2019 second extraordinary general meeting dated 1 November 2019, Yankuang Finance Company and Yankuang Group renewed the Financial Service Agreement originally signed by Yankuang Finance Company and Yankuang Group in 2017 and expired on 31 December 2019, which set out that Yankuang Finance Company shall provide deposit services, comprehensive credit facility services and other miscellaneous financial services to Yankuang Group from 2020 to 2022, and the annual transaction caps (if applicable).

For details, please refer to the resolution announcement of the twenty-seventh meeting of the seventh session of the Board and the relevant continuing connected/ related transaction announcements dated 30 August 2019, and the announcement in relation to the resolutions passed at the 2019 second extraordinary general meeting dated 1 November 2019, which were posted on the websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange, the Company’s website and/or China Securities Journal and Shanghai Securities News and Securities Times in the PRC.

Continuing connected/related transactions of financing lease

The Company held the thirtieth meeting of the seventh session of the Board on 30 December 2019 to consider and approve that Zhongyin Financial Leasing and Yankuang Group enter into the Finance Lease Agreement and the relevant annual cap thereunder for the year 2020.

For details, please refer to the resolution announcement of the thirtieth meeting of the seventh session of the Board and the relevant continuing connected/related transactions announcement dated 30 December 2019 which were posted on the websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange, the Company’s website and/or China Securities Journal and Shanghai Securities News and Securities Times in the PRC.

Continuing connected/related transactions of house lease

As considered and approved at the thirty-first meeting of the seventh session of the Board dated 7 February 2020, Shanghai Dongjiang Real Estate Development Co., Ltd, a wholly-owned subsidiary of the Company, entered into the Lease Agreement in relation to Shanghai Dongjiang Pearl Square with Shanghai Yankuang Xinda Hotel Co., Ltd., a subsidiary of Yankuang Group.

For details, please refer to the resolution announcement of the thirty-first meeting of the seventh session of the Board and the relevant continuing connected/related transactions announcement dated 7 February 2020, which were posted on the websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange, the Company’s website and/or China Securities Journal and Shanghai Securities News and Securities Times in the PRC.

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2. Matters disclosed in extraordinary announcements but with subsequent progress or change

(1) Approval and execution of continuing connected/related transactions entered into with Yankuang Group during the reporting period

① Continuing connected/related transaction of materials and services provision and insurance fund

As approved at the 2018 first extraordinary general meeting of the Company held on 26 January 2018, five continuing connected/related transaction agreements were entered into by the Company with Yankuang Group, namely, the “Provision of Material Supply Agreement”, “Mutual Provision of Labor and Services Agreement”, “Provision of Insurance Fund Administrative Services Agreement”, “Provision of Products, Materials and Equipment Leasing Agreement” and “Bulk Commodities Sales and Purchase Agreement”, each of which defines the annual cap of transaction within a period from 2018 to 2020.

Except “Provision of Insurance Fund Administrative Services Agreement”, the pricing of the transactions was mainly determined on basis of state price, market price, as well as the actual cost. The charge for transaction can be settled in one lump sum or by installments. The payment payable to the other party or receivable from the other party due in a calendar month shall be written down on the last business day of the calendar month. The continuing connected/ related transactions made in a calendar month shall be settled in the following month, except for incomplete transactions or where the transaction amounts are in dispute.

The sales of goods and provision of services by the Group to its Controlling Shareholder amounted to RMB3.829 billion in 2019. The goods and services provided by the Controlling Shareholder to the Group amounted to RMB3.861 billion.

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The following table sets out the continuing connected/related transactions of the supply of materials and services between the Group and the Controlling Shareholder in 2019:


		Percentage		Percentage	Increase/decrease of
	Amount	of operating	Amount	of operating	connected/related
	(RMB’000)	revenue (%)	(RMB’000)	revenue (%)	Transactions (%)
Sales of goods and provision of
services by the Group to its
Controlling Shareholder	3,828,693	1.91	3,556,594	2.18	7.65
Sales of goods and provision of
services by the Controlling
Shareholder to the Group	3,861,130	1.92	2,710,218	1.66	42.47

The table below shows the effect on the Group’s profits from sales of coal by the Group to the Controlling Shareholder in 2019:

		Sales income	Sales cost	Gross profit
		(RMB’000)	(RMB’000)	(RMB’000)
Coal sold to the Controlling Shareholder		2,860,293	1,745,352	1,114,941

Pursuant to the Provision of Insurance Fund Administrative Services Agreement, the Controlling Shareholder shall provide free management and transferring services for the Group’s basic pension insurance fund, basic medical insurance fund, supplementary medical insurance fund, unemployment insurance fund, maternity insurance fund and industrial injury fund (the “Insurance Fund”). The actual amount of the Insurance Fund paid by the Group for the year 2019 was RMB962 million.

② Continuing connected/related transaction of financial services

As approved at the 2016 annual general meeting of shareholders held on 29 June 2017, Yankuang Finance Company entered into Financial Services Agreement with Yankuang Group, in pursuant to which Yankuang Finance Company shall provide deposit services, comprehensive credit facility services and other miscellaneous financial services to Yankuang Group from 2017 to 2019 within the annual caps for the transactions.

As at 31 December 2019, the balance of principal and interest of deposit of Yankuang Group in Yankuang Finance Company was RMB10.13 billion, the comprehensive credit balance was RMB6.894 billion, and the financial service fee occurred in 2019 was RMB852 thousand.

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Chapter 06 Significant Events

③ Continuing connected/related transaction of entrusted management of chemical projects

As considered and approved at 2018 first extraordinary general meeting held on 26 January 2018, the Company entered into the Entrusted Management Agreement of Chemical Projects with Yankuang Group, which defines the annual caps for a period from 2018 to 2020. The price was mainly determined on basis of the actual cost.

Pursuant to the Chemicals Projects Entrusted Management Agreement, Yankuang Group should provide chemicals project entrusted management services and sales agency services to the Group, while the payment of chemical entrusted management fee is made after the annual assessment.

As at the end of reporting period, the Group paid RMB5,790 thousand of entrusted management fee to Yankuang Group for 2019.

④ Continuing connected/related transaction of entrusted management of the subordinates of Yankuang Group

As considered and approved at the twentieth meeting of the seventh session of the Board held on 5 December 2018, the Company entered into the Entrusted Management Agreement with Yankuang Group, which defines the annual caps for a period from 2019 to 2020. The price was mainly determined based on the actual cost plus reasonable profit.

Pursuant to the Entrusted Management Agreement, the Group will provide professional management to 8 subordinates of Yankuang Group. Yankuang Group will pay entrusted management fee of RMB7.3 million to Yanzhou Coal within one month since the audited annual reports of the above 8 companies were issued.

As at the end of reporting period, Yankuang Group has not paid the entrusted management fee to the Group yet.

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The following table sets out the details of the annual transaction caps and actual transaction amounts for 2019 for the above continuing connected/related transactions.

			Annual Transaction	Annual Transaction
			Cap for the Year 2019	Amount for the Year
No.	Type of connected/related transaction	Agreement	(RMB’000)	2019 (RMB’000)
1	Material and facilities provided by Yankuang Group	Provision of Materials	300,000	275,204
		Supply Agreement
2	Labor and services provided by Yankuang Group	Mutual Provision of Labor	2,830,700	2,056,956
	Labor and services provided to Yankuang Group	and Services Agreement	179,100	96,759
3	Insurance fund management and payment services	Provision of Insurance Fund	1,517,340	961,616
	provided by Yankuang Group (free of charge) for the	Administrative Services
	Group’s staff	Agreement
4	Sale of products, material and equipment lease provided	Provision of Products,	4,495,800	2,116,603
	to Yankuang Group	Material and Equipment
		Leasing Agreement
	Procurement of bulk commodities from Yankuang Group	Bulk Commodities Sales	4,700,000	561,565
5
	Sale of bulk commodities to Yankuang Group	and Purchase Agreement	3,841,000	1,615,332
	Deposit		10,700,000	10,129,683
	Financial services to	Financial Services
6	Yankuang Group Comprehensive Credit	Agreement	8,000,000	6,894,000
	Financial service fee		4,000	852
7	Commissioned management service of chemical projects	Chemical Projects Entrusted	5,500	2,713
	by Yankuang Group	Management Agreement
	Marketing and sales agent service by Yankuang Group		19,500	3,077
8	Provision of entrusted management services to the	Entrusted Management	7,300	Note
	controlling shareholder	Special Agreement

Note: As at the date of disclosure of this report, YanKuang Group paid entrusted management fee of RMB7.30 million for the year 2019 at full to Yanzhou Coal in accordance with the Entrusted Management Special Agreement.

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(2) Approval and execution of continuing connected/related transactions with Century Ruifeng during the reporting period

At the 2018 first extraordinary general meeting of the Company held on 26 January 2018, the Bulk Commodities Mutual Supply Agreement between the Company and Century Ruifeng (a substantial shareholder of the Company’s subsidiary and a connected person of the Company), together with the annual caps for such transactions for a period from 2018 to 2020 were approved. The transaction price is determined on basis of the market price. The charge for transaction can be settled in one lump sum or by installments. The continuing connected/related transaction payable to another party or that of receivable from another party due in the current month shall be recognized on the last business day of each corresponding calendar month. The continuing connected/related transactions made in each calendar month shall be settled in the following month, except for incomplete transactions or where the transaction amounts are in dispute.

The 2019 annual cap for sales of commodities by the Group to Century Ruifeng was RMB2.195 billion and that by Century Ruifeng to the Group was RMB1.1 billion.

The Group didn't sell any commodities to Century Ruifeng in 2019. The aggregate amount of commodity sold by Century Ruifeng to the Group was RMB21,200 in 2019.

(3) Approval and execution of continuing connected/related transactions with Glencore during the reporting period

① Continuing connected/related transaction of coal sales

At the fifteenth meeting of the seventh session of the Board of the Company held on 29 June 2018, Glencore Coal Sales Framework Agreement (the “Agreement”) between Yancoal Australia and Glencore (a substantial shareholder of the Company’s certain subsidiary and a connected person of the Company), together with the annual caps for such transaction for a period from 2018 to 2020 were approved. The transaction price determined on basis of the market price, together with adjustment according to related industry benchmarks and indexes. The payment time for transaction shall be determined by both parties in accordance with international practices and applicable laws and regulations in this agreement and be specified in details in the specific coal sales agreement.

The 2019 annual cap for coal sales of the Group to Glencore and its subsidiaries was USD350 million. In 2019, the Group has sold coal amounting approximately USD68 million to Glencore and its subsidiaries.

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② Continuing connected/related transaction of coal purchase

At the 2018 second extraordinary general meeting of the Company held on 24 August 2018, the HVO Sales Contract between Yancoal Australia and Glencore, together with the estimated maximum annual transaction amounts for such transaction from 2018 to 2020 had been approved. It was stipulated in HVO Sales Contract that HVO Coal Sales Pty Ltd, a subsidiary of Yancoal Australia, shall pay the corresponding transaction amount to Yancoal Australia and Glencore respectively according to the total amount and corresponding product quota collected in each sales agreement with the client and HVO Coal Sales Pty Ltd shall pay the transaction amount to Yancoal Australia and Glencore no later than 3 business days after receiving payment from clients.

The 2019 annual transaction amount for coal purchase (on equity basis) of the Group from Glencore under HVO Sales Contract was USD750 million. In 2019, the connected transaction amount between the Group and Glencore was approximately USD621 million.

At the 2018 second extraordinary general meeting of the Company held on 24 August 2018, the Glencore Coal Purchase Agreement between Yancoal Australia and Glencore, together with the annual caps for such transaction for the years of 2018 to 2020 were approved. The final transaction price adopted under the Coal Purchase Framework Agreement for the purchase of coal will be finally determined on the basis of fair negotiation, in accordance with normal commercial terms and with reference to the market price of relevant type of coal at the time. The payment time for transaction shall be determined by both parties in accordance with international practices and applicable laws and regulations in this agreement and be specified in details in the specific coal sales agreement.

The 2019 annual cap for coal purchase of the Group from Glencore and its subsidiaries under the Glencore Coal Purchase Agreement was USD350 million. In 2019, the connected transaction amount between the Group and Glencore was approximately USD72 million.

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③ Continuing connected/related transaction of coal sales service

At the 2018 second extraordinary general meeting of the Company held on 24 August 2018, the HVO Services Agreement between Yancoal Australia and Glencore, together with the estimated maximum annual transaction amounts for such transaction for the years of 2018 to 2020 were approved. According to this agreement, HV Operations Pty Ltd.(the “HV Operations”), a controlled subsidiary of Yancoal Australia, shall pay the follows to Glencore: (i) all costs, charges and expenses incurred in providing services to HVO Joint Venture or HVO Coal Sales Pty Ltd; (ii) all off-site costs, charges and expenses (“general expenses”) incurred by Glencore in providing services. The determination of general expenses is based on the principle of fairness and reasonableness and with reference to all costs, charges and expenses incurred by Glencore in providing similar services without particular sites. Both parties agreed that Glencore provide monthly invoice to HV Operations and HV Operations shall finish the payment within 5 business days after receiving such invoice.

The 2019 maximum annual transaction amount for service purchase of the Group from Glencore was USD18 million. In 2019, this connected/related transaction involved approximately USD11.27 million.

④ Continuing connected/related transactions in relation to diesel fuel supply

At the twenty-eighth meeting of the seventh session of the Board held on 25 October 2019, the Diesel Fuel Supply Agreement between HV Operations and Glencore Australia Oil Pty Ltd (the “GAO”), a subsidiary of Glencore plc, as well as the annual caps for such transaction for the years from 2019 to 2021 were approved. The Diesel Fuel Supply Agreement stipulates that: (i) HV Operations shall generate a purchase order before the delivery month; (ii)GAO shall deliver the amount of fuel before the date specified in the purchase order, and HV Operations shall pay after the fuel is delivered; and (iii) the payment is calculated based on the amount delivered and the price determined after the bidding process.

The 2019 annual cap for diesel fuel purchase of HV Operations from GAO was AUD30 million. In 2019, the connected transaction amount was approximately AUD22 million.

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(4) Approval and execution of continuing connected/related transactions with Sojitz during the reporting period

At the 2018 second extraordinary general meeting of the Company held on 24 August 2018, it was reviewed and approved that: ① Yancoal Australia – Sojitz Coal Sales Agreement between Yancoal Australia and Sojitz (Sojitz is a substantial shareholder of the Company’s subsidiary and a connected person of the Company), together with the annual caps for such transaction for the years of 2018 to 2020. ② Syntech – Sojitz Coal Sales Agreement between Syntech Holding Pty Ltd (“Syntech”), a wholly-owned subsidiary of the Company, and Sojitz, together with the annual caps for such transaction for the years of 2019 to 2020. The final transaction prices for the above two agreements will be finally determined on the basis of fair negotiation, in accordance with normal commercial terms and with reference to the market price of relevant type of coal at the time. The payment time for transaction shall be determined by both parties in accordance with international practices and applicable laws and regulations in this agreement and be specified in details in the specific coal sales agreement.

The annual cap for the above-mentioned two transactions was USD100 million and USD150 million, respectively, totaling USD250 million. In 2019, the Group has sold coal to Sojitz and its subsidiaries amounting approximately USD126 million.

(5) Opinion of the Independent Non-executive Directors

The above non-exempt continuing connected/related transactions and relevant internal control procedures have been reviewed by Finance Management Department and Auditing and Risk Management Department of the Company and the review result has been submitted to independent non-executive Directors of the Company. The Company also provided main materials to the independent non-executive Directors for examination.

The Company’s independent non-executive Directors have reviewed the Group’s continuing connected/related transactions with the Controlling Shareholder for the year 2019 and confirm that: ① all such connected transactions have been: (i) entered into by the Group in its ordinary and usual course of business; (ii) conducted either on normal commercial terms, or where there are not sufficient comparable transactions to determine whether they are on normal commercial terms, on terms no less favorable to the Group than terms available to or from independent third parties; and (iii) entered into in accordance with the relevant governing agreement on terms that are fair and reasonable and in the interests of the Shareholders as a whole; ② the amount of the related transactions stated under the section headed “Connected/Related Transactions Performance in relation to Daily Operation” above did not exceed the annual transaction caps approved by independent Shareholders and the Board.

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Chapter 06 Significant Events

(6) Opinion of the Auditors

Pursuant to the Hong Kong Listing Rules, the Directors have engaged the auditors of the Company to perform certain procedures required by the Hong Kong Listing Rules in respect of the continuing connected transactions of the Group. The auditors have reported to the Directors that the above continuing connected transactions: ① have received approvals of the Board; ② are in accordance with the pricing policies of the Company; ③ have been carried out in accordance with the relevant provisions of the agreements governing the transactions; and ④ have not exceeded the relevant annual caps.

3. Undisclosed events in extraordinary announcements

Not applicable.

(II) Connected/Related Transactions in relation to Assets or Equity Acquisition and Sale Matters disclosed in extraordinary announcements and with no subsequent progress or change

1. Matters disclosed in extraordinary announcements and with no subsequent progress or change

Summary of Matters Query Index

Connected/related transaction of disposal of 100% equity interests of non-coal trading companies

As considered and reviewed at the thirty-second meeting of the seventh session of the Board dated 27 March 2020, an equity purchase agreement was entered into between Yancoal International and Yankuang Aluminum (Hong Kong) Company (“Aluminum Hong Kong Company”), a wholly-owned subsidiary of Yankuang Group. Yancoal International sold the 100% equity interests of Yancoal International Trade Co., Ltd and Yancoal International (Singapore) Co., Ltd fully held by Yancoal International at a transaction price of RMB150.6712 million.

For details, please refer to the announcement in relation to resolutions passed at the thirtysecond meeting of the seventh session of the Board and the announcement in relation to the connected/related share transaction dated 27 March 2020, which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/ or China Securities Journal and Shanghai Securities News and Securities Times.

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2. Matters disclosed in extraordinary announcements but with subsequent progress or change

(1) Connected/Related Transaction in Relation to Acquiring 100% Equity Interests of Shanghai Dongjiang Real Estate Development Co., Ltd.

As considered and reviewed at the twenty-fourth meeting of the seventh session of the Board dated 29 March 2019, a share transfer agreement was entered into between Zhongyin Financial Leasing and Shanghai Zhouhai Real Estate Development Co., Ltd. (“Zhouhai Company”), a wholly-owned subsidiary of Yankuang Group. Shanghai Dongjiang Real Estate Development Co., Ltd., a whollyowned subsidiary of Zhouhai Company, was agreed to be transferred to Zhongyin Financial Leasing for its 100% shares at a transaction price of RMB185.3709 million.

As of the date of this report, Zhongyin Financial Leasing and Zhouhai Company have completed the equity interest transfer and registration changing procedures in relation to Shanghai Dongjiang Real Estate Development Co., Ltd.

For details, please refer to the announcement in relation to resolutions passed at the twenty-fourth meeting of the seventh session of the Board and the announcement in relation to the connected/ related transaction on acquisition of shares of Shanghai Dongjiang Real Estate Development Co., Ltd. dated 29 March 2019, which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal and Shanghai Securities News and Securities Times.

(2) Connected/Related Transaction in Relation to Acquiring 100% Equity Interests of Qingdao Dongfang Shenglong Industrial Co., Ltd.

As considered and reviewed at the twenty-ninth meeting of the seventh session of the Board dated 4 December 2019, a share transfer agreement was entered into between Qingdao Duanxin Assets Management Co., Ltd., a wholly-owned subsidiary of the Company, and Yankuang Group. 100% equity interests of Qingdao Dongfang Shenglong Industrial Co., Ltd., a wholly-owned subsidiary of Yankuang Group, was agreed to be transferred to Qingdao Duanxin Assets Management Co., Ltd. at a transaction price of RMB53.3977 million.

As of the date of this report, Qingdao Duanxin Assets Management Co., Ltd. and Yankuang Group have completed the equity interest transfer and registration changing procedures in relation to Qingdao Dongfang Shenglong Industrial Co., Ltd.

For details, please refer to the announcement in relation to resolutions passed at the twenty-ninth meeting of the seventh session of the Board and the announcement in relation to the connected/ related transaction on acquisition of shares of Qingdao Dongfang Shenglong Industrial Co., Ltd. dated 4 December 2019, which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal and Shanghai Securities News and Securities Times.

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Chapter 06 Significant Events

(3) Connected/Related Transaction in Relation to Acquiring 10% Equity Interests of Moolarben Coal Joint Venture

As considered and reviewed at the thirty-second meeting of the seventh session of the Board dated 27 March 2020, the Joint Venture Interest Sale Deed was entered into between Yancoal Australia and its wholly-owned subsidiary, Yancoal Moolarben Pty Ltd (“Yancoal Moolarben”) with Sojitz Moolarben Resources Pty Ltd (“Sojitz”), a wholly-owned subsidiary of Sojitz Corporation. Yancoal Moolarben purchased 10% equity interests of Moolarben Coal Joint Venture held by Sojitz at a consideration of AUD300 million.

As of the date of this report, Yancoal Moolarben and Sojitz have completed the 10% equity interest transfer in relation to Moolarben Coal Joint Venture.

For details, please refer to the announcements dated 27 March 2020 in relation to resolutions passed at the thirty-second meeting of the seventh session of the Board and the connected/related transaction in relation to acquisition of equity interests, and the updating announcement dated 31 March 2020 in relation to acquisition of equity interest, which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal and Shanghai Securities News and Securities Times.

3. Matters not disclosed in extraordinary announcement

Not applicable.

4. Disclosure of the performance of the results relating to results agreement during the reporting period

Not applicable.

(III) Significant Connected/related Transactions of Cooperative External Investment

1. Events disclosed in extraordinary announcements and with no subsequent progress or change

Not applicable.

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2. Events disclosed in extraordinary announcements with subsequent progress or changes during implementation

(1) Connected/Related Transaction in Relation to Capital Increase in Yankuang Finance Company

As discussed and approved at the twenty-seventh meeting of the seventh session of the Board held on 30 August 2019, the capital increase agreement was entered into by the Company, Yankuang Group and Yankuang Finance Company, pursuant to which the Company and Yankuang Group increased the capital contribution of RMB1.5 billion to Yankuang Finance Company according to their respective shareholding interest, of which, the Company contributing RMB1.425 billion and Yankuang Group contributing RMB75 million (the “capital increase”).

As of the date of this report, fund payment and registration changing procedures in relation to the capital increase have been completed.

For details, please refer to the announcements dated 30 August 2019 in relation to resolutions passed at the twenty-seventh meeting of the seventh session of the Board and the inside information announcement and connected/related transaction announcement in relation to the increase of registered capital of Yankuang Finance Company which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal and Shanghai Securities News and Securities Times.

(2) Connected/Related Transaction in Relation to Capital Increase in Shanghai Zhongqi Futures Company Limited (“Shanghai Zhongqi”)

As reviewed and approved at the twenty-ninth meeting of the seventh session of the Board held on 4 December 2019, Yankuang Group and Shanghai Zhongqi entered into the capital increase agreement with the Company, pursuant to which the Company and Yankuang Group increased their capital contribution to Shanghai Zhongqi according to their respective shareholding ratio (the “capital increase”).

The capital increase was priced at the latest audited net assets per share of Shanghai Zhongqi, being RMB1.62 per share. The Company and Yankuang Group paid a transaction consideration of RMB324 million (of which RMB200 million was used as the registered capital increase of Shanghai Zhongqi) and RMB648 million (of which RMB400 million was used as the registered capital increase of Shanghai Zhongqi) respectively.

As of the date of this report, fund payment and registration changing procedures in relation to the capital increase have been completed.

For details, please refer to the announcements dated 4 December 2019 in relation to resolutions passed at the twenty-ninth meeting of the seventh session of the Board and the connected/related transaction announcement in relation to the increase of registered capital of Shanghai Zhongqi, which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal and Shanghai Securities News and Securities Times.

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Chapter 06 Significant Events

3. Events not disclosed in extraordinary announcements

Not applicable.

(IV) Credit and Debt Obligation among Connected Parties

1. Events disclosed in extraordinary announcements and with no subsequent progress or change

Not applicable.

2. Events disclosed in extraordinary announcements with subsequent progress or changes during implementation

Not applicable.

3. Events not disclosed in extraordinary announcements

Unit: RMB100 million

		Fund provided to connected parties	Fund provided to connected parties	Fund provided to connected parties	Fund provided to the Company	Fund provided to the Company	Fund provided to the Company
		Balance			Balance
		at the	Amount	Closing	at the	Amount	Closing
Connected parties	Relationship	beginning	occurred	balance	beginning	occurred	balance
Yankuang Group	Controlling	72.23	111.32	78.12	123.26	94.17	116.49
	Shareholder
Century Ruifeng	Other related	0	0	0	0.14	6.80	0.83
	party
Glencore and its	Other related	0	4.77	0	0	50.04	0
subsidiaries	party
Sojitz and its	Other related	0.39	8.83	0	0	0	0
subsidiaries	party
	Total	72.62	124.92	78.12	123.40	151.37	117.32

Reasons for credit and debt obligation Mutual sale of goods and provision of services among connected parties Impact on the operating result and No significant impact financial conditions of the Company by credit and debt obligation

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Significant Events Chapter 06

(V) Others

Pursuant to the Hong Kong Listing Rules, the Group’s connected/related transactions set out in Note “Related Company Balances and Transactions” to the consolidated financial statements prepared in accordance with the IFRS constitute continuing connected/related transactions in Chapter 14A of the Hong Kong Listing Rules, and the Company confirmed that such transactions have complied with the relevant disclosure requirements under the Hong Kong Listing Rules.

Other than the material connected/related transactions disclosed in this section, the Group was not a party to any material connected transaction which is required to be disclosed in pursuance to the Hong Kong Listing Rules during the reporting period.

XV. MATERIAL CONTRACTS AND PERFORMANCE

(I) Trust, Contract or Lease

1. Trust

Not applicable.

2. Contract

Not applicable.

3. Lease

Not applicable.

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Chapter 06 Significant Events

(II) Guarantees

	Unit: RMB100 million
External guarantee of the Company (excluding guarantees to the
subsidiaries)
Total amount of guarantee during the reporting period	0
(excluding guarantees to the subsidiaries)
Total guarantee balance by the end of the reporting period (A)	0
(excluding guarantees to the subsidiaries)
Guarantees to subsidiaries by the Company and its subsidiaries
Total amount of guarantee to subsidiaries during the reporting	100.88
period
Total balance of guarantee to subsidiaries by the end of the	312.98
reporting period (B)
Total guarantees (including guarantees to subsidiaries)
Total amount of guarantees (A+B)	312.98
Percentage of total amount of guarantee in the net assets of the	49.45
Company (%)
Of which:
Amount of guarantees to Shareholders, actual controllers and	0
related parties (C)
Amount of guarantees directly or indirectly to guaranteed	62.05
parties with a debt-to-assets ratio exceeding 70% (D)
Total amount of guarantee exceeding 50% of net assets (E)	0
Total amount of the above 3 categories guarantees (C+D+E)	62.05
Explanation on unexpired guarantee that may be subject to	–
joint and several liability

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Significant Events Chapter 06

Guarantee explanations

1. The external guarantee occurred during the previous period and extended to the reporting period.

As approved at the 2011 annual general meeting, Yancoal Australia took a bank loan of USD3.04 billion for acquisition of equity interests in Felix. As at 31 December 2019, the balance of the above bank loan was USD1.394 billion. The Company provided the guarantees of USD920 million and RMB3.31 billion to Yancoal Australia.

As approved at the 2012 second extraordinary general meeting, the Company provided guarantees to Yancoal International Resources, for issuing USD1.0 billion corporate bonds in the overseas market. As at 31 December 2019, the balance of the above guarantee was USD104 million.

As approved at the 2016 annual general meeting, the Company provided guarantees to Yancoal International Resources, for issuing USD500 million corporate bonds. As at 31 December 2019, the balance of the above guarantee was USD500 million.

As considered and approved at the 2016 annual general meeting, the Company provided guarantee in the amount of RMB600 million to its holding subsidiary, Qingdao Vast Lucky. As at 31 December 2019, the balance of the above guarantee was RMB600 million.

As approved at the 2016 annual general meeting, the Company provided guarantee of RMB1.67 billion to Zhongyin Financial Leasing. As at 31 December 2019, the balance of the above guarantee was RMB1.67 billion.

As reviewed and approved at the 2017 annual general meeting, the Company provided guarantees to Yancoal International Resources, for issuing USD335 million corporate bonds. As at 31 December 2019, the balance of the above guarantee was USD335 million.

As of 31 December 2019, Yancoal Australia and its subsidiaries produced performance deposits and performance guarantees in a total of AUD921 million due to operational necessity.

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2. Guarantees arising during the reporting period

As reviewed and approved at the 2017 annual general meeting of the Company, the Company has provided guarantees to Yancoal International (Singapore) Pte. Ltd., a wholly-owned subsidiary of the Company, Qingdao Vast Lucky, Zhongyin Financial Leasing, Qingdao Zhongyan Trade Co., Ltd. (“Qingdao Zhongyan”), a wholly-owned subsidiary of the Company, Duanxin Supply Chain Management (Shenzhen) Co., Ltd. (“Duanxin Supply Chain”), a wholly-owned subsidiary of the Company, and Duanxin Commercial Factoring (Shenzhen) Co., Ltd., a wholly-owned subsidiary of the Company, of USD30 million, RMB600 million, RMB1.438 billion, RMB1 billion, RMB30 million and RMB50 million respectively during the reporting period.

As reviewed and approved at the 2018 annual general meeting of the Company, the Company has provided guarantees to Yancoal International Trading Co., Ltd, Qingdao Vast Lucky, Qingdao Zhongyan and Shandong Zhongyin International Trade Co., Ltd. of USD50 million, RMB2.07 billion, RMB1.905 billion and RMB600 million during the reporting period.

As approved at the 2018 annual general meeting of the Company, Yancoal Australia and its subsidiaries provided a guarantee in an amount not exceeding AUD1.2 billion per year to its subsidiaries for their daily operation. During the reporting period, Yancoal Australia and its subsidiaries produced performance deposits and performance guarantees totaled AUD376 million due to operational necessity.

Note: The table above was prepared in accordance with the CASs and calculated at USD/RMB exchange rate of 6.9762 and AUD/RMB exchange rate of 4.8843.

Save as disclosed above, there were no other guarantee contracts or outstanding guarantee contracts of the Company during the reporting period; there were no other external guarantees during the reporting period.

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(III) Entrusted Cash and Assets Management

1. Entrusted wealth management

(1) General information on entrusted wealth management

Not applicable.

Other information

Not applicable.

(2) Specific entrusted wealth management

Not applicable.

Other information

Not applicable.

(3) Provisions for impairment of loss for entrusted wealth management

Not applicable.

2. Entrusted Loan

(1) General information on entrusted loan

Not applicable.

Other information

Not applicable.

(2) Specific entrusted loan

Not applicable.

Other information

Not applicable.

(3) Entrusted loan impairment provision

Not applicable.

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3. Other information

Not applicable.

(IV) Other Significant Contract

Not applicable.

(V) Repurchase, Sale or Redemption of Securities

During the reporting period, the Company or its subsidiaries have made no repurchase, sale or redemption of the listed securities of the Company.

XVI. EXPLANATION ON OTHER SIGNIFICANT EVENTS

(I) Termination of Non-public Issuance of A Shares

As considered and approved at the second extraordinary general meeting of 2017, the third class meeting of the holders of A Shares and the third class meeting of the holders of H Shares of 2017 held on 25 August 2017, the Company was authorized to implement non-public issuance of A Shares in an amount not exceeding 647 million shares (inclusive) to specific investors, with proceeds to be raised not exceeding RMB7 billion (inclusive) (the “Non-Public Issuance of A Shares”), and the net proceeds after deduction of financing expenses will be used for the purchase of 100% equity of C&A.

According to the regulatory requirements of regulatory authorities, taking into account of the trend of exchange rate of USD and market expectation, the twelfth meeting of the seventh session of the Board of the Company held on 24 April 2018 considered and approved that the proceeds to be raised was changed to be an amount not exceeding RMB6.35 billion.

The validity period of the resolution relating to the Non-Public Issuance of A Shares and the validity period of the authorization are both twelve months from the passing of the relevant resolutions at the aforesaid general meetings (i.e., the validity period would expire on 24 August 2018). As approved at the second extraordinary general meeting of 2018 of the Company, the second class meeting of the holders of A Shares and the second class meeting of the holders of H Shares of 2018 on 24 August 2018, it was considered and approved to extend the validity of the resolution of the Non-Public Issuance of A Shares to 24 August 2019. As approved at the second extraordinary general meeting of 2018 of the Company on 24 August 2018, the validity of the authorization to the Board to deal with matters relating to the Non-Public Issuance of A Shares was extended to 24 August 2019.

In view of the changes in the capital market conditions, financing opportunities and other factors, and in order to protect the interests of the investors, after communication with multiple parties and in consideration of various internal and external factors, and as considered and approved at the twenty-sixth meeting of the seventh session of the Board dated 16 August 2019, the Company was approved to terminate the Non-Public Issuance of A Shares and withdraw the application documents.

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For details, please refer to the announcements dated 31 March 2017, 28 April 2017, 29 June 2017, 25 August 2017 and 15 December 2017 in relation to the non-public issuance of A Shares, respectively, the announcement in relation to “Notice of Acceptance of the Application for Administration Permission” issued by the CSRC dated 27 December 2017, the announcement in relation to “Receipt of CSRC Notice of the First Feedback on the Review of Administrative Item” dated 9 February 2018 and relevant announcements dated 24 April 2018, 29 June 2018, 24 August 2018, 16 August 2019 and 18 September 2019, which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(II) Capital and Shares Increase of Haosheng Company

As considered and approved at the eighteenth meeting of the seventh session of the Board of the Company held on 7 September 2018, it was approved that the Company, Haosheng Company and Xibu New Times Energy Investment Co., Ltd. (“Xibu Company”) would enter into the capital increase agreement of Haosheng Coal Mining Company Limited, pursuant to which Xibu Company would increase the capital of Haosheng Company by RMB2,742,460,000 (including RMB676.90 million in cash and coal resources of 400 million tons in Shilawusu minefield at a consideration of RMB2.06556 billion). After the capital increase, Xibu Company held 23.61% equity interests in Haosheng Company (the “capital increase”).

After the capital increase, the equity interests of the Company in Haosheng Company decreased from 77.74% to 59.38%, which was deemed as disposal of 18.36% equity interests of Haosheng Company and acquisition of 400 million tons of coal resources in Shilawusu minefield under Hong Kong Listing Rules.

As at the end of this reporting period, the relevant equity transfer and registration changing procedures have been completed.

For details, please refer to the announcement in relation to the resolutions passed at the eighteenth meeting of the seventh session of the Board dated 7 September 2018 and the announcement in relation to capital increase of a controlled subsidiary/deemed disposal of 18.36% equity interests of Haosheng Company and acquisition of 400 million tons of coal resources in Shilawusu minefield dated 4 November 2019, which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(III) Sale of shares the Company held in Dongguan Haichang Industry Co., Ltd. (“Haichang Company”)

As considered and approved at the general manager work meeting of the Company held on 7 January 2019 and in accordance with relevant provisions specified in the Capital Increase Agreement, Supplementary Agreement and Shares Repurchase Agreement between the Company and Dongguan Guantai Industry Co., Ltd. (“Guantai Industry”), the Company sold 20.89% of equity interests in Haichang Company held by the Company at a consideration of RMB784 million to Guantai Industry. As at the disclosure date of this report, the Company has received payment of RMB734 million. The Company will start the registration changing procedures upon receipt of the remaining transaction payment.

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(IV) Election of Director of the Company

As considered and approved at the twenty-fourth meeting of the seventh session of the Board held on 29 March 2019, Mr. Liu Jian was nominated as a candidate for non-independent Director of the seventh session of the Board, and this proposal was presented to the 2018 annual general meeting of the Company for consideration.

As considered and approved at the 2018 annual general meeting of the Company held on 24 May 2019, Mr. Liu Jian was elected as a non-independent Director of the seventh session of the Board from the conclusion of the 2018 annual general meeting till the conclusion of the general meeting where the Directors of the eighth session of the Board are elected. Since 24 May 2019, Mr. Wu Yuxiang no longer served as a Director.

For details, please refer to the announcement in relation to the resolutions passed at the twenty-fourth meeting of the seventh session of the Board, and the announcement in relation to the proposed change of the Director dated 29 March 2019, and the announcement in relation to the resolutions passed at the 2018 annual general meeting dated 24 May 2019, which were published on the websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the Company and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(V) Sale of 4.5% Shares the Company held in Zoucheng Zhongyin Fudeng Rural Bank

As reviewed and approved at the general manager work meeting held on 15 April 2019, the Company adopted a public listing method to sell 4.5% of the equity interests the Company held in Zoucheng Zhongyin Fudeng Rural Bank. As at the disclosure date of this report, the sale procedure is suspended as the shares have not been delisted yet.

(VI) Purchase of 5% Shares of Yankuang Finance Company held by China Credit Trust Co., Ltd.

As reviewed and approved at the general manager office meeting held on 22 April 2019, the Company delisted and purchased 5% equity shares of Yankuang Finance Company held by China Credit Trust Co., Ltd. at the Beijing Property Rights Exchange Center at a price not higher than the evaluation value.

As at the end of this report, the procedures for equity transfer and registration changing have been completed.

(VII) Adjustments in the Company’s Department and Organization

As considered and approved at the twenty-fifth meeting of the seventh session of the Board held on 26 April 2019, the Company set up the Coal Burst Prevention and Control Research Center, which is mainly responsible for organizing anti-burst technology research, anti-burst equipment research and development, evaluation, anti-burst system and technical standard formulation, monitoring operation, mine diagnosis, technology promotion and transformation, talent training and technical exchange to guide the coal mines in coal burst prevention.

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As considered and approved at the twenty-sixth meeting of the seventh session of the Board held on 16 August 2019, the Company canceled the Coal Burst Prevention and Control Research Center and established the Coal Burst Prevention Office which is mainly in charge of prevention management and daily monitoring of coal burst, and performance of professional management and assessment responsibilities. The Company established the Ecological Restoration Comprehensive Management Office, which is mainly responsible for the construction of the ecological restoration comprehensive treatment demonstration parks, the promotion of the “Green Heart” Project in the urban areas and the construction of ecological management projects. The Company established and managed the Subsidence Remediation Development Fund, and carried out all-round strategic cooperation with relevant parties to realize the coordinated development of coal resource development and ecological civilization construction in mining areas.

For details, please refer to the announcement in relation to the resolutions passed at the twenty-fifth meeting of the seventh session of the Board dated 26 April 2019 and the announcement in relation to the resolutions passed at the twenty-sixth meeting of the seventh session of the Board dated 16 August 2019, which were published on the websites of the Shanghai Stock Exchange, the Hong Kong Stock Exchange and the Company and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(VIII) Establishment of Blue Gold Shipping Industry Investment Fund (“Blue Gold Fund”)

As considered and approved at the general manager work meeting held on 15 July 2019, the Company jointly established the Blue Gold Fund with Shandong Shipping Asset Management Co., Ltd. (“Shandong Shipping Asset Management”) through Yancoal International. The Blue Gold Fund operates in a partnership-based business model with a total size of USD60 million. Yancoal International has invested USD50 million as a limited partner with priority, and Shandong Shipping Asset Management has invested USD10 million as a limited partner with inferiority. At present, the matter is going through the state-owned assets supervision procedures.

(IX) Increase of Registered Capital in Ordos Neng Hua and Ordos Yingpanhao Company Limited (“Yingpanhao Company”)

As considered and approved at the twenty-seventh meeting of the seventh session of the Board dated 30 August 2019, the Company increased its capital contribution to the registered capital of Ordos Neng Hua in cash in an amount of RMB2.7 billion, and Ordos Neng Hua increased its capital contribution to the registered capital of Yingpanhao Company in cash in an amount of RMB2.7 billion (the “capital increase”). After the completion of the capital increase, the registered capital of Ordos Neng Hua increased from RMB8.1 billion to RMB10.8 billion, and the registered capital of Yingpanhao Company increased from RMB300 million to RMB3 billion.

For details, please refer to the announcement in relation to the resolutions passed at the twenty-seventh meeting of the seventh session of the Board dated 30 August 2019 and the announcement in relation to “Registered Capital Increase in Ordos Neng Hua and Yingpanhao Company”, which were published on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

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(X) Change of Representative of Securities Affairs of the Company

Upon the consideration and approval by the Board at the twenty-seventh meeting of the seventh session of the Board held on 30 August 2019, the Company appointed Ms. Shang Xiaoyu as the representative of securities affairs of the Company.

For details, please refer to the announcements dated on 30 August 2019 in relation to the resolutions passed at the twenty-seventh meeting of the seventh session of the Board and the change of representative of securities affairs of the Company, which were posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(XI) Establishment of Yankuang Intelligent Ecological Investment and Development Co., Ltd. (“Yankuang Ecological Investment Company”)

As considered and approved at the general manager work meeting held on 9 September 2019, the Company established Yankuang Ecological Investment Company.

As a wholly-owned subsidiary with registered capital of RMB80 million, Yankuang Ecological Investment Company is mainly engaged in ecological restoration, investment and management of industrial projects, landscape engineering design and construction, etc.

(XII) Establishment of Yankuang Dongping Land Port Co., Ltd. (“Dongping Land Port Company”) by Joint Venture

As considered and approved at the general manager work meeting held on 9 October 2019, the Company, Yancoal International, Hong Kong Taizhong Energy Co., Ltd. (“Hong Kong Taizhong”), Ruixing Group Co., Ltd. (“Ruixing Group”), Tai’an Dongyuan Assets Operations Co., Ltd. (“Dongyuan Assets”) and Tai’an Dongyuejincai Investment Co., Ltd. (“Dongyuejincai”) jointly established Dongping Land Port Company.

The registered capital of Dongping Land Port Company is RMB600 million, of which, the Company and Yancoal International contributing RMB60 million and RMB366 million, respectively, and holding 10% and 61%, respectively (totally holding 71% by the Company and Yancoal International); Hong Kong Taizhong, Ruixing Group, Dongyuan Assets and Dongyuejincai investing RMB60 million, RMB54 million, RMB30 million and RMB30 million, respectively, and holding 10%, 9%, 5% and 5%, respectively. Dongping Land Port Company is mainly engaged in port infrastructure construction, operation and management, road freight transportation, railway transportation, cargo unloading and loading services, etc.

(XIII) Sale of 50% shares of Shengdi Fenlei Coal Preparation Engineering Technology (Tianjin) Co., Ltd. (“Shengdi Fenlei”)

As considered and approved at the general manager work meeting of the Company held on 25 November 2019, the Company proposed to sell its 50% equity interests in Shengdi Fenlei through public listing. Currently, this case is going through the transfer procedures.

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(XIV) Appointment of Deputy General Manager of the Company

As considered and approved at the thirtieth meeting of the seventh session of the Board held on 30 December 2019, Mr. Li Wei was appointed as a deputy general manager of the Company whose terms of service would be consistent with other senior management appointed by the seventh session of the Board.

For details, please refer to the announcements passed at the thirtieth meeting of the seventh session of the Board dated 30 December 2019, which was posted on the websites of the Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(XV) Cancellation of Xinyinlian Co., Ltd.

As reviewed and approved at the general manager work meeting of the Company held on 19 January 2020, Xinyinlian Co., Ltd, a controlled-subsidiary of the Company, proposed to perform the liquidation procedure in accordance with local laws and Articles of Association in Singapore. Currently, this case is going through the stateowned assets supervision procedures.

(XVI) Changes of the Board of Directors and the Supervisory Committee

As considered at the thirty-second meeting of the seventh session of the Board held on 27 March 2020, Mr. Li Xiyong, Mr. Li Wei, Mr. Wu Xiangqian, Mr. Li Jian, Mr. Zhao Qingchun and Mr. He Jing were nominated as candidates of non-independent Directors of the eighth session of the Board; Mr. Tian Hui, Mr. Cai Chang, Mr. Poon Chiu Kwok and Mr. Zhu Limin were nominated as candidates of independent Directors of the eighth session of the Board.

As considered at the eighteenth meeting of the seventh session of the Board held on 27 March 2020, Mr. Gu Shisheng, Mr. Zhou Hong, Mr. Li Shipeng and Mr. Qin Yanbo were nominated as candidates of non-employee representative supervisors of the eighth session of the board of Supervisors.

The aforesaid changes of the Board of Directors and the board of Supervisors still need to be submitted to the 2019 annual general meeting of the Company for consideration and approval.

For details, please refer to the announcements dated 27 March 2020 in relation to the resolutions passed at the thirty-second meeting of the seventh session of the Board, the resolutions passed at the eighteenth session of the board of Supervisors, and the proposed change of Directors and Supervisors, which were posted on the websites of Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(XVII) Appointment of Chief Investment Officer of the Company

As considered and approved at the thirty-second meeting of the seventh session of the Board held on 27 March 2020, Mr. Zhang Lei was appointed as the chief investment officer of the Company, whose term is the same as that of other senior managements appointed by the seventh session of the Board.

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For details, please refer to the announcement dated 27 March 2020 in relation to the resolutions passed at the thirty-second meeting of the seventh session of the Board, which was posted on the websites of Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(XVIII) Appointment of General Manager of the Company

As considered and approved at the thirty-third meeting of the seventh session of the Board held on 22 April 2020, Mr. Liu Jian was appointed as the general manager of the Company, whose term is the same as that of other senior managements appointed by the seventh session of the Board. On the same day, Mr. Wu Xiangqian ceased to be the general manager of the Company.

For details, please refer to the announcements dated 22 April 2020 in relation to the resolutions passed at the thirty-third meeting of the seventh session of the Board and the change of the general manager, which was posted on the websites of Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

(IXX) Appointment of Deputy General Manager and Chief Engineer of the Company

As considered and approved at the thirty-third meeting of the seventh session of the Board held on 22 April 2020, Mr. Xiao Yaomeng, Mr. Zhang Chuanchang and Mr. Wang Peng were appointed as deputy general managers of the Company and Mr. Wang Chunyao was appointed as the chief engineer of the Company. The terms of the above personnel are the same as the terms of other senior managements appointed by the seventh session of the Board And on the same day, Mr. Zhao Honggang ceased to be the vice general manager of the Company, and Mr. Wang Fuqi ceased to be the deputy chief engineer of the Company.

For details, please refer to the announcement in relation to the resolutions passed at the thirty-third meeting of the seventh session of the Board dated 22 April 2020, which was posted on the websites of Shanghai Stock Exchange, the HKEX, the Company’s website and/or China Securities Journal, Shanghai Securities News and Securities Times in the PRC.

XVII. IMPLEMENTATION OF SOCIAL RESPONSIBILITIES IN AN ACTIVE MANNER

(I) Performance of Poverty Alleviation by the Company

Targeted poverty alleviation program

In accordance with the national targeted poverty alleviation plan and the actual conditions, the Company actively fulfilled its social responsibility. Through the formulation of various forms of poverty alleviation plans, such as goods and materials poverty alleviation, political poverty alleviation, industrial poverty alleviation, cultural poverty alleviation and education poverty alleviation, the Company has deepened the cooperation between local government and enterprises, pushed local development and propelled alleviate poverty.

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2. Summary of annual targeted poverty alleviation

In 2019, the Group actively carried out various targeted poverty alleviations, in the realization of steady development, the Group has actively performed responsibility for targeted poverty alleviation, and formed pairs with 22 poverty-stricken villages including 17 ones in Shandong Province and 5 ones outside, investing assistance fund totaling over RMB26 million. The Group has implemented “five-in-one” poverty alleviation scheme in terms of political, goods and materials, industrial, culture and education, deepened the cooperation between locals and enterprises, driven local development and helped to overcome poverty. In terms of political poverty alleviation, 3 persons were sent to serve as the chief secretaries of three villages of Huangdian town, Dingtao district, Heze city, to carry out the fourth round of assistance package work, implemented a series of projects such as “leading geese”, “nine-palace grids” and “double training” for party construction in the village, and guided the establishment of 26 units for party construction activities. In terms of goods and materials poverty alleviation, the Group assisted villages in hardening concrete roads, digging wells and constructing bridges, constructing sewers, installing road lamps and invested RMB6.25 million in helping villagers to handle river in Zagreb Isaac town, Ordos City. As a result, the infrastructure, water conservatory facilities and life conditions of the targeted villages have been significantly improved. The Company provided 138,000 tons of coal to Ejin Horo Banner of Ordos City and Yuncheng County of Heze City to ensure local residents keep warm in winter. Furthermore, the Company vigorously responded to the call of local governments, launched various kinds of public donations and social reliefs with total donation of RMB6.94 million, setting up a good brand image for the Company. In terms of industrial poverty alleviation, the Company actively trained leaders in property elimination to support villages in Shandong province, set up three village-level cooperatives including tomato, grape and flat peach, and implemented online sales for these fruits. Three poverty alleviation workshops including knitting projects, garment processing and cement prefabricated parts have been set up, and the largest rose flower production distribution center in north of the Yangtze river has been set up, helping local villages out of poverty. Ordos Neng Hua supported the Linguo economic project and food deep processing project of Ejin Horo Banner, and invested RMB1.95 million in poverty alleviation. In terms of cultural poverty alleviation, t he Company actively sought funds for provincial level sports facilities, awards and subsidies for cultural institutes, and built 4 cultural and sports squares. We organized 45 rounds of traditional operas performance and movies to the countryside, held regular cultural shows, and continued to deliver cultural feasts to villagers. I n terms of educational poverty alleviation, Ordos Neng Hua has actively participated in the local government’s “100 enterprises assisting 100 villages” campaign, donating RMB1 million and RMB3.75 million to Uxin banner senior high school and Eijin Horo banner for education, respectively, so as to improve the conditions of the enterprise’s resident school. At the same time, the Company insisted on carrying out targeted assistance and heart-warmth campaign among our employees, carrying out serious illness relief, family members without regular income relief and “golden autumn aid” activities in an extensive manner, assisting 307 employees with relief subsidy of RMB2.53 million. We visited 4,115 families with various kinds of workers in difficulties, paid consolation funds of RMB4.29 million, helped 241 eligible workers with difficulties implementing relevant policies for the benefit of the people, and assisted 200 children of workers for education.

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Achievement on targeted poverty alleviation

Unit: RMB10 thousand

Indicators	Indicators		Amount of Investment
			and Implementation
I.	Overview
Of	which: 1.Poverty alleviation fund		2,601
II.	Investment by items
	1. Poverty alleviation by industry
Of	which: 1.1	Number of poverty alleviation projects	4
	1.2	Amount of investment in poverty alleviation projects	480
	2. Poverty alleviation by education
Of	which: 2.1	Amount of investment in improving educational	1,000
		resources of the poverty-stricken areas
	3. Social poverty alleviation
Of	which: 3.1	Investment in specific place poverty alleviation	195
	3.2	Poverty alleviation charitable foundation	320
	4. Other projects
Of	which: 4.1	Number of poverty alleviation projects	5
	4.2	Amount of investment in poverty alleviation projects	606
	4.3	Explanations on other projects	Supply coal in poverty-stricken areas, help
			families of workers and staff in need, assist
			survivors without support, launch golden
			autumn assistance in education and console
			elderly Party members in need.

Subsequent targeted poverty alleviation plan

In 2020, the Company will continue taking targeted poverty alleviation as the way to fulfill social responsibility, enhance core competitiveness and build a good corporate image, continue to carry out deployment requirements on poverty alleviation by national and local governments, vigorously perform all kinds of responsibilities, build platform, invigorate living carrier, promote cooperation and seek win-win situation, to ensure that higher standards, stricter requirement and concrete measures are adopted to maintain targeted poverty alleviation and achieve concrete results.

(II) Performance of Social Responsibilities Works

The Group always takes the fulfillment of social responsibility as a crucial part of core competitiveness and persistently enhancing influence and contribution in sustainable development of economy, society and environment. During the reporting period, there is no major environmental or social security problem. For details in relation to safety, environment protection and other social responsibilities, please refer to the “2019 Social Responsibility Report” published on the websites of the Shanghai Stock Exchange, the HKEX and the Company.

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(III) Environmental Protection Information

1. Explanation on environmental protection practices of the Company and its subsidiaries in the List of Key pollutant Discharging entities released by the environmental protection authorities

(1) Pollutant discharging

During the reporting period, no significant environment pollution incidents occur within the Group, who has not received any punishment due to significant violation of environment protection laws from environmental protection regulators. The Group has strictly abided by the laws and regulations, including Environmental Protection Law of the People’s Republic of China, Prevention and Control of Atmospheric Pollution Law of the People’s Republic of China, Water Pollution Prevention and Control Law of the People’s Republic of China (second revision), the Environmental Impact Assessment Law of the People’s Republic of China, etc. The Group actively engages in pollution control to meet standards and criteria stipulated by relevant regulations, including Emission Standard of Air Pollutants for Thermal Power Plants (GB13223-2011), Emission Standard of Air Pollutants for Boiler (GB13271-2014), Emission Standard for Pollutants from Coal Industry (GB 20426-2006) and National Comprehensive Working Plan for Energy Conservation and Emission Reduction for the Thirteenth Five-Year Plan Period.

In 2019, the coal mines affiliated to the Group equipped with sound facilities for sewage process and dust control at coal stockyards, which operated in a stable manner, and the discharge of main pollutants, such as SO2, COD, ammonia nitrogen, nitrogen oxide (NOX), PM10 etc. meet all discharging standards. The power plants affiliated to the Group equipped with sound facilities for exhaust gas management, which operated in a stable manner, and the discharge of main pollutants, such as smoke dust, SO2, NOX, etc. meet all discharging standards. The chemical plants affiliated to the Group equipped with sound facilities for industrial sewage processing and boiler fuel gas management, which operated in a stable manner, and the discharge of main pollutants, such as COD, ammonia nitrogen, smoke dust, SO2, NOX, etc. meet all discharging standards. The Group has been improving its environmental protection management system, standardizing its management processes and working procedures for energy conservation and emission reduction, so as to prevent environmental pollution and ecological damage from the beginning and to strive to build itself into a resource-saving and environmental-friendly company.

All of the key pollutant discharging entities in the Group have been granted the pollutant discharging certificates, discharged pollutants accordingly and within the total permitted discharging volume, which met the relevant environmental protection requirements. Information of the subsidiaries in the list of key pollutant discharging entities released by the environmental protection authorities are as follows:

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						Annual pollutant
	Key pollutant					discharging	Actual discharging
No.	discharging entities	Types of pollutant	Main pollutants	Discharging method	Discharging standard	permission volume	volume in 2019
1	Nantun Coal Mine	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	24.1 tons of COD,	8.9 tons of COD and 0.1 tons
	(Key pollutant	wastewater	demand (COD),	water body after	for Coal Industry (GB20426-	0.7 tons of ammonia	of ammonia nitrogen
	discharging entity in		ammonia nitrogen	processing in sewage	2006), Shandong Provincial	nitrogen
	Shandong Province)			treatment station	Comprehensive Discharging
					Standard for Water Pollutant
					along South Water to North
					Infrastructures (DB37/3416.1-
					2008)
2	Baodian Coal Mine	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	103.81 tons of COD,	40.8 tons of COD and 1.0
	(Key pollutant	wastewater,	demand (COD),	water body after	for Coal Industry (GB20426-	5.4 tons of ammonia	tons of ammonia nitrogen
	discharging entity in	household	ammonia nitrogen	processing in sewage	2006), Shandong Provincial	nitrogen
	Shandong Province)	wastewater		treatment station	Comprehensive Discharging
					Standard for Water Pollutant
					along South Water to North
					Infrastructures (DB37/3416.1-
					2008)
3	Yangcun Coal Mine	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	33.2 tons of COD and	15.3 tons of COD and 0.8
	(Key pollutant	wastewater,	demand (COD),	water body after	for Coal Industry (GB20426-	1.7 tons of ammonia	tons of ammonia nitrogen
	discharging entity in	household	ammonia nitrogen	processing in sewage	2006), Shandong Provincial	nitrogen
	Shandong Province)	wastewater		treatment station	Comprehensive Discharging
					Standard for Water Pollutant
					along South Water to North
					Infrastructures (DB37/3416.1-
					2008)
4	Heze Neng Hua	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	95.4 tons of COD and	15.9 tons of COD and 0.4
	Zhaolou Coal Mine	wastewater,	demand (COD),	water body after	for Coal Industry (GB20426-	5.9 tons of ammonia	tons of ammonia nitrogen
	(Key pollutant	household	ammonia nitrogen	processing in sewage	2006), Shandong Provincial	nitrogen
	discharging entity in	wastewater		treatment station	Comprehensive Discharging
	Shandong Province)				Standard for Water Pollutant
					along South Water to North
					Infrastructures (DB37/3416.1-
					2008)

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						Annual pollutant
	Key pollutant					discharging	Actual discharging
No.	discharging entities	Types of pollutant	Main pollutants	Discharging method	Discharging standard	permission volume	volume in 2019
5	Xinglongzhuang Coal	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	109 tons of COD,	1.3 tons of COD and 0.1 tons
	Mine (Key industrial	wastewater,	demand (COD),	water body after	for Coal Industry (GB20426-	5.5 tons of ammonia	of ammonia nitrogen
	wastewater discharging	household	ammonia nitrogen	processing in sewage	2006), Shandong Provincial	nitrogen
	entity in Shandong	wastewater		treatment station	Comprehensive Discharging
	Province, National key				Standard for Water Pollutant
	pollutant discharging				along South Water to North
	entity of household				Infrastructures (DB37/599-
	wastewater)				2006), Pollutant Discharging
					Standard for Urban Sewage
					Water Treatment Plant
					(GB18918-2002)
6	Dongtan Coal Mine	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	9.8 tons of COD, 0.4	2.7 tons of COD and 0.1 tons
	(Key industrial	wastewater,	demand (COD),	water body after	for Coal Industry (GB20426-	tons of ammonia	of ammonia nitrogen
	wastewater discharging	household	ammonia nitrogen	processing in sewage	2006), Shandong Provincial	Nitrogen
	entity in Shandong	wastewater		treatment Station	Comprehensive Discharging
	Province, National key				Standard for Water Pollutant
	pollutant discharging				along South Water to North
	entity of household				Infrastructures (DB37/599-
	wastewater)				2006), Pollutant Discharging
					Standard for Urban Sewage
					Water Treatment Plant
					(GB18918-2002)
7	Jining II Coal Mine	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	32.4 tons of COD	14.7 tons of COD
	(Key pollutant	wastewater,	demand (COD)	water body after	for Coal Industry (GB20426-
	discharging entity in	household		processing in sewage	2006), Shandong Provincial
	Shandong Province)	wastewater		treatment station	Comprehensive Discharging
					Standard for Water Pollutant
					along South Water to North
					Infrastructures (DB37/599-
					2006), Pollutant Discharging
					Standard for Urban Sewage
					Water Treatment Plant
					(GB18918-2002)

Annual Report 2019 103

Chapter 06 Significant Events

						Annual pollutant
	Key pollutant					discharging	Actual discharging
No.	discharging entities	Types of pollutant	Main pollutants	Discharging method	Discharging standard	permission volume	volume in 2019
8	Jining III Coal Mine	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	40.5 tons of COD	21.8 tons of COD
	(Key pollutant	wastewater,	demand (COD)	water body after	for Coal Industry (GB20426-
	discharging entity in	household		processing in sewage	2006), Shandong Provincial
	Shandong Province)	wastewater		treatment station	Comprehensive Discharging
					Standard for Water Pollutant
					along South Water to North
					Infrastructures (DB37/599-
					2006), Pollutant Discharging
					Standard for Urban Sewage
					Water Treatment Plant
					(GB18918-2002)
9	Yanzhou Coal Mining	Industrial	Chemical oxygen	discharging to receiving	Pollutant Discharging Standard	12.5 tons of COD	4.1 tons of COD
	Engineering Company	wastewater,	demand (COD)	water body after	for Coal Industry (GB20426-
	Limited (Key pollutant	household		processing in sewage	2006), Shandong Provincial
	discharging entity in	wastewater		treatment station	Comprehensive Discharging
	Shandong Province)				Standard for Water Pollutant
					along South Water to North
					Infrastructures (DB37/599-
					2006), Pollutant Discharging
					Standard for Urban Sewage
					Water Treatment Plant
					(GB18918-2002)
10	Power Generation	boiler smoke and	PM (particulate	discharged to the air	Shandong Province Air	PM182.12 tons, SO2	31.2 tons of PM, 120 tons of
	Plant of Huaju Energy	gas	matter), SO2, NOx	after purification	Pollutants Discharge Standards	880.8 tons, NOx2,145	SO2, 1,012 tons of NOx
	(National key pollutant				for Coal-burned Power Plant	tons
	discharging entity)				(DB37/664-2013)
11	Tianchi Coal Mine of	boiler smoke and	SO2, NOx, COD	smoke and gas	Air Pollutants Discharge	SO246.8 tons, NOx46.8	1.2 tons of SO2, 2 tons of NOx
	Shanxi Neng Hua (Key	gas, industrial		discharged to the air	Standards for Boilers (GB13271-	tons, COD 25 tons	and 5.1 tons of COD
	pollutant discharging	waste water,		after purification, and	2014), Pollutant Discharging
	entity of Jinzhong	household		the waste water recycled	Standard for Coal Industry
	City)	wastewater		for reutilization after	(GB20426-2006)
				treatment in waste water
				treatment station and
				not discharged at all

104 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

						Annual pollutant
	Key pollutant					discharging	Actual discharging
No.	discharging entities	Types of pollutant	Main pollutants	Discharging method	Discharging standard	permission volume	volume in 2019
12	Methanol Plant of	boiler smoke and	PM, SO2, NOx, COD,	smoke and gas	Air Pollutants Discharge	PM 143 tons, SO2	58.9 tons of PM, 295.7 tons of
	Yulin Neng Hua	gas, industrial	ammonia nitrogen	discharged to the air	Standards for Boilers (GB13271-	946.6 tons, NOx473.3	SO2, 233.7 tons of NOx, 31.9
	(National key pollutant	waste water,		after purification, and	2014), Comprehensive Waste	tons, COD 129.2 tons,	tons of COD, and 2.1 tons of
	discharging entity)	household		the waste water recycled	Water Discharging Standard (GB	ammonia nitrogen 31.1	ammonia nitrogen
		wastewater		for reutilization after	8978-1996)	tons
				treatment in waste water
				treatment station and
				not discharged at all
13	Rongxin Chemicals	boiler smoke and	PM, SO2, NOx, COD,	smoke and gas	Air Pollutants Discharge	PM 325.1 tons, SO2	19.5 tons of PM, 126.7 tons
	of Ordos Neng Hua	gas, industrial	ammonia nitrogen	discharged to the air	Standards for Boilers (GB13271-	1,003.8 tons, NOx950	of SO2, 203.7 tons of NOxand
	(National key pollutant	waste water,		after purification, and	2014), Comprehensive Waste	tons, COD 80 tons,	5.9 tons of COD, and zero
	discharging entity)	household		the waste water recycled	Water Discharging Standard (GB	ammonia nitrogen 14.4	ton of ammonia nitrogen
		wastewater		for reutilization after	8978-1996)	tons
				treatment in waste water
				treatment station and
				not discharged at all
14	Zhuanlongwan Coal	boiler smoke and	SO2, NOx, COD	smoke and gas	Air Pollutants Discharge	SO2 94.1 tons, NOx	7.1 tons of SO2and 48.2 tons
	Mine of Ordos Neng	gas, industrial		discharged to the air	Standards for Boilers (GB13271-	81.2 tons	of NOx
	Hua (Ordos City key	waste water,		after purification, and	2014)
	pollutant discharging	household		the waste water recycled
	entity)	wastewater		for reutilization after
				treatment in waste water
				treatment station and
				not discharged at all

Annual Report 2019 105

Chapter 06 Significant Events

(2) Construction and operation of pollution prevention and control facilities

All of the coal mine enterprises affiliated to the Group have built mine water and domestic sewage treatment facilities. The Group has completed the whole sealing of the coal yard and coal refuse yard and the construction of silos, closed coal sheds and closed material sheds. The power plant boilers have all completed ultra-low emission renovation. Chemical enterprises have built industrial sewage treatment plants, and boilers have undergone ultra-low emission modification as required. Currently, VOCs are being treated. The pollution control facilities operate in parallel with the production system to ensure that pollutants are discharged according to relevant standards.

Key pollutant
No. discharging entities Construction and operation of pollution control facilities 1 Nantun Coal Mine Nantun Coal Mine has established a mine water treatment station and a household wastewater treatment station as required, which are all in normal operation. Sealed coal sheds and sealed material sheds are set up.
2 Baodian Coal Mine Baodian Coal Mine has established a mine water treatment station and a household wastewater treatment station as required, which are all in normal operation. Sealed coal sheds and sealed material sheds are set up.
3 Jining No. 2 Coal Mine Jining No. 2 Coal Mine has established a mine water treatment station and a household wastewater treatment station as required, which are all in normal operation. Sealed coal sheds and sealed material sheds are set up.
4 Yangcun Coal Mine Yangcun Coal Mine has established a mine water treatment station and a household wastewater treatment station as required, which are all in normal operation. Sealed coal sheds and sealed material sheds are set up.
5 Zhaolou Coal Mine, Heze Zhaolou Coal Mine, Heze Neng Hua has established a mine Neng Hua water treatment station and a household wastewater treatment station as required, which are all in normal operation. Sealed coal sheds and sealed material sheds are set up.
6 Xinglongzhuang Coal Mine Xinglongzhuang Coal Mine has established a mine water treatment station and a household wastewater treatment station as required, which are all in normal operation. Silos and sealed material sheds are set up.

106 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

Key pollutant
No. discharging entities Construction and operation of pollution control facilities 7 Dongtan Coal Mine Dongtan Coal Mine has established a mine water treatment station and a household wastewater treatment station as required, which are all in normal operation. Silos and sealed material sheds are set up.
8 Jining No.3 Coal Mine Jining No.3 Coal Mine has established a mine water treatment station, a household wastewater treatment station and an industrial wastewater treatment station as required, which are all in normal operation. Silos and sealed material sheds are set up.
9 Yanzhou Coal Mining Yanzhou Coal Mining Engineering Company Limited has Engineering Company established a household wastewater treatment station, which is in Limited normal operation.
10 Power plants of Huaju Equipped with de-dusting, desulfurization and de-nitration Energy facilities, the power plants of Huaju Energy have 18 boilers of 3,375 steam tons in total, which have completed ultra-low emission retrofit and are in normal operation.
11 Tianchi Coal Mine, Shanxi Tianchi Coal Mine has established a mine water treatment Neng Hua station and a household wastewater treatment station as required, which are all in normal operation. Moreover, the boiler house of the coal mine has 1 boiler of 15 steam tons and 2 boilers of 6 steam tons, which are equipped with de-dusting, and desulfurization facilities and are in normal operation. The natural gas replacement project has been finished.
12 Methanol plant of Yulin Methanol plant of Yulin Neng Hua has an industrial wastewater Neng Hua treatment station in normal operation and 3 coal fines boilers of 260 steam tons, which are all equipped with de-dusting, desulfurization and de-nitration facilities, which have completed ultra-low emission retrofit and are in normal operation.
13 Rongxin Chemicals, Ordos Rongxin Chemicals has established a mine water treatment Neng Hua station and a domestic sewage treatment station as required, which are all in normal operation. Moreover, Rongxin Chemicals has three units of 220 steam tons circulating fluidized bed boilers, which are all equipped with de-dusting, desulfurization and denitration facilities, which have completed ultra-low emission retrofit and are in normal operation.

Annual Report 2019 107

Chapter 06 Significant Events

	Key pollutant
No.	discharging entities	Construction and operation of pollution control facilities
14	Zhuanlongwan Coal Mine,	Zhuanlongwan Coal Mine has established a mine water
	Ordos Neng Hua	treatment station and a domestic sewage treatment station as
		required, which are all in normal operation. Moreover, the
		coal mine has 3 boilers (two units of 20 steam tons boilers and
		one 6 steam tons), which are all equipped with de-dusting,
		desulfurization and de-nitration facilities and are in normal
		running.

(3) Environmental impact assessment on constructive projects and other administrative licenses for environmental protection

The Group has carried out environmental impact assessment before commencement of the project construction. The pollution control and ecological preservation projects and the main construction project are designed, constructed and put into use in the meantime according to requirements for environmental impact assessment and reply. After the trial run is completed, the environmental protection for acceptance will be applied as required. Once obtaining the approval of acceptance, the Group can put into operation and use.

(4) Emergency plan for emergency environmental problems

Each production unit of the Group has, on its own or authorized qualified units to prepare contingency plans for environmental emergencies, which will be assessed by the competent environmental protection administration department of the government and relevant experts for the record. At the same time, we have strengthened emergency facilities, carried out regular emergency drills to improve our capacity of preventing and controlling environmental pollution events so as to minimize or reduce environmental problems.

(5) Environmental self-monitoring program

The coal mine enterprises affiliated to the Group are all equipped with online sewage monitoring systems and PM10 coal field online monitoring facilities. The boilers of power plants are all equipped with online exhaust gas monitoring facilities. The chemical enterprises are all equipped with online industrial waste water and boiler exhaust monitoring facilities. All these online monitoring facilities are connected to the monitoring platform of the government to realize real-time supervision. All production units of the Group have prepared self-monitoring plans, carried out self-monitoring regularly, and disclosed monitoring information of key pollution sources to the public as required. The main methods of monitoring are online monitoring and entrusted monitoring.

108 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

i. On-line monitoring
① Mine water

On-line monitoring of COD in the discharge water from the coal mine is carried out by a third party as required with monitoring frequency of once every 2 hours and monitoring data connected with government monitoring platform in real time.

② Domestic sewage

On-line monitoring of COD, ammonia nitrogen, TP and TN in the discharge water is carried out by a third party as required with monitoring frequency of once every 2 hours and monitoring data connected with government monitoring platform in real time.

③ Industrial wastewater

④ Boiler smoke

On-line monitoring of SO2, NOX, smoke and dust is carried out by a third party as required once an hour and monitoring data are connected with government monitoring platform in real time.

⑤ Online monitoring of PM10 in coal stockpile

On-line monitoring of PM10 in coal stockpile exit is carried out by a third party as required once an hour and monitoring data are connected with Jining Municipal Coal Bureau monitoring platform in real time.

ii. Entrusted monitoring
① Monitoring of pollutants in the discharge water is carried out by a third party as required once a month and the monitoring objectives shall refer to the Standard for the Discharge of Pollutants in Urban Sewage Treatment Plant.
② The Group has entrusted a third party to implement manual monitoring of Ringelman emittance, smoke and dust, SO2 and NOX quarterly.
③ The Group has entrusted a third party to implement plant boundary noise monitoring quarterly.

Annual Report 2019 109

Chapter 06 Significant Events

④ The monitoring of radioactive sources (if any) has been conducted once a year by a third party as required.

(6) Other environmental information that should be disclosed

Not applicable.

2. Environmental protection statement for companies other than the key discharging entities

In accordance with the principles of source prevention, process control and end treatment, the Group implements clean production, carries out pollution prevention and control, and minimizes the impact of production on the environment. The Group actively carries out water and soil conservation, subsidence area treatment, reclamation greening, ecological construction and other work, to protect and improve the local ecological environment. All the companies other than the key pollutant discharging units have built pollution control facilities in accordance with the environmental approval requirements, and operate normally without exceeding the emission standards. The total amount of pollutants discharged meets the total amount approved by the superior competent department.

3. Explanation of reasons for non-disclosure of environmental information by companies other than key discharging entities

The impact of companies other than key discharging entities on the environment is mainly daily office operations on energy resource consumption and emissions, which has less impact on the environment, and we have strictly abide by Environmental Protection Law of the PRC, Water Pollution Prevention and Control Law of the PRC, Prevention and Control of Atmospheric Pollution Law of the PRC and Solid Waste Pollution Prevention and Control Law of the PRC. Therefore, the Company received no punishment due to violations of environmental regulations during the reporting period.

4. Description of the follow-up progress or changes in the disclosure of environmental information during the reporting period

Not applicable.

(IV) Other Explanation

Not applicable.

110 Yanzhou Coal Mining Company Limited

Significant Events Chapter 06

XVIII. COMPLIANCE WITH LAWS, REGULATIONS AND RULES

The Company understands the importance of complying with the requirements of laws, regulations and rules, and has established a relatively mature system to ensure contined compliance with applicable laws, regulations and rules. During the reporting period, to the best of the Company’s knowledge, all major matters of the Company have complied with applicable laws, regulations and rules including but not limited to, the Law on Production safety of the PRC and the Law on the Prevention and Control of Occupational Diseases of the PRC and other laws and regulations that have significant meanings or impacts to the Company’s main business. As a company listed on the Shanghai Stock Exchange and the Hong Kong Stock Exchange, the Company also complied with the listing rules of the listing places and applicable laws, regulations and rules during the reporting period.

XIX. CONVERTIBLE CORPORATE BONDS

Not applicable.

Annual Report 2019 111

Chapter 07 Changes in Ordinary Shares and Shareholders

I. CHANGES IN ORDINARY SHARES

(I) Table of Changes in Ordinary Shares

1. Table of changes in ordinary shares

During the reporting period, no changes occurred to the total number of ordinary shares and capital structure of the Company.

2. Explanation on changes in ordinary shares

Not applicable.

3. The impact of changes in ordinary shares on financial indicators such as earnings per share, net asset per share of last year and last financial year (if any)

Not applicable.

4. Other disclosures the Company considers necessary or required by securities regulatory institutions

As at the latest practicable date prior to the publication of this annual report, according to the information publicly available to the Company and within the knowledge of the Directors, the Directors believe that during the reporting period, the public float of the Company was more than 25% of the Company’s total issued shares, which is in compliance with the requirement of the Hong Kong Listing Rules.

(II) Changes in Shares with Restricted Moratorium

Not applicable.

112 Yanzhou Coal Mining Company Limited

Changes in Ordinary Shares and Shareholders Chapter 07

II. SECURITIES ISSUANCE AND LISTING

(I) Securities Issuance during the Reporting Period

Not applicable.

Explanation on securities issuance during the reporting period (for bonds with different interest rates during the duration, please explain separately).

Not applicable.

(II) Changes in Total Number of Shares, Shareholders’ Structure, and Assets and Liability of the Company

Not applicable.

(III) Changes in Total Number of Shares Held by the Employees of the Company

Not applicable.

III. SHAREHOLDERS AND ACTUAL CONTROLLER

(I) Total Number of Shareholders

Total number of Shareholders as at 31 December 2019	75,723
Total number of ordinary Shareholders at the end of last month prior
to the disclosure date of this annual report	81,299
Total number of preferred Shareholders with resumed voting right
by the end of the reporting period	0
Total number of preferred Shareholders with resumed voting right at
the end of last month before disclosure date of this annual report	0

Annual Report 2019 113

Chapter 07 Changes in Ordinary Shares and Shareholders

(II) Top Ten Shareholders Holding Trading Shares Not Subject to Trading Moratorium (or Unrestricted Shareholders) as at 31 December 2019

Unit: share(s)

		Shareholding of the top ten shareholders	Shareholding of the top ten shareholders	Shareholding of the top ten shareholders	Shareholding of the top ten shareholders
	Increase/
	decrease	Number of			Number of
	during the	shares held			shares held	Pledged or locked
	reporting	by the end of	Percentage	with trading			Number of
Name of shareholders	period	2019	(%)	moratorium		Status	shares	Class of shareholders
Yankuang Group Company Limited	0	2,267,169,423	46.16		0	No	0	State-owned legal person
Hong Kong Securities Clearing Company	-478,096	1,948,130,403	39.66		0	N/A	0	Overseas legal person
(Nominees) Limited
Hong Kong Securities Clearing Company	24,140,879	27,796,876	0.57		0	No	0	Overseas legal person
Limited
Abu Dhabi Investment Authority (ADIA)	4,259,877	23,070,443	0.47		0	No	0	Others
New China Life Insurance Co., Ltd.-	20,712,597	21,957,897	0.45		0	No	0	Others
Dividend-Individual Annuity
Insurance-018L-FH002HU
Central Huijin Assets Management Co.,	0	19,355,100	0.39		0	No	0	State-owned legal person
Ltd.
New China Life Insurance Co., Ltd.-	3,033,229	15,294,707	0.31		0	No	0	Others
Dividend-Group Annuity Insurance-
018L-FH001HU
National Social Security Fund 412	8,220,293	12,062,107	0.25		0	No	0	Others
Combination
National Social Security Fund 403	-1,000,000	9,884,351	0.20		0	No	0	Others
Combination
Bank of China co., LTD.-The Belt and	9,665,551	9,665,551	0.20		0	No	0	Others
Road Exchange-End Index Securities
Investment Fund

114 Yanzhou Coal Mining Company Limited

Changes in Ordinary Shares and Shareholders Chapter 07

	Top ten shareholders holding tradable shares not subject to trading moratorium	Top ten shareholders holding tradable shares not subject to trading moratorium
		Number Class and number of shares held
		of tradable Number of
Name of shareholders		shares held Class of shares shares held
Yankuang Group Company Limited		2,267,169,423 A shares 2,267,169,423
Hong Kong Securities Clearing Company (Nominees) Limited		1,948,130,403 H shares 1,948,130,403
Hong Kong Securities Clearing Company Limited		27,796,876 A shares 27,796,876
Abu Dhabi Investment Authority (ADIA)		23,070,443 A shares 23,070,443
New China Life Insurance Co., Ltd.-Dividend-Individual Annuity		21,957,897 A shares 21,957,897
Insurance-018L-FH002HU
Central Huijin Assets Management Co., Ltd.		19,355,100 A shares 19,355,100
New China Life Insurance Co., Ltd.-Dividend-Group Annuity Insurance-		15,294,707 A shares 15,294,707
018L-FH001HU
National Social Security Fund	412 Combination	12,062,107 A shares 12,062,107
National Social Security Fund	403 Combination	9,884,351 A shares 9,884,351
Bank of China Co., LTD.-The	Belt and Road Exchange-End Index	9,665,551 A shares 9,665,551
Securities Investment Fund
Connected relationship or concerted-party relationship among the above		Yankuang Group (Hong Kong) Co., Ltd. (“Yankuang Hong
shareholders		Kong”), a wholly-owned subsidiary of Yankuang Group
		incorporated in Hong Kong held 375,000,000 H shares
		through HKSCC (Nominees) Limited. New China Life
		Insurance Co., Ltd.-Dividend-Individual Annuity Insurance-
		018L-FH002HU and New China Life Insurance Co., Ltd.-
		Dividend-Group Annuity Insurance-018L-FH001HU are
		both managed by New China Life Insurance Co., Ltd.
		Apart from this, it is unknown whether other shareholders
		are connected with one another or whether any of these
		shareholders fall within the meaning of parties acting in

concert.

Explanation on the preferred shareholders with resumed voting right and their corresponding number of shareholdings held

Not applicable.

Notes:

The above Total Number of the Shareholders, Top ten Shareholders holding trading shares not subject to trading moratorium (or unrestricted shareholders) as at 31 December 2019 and Top ten shareholders holding tradable shares not subject to trading moratorium are prepared according to the Company’s shareholder register provided by China Securities Registration and Clearing Co., LTD. Shanghai Branch and Hong Kong Central Securities Registration Co., LTD.
As the clearing company of the Company’s H shares, Hong Kong Securities Clearing Company (Nominees) Limited holds the Company’s shares as an agent. Hong Kong Securities Clearing Company Limited is the nominal holder of the Company’s Shanghai-Stock Connect Shares.
As of December 31, 2019, Yankuang Group held 2,267,169,423 of the Company’s A shares, including 1,875,662,151 A shares held through its own account, and 391,507,272 A shares held through its guarantees and trust account jointly opened with CITIC Securities Co., LTD., to guarantee the exchangeable corporate bonds issued by Yankuang Group. Yankuang Group held 374,989,000 H shares through Yankuang Hong Kong. Yankuang Group directly and indirectly held 53.79% of the Company’s shares.

Annual Report 2019 115

Chapter 07 Changes in Ordinary Shares and Shareholders

Shareholding amount by top 10 shareholders holding shares with restricted trading moratorium and restricted trading moratorium.

Not applicable.

(III) Strategic Investors or Ordinary Legal Persons Becoming Top Ten Shareholders through New Shares Allotment

Not applicable.

(IV) Substantial Shareholders’ Interests and Short Positions in the Shares and Underlying Shares of the Company

As far as the Directors are aware, save as disclosed below, as at 31 December 2019, other than the Directors, Supervisors or chief executives of the Company, there were no other persons who were substantial shareholders of the Company or had interests or short positions in the shares or underlying shares of the Company, which should (i) be disclosed pursuant to Sections 2 and 3 under Part XV of the Securities and Futures Ordinance (“SFO”); (ii)be recorded in the register to be kept pursuant to Section 336 of the SFO; or (iii) notify the Company and the HKEX in other way.

						Percentage in
			Number of		Percentage in the	Total Share
			Shares Held		H Share Capital	Capital of the
Name of Substantial Shareholders	Class of Shares	Capacity	(shares)	Nature of Interests	of the Company	Company
Yankuang Group	A Shares (state-owned	Beneficial owner	2,267,169,423	Long position	–	46.16%
	legal person shares)
		Beneficial owner	391,507,272	Short position	–	7.97%
Yankuang Group(Note 1)	H Shares	Interest of controlled corporations	374,989,000	Long position	19.21%	7.63%
BNP Paribas Investment Partners SA	H Shares	Investment manager	117,641,207	Long position	6.03%	2.39%
BlackRock, Inc.	H Shares	Interest of controlled corporations	98,173,526	Long position	5.03%	2.00%
			1,814,000	Short position	0.09%	0.04%

Notes:

Those H Shares are held by Yankuang Hong Kong in the capacity of beneficial owner.
The percentage figures above have been rounded off to the nearest second decimal place.
The information disclosed is based on the information provided by the website of the Hong Kong Stock Exchange (www. hkex. com. hk) and the China Securities Depository and Clearing Corporation Limited Shanghai Branch.

116 Yanzhou Coal Mining Company Limited

Changes in Ordinary Shares and Shareholders Chapter 07

IV. CONTROLLING SHAREHOLDER AND ACTUAL CONTROLLER

(I) Controlling Shareholder

1. Legal person

Name

Yankuang Group

Person in charge or legal Li Xiyong representative Date of establishment 12 March 1996 Main business

Mining (Coal and nonferrous metals) production, processes, trades, adequate and systematic services, high-end chemicals, modern logistics, engineering and technology services. Please see the table below.

Controlling shares or Please see the table below. participating shares held by Yankuang Group of other companies listed at home and abroad Other explanations As at 31 December 2019, Yankuang Group held 2,267,000,000 A Shares; Yankuang Hong Kong held 375,000,000 H Shares; Yankuang Group and Yankuang Hong Kong jointly held 2,642,000,000 Shares, representing 53.79% of the total share capital of the Company.

As at 31 December 2019, the shares of other domestic and overseas listed companies held by Yankuang Group were as follows:

					Number of	Percentage
	Name of the Listed				Shares Held	of Shares
No.	Company		Stock Exchange	Stock Code	(shares)	Held (%)
1	Guizhou Panjiang		Shanghai Stock Exchange	600395	191,970,000	11.60
		Refined Coal Co., Ltd.
2	Rizhao Port Co., Ltd.		Shanghai Stock Exchange	600017	167,550,000	5.45
3	Tiandi Science and		Shanghai Stock Exchange	600582	21,460,000	0.52
		Technology Co., Ltd.
4	Shenzhen DAS		Shenzhen Stock Exchange	002421	1,520,000	0.08
		Intelligence Co., Ltd.
5	Guotai Junan Securities		Shanghai Stock Exchange	601211	48,710,000	0.56

Annual Report 2019 117

Chapter 07 Changes in Ordinary Shares and Shareholders

(II) Actual Controller

Name of actual controller:

State-owned Assets Supervision and Administration Commission of Shandong Province (SASAC of Shandong Province)

Diagram of equity and relationship of control between the Company and the actual controller:

==> picture [236 x 102] intentionally omitted <==

----- Start of picture text -----

SASAC of Shandong Province
Direct and indirect shareholding: 90%
Yankuang Group
Direct and indirect shareholding: 53.79%
Yanzhou Coal
----- End of picture text -----

Actual controller controlling the Company through trust or other asset management

Not applicable.

(III) Other Explanations on the Controlling Shareholder and the Actual Controller

Not applicable.

V. LEGAL PERSONS AS SHAREHOLDERS WITH SHAREHOLDING OF 10% OR MORE

As at 31 December 2019, the HKSCC (Nominees) Limited held 1,948,130,403 H Shares on behalf of its several clients, representing 39.66% over the total share capital of the Company. The HKSCC (Nominees) Limited is a member of Hong Kong central clearing and settlement system, providing customers with security registration and custody business.

VI. EXPLANATION ON RESTRICTION OF SELLDOWN SHAREHOLDING

Not applicable.

VII. PRE-EMPTIVE RIGHTS

The Articles and the laws of the PRC do not contain any provision for any pre-emptive rights requiring the Company to offer new Shares on a pro-rata basis to its existing Shareholders.

118 Yanzhou Coal Mining Company Limited

Chapter 08

Directors, Supervisors, Senior Management and Employees

I. CHANGES IN SHAREHOLDING AND REMUNERATION

(I) Changes in Shareholding and Remuneration of Current and Resigned Directors, Supervisors and Senior Management

Unit: Share(s)

														Total
								Number						Remuneration	Whether
								of Shares	Number	Increase/				Before Tax	Receive
								Held at the	of Shares	Decrease of				Received From	Remuneration
								Beginning	Held at the	Shareholding				the Company	from
					Beginning Date			of the	end of this	During the				During the	Connected
					of the Office		Ending Date of	Reporting	Reporting	Reporting		Reasons	Reporting Period		Parties of the
Name	Title (note)		Gender	Age	Term	the Office Term		Period	Period	Period	for Change			(RMB10,000)	Company
Li Xiyong	Director, Chairman of the		Male	56	9 Sep 2013		29 June 2020	10,000	10,000	0		–		0	Yes
		Board
Li Wei	Director, Vice Chairman of		Male	53	3 June 2016		29 June 2020	10,000	10,000	0		–		0	Yes
		the Board
Wu Xiangqian	Director		Male	54	14 May 2014		29 June 2020	10,000	10,000	0		–		105.78	No
	General Manager				6 Jan 2016		22 April 2020
Liu Jian	Director		Male	51	24 May 2019		29 June 2020	0	0	0		–		82.04	No
	Vice General Manager				30 December		22 April 2020
					2016
Guo Dechun	Director		Male	58	3 June 2016		29 June 2020	0	0	0		–		101.44	No
Zhao Qingchun	Director		Male	52	3 June 2016		29 June 2020	0	0	0		–		85.03	No
	Chief Financial Officer				6 Jan 2016		29 June 2020
Guo Jun	Employee Director		Male	57	3 June 2016		29 June 2020	10,000	10,000	0		–		72.76	No
Kong Xiangguo	Independent Director		Male	64	10 Mar 2017		29 June 2020	0	0	0		–		15.00	No
Cai Chang	Independent Director		Male	48	27 November		29 June 2020	0	0	0		–		15.00	No
					2017
Poon Chiu Kwok	Independent Director		Male	57	29 June 2017		29 June 2020	0	0	0		–		15.00	No
Qi Anbang	Independent Director		Male	68	3 June 2016		29 June 2020	0	0	0		–		15.00	No
Gu Shisheng	Supervisor		Male	56	14 May 2014		29 June 2020	10,000	10,000	0		–		0	Yes
	Chairman of Supervisory				29 June 2017		29 June 2020
		Committee
Zhou Hong	Supervisor, Vice Chairman		Male	49	29 June 2017		29 June 2020	0	0	0		–		0	Yes
		of the Supervisory
		Committee
Meng Qingjian	Supervisor		Male	58	3 June 2016		29 June 2020	0	0	0		–		0	Yes
Zhang Ning	Supervisor		Male	51	29 June 2017		29 June 2020	0	0	0		–		0	Yes
Jiang Qingquan	Employee Supervisor		Male	56	3 June 2016		29 June 2020	10,000	10,000	0		–		76.68	No
Zheng Kai	Employee Supervisor		Male	50	25 December		29 June 2020	0	0	0		–		47.69	No
					2018
Wang Fuqi	Chief Engineer		Male	55	6 March 2014		22 April 2020	10,000	10,000	0		–		83.22	No

Annual Report 2019 119

Chapter 08 Directors, Supervisors, Senior Management and Employees

													Total
							Number						Remuneration	Whether
							of Shares	Number	Increase/				Before Tax	Receive
							Held at the	of Shares	Decrease of				Received From	Remuneration
							Beginning	Held at the	Shareholding				the Company	from
				Beginning Date			of the	end of this	During the				During the	Connected
				of the Office		Ending Date of	Reporting	Reporting	Reporting		Reasons	Reporting Period		Parties of the
Name	Title (note)	Gender	Age	Term	the Office Term		Period	Period	Period	for Change			(RMB10,000)	Company
Zhao Honggang	Vice General Manager	Male	54	23 December		22 April 2020	10,000	10,000	0		–		78.78	No
				2014
He Jing	Vice General Manager	Male	49	29 June 2017		29 June 2020	0	0	0		–		101.98	No
Gong Zhijie	Vice General Manager	Male	54	27 December		29 June 2020	0	0	0		–		71.37	No
				2018
Jin Qingbin	Secretary to the Board	Male	42	29 March 2016		29 June 2020	0	0	0		–		72.89	No
Li Wei	Vice General Manager	Male	48	30 December		29 June 2020	0	0	0		–		79.25	No
				2019
Wu Yuxiang	Director (resigned)	Male	58	22 April 2002		24 May2019	30,000	30,000	0		–		0	Yes
Total	/	/	/	/		/	110,000	110,000	0		/		1,118.91	/

Notes:

Mr. Li Wei, vice chairman of the Company, and Mr. Li Wei, vice general manager of the Company, have the same name but not the same person.
The Directors’ term of the seventh session of the Board and Supervisors’ term of the seventh session of the board of Supervisors of the Company shall be ended on the date of the Shareholders’ meeting for election of Directors of the eighth session of the Board and Supervisors of the eighth session of the board of Supervisors. The terms of senior managers appointed by the seventh session of the Board shall be ended on the date of the Board for appointments of new session of the senior managers.
As at 31 December 2019, Directors, Supervisors and senior management together held 110,000 A Shares, representing 0.0022% of the Company’s total issued share. All of the disclosed interests above represent the Company’s long position in shares.

120 Yanzhou Coal Mining Company Limited

Directors, Supervisors, Senior Management and Employees Chapter 08

(II) Work experience of Directors, Supervisors and Senior Management

Name Major Work Experience Li Xiyong Born in October 1963, Mr. Li Xiyong is a research fellow in applied engineering technology with an EMBA degree, and currently serves as the chairman of the Company and the chairman and the Secretary of the Party Committee of Yankuang Group. Mr. Li commenced his career in 1981. He was appointed as the head of Huafeng Coal Mine of Xinwen Mining Group Co., Ltd. (“Xinwen Group”) in May 2001. In June 2006, he was appointed as the vice general manager of Xinwen Group. In May 2010, he was appointed as the chairman and the secretary of the Party Committee of Xinwen Group. In March 2011, he was appointed as the vice chairman of Shandong Energy Group Co., Ltd. and the chairman and the secretary of the Party Committee of Xinwen Group. In July 2013, he was appointed as the director, the general manager and the deputy secretary of the Party Committee of Yankuang Group. In February 2015, he was appointed as the chairman and Party Committee secretary of Yankuang Group. In September 2013, he was appointed as the chairman of the Company. Mr. Li graduated from Shandong University of Science and Technology and Nankai University. Li Wei Born in September 1966, Mr. Li Wei is a research fellow in applied engineering technology (Vice Chairman) with a doctoral degree of engineering, and currently serves as the vice chairman of the Company and the vice secretary of the Party Committee and the general manager of Yankuang Group. Mr. Li joined the Company’s predecessor in 1988. He was appointed as the deputy head of Baodian Coal Mine of Yankuang Group in December 1996, the director of reorganization division of strategic resource development department of Yankuang Group in May 2002, the chairman, the secretary of the Party Committee and the general manager of Yankuang Xilin Neng Hua Co., Ltd in September 2002. In March 2004, he was in charge of all party committee works and management of Baodian Coal Mine, and he was appointed as the head and vice secretary of the Party Committee of Baodian Coal Mine in September 2004, the head and the vice secretary of party committee of Nantun Coal Mine in August 2007, the deputy chief engineer of Yankuang Group and the vice director of production safety inspection office in August 2009, the vice general manager of Yankuang Group and the director of production safety inspection bureau in April 2010. In May 2015, he was appointed as the director, the general manager and the vice secretary of the Party Committee of Yankuang Group, the general manager of Yankuang Group in December 2015, the vice secretary of the Party Committee of Yankuang Group in October 2019, and the vice chairman of the Company in June 2016. Mr. Li graduated from the University of Science and Technology Beijing.

Annual Report 2019 121

Chapter 08 Directors, Supervisors, Senior Management and Employees

Name Major Work Experience

Wu Xiangqian

Born in February 1966, Mr. Wu Xiangqian is a research fellow in applied engineering technology with a doctoral degree of engineering, and currently serves as a Director and the general manager of the Company. Mr. Wu joined the Company’s predecessor in 1988. In 2003, he was appointed as the deputy head of Jining No.3 Coal Mine of the Company. In 2004, Mr. Wu was appointed as the deputy head and the chief engineer of Jining No.3 Coal Mine. In 2006, he was appointed as the manager of Jining No.3 Coal Mine. In March 2014, he was promoted as the chairman and the general manager of Yanzhou Coal Ordos Neng Hua Co., Ltd. and chairman of Inner Mongolia Haosheng Coal Mining Co., Ltd. In May 2014, he was appointed as a Director. In January 2016, he was appointed as the general manager of the Company. Mr. Wu graduated from Shandong University of Science and Technology and China University of Mining and Technology.

Liu Jian Born in February 1969, Mr. Lin Jian is a research fellow in applied engineering technology with a master’s degree of engineering, and currently serves as a Director and vice general manager of the Company. Mr. Liu joined the Company’s predecessor in 1992 and was appointed as the vice manager of Dongtan Coal Mine of the Company in 2009. He was appointed as the manager of Jining No.3 Coal Mine and the manager of Dongtan Coal Mine of the Company in 2014 and January 2016, respectively. In December 2016, he was appointed as the vice general manager of the Company. In May 2019, he was appointed as a Director. Mr. Liu graduated from Shandong University of Science and Technology.

Guo Dechun Born in February 1962, Mr. Guo Dechun is a senior engineer with a master’s degree of engineering, and currently serves as a Director. Mr. Guo joined the Company’s predecessor in 1987 and was appointed as the director of the Safety Inspection Department of Dongtan Coal Mine in January 2000, the vice manager of Dongtan Coal Mine in June 2002. In August 2008, he was appointed as the vice manager and the chief engineer of Baodian Coal Mine, and the vice manager of Baodian coalmine in September 2009, the manager and the vice secretary of the Party Committee of Yangcun Coal Mine in April 2010. In January 2014, he was appointed as the manager and the vice secretary of Party Committee of Dongtan Coal Mine in January 2014. In December 2015, he was appointed as the chairman, the general manager and the vice secretary of Party Committee of Yanzhou Coal Ordos Neng Hua Co., Ltd., the Chairman of Inner Mongolia Haosheng Coal Co., Ltd., the chairman, the general manager and the secretary of Party Committee of Yancoal Yulin Neng Hua Co., Ltd. In July 2018, he was appointed as the Secretary of party committee of Ordos Neng Hua Co., Ltd. and was appointed as a director in June 2016. Mr. Guo graduated from China University of Mining and Technology.

122 Yanzhou Coal Mining Company Limited

Directors, Supervisors, Senior Management and Employees Chapter 08

Name Major Work Experience Zhao Qingchun Born in March 1968, Mr. Zhao Qingchun is a senior accountant with an EMBA degree, and currently serves as a Director and the CFO of the Company. Mr. Zhao joined the Company’s predecessor in 1989 and was appointed as the chief accountant of Finance Department in 2002 and director of the Planning and Finance Department of the Company in 2006. In March 2011, he was appointed as the vice chief financial officer and the director of the Finance Department of the Company. In March 2014, Mr. Zhao was appointed the general manager assistant and the director of the Finance Management Department of the Company. In January 2016, he was appointed as the CFO of the Company, and was appointed as a Director in June 2016. Mr. Zhao graduated from Nankai University. Guo Jun Born in January 1963, Mr. Guo Jun is a professor-level senior administrative officer, a senior economist, with a doctoral degree of business administration, and currently serves as an employee Director and the deputy secretary of Party Committee and the chairman of the Labor Union of the Company. Mr. Guo joined the Company’s predecessor in 1980 and served as the Director of the economic division of the general manager’s office in 1996. He was appointed as the vice director of the general manager’s office in 1997 and served as the office director of board of directors respectively in 2000 and 2002. He was appointed as the secretary of the Party Committee and deputy head of Baodian Coal Mine of the Company in 2004. In March 2014, Mr. Guo was appointed as the secretary of the Discipline Inspection Commission of the Company in March 2014 and an employee Supervisor of the Company in April 2014, and was appointed as the vice secretary of Party Committee and the chairman of the Labor Union of the Company in April 2016 and an employee Director in June 2016. Mr. Guo graduated from China University of Mining Technology (Beijing).

Kong Xiangguo Born in June 1955, Mr. Kong Xiangguo is a professor-level senior engineer, a national registered consulting engineer, a national registered mining engineer, enjoys allowance of the state council, and currently serves as an independent Director. Mr. Kong currently serves as the director of Transportation Technology Department of Survey and Engineering Commission of China Coal Construction Association, the consultant committee member of Technology Committee of China Coal Technology Engineering Group (“CCTEG”), a member of the twelfth and thirteenth session of Nanjing CPPCC, an eternal director of CCTEG Xi’an Research Institute. Mr. Kong served as the chairman and the vice secretary of Party Committee of CCTEG Nanjing Engineering Co., Ltd., and was awarded with Excellent President of National Survey and Engineering Institute, Ten Best Modern Management Entrepreneur among national survey and engineering industry and many other honors. Mr. Kong was appointed as an independent Director in March 2017. Mr. Kong graduated from Shandong University of Science and Technology.

Annual Report 2019 123

Chapter 08 Directors, Supervisors, Senior Management and Employees

Name

Major Work Experience

Cai Chang

Born in December 1971, Mr. Cai Chang is a professor, doctoral tutor, with a doctoral degree of accountancy, and a postdoctoral degree of economics, an International Certified Senior Public Accountant (ICSPA), and currently serves as an independent Director. Mr. Cai is currently the director of the Tax Planning and Legal Research Center of the Central University of Finance and Economics, the director of the Tax Administration Department of School of Public Finance and Tax, and the director of Editorial Board of the Chinese Tax and Legal Think Tank. Mr. Cai is also a member of council of China Certified Tax Agents Association, a visiting professor of Peking University and Tsinghua University, and a master supervisor of Chinese Academy of Social Sciences Graduate School of Taxation and Chair professor of Minjiang Scholarship. Mr. Cai presided over the completion of a number of national and provincial key scientific research projects and published ten famous works in the field of accounting and tax. Mr. Cai was appointed as the Independent Director of the Company in November 2017. Mr. Cai graduated from Tianjin University of Finance and Economics and the Chinese Academy of Social Sciences.

Poon Chiu Kwok Born in April 1962, Mr. Poon Chiu Kwok holds the degrees of a bachelor of laws and a bachelor of business and a master of international accounting, is an FCPA Australia, a senior member of Hong Kong Institute of Chartered Secretaries and a member of its consulting group, the audit committee, the China Concern Group, a senior member of the Chartered Corporate Governance Institute (formerly Institute of Chartered Secretaries and Administrators), a senior member and invited tutor of the Hong Kong Securities and Investment Association, and currently serves as an independent Director Company. Mr. Poon currently serves as an executive director, vice president and the company secretary of Huabao International Holdings Limited. Mr. Poon has worked for investment banks for many years and is experienced in listed company governance, financing and management. Now he also acts as an Independent Director of companies listed in the HKEX including Sunac China Holdings Limited, SANY Heavy Equipment International Holdings Limited, AUX International Holdings Limited, Chongqing Changan Minsheng APLL Logistics Co., Ltd., Green Town Service Group Co., Ltd., Tonly Electronics Holdings Limited, TUS International Limited, Yuanda China Holdings Limited, Jinchuan Group International Resource Co. Ltd, Honghua Group Co., Ltd and etc. Mr. Poon was appointed as an independent Director in June 2017. He graduated from University of London UK.

124 Yanzhou Coal Mining Company Limited

Directors, Supervisors, Senior Management and Employees Chapter 08

Name	Major Work Experience
Qi Anbang	Born in February 1952, Mr. Qi Anbang is a professor, doctoral tutor, with a doctoral degree
	of management, and currently serves as an independent Director. Mr. Qi is the director
	of the master center of project management of Nankai University, the director of modern
	project management research center. Mr. Qi is mainly engaged in enterprise management,
	project management, investment project assessment, technological and economic analysis
	and has completed many topic researches at national-level and provincial level. He was
	awarded a series of honors, including 2009 Research Award by International Project
	Management Association and Excellent Achievement on Social Science Research of Tianjin
	City. He also served as the Chairman of Research Committee of International Project
	Management Association, the Vice Chairman of China Project Management Research
	Association, the Vice Chairman of Information System Research Association of China
	System Union, a member of expert committee of China Engineering Cost Association, a
	consultant for government management of Tianjin City and many other social positions.
	Mr. Qi was appointed as an independent Director in June 2016. He graduated from Nankai
	University.

Gu Shisheng Born in January 1964, Mr. Gu Shisheng is a professor level senior administrative officer with a master’s degree, and currently serves as the vice chairman of the supervisory committee of the Company and an employee director, a member of the Party’s Standing Committee and the chairman of the Labor Union of Yankuang Group. Mr. Gu joined the Company’s predecessor in 1979. He served as the deputy Party Committee secretary of Xinglongzhuang Coal Mine of Yankuang Group in 1996 and the Party Committee secretary of Xinglongzhuang Coal Mine of the Company in 2002. He served as the deputy secretary of the Discipline Inspection Commission and the director of Supervision Department of Yankuang Group in 2003. He was appointed as the chairman of the Labor Union of Yankuang Group in January 2014 and an employee director and member of the Party’s standing Committee in December 2015. He served as a Supervisor since May 2014 and vice chairman of the supervisory committee of the Company in July 2015. He was appointed as the chairman of the supervisory committee of the Company in June 2017. Mr. Gu graduated from the Party School of Shandong Provincial Communist Committee.
Zhou Hong Born in May 1970, Mr. Zhou Hong is a senior accountant, a professor level senior administrative officer, senior economist, an A level Human Resource Professional, with a bachelor’s degree in economics and currently serves as the vice chairman of the supervisory committee of the Company. Mr. Zhou joined the predecessor of the Company in 1994 and served as the chief economist, the vice director and the director of the Human Resource Department of Yankuang Group in August 2006, August 2009, June 2012 successively. He was appointed as the director of the operation management department of Yankuang Group in March 2014, the director of the Organization Department of the Party Committee (Human Resource Department) in November 2015, the employee supervisor of Yankuang Group in December 2015, the general manager assistant of Yankuang Group in June 2016, and a member of the Party’s Standing Committee of Yankuang Group in October 2019, and assumed as the vice chairman of the supervisory committee of the Company in June 2017. Mr. Zhou graduated from China Coal Economics Institute.

Annual Report 2019 125

Chapter 08 Directors, Supervisors, Senior Management and Employees

Name

Meng Qingjian

Zhang Ning

Jiang Qingquan

Major Work Experience

Born in February 1962, Mr. Meng Qingjian is a senior accountant with a bachelor’s, and currently serves as a Supervisor and the director of the Finance Management Department of Yankuang Group. Mr. Meng joined the Company’s predecessor in 1981, and was appointed as the chief accountant and the vice director of Finance Department of Yankuang Group in December 1999 and June 2002, respectively. He was appointed as the vice director and the director of the Finance Management Department of Yankuang Group in October 2008 and January 2014, respectively. He was appointed as a Supervisor in June 2016. Mr. Meng graduated from the Party School of the Central Committee of CPC.

Born in October 1968, Mr. Zhang Ning is a senior accountant, an international financial manager with an EMBA degree, and currently serves as a Supervisor. Mr. Zhang joined the predecessor of the Company in 1991 and served as the chief accountant and the vice director of the Financial Department of Yankuang Group in September 2006 and July 2008, respectively. He took a temporary position as the assistant director of the Customer Department II of China Development Bank Shandong Branching August 2011, and became the vice director of the finance department of Yankuang Group in June 2012, the director of the Audit and Risk Department of Yankuang Group in 24 February 2016 and the director of the Audit Center of Yankuang Group in May 2018. He was appointed as a Supervisor in June 2017. Mr. Zhang graduated from Tianjin University of Finance and Economics.

Born in December 1963, Mr. Jiang Qingquan is a professor level senior administrative officer and an engineer with a master’s degree, and currently serves as an employee Supervisor. Mr. Jiang joined the Company’s predecessor in 1984 and served as the office director of Safety Supervision Office of Yankuang Group in 1994 (worked in Personnel Division of Yankuang Group from November 1996 to September 1997). He served as the vice president of Yankuang Group General Hospital in 1997 (worked in Organization Department of Yankuang Group from June 1999 to January 2000). He served as the Party Committee secretary of the Railway Transportation Department of Yankuang Group in 2000. He served as the manager and the Deputy Party Committee secretary of the Railway Transportation Department in 2004. He served as the general manager assistant of the Company in 2012, the chairman of the Labor Union of the Company in March 2014, an employee Director in April 2014 and the secretary of the Discipline Inspection Committee in April 2016. He was appointed as a Supervisor in June 2016. Mr. Jiang graduated from the Qufu Normal University and the Party School of Shandong Provincial Communist Committee.

126 Yanzhou Coal Mining Company Limited

Directors, Supervisors, Senior Management and Employees Chapter 08

Name	Major Work Experience
Zheng Kai	Born in September 1969, Mr. Zheng Kai is a professor level senior administrative officer
	with a master’s degree, and currently serves as an employee Supervisor. Mr. Zheng joined
	the predecessor of the Company in July 1990. He was appointed as the chairman of the
	Labor Union of Baodian Coal Mine of the Company in September 2009 and the vice
	manager of Baodian Coal Mine in December 2014. He served as the deputy party secretary,
	the secretary of Discipline Inspection Committee and the chairman of the Labor Union
	of Baodian Coal Mine of the Company in August 2016. He was appointed as the deputy
	director of the Department of Party and Mass Work (the Labor Union) of the Company
	in October 2017 and the director of the Department of Party and Mass Work (the Labor
	Union) of the Company in October 2019. He was appointed as an employee Supervisor
	in December 2018. Mr. Zheng graduated from the Party School of Shandong Provincial
	Communist Committee.

Wang Fuqi Born in May 1964, Mr. Wang Fuqi is a research fellow in applied engineering technology with an EMBA degree and a master’s degree of engineering, and currently serves as the chief engineer of the Company. Mr. Wang joined the Company’s predecessor in 1985. In 2000, he was appointed as the chief engineer of Production and Technology Division of Yankuang Group. In 2002, he served as the director of Production and Technique Department of the Company. In 2003, he was appointed as the deputy chief engineer of the Company and director of Production and Technique Department of the Company. In March 2014, he served as the chief engineer of the Company. Mr. Wang graduated from Northeastern University and Nankai University.
Zhao Honggang Born in November 1965, Mr. Zhao Honggang is a research fellow in applied engineering technology and with a master’s degree of engineering, and currently serves as a vice general manager of the Company. Mr. Zhao joined the Company’s predecessor Company in 1987 and served as the vice manager of Dongtan Coal Mine of the Company in March 2006. In September 2009, he was appointed as the director of Electromechanical Department. In December 2013, he was appointed as the chairman and the general manager of Shandong Huaju Energy Co., Ltd. In December 2014, he was appointed as the vice general manager of the Company. Mr. Zhao graduated from Shandong University of Science and Technology.
He Jing Born in June 1970, Mr. He Jing is a senior economist, and currently serves as a vice general manager of the Company. Mr. He joined the predecessor of the Company in 1992 and served as the vice director of the Human Resource Department of Yankuang Group in 2013 and the Vice Director of the Operation Management Department of Yankuang Group in 2014, the vice director and the director of the Materials Supply Center of the Company in 2015 and 2016 successively. In 2017, he assumed the position as the Director of the Marketing Center of the Company. He was appointed as a vice general manager of the Company in June 2017. He graduated from China Coal Economics Institute.

Annual Report 2019 127

Chapter 08 Directors, Supervisors, Senior Management and Employees

Name

Major Work Experience

Gong Zhijie Born in December 1965, Mr. Gong Zhijie is a research fellow in applied engineering technology with a master’s degree of engineering, and currently serves as a vice general manager of the Company. Mr. Gong joined the Company’s predecessor in 1985 and served as the vice manager of Xinglongzhuang Coal Mine of the Company in 2003. He served as the manager of Xinglongzhuang Coal Mine in 2014 and the manager of Jining No.3 Coal Mine of the Company in 2015 successively. In 2018, he assumed the position as the chief safety officer of the Company. He was appointed as a vice general manager of the Company in December 2018. Mr. Gong graduated from the China University of Mining Technology.

Jin Qingbin Born in November 1977, Mr. Jin Qingbin a senior accountant, a senior economist with an MBA degree, and currently serves as serves as the Secretary to the Board. Mr. Jin joined the Company in 1998 and was appointed as the vice director and the director of the Secretary Office of the Board successively. He assumed the position as the security representative of the Company in November 2013. In March 2016, he was appointed as the secretary to the Board. Mr. Jin graduated from Missouri State University.

Li Wei Born in July 1971, Mr. Li Wei is a research fellow in applied engineering technology with a (Deputy General master’s degree of engineering, and currently serves as serves as a vice general manager of Manager) the Company. Mr. Li joined the Company’s predecessor in 1990 and served as the deputy director of the preparatory office of Yankuang Jining No.3 power plant in May 2004, the vice general manager and general manager of Shandong Yankuang Jining No.3 Power Generation Co., Ltd in November 2004 and January 2014 respectively. In January 2017, he was appointed as the chairman and general manager of Shandong Huaju Energy Co., Ltd. He was appointed as a vice general manager of the Company in December 2019. Mr. Li graduated from Shandong University of Science and Technology.

Other explanations.

Not applicable.

128 Yanzhou Coal Mining Company Limited

Directors, Supervisors, Senior Management and Employees Chapter 08

(III) Share Incentive Mechanism to the Directors, Supervisors and Senior Management during the Reporting Period

								Unit: 10 thousand Shares	Unit: 10 thousand Shares
				Number of				Number	Market
		Number	new A Share		Exercisable	A Share		of A Share	price of A
		of A Share		options	A Share	options	Exercise	options	Shares at
		options		granted	options	exercised	price of	held at the	the end of
		held at the		during the	during the	during the	A Share	end of the	reporting
		beginning		reporting	reporting	reporting	options	reporting	period
Name	Title	of 2019		period	period	period	(RMB)	period	(RMB)
Wu Xiangqian	Director, General	0		32	0	0	9.64	32	10.56
	Manager
Liu Jian	Director, Vice	0		26	0	0	9.64	26	10.56
	General Manager
Zhao Honggang	Vice General	0		26	0	0	9.64	26	10.56
	Manager
Zhao Qingchun	Director, CFO	0		26	0	0	9.64	26	10.56
He Jing	Vice General	0		26	0	0	9.64	26	10.56
	Manager
Gong Zhijie	Vice General	0		26	0	0	9.64	26	10.56
	Manager
Jin Qingbin	Secretary to the	0		26	0	0	9.64	26	10.56
	Board
Li Wei	Vice General	0		15	0	0	9.64	15	10.56
	Manager
Total	/	0		203	0	0	/	203	/

Note: In 2019, the Company implemented the Share Option Scheme. For details, please refer to “Circumstance and Impact of the Share Incentive Scheme and Employee Stock Ownership Plan or Other Incentive Scheme to Employees” in “Chapter 6 Significant Events” of this annual report.

Annual Report 2019 129

Chapter 08 Directors, Supervisors, Senior Management and Employees

II. POSITIONS OF CURRENT AND RESIGNED DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT DURING THE REPORTING PERIOD

(I) Term of Office of Directors, Supervisors and Senior Management in Yankuang Group

	The shareholding			Beginning date	Termination
Name	company	Title		of office term	of the office term
Li Xiyong	Yankuang Group	Chairman, Secretary of the		15 February 2015
			Party Committee
Li Wei	Yankuang Group	General manager		18 May 2015
(Vice Chairman)
		Vice secretary of the Party		16 October 2019
			Committee
Wu Yuxiang	Yankuang Group	Deputy chief accountant		3 January 2016	28 January 2019
Gu Shisheng	Yankuang Group	Chairman of the Labor Union		29 January 2014
		Employee director		11 December 2015
		Member of Party’s standing		30 October 2015
			committee
Zhou Hong	Yankuang Group	General manager assistant		11 December 2015	28 December 2019
		Director of the organization		11 December 2015
			department of the Party
			Committee (human
			resource department)
		Employee supervisor		11 December 2015
		Member of Party’s standing		16 October 2019
			committee
Meng Qingjian	Yankuang Group	Deputy chief accountant		28 December 2017	28 December 2019
		Director of the finance		28 January 2014	28 December 2019
			management department
Zhang Ning	Yankuang Group	Director of the audit and risk		24 February 2016
			department
		Director of the audit center		31 May 2018
Explanation	No
on their
incumbency
in Yankuang
Group

130 Yanzhou Coal Mining Company Limited

Directors, Supervisors, Senior Management and Employees Chapter 08

(II) Term of Office of Directors, Supervisors and Senior Management in Other Entities in Addition to Yankuang Group

					Beginning date
Name	Name of other entities		Title		of office term
Li Wei	Yancoal International (Holding) Co., Ltd.		Chairman of the board		4 January 2018
(Vice Chairman)
Wu Xiangqian	Yancoal Australia Limited		Director		28 April 2017
	Yancoal International (Holding) Co., Ltd.		Director		4 January 2018
Liu Jian	Shaanxi Future Energy Chemical Co. Ltd.		Director		9 January 2017
	Yanmei Heze Neng Hua Co., Ltd		Director		15 March 2017
	Yanzhou Coal Shanxi Neng Hua Co., Ltd		Chairman		15 March 2017
	Yancoal International (Holding) Co., Ltd		Director		28 May 2018
	Yankuang Donghua Heavy Industry Company		Executive director		3 September 2018
		Limited
Guo Dechun	Yanzhou Coal Ordos Neng Hua		Secretary of the Party’s Committee		11 July 2018
		Company Limited
Zhao Qingchun	Inner Mongolia Haosheng Coal Mining Co., Ltd.		Director		28 May 2018
	Shengdi Fenlei Coal Preparation Engineering		Chairman of the supervisory		18 December 2014
		Technology (Tianjin) Co., Ltd.		committee
	Shandong Duanxin Supply Chain Management		Supervisor		9 July 2015
		Co., Ltd.
	Shandong Zhongyin International Trade Co., Ltd		Head of the supervisory committee		9 July 2015
	Qilu Bank Co., Ltd		Director		31 December 2015
	Yankuang Group Finance Co., Ltd		Director		20 December 2017
	Shanghai CIFCO Futures		Director		6 July 2015
	Shaanxi Future Energy Chemical Co., Ltd		Chairman of the supervisory		19 May 2014
				committee
	Duanxin Investment Holding (Beijing) Co., Ltd		Chairman		4 September 2019
	Huadian Zouxian Power Generation Company		Chairman of the supervisory		26 April 2016
		Limited		committee
	Duanxin Investment Holding (Shenzhen) Co., Ltd		Director and general manager		22 March 2016
	Qingdao Duanxin Asset Management Co., Ltd		Executive director		3 August 2016
	Yancoal Australia Limited		Director		28 April 2017
	Yancoal International (Holding) Co., Ltd.		Director		4 January 2018
	Shanghai Jujiang Asset Management Co., Ltd.		Chairman		18 December 2017
	Yanzhou Coal Yulin Neng Hua		Director		28 May 2018
		Company Limited
Guo Jun	Yanmei Heze Neng Hua Company Limited		Head of the supervisory committee		26 July 2014

Annual Report 2019 131

Chapter 08 Directors, Supervisors, Senior Management and Employees

					Beginning date
Name	Name of other entities		Title		of office term
Poon Chiu Kwok	Huabao International Holdings Limited		Executive director, vice president,		1 May 2006
				company secretary
	Sunac China Holdings Limited		Independent director		8 June 2011
	Sany Heavy Equipment International Holdings		Independent director		18 December 2015
		Limited
	AUX International Holdings Limited		Independent director		15 May 2015
	Chongqing Changan Minsheng APLL Logistics		Independent director		30 September 2011
		Co., Ltd.
	Green Town Service Group Co., Ltd.		Independent director		13 June 2016
	Tonly Electronics Holdings Limited		Independent director		12 July 2013
	TUS International Limited		Independent director		1 September 2015
	Yuanda China Holdings Limited		Independent director		12 April 2011
	Jinchuan Group International Resource Co. Ltd		Independent director		21 March 2017
	Honghua Group Co., Ltd		Independent director		15 June 2017
Wang Fuqi	Yanmei Heze Neng Hua Co., Ltd.		Director		26 July 2014
	Yancoal Australia Limited		Director		23 April 2015
	Shaanxi Future Energy Chemical Co. Ltd.		Director		19 May 2014
He Jing	Shandong Zhongyin International Trade Co., Ltd		Chairman		1 August 2017
	Yanzhou Coal Shanxi Neng Hua Co., Ltd		Director		1 August 2017
	Duanxin Investment Holding (Shenzhen) Co., Ltd		Chairman		23 January 2019
	Qingdao Vast Lucky International Trade Co., Ltd.		Chairman		23 January 2019
	Yanzhou Coal Co., Ltd. International Trade Branch		General manager		25 November 2019
Jin Qingbin	Duanxin Investment Holding (Shenzhen) Co., Ltd		Director		1 August 2017
	Yancoal International (Holding) Co., Ltd		Director		4 January 2018
Li Wei	Shandong Huaju Energy Co., Ltd.		Chairman, general manager		18 January 2017
(Deputy General
Manager)
Explanations on term	No
of office in other
entities in addition to
Yankuang Group

132 Yanzhou Coal Mining Company Limited

Directors, Supervisors, Senior Management and Employees Chapter 08

III. REMUNERATION POLICY AND ANNUAL REMUNERATION FOR DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Remuneration Approval Procedures for Directors, Supervisors and Senior Management

The remuneration for the Directors, Supervisors and senior management is proposed to the Board by the remuneration committee under the Board. Upon review and approval by the Board, any remuneration proposal for the Directors and Supervisors will be proposed to the Shareholders’ general meeting for approval. The remuneration for senior management is reviewed and approved by the Board.

Remuneration Calculating Basis for Directors, Supervisors and Senior Management

The Company adopts a combined annual remuneration, safety control deposit and special contribution award system as the means for assessing and incentivizing the Directors and senior management. The annual remuneration consists of annual basic salary and annual performance salary. The annual basic salary is determined according to the operational scale, profitability, operating management difficulty and employees’ income of the Company, whereas annual performance salary is determined by the actual operational results of the Company. The annual basic salaries for the Directors and senior management of the Company are pre-paid on a monthly basis and the annual performance salaries are cashed after the audit assessment to be carried out in the following year.

Actual Payment of Remuneration Please refer to the section headed Changes in Shareholding and for Directors, Supervisors and Senior Remuneration in this Chapter. Management

Total Remuneration received by Directors, Please refer to the section headed Changes in Shareholding and Supervisors and Senior Management by Remuneration in this Chapter. the end of the reporting period

IV. ELECTION OR RESIGNATION OF DIRECTORS AND SUPERVISORS AND APPOINTMENT OR DISMISSAL OF SENIOR MANAGEMENT DURING THE REPORTING PERIOD

(I) Changes of Members of Directors and Senior Management

Name	Title	Changes	Causes for Change
Wu Yuxiang	Director	Resigned	Other work commitment
Liu Jian	Director	Elected	Other work commitment
Li Wei	Deputy General Manager	Appointed	Other work commitment

Note: For details, please refer to the section headed Significant Events in Chapter Six.

Annual Report 2019 133

Chapter 08 Directors, Supervisors, Senior Management and Employees

(II) Changes in the Positions of the Company’s Directors, Supervisors and Senior Management in the Company’s Subsidiaries

(Prepared in accordance with the Hong Kong Listing Rules)

Title	Name	Before Changes	Before Changes	After Changes	Time of Changes
Director, General	Wu Xiangqian	Chairman of Duanxin Investment		–	23 January 2019
Manager			Holding (Shenzhen) Co., Ltd
Director, Chief Financial	Zhao Qingchun	Chairman of Qingdao Vast Lucky		–	23 January 2019
Officer			International Trade Co., Ltd.
		Director of Duanxin Investment		Chairman of Duanxin	4 September 2019
			Holding (Beijing) Co., Ltd	Investment Holding (Beijing)
				Co., Ltd
Deputy General Manager	He Jing	–		Chairman of Duanxin	23 January 2019
				Investment Holding
				(Shenzhen) Co., Ltd
		–		Chairman of Qingdao Vast	23 January 2019
				Lucky International Trade
				Co., Ltd.
		–		General Manager of Yanzhou	25 November 2019
				Coal Co., Ltd. International
				Trade Branch

V. PENALTY BY SECURITY REGULATORY AUTHORITIES IN RECENT THREE YEARS

Not Applicable.

134 Yanzhou Coal Mining Company Limited

Directors, Supervisors, Senior Management and Employees Chapter 08

VI. EMPLOYEES OF THE GROUP AND ITS MAIN SUBSIDIARIES

(I) Employees

On-the-job Employees of the Group	38,044
On-the-job Employees of its main subsidiaries	23,199
Total on-the-job Employees	61,243
Total resigned and retired staff whose welfare fees shall be paid
by the Group and its main subsidiaries	32,935
Composition by Specialty
Specialty	Number
Production personnel	29,407
Sales personnel	446
Technical personnel	5,308
Financial personnel	693
Administrative staff	3,154
Other support staff	22,235
Total	61,243
Education Level
Education Level	Number (Persons)
College and above	24,692
Secondary education	25,473
Junior high school and below	11,078
Total	61,243

(II) Remuneration Policy

The total wages and allowances of the staff of the Group for the year 2019 amounted to RMB5.203 billion. For the details of remuneration policy for Directors, Supervisors and senior management, please refer to the section headed Remuneration Policy and Annual Remuneration for Directors, Supervisors and Senior Management in this chapter.

The Group adopts a post-performance salary system for employees other than Directors, Supervisors and senior management, which consists post basic salary and post-performance salary. The post-performance salary is cashed upon assessment of individual post performance while putting the overall economic benefit of the Company into consideration.

Annual Report 2019 135

Chapter 08 Directors, Supervisors, Senior Management and Employees

(III) Training Plan

The Group values employee training in respect of technical skills and professional competence. By making full use of various educational resources, training institutes and various ways of training, the Group focused on the training of professional skills and improved the training of political ideology, management, ongoing education, skills, safety, transfer-employment talent, pre-employment and others. In 2019, it was planned that 56,244 persontimes would participate off-job training and 66,490 person times actually participated, representing a completion rate of 118%.

(IV) Labor Outsourcing

Not Applicable

VII. OTHERS

(I) Service Contracts of Directors and Supervisors

No Director or Supervisor has entered into any service contract with the Company, which is not terminable by the Company within one year without payment of compensation (other than statutory compensation).

(II) Interests of Directors, Supervisors and Senior Management in Contracts

None of the Directors, Supervisors or senior management of the Company had a direct or indirect material interest in any material contract entered into or performed by the Company, its Controlling Shareholder, any of its subsidiaries or subsidiaries of its controlling shareholder during the year ended 31 December 2019.

(III) Directors’, Supervisors’ and Senior Managements’ Interest in Competing Business

As at 31 December 2019, none of the Directors, Supervisors or senior management has interests in any business that competes or is likely to compete, either directly or indirectly, with the business of the Company.

Except for their working relationship, there is no financial, business, family or any other material relationship between the Directors, Supervisors and senior management of the Company.

136 Yanzhou Coal Mining Company Limited

Chapter 09

Corporate Governance

I. INFORMATION ON CORPORATE GOVERNANCE

The Company has closely monitored the securities market standards and rule of law, and actively improved its corporate governance structure. During the reporting period, the Company further improved its corporate governance structure. The Company, in accordance with the latest regulatory rules and requirements applicable at its listed jurisdictions, made amendments to terms in relation to the repurchase of the Company’s shares in the Articles of the Company, and accordingly amended its Rules of Procedures for Shareholders’ General Meeting, Rules of Procedures for the Board of Directors, Rules of Procedure for Supervisory Committee based on the amendments to the Articles of the Company.

Whether there is significant difference between the corporate governance of the Company and the requirements in relevant documents specified by the CSRC. If any, the reason should be stated.

Since the beginning of its listing, the Company, in accordance with the Company Law, Securities Law and relevant regulatory requirements at its listed places in China and aboard, following the principles of transparency, accountability and protection of the rights and interests of all Shareholders, has established a relatively regulated and robust corporate governance structure, which does not have significant difference with the requirements in relevant documents specified by the CSRC.

II. SHAREHOLDERS’ GENERAL MEETING DURING THE REPORTING PERIOD

			Designated Website on which	Date of Resolution
Session and Number of Meeting		Date of Meeting	Resolutions Posted	Disclosed
The 2019 First Extraordinary General Meeting		12 February 2019	Website of the Shanghai Stock Exchange:	12 February 2019
			(http://www.sse.com.cn)
The First Class Meeting of the Holders of		12 February 2019		12 February 2019
A shares for the year 2019			Website of the HKEX:
			(http://www.hkexnews.hk)
The First Class Meeting of the Holders of		12 February 2019		12 February 2019
H shares for the year 2019			Website of the Company:
			(http://www.yanzhoucoal.com.cn)
The 2018 Annual General Meeting		24 May 2019		24 May 2019
The Second Class Meeting of the Holders of		24 May 2019		24 May 2019
A shares for the year 2019
The Second Class Meeting of the Holders of		24 May 2019		24 May 2019
H shares for the year 2019
The 2019 Second Extraordinary General Meeting		1 November 2019		1 November 2019
Note: The date of disclosure of the resolutions	published is the date set out in the resolutions.

Explanations for the shareholders’ general meetings.

Not applicable.

Annual Report 2019 137

Chapter 09 Corporate Governance

III. PERFORMANCE OF DIRECTORS

(I) Director’s Attendance of the Board Meeting and the General Meeting of Shareholders

									Attendance
									at the
									General
				Attendance at the Board Meetings					Meetings
		Times			Times of			Whether
	Whether	of Board			Presence			Absent
	Independent	meeting	Times of		via	Times of		from Two
	Director	entitled to	Presence at		Telecomm-	Presence by	Times of	Consecutive	Times of
Name of Directors	or not	attend	Person		unication	Proxy	Absence	Meetings	Presence
Li Xiyong	No	9	9		9	0	0	No	3
Li Wei	No	9	9		9	0	0	No	4
Wu Xiangqian	No	9	9		9	0	0	No	7
Liu Jian	No	5	5		5	0	0	No	0
Guo Dechun	No	9	9		9	0	0	No	0
Zhao Qingchun	No	9	9		9	0	0	No	1
Guo Jun	No	9	9		9	0	0	No	6
Kong Xiangguo	Yes	9	9		9	0	0	No	7
Cai Chang	Yes	9	9		9	0	0	No	3
Poon Chiu Kwok	Yes	9	9		9	0	0	No	7
Qi Anbang	Yes	9	9		9	0	0	No	4
Wu Yuxiang (Resigned)	No	4	4		4	0	0	No	0

Mr. Qi Anbang, an independent Director, was unable to attend the 2019 first extraordinary general meeting of the Company, the first class meeting of the holders of A Shares for the year 2019, the first class meeting of the holders of H Shares for the year 2019 held on 12 February 2019, due to work reasons; Mr. Cai Chang, an independent Directors, was unable to attend the 2018 annual general meeting of the Company, the second class meeting of the holders of A Shares for the year 2019, the second class meeting of the holders of H Shares for the year 2019 held on 24 May 2019 and the 2019 second extraordinary general meeting of the Company held on 1 November 2019 due to work reasons.

Explanations for not attending the Board meetings in person for two consecutive times.

Not Applicable.
Times of Board meetings held during the reporting year	9
of which: On-Site meetings	0
Meetings via telecommunication	9
On-Site meetings combined with telecommunication	0

138 Yanzhou Coal Mining Company Limited

Corporate Governance Chapter 09

(II) Independent Directors’ Opposing Opinions against Relevant Matters of the Company

Not Applicable.

(III) Others

Not Applicable.

IV. DISCLOSURES ON OPPOSING OPINIONS GIVEN BY THE COMMITTEES TO THE BOARD DURING THE REPORTING PERIOD, IF ANY

Not Applicable.

V. RISKS IDENTIFIED BY THE SUPERVISORY COMMITTEE

Not Applicable.

During the reporting period, all Supervisors of the Company have, in accordance with the Company Law, the Articles and the Rules of Procedure for the Supervisory Committee, faithfully performed their duties, safeguarded the rights and interests of the Company and all its shareholders and carried out works under principle of good faith.

The Supervisory Committee of the Company had no objections to the supervisory items during the reporting period, and confirmed no risks existing in the Company during the reporting period.

VI. EXPLANATION ON WHY THE COMPANY CANNOT GUARANTEE INDEPENDENCE AND SEPARATION OF ITS BUSINESS, PERSONNEL, ASSETS, ORGANIZATION AND FINANCE FROM ITS CONTROLLING SHAREHOLDERS

Not Applicable.

Relevant solution, work schedule and follow-on work plan on controlling shareholders with horizontal competition.

Not Applicable.

VII. THE ESTABLISHMENT AND IMPLEMENTATION OF THE APPRAISAL AND INCENTIVISATION FOR SENIOR MANAGEMENT DURING THE REPORTING PERIOD

The Company has adopted a combined annual remuneration, safety control deposit and special contribution award system as the means for assessing and incentivizing the senior management, which links the assessment results of the senior management with the economic and operational achievement of the Company. In accordance with the relevant operation and management indicators and standards, the Company assesses, rewards or penalizes the senior management for their performance and efficiency. Pursuant to the completion of the operation hurdles by the senior management and the results of the assessment, the Company would pay the remuneration to the senior management for the year 2019.

139

Annual Report 2019

Chapter 09 Corporate Governance

In 2019, the Company implemented A share incentive scheme, for details, please refer to relevant content in “Circumstance and Impact of the share incentive scheme, employee stock ownership plan or other incentive scheme to employees” in “Chapter 6 Significant Events”.

VIII. REPORT OF SELF-EVALUATION ON INTERNAL CONTROL

In accordance with the domestic and overseas listing regulatory requirements, the Company formulated the Design and Applications on Internal Control of Yanzhou Coal in 2006, establishing an effective operating internal control system.

In 2011, in accordance with the relevant requirements under the “General Rules on Internal Control for Enterprises” and the “Supporting Guidelines of Internal Control for Enterprises” jointly issued by five ministries including Ministry of Finance, and the regulatory requirements of places where the Company are listed, the Company, based on 18 provisions in the Supporting Guidelines of Internal Control for Enterprises and its business practice, has issued 7 new guidelines regarding internal control procedures and internal control policies applied at three levels in the Group, i.e. the Company, its subordinated departments and subsidiaries, and their businesses, covering production, inventory, taxation, legal affairs, etc., which further improved and strengthened the internal control system.

The Board and its subordinate special committees are responsible for the establishment and effective implementation of internal control system; the Supervisory Committee is responsible for supervision of the internal control system established and implemented by the Board; the management is responsible for the organization and management of the daily operation of internal control.

The Board has assessed the effectiveness of the Company’s internal control system once a year since 2007. At the thirty-third meeting of the seventh session of the Board held on 22 April 2020, the Board made an assessment on the effectiveness of the internal control systems of the Company for the year 2019. The Board, after assessment, believed that the internal control system of the Company is sound and has been implemented effectively and no major defect was found in the design of the internal control or its implementation.

The report of self-evaluation on internal control of the Company was posted on the Shanghai Stock Exchange website, the HKEX website and the Company’s website.

The Company formulated the “Measures on Overall Risk Management” and established a risk IT management and control platform and a sound risk control mechanism. The Company, through the risk IT management and control platform, conducted overall risk management work including risk identification, assessment, response and the monitoring of key risk points within the scope of the Company and its subsidiaries each year, and issued the “Annual Risk Assessment Report” and “Annual Risk Control Report”; developed practical risk control strategies and solutions for the identified major risks, regularly summarized the risk control and prepared a major risk control report. With the help of IT measures, through the accurate identification, assessment and quantitative analysis, scientific response and regular tracking evaluation of major risks, the closed-loop control of the whole process of major risks has been realized.

The Board is responsible for the aforementioned risk control and internal control systems and reviews the effectiveness of such systems in a timely manner. The Board further clarifies that the foregoing system is designed to manage, and not eliminate, the risk of failure to achieve business objectives, and to make reasonable, but not absolute assurances that there will be no material misstatement or loss.

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Corporate Governance Chapter 09

In terms of processing and disclosing inside information, the Company has formulated its internal systems, such as the Management System of Securities Held and Transacted by Directors, Supervisors, Senior Management and Insiders, the Rules for Disclosure of Information, the Rules for Insiders Registration and Management, and the Rules for Material Information Internal Report, which define inside information and the scope, reporting process, registration and recording, prohibited behaviors for inside man, that strictly control the size of inside man and prevent the leakage of inside information.

Explanation of significant defects in internal control during the reporting period

Not Applicable.

IX. THE ASSESSMENT OF THE COMPANY’S INTERNAL CONTROL SYSTEM BY THE AUDITORS

The Company has appointed domestic annual auditing accountants since 2013 to make a review and assessment on whether the internal control of the Company complied with the domestic regulatory requirements and the efficiency of internal control of the financial statements.

The Company appointed ShineWing Certified Public Accountants (Special General Partnership) to make a review and assessment of the efficiency of internal control of the 2019 financial statements. Shine Wing Certified Public Accountants believed that, in accordance with the requirements of General Rules on Internal Control for Enterprises and related regulations, the Company maintained efficient internal control of financial statement in all material aspects.

The full version of the audit report of the internal control of the 2019 financial statement report issued by ShineWing Certified Public Accountants (Special General Partnership) was posted on the Shanghai Stock Exchange website, the HKEX website and the Company’s website.

Whether disclose audit report of the internal control: Yes

X. OTHERS

CORPORATE GOVERNANCE REPORT (PREPARED IN ACCORDANCE WITH THE HONG KONG LISTING RULES)

(I) Compliance with Corporate Governance Practices and Model Code

The Group has set up a relatively regulated and robust corporate governance system and has abided by the corporate governance principles of transparency, accountability and protection of the rights and interests of all Shareholders.

Annual Report 2019 141

Chapter 09 Corporate Governance

The Board believes that good corporate governance is important to the operation and development of the Group. The Group, has established reporting mechanism to all Directors so as to ensure Directors are all informed of its business, and believed that the regular Board meetings held are efficient communication ways for nonexecutive Directors to make full and open discussion on the Group’s business. The Board regularly reviews corporate governance practices to ensure the Company’s operation is in compliance with the laws, regulations and supervisory rules of the places where the Company is listed, and consistently endeavors to implement a high standard of corporate governance.

The corporate governance rules implemented by the Group include, but not limited to the followings: the Articles of Association, the Rules of Procedures for Shareholders’ General Meeting, the Rules of Procedures for the Board of Directors, the Rules of Procedures for Supervisory Committee, the Detailed Work Policy of the General Manager, the Work Policy of the Independent Directors, the Rules for Disclosure of Information, the Rules for the Approval and the Disclosure of Connected Transactions of the Company, the Rules for the Management of Relationships with Investors, the Management System of Securities Held and Transacted by Directors, Supervisors, Senior Management and Insiders, the Rules for Monitoring and Assessment of the Implementation of the Resolutions of the Board, the Rules for Report by Directors and Supervisors Dispatched by the Company, the Rules for Management of Employees Stationed at Subsidiaries, the Standard of Conduct and Professional Ethics for Senior Employees, the Measures on the Establishment of Internal Control System and the Measures on Overall Risk Management. For the year ended 31 December 2019 and as of the disclosure date of this annual report, the corporate governance rules and practices of the Group are compliant with the principles and the code provisions set out in the Corporate Governance Code (the “Code”) contained in the Hong Kong Listing Rules. The Group’s corporate governance performance also meets the requirements of the Code.

The following are the major aspects of the corporate governance practice adopted by the Group that are more stringent than the Code in practice:

To actively carry forward the development of the special committees to the Board. Besides the requirement to establish the audit committee to the Board (the “Audit Committee”), the remuneration committee to the Board (the “Remuneration Committee”) and the nomination committee to the Board (the “Nomination Committee”) as set out in the Code, the Company also established the strategy and development committee to the Board (the “Strategy and Development Committee”). All these committees were entrusted with detailed responsibilities;
To formulate more stringent provisions in the Management System of Securities Held and Transacted by Directors, Supervisors, Senior Management and Insiders, the Standard of Conduct and Professional Ethics of the Senior Employees than those of the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model Code”);
To establish an internal control system in accordance with the Guidance on Internal Control for Listed Companies issued by the Shanghai Stock Exchange, General Rules on Internal Control jointly issued by five ministries including the Chinese Ministry of Finance and the provisions under the Code. The standards of the internal control system are more detailed than those of the Code;
To announce the evaluation conclusions of the Board and auditors in relation to the effectiveness of internal control of the Company for the year 2019.

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Corporate Governance Chapter 09

(II) Securities Transactions of Directors and Supervisors

Having made inquiries with all the Directors and Supervisors, the Directors and Supervisors have strictly complied with the Model Code and the Management System of Securities Held and Transacted by Directors, Supervisors, Senior Management and Insiders during the reporting period.

On 21 April 2006, the Code for Securities Transactions of the Management was approved at the fifth meeting of the third session of the Board. On 23 April 2010, the Code for Securities Transactions of the Management was amended at the fourteenth meeting of the fourth session of the Board, which is drafted based on the Model Code, but is more stringent than the Model Code after taking the domestic and overseas laws, regulations and supervision requirement in relation to securities transactions into account.

On 13 February 2018, the Management System of Securities Held and Transacted by Directors, Supervisors, Senior Management and Insiders was approved, and the Code for Securities Transactions of the Management was abolished at the tenth meeting of the seventh session of the Board. On 5 December 2018, the Management System of Securities Held and Transacted by Directors, Supervisors, Senior Management and Insiders was amended at the twentieth meeting of the seventh session of the Board, which is drafted based on the Code for Securities Transactions of the Management, standardized the behavior of Securities Held and Transacted by Insiders, added the penalty rules for violating regulatory measures, but is more comprehensive and stringent than the Code for Securities Transactions of the Management.

(III) Board of Directors

As at the disclosure date of this annual report, the Board comprised eleven Directors including four independent non-executive Directors. The names, appointments and resignations of the Directors are set out in the section headed “Chapter 8 Directors, Supervisors, Senior Management and Employees” in this annual report.

The duties and authorities of the Board and the senior management team have been stipulated in detail in the Articles.

The Board is mainly responsible for making strategic decisions for the Company and the supervision of operations of the Company and its management team. The Board primarily has the powers to decide on operation plans and approve investment projects, to formulate the policy for financial decision and distribution of profits, to implement and review the internal control system, to execute the duty of corporate governance and to confirm the management organization and the basic management system of the Company, etc.

The management team of the Company is mainly responsible for the operation and management of the production of the Company and shall exercise the following functions and powers: to be in charge of the operation and management of the Company’s production; to organize the implementation of the resolutions of the Board; to organize the implementation of the Company’s annual business plan and investment program; to draft and propose the Company’s management organization structure; to draft the Company’s basic management rules; to protocol a package of staff’s salaries, benefits, awards and penalties, and to decide the appointment and dismissal of the staff of the Company, etc.

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Chapter 09 Corporate Governance

The Company has received from each of the independent non-executive Directors an annual confirmation concerning his independence pursuant to the Hong Kong Listing Rules. The Company confirms that all of the four independent non-executive Directors comply with the qualification requirements of independent nonexecutive Directors as required under the Hong Kong Listing Rules.

The Directors are responsible for preparing the Company’s financial accounts as a true and fair reflection of the Company’s financial situation, operating results and cash flows for the relevant accounting period.

Since 2008, the Company has purchased liability insurance for the Directors, Supervisors and senior management of the Company and its subsidiaries every year.

(IV) Board Meetings and Director’s Training

According to the Articles and the Rules of Procedures for the Board of Directors of the Company, all Directors are entitled to propose matters to be included in the agenda for Board meetings. The Company delivered the meeting notice to the Directors fourteen days before an regular Board meeting or three days before an extraordinary Board meeting; circulated the agenda and information for discussion of the meeting to the Directors for their review five days before an regular Board meeting or three days before an extraordinary Board meeting; kept detailed minutes of the matters considered and the decisions formed by each Director in the meetings; sent the draft versions and the final versions of the minutes of Board meetings to all Directors for their comments and records respectively within a reasonable time after the Board meetings were held. Each Director is entitled to inspect the minutes of Board meetings kept by the Company at any reasonable time.

The Board and each Director has independent channels to communicate with the senior management of the Company. Any of the Directors is entitled to inspect the files and relevant documents of the Board.

The Company has set up a special institution under the Board, through which all Directors are able to access the services of the Secretary to the Board. The Board is entitled, at the Company’s expense, to seek independent professional advice for its Directors in appropriate circumstances. When the Board reviews connected transactions, any connected Director would abstain from voting on such transactions.

For the year ended 31 December 2019, nine Board meetings were held. For the Directors’ attendance at the Board meetings and the Shareholders’ general meetings, please refer to the section headed Performance of Directors in this chapter.

All the Directors were involved in the continued professional development to strengthen their knowledge and skills and make greater contributions to the Board.

144 Yanzhou Coal Mining Company Limited

Corporate Governance Chapter 09

The trainings of Directors during the reporting period are as follows:

Name	Training
Li Xiyong	attended the training for Supervision of Securities and Futures in Shandong held
	in Jinan, Shandong on 15 April 2019.
Zhao Qingchun	attended the training for 2019 annual report disclosure and audit in Shandong
	held in Jinan, Shandong on 10 December 2019.
Kong Xiangguo	attended the training for compliance performance of independent directors of
	listed companies held in Yantai, Shandong on 1 August 2019.
Poon Chiu Kwok	during January 2019 to December 2019, participated in several training courses
	in Hong Kong related to securities listing rules, company law and accounting.
	The total training time was not less than 60 hours.

During the reporting period, besides inviting domestic and overseas legal consultants and annual audit accountants of the Company to conduct review and study on domestic and overseas regulatory rules and accounting standards, all Directors have been circulated with materials in relation to laws and regulations amendments, updates on regulatory requirements, training materials and typical case studies in a timely manner, through which, they have continuously improved their working capabilities.

(V) Chairman and Chief Executive Officer

Mr. Li Xiyong serves as the chairman of the Board of the Company (the “Chairman”), and Mr. Wu Xiangqian serves as the general manager of the Company (the “General Manager”). The authorities and responsibilities of the Chairman and the General Manager are clearly divided. Details of such authorities and responsibilities of the Chairman and the General Manager are documented in the Articles.

In 2019, the Chairman and independent non-executive Directors held a meeting without the presence of other Directors.

(VI) Non-Executive Directors

Each of the non-executive Directors has entered into a service contract with the Company. Pursuant to the Articles, the term of office of the members of the Board (including the non-executive Directors) is three years. The members of the Board can be reappointed consecutively after the expiry of the term. However, the term of reappointment of independent non-executive Directors cannot exceed six years.

The duties of the non-executive Directors include, but are not limited to, the followings:

to participate in the Board meetings of the Company, provide independent advice on matters involving strategy, policy, performance of the Company, accountability, resources, main appointments and codes of conduct;

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to play a leading and guiding role in the event of potential conflicts of interest;
to act as members of the Audit Committee, Remuneration Committee, Nomination Committee and Strategy and Development Committee;
to scrutinize whether the performance of the Company achieves its objectives and targets, supervise and report the performance of the Company.

(VII) Performance of Committees to the Board

As approved at the first meeting of the seventh session of the Board held on 29 June 2017, the Company set up the Audit Committee, the Remuneration Committee, the Nomination Committee and the Strategy and Development Committee of the seventh session of the Board. All the special committees to the Board formulate the terms of reference which set out the role, composition and responsibilities of each committee. During the reporting period, every committee performed its duties in compliance with the terms of reference strictly.

As the Company has not established a corporate governance committee, the Board is responsible for matters in relation to corporate governance, mainly including (1) to develop and review the Company’s policies and practices on corporate governance; (2) to review and monitor the training and continuous professional development of directors and senior management; (3) to review and monitor the Company’s policies and practices in relation to their compliance with legal and regulatory requirements; (4) to formulate, review and monitor the code of conduct and compliance manual applicable to employees and Directors; and (5) to review the Company’s compliance with the Corporate Governance Code of the stock exchange on which the Company’s securities are listed and disclosure in the Corporate Governance Report.

Audit Committee to the Board

The Audit Committee comprises four independent Directors, namely Mr. Cai Chang, Mr. Kong Xiangguo, Mr. Poon Chiu Kwok, Mr. Qi Anbang and one employee Director Mr. Guo Jun. Mr. Cai Chang serves as the chairman of the Audit Committee.

The Audit Committee’s main responsibilities include recommending the appointment or replacement of external auditor, reviewing the accounting policy and practice, financial situation and financial reporting procedures, and reviewing financial monitor and control system, internal control system and risk management system of the Company.

During the reporting period, the Audit Committee conscientiously fulfilled the responsibilities specified in the Terms of Reference of the Audit Committee and conducted various tasks in a strict and regulated manner. The Audit Committee already reviewed the interim results of the Company for the first half of 2019 and the final results of the Company for the year 2019, and also examined the effectiveness of the risk management and the internal control system of the Group for the year 2019. The examination covered financial control, operational control, compliance control and all other material aspects under control. The Audit Committee considered that the risk management and the internal control system of the Group is effective and adequate.

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During the reporting period, the Audit Committee held four meetings. Details are as follows:

Date	Main Topic	Member	Present
22 March 2019	ShineWing Certified Public Accountants and	Cai Chang	√
	SHINEWING (HK) CPA Limited reported to	Kong Xiangguo	√
	the Audit Committee of the Board on the audit	Poon Chiu Kwok	√
	matters of the 2018 annual report.	Qi Anbang	√
		Guo Jun	√
22 March 2019	The audit committee evaluated the work of	Cai Chang	√
	the annual audit accountants in 2018 and puts	Kong Xiangguo	√
	forward opinions on the employment and	Poon Chiu Kwok	√
	remuneration arrangement in 2019, approved the	Qi Anbang	√
	internal control self-evaluation report and the	Guo Jun	√
	audit committee’s performance report in 2018.
23 August 2019	ShineWing Certified Public Accountants and	Cai Chang	√
	SHINEWING (HK) CPA Limited reported to the	Kong Xiangguo	√
	Audit Committee of the Board on the interim	Poon Chiu Kwok	√
	audit in 2019.	Qi Anbang	√
		Guo Jun	√
23 August 2019	The Audit Committee debriefed a special report	Cai Chang	√
	by the management of the Company on updates	Kong Xiangguo	√
	on accounting policy, risk management and	Poon Chiu Kwok	√
	control, anti-fraud works. ShineWing Certified	Qi Anbang	√
	Public Accountants provided special training on	Guo Jun	√
	the impact on annual report of implementation
	of the new accounting standard and updates on
	listing rules.

On 15 April 2020, the Audit Committee convened a special meeting to hear major issues and suggestions for improvement in the 2019 Annual Report audit conducted by ShineWing Certified Public Accountants and SHINEWING (HK) CPA Limited. The report was voted and the resolution was submitted to the board of directors for review.

Remuneration Committee to the Board

The Company established the Remuneration Committee to the Board. The seventh session of Remuneration Committee comprises of three members, namely Mr. Qi Anbang, Mr. Poon Chiu Kwok and Mr. Cai Chang. Mr. Qi Anbang serves as the chairman of the Remuneration Committee.

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The Remuneration Committee’s responsibilities mainly including: (1) to formulate remuneration policies for the Directors, Supervisors and senior management; (2) to assess and cash the annual remuneration for the Directors, Supervisors and senior management; (3) to review the annual performance of the Directors, Supervisors and senior management; (4) to review the disclosure on remuneration of the Company.

During the reporting period, the Remuneration Committee held one meeting. Details are as follows:

Date	Main	Topic	Member	Present
6 March 2019	1.	discussed and reviewed the Proposal on	Poon Chiu Kwok	√
		Remuneration for Directors, Supervisors and	Qi Anbang	√
		Senior Management for the Year 2019;	Cai Chang	√
	2.	discussed and reviewed the Remuneration
		Standards and Operation Assessment Target
		for the Directors, Supervisors and Senior
		Management.

Nomination Committee to the Board

The Nomination Committee comprises of two independent Directors, namely Mr. Poon Chiu Kwok and Mr. Kong Xiangguo, and Mr. Li Xiyong, the Chairman of the Company. Mr. Poon Chiu Kwok serves as the chairman of the Nomination Committee.

The main duties of the Nomination Committee are: (1) to recommend to the Board on the structure, the number of Directors and the composition of the Board according to the operation, asset scale and share structure of the Company, to realize the diversity of the Board members by considering the related factors including but not limited to gender, age, culture and education background, professional experience, skills and service year, etc., according to the Company’s business model and specific needs; (2) to study and formulate the selection criteria and procedures for Directors and senior management, and make relevant recommendations; (3) to extensively identify eligible candidates for the positions of Directors and senior management of the Company, and make relevant recommendations to the Board; (4) to review the candidates for Directors and senior management, and to recommend to the Board on the proposed appointments and the succession plan of Directors and senior management and other relevant matters; (5) to assess the independence of independent non-executive Directors.
Summary of the Company’s diversity policy for Board members:

The Nomination Committee considers the diversity of the Board members from various aspects, including but not limited to gender, age, cultural and educational background, professional experience, skills and years of service. After considering the above factors, the Nominating Committee makes a final recommendation to the Board on the merits of the candidates and their potential contribution to the Company and the Board.

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The Company’s director nomination policy and implementation:

The employee directors are democratically elected by the staff and workers of the Company through their congresses or other forms.

Candidates for non-employee representative directors are normally submitted to the shareholders’ meeting by the board of directors in the form of proposals. The Shareholders and the Board of Supervisors of the company may nominate candidates for non-employee representative directors in accordance with the articles of incorporation.

The Board of Directors, the Board of supervisors, or the Shareholders holding more than one percent of the Company’s issued shares separately or in combination may propose candidates for independent directors, which should be elected and decided by the Shareholders’ meeting.

During the reporting period, the Nomination Committee held two meetings. The details are as follows:

Date	Main Topic	Member	Present
27 March 2019	The fourth meeting of the seventh session of the	Poon Chiu Kwok	√
	Nomination Committee to the Board reviewed	Li Xiyong	√
	and passed the nomination of Mr. Liu Jian as	Kong Xiangguo	√
	the candidate for director of the board of the
	Company.
25 December 2019	The fifth meeting of the seventh session of the	Poon Chiu Kwok	√
	Nomination Committee to the Board reviewed	Li Xiyong	√
	and passed the nomination of Mr. Li Wei as the	Kong Xiangguo	√
	candidate for deputy general manager of the
	Company.

During the reporting period, pursuant to the relevant requirements of the Articles, the Nomination Committee reviewed the structure, the number of Directors and the composition of the Board (including professional skills, knowledge and experience) according to the operation, asset scale and share structure of the Company, and considered that the structure, composition and Directors numbers of the current session of the Board were suitable to and consistent with the Company’s development strategy; and the independence of the independent non-executive Directors was in compliance with the regulatory requirements.

Strategy and Development Committee to the Board

The Strategy and Development Committee comprises Mr. Li Xiyong, Director, Mr. Li Wei, Director, Mr. Wu Xiangqian, Director and Mr. Qi Anbang, independent Director. Mr. Li Xiyong serves as the chairman of the Strategy and Development Committee.

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The main duties and responsibilities of the Strategy and Development Committee include: (1) to conduct research and propose on the long-term development strategy and significant investment decisions of the Company; (2) to conduct research and propose on the annual strategic development plan and operational plan of the Company; (3) to supervise the implementation of the Company’s strategic plan and operational plan; (4) to conduct research and propose on other significant issues affecting the development of the Company; (5) other duties and responsibilities delegated by the Board.

During the reporting period, the Strategy and Development Committee held one meeting. The details are as follows:

Date	Main Topic	Member	Present
29 November 2019	Discussed and reviewed the plan of production	Li Xiyong	√
	and operation and the plan of capital investment	Li Wei	√
	of the Company for the year 2020	Wu Xiangqian	√
		Qi Anbang	√

(VIII) Auditors’ Remuneration

The details are set out in the section headed “Appointment and Dismissal of Auditors” of “Chapter 6 Significant Events” in this annual report.

(IX) Company Secretary

As considered and approved at the first meeting of the seventh session of the Board held on 29 June 2017, Mr. Jin Qingbin was appointed as the Secretary to the Board and the Company secretary, and Ms. Leung Wing Han Sharon was appointed as the co-secretary to the Company.

Mr. Jin Qingbin has worked on public company’s governance and investor relations management for a long time. He is a senior accountant and senior economist with bachelor degree of economics and master degree of business administration. He is competent to the company secretary in the aspects of academics, professional qualification and work experience. Meanwhile, Mr. Jin is a member of the senior management who can well know daily operation so as to ensure the effective communication between the Directors and other senior management and help the Board strengthen corporate governance mechanism construction.

During the reporting period, Mr. Jin participated in the relevant trainings organized by domestic and overseas regulatory authorities such as the CSRC, the Shanghai Stock Exchange and the Hong Kong Institute of Chartered Secretaries for more than 15 hours in total.

The duties and responsibilities of the company secretary are set out in detail in the Articles.

(X) Shareholder’s Right

The procedures for Shareholders’ proposal to convene a general meeting of Shareholders, for submitting inquiries to the Board and for submitting proposals at general meetings have been set out in details in the Articles.

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After providing enough contact details, the qualified Shareholders can propose to convene an extraordinary general meeting by the following ways: (1) Shareholders are entitled to propose to the Board to convene an extraordinary general meeting in writing and state the motions of the meeting. Within the prescribed period, the Board shall provide its written decision to the Shareholders; (2) If the Board decides against convening the proposed extraordinary general meeting, the shareholders are entitled to propose to convene the extraordinary general meeting to the Supervisory Committee in writing; (3) If the Supervisory Committee fails to issue a notice of general meeting within the prescribed period, the Supervisory Committee shall be deemed not to convene and hold the meeting. Shareholders may convene and hold the extraordinary general meeting on their own. All reasonable expenses incurred for such extraordinary general meeting convened by Shareholders as a result of the failure of the Board and the Supervisory committee to convene an extraordinary general meeting as required by the above request(s) shall be borne by the Company. The Board and the secretary of the Company should cooperate in organizing and convening the Shareholders’ extraordinary general meeting and the relevant matters.

After submitting relevant proof of identities and enough contact details, the Shareholders are entitled to inquire the Board for the inspection of the register of Shareholders, personal information of Directors, Supervisors and senior management, minutes of Shareholders’ general meetings, resolutions of the meetings of the Board, resolutions of the meetings of the Supervisory Committee, financial and accounting reports and the copies of the Company’s debentures.

The qualified Shareholder(s) may propose special resolutions in writing to the convener 10 days before the Shareholders’ general meeting is convened. The convener shall issue a supplementary notice of the general meeting within two days after receiving the proposal to announce the content of the proposal. All Directors, Supervisors and senior management should attend the meeting. Except where trade secrets of the Company are involved, the Board, the Supervisors and the senior management should make an explanation or statement regarding the Shareholders’ queries and suggestions.

(XI) Investor Relations

1. Continuously optimizing the Rules for the Management of Relationships with Investors

Pursuant to the laws and supervisory regulations of both the domestic and overseas markets where the Company’s shares are traded, and based on day-to-day business practices, the Company has developed and enhanced the Rules for the Management of Relationship with Investors and the Rules for Disclosure of Information etc. to regulate the management of investor relations by effective information collection, compilation, examination, disclosure and feedback control procedures.

The Company amends and perfects the Articles and other documents from time to time. The details of the amendments are set out in the section headed “Related Information on Corporate Governance” under this Chapter.

2. Actively communicating with the investors

The Company always communicates with investors sincerely, adhering to the principles of transparency, equity and justice.

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During the reporting period, the Company reported to investors on its business operations and collected opinions and recommendations on the Company from investors and capital market through face-to-face meetings at international and domestic road-shows. In order to facilitate its bidirectional communications with the capital market, the Company has actively participated in investment strategy meetings organized by brokers at home and abroad, invited investors for Company site visits and also made full use of the “SSE e-interactive platform”, hotlines, faxes and e-mails. The Company has had nearly 600 contacts with analysts, fund managers and investors.

The Company emphasizes greatly on communications with Shareholders through Shareholders’ general meetings, and encourages the minority Shareholders to participate in Shareholders’ general meetings by various means such as Internet voting. The chairman and vice chairman of the Board, the general manager, the chairman and the vice chairman of the Supervisory Committee, and the relevant Directors, Supervisors and senior management should attend the Shareholders’ general meeting. At the Shareholders’ meeting, each proposal is submitted separately and all the proposals are voted by poll.

(XII) Information Disclosure

The Company emphasizes on the truthfulness, timeliness, fairness, accuracy and completeness of information disclosure and has ensured the disclosed information simple, clear, easy to understand, and complies with the Hong Kong Listing Rules. The Company has set up standardized and effective information collection, compilation, examination, disclosure and feedback control procedures to ensure that the disclosure of information is in compliance with the regulatory requirements of places where the Company’s shares are listed, and also to give investors reasonable access to the Company’s information.

The chief financial officer of the Company shall ensure the financial report and related information disclosed are a true, accurate, fair and complete reflection of the Company’s business operations and financial status, applying the applicable accounting standards and relevant rules and regulations. The Company, through its website, realizing simultaneous disclosure of the Company’s extraordinary announcements, periodic reports on the websites of the stock exchanges and the statutory media, provides investors with up-to-date information of the Company, the improved status of the corporate governance system and the industrial information.

Due to the Company’s multiple stock listings domestically and internationally, the Company consistently adheres to the principle of simultaneous and fair disclosure to enable domestic and foreign investors to get timely and fair information on business conditions of the Company.

(XIII) Risk Management and Internal Supervision and Control

The details are set out in the section headed “Risk Management and Internal Control” in this chapter.

(XIV) Directors’ Acknowledgment of Their Responsibilities in the Preparation of the Company’s Accounts

All Directors acknowledge their responsibilities for preparing the accounts for the year ended 31 December 2019 as a true and fair reflection of the Company’s financial situation, operating results and cash flows.

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Corporate Bonds

I. BASIC INFORMATION OF CORPORATE BONDS

Unit: RMB 100 million

							Way to repay capital
Name	Abbreviation	Code	Issue date	Maturity date	Balance	Interest rate	and interest	Trade place
2012 Corporate Bond of	12YanzhouCoal02	122168	2012/7/23	2022/7/23	40	4.95%	Interest paid once a year,	Shanghai Stock
Yanzhou Coal (first							the entire principal repaid	Exchange
tranche)							at one time at maturity, the
							final interest paid together
							with the principal.
2012 Corporate Bond of	12YanzhouCoal04	122272	2014/3/3	2024/3/3	30.50	6.15%	Interest paid once a year,	Shanghai Stock
Yanzhou Coal (second							the entire principal repaid	Exchange
tranche)							at one time at maturity, the
							final interest paid together
							with the principal.
2017 Renewable Corporate	17YanzhouCoalY1	143916	2017/8/17	2020/8/17	50	5.70%	If the Company does not	Shanghai Stock
Bond of Yanzhou Coal							exercise deferred payment	Exchange
(first tranche)							of interest, the interest will
							be paid once a year.
2018 Renewable Corporate	18 YanzhouCoalY1	143959	2018/3/26	2021/3/26	50	6.00%	If the Company does not	Shanghai Stock
Bond of Yanzhou Coal							exercise deferred payment	Exchange
(first tranche)							of interest, the interest will
							be paid once a year.
2020 Corporate Bond of	20YanzhouCoal01	163234	2020/3/12	2023/3/12	3	2.99%	Interest paid once a year,	Shanghai Stock
Yanzhou Coal (first							the entire principal repaid	Exchange
tranche)							at one time at maturity, the
							final interest paid together
							with the principal.
2020 Corporate Bond of	20YanzhouCoal02	163235	2020/3/12	2025/3/12	27	3.43%	Interest paid once a year,	Shanghai Stock
Yanzhou Coal (first							the entire principal repaid	Exchange
tranche)							at one time at maturity, the
							final interest paid together
							with the principal.
2020 Corporate Bond of	20YanzhouCoal03	163236	2020/3/12	2030/3/12	20	4.29%	Interest paid once a year,	Shanghai Stock
Yanzhou Coal (first							the entire principal repaid	Exchange
tranche)							at one time at maturity, the
							final interest paid together
							with the principal.

Note: For 2017 Renewable Corporate Bond of Yanzhou Coal (first tranche) and 2018 Renewable Corporate Bond of Yanzhou Coal (first tranche), every three interest-bearing years are regarded as one cycle. At the end of each cycle, the Company has the right to choose to extend the term of the current bond by one cycle (that is, by three years) or to repay the principal and interest of the current bond due at maturity in full at the end of the cycle.

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Principal and interest payment of corporate bonds

During the reporting period, the Company paid the interest of the relevant bonds on schedule without the default.

Other explanation of corporate bond issues

Not applicable.

II. CONTACT INFORMATION OF CORPORATE BOND TRUSTEE AND CREDIT RATING AGENCY

Bond trustee	Name	BOC International China Limited (“BOC International”)
	Office address	7/F, No.110 Xidan North Avenue, Xicheng District, Beijing, PRC
	Contact person	He Yinhui
	Contact number	021-20328000
Bond trustee	Name	Ping An Securities Co., Ltd. (“Ping An Securities”)
	Office address	Floor16-20, Rongchao Building No.4036 Jintian Road, Futian District,
		Shenzhen, PRC
	Contact person	Zhou Ziyuan
	Contact number	010-66299579
Bond trustee	Name	Haitong Securities Co., Ltd. (“Haitong Securities”)
	Office address	No.689 Guangdong Road, Shanghai, PRC
	Contact person	Du Xiaohui, Geng Yun
	Contact number	010-88027267
Credit rating agency	Name	Dagong Global Credit Rating Co., Ltd. (“Dagong Global”)
	Office address	29/F, A Tower, Eagle Run Plaza, No.26 Xiaoyun Road, Chaoyang
		District, Bejing
Credit rating agency	Name	China Chengxin Securities Rating Co., Ltd. (“China Chengxin”)
	Office address	21/F, An Ji Plaza, No.760 Xizang South Road, Shanghai, China
Credit rating agency	Name	Golden Credit Rating International Co., Ltd. (“Golden Credit Rating”)
	Office address	11-12/F, South Tower, Building 1, No.3 Chaowai West Street,
		Chaoyang District, Bejing

Other explanation

The bond trustee for the 2012 corporate bond of Yanzhou Coal (first tranche) and the 2012 corporate bond of Yanzhou Coal (second tranche) is BOC International, and the credit rating agency is Dagong Global.

The bond trustee for the 2017 Renewable Corporate Bond of Yanzhou Coal (first tranche) and the 2018 Renewable Corporate Bond of Yanzhou Coal (first tranche) is Ping An Securities, and the credit rating agency is China Chengxin.

The bond trustee for the 2020 Corporate Bond of Yanzhou Coal (first tranche) is Haitong Securities, and the credit rating agency is Golden Credit Rating.

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III. USE OF PROCEEDS BY CORPORATE BONDS

The proceeds raised by the issuance of bonds of 12 Yanzhou Coal 02 and 12 Yanzhou Coal 04 are RMB4 billion and RMB3.05 billion, respectively, with RMB7.05 billion (before deducting issuing expenses) funds raised in total. The whole proceeds were used to replenish working capital including technical improvement for old mines, construction on new mines, coal mining, procurement and repair for preparation equipment, and the continuous input to ensure the safety production of coal mines. The utilization and use plan keep consistent with the commitment in the prospectus.

The bond balance of 12 Yanzhou Coal 02 was RMB4 billion. The bond balance at the end of the year of 12 Yanzhou Coal 02 was RMB3.05 billion.

The proceeds raised by the issuance of bonds of 17 Yanzhou Coal Y1 and 18 Yanzhou Coal Y1 are RMB5 billion, respectively, with RMB10 billion (before deducting issuing expenses) funds raised in total. The whole proceeds were used to replenish working capital including technical improvement for old mines, construction on new mines, coal mining, procurement and repair for preparation equipment, and the continuous input to ensure the safety production of coal mines. The utilization and use plan keep consistent with the prospectus.

The bond balance of 17 Yanzhou Coal Y1 was RMB5 billion. The bond balance at the end of the year of 18 Yanzhou Coal Y1 was RMB5 billion.

The proceeds raised by the issuance of bonds of 20 Yanzhou Coal 01, 20 Yanzhou Coal 02 and 20 Yanzhou Coal 03 are RMB0.3 billion, RMB2.7 billion and RMB2.0 billion, respectively, with RMB5.0 billion (before deducting issuing expenses) funds raised in total. The whole proceeds were used to repay interest-bearing debt and replenish working capital. The utilization and use plan keep consistent with the commitment in the prospectus.

The bond balance of 20 Yanzhou Coal 01, 20 Yanzhou Coal 02 and 20 Yanzhou Coal 03 are RMB0.3 billion, RMB2.7 billion and RMB2.0 billion, respectively.

IV. INFORMATION OF CREDIT RATING OF CORPORATE BOND

On 24 April 2019, the track ratings made by Dagong Global based on the conditions of the Company were as follows: the long-term credit rating to the Company remains AAA and the rating is expected to remain stable; the credit ratings to 12 Yanzhou Coal 02 and 12 Yanzhou Coal 04 remain AAA. The relevant information was published on the website of the Shanghai Stock Exchange and the website of the Company on 26 April 2019 respectively. The credit ratings remain unchanged, which indicates that the risk of bonds unable to repay at maturity is very small.
On 28 May 2019, China Chengxin issued the following track ratings for 2017 Renewable Corporate Bond of Yanzhou Coal (first tranche) and 2018 Renewable Corporate Bond of Yanzhou Coal (first tranche) according to the Company’s situation: the main credit rating to the Company remains AAA and the rating is expected to remain stable; the credit ratings to 17 Yanzhou Coal Y1 and 18 Yanzhou Coal Y1 remain AAA. The relevant information was published on the website of the Shanghai Stock Exchange and the website of the Company on 30 May 2019 respectively. The credit ratings remain unchanged, which indicates that the risk of bonds unable to repay at maturity is very small.

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On 25 October 2019, Golden Credit Rating issued the following track ratings for 2020 Corporate Bond of Yanzhou Coal (first tranche) according to the Company’s situation: the main credit rating to the Company remains AAA and the rating is expected to remain stable; the credit ratings to 20 Yanzhou Coal 01, 20 Yanzhou Coal 02 and 20 Yanzhou Coal 03 remain AAA. The relevant information was published on the website of the Shanghai Stock Exchange and the website of the Company on 6 March 2020 respectively. The credit ratings indicate that the risk of bonds unable to repay at maturity is very small.

V. CREDIT ENHANCEMENT MECHANISM, DEBT REPAYMENT SCHEME AND OTHER RELEVANT INFORMATION OF CORPORATE BONDS DURING THE REPORTING PERIOD

During the reporting period, credit enhancement mechanism, debt payment scheme and other debt payment supporting measures have not changed.

1. Guarantee

On 2 January 2012, the board of directors of Yankuang Group approved that, Yankuang Group, the controlling shareholder of the Company, to provide an irrevocable, unconditional and joint liability guarantee for the full amount of 2012 corporate bond (first tranche) and 2012 corporate bond (second tranche) of Yanzhou Coal.

Key financial data and indicators of Yankuang Group (unaudited) are as follows:

	Unit: RMB10 thousand	Unit: RMB10 thousand
	31 December	31 December
	2019	2018
Net assets	9,871,179	9,059,838
Liability to asset ratio	68.49%	70.53%
Return rate on net assets	9.06%	6.25%
Current ratio	1.04	1.05
Liquidityratio	0.74	0.80
Credit status ofguarantor	AAA	AAA
Accumulative balance of external guarantee	28,900	112,150
Accumulative balance of externalguarantee to net assets ratio	0.29%	1.24%

Note: The “Accumulative balance of external guarantee” in the above table does not include the guarantee amount of Yankuang Group to the holding subsidiary.

As of the end of this reporting period, the other main assets owned by Yankuang Group other than the equity of Yanzhou Coal Mining are: (1) 100% equity of Yankuang Lunan Chemical Co., Ltd.; (2) 50% equity of Shaanxi Future Energy Chemical Co., Ltd.; (3) 51.37% equity of Yankuang Guizhou Neng Hua Co., Ltd.; (4) 100% equity of Yankuang Xinjiang Neng Hua Co., Ltd.; (5) 100% equity of Zhongyin Real Estate Co., Ltd.

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2. Debt repayment scheme

The value date of 12 Yanzhou Coal 02 is on 23 July 2012. Bond interest will be paid once a year within the duration from the value date. The payment date of 12 Yanzhou Coal 02 for the previous interest year from 2013 to 2022 is on 23 July (in case of statutory holidays or rest days, it is postponed to the first trading day). The maturity date of 12 Yanzhou Coal 02 is on 23 July 2022. The principal and the interest for the final tranche should be paid on the maturity date.

The value date of 12 Yanzhou Coal 04 is on 3 March 2014. Bond interest will be paid once a year within the duration from the value date. The payment date of 12 Yanzhou Coal 04 for the previous interest year from 2015 to 2024 is on 3 March (in case of statutory holidays or rest days, it is postponed to the first trading day). The maturity date of 12 Yanzhou Coal 04 is on 3 March 2024. The principal and the interest for the final tranche should be paid on the maturity date.

The value date of 17 Yanzhou Coal Y1 is on 17 August 2017. If the Company does not exercise the right of deferred payment of interest, the bond interest will be paid once a year for the duration of the bond, and on 17 August of each year during the duration (in case of statutory holidays or rest days, it is postponed to the first trading day) is the interest payment date of the last interest-bearing year; if the Company chooses to extend the term of the bond during the renewal option exercise year, the term of 17 Yanzhou Coal Y1 will be extended for one cycle from the interest payment date of the year, if the Company chooses to pay the bond in full during the renewal option exercise year, the interest payment date of the interest-bearing year will be the date on which 17 Yanzhou Coal Y1 is redeemed.

The value date of 18 Yanzhou Coal Y1 is on 26 March 2018. If the Company does not exercise the right of deferred payment of interest, the bond interest will be paid once a year for the duration of the bond, and on 26 March of each year during the duration (in case of statutory holidays or rest days, it is postponed to the first trading day) is the interest payment date of the last interest-bearing year; if the Company chooses to extend the term of the bond during the renewal option exercise year, the term of 18 Yanzhou Coal Y1 will be extended for one cycle from the interest payment date of the year, if the Company chooses to pay the bond in full during the renewal option exercise year, the interest payment date of the interest-bearing year will be the date on which 18 Yanzhou Coal Y1 is redeemed.

The value date of 20 Yanzhou Coal 01 is on 12 March 2020. Bond interest will be paid once a year within the duration from the value date. The payment date of 20 Yanzhou Coal 01 for the previous interest year from 2020 to 2023 is on 12 March (in case of statutory holidays or rest days, it is postponed to the first trading day). The maturity date of 20 Yanzhou Coal 01 is on 12 March 2023. The principal and the interest for the final tranche should be paid on the maturity date.

The value date of 20 Yanzhou Coal 02 is on 12 March 2020. Bond interest will be paid once a year within the duration from the value date. The payment date of 20 Yanzhou Coal 02 for the previous interest year from 2020 to 2025 is on 12 March (in case of statutory holidays or rest days, it is postponed to the first trading day). The maturity date of 20 Yanzhou Coal 02 is on 12 March 2025. The principal and the interest for the final tranche should be paid on the maturity date.

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Chapter 10 Corporate Bonds

The value date of 20 Yanzhou Coal 03 is on 12 March 2020. Bond interest will be paid once a year within the duration from the value date. The payment date of 20 Yanzhou Coal 03 for the previous interest year from 2020 to 2030 is on 12 March (in case of statutory holidays or rest days, it is postponed to the first trading day). The maturity date of 20 Yanzhou Coal 03 is on 12 March 2030. The principal and the interest for the final tranche should be paid on the maturity date.

The payment of principal and interest for 12 Yanzhou Coal 02, 12 Yanzhou Coal 04, 20 Yanzhou Coal 01, 20 Yanzhou Coal 02 and 20 Yanzhou Coal 03 will be conducted by bond registration and depository institution and relevant organizations. The payment details will be explained in the announcement issued through the media designated by the Company in CSRC according to relevant requirements.

3. Debt repayment supporting plan

During the reporting period, the plans and measures for debt repayment supporting were consistent with the prospectus, including:

(1) to establish specialized team for debt payment;
(2) to ensure that the fixed fund is used for its specified purpose only;
(3) to give full play to the role of bond trustee;
(4) to formulate the rules for bond holders meeting;
(5) to disclose the information strictly;
(6) in case that the Company cannot pay back the principal and interests of this bond in time, the Company undertakes to take the following measures to effectively protect the interest of bondholders: ① do not distribute profits to shareholders; ② postpone the implementation of significant external investment, merger and acquisition and other capital expenditure projects; ③ reduce or suspend the salaries and bonuses for Directors and senior management; ④ main responsibility person cannot be changed.

4. Special account for debt payment

The Company did not set up the special account for debt repayment.

VI. BONDHOLDERS’ MEETING

During the reporting period, there was no bondholders’ meeting.

158 Yanzhou Coal Mining Company Limited

Corporate Bonds Chapter 10

VII. PERFORMANCE OF DUTIES BY BOND TRUSTEE

The Company and BOC International entered into the Agreement on Bond Entrusted Management in January 2012, according to which, BOC International was appointed as the trustee of the 2012 Corporate Bond (first tranche) and 2012 Corporate Bond (second tranche) issued by the Company. During the reporting period, reports on entrusted management businesses for the year 2018 have been disclosed by BOC International and posted on the website of the Shanghai Stock Exchange.
The Company and Ping An Securities entered into the Agreement on Bond Entrusted Management in August 2017, according to which, Ping An Securities was appointed as the trustee of the 2017 Renewable Corporate Bond of Yanzhou Coal (first tranche). During the reporting period, reports on entrusted management businesses for the year 2018 and temporary entrusted management businesses for the year 2019 have been disclosed by Ping An Securities and posted on the website of the Shanghai Stock Exchange.
The Company and Ping An Securities entered into the Agreement on Bond Entrusted Management in August 2017, according to which, Ping An Securities was appointed as the trustee of the 2018 Renewable Corporate Bond of Yanzhou Coal (first tranche). Reports on entrusted management businesses for the year 2018 and temporary entrusted management businesses for the year 2019 have been disclosed by Ping An Securities and posted on the website of the Shanghai Stock Exchange.
The Company and Haitong Securities entered into the Agreement on Bond Entrusted Management in June 2019, according to which, Haitong Securities was appointed as the trustee of the 2020 Corporate Bond of Yanzhou Coal (first tranche).

VIII. ACCOUNTING DATA AND FINANCIAL INDICATORS FOR THE TWO YEARS PRECEDING THE END OF THE REPORTING PERIOD

Unit: RMB 10 thousand

			Unit: RMB 10 thousand
			Increase/Decrease for the period
			compared with that of the same
Main Indicators	2019	2018	period of previous year (%)
EBITDA	2,503,432	2,658,709	-5.84
Current ratio	0.87	1.12	-22.32
Liquidity ratio	0.72	0.97	-25.77
Liability to asset ratio (%)	59.81	58.29	increased by 1.52 percentage points
Total debt to EBITDA ratio	2.61	2.57	1.56
Interest cover ratio	5.37	5.16	4.07
Cash interest cover ratio	8.24	7.43	10.90
EBITDA interest cover ratio	8.00	7.36	8.70
Loan repayment rate (%)	100	100	0
Interest coverage (%)	100	100	0

Annual Report 2019 159

Chapter 10 Corporate Bonds

IX. PRINCIPAL AND INTEREST PAYMENT OF OTHER BONDS AND FINANCING INSTRUMENTS OF THE GROUP

The Company, as arranged, have repaid the principals and interests for the 10-year-term USD bonds issued in 2012, USD perpetual bonds issued in 2017, 3-year-term USD bonds issued in 2018, medium term notes issued in 2018 and 3 tranches of super-short-term bonds issued during the reporting period, and no default occurred.

X. BANK CREDIT STATUS OF THE GROUP DURING THE REPORTING PERIOD

As at 31 December 2019, the total bank credit facility of the Group was RMB118.968 billion, of which, RMB56.677 billion has been used and RMB62.291 billion remained unused. In 2019, the Group repaid the principal and interest of bank loan amounting to RMB19.696 billion on schedule.

Save as disclosed above, there were no extension, drawdown and default during the reporting period.

XI. PERFORMANCE OF THE RELEVANT AGREEMENT OR COMMITMENT IN BOND PROSPECTUS DURING THE REPORTING PERIOD

The Company strictly performed the relevant agreement and fulfilled the commitment of prospectus without any default. There was no matter occurred that may affect the safety of investor’s funds.

XII. EFFECT ON OPERATIONS AND DEBT PAYING ABILITY OF THE COMPANY BY SIGNIFICANT EVENTS

For the information on significant events and latest progress of the Company, please refer to the section headed “Chapter 6 Significant Events” in this annual report.

The abovementioned significant events had no great effects on the Company’s operation and did not influence the Company’s debt payment ability to investors as the Company operates stably and has smooth financing sources.

160 Yanzhou Coal Mining Company Limited

Chapter 11 Independent Auditor’s Report

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TO THE SHAREHOLDERS OF YANZHOU COAL MINING COMPANY LIMITED

(A joint stock company with limited liability established in the People’s Republic of China)

OPINION

We have audited the consolidated financial statements of Yanzhou Coal Mining Company Limited (the “Company”) and its subsidiaries (collectively referred to as the “Group”) set out on pages 167 to 309, which comprise the consolidated statement of financial position as at 31 December 2019, the consolidated statement of profit or loss, 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 2019, 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 (the “IASB”) and have been properly prepared in compliance with the disclosure requirements of the Hong Kong Companies Ordinance.

BASIS FOR OPINION

We conducted our audit in accordance with Hong Kong Standards on Auditing (“HKSAs”) issued by the Hong Kong Institute of Certified Public Accountants (the “HKICPA”). 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 HKICPA’s Code of Ethics for Professional Accountants (the “Code”) 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.

Annual Report 2019 161

Chapter 11 Independent Auditor’s Report

IMPAIRMENT OF INTANGIBLE ASSETS

Refer to note 23 to the consolidated financial statements.

The key audit matter

How the matter was addressed in our audit

We have identified the impairment of intangible assets as a key audit matter because of its significance to the consolidated financial statements and because the Group’s assessment of impairment of intangible assets is a judgemental process which requires estimates concerning the forecast future cash flows associated with the assets in determining the recoverable amount.

Our procedures were designed to evaluate the management’s impairment assessment process and to challenge the reasonableness of the selection of valuation model, adoption of key assumptions and input data by reference to the historical information and internal forecasts, together with market and other externally available information and sensitivity analysis.

The selection of valuation model, adoption of key assumptions and input data may be subject to management bias and changes in these assumptions and inputs to the valuation model may result in significant financial impact.

We have also considered the overall reasonableness of these forecasts.

Besides, we have also challenged the management’s assessment on the appropriateness of the useful lives and the amortisation rate used, and considered the potential impact of reasonably possible downside changes in these key assumptions.

IMPAIRMENT OF PROPERTY, PLANT AND EQUIPMENT

Refer to note 24 to the consolidated financial statements.

The key audit matter

How the matter was addressed in our audit

We have identified the impairment of property, plant and equipment as a key audit matter because of its significance to the consolidated financial statements of the Group and the Group’s assessment of impairment of property, plant and equipment is a judgemental process which requires estimates concerning the forecast future cash flows associated with the assets in determining the recoverable amount.

Our procedures were designed to evaluate management’s impairment assessment process and to challenge the reasonableness of the selection of valuation model, adoption of key assumptions and input data by reference to the historical information and internal forecasts, together with market and other externally available information and sensitivity analysis.

The selection of valuation model, adoption of key assumptions and input data may be subject to management bias and changes in these assumptions and input to the valuation model may result in significant financial impact.

We have also considered the overall reasonableness of these forecasts.

162

Yanzhou Coal Mining Company Limited

Independent Auditor’s Report Chapter 11

IMPAIRMENT ASSESSMENT ON GOODWILL

Refer to note 26 to the consolidated financial statements.

The key audit matter

How the matter was addressed in our audit

We have identified the impairment of goodwill as a key audit matter because of its significance to the consolidated financial statements and because the Group’s assessment of impairment of goodwill is a judgemental process which requires estimates concerning forecast future cash flows expected to arise from cash-generating unit and an appropriate discount rate in order to derive the value in use.

Our procedures were designed to evaluate management’s impairment assessment process and challenge the reasonableness of the selection of valuation model, adoption of key assumptions and input data by reference to the historical information and internal forecasts, together with other externally available information and sensitivity analysis.

We have also considered the overall reasonableness of these forecasts.

Annual Report 2019 163

Chapter 11 Independent Auditor’s Report

INFORMATION OTHER THAN THE CONSOLIDATED FINANCIAL STATEMENTS AND AUDITOR’S REPORT THEREON

The directors of the Company (the “Directors”) are responsible for the other information. The other information comprises all of 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.

RESPONSIBILITIES OF DIRECTORS AND THOSE CHARGED WITH GOVERNANCE FOR THE CONSOLIDATED FINANCIAL STATEMENTS

The Directors 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 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 either intend to liquidate the Group or to cease operations, or have no realistic alternative but to do so.

Those charged with governance are responsible for overseeing the Group’s financial reporting process.

164

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Independent Auditor’s Report Chapter 11

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, solely to you, as a body, in accordance with our agreed terms of engagement, 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 HKSAs 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 HKSAs, we exercise professional judgement and maintain professional skepticism 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.
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.

Annual Report 2019 165

Chapter 11 Independent Auditor’s Report

AUDITOR’S RESPONSIBILITIES FOR THE AUDIT OF THE CONSOLIDATED FINANCIAL STATEMENTS (continued)

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 those charged with governance 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 those charged with governance 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.

From the matters communicated with those charged with governance, 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 Lau Kai Wong.

SHINEWING (HK) CPA Limited

Certified Public Accountants Lau Kai Wong Practising Certificate Number: P06623 Hong Kong 22 April 2020

166

Yanzhou Coal Mining Company Limited

Chapter 12 Consolidated Financial Statements

CONSOLIDATED STATEMENT OF PROFIT OR LOSS

For the year ended 31 December 2019

	NOTES	2019 RMB’000	2018 RMB’000
Gross sales of coal	7	63,777,065	62,428,313
Railway transportation service income		382,545	420,303
Gross sales of electricity power		583,458	592,077
Gross sales of methanol		2,863,438	3,494,892
Gross sales of heat supply		32,859	34,324
Gross sales of equipment manufacturing		165,279	477,195
Total revenue		67,804,644	67,447,104
Transportation costs of coal	7	(3,763,957)	(3,751,061)
Cost of sales and services provided	8	(40,176,591)	(36,177,841)
Cost of electricity of power		(498,064)	(545,608)
Cost of methanol		(2,150,962)	(2,298,851)
Cost of heat supply		(20,452)	(18,699)
Cost of equipment manufacturing		(165,132)	(348,506)
Total cost of sales		(46,775,158)	(43,140,566)
Gross profit		21,029,486	24,306,538
Selling, general and administrative expenses	9	(8,777,402)	(10,659,581)
Share of results of associates		1,710,082	1,296,207
Share of results of joint ventures		(135,352)	238,101
Other income and gains	10	3,911,262	4,362,227
Finance costs	11	(2,751,234)	(3,612,394)
Profit before tax	13	14,986,842	15,931,098
Income tax expenses	12	(3,160,063)	(4,608,406)
Profit for theyear		11,826,779	11,322,692
Attributable to:
Equity holders of the Company		9,388,645	8,582,556
Owners of perpetual capital securities	44	580,181	607,095
Non-controlling interests
– Perpetual capital securities	44	200,566	202,733
– Other		1,657,387	1,930,308
		11,826,779	11,322,692
Earningsper share, basic and diluted	16	RMB1.91	RMB1.75

Annual Report 2019 167

Chapter 12 Consolidated Financial Statements

STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME For the year ended 31 December 2019

	2019 RMB’000	2018 RMB’000
Profit for the year	11,826,779	11,322,692
Other comprehensive (expense) income (after income tax):
Items that will not be reclassified subsequently to profit or loss:
Fair value change on equity investments at fair value through
other comprehensive income (“FVTOCI”)	(623)	(148)
Income tax relatingto item that will not be reclassified subsequently	156	37
	(467)	(111)
Items that may be reclassified subsequently to profit or loss:
Cash flow hedges:
Cash flow hedge amounts recognised in other comprehensive income	111,593	(1,078,397)
Reclassification adjustments for amounts transferred to income statement
(included in revenue)	586,111	661,151
Deferred taxes	(209,311)	125,174
	488,393	(292,072)
Share of other comprehensive income of associates	184,490	158,010
Exchange difference arisingon translation of foreign operations	439,816	(1,988,952)
Other comprehensive income(expense)for theyear	1,112,232	(2,123,125)
Total comprehensive income for theyear	12,939,011	9,199,567
Attributable to:
Equity holders of the Company	10,180,924	7,148,709
Owners of perpetual capital securities	580,181	607,095
Non-controlling interests
– Perpetual capital securities	200,566	202,733
– Other	1,977,340	1,241,030
	12,939,011	9,199,567

168 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

As at 31 December 2019

	NOTES	2019 RMB’000	2018 RMB’000
Current assets
Bank balances and cash	17	22,789,951	27,372,942
Pledged term deposits	17	210,000	1,913,231
Restricted cash	17	4,273,655	3,436,572
Bills and accounts receivables	18	7,598,163	9,157,262
Long-term receivables – due within one year	29	1,355,851	1,571,284
Royalty receivable	19	120,538	134,544
Inventories	20	6,007,309	4,068,995
Prepayments and other receivables	21	20,339,819	16,873,188
Prepaid lease payments	22	–	29,718
Derivative financial instruments	40	36,114	–
Assets classified as held for sale	34	62,731,400 217,644	64,557,736 272,902
		62,949,044	64,830,638
Non-current assets
Intangible assets	23	51,958,569	47,868,989
Prepaid lease payments	22	–	1,275,029
Property, plant and equipment	24	44,995,450	45,296,120
Right-of-use assets	25	1,739,438	–
Construction in progress	27	16,288,401	10,896,287
Prepayments for property, plant and equipment and intangible assets		1,860,196	1,224,943
Goodwill	26	1,655,090	1,651,211
Investments in securities	33	156,720	162,086
Interests in associates	28	17,115,439	16,023,709
Interests in joint ventures	31	518,956	660,221
Long-term receivables – due after one year	29	8,762,200	8,654,642
Royalty receivable	19	1,022,552	796,712
Deposits made on investments	30	117,926	117,926
Deferred tax assets	42	1,620,590	6,545,102
		147,811,527	141,172,977
Total assets		210,760,571	206,003,615

Annual Report 2019 169

Chapter 12 Consolidated Financial Statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION (Continued)

As at 31 December 2019

As at 31 December 2019
	NOTES	2019 RMB’000	2018 RMB’000
Current liabilities
Bills and accounts payables	35	19,116,658	12,514,298
Other payables and accrued expenses	36	26,798,374	20,679,288
Contract liabilities	36	2,717,475	2,207,641
Provision for land subsidence, restoration, rehabilitation
and environmental costs	37	50,940	2,327,177
Amounts due to Parent Company and its subsidiaries	50	1,093,707	929,654
Borrowings – due within one year	39	16,207,455	20,069,685
Long term payables – due within one year	41	4,070	122,388
Provision	38	54,368	135,876
Derivative financial instruments	40	148,554	1,254
Lease liabilities	25	156,852	–
Taxpayable		653,437	613,153
		67,001,890	59,600,414
Non-current liabilities
Borrowings – due after one year	39	49,168,036	48,608,238
Deferred tax liabilities	42	3,414,196	8,008,106
Provision for land subsidence, restoration, rehabilitation
and environmental costs	37	1,991,782	1,425,053
Provision	38	1,091,640	1,187,229
Lease liabilities	25	328,072	–
Longtermpayables – due after oneyear	41	2,416,350	129,586
		58,410,076	59,358,212
Total liabilities		125,411,966	118,958,626
Capital reserves
Share capital	43	4,912,016	4,912,016
Reserves	43	49,207,784	47,165,344
Equity attributable to equity holders of the Company		54,119,800	52,077,360
Owners of perpetual capital securities	44	10,311,611	10,316,444
Non-controlling interests
– Perpetual capital securities	44	3,417,351	3,417,351
– Others		17,499,843	21,233,834
		85,348,605	87,044,989
Total liabilities and equity		210,760,571	206,003,615

The consolidated financial statements on pages 167 to 309 were approved and authorised for issue by the Board of Directors on 22 April 2020 and are signed on its behalf by:

Li Xiyong Director

Zhao Qingchun Director

170 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

For the year ended 31 December 2019

	Attributable to equityholders of the Company Share capital Share premium Capital reserve Future development fund Statutory common reserve fund Translation reserve Investment revaluation reserve Cash flow hedge reserve Retained earnings Total Perpetual Capital Securities issued by the Company RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (note 43) (note 43) (note 43) (note 43) (note 43) (note 44)	Non-controllinginterests Perpetual Capital Securities issued by a subsidiary Subordinated Capital Notes Others Total RMB’000 RMB’000 RMB’000 RMB’000 (note 44) (note 45)
At 1 January 2018 Profit for the year Other comprehensive income (expense) for the year: – Fair value change of financial assets at FVTOCI – Cash flow hedge reserve recognised – Share of other comprehensive income from associates – Exchange differences arising on translation of foreign operations	4,912,016 2,967,947 514,658 969,450 5,952,503 (5,583,141) 50,326 (1,110,797) 38,775,164 47,448,126 9,249,649 – – – – – – – – 8,582,556 8,582,556 607,095 – – – – – – (111) – – (111) – – – – – – – – (191,190) – (191,190) – – – – – – – 158,010 – – 158,010 – – – – – – (1,400,556) – – – (1,400,556) –	3,417,351 3,102 19,637,014 79,755,242 202,733 – 1,930,308 11,322,692 – – – (111) – – (100,882) (292,072) – – – 158,010 – – (588,396) (1,988,952)
Total comprehensive income (expense) for theyear	– – – – – (1,400,556) 157,899 (191,190) 8,582,556 7,148,709 607,095	202,733 – 1,241,030 9,199,567
Transactions with owners – Issue of shares under global offering by a subsidiary (note i) – – 27,495 – – – – – – 27,495 – – Acquisition of additional interests in subsidiaries – – (148,880) – – – – – – (148,880) – – Issuance of perpetual capital securities – – – – – – – – – – 4,962,500 – Distribution paid to holders of perpetual capital securities – – – – – – – – – – (538,800) – Appropriations to reserves – – – – 324,265 – – – (324,265) – – – Transactions with non- controlling interest (note iii) – – – – – – – – – – – – Dividends to non-controlling interests – – – – – – – – – – – – Dividends – – – – – – – – (2,357,768) (2,357,768) – – Recongnition of share based payment expense (note 47) – – – – – – – – – – – – Redemption of perpetual capital securities – – – – – – – – – – (3,964,000) – Redemption of Subordinated Capital Notes – – – – – – – – – – – – Others – – – – – – – – (40,322) (40,322) –		– – 1,355,689 1,383,184 – – 38,127 (110,753) – – – 4,962,500 (202,733) – – (741,533) – – – – – – 49,000 49,000 – – (1,120,123) (1,120,123) – – – (2,357,768) – – 33,097 33,097 – – – (3,964,000) – (3,102) – (3,102) – – – (40,322)
Transactions with owners – – (121,385) – 324,265 – – – (2,722,355) (2,519,475) 459,700		(202,733) (3,102) 355,790 (1,909,820)
At 31 December 2018 4,912,016 2,967,947 393,273 969,450 6,276,768 (6,983,697) 208,225 (1,301,987) 44,635,365 52,077,360 10,316,444		3,417,351 – 21,233,834 87,044,989

Annual Report 2019 171

Chapter 12 Consolidated Financial Statements

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY (Continued)

For the year ended 31 December 2019

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Attributable to equity holders of the Company Non-controlling interests
Perpetual Perpetual
Capital Capital
Share Future Statutory Investment Cash flow Securities Securities
Share Share Capital option development common Translation revaluation hedge Retained issued by the issued by a
capital premium reserve reserve fund reserve fund reserve reserve reserve earnings Total Company subsidiary Others Total
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
(note 43) (note 43) (note 43) (note 43) (note 43) (note 44) (note 44)
At 1 January 2019 4,912,016 2,967,947 393,273 – 969,450 6,276,768 (6,983,697) 208,225 (1,301,987) 44,635,365 52,077,360 10,316,444 3,417,351 21,233,834 87,044,989
Profit for the year – – – – – – – – – 9,388,645 9,388,645 580,181 200,566 1,657,387 11,826,779
Other comprehensive income
for the year:
– Fair value change of equity
instruments at FVTOCI – – – – – – – (467) – – (467) – – – (467)
– Cash flow hedge reserve
recognised – – – – – – – – 276,986 – 276,986 – – 211,407 488,393
– Share of other
comprehensive income
from associates – – – – – – – 184,490 – – 184,490 – – – 184,490
– Exchange differences
arising on translation of
- Transactions with non-controlling interests (note iii) foreign operations – – – – (600,208) – – – – – – – – 331,270 – – – – – – (600,208) 331,270 – – – – 3,513,750 108,546 2,913,542 439,816
Total comprehensive income for
the year – – – – – – 331,270 184,023 276,986 9,388,645 10,180,924 580,181 200,566 1,977,340 12,939,011
Transactions with owners
– Issue of shares under global
offering by a subsidiary (note i) – – (49) – – – – – – – (49) – – 2,565 2,516
– Acquisition of additional
interests in subsidiaries (note
– – – – – – – – – – – – –
ii) (8,000,000) (8,000,000)
– Distribution paid to holders of
– – – – – – – – – – – –
perpetual capital securities (585,014) (200,566) (785,580)
– Appropriations to reserves – – – – – 580,399 – – – (580,399) – – – – –
– Dividends to non-controlling
interests – – – – – – – – – – – – – (1,223,842) (1,223,842)
– Dividends – – – – – – – – – (7,564,505) (7,564,505) – – – (7,564,505)
– Recognition of share based
payment expenses (note 47) – – – 32,553 – – – – – – 32,553 – – (24,350) 8,203
– Transactions with non-
- Transactions with non-controlling interests (note iii) controlling (note iii) – – – – (600,208) (606,483) – – – – – – – – – – – – – – (600,208) (606,483) – – – – 3,513,750 3,534,296 2,913,542 2,927,813
Total transactions with owners – – (606,532) 32,553 – 580,399 – – – (8,144,904) (8,138,484) (585,014) (200,566) (5,711,331) (14,635,395)
At 31 December 2019 4,912,016 2,967,947 (213,259) 32,553 969,450 6,857,167 (6,652,427) 392,248 (1,025,001) 45,879,106 54,119,800 10,311,611 3,417,351 17,499,843 85,348,605
----- End of picture text -----

Note (i): For the year ended 31 December 2019 and 2018, the amount recorded in to capital reserve represented gain or loss on the dilution of the equity interests in Yancoal Australia Limited (“Yancoal Australia”) as further set out in note 59(a).

(ii) During the year ended 31 December 2019, the Group acquired additional interests in certain non-wholly owned subsidiaries for an aggregate cash consideration of approximately RMB8 billion (2018: RMB110.8 million).

(iii) During the year ended 31 December 2019, the non-controlling shareholders of certain non-wholly owned subsidiaries made capital injection in aggregate of approximately RMB2,928 million (2018: RMB49 million) and resulted in approximately RMB600 million debited to capital reserves.

172

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

CONSOLIDATED STATEMENT OF CASH FLOWS

For the year ended 31 December 2019

	NOTES	2019 RMB’000	2018 RMB’000
OPERATING ACTIVITIES
Profit before tax		14,986,842	15,931,098
Adjustments for:
Interest expenses	11	2,751,234	3,612,394
Interest income	10	(847,057)	(1,003,958)
Dividend income	10	–	(152,732)
Net unrealised foreign exchange loss		32,716	499,687
Loss on deemed disposal of an associate	9	–	53
Gain on partial disposal of a joint operation	10	–	(388,607)
Depreciation of property, plant and equipment	13	4,032,906	4,929,225
Depreciation of right-of-use assets	13	212,027	–
Amortisation of intangible assets	13	1,584,967	1,393,682
Release of prepaid lease payments	13	–	29,718
Gain on disposal of an associate	10	(101,950)	–
Loss on disposal of property, plant and equipment, net	9	50,237	9,046
Impairment loss on bills and accounts receivables, net	9	118,890	164,405
Impairment loss on other receivables, net	9	346,645	127,748
Impairment loss on long-term receivables, net	9	37,424	173,133
Impairment loss on intangible assets	9	147,464	289,787
Impairment loss on inventories	9	25,843	7,227
Share of results of joint ventures		135,352	(238,101)
Share of results of associates		(1,710,082)	(1,296,207)
Share-based payment expenses	13	8,203	33,097
Loss (gain) on change in fair value of financial assets at FVTPL	9,10	4,743	(37,623)
Loss on change in fair value of derivative
financial instruments	9	111,112	28,466
Gain on change in fair value of royaltyreceivable	10	(157,112)	(18,573)
Operating cash flows before movements in working capital		21,770,404	24,092,965
(Increase) decrease in bills and accounts receivables		(1,507,306)	4,072,302
Increase in inventories		(1,948,493)	(925,670)
Movement in provision for land subsidence, restoration,
rehabilitation and environmental cost		(1,783,636)	(168,919)
Decrease in provisions		(255,557)	(513,547)
Increase in prepayments and other receivables		(1,713,568)	(6,474,318)
(Increase) decrease in royalty receivable		93,689	155,700
Increase in bills and accounts payables		6,560,842	3,404,394
(Decrease) increase in other payables and accrued expenses		173,247	833,998
Increase (decrease) in contract liabilities		509,834	(361,743)
Increase in amount due to Parent Company and its subsidiaries		164,053	236,640
Decrease in long-termpayables		(181,789)	–
Cash generated from operations		21,881,720	24,351,802
Income taxes paid		(2,789,177)	(3,373,071)
Interest paid		(3,354,897)	(3,693,012)
Interest received		673,556	957,592
NET CASH FROM OPERATING ACTIVITIES		16,411,202	18,243,311

Annual Report 2019 173

Chapter 12 Consolidated Financial Statements

CONSOLIDATED STATEMENT OF CASH FLOWS (Continued) For the year ended 31 December 2019

	2019 RMB’000	2018 RMB’000
INVESTING ACTIVITIES
Withdrawal of term deposits (Placement) withdrawal of restricted cash	1,703,231 (837,083)	1,710,404 434,789
Purchase of property, plant and equipment Payments for construction in progress Purchase of intangible assets Payments for prepaid land lease payments Payments for right-of-use assets Increase in deposit paid for property, plant and equipment Proceeds from disposal of financial assets at amortised cost Proceeds for disposal of property, plant and equipment Proceeds from disposal of prepaid lease payments Investments in securities	(1,788,436) (4,199,736) (2,789,889) – (38,100) (1,860,196) – 831,878 – –	(4,565,675) (5,192,365) (16,639) (80,690) – (319,295) 69,427 3,478,879 20,006 (1,731,520)
Proceed from disposal of investments in securities Investments in associates	– (352,755)	203,146 (2,357,211)
Payments for acquisition of interests in subsidiaries Settlement of payables for acquisition of subsidiaries Settlement of non-contingent royalty payable Proceed from disposal of assets classified as held for sale Proceed from disposal of a joint venture Proceed from disposal of an associate Investment in a joint venture Loan receivables advanced	– (1,694,438) – 58,257 4,900 784,560 – (2,888,751)	(77,656) (862,062) (564,540) – – 4,944 (40,000) (1,963,809)
Repayment of loan receivables Net cash outflow arising on acquisition of additional interests in joint operations Net cash inflow on partial disposal of a joint operation Dividend received	1,058,383 – – 16,116	550,050 (1,983,878) 2,703,995 187,932
Dividend received from a joint venture Dividend received from associates	– 624,123	1,712 218,101
NET CASH USED IN INVESTING ACTIVITIES	(11,367,936)	(10,171,955)
FINANCING ACTIVITIES
Proceeds from borrowings Repayment of borrowings Proceeds from issuance of guaranteed notes Proceeds from issuance of perpetual capital securities Customers’ deposits for financing business received Redemption of perpetual capital securities Repayment of guaranteed notes Dividends paid Repayment of lease liabilities Distribution paid to holders of perpetual capital securities and subordinated capital notes Redemption of subordinated capital notes Dividend paid to non-controlling shareholders Payments for acquisition of additional interests in non-controlling subsidiaries	17,466,315 (17,054,738) 8,000,000 – 6,562,462 – (11,949,984) (5,688,465) (185,592) (785,580) – (1,223,842) (8,000,000)	21,736,560 (22,674,613) 14,271,160 4,962,500 1,826,603 (3,964,000) (15,261,013) (2,355,848) – (741,533) (3,102) (1,120,123) –
Proceeds from issue of shares under global offering by a subsidiary Proceeds from issue of shares by a subsidiary Contribution from non-controllinginterests	2,516 – 2,927,813	1,383,184 – 49,000
NET CASH USED IN FINANCING ACTIVITIES	(9,929,095)	(1,891,225)
NET (DECREASE) INCREASE IN CASH AND CASH
EQUIVALENTS	(4,885,829)	6,180,131
CASH AND CASH EQUIVALENTS AT 1 JANUARY	27,372,942	21,073,256
Effect of foreign exchange rate	302,838	119,555
CASH AND CASH EQUIVALENTS AT 31 DECEMBER,
REPRESENTED BY BANK BALANCES AND CASH	22,789,951	27,372,942

174

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

For the year ended 31 December 2019

1. GENERAL

Yanzhou Coal Mining Company Limited (the “Company”) is established as a joint stock company with limited liability in the People’s Republic of China (the “PRC”). In April 2001, the status of the Company was changed to that of a Sinoforeign joint stock limited company. The Company’s A shares are listed on the Shanghai Stock Exchange (“SSE”) while its H shares are listed on The Stock Exchange of Hong Kong Limited (the “SEHK”). The Company’s parent and ultimate holding company is Yankuang Group Corporation Limited (the “Parent Company”), a state-owned enterprise in the PRC. The addresses of the registered office and principal place of business of the Company are disclosed in the Group Profile section of the annual report.

The principal activities of the Company are investment holdings, coal mining and coal railway transportation. The activities of its principal subsidiaries, associates, joint ventures and joint operations (together with the Company referred to as the “Group”) are set out in notes 59, 28, 31 and 32 respectively.

The consolidated financial statements as presented in Renminbi (“RMB”), which is also the functional currency of the Company.

2. BASIS OF PREPARATION AND PRESENTATION

These annual consolidated financial statements have been prepared in accordance with International Financial Reporting Standards (“IFRS”). The Company also prepares a set of consolidated financial statements in accordance with the China Accounting Standards for Business Enterprises (“PRC GAAP”).

These consolidated financial statements include applicable disclosures required by the Hong Kong Companies Ordinance and the Rules Governing the Listing of Securities on the SEHK (the “Listing Rules”).

The consolidated financial statements have been prepared on a going concern basis notwithstanding the Group had net current liabilities of approximately RMB4,052,846,000 as at 31 December 2019.

In the opinion of the directors of the Company, the Group should be able to maintain itself as a going concern in the next twelve months from 31 December 2019 by taking into consideration the followings:

The directors of the Company anticipate that the Group will generate positive cash flows from its operations; and
The undrawn borrowings facilities available for immediate use.

Annual Report 2019 175

Chapter 12 Consolidated Financial Statements

2. BASIS OF PREPARATION AND PRESENTATION (Continued)

Based on the above, the directors of the Company consider that the Group will have sufficient working capital to meet its financial obligations when they fall due for the next twelve months from 31 December 2019. Accordingly, the directors of the Company are satisfied that it is appropriate to prepare these consolidated financial statements relating to the carrying amounts and reclassification of assets and liabilities that might be necessary should the Group be unable to continue as a going concern.

3. APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS(s)”)

In the current year, the Group has applied, for the first time, the following new and amendments to IFRSs issued by the International Accounting Standards Board (the “IASB”).

IFRS 16	Leases
IFRIC-Int 23	Uncertainty over Income Tax Treatments
Amendments to IFRS 9	Prepayment Features with Negative Compensation
Amendments to IAS 19	Plan Amendment, Curtailment or Settlement
Amendments to IAS 28	Long-term Interests in Associates and Joint Ventures
Amendments to IFRSs	Annual Improvements to IFRSs 2015-2017 Cycle

The adoption of IFRS 16 resulted in the changes in the Group’s accounting policies and adjustments to the amounts recognised in the consolidated financial statements as summarises below. The application of other new and amendments to IFRSs in the current year has had no material impact on the Group’s financial performance and position for the current and prior years and/or on the disclosures set out in these consolidated financial statements.

3.1 Impacts on adoption of IFRS 16 Leases

IFRS 16 introduces new or amended requirements with respect to lease accounting. It introduces significant changes to the lessee accounting by removing the distinction between operating lease and finance lease and requiring the recognition of right-of-use asset and a lease liability for all leases, except for short-term leases and leases of low value assets. In contrast to lessee accounting, the requirements for lessor accounting have remained largely unchanged. Details of these new accounting policies are described in note 4. Comparative information has not been restated and continues to be reported under IAS 17 Leases.

On transition to IFRS 16, the Group elected to apply the practical expedient to grandfather the assessment of which arrangements are, or contain, leases. It applied IFRS 16 only to contracts that were previously identified as leases. Contracts that were not identified as leases under IAS 17 and IFRIC-4 Determining whether an Arrangement contains a Lease were not reassessed. Therefore, the definition of a lease under IFRS 16 has been applied only to contracts entered into or changed on or after 1 January 2019.

176

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

3. APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS(s)”) (Continued)

3.1 Impacts on adoption of IFRS 16 Leases (Continued)

The Group as lessee

Operating lease

On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified as ‘operating leases’ under the principles of IAS 17 Leases (except for lease of low value assets and lease with remaining lease term of twelve months or less). These liabilities were measured at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019 ranged from 4.75% to 7%.

As at 1 January 2019, the Group recognises right-of-use assets and measures them at an amount equal to the related lease liability, adjusted by the amount of any prepaid or accrued lease payments.

Finance lease

In addition, the Group leases certain production equipment that were classified as finance leases under IAS 17. For these finance leases, the carrying amount of the right-of-use asset and the lease liability at 1 January 2019 were determined at the carrying amount of the leased asset and lease liability under IAS 17 immediately before that date. Accordingly, the obligations under finance leases previously included in borrowings are now included within lease liabilities, and the carrying amount of the corresponding leased asset is identified as a right-of-use asset. There is no impact on the opening balance of equity.

The following table summarises the impact of transition to IFRS 16 at 1 January 2019. Line items that were not affected by the adjustments have not been included.

		Carrying amount
		previously reported	Impact on	Carrying amount
		at 31 December	adoption of	as restated at
	Notes	2018	IFRS 16	1 January 2019
		RMB’000	RMB’000	RMB’000
Property, plant and equipment	(c)	45,296,120	(345,172)	44,950,948
Right-of-use assets	(a),(b)&(c)	–	2,002,460	2,002,460
Lease liabilities	(a)&(c)	–	(557,854)	(557,854)
Prepaid lease payments	(b)	1,304,747	(1,304,747)	–
Borrowings	(c)	(68,677,923)	205,313	(68,472,610)

Annual Report 2019 177

Chapter 12 Consolidated Financial Statements

3. APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS(s)”) (Continued)

3.1 Impacts on adoption of IFRS 16 Leases (Continued)

The Group as lessee (Continued)

Notes:

(a) As at 1 January 2019, right-of-use assets in relation to leased properties previously under operating leases were measured at an amount equal to the lease liability of approximately RMB352,541,000.
(b) Prepaid lease payments of approximately RMB1,304,747,000 which represent the upfront payments for leasehold lands in the PRC as at 31 December 2018 was reclassified to right-of-use assets.
(c) The obligations under finance leases of approximately RMB205,313,000 previously included in borrowings as at 31 December 2018 are now included within lease liabilities under IFRS 16. The carrying amount of the related assets under finance leases amounting to approximately RMB345,172,000 is reclassified to right-of-use assets.

Practical expedients applied

On the date of initial application of IFRS 16, the Group has used the following practical expedients permitted by the standard:

not to reassess whether a contract is, or contains a lease at the date of initial application. Instead, for contracts entered into before the transition date the Group relied on its assessment made applying IAS 17 and IFRIC-4 Determining whether an Arrangement contains a Lease.
the use of a single discount rate to a portfolio of leases with reasonably similar characteristics
reliance on previous assessments on whether leases are onerous by applying IAS 37 as an alternative to performing an impairment review
the accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term leases
the exclusion of initial direct costs for the measurement of the right-of-use asset at the date of initial application, and

178

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

3. APPLICATION OF NEW AND AMENDMENTS TO INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS(s)”) (Continued)

3.1 Impacts on adoption of IFRS 16 Leases (Continued)

Practical expedients applied (Continued)

Differences between operating lease commitments as at 31 December 2018, the date immediately preceding the date of initial application, discounted using the incremental borrowing rate, and the lease liabilities recognised as at 1 January 2019 are as follow:

			RMB’000
	Operating lease commitment disclosed as at 31 December 2018		457,620
	Less: Short-term leases and other leases with remaining lease term ended
	on or before 31 December 2019		(78,638)
			378,982
	Lease liabilities discounted using the incremental borrowing rates at 1 January 2019		352,541
	Add: Finance lease liabilities recognised under IAS 17 as at 31 December 2018		205,313
	Lease liabilities recognised as at 1January2019		557,854
	Analysed as
	Current portion		139,632
	Non-currentportion		418,222
			557,854

New and amendments to IFRSs issued but not yet effective

The Group has not early applied the following new and amendments to IFRSs that have been issued but are not yet effective:

IFRS 17 Insurance Contracts[2] Amendments to IFRS 10 and IAS 28 Sale or Contribution of Assets between an Investor and its Associate or Joint Venture[4] Amendments to IFRS 3 Definition of a Business[5] Amendments to IAS 1 Classification of Liabilities as Current or Non-Current[3] Amendments to IAS 1 and IAS 8 Definition of Material[1] Amendments to IFRS 9, IAS 39 and IFRS 7 Interest Rate Benchmark Reform[1] Conceptual Framework for Financial Reporting 2018 Revised Conceptual Framework for Financial Reporting[1]

1 Effective for annual periods beginning on or after 1 January 2020
2 Effective for annual periods beginning on or after 1 January 2021
3 Effective for annual periods beginning on or after 1 January 2022
4 Effective for annual periods beginning on or after a date to be determined
5 Effective for business combinations and assets acquisitions for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 1 January 2020

The directors of the Company anticipate that the application of the new and amendments to IFRSs will have no material impact on the results and the financial position of the Group.

Annual Report 2019 179

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES

The consolidated financial statements have been prepared on the historical cost basis except for certain financial instruments, which are stated at fair value. The principal accounting policies are set out below.

Historical cost is generally based on the fair value of the consideration given in exchange for goods and services.

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 in the principal (or most advantageous) market at the measurement date under current market conditions (i.e. an exit price) regardless of whether that price is directly observable or estimated using another valuation technique. Details of fair value measurement are explained in the accounting policies set out below.

The principal accounting policies are set out below.

Basis of consolidation

The consolidated financial statements incorporate the financial statements of the Company and entities controlled by the Company and its subsidiaries. If a subsidiary prepares its financial statements using accounting policies other than those adopted in the consolidated financial statements for like transactions and events in similar circumstances, appropriate adjustments are made to that subsidiary’s financial statements in preparing the consolidated financial statements to ensure conformity with the Group’s accounting policies.

Control is achieved where the Group has: (i) the power over the investee; (ii) exposure, or rights, to variable returns from its involvement with the investee; and (iii) the ability to use its power over the investee to affect the amount of the Group’s returns. When the Group has less than a majority of the voting rights of an investee, power over the investee may be obtained through: (i) a contractual arrangement with other vote holders; (ii) rights arising from other contractual arrangements; (iii) the Group’s voting rights and potential voting rights; or (iv) a combination of the above, based on all relevant facts and circumstances.

The Group reassesses whether it controls an investee if facts and circumstances indicate that there are changes to one or more of these elements of control stated above.

Consolidation of a subsidiary begins when the Group obtains control of the subsidiary and ceases when the Group loses control of the subsidiary.

Income and expenses of subsidiaries are included in the consolidated statement of profit or loss from the date the Group gains control until the date when the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income of subsidiaries are attributed to the owners of the Company and to the non-controlling interests. Total comprehensive income of subsidiaries is attributed to the owners of the Company 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 entities of the Group are eliminated in full on consolidation.

180 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Basis of consolidation (Continued)

Changes in the Group’s ownership interests in existing subsidiaries

Changes in the Group’s ownership interests in existing subsidiaries that do not result in the Group losing control over the subsidiaries are accounted for as equity transactions. The carrying amounts of the Group’s interests and the noncontrolling interests are adjusted to reflect the changes in their relative interests in the subsidiaries. Any difference between the amount by which the non-controlling interests are adjusted and the fair value of the consideration paid or received is recognised directly in equity and attributed to owners of the Company.

When the Group loses control of a subsidiary, it (i) derecognises the assets (including any goodwill) and liabilities of the subsidiary at their carrying amounts at the date when control is lost, (ii) derecognises the carrying amount of any non-controlling interests in the former subsidiary at the date when control is lost (including any components of other comprehensive income attributable to them), and (iii) recognises the aggregate of the fair value of the consideration received and the fair value of any retained interest, with any resulting difference being recognised as a gain or loss in profit or loss attributable to the Group. When assets and liabilities of the subsidiary are carried at revalued amounts or fair values and the related cumulative gain or loss has been recognised in other comprehensive income and accumulated in equity, the amounts previously recognised in other comprehensive income and accumulated in equity are accounted for as if the Group had directly disposed of the related assets and liabilities (i.e. reclassified to profit or loss or transferred directly to retained earnings as specified by applicable IFRSs). The fair value of any investment retained in the former subsidiary at the date when control is lost is regarded as the fair value on initial recognition for subsequent accounting under IFRS 9 Financial Instruments (on or after 1 January 2019) or, when applicable, the cost on initial recognition of an investment in an associate or a joint venture.

In the Company’s statement of financial position, subsidiaries are carried at cost less any impairment loss unless the subsidiary is held for sale or included in a disposal group. Cost is adjusted to reflect changes in consideration arising from contingent consideration amendments. Cost also includes direct attributable costs of investment.

The results of subsidiaries are accounted for by the Company on the basis of dividends received and receivable at the reporting date. All dividends whether received out of the investee’s pre or post-acquisition profits are recognised in the Company’s profit or loss.

Business combination

Acquisitions of businesses are accounted for using the acquisition method. The consideration transferred in a business combination is measured at fair value, which is calculated as the sum of the acquisition-date fair values of the assets transferred by the Group, liabilities incurred by the Group to former owners of the acquiree and the equity interests issued by the Group in exchange for control of the acquiree. Acquisition-related costs incurred to effect a business combination are recognised in profit or loss as incurred.

Annual Report 2019 181

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Business combination (Continued)

Identifiable assets acquired and liabilities and contingent liabilities assumed in a business combination are measured initially at their fair values at the acquisition date, except that:

deferred tax assets or liabilities arising from the assets acquired and liabilities assumed in the business combination are recognised and measured in accordance with IAS 12 Income Taxes ;
assets or liabilities related to the acquiree’s employee benefit arrangements are recognised and measured in accordance with IAS 19 Employee Benefits ;
liabilities or equity instruments related to share-based payment transactions of the acquiree or the replacement of the acquiree’s share-based payment transactions with the share-based payment transactions of the Group are measured in accordance with IFRS 2 Share-based Payment at the acquisition date (see the accounting policy below);
assets (or disposal groups) that are classified as held for sale in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations are measured in accordance with that standard; and
lease liabilities are measured at the present value of the remaining lease payments as if the acquired lease was a new lease at the acquisition date, except for leases for which (a) the lease term ends within 12 months of the acquisition date; or (b) the underlying asset is of low value. Right-of-use assets are measured at an amount equal to the lease liabilities, adjusted to reflect favourable or unfavourable terms of the lease when compared with market terms.

Goodwill is measured as the excess of the aggregate of the consideration transferred, the amount of any non-controlling interests in the acquiree, and the fair value of the Group’s previously held equity interest in the acquiree (if any) over the net of the acquisition-date amounts of the identifiable assets acquired and the liabilities assumed. If, after re-assessment, the net of the acquisition-date amounts of the identifiable assets acquired and liabilities assumed exceeds the aggregate of the consideration transferred, the amount of any non-controlling interests in the acquiree and the fair value of the acquirer’s previously held interest in the acquiree (if any), the excess is recognised immediately in profit or loss as a gain on bargain purchase.

Non-controlling interests, unless as required by another standards, are measured at acquisition-date fair value except for non-controlling interests that are present ownership interests and entitle their holders to a proportionate share of the entity’s net assets in the event of liquidation are measured either at fair value or at the present ownership instruments’ proportionate share in the recognised amounts of the acquiree’s identifiable net assets on a transaction-by-transaction basis.

182 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Business combination (Continued)

Where the consideration transferred by the Group in a business combination includes assets or liabilities resulting from a contingent consideration arrangement, the contingent consideration is measured at its acquisition-date fair value and included as part of the consideration transferred in a business combination. Changes in the fair value of the contingent consideration that qualify as measurement period adjustments are adjusted retrospectively, with the corresponding adjustments being made against goodwill. Measurement period adjustments are adjustments that arise from additional information obtained during the measurement period about facts and circumstances that existed as of the acquisition date. Measurement period can not exceed one year from the acquisition date.

The subsequent accounting for changes in the fair value of the contingent consideration that do not qualify as measurement period adjustments depends on how the contingent consideration is classified. Contingent consideration that is classified as equity is not remeasured at subsequent reporting dates and its subsequent settlement is accounting for within equity. Contingent consideration that is classified as an asset or a liability is remeasured at subsequent reporting dates at fair value with corresponding gain or loss being recognised in profit or loss.

When a business combination is achieved in stages, the Group’s previously held equity interest in the acquiree is remeasured to fair value at the acquisition date (i.e. the date when the Group obtains control), and the resulting gain or loss, if any, is recognised in profit or loss or other comprehensive income, as appropriate. Amounts arising from interests in the acquiree prior to the acquisition date that have previously been recognised in other comprehensive income are reecognised on the same basis as would be required if the Group had disposed directly of the previously held equity interest.

If the initial accounting for a business combination is incomplete by the end of the reporting period in which the combination occurs, the Group reports provisional amounts for the items for which the accounting is incomplete. Those provisional amounts are adjusted retrospectively during the measurement period (see above), or additional assets or liabilities are recognised, to reflect new information obtained about facts and circumstances that existed as of the acquisition date that, if known, would have affected the amounts recognised as of that date.

Investments in associates and joint ventures

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 of those policies.

A joint venture is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

Annual Report 2019 183

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments in associates and joint ventures (Continued)

The Group’s investments in associates and joint ventures are accounted for in the consolidated financial statements using the equity method, except for the investments classified as held for sale in which case it is accounted for in accordance with IFRS 5 Non-current Assets Held for Sale and Discontinued Operations . Under the equity method, investments in associates and joint ventures are initially recognised at cost. The Group’s share of the profit or loss and changes in the other comprehensive income of the associates and joint ventures are recognised in profit or loss and other comprehensive income respectively after the date of acquisition. If the Group’s share of losses of an associate or a joint venture equals or exceeds its interest in the associate or joint venture, which determined using the equity method together with any long-term interests that, in substance, form part of the Group’s net investment in the associate or joint venture, the Group discontinues recognising its share of further losses. Additional losses are provided for, and a liability is recognised, only to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of the associate or joint venture.

If an associate or a joint venture uses accounting policies other than those of the Group for like transactions and events in similar circumstances, adjustments are made to make the associate’s or joint venture’s accounting policies conform to those of the Group when the associate’s or joint venture’s financial statements are used by the Group in applying the equity method.

An investment in an associate or a joint venture is accounted for using the equity method from the date on which the investee becomes an associate or a joint venture. On acquisition of the investment, any excess of the cost of acquisition over the Group’s share of the net fair value of the identifiable assets and liabilities of the associate or joint venture is recognised as goodwill and is included in the carrying amount of the investment.

Any excess of the Group’s share of the net fair value of the identifiable assets and liabilities over the cost of acquisition, after reassessment, is recognised in profit or loss in the period in which the investment is acquired.

After application of the equity method, including recognising the associate’s or joint venture’s losses (if any), the Group determines whether there is an objective evidence that the net investment in the associate or joint venture is impaired. Goodwill that forms part of the carrying amount of an investment in an associate or a joint venture is not separately recognised. The entire carrying amount of the investment (including goodwill) is tested for impairment as a single asset by comparing its recoverable amount (higher of value in use and fair value less costs of disposal) with its carrying amount. Any impairment loss recognised is not allocated to any asset, including goodwill, that forms part of the carrying amount of the net investment in the associate or joint venture. Any reversal of that impairment loss is recognised to the extent that the recoverable amount of the investment subsequently increases.

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Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Investments in associates and joint ventures (Continued)

When the investment ceases to be an associate or a joint venture upon the Group losing significant influence over the associate or joint control over the joint venture, the Group discontinues to apply equity method and any retained interest is measured at fair value at that date which is regarded as its fair value on initial recognition as a financial asset in accordance with IFRS 9. Any difference between the fair value of any retained interest and any proceeds from disposing of a part interest in the associate or joint venture and the carrying amount of the investment at the date the equity method was discontinued is recognised in profit or loss. Any amount previously recognised in other comprehensive income in relation to that investment is accounted for on the same basis as it would have been required if the investee had directly disposed of the related assets or liabilities.

When the Group’s ownership interest in an associate or a joint venture is reduced, but the Group continues to apply the equity method, the proportion of the gain or loss that had previously been recognised in other comprehensive income relating to that reduction in ownership interest is reclassified to profit or loss if that gain or loss would be required to be reclassified to profit or loss on the disposal of the related assets or liabilities.

Gains and losses resulting from transactions between the Group and its associate or joint venture are recognised in consolidated financial statements only to the extent of unrelated investors’ interests in the associate or joint venture. The Group’s share in the associate’s or joint venture’s gains or losses resulting from these transactions is eliminated.

Interests in joint operations

A joint operation is a joint arrangement whereby the parties that have joint control of the arrangement have rights to the assets, and obligations for the liabilities, relating to the arrangement. Joint control is the contractually agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require the unanimous consent of the parties sharing control.

The Group, as a joint operator, recognises in relation to its interest in a joint operation:

its assets, including its share of any assets held jointly;
its liabilities, including its share of any liabilities incurred jointly;
its revenue from the sale of its share of the output arising from the joint operation;
its share of the revenue from the sale of the output by the joint operation; and
its expenses, including its share of any expenses incurred jointly.

The Group accounts for the assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs applicable to the particular assets, liabilities, revenues and expenses.

Annual Report 2019 185

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Interests in joint operations (Continued)

When a group entity enters into a transaction with a joint operation in which the group entity is a joint operator, such as a sale or contribution of assets, the Group is considered to be conducting the transaction with the other parties to the joint operation and the Group recognises gains and losses resulting from such a transaction only to the extent of the other parties’ interests in the joint operation.

When a group entity enters into a transaction with a joint operation in which the group entity is a joint operator, such as a purchase of assets, the Group recognises its share of the gains and losses until it resells those assets to a third party.

Non-current assets classified as held for sale

Non-current assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the asset (or disposal group) is available for immediate sale or disposal in its present condition subject only to terms that are usual and customary for sales or disposals of such assets (or disposal group) and the transaction is highly probable. Management must be committed to the transaction, which should be expected to qualify for recognition as a completed sale within one year from the date of classification.

When the Group is committed to a sale plan or other transaction involving loss of control of a subsidiary, all of the assets and liabilities of that subsidiary are classified as held for sale when the criteria described above are met, regardless of whether the Group will retain a non-controlling interest in the relevant subsidiary after the sale.

When the Group is committed to a sale plan involving disposal of an investment, or a portion of an investment, in an associate or joint venture, the investment or the portion of the investment that will be disposed of is classified as held for sale when the criteria described above are met, and the Group discontinues the use of the equity method in relation to the portion that is classified as held for sale from the time when the investment (or a portion of the investment) is classified as held for sale. Any retained portion of an investment in an associate or a joint venture that has not been classified as held for sale continues to be accounted for using the equity method. The Group discontinues the use of the equity method at the time of disposal when the disposal results in the Group losing significant influence over the associate or joint control over the joint venture.

Non-current assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell.

186

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Impairment of tangible and intangible assets other than goodwill

At each reporting date, the Group reviews the carrying amounts of its tangible assets and intangible assets with finite useful life to determine whether there is any indication that these assets have suffered an impairment loss. If any such indication exists, the recoverable amount of the asset (determined at the higher of its fair value less costs of disposal and its value in use) is estimated in order to determine the extent of the impairment loss (if any). Intangible assets with an indefinite useful life will be tested for impairment annually. 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. If the recoverable amount of an asset (or cash-generating unit) is estimated to be less than its carrying amount, the carrying amount of the asset (cash generating unit) is reduced to its recoverable amount. Impairment loss is recognised as an expense immediately. Where an impairment loss subsequently reverses, the carrying amount of the asset (cash-generating unit) is increased to the revised estimate of its recoverable amount, but such that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (cash-generating unit) in prior years. A reversal of an impairment loss is recognised as an income immediately. For the purposes of impairment testing, assets are grouped at the lowest levels for which there are separately identifiable cash inflows which are largely independent of the cash inflows from other assets or groups of assets (cash-generating units). Assessment is performed for each area of interest in conjunction with the group of operating assets (representing a cash generating unit) to which the Group’s activity is attributed.

Revenue recognition

Revenue is recognised to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services.

Specifically, the Group uses a 5-step approach to revenue recognition:

Step 1: Identify the contract(s) with a customer
Step 2: Identify the performance obligations in the contract
Step 3: Determine the transaction price
Step 4: Allocate the transaction price to the performance obligations in the contract
Step 5: Recognise revenue when (or as) the entity satisfies a performance obligation

The Group recognises revenue when (or as) a performance obligation is satisfied, i.e. when “control” of the goods or services underlying the particular performance obligation is transferred to customers.

A performance obligation represents a good or service (or a bundle of goods or services) that is distinct or a series of distinct goods or services that are substantially same.

Annual Report 2019 187

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Revenue recognition (Continued)

Control is transferred over time and revenue is recognised over time by reference to the progress towards complete satisfaction of the relevant performance obligation if one of the following criteria is met:

The customer simultaneously receives and consumes the benefits provided by the Group’s performance as the Group performs;
The Group’s performance creates or enhances an asset that the customer controls as the asset is created or enhanced; or
The Group’s performance does not create an asset with an alternative use to the Group and the Group has an enforceable right to payment for performance completed to date.

Otherwise, revenue is recognised at a point in time when the customer obtains control of the distinct goods or service.

Revenue is measured based on the consideration specified in a contract with a customer, excludes amounts collected on behalf of third parties, discounts and sales related taxes.

Contract liabilities

A contract liability represents the Group’s obligation to transfer goods or services to a customer for which the Group has received consideration from the customer.

The Group recognised revenue from the following major sources:

Sales of goods (including coal, methanol and equipment manufacturing)
Provision of services (including coal railway transportation, electricity and heat supply)

Sales of goods

Revenue from sale of coal, methanol and equipment manufacturing is recognised at the point when the control of the goods is transferred to the customers (generally on delivery of the goods to the location specified by the customers and accepted by the customers). It is a point of time where the customer has the ability to direct the use of the products and obtain substantially all of the remaining benefits of the products.

Provision of services

Revenue from coal railway transportation services is recognised when the services are rendered.

Supply of electricity and heat is recognised at the time when the electricity or heat is transmitted.

188

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible assets

Intangible assets acquired separately

Intangible assets acquired separately are carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is recognised over their estimated useful lives. The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis.

An intangible asset is derecognised on disposal, or when no future economic benefits are expected from use or disposal. Gains or losses arising from derecognition of an intangible asset are measured at the difference between the net disposal proceeds and the carrying amount of the asset and are recognised in profit or loss in the period when the asset is derecognised.

Internally-generated intangible assets – research and development expenditure

Expenditure on research activities is recognised as an expense in the period in which it is incurred.

An internally-generated intangible asset arising from development expenditure is recognised only if it is anticipated that the development costs incurred on a clearly-defined project will be recovered through future commercial activity. The resultant asset is amortised on a straight line basis over its useful life. Expenditure incurred on projects to develop new products is capitalised only when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits, the availability of resources to complete the project and the ability to measure reliably the expenditure during the development.

Intangible assets acquired in a business combination

Intangible assets acquired in a business combination and recognised separately from goodwill are initially recognised at their fair value at the acquisition date (which is regarded as their cost).

Subsequent to initial recognition, intangible assets acquired in a business combination are carried at cost less any accumulated amortisation and accumulated impairment losses, on the same basis as intangible assets that are acquired separately.

(i) Mining reserves

Mining reserves represent the portion of total proven and probable reserves in the mine. Mining reserves are amortised over the life of the mine on a unit of production basis of the estimated total proven and probable reserves. Changes in the annual amortisation rate resulting from changes in the remaining reserves are applied on a prospective basis from the commencement of the next financial year.

Annual Report 2019 189

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Intangible assets (other than goodwill) (Continued)

Intangible assets acquired in a business combination (Continued)

(ii) Mining resources

Mining resources represent the fair value of economically recoverable reserves (excluding the portion of total proven and probable reserves of a mining right i.e. does not include the above mining reserves) of a mining right (Details are set out in the accounting policy of exploration and evaluation expenditure). When production commences, the mining resources for the relevant areas of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

Exploration and evaluation expenditure

Exploration and evaluation expenditure incurred is accumulated in respect of each separately identifiable area of interest which is at individual mine level.

Exploration and evaluation expenditure comprises costs that are directly attributable to:

Researching and analysing existing exploration data;
Conducting geological studies, exploratory drilling and sampling;
Examining and testing extraction and treatments methods; and/or
Compiling pre-feasibility and feasibility studies.

These costs include employee remuneration, materials and fuel used, rig costs and payments made to contractors.

Exploration expenditure relates to the initial search for deposits with economic potential. Expenditure on exploration activity is not capitalised.

Evaluation expenditure relates to a detailed assessment of deposits or other projects that have been identified as having economic potential. Capitalisation of evaluation expenditure commences when there is a high degree of confidence that the Group will determine that a project is commercially viable, i.e. the project will provide a satisfactory return relative to its perceived risks, and therefore it is considered probable that future economic benefits will flow to the Group.

Exploration and evaluation expenditure incurred is accumulated in respect of each separately identifiable area of interest which is at individual mine level. These costs are only carried forward where the right of tenure for the area of interest is current and to the extent that they are expected to be recouped through successful development and commercial exploitation, or alternatively, sale of the area, or where activities in the area have not yet reached a stage which permits reasonable assessment of the existence of economically recoverable reserves and active and significant operations in, or in relation to, the area of interest are continuing.

190 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Exploration and evaluation expenditure (Continued)

The carrying amount of exploration and evaluation assets is assessed for impairment when facts or circumstances suggest the carrying amount of the assets may exceed their recoverable amount.

A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward costs in relation to that area of interest. Accumulated costs in relation to an abandoned area are written-off in full in the period in which the decision to abandon the area is made.

Capitalised exploration and evaluation expenditure considered to be tangible is recorded as a component of property, plant and equipment. Otherwise, it is recorded as an intangible asset. Exploration and evaluation expenditure acquired in a business combination are recognised at their fair value at the acquisition date (the fair value of potential economically recoverable reserves at the acquisition date which is shown as “Mining resources”).

Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable (i.e. when proved reserves of coal are determined and development is approved by management), the exploration and evaluation assets attributable to that area of interest are first tested for impairment and then reclassified to mining reserves or property, plant and equipment. When production commences, the accumulated costs for the relevant area of interest are amortised over the life of the area according to the rate of depletion of the economically recoverable reserves.

On reclassification, the carrying amounts of exploration and evaluation assets are also reviewed and, where appropriate, written down to their recoverable amount.

Property, plant and equipment

Property, plant and equipment (including right-of-use assets), other than construction in progress and freehold land, are stated at cost less subsequent accumulated depreciation and accumulated impairment losses.

Freehold lands are not depreciated and measured at cost less subsequent accumulated impairment loss.

Ownership interests in leasehold land and buildings

For payments of ownership interest of properties which includes both leasehold land and building elements, the entire property is presented as property, plant and equipment of the Group when the payments cannot be allocated reliably between the leasehold land and building elements.

To the extend the allocation of the relevant payments can be made reliably, interest in leasehold land that is accounted for as an operating lease is presented as “right-of-use assets” (upon application of IFRS 16) or “prepaid lease payments” (before application IFRS 16) in the consolidated statement of financial position.

Depreciation is charged so as to write off the cost of items of property, plant and equipment, other than construction in progress and freehold land, over their estimated useful lives and after taking into account their estimated residual value, using the straight line method or unit of production method.

Annual Report 2019 191

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Property, plant and equipment (Continued)

Any gain or loss arising on the disposal of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised immediately in the consolidated statement of profit or loss.

Goodwill

Goodwill arising on acquisitions prior to 1 January 2005

Goodwill arising on an acquisition of net assets and operations of another entity for which the agreement date is before 1 January 2005 represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets and liabilities of the relevant acquiree at the date of acquisition.

The Group has discontinued amortisation from 1 January 2005 onwards, and such goodwill is tested for impairment annually, and whenever there is an indication that the cash-generating unit to which the goodwill relates may be impaired (see the accounting policy below).

Goodwill arising on acquisitions on or after 1 January 2005

Goodwill arising on an acquisition of a business for which the agreement date is on or after 1 January 2005 represents the excess of the cost of acquisition over the Group’s interest in the fair value of the identifiable assets, liabilities and contingent liabilities of the relevant business at the date of acquisition. Such goodwill is carried at cost less any accumulated impairment losses.

Goodwill is presented separately in the consolidated statement of financial position.

For the purposes of impairment testing, goodwill is allocated to each of the Group’s cash-generating units expected to benefit from the synergies of the acquisition. Cash-generating units to which goodwill has been allocated are tested for impairment annually, or more frequently when there is an indication that the unit may be impaired. If the recoverable amount of the cash-generating unit is less than the carrying amount of the unit, the impairment loss is allocated to reduce the carrying amount of any goodwill allocated to the unit first and then to the other assets of the unit on a prorata on the basis of based on the carrying amount of each asset in the unit. Any impairment is recognised immediately in the consolidated statement of profit or loss and is not subsequently reversed.

On disposal of the relevant cash-generating unit, the attributable amount of goodwill is included in the determination of the gain or loss on disposal.

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Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Construction in progress

Construction in progress represents production site development projects under construction for production or for its own use purposes. Construction in progress is carried at cost less any impairment loss. Costs included costs of constructing the manufacturing plant and acquisition of mining rights, mining permits and licenses that form an integral part of the overall development projects. Construction in progress is classified to the appropriate category of property, plant and equipment or intangible assets when completed and ready for intended use. Depreciation or amortisation commences when the assets are ready for their intended use.

Cash and cash equivalents

Cash and cash equivalents include cash at bank and in hand, demand deposits with banks and other financial institution and short term highly liquid investments with original maturities of three months or less that are readily convertible into known amounts of cash and which are subject to an insignificant risk of changes in value. For the preparation of consolidated cash flow statement, cash and cash equivalents include bank overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

Inventories

Inventories of coal, methanol, iron ore and equipment are stated at the lower of cost and net realisable value. Cost, which comprises direct materials and, where applicable, direct labour and overheads that have been incurred in bringing the inventories to their present location and condition, is calculated using the weighted average method. Net realisable value represents the estimated selling price less all further costs to completion and costs to be incurred in selling, marketing and distribution.

Inventories of auxiliary materials, spare parts and small tools expected to be used in production are stated at weighted average cost less allowance, if necessary, for obsolescence.

Overburden in advance

Overburden in advance comprises mining stripping (waste removal) costs both during the development and production phase of the Group’s operations.

When stripping costs are included in the development phase of a mine before the production phase commences (development stripping). Such expenditure is capitalised as part of the cost of constructing the mine if it can be demonstrated that it is probable that future economic benefits will be realised, the costs can be reliably measured and the entity can identify the component of the ore body for which access has been improved. The stripping assets are subsequently amortised over its useful life using a units of production method, in accordance with the policy applicable to mine properties. The capitalisation of development stripping costs ceases when the mine/component is commissioned and ready for use as intended by management.

Annual Report 2019 193

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Overburden in advance (Continued)

Waste development costs incurred in the production phase creates two benefits, being either the production of inventory or improved access to the ore to be mined in the future. Where the benefits are realised in the form of inventory produced in the period, the production stripping costs are accounted for as part of the cost of producing those inventories. Where production stripping costs are incurred and the benefit is improved access to ore to be mined in the future, the costs are recognised as a stripping activity asset in mine properties.

If the costs of the inventory produced and the stripping asset are not separately identifiable, the allocation is undertaken based on waste-to-ore stripping ratio for the particular ore component concerned. If mining of waste in a period occurs in excess of the expected life-of-component average waste-to-ore strip ratio, the excess is recognised as part of the stripping asset. Where mining occurs at or below the expected life-of-component stripping ratio in a period, the entire production stripping cost is allocated to the cost of the ore inventory produced.

Amortisation is provided using the units-of-production method over the life of the identified component of ore body. The units-of-production method results in an amortisation charge proportional to the depletion of the economically recoverable mineral resources (comprising proven and probable reserves).

Stripping costs that do not satisfy the asset recognition criteria are expensed.

Taxation

Income tax comprises current tax and deferred tax.

Current income tax assets and/or liabilities comprise those obligations to, or claims from, fiscal authorities relating to the current or prior reporting period, that are unpaid at the reporting date. They are calculated according to the tax rates and tax laws applicable to the fiscal periods to which they relate, based on the taxable profit for the year. All changes to current tax assets or liabilities are recognised as a component of tax expense in profit or loss.

The tax currently payable is based on taxable profit for the year. Taxable profit differs from profit before tax as reported in the consolidated statement of profit or loss because it excludes items of income or expense that are taxable or deductible in other years and it further excludes items that are never taxable or deductible. The Group’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the end of the reporting period.

194

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Taxation (Continued)

Deferred tax is recognised on temporary differences at the reporting date between the carrying amounts of assets and liabilities in the financial statements and their respective tax bases. Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are recognised for all deductible temporary differences, tax losses available to be carried forward as well as other unused tax credits, to the extent that it is probable that taxable profit, including existing taxable temporary differences, will be available against which the deductible temporary differences, unused tax losses and unused tax credits can be utilised.

Deferred tax assets and liabilities are not recognised if the temporary difference arises from goodwill or from initial recognition (other than in a business combination) of assets and liabilities in a transaction that affects neither taxable nor accounting profit or loss.

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, interest in associates and joint ventures, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

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 asset to be recovered.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised. Changes in deferred tax assets or liabilities are recognised in profit or loss, or in other comprehensive income or directly in equity if they relate to items that are charged or credited to other comprehensive income or directly in equity.

Annual Report 2019 195

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Taxation (Continued)

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority on either (i) the same taxable entity; or (ii) 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.

Certain of the Company’s Australian subsidiaries have formed an income tax consolidated group under the tax consolidation regime. Each entity in the tax consolidated group recognises its own deferred tax assets and liabilities, except where the deferred tax assets relate to unused tax losses and credits, in which case the Australian subsidiaries recognises the assets. Australian subsidiaries have entered into a tax sharing agreement whereby each company of Australian subsidiaries contributes to the income tax payable in proportion to their contribution to the profit before tax of the tax consolidated group. The tax consolidated group has also entered into a tax funding agreement whereby each entity in Australian subsidiaries group can recognise their balance of the current tax assets and liabilities through interentity accounts.

Land subsidence, restoration, rehabilitation and environmental costs

One consequence of coal mining is land subsidence caused by the resettlement of the land above the underground mining sites. Depending on the circumstances, the Group may relocate inhabitants from the land above the underground mining sites prior to mining those sites or the Group may compensate the inhabitants for losses or damages from land subsidence after the underground sites have been mined. The Group may also be required to make payments for restoration, rehabilitation or environmental protection of the land after the underground sites have been mined.

An estimate of such costs is recognised in the period in which the obligation is identified and is charged as an expense in proportion to the coal extracted. At each statement of financial position date, the Group adjusts the estimated costs in accordance with the actual land subsidence status. The provision is also adjusted for changes in estimates. Those adjustments are accounted for as a change in the corresponding capitalised cost, except where a reduction in the provision is greater than the undepreciated capitalised cost of any related assets, in which case the capitalised cost is reduced to nil and remaining adjustment is recognised in the consolidated statement of profit or loss. Changes to the capitalised cost result in an adjustment to future depreciation and financial charges.

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Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leasing

(Accounting Policy applicable on or after 1 January 2019)

Definition of a lease

Under IFRS 16, a contract is, or contains, a lease if the contract conveys a right to control the use of an identified asset for a period of time in exchange for consideration.

The Group as lessee

The Group assesses whether a contract is or contains a lease, at inception of the contract. The Group recognises a rightof-use asset and a corresponding lease liability with respect to all lease arrangements in which it is the lessee, except for short-term leases (defined as leases with a lease term of 12 months or less) and leases of low value assets. For these leases, the Group recognises the lease payments as an operating expense on a straight-line basis over the term of the lease unless another systematic basis is more representative of the time pattern in which economic benefits from the leased assets are consumed.

Lease liabilities

At the commencement date, the Group measures lease liability at the present value of the lease payments that are not paid at that date. The lease payments are discounted by using the interest rate implicit in the lease. If this rate cannot be readily determined, the Group uses its incremental borrowing rate.

Lease payments included in the measurement of the lease liability comprise:

fixed lease payments (including in-substance fixed payments), less any lease incentives receivable;
variable lease payments that depend on an index or rate, initially measured using the index or rate at the commencement date;
the amount expected to be payable by the lessee under residual value guarantees;
the exercise price of purchase options if the lessee is reasonably certain to exercise the options; and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising an option to terminate the lease.

The lease liability is presented as a separate line in the consolidated statement of financial position.

The lease liability is subsequently measured by increasing the carrying amount to reflect interest on the lease liability (using the effective interest method) and by reducing the carrying amount to reflect the lease payments made.

Annual Report 2019 197

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leasing (Continued)

(Accounting Policy applicable on or after 1 January 2019) (Continued)

The Group as lessee (Continued)

Lease liabilities (Continued)

Lease liability is remeasured (and with a corresponding adjustment to the related right-of-use asset) whenever:

the lease term has changed or there is a significant event or change in circumstances resulting in a change in the assessment of exercise of a purchase option, in which case the lease liability is remeasured by discounting the revised lease payments using revised discount rate.
the lease payments change due to changes in an index or rate or a change in expected payment under a guaranteed residual value, in which cases the lease liability is remeasured by discounting the revised lease payments using the initial discount rate (unless the lease payments change is due to a change in a floating interest rate, in which case a revised discount rate is used).
A lease contract is modified and the lease modification is not accounted for as a separate lease, in which case the lease liability is remeasured based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

Right-of-use assets

The right-of-use assets comprise the initial measurement of the corresponding lease liability, lease payments made at or before the commencement date and any initial direct costs, less lease incentives received. Whenever the Group incurs an obligation for costs to dismantle and remove a leased asset, restore the site on which it is located or restore the underlying asset to the condition required by the terms and conditions of the lease, provision is recognised and measured under IAS 37 “Provision, Contingent Liabilities and Contingent Assets”. The costs are included in the related right-of-use asset, unless those costs are incurred to produce inventories.

They are depreciated over the shorter period of lease term and useful life of the underlying asset. If a lease transfers ownership of the underlying asset or the cost of the right-of-use asset reflects that the Group expects to exercise a purchase option, the related right-of-use asset is depreciated over the useful life of the underlying asset. The depreciation starts at the commencement date of the lease.

The Group presents right-of-use assets as a separate line in the consolidated statement of financial position.

198 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Leasing (Continued)

(Accounting Policy applicable on or after 1 January 2019) (Continued)

The Group as lessee (Continued)

Right-of-use assets (Continued)

The Group applies IAS 36 to determine whether a right-of-use asset is impaired and accounts for any identified impairment loss.

Allocation of consideration to components of a contract

For a contract that contains a lease component and one or more additional lease or non-lease components, the Group allocates the consideration in the contract to each lease component on the basis of the relative stand-alone price of the lease component and the aggregate stand-alone price of the non-lease components.

As a practical expedient, IFRS 16 permits a lessee not to separate non-lease components, and instead account for any lease and associated non-lease components as a single arrangement. The Group hasused this practical expedient for all leases.

Lease modification

The Group accounts for a lease modification as a separate lease if:

the modification increases the scope of the lease by adding the right to use one or more underlying assets; and
the consideration for the lease increases by an amount commensurate with the stand-alone price for the increase in scope and any appropriate adjustments to that stand-alone price to reflect the circumstances of the particular contract.

For a lease modification that is not accounted for a separate lease, the Group remeasures the lease liability based on the lease term of the modified lease by discounting the revised lease payments using a revised discount rate at the effective date of the modification.

Annual Report 2019 199

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Accounting Policy applicable prior to 1 January 2019

Leases are classified as finance leases whenever the terms of the lease transfer substantially all the risks and rewards of ownership to the lessee. All other leases are classified as operating leases.

Where the Group acquires the use of assets under finance leases, the amounts representing the fair value of the leased asset, or, if lower, the present values of the minimum lease payments of such assets are included in property, plant and equipment and the corresponding liabilities, net of finance charges, are recorded as an obligation under finance leases.

Each lease payment is allocated between liability and finance charges so as to achieve a constant rate of interest on the remaining balance of the liability. The finance lease liabilities are included in current and non-current borrowings. The finance charges are expensed in the consolidated statement of profit or loss over the lease periods so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The assets accounted for as finance leases are depreciated over the shorter of their estimated useful lives or the lease periods.

Operating lease payments are recognised as an expense on a straight-line basis over the lease term except where another systematic basis is more representative of the time pattern in which economic benefits from the leased asset are consumed. Contingent rentals arising under operating leases are recognised as an expense in the period in which they are incurred.

Provisions and contingent liabilities

Provisions are recognised when the Group has a present obligation (legal or constructive) as a result of a past event, and it is probable that an outflow of economic benefits will be required to settle the obligation and a reliable estimate of the amount of the obligation can be made. Where the time value of money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

All provisions are reviewed at the end of each reporting period and adjusted to reflect the current best estimate.

Where it is not probable that an outflow of economic benefits will be required, or the amount cannot be estimated reliably, the obligation is disclosed as a contingent liability, unless the probability of outflow of economic benefits is remote. Possible obligations, whose existence will only be confirmed by the occurrence or non-occurrence of one or more future uncertain events not wholly within the control of the Group are also disclosed as contingent liabilities unless the probability of outflow of economic benefits is remote.

Borrowing costs

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 capitalised as part of 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. Capitalisation of borrowing costs is suspended or ceases when substantially all the activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

200 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Borrowing costs (Continued)

All other borrowings costs are recognised as expenses in the period in which they are incurred.

Foreign currencies

In the individual financial statements of each individual group entity, transactions in currencies other than the functional currency of that entity (foreign currencies) are recorded in the respective functional currency (i.e., the currency of the primary environment in which the entity operates) at the rates of exchanges prevailing on the dates of the transactions. At each balance sheet date, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the reporting date.

Non-monetary items carried at fair value that are denominated in foreign currencies are translated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on the retranslation of monetary items, are recognised in profit or loss in the period in which they arise.

Exchange differences on monetary items receivable from or payable to foreign operation for which settlement is neither planned nor likely to occur (therefore forming part of the net investment in the foreign operation), which are recognised initially in other comprehensive income and reclassified from equity to profit or loss on repayment of the monetary items.

In the consolidated financial statements, the assets and liabilities of the Group’s foreign operations are translated into the presentation currency of the Company (i.e. Renminbi) at the rate of exchange prevailing at the reporting date, and their income and expenses are translated at the average exchange rates for the year, unless exchange rates fluctuate significantly during the period, in which case, the exchange rates prevailing at the dates of transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in equity (attributed to non-controlling interests as appropriate). Such exchange differences are recognised in profit or loss in the period in which the foreign operation is disposed of.

Government grants

Government grants are not recognised until there is reasonable assurance that the Group will comply with the conditions attaching to them and that the grants will be received.

Government grants are recognised in profit or loss on a systematic basis over the periods in which the Group recognises as expenses the related costs for which the grants are intended to compensate. Specifically, government grants whose primary condition is that the Group should purchase, construct or otherwise acquire non-current assets are recognised as deferred income in the consolidated statement of financial position and transferred to profit or loss on a systematic and rational basis over the useful lives of the related assets.

Annual Report 2019 201

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Government grants (Continued)

Government grants that are receivable as compensation for expenses or losses already incurred or for the purpose of giving immediate financial support to the Group with no future related costs are recognised in profit or loss in the period in which they become receivable.

Retirement benefits costs

Payments to defined contribution plans including included state-managed retirement benefit schemes and superannuation funds are recognised as an expense when employees have rendered service entitling them to the contributions.

Short-term and other long-term employee benefits

Benefits accruing to employees in respect of wages and salaries, annual leave and sick leave are included in other payables and accrued expenses. Related on-costs are also included in other payables and accrued expenses as other creditors. Long service leave is provided for when it is probable that settlement will be required and it is capable of being measured reliably.

Employee benefits expected to be settled within 12 months are measured using the remuneration rate expected to apply at the time of settlement. Provisions made in respect of employee benefits which are not expected to be settled within 12 months are measured as the present value of the estimated future cash outflows to be made by the Group in respect of services provided by employees up to the reporting date.

Financial instruments

Financial assets and financial liabilities are recognised in the consolidated statement of financial position when the Group becomes a party to the contractual provisions of the instrument.

Financial assets and financial liabilities are initially measured at fair value, except for trade receivables arising from contracts with customers which are initially measured in accordance with IFRS 15. Transaction costs that are directly attributable to the acquisition or issue of financial assets and financial liabilities (other than financial assets and financial liabilities at fair value through profit or loss) are added to or deducted from the fair value of the financial assets or financial liabilities, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of financial assets or financial liabilities at fair value through profit or loss are recognised immediately in profit or loss.

Financial assets

All regular way purchases or sales of financial assets are recognised and derecognised on a trade date basis. Regular way purchases or sales are purchases or sales of financial assets that require delivery of assets within the time frame established by regulation or convention in the marketplace.

202 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial assets (Continued)

All recognised financial assets are subsequently measured in their entirety at either amortised cost or fair value, depending on the classification of the financial assets. Financial assets are classified, at initial recognition, as subsequently measured at amortised cost, FVTOCI and FVTPL.

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.

Financial assets at amortised cost (debt instruments)

The Group measures financial assets subsequently at amortised cost if both of the following conditions are met:

the financial asset is held within a business model whose objective is to hold financial assets in order to collect contractual cash flows; and
the 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.

(i) Amortised cost and effective interest method

The effective interest method is a method of calculating the amortised cost of a debt instrument and of allocating interest income over the relevant period.

For financial assets other than purchased or originated credit-impaired financial assets (i.e. assets that are creditimpaired on initial recognition), the effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) excluding expected credit losses, through the expected life of the debt instrument, or, where appropriate, a shorter period, to the gross carrying amount of the debt instrument on initial recognition. For purchased or originated credit-impaired financial assets, a credit-adjusted effective interest rate is calculated by discounting the estimated future cash flows, including expected credit losses, to the amortised cost of the debt instrument on initial recognition.

The amortised cost of a financial asset is the amount at which the financial asset is measured at initial recognition minus the principal repayments, plus the cumulative amortisation using the effective interest method of any difference between that initial amount and the maturity amount, adjusted for any loss allowance. The gross carrying amount of a financial asset is the amortised cost of a financial asset before adjusting for any loss allowance.

Annual Report 2019 203

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Financial assets at amortised cost (debt instruments) (Continued)

(i) Amortised cost and effective interest method (Continued)

Interest income is recognised using the effective interest method for debt instruments measured subsequently at amortised cost and at FVTOCI. For financial assets other than purchased or originated credit-impaired financial assets, interest income is calculated by applying the effective interest rate to the gross carrying amount of a financial asset, except for financial assets that have subsequently become credit-impaired (see below). For financial assets that have subsequently become credit-impaired, interest income is recognised by applying the effective interest rate to the amortised cost of the financial asset. If, in subsequent reporting periods, the credit risk on the credit-impaired financial instrument improves so that the financial asset is no longer credit-impaired, interest income is recognised by applying the effective interest rate to the gross carrying amount of the financial asset.

Interest income is recognised in profit or loss and is included in the “Other income and gains” line item (note 10).

Equity instruments designated as at FVTOCI

On initial recognition, the Group may make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments as at FVTOCI. Designation at FVTOCI is not permitted if the equity investment is held for trading or if it is contingent consideration recognised by an acquirer in a business combination.

Investments in equity instruments at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains and losses arising from changes in fair value recognised in other comprehensive income and accumulated in the investment revaluation reserve. The cumulative gain or loss will not be reclassified to profit or loss on disposal of the equity investments, instead, they will be transferred to retained earnings.

Dividends on these investments in equity instruments are recognised in profit or loss when the Group’s right to receive the dividends is established, unless the dividends clearly represent a recovery of part of the cost of the investment. Dividends are included in the “Other income and gains” line item in profit or loss.

204

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Financial assets at FVTPL

Financial assets that do not meet the criteria for being measured at amortised cost or FVTOCI are measured at FVTPL. Specifically:

Investments in equity instruments are classified as at FVTPL, unless the Group designates an equity investment that is neither held for trading nor a contingent consideration arising from a business combination as at FVTOCI on initial recognition.
Debt instruments that do not meet the amortised cost criteria or the FVTOCI criteria are classified as at FVTPL. In addition, debt instruments that meet either the amortised cost criteria or the FVTOCI criteria may be designated as at FVTPL upon initial recognition if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring assets or liabilities or recognising the gains and losses on them on different bases. The Group has not designated any debt instruments as at FVTPL.

Financial assets at FVTPL are measured at fair value at the end of each reporting period, with any fair value gains or losses recognised in profit or loss to the extent they are not part of a designated hedging relationship. The net gain or loss recognised in profit or loss excludes any dividend or interest earned on the financial asset and is included in the “Other income and gains” line item. Fair value is determined in the manner described in note 46c.

A financial asset is classified as held for trading if:

it has been acquired principally for the purpose of selling it in the near term; or
on initial recognition, it is part of a portfolio of identified financial instruments that the Group manages together and has evidence of a recent actual pattern of short-term profit-taking; or
it is a derivative (except for a derivative that is a financial guarantee contract or a designated and effective hedging instrument).

Impairment of financial assets

The Group recognises a loss allowance for expected credit losses on investments in debt instruments that are measured at amortised cost as well as financial guarantee contracts. The amount of expected credit losses is updated at each reporting date to reflect changes in credit risk since initial recognition of the respective financial instrument.

Annual Report 2019 205

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets (Continued)

The Group always recognises lifetime ECL for bills and accounts receivables. The expected credit losses on these financial assets are estimated using a provision matrix based on the Group’s historical credit loss experience, adjusted for factors that are specific to the debtors, general economic conditions and an assessment of both the current as well as the forecast direction of conditions at the reporting date, including time value of money where appropriate.

For all other financial instruments, the Group measures the loss allowance equal to 12-month ECL, unless when there has a significant increase in credit risk since initial recognition, the Group recognises lifetime ECL. The assessment of whether lifetime ECL should be recognised is based on significant increase in the likelihood or risk of a default occurring since initial recognition.

Significant increase in credit risk

In assessing whether the credit risk on a financial instrument has increased significantly since initial recognition, 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. In making this assessment, the Group considers both quantitative and qualitative information that is reasonable and supportable, including historical experience and forward-looking information that is available without undue cost or effort.

In particular, the following information is taken into account when assessing whether credit risk has increased significantly since initial recognition:

an actual or expected significant deterioration in the financial instrument’s external (if available) or internal credit rating;
significant deterioration in external market indicators of credit risk for a particular debtor, e.g. a significant increase in the credit spread, the credit default swap prices for the debtor;
existing or forecast adverse changes in business, financial or economic conditions that are expected to cause a significant decrease in the debtor’s ability to meet its debt obligations;
an actual or expected significant deterioration in the operating results of the debtor;
significant increases in credit risk on other financial instruments of the same debtor;
an actual or expected significant adverse change in the regulatory, economic, or technological environment of the debtor that results in a significant decrease in the debtor’s ability to meet its debt obligations.

206 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets (Continued)

Significant increase in credit risks (Continued)

Irrespective of the outcome of the above assessment, the Group presumes that the credit risk on a financial asset has increased significantly since initial recognition when contractual payments are more than 30 days past due, unless the Group has reasonable and supportable information that demonstrates otherwise.

Despite the foregoing, the Group assumes that the credit risk on a financial instrument has not increased significantly since initial recognition if the financial instrument is determined to have low credit risk at the reporting date. A financial instrument is determined to have low credit risk if i) the financial instrument has a low risk of default, ii) the borrower has a strong capacity to meet its contractual cash flow obligations in the near term, and iii) adverse changes in economic and business conditions in the longer term may, but will not necessarily, reduce the ability of the borrower to fulfil its contractual cash flow obligations. The Group considers a financial asset to have low credit risk when the asset has external credit rating of ‘investment grade’ in accordance with the globally understood definition or if an external rating is not available, the asset has an internal rating of ‘performing’. Performing means that the counterparty has a strong financial position and there is no past due amounts.

For financial guarantee contracts, the date that the Group becomes a party to the irrevocable commitment is considered to be the date of initial recognition for the purposes of assessing the financial instrument for impairment. In assessing whether there has been a significant increase in the credit risk since initial recognition of a financial guarantee contract, the Group considers the changes in the risk that the specified debtor will default on the contract.

The Group regularly monitors the effectiveness of the criteria used to identify whether there has been a significant increase in credit risk and revises them as appropriate to ensure that the criteria are capable of identifying significant increase in credit risk before the amount becomes past due.

Definition of default

The Group considers the following as constituting an event of default for internal credit risk management purposes as historical experience indicates that receivables that meet either of the following criteria are generally not recoverable:

when there is a breach of financial covenants by the debtor; or
information developed internally or obtained from external sources indicates that the debtor is unlikely to pay its creditors, including the Group, in full (without taking into account any collaterals held by the Group).

Annual Report 2019 207

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets (Continued)

Credit-impaired financial assets

A financial asset is credit-impaired when one or more events that have a detrimental impact on the estimated future cash flows of that financial asset have occurred. Evidence that a financial asset is credit-impaired includes observable data about the following events:

significant financial difficulty of the issuer or the borrower;
a breach of contract, such as a default or past due event;
the lender(s) of the borrower, for economic or contractual reasons relating to the borrower’s financial difficulty, having granted to the borrower a concession(s) that the lender(s) would not otherwise consider;
it is becoming probable that the borrower will enter bankruptcy or other financial reorganisation; or
the disappearance of an active market for that financial asset because of financial difficulties.

Write-off policy

The Group writes off a financial asset when there is information indicating that the debtor is in severe financial difficulty and there is no realistic prospect of recovery, e.g. when the counterparty has been placed under liquidation or has entered into bankruptcy proceedings, or in the case of trade receivables, when the amounts are over 4 years past due, whichever occurs sooner. Financial assets written off may still be subject to enforcement activities under the Group’s recovery procedures, taking into account legal advice where appropriate. Any recoveries made are recognised in profit or loss.

Measurement and recognition of expected credit losses

The measurement of expected credit losses is a function of the probability of default, loss given default (i.e. the magnitude of the loss if there is a default) and the exposure at default. The assessment of the probability of default and loss given default is based on historical data adjusted by forward-looking information. As for the exposure at default, for financial assets, this is represented by the assets’ gross carrying amount at the reporting date; for financial guarantee contracts, the exposure includes the amount drawn down as at the reporting date, together with any additional amounts expected to be drawn down in the future by default date determined based on historical trend, the Group’s understanding of the specific future financing needs of the debtors, and other relevant forward-looking information.

208 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial assets (Continued)

Impairment of financial assets (Continued)

Measurement and recognition of expected credit losses (Continued)

For financial assets, the expected credit loss is estimated as the difference between all contractual cash flows that are due to the Group in accordance with the contract and all the cash flows that the Group expects to receive, discounted at the original effective interest rate.

For a financial guarantee contract, as the Group is required to make payments only in the event of a default by the debtor in accordance with the terms of the instrument that is guaranteed, the expected loss allowance is the expected payments to reimburse the holder for a credit loss that it incurs less any amounts that the Group expects to receive from the holder, the debtor or any other party.

If the Group has measured the loss allowance for a financial instrument at an amount equal to lifetime ECL in the previous reporting period, but determines at the current reporting date that the conditions for lifetime ECL are no longer met, the Group measures the loss allowance at an amount equal to 12-month ECL at the current reporting date, except for assets for which simplified approach was used.

The Group recognises an impairment gain or loss in profit or loss for all financial instruments with a corresponding adjustment to their carrying amount through a loss allowance account.

Derecognition of financial assets

The Group derecognises a financial asset only when the contractual rights to the cash flows from the asset expire, or when it transfers the financial asset and substantially all the risks and rewards of ownership of the asset to another party. If the Group neither transfers nor retains substantially all the risks and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the asset and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the financial asset and also recognises a collateralised borrowing for the proceeds received.

On derecognition of a financial asset measured at amortised cost, the difference between the asset’s carrying amount and the sum of the consideration received and receivable is recognised in profit or loss. On derecognition of an investment in equity instrument which the Group has elected on initial recognition to measure at FVTOCI, the cumulative gain or loss previously accumulated in the investments revaluation reserve is not reclassified to profit or loss, but is transferred to retained earnings.

Annual Report 2019 209

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial liabilities and equity instruments

Classification as debt or equity

Debt and equity instruments issued by a group entity are classified as either financial liabilities or as equity in accordance with the substance of the contractual arrangements and the definitions of a financial liability and an equity instrument.

Equity instruments

An equity instrument is any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities. Equity instruments issued by a group entity are recognised at the proceeds received, net of direct issue costs.

Perpetual capital securities and subordinated capital notes issued by the Group, which includes no contractual obligation for the Group to deliver cash or another financial asset to the holders or to exchange financial assets or financial liabilities with the holders under conditions that are potentially unfavourable to the Group, are classified as equity instruments and are initially recorded at the proceeds received

Financial liabilities

All financial liabilities are subsequently measured at amortised cost using the effective interest method or at FVTPL.

Financial liabilities at FVTPL

Financial liabilities at FVTPL are stated at fair value with any gains or losses arising on changes in fair value recognised in profit or loss to the extent that they are not part of a designated hedging relationship. The net gain or loss recognised in profit or loss incorporates any interest paid on the financial liabilities and is included in the ‘other incomes and gains’ line item in profit or loss.

Financial liabilities subsequently measured at amortised cost

Financial liabilities that are not 1) contingent consideration of an acquirer in a business combination, 2) held-fortrading, or 3) designated as at FVTPL, are subsequently measured at amortised cost using the effective interest method.

The effective interest method is a method of calculating the amortised cost of a financial liability and of allocating interest expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash payments (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the financial liability, or (where appropriate) a shorter period, to the amortised cost of a financial liability.

210 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Financial liabilities and equity instruments (Continued)

Financial liabilities (Continued)

Financial guarantee contracts

A financial guarantee contract is a contract that requires the issuer to make specified payments to reimburse the holder for a loss it incurs because a specified debtor fails to make payments when due in accordance with the terms of a debt instrument.

Financial guarantee contracts issued by a group entity are initially measured at their fair values and, if not designated as at FVTPL and do not arise from a transfer of a financial asset, are subsequently measured at the higher of:

the amount of the loss allowance determined in accordance with IFRS 9; and
the amount initially recognised less, where appropriate, cumulative amortisation recognised over the guarantee period.

Derecognition of financial liabilities

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, cancelled or they expire. The difference between the carrying amount of the financial liability derecognised and the consideration paid and payable, including any non-cash assets transferred or liabilities assumed, is recognised in profit or loss.

Hedge accounting

The Group designates certain derivatives as hedging instruments in respect of foreign currency risk as cash flow hedges. Hedges of foreign exchange risk on firm commitments are accounted for as cash flow hedges.

At the inception of the hedge relationship, the Group documents the relationship between the hedging instrument and the hedged item, along with its risk management objectives and its strategy for undertaking various hedge transactions. Furthermore, at the inception of the hedge and on an ongoing basis, the Group documents whether the hedging instrument is effective in offsetting changes in cash flows of the hedged item attributable to the hedged risk, which is when the hedging relationships meet all of the following hedge effectiveness requirements:

there is an economic relationship between the hedged item and the hedging instrument;
the effect of credit risk does not dominate the value changes that result from that economic relationship; and
the hedge ratio of the hedging relationship is the same as that resulting from the quantity of the hedged item that the Group actually hedges and the quantity of the hedging instrument that the entity actually uses to hedge that quantity of hedged item.

Annual Report 2019 211

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Financial instruments (Continued)

Hedge accounting (Continued)

If a hedging relationship ceases to meet the hedge effectiveness requirement relating to the hedge ratio but the risk management objective for that designated hedging relationship remains the same, the Group adjusts the hedge ratio of the hedging relationship (i.e. rebalances the hedge) so that it meets the qualifying criteria again.

Cash flow hedges

The effective portion of changes in the fair value of derivatives and other qualifying hedging instruments that are designated and qualify as cash flow hedges is recognised in other comprehensive income and accumulated under the heading of cash flow hedging reserve, limited to the cumulative change in fair value of the hedged item from inception of the hedge. The gain or loss relating to the ineffective portion is recognised immediately in profit or loss, and is included in the “Other income and gains” line item.

Amounts previously recognised in other comprehensive income and accumulated in equity are reclassified to profit or loss in the periods when the hedged item affects profit or loss, in the same line as the recognised hedged item. However, when the hedged forecast transaction results in the recognition of a non-financial asset or a non-financial liability, the gains and losses previously recognised in other comprehensive income and accumulated in equity are removed from equity and included in the initial measurement of the cost of the non-financial asset or non-financial liability. This transfer does not affect other comprehensive income. Furthermore, if the Group expects that some or all of the loss accumulated in other comprehensive income will not be recovered in the future, that amount is immediately reclassified to profit or loss.

The Group discontinues hedge accounting only when the hedging relationship (or a part thereof) ceases to meet the qualifying criteria (after rebalancing, if applicable). This includes instances when the hedging instrument expires or is sold, terminated or exercised. The discontinuation is accounted for prospectively. Any gain or loss recognised in other comprehensive income and accumulated in equity at that time remains in equity and is recognised when the forecast transaction occurs. When a forecast transaction is no longer expected to occur, the gain or loss accumulated in equity is recognised immediately in profit or loss.

Offsetting financial instruments

Financial assets and liabilities of the Group are offset and the net amount presented in the consolidated statement of financial position when, and only when, there is a legally enforceable right to set off the recognised amounts and there is an intention to settle on a net basis or realise the asset and settle the liability simultaneously.

212 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Share-based payment transactions

Share options granted to employees

Equity-settled share-based payment transactions

The fair value of services received determined by reference to the fair value of share options granted at the date of grant is expensed on a straight-line basis over the vesting period, with a corresponding increase in equity (share options reserve).

At the end of the reporting period, the Group revises its estimates of the number of options that are expected to ultimately vest. The impact of the revision of the original estimates during the vesting period, if any, is recognised in profit or loss such that the cumulative expense reflects the revised estimate, with a corresponding adjustment to share options reserve.

When share options are exercised, the amount previously recognised in share options reserve will be transferred to other reserve. When the share options are forfeited after the vesting date or are still not exercised at the expiry date, the amount previously recognised in share options reserve will be transferred to retained earnings.

Cash-settled share-based payment transactions

For cash-settled share-based payments, a liability is recognised for goods or services acquired, measured initially at the fair value of the liability. At the end of the reporting period, the liability is remeasured at its fair value until the liability is settled, with any changes in fair value recognised in profit or loss for the year.

In case of share options granted by a subsidiary, the share options reserve of the subsidiary is classified as and grouped under non-controlling interests by the Group on consolidation. At the time when the share options are exercised, the amount previously recognised in share options reserve will be transferred to share premium of that subsidiary. The Group will account for the dilution as an equity transaction if the exercise of share options does not constitute a loss of the Group’s control over that subsidiary.

Annual Report 2019 213

Chapter 12 Consolidated Financial Statements

4. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Fair value measurement

When measuring fair value except for the Group’s share-based payment transactions, leasing transactions, net realisable value of inventories and value in use of intangible assets, prepaid lease payments, property, plant and equipment and construction in progress for the purpose of impairment assessment, the Group takes into account the characteristics of the asset or liability if market participants would take those characteristics into account when pricing the asset or liability at the measurement date.

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. Specifically, the Group categorised the fair value measurements into three levels, based on the characteristics of inputs, as follow:

Level 1 – Quoted (unadjusted) market prices in active markets for identical assets or liabilities.

Level 2 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is directly or indirectly observable.
Level 3 – Valuation techniques for which the lowest level input that is significant to the fair value measurement is unobservable.

At the end of the reporting period, the Group determines whether transfer occur between levels of the fair value hierarchy for assets and liabilities which are measured at fair value on recurring basis by reviewing their respective fair value measurement.

5. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in note 4, the directors of the Company are required to make judgements, estimates and assumptions about the amounts of assets, liabilities, revenue and expenses reported and disclosure made in the consolidated financial statements. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an on-going basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.

Critical judgement in applying accounting policies

The following is the critical judgement, apart from those involving estimations (see below), that the directors of the Company have made in the process of applying the Group’s accounting policies and that have the most significant effect on the amounts recognised and disclosures made in the consolidated financial statements.

214 Yanzhou Coal Mining Company Limited

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5. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

Critical judgement in applying accounting policies (Continued)

Going concern consideration

The assessment of the going concern assumptions involves making judgements by the management, at a particular point of time, about the future outcome of events or conditions which are inherently uncertain. The directors of the Company consider that the Group has ability to continue as a going concern and the major events or conditions, which may give rise to business risks, that individually or collectively may cast significant doubt about the going concern assumptions are set out in note 2 to the consolidation financial statements.

Significant influence over associates

As per note 28, the directors of the Company considered that China Zheshang Bank Co., Ltd. (“Zheshang Bank”), 臨商銀行股份有限公司 (“Linshang Bank”) and Qilu Bank Co. Ltd. (“Qilu Bank”), in which the Group has 4.39%, 19.75% and 8.67% equity interest respectively, are associates of the Group.

The Group considered that it has the practical ability to exercise significant influence on the associates even though it owns less than 20% of the ownership interest and voting control taking into account 1) the Group’s ownership interest is significant relative to other shareholders due to the wide dipersion of shareholding interests; 2) the representation or right to appoint/nominate directors on the board of directors of the associates; and 3) the rights to participate in the policy-making process, including dividends and other distribution.

Key sources of estimation uncertainty

The followings are the key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of resulting in a material adjustment to the carrying amounts of assets and liabilities within the next financial year.

Depreciation of mining structures

The cost of mining structures (note 24) is depreciated using the unit of production method based on the estimated total production volume for which the structure was designed. The management exercises their judgement in estimating the useful lives of the mining structures and the estimated total production volume of the mine. The estimated coal production volumes are updated at regular intervals and have taken into account recent production and technical information about each mine. These changes are considered a change in estimate for accounting purposes and are reflected on a prospective basis in related depreciation rates. Estimates of the production volume are inherently imprecise and represent only approximate amounts because of the subjective judgements involved in developing such information.

Annual Report 2019 215

Chapter 12 Consolidated Financial Statements

5. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

Key sources of estimation uncertainty (Continued)

Amortisation of assets

Mining reserve (note 23) is amortised based on unit of production basis. The expensing of overburden removal costs is based on saleable coal production over estimated economically recoverable reserves. The useful lives are estimated on the basis of the total proven and probable reserves of the mine. Proven and probable mining reserve estimates are updated at regular intervals and have taken into account recent production and technical information about each mine.

Provision for land subsidence, restoration, rehabilitation and environmental costs

The provision (note 37) is reviewed regularly to verify that it properly reflects the remaining obligation arising from the current and past mining activities. Provision for land subsidence, restoration, rehabilitation and environmental costs are determined by the management based on their best estimates of the current and future costs, latest government policies and past experience.

Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash flows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. As at 31 December 2019, the carrying amount of goodwill is RMB1,655,090,000 (2018: RMB1,651,211,000). During the year ended 31 December 2019, no impairment loss on goodwill (2018: nil) was recognised by the Group. Details of the Group’s impairment assessment on goodwill are set out in note 26.

Cash flow projections during the budget period for each of the cash generating units are based on the budgeted revenue and expected gross margins during the budget period and the raw materials price inflation during the budget period. Expected cash inflows/outflows have been determined based on past performance and management’s expectations for the market development.

Estimated impairment of property, plant and equipment and intangible assets

When there is an impairment indicator, the Group takes into consideration the estimation of future cash flows. The amount of the impairment loss is measured as the difference between the asset’s carrying amount and the present value of estimated future cash flows. Where the actual future cash flows are less than expected, a material impairment loss may arise. In estimating the future cash flows, the management have taken into account the recent production and technical advancement. As prices and cost levels change from year to year, the estimate of the future cash flow also changes. Notwithstanding the management has used all the available information to make their impairment assessment, inherent uncertainty exists on conditions of the mine and of the environment and actual written off may be higher than the amount estimated.

216 Yanzhou Coal Mining Company Limited

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5. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

Estimated impairment of property, plant and equipment and intangible assets (Continued)

As at 31 December 2019, the carrying amount of property, plant and equipment is approximately RMB44,995,450,000 (2018: RMB45,296,120,000). During the year ended 31 December 2019, no impairment loss on property, plant and equipment (2018: nil) was recognised by the Group.

As at 31 December 2019, the carrying amount of intangible assets is approximately RMB51,958,569,000 (2018: RMB47,868,989,000). During the year ended 31 December 2019, an impairment loss on intangible assets of approximately RMB147,464,000 (2018: RMB289,787,000) was recognised by the Group.

Exploration and evaluation expenditure

Under the Group’s accounting policy, exploration expenditure is not capitalised. Evaluation expenditure is capitalised when there is a high degree of confidence that the Group will determine that a project is commercially viable and therefore it is considered probable that future economic benefits will flow to the Group.

There are occasions when the Group concludes that the asset recognition criteria are met at an earlier stage than approval to proceed. In these cases, evaluation expenditure is capitalised if there is a high degree of confidence that the Group will determine the project is commercially viable. The Group’s view is that a high degree of confidence is greater than “more likely than not” (that is greater than 50 per cent certainty) and less than “virtually certain” (that is less than 90 per cent certainty). Determining whether there is a high degree of confidence that the Group will determine that an evaluation project is commercially viable requires a significant degree of judgement and assessment of all relevant factors such as the nature and objective of the project; the project’s current stage and project timeline; current estimates of the project’s net present value including sensitivity analyses for the key assumptions; and the main risks of the project. Development expenditure incurred prior to the decision to proceed is subject to the same criteria for capitalisation, being a high degree of confidence that the Group will determine that a project is commercially viable.

In accordance with IFRS 6 “Exploration for and Evaluation of Mineral Resources”, the criteria for the capitalisation of evaluation costs are applied consistently from period to period.

Subsequent recovery of the carrying value for evaluation costs depends on successful development or sale of the undeveloped project. If a project does not prove viable, all irrecoverable costs associated with the project net of any related impairment provisions are charged to the consolidated statement of profit or loss.

Annual Report 2019 217

Chapter 12 Consolidated Financial Statements

5. CRITICAL ACCOUNTING JUDGEMENT AND KEY SOURCES OF ESTIMATION UNCERTAINTY (Continued)

Impairment of bills and accounts receivables, other receivables and long-term receivables

The impairment provisions for bills and accounts receivables, other receivables and long-term receivables are based on assumptions about expected credit loss. The Group uses judgement in making these assumptions and selecting the inputs to the impairment calculation, bases on the number of days that an individual receivable is outstanding as well as the Group’s historical experience and forward-looking information at the end of the reporting period. Changes in these assumptions and estimates could materially affect the result of the assessment and it may be necessary to make additional impairment charge to the consolidated statement of profit or loss and other comprehensive income.

At 31 December 2019, the carrying amount of bills and accounts receivables is approximately RMB7,598,163,000 (2018: RMB9,157,262,000), net of accumulated impairment losses of approximately RMB482,331,000 (2018: RMB401,648,000).

At 31 December 2019, the carrying amount of other receivables is approximately RMB13,581,816,000 (2018: RMB9,158,687,000), net of accumulated impairment losses of approximately RMB769,779,000 (2018: RMB423,134,000).

At 31 December 2019, the carrying amount of long-term receivables is approximately RMB10,118,051,000 (2018: RMB10,225,926,000), net of accumulated impairment losses of approximately RMB234,354,000 (2018: RMB196,930,000).

6. SEGMENT INFORMATION

The Group is engaged primarily in the mining business. The Group is also engaged in the coal railway transportation business. The Company does not currently have direct export rights in the PRC and all of its export sales is made through China National Coal Industry Import and Export Corporation (“National Coal Corporation”), Minmetals Trading Co., Ltd. (“Minmetals Trading”) or Shanxi Coal Imp. & Exp. Group Corp. (“Shanxi Coal Corporation”). The final customer destination of the Group’s export sales is determined by the Group, National Coal Corporation, Minmetals Trading or Shanxi Coal Corporation. The exploitation right of the Group’s foreign subsidiaries is not restricted. Certain of the Company’s subsidiaries and associates are engaged in manufacturing and trading of mining machinery and the transportation business via rivers and lakes and financial services in the PRC. No separate segment information about these businesses is presented in these financial statements as the underlying gross sales, results and assets of these businesses, which are currently included in the mining business segment, are insignificant to the Group. Certain of the Company’s subsidiaries are engaged in production of methanol and other chemical products, and invest in heat and electricity. Upon the acquisition of Yankuang Donghua Heavy Industry Limited (“Donghua”) in 2016, the Group is also engaged in the manufacturing of comprehensive coal mining and excavating equipment.

Gross revenue disclosed below is same as the turnover (total revenue).

For management purposes, the Group is currently organised into four operating divisions-coal mining, coal railway transportation, methanol, electricity and heat supply and equipment manufacturing. These divisions are the basis on which the Group reports its segment information.

218 Yanzhou Coal Mining Company Limited

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6. SEGMENT INFORMATION (Continued)

Principal activities are as follows:

Coal mining	Underground and open-cut mining, preparation and sales of coal and
	potash mineral exploration
Coal railway transportation	Provision of railway transportation services
Methanol, electricity and heat supply	Production and sales of methanol and electricity and related heat supply
	services
Equipment manufacturing	Manufacturing of comprehensive coal mining and excavating equipment

The accounting policies of the reportable segments are same as the Group’s accounting policies described in note 4. Segment results represents the results of each segment without allocation of corporate expenses and directors’ emoluments, share of results of associates and joint ventures, interest income, interest expenses and income tax expenses. This is the measure reported to the chief operating decision maker for the purposes of resources allocation and assessment of segment performance.

Unallocated corporate income for the years ended 31 December 2019 and 2018 mainly included gain on sales of materials and sundry items.

Unallocated corporate expenses for the years ended 31 December 2019 and 2018 mainly included bank charges, salaries and other employee benefits, miscellaneous taxes and sundry items.

Unallocated corporate assets at 31 December 2019 and 2018 mainly included certain bank balances and cash, investments in securities, deferred tax assets and sundry items.

Unallocated corporate liabilities at 31 December 2019 and 2018 mainly included borrowings, dividend payables, deferred tax liabilities and sundry items.

(a) Segment revenues and results

Segment information about these businesses is presented below:

==> picture [439 x 122] intentionally omitted <==

Annual Report 2019 219

Chapter 12 Consolidated Financial Statements

6. SEGMENT INFORMATION (Continued)

(a) Segment revenues and results (Continued)

==> picture [439 x 248] intentionally omitted <==

----- Start of picture text -----

For the year ended 31 December 2019
Methanol,
Coal railway electricity and Equipment
Coal mining transportation heat supply manufacturing Unallocated Eliminations Consolidated
RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
RESULTS
Segment results 14,951,626 143,446 568,844 147 – – 15,664,063
Unallocated corporate
– – – – – –
expenses (3,324,714)
Unallocated corporate
income – – – – – – 3,024,360
Interest income – – – – – – 799,637
Share of results of associates 605,155 146,845 16,423 – 941,659 – 1,710,082
Share of results of joint
ventures (135,352) – – – – – (135,352)
Finance costs – – – – – – (2,751,234)
Profit before tax 14,986,842
Income tax expenses (3,160,063)
Profit for the year 11,826,779
----- End of picture text -----

			For the year ended 31 December 2018	For the year ended 31 December 2018	For the year ended 31 December 2018
			Methanol,
		Coal railway	electricity and	Equipment
	Coal mining	transportation	heat supply	manufacturing	Unallocated	Eliminations	Consolidated
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
SEGMENT REVENUE
External	62,428,313	420,303	4,121,293	477,195	–	–	67,447,104
Inter-segment	5,902,994	82,491	506,440	686,324	–	(7,178,249)	–
Total	68,331,307	502,794	4,627,733	1,163,519	–	(7,178,249)	67,447,104

220 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

6. SEGMENT INFORMATION (Continued)

(a) Segment revenues and results (Continued)

Inter-segment revenue is charged at prices pre-determined by the relevant governmental authority.

			For the year ended 31 December 2018	For the year ended 31 December 2018	For the year ended 31 December 2018
			Methanol,
		Coal railway	electricity and	Equipment
	Coal mining	transportation	heat supply	manufacturing	Unallocated	Eliminations	Consolidated
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
RESULTS
Segment results	18,588,383	160,012	1,046,315	128,689	–	–	19,923,399
Unallocated corporate expenses	–	–	–	–	–	–	(5,523,706)
Unallocated corporate income	–	–	–	–	–	–	2,605,533
Interest income	–	–	–	–	–	–	1,003,958
Share of results of associates	381,102	195,484	54,376	–	665,245	–	1,296,207
Share of results of
joint ventures	238,101	–	–	–	–	–	238,101
Finance costs	–	–	–	–	–	–	(3,612,394)
Profit before tax							15,931,098
Income tax expenses							(4,608,406)
Profit for theyear							11,322,692

The revenue for the years ended 31 December 2019 and 2018 represented revenue from contracts with customers within the scope of IFRS 15.

Disaggregation of revenue from contracts with customers by timing of recognition

		Year ended 31/12/2019 RMB’000	Year ended 31/12/2018 RMB’000
	Timing of revenue recognition
	At apoint in time	67,804,644	67,447,104

Annual Report 2019 221

Chapter 12 Consolidated Financial Statements

6. SEGMENT INFORMATION (Continued)

(b) Segment assets and liabilities

	Coal mining RMB’000	Coal railway transportation RMB’000	As at 31 December 2019 Methanol, electricity and heat supply Equipment manufacturing RMB’000 RMB’000	As at 31 December 2019 Methanol, electricity and heat supply Equipment manufacturing RMB’000 RMB’000	Unallocated RMB’000	Consolidated RMB’000
ASSETS Segment assets Interests in associates Interests in joint ventures Unallocated corporate assets	140,299,628 3,963,236 518,956	522,924 2,177,992 –	18,190,949 1,029,771 –	5,025,645 – –	– 9,944,440 –	164,039,146 17,115,439 518,956 29,087,030
						210,760,571
LIABILITIES Segment liabilities Unallocated corporate liabilities	38,006,558	240,723	11,825,195	3,671,294	–	53,743,770 71,668,196
						125,411,966
			As at 31 December 2018
			Methanol,
		Coal railway	electricity and	Equipment
	Coal mining	transportation	heat supply	manufacturing	Unallocated	Consolidated
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
ASSETS
Segment assets	129,125,496	500,299	14,843,736	5,420,221	–	149,889,752
Interests in associates	3,782,845	2,031,147	1,101,480	–	9,108,237	16,023,709
Interests in joint ventures	660,221	–	–	–	–	660,221
Unallocated corporate assets						39,429,933
						206,003,615
LIABILITIES
Segment liabilities	28,285,399	208,883	9,042,656	4,077,626	–	41,614,564
Unallocated corporate liabilities						77,344,062
						118,958,626

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6. SEGMENT INFORMATION (Continued)

(c) Other segment information

	Coal mining RMB’000	Coal railway transportation RMB’000	For the year ended Methanol, electricity and heat supply RMB’000	31 December 2019 Equipment manufacturing RMB’000	31 December 2019 Equipment manufacturing RMB’000	Corporate RMB’000	Consolidated RMB’000
Capital additions Additions of investments in associates Amortisation of intangible assets Depreciation of property, plant and equipment Depreciation of right-of-use assets Impairment loss on: – inventories – bills and accounts receivables, net – other receivables, net – long-term receivables – intangible assets	15,158,689 – 1,557,702 2,749,733 209,810 25,843 118,890 346,645 37,424 147,464	21,918 – – 4,642 – – – – – –	752,412 – 23,498 843,976 2,217 – – – – –		39,171 – 3,614 433,508 – – – – – –	94,255 352,755 153 1,047 – – – – – –	16,066,445 352,755 1,584,967 4,032,906 212,027 25,843 118,890 346,645 37,424 147,464

			For the year ended	31 December 2018
			Methanol,
		Coal railway	electricity and		Equipment
	Coal mining	transportation	heat supply		manufacturing	Corporate	Consolidated
	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000
Capital additions	9,546,978	222,864	5,531,592		56,088	495,271	15,852,793
Additions of investments in
associates	200,000	–	–		–	5,938,411	6,138,411
Amortisation of intangible assets	1,368,374	–	20,618		3,792	898	1,393,682
Depreciation of property,
plant and equipment	3,593,903	27,824	853,191		453,192	1,115	4,929,225
Release of prepaid lease payments	13,084	5,372	7,702		3,560	–	29,718
Impairment loss on:
– inventories, net	7,227	–	–		–	–	7,227
– bills and accounts
receivables, net	164,405	–	–		–	–	164,405
– other receivables, net	127,748	–	–		–	–	127,748
– long-term receivables, net	173,133	–	–		–	–	173,133
– intangible assets	289,787	–	–		–	–	289,787
Gain on partial disposal
of ajoint operation	(388,607)	–	–		–	–	(388,607)

Annual Report 2019 223

Chapter 12 Consolidated Financial Statements

6. SEGMENT INFORMATION (Continued)

GEOGRAPHICAL INFORMATION

The following table sets out the geographical information. The geographical location of sales to external customers is based on the location at which the services were provided or the destination of goods delivered. The geographical location of the specified non-current assets is based on the physical location of the asset, in the case of property, plant and equipment, the location of the operation to which they are allocated, in the case of intangible assets and goodwill, and the location of operations, in the case of interests in associates and joint ventures.

The geographical information of revenue from contracts with customers are as follows:

		Revenue from
		external customers
		For the year ended
		31 December
		2019 2018
		RMB’000 RMB’000
	The PRC (place of domicile)	49,923,850 45,085,252
	Australia	2,482,552 2,935,668
	Others	15,398,242 19,426,184
	Total	67,804,644 67,447,104

The geographical information of non-current assets (note) are as follows:

	Non-current assets	Non-current assets
	At 31 December
	2019	2018
	RMB’000	RMB’000
The PRC (place of domicile)	93,952,113	82,385,729
Australia	40,257,731	40,706,882
Canada	1,921,695	1,803,898
Total non-current assets	136,131,539	124,896,509

Note: Non-current assets excluded investments in securities, long-term receivables, royalty receivable, deposits made on investments and deferred tax assets.

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7. NET SALES OF COAL

NET SALES OF COAL	NET SALES OF COAL
Year ended 31 December 2019 2018 RMB’000 RMB’000
Coal sold in the PRC, gross 45,658,024 Less: Transportation costs (1,056,479)	41,796,456 (1,092,894)
Coal sold in the PRC, net 44,601,545 Coal sold outside the PRC, gross 18,119,041 Less: Transportation costs (2,707,478)	40,703,562 20,631,857 (2,658,167)
Coal sold outside the PRC, net 15,411,563	17,973,690
Net sales of coal 60,013,108	58,677,252

Net sales of coal represent the invoiced value of coal sold and are net of returns, discounts and transportation costs if the invoiced value includes transportation costs to the customers.

8. COST OF SALES AND SERVICES PROVIDED

Cost of sales and services provided included:

	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Wages and employee benefits	6,216,147	5,834,929
Depreciation of property, plant and equipment	2,307,479	2,873,140
Depreciation of right-of-use assets	167,828	–
Amortisation of miningrights	1,543,039	1,368,374

9. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES

Selling, general and administrative expenses included:

	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Wages and employee benefits Release of prepaid lease payment Amortisation of intangible assets Depreciation of property, plant and equipment Depreciation of right-of-use assets Impairment loss on bills and accounts receivables, net Impairment loss on other receivables, net Impairment loss on inventories Impairment loss on intangible assets Impairment loss on long-term receivables, net Loss on disposals of property, plant and equipment Loss on change in fair value of financial assets at FVTPL Exchange loss, net Deemed loss on disposal of an associate Loss on change in fair value of derivative financial instruments	2,974,468 – 41,928 645,464 44,199 118,890 346,645 25,843 147,464 37,424 50,237 4,743 134,212 – 111,112	3,931,798 29,718 25,308 701,670 – 164,405 127,748 7,227 289,787 173,133 9,046 182,493 260,390 53 28,466

Annual Report 2019 225

Chapter 12 Consolidated Financial Statements

10. OTHER INCOME AND GAINS

OTHER INCOME AND GAINS	OTHER INCOME AND GAINS
Year ended 31 December 2019 2018 RMB’000 RMB’000
Dividend income – Gain on sales of auxiliary materials 1,903,663 Interest income 847,057 Gain on change in fair value of royalty receivable 157,112 Gain on change in fair value of financial assets at FVTPL – Gain on disposal of an associate 101,950 Government grants 245,394 Gain on partial disposal of a joint operation – Others 656,086	152,732 2,180,849 1,003,958 18,573 220,116 – 219,865 388,607 177,527
3,911,262	4,362,227

Note a: The above dividend income is from listed investments. Note b: Government grants mainly represented subsidies provided to the Group to finance its operations and there were no unfulfilled conditions.

11. FINANCE COSTS

	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Interest expenses on: – Bank and other borrowings – Bills receivable discounted without recourse	3,086,837 8,512	3,702,480 6,831
– Lease liabilities	33,894	–
	3,129,243	3,709,311
Less: interest expenses capitalised into construction inprogress	(378,009)	(96,917)
	2,751,234	3,612,394

Borrowing costs capitalised during the year arose on the general borrowing pool and are calculated by applying a capitalisation rate of 4.35% to 5.9% (2018: 4.35% to 5.9%) per annum to expenditure on qualifying assets.

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12. INCOME TAX EXPENSES

INCOME TAX EXPENSES	INCOME TAX EXPENSES
Year ended 31 December 2019 2018 RMB’000 RMB’000
Income taxes: Current taxes 2,829,461 Deferred taxes(note 42) 330,602	3,210,681 1,397,725
3,160,063	4,608,406

Except for certain subsidiaries in the PRC that are entitled to a preferential tax rate of 15%, the Company and its subsidiaries in the PRC are subject to the standard income tax rate of 25% on its taxable income (2018: 25%).

Taxation arising in other jurisdictions is calculated at the rates prevailing in the relevant jurisdictions.

The total tax charge for the year can be reconciled to the profit per the consolidated statement of profit or loss as follows:

	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Profit before tax	14,986,842	15,931,098
Standard income tax rate in the PRC	25%	25%
Standard income tax rate applied to profit before tax Reconciling items: Tax effect of expenses not deductible for tax purpose Utilisation of unrecognised tax losses in prior years Effect of tax rate differences in other taxation jurisdictions Tax effect of share of results of associates and joint ventures Changes in tax base of assets (note) Tax effect of tax losses not recognised Others	3,746,711 624,753 (9,514) 56,468 (393,683) (996,040) 139,927 (8,559)	3,982,775 620,767 (22,089) 30,902 (383,577) – 554,516 (174,888)
Income taxes	3,160,063	4,608,406
Effective income tax rate	21.09%	28.93%

Note: The amount represented the one-off tax benefits relating to the finalisation of tax bases arising from the acquisition of Coal and Allied Industries Limited in prior years.

Annual Report 2019 227

Chapter 12 Consolidated Financial Statements

13. PROFIT BEFORE TAX

PROFIT BEFORE TAX
	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Profit before tax has been arrived at after charging: Amortisation of intangible assets Depreciation of property, plant and equipment Depreciation of right-of-use assets Release of prepaid lease payments Auditors’ remuneration	1,584,967 4,032,906 212,027 – 15,295	1,393,682 4,929,225 – 29,718 16,766
Staff costs, including directors’, chief executive director’s, supervisors’ and management team’s emoluments Retirement benefit scheme contributions (included in staff costs above)	9,791,567 2,312,015	10,325,821 2,586,451
Share-based payments expenses (include in staff costs above) Assets transfer expenses (note) Cost of inventories recognised as expenses Research and development costs Operatinglease charges in respect of leasedpremises	8,203 – 19,112,498 265,014 N/A	33,097 538,931 17,094,576 157,560 123,688

Note: In accordance with the relevant policies issued by the State-owned Assets Supervision and Administration Commission of the State Council and the Ministry of Finance of the People’s Republic of China, state-owned enterprises shall carve out and transfer their assets related to water supply, power supply, heat/gas supply and property management of employees’ communities, together with their maintenance obligation and management function, to the parties, which are designated by local governments, after the necessary upgrades, before the year end of 2018 (the “Transfer”,三供一業移交). The Group has completed the Transfer during the year ended 31 December 2018 and recognised an one-off expense of approximately RMB538,931,000 thereon.

228

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Consolidated Financial Statements Chapter 12

14. DIRECTORS’, CHIEF EXECUTIVE DIRECTOR’S, SUPERVISORS’ AND MANAGEMENT TEAM’S REMUNERATION AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS

Directors’, chief executive director’s, supervisors’ and management team’s emoluments

Directors’ and chief executive’s emoluments, disclosed pursuant to the Listing Rules, section 383(1) of the Hong Kong Companies Ordinance and Part 2 of the Companies (Disclosure of Information about Benefits of Directors) Regulation, is as follows:

	For the year ended Fees Salaries, allowance and other benefits in kind RMB’000 RMB’000	For the year ended Fees Salaries, allowance and other benefits in kind RMB’000 RMB’000	31 December 2019 Retirement benefit scheme contributions Total RMB’000 RMB’000	31 December 2019 Retirement benefit scheme contributions Total RMB’000 RMB’000
Independent non-executive directors Qi Anbang Kong Xiangguo Cai Chang Poon Chiu Kwok	142 142 142 142	– – – –	– – – –	142 142 142 142
	568	–	–	568
Executive directors Wu Yuxiang1 Wu Xiangqian Guo Jun Li Wei* Zhao Qingchun Guo Dechun LiuJian2	– – – – – – –	– 1,058 728 – 850 1,014 820	– 187 128 – 150 179 144	– 1,245 856 – 1,000 1,193 964
	–	4,470	788	5,258
Chief executive director Li Xiyong*	–	–	–	–

Annual Report 2019 229

Chapter 12 Consolidated Financial Statements

14. DIRECTORS’, CHIEF EXECUTIVE DIRECTOR’S, SUPERVISORS’ AND MANAGEMENT TEAM’S REMUNERATION AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS (Continued)

Directors’, chief executive director’s, supervisors’ and management team’s emoluments (Continued)

	For the year ended Fees Salaries, allowance and other benefits in kind RMB’000 RMB’000	For the year ended Fees Salaries, allowance and other benefits in kind RMB’000 RMB’000	31 December 2019 Retirement benefit scheme contributions Total RMB’000 RMB’000	31 December 2019 Retirement benefit scheme contributions Total RMB’000 RMB’000
Supervisors Zhang Ning Zhou Hong Gu Shisheng Jiang Qingquan Meng Qinjian ZhengKai	– – – – – –	– – – 767 – 477	– – – 135 – 82	– – – 902 – 559
	–	1,244	217	1,461
Other management team Wang Fuqi Zhao Honggang Jin Qingbin He Jing GongZhijie	– – – – –	832 788 729 1,020 714	146 138 128 180 125	978 926 857 1,200 839
	–	4,083	717	4,800
Total	568	9,797	1,722	12,087

The executive directors, chief executive directors’ and other management team’s emoluments shown above were for their services to the management of the affairs of the Company and the Group.

The independent non-executive directors’ and the supervisors’ emoluments shown above were for their services as directors/supervisors of the Company.

Emoluments of these directors and supervisors were borne by the Parent Company and there is no reasonable basis of allocating their emoluments to the Group.
1 Resigned on 28 March 2019
2 Appointed on 29 March 2019

230

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14. DIRECTORS’, CHIEF EXECUTIVE DIRECTOR’S, SUPERVISORS’ AND MANAGEMENT TEAM’S REMUNERATION AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS (Continued)

Directors’, chief executive director’s, supervisors’ and management team’s emoluments (Continued)

		For the year ended	31 December 2018
		Salaries,
		allowance and	Retirement
		other benefits	benefit scheme
	Fees	in kind	contributions	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Independent non-executive directors
Qi Anbang	130	–	–	130
Kong Xiangguo	130	–	–	130
Cai Chang3	130	–	–	130
Poon Chiu Kwok2	130	–	–	130
	520	–	–	520
Executive directors
Wu Yuxiang*	–	–	–	–
Wu Xiangqian	–	937	165	1,102
Guo Jun	–	752	132	884
Li Wei*	–	–	–	–
Zhao Qingchun	–	755	133	888
Guo Dechun	–	903	159	1,062
	–	3,347	589	3,936
Chief executive director
Li Xiyong*	–	–	–	–

Annual Report 2019 231

Chapter 12 Consolidated Financial Statements

14. DIRECTORS’, CHIEF EXECUTIVE DIRECTOR’S, SUPERVISORS’ AND MANAGEMENT TEAM’S REMUNERATION AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS (Continued)

Directors’, chief executive director’s, supervisors’ and management team’s emoluments (Continued)

	For the year ended	For the year ended	31 December 2018
		Salaries,
		allowance and	Retirement
		other benefits	benefit scheme
	Fees	in kind	contributions	Total
	RMB’000	RMB’000	RMB’000	RMB’000
Supervisors
Zhang Ning*	–	–	–	–
Zhou Hong*	–	–	–	–
Gu Shisheng*	–	–	–	–
Tang Daqing1	–	675	118	793
Jiang Qingquan	–	782	138	920
Meng Qinjian*	–	–	–	–
ZhengKai2	–	415	71	486
	–	1,872	327	2,199
Other management team
Wang Fuqi	–	788	139	927
Zhao Honggang	–	768	135	903
Jin Qingbin	–	326	56	382
Liu Jian	–	694	122	816
He Jing	–	775	136	911
GongZhijie3	–	916	162	1,078
	–	4,267	750	5,017
Total	520	9,486	1,666	11,672

The executive directors’, chief executive director’s and other management team’s emoluments shown above were for their services to the management of the affairs of the Company and the Group.

The independent non-executive directors’ and the supervisors’ emoluments shown above were for their services as directors/supervisors of the Company.

Emoluments paid to these directors, the chief executive director, supervisors and management team were borne by the Parent Company and there is no reasonable basis of allocating their emoluments to the Group.
1 Resigned on 25 December 2018
2 Appointed on 25 December 2018
3
Appointed on 27 December 2018

232 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

14. DIRECTORS’, CHIEF EXECUTIVE DIRECTOR’S, SUPERVISORS’ AND MANAGEMENT TEAM’S REMUNERATION AND FIVE HIGHEST PAID INDIVIDUALS’ EMOLUMENTS (Continued)

Employees’ emoluments

The five highest paid individuals in the Group included one (2018: one) director for the year ended 31 December 2019. The emoluments of the remaining four (2018: four) highest paid individuals were stated as follows:

	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Salaries, allowance and other benefits in kind	15,272	13,989
Retirement benefit scheme contributions	406		367
Discretionarybonuses	2,154	12,928
	17,832	27,284
Their emoluments were within the following bands:
	Year ended	31 December
	2019	2018
HKD 1,500,001 to HKD 2,000,000	1		–
HKD2,000,001 to HKD2,500,000	–		1
HKD 2,500,001 to HKD 3,000,000	1		–
HKD3,500,001 to HKD4,000,000	–		–
HKD4,500,001 to HKD5,000,000	–		1
HKD5,500,001 to HKD6,000,000	–		1
HKD6,000,001 to HKD6,500,000	1		–
HKD 8,500,001 to HKD 9,000,000	1		–
HKD16,000,001 to HKD16,500,000	–		–
HKD17,000,001 to HKD17,500,000	–		1
	4		4

None of the directors, chief executive director, supervisors, management team and the five highest paid individuals waived any emoluments in the year ended 31 December 2019 and 2018. No emoluments were paid by the Group to any of the directors, supervisors, management team or five highest paid individuals as an inducement to joining the Group or as compensation for loss of office.

Annual Report 2019 233

Chapter 12 Consolidated Financial Statements

15. DIVIDEND RECOGNISED AS DISTRIBUTION DURING THE YEAR

DIVIDEND RECOGNISED AS DISTRIBUTION DURING THE YEAR
2019 RMB’000	2018 RMB’000
2019 interim dividend, RMB1.00 per share (2018: 2018 interim dividend, nil) 4,912,016 2018 final dividend, RMB0.54 per share (2018: 2017 final dividend, RMB0.48per share) 2,652,489	– 2,357,768
7,564,505	2,357,768

Pursuant to the annual general meeting held on 25 May 2018, a final dividend of RMB0.48 per share in respect of the year ended 31 December 2017 was approved by the shareholders and paid to the shareholders of the Company.

Pursuant to the annual general meeting held on 24 May 2019, a final dividend of RMB0.54 per share in respect of the year ended 31 December 2018 was approved by the shareholders and paid to the shareholders of the Company.

Pursuant to the extraordinary general meeting held on 1 November 2019, an interim dividend of RMB1.00 per share in respect of the six month ended 30 June 2019 was approved by the shareholders and paid to the shareholders of the Company.

The board of directors proposes to declare a final dividend of approximately RMB2,848,969,000 calculated based on a total number of 4,912,016,000 shares issued at RMB0.58 each in respect of the year ended 31 December 2019. The declaration and payment of the final dividend needs to be approved by the shareholders of the Company by way of an ordinary resolution in accordance with the requirements of the Company’s Articles of Association. A shareholders’ general meeting will be held for the purpose of considering and, if thought fit, approving this ordinary resolution.

16. EARNINGS PER SHARE

The calculation of the earnings per share attributable to the equity holders of the Company for the years ended 31 December 2019 and 2018 is based on the profit attributable to the equity holders of the Company for the year of approximately RMB9,388,645,000 and RMB8,582,556,000, respectively, and on the weighted average 4,912,016,000 shares in issue during 2019 and 2018.

For the purpose of computation of diluted earnings per share for the year ended 31 December 2019, the Company had taken into consideration the dilutive effects of the share options issued by the Company and shares issuable under share incentive schemes of a non-wholly-owned listed subsidiary (2018: shares issuable under share incentive schemes and subordinated capital notes of a non-wholly-owned listed subsidiary). The diluted earnings per share for the year ended 31 December 2019 and 2018 approximate the basic earnings per share.

234

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Consolidated Financial Statements Chapter 12

17. BANK BALANCES AND CASH/PLEDGED TERM DEPOSITS AND RESTRICTED CASH

Bank balances carry interest at market rates which ranged from 0.30% to 1.75% (2018: from 0.30% to 1.69%) per annum.

At the reporting date, the restricted cash represents the bank acceptance bill deposits paid for safety work as required by the State Administrative of work safety which carry interest at market rates of 0.30% to 0.42% (2018: 0.30% to 0.42%) per annum.

Pledged term deposits were pledged to certain banks as security for loans and banking facilities granted to the Group, which carry fixed interest rate ranging from 0.55% to 3.10% (2018: 0.55% to 2.9%) per annum.

18. BILLS AND ACCOUNTS RECEIVABLES

BILLS AND ACCOUNTS RECEIVABLES
	At 31 December
	2019	2018
	RMB’000	RMB’000
Accounts receivables	4,976,900	5,128,383
Less: impairment loss	(481,503)	(399,830)
	4,495,397	4,728,553
Bills receivables	3,103,594	4,430,527
Less: impairment loss	(828)	(1,818)
Total bills and accounts receivables, net	7,598,163	9,157,262

Bills receivable represents unconditional orders in writing issued by or negotiated from customers of the Group for completed sale orders which entitle the Group to collect a sum of money from banks or other parties. The bills are noninterest bearing and have a maturity of six months.

At as 31 December 2019, the gross amount of bills and accounts receivable arising from contracts with customers amounted to approximately RMB8,080,494,000 (2018: RMB9,558,910,000).

Annual Report 2019 235

Chapter 12 Consolidated Financial Statements

18. BILLS AND ACCOUNTS RECEIVABLES (Continued)

According to the credit rating of different customers, the Group generally allows a range of credit periods to its trade customers not exceeding 180 days.

The following is an aged analysis of bills and accounts receivables, net of allowance for impairment, presented based on the invoice dates, which approximates the respective revenue recognition dates, at the end of the reporting period:

	At 31	December
	2019	2018
	RMB’000	RMB’000
0-90 days	4,352,677	5,151,867
91-180 days	1,625,634	1,959,033
181-365 days	1,365,969	1,709,290
Over 1year	253,883	337,072
	7,598,163	9,157,262

Before accepting any new customer, the Group assesses the potential customer’s credit quality and defines credit limits by customer. Limits attributed to customers are reviewed once a year.

The Group measures the loss allowance for bills and accounts receivables at an amount equal to lifetime ECL. As part of the Group’s credit risk management, the Group uses debtors’ ageing to assess the impairment on a collective basis for part of its customers which consist of large number of small customers with common risk characteristics that are representative of the customers’ abilities to pay all amounts due in accordance with the contractual terms.

For accounts receivables of approximately RMB1,134,601,000 (2018: RMB591,427,000) that are due from large and state-owned enterprises which have good credit rating and very rare past default payment history, the directors of the Company considered that there is no expected credit loss on these receivables as at 31 December 2019.

The following table provide information about the exposure to credit risk and ECL for bills and accounts receivables from customers, other than those large and state-owned enterprises, which are assessed individually or collecteively based on provision matrix as at 31 December 2019.

As at 31 December 2019	Average expected loss rate %	Gross carrying amount RMB’000	Loss allowance RMB’000
Accounts receivables – collective assessment – Within 1 year – 1-2 years – 2-3 years – Over 3years	0.23 6.19 33.00 95.62	3,187,935 103,317 35,190 112,379	7,457 6,400 11,614 107,453
Accounts receivables – individual assessment	86.39	3,438,821 403,478	132,924 348,579
Bills receivables	0.03	3,842,299 3,103,594	481,503 828
		6,945,893	482,331

236

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Consolidated Financial Statements Chapter 12

18. BILLS AND ACCOUNTS RECEIVABLES (Continued)

	Average	Gross
	expected	carrying	Loss
	loss rate	amount	allowance
As at 31 December 2018	%	RMB’000	RMB’000
Accounts receivables – collective assessment
– Within 1 year	0.19	3,960,486	7,375
– 1-2 years	16.87	50,307	8,487
– 2-3 years	34.84	9,433	3,288
– Over 3years	100.00	244,630	244,630
		4,264,856	263,780
Accounts receivables – individual assessment	50.00	272,100	136,050
		4,536,956	399,830
Bills receivables	0.04	4,430,527	1,818
		8,967,483	401,648

The estimated loss rates are estimated based on historical observed default rates over the expected life of the debtors and are adjusted for forward looking information that is available without undue cost or effort. The grouping is regularly reviewd by the management to ensure relevant information about specific debtor is updated.

Receivable are written off if past due for more than 4 years and are not subject to enforcement activity. The Group does not hold collateral as security. During the year ended 31 December 2019, no accounts receivables were written-off (2018: RMB108,000).

An analysis of the impairment loss on bills and accounts receivables for 2019 and 2018 are as follows:

	At 31 December	At 31 December
	2019		2018
	RMB’000	RMB’000
Balance at 1 January	401,648		237,351
Amounts written off as uncollectible	(38,207)		(108)
Provided for the year	223,230		170,238
Impairment loss reversed	(104,340)		(5,833)
Balance at 31 December	482,331		401,648

Included in bills and accounts receivables as at 31 December 2019 are balances of approximately RMB2,075,393,000 (2018: RMB875,500,000) that have been pledged to secure borrowings and banking facilities granted to the Group.

Annual Report 2019 237

Chapter 12 Consolidated Financial Statements

19. ROYALTY RECEIVABLE

ROYALTY RECEIVABLE	ROYALTY RECEIVABLE
At 31 December 2019 2018 RMB’000 RMB’000
As at 1 January 931,256 Cash received (93,689) Unwinding discount 98,986 Exchange re-alignment 49,425 Change in fair value 157,112	1,016,446 (155,700) 103,383 (51,446) 18,573
As at 31 December 1,143,090	931,256
Presented as: Current portion 120,538 Non-currentportion 1,022,552	134,544 796,712
1,143,090	931,256

A right to receive a royalty of 4% of Free on Board trimmed sales from Middlemount Coal Pty Ltd (“Middlemount”) mine operated by Middlemount Joint Venture was acquired as part of the acquisition of Gloucester Coal Limited (“Gloucester”). This financial asset has been determined to have a finite life being the life of the Middlemount mine and is measured at fair value basis.

The royalty receivable is measured based on management expectations of the future cash flows at each reporting date with the re-measurement recorded in profit or loss. The amount expected to be received in the next 12 month is disclosed as current receivable and the discounted expected future cash flow beyond 12 months is disclosed as a noncurrent receivable. Change in fair value is included in other income and gains.

20. INVENTORIES

INVENTORIES
	At 31	December
	2019	2018
	RMB’000	RMB’000
Work in progress Finishedgoods	850,927 390,144	639,492 178,562
	1,241,071	818,054
Methanol	175,194	74,173
Auxiliary material, spare parts and small tools Coal products Iron ore	1,112,499 3,067,810 392,570	1,018,680 1,955,580 196,866
Others	18,165	5,642
	6,007,309	4,068,995

238 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

21. PREPAYMENTS AND OTHER RECEIVABLES

PREPAYMENTS AND OTHER RECEIVABLES
	At 31 December
	2019	2018
	RMB’000	RMB’000
Advance to suppliers Less: Impairment loss on advance to suppliers(note(i))	4,063,775 (579,506)	3,831,239 (614,343)
	3,484,269	3,216,896
Prepaid relocation costs of inhabitants Other taxes	1,962,913 1,310,821	3,543,234 954,371
Dividend receivable	–	16,116
Loan receivables (note (ii))	9,504,131	7,467,365
Interest receivable	118,464	43,949
Others	4,729,000	2,054,391
Less: Impairment loss on other receivables	(769,779)	(423,134)
	20,339,819	16,873,188

(i) An analysis of the impairment loss on advance to suppliers for 2019 and 2018 are as follows:

	2019 RMB’000	2018 RMB’000
Balance at 1 January	614,343	1,365,448
Amounts written off as uncollectible	(34,837)	(751,105)
Balance at 31 December	579,506	614,343

Advances will be written off, if aged over 4 years and considered irrecoverable by the management after considering the credit quality of the individual party and the nature of the amount overdue. During the year ended 31 December 2019, advance to suppliers of approximately RMB 34,837,000 (2018: RMB 751,105,000) were written-off.

(ii) The loans receivables carried interest ranging from 3.48% to 4.35% per annum and are repayable within 12 months from the end of the reporting period.

Annual Report 2019 239

Chapter 12 Consolidated Financial Statements

21. PREPAYMENTS AND OTHER RECEIVABLES (Continued)

The Group recognised lifetime ECL and 12-month ECL for other receivables based on the credit risk grading framework as follows:

Average expected loss rate As at 31 December 2019 %	Gross carrying amount	Loss allowance
	RMB’000	RMB’000
Other receivables – Performing 3.52 Other receivables – Default 100.00 Remainingother receivables *
	5,512,660	193,872
	575,907	575,907
	8,263,028	–

	14,351,595	769,779
Average expected loss rate As at 31 December 2018 %	Gross carrying amount RMB’000	Loss allowance RMB’000
Other receivables – Performing 2.72 Other receivables – Default 92.75 Remainingother receivables *	8,742,372 199,818 639,631	237,796 185,338 –
	9,581,821	423,134

For the remaining balance of other receivables of approximately RMB8,263,028,000 (2018: RMB639,631,000), it has low risk of default or has not been significantly increase in credit risk since initial recognition and impairment is not recognised.

Movement in the impairment losses on other receivables is as follows:

		Lifetime
	12-month	ECL – credit
	ECL	impaired	Total
	RMB’000	RMB’000	RMB’000
At 1 January 2018	223,943	71,443	295,386
Provided for the year	88,574	113,895	202,469
Impairment loss reversed	(74,721)	–	(74,721)
At 31 December 2018 and 1 January 2019	237,796	185,338	423,134
Provided for the year	13,473	390,569	404,042
Impairment loss reversed	(57,397)	–	(57,397)
At 31 December 2019	193,872	575,907	769,779

240 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

22. PREPAID LEASE PAYMENTS

		31/12/2018
		RMB’000
	Current portion	29,718
	Non-currentportion	1,275,029
		1,304,747

The amounts represent prepaid lease payments for land use rights which are situated in the PRC have a term of 45 to 50 years from the date of grant of land use rights certificates.

Upon adoption of IFRS 16 on 1 January 2019, the carrying amount of prepaid lease payments of RMB1,304,747,000 was reclassified to right-of-use assets.

23. INTANGIBLE ASSETS

		Mining resources	Potash mineral
		(exploration and	exploration
	Mining reserves	evaluation assets)	permit	Technology	Water licenses	Others	Total
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
COST
At 1 January 2018	52,928,447	4,178,910	1,301,392	249,696	310,331	129,220	59,097,996
Exchange re-alignment	(1,512,114)	(158,766)	(1,376)	(6,695)	(23,513)	(40,527)	(1,742,991)
Additions	38	9,918	–	–	3,139	3,544	16,639
Acquisition of additional interests
injoint operations	647,060	59,507	–	–	174	8,381	715,122
At 31 December 2018 and 1 January 2019	52,063,431	4,089,569	1,300,016	243,001	290,131	100,618	58,086,766
Exchange re-alignment	670,251	74,278	23,612	1,483	14,952	33,853	818,429
Additions	3,472,654	38,100	–	880	–	1,625,409	5,137,043

At 31 December 2019	56,206,336	4,201,947	1,323,628	245,364	305,083	1,759,880	64,042,238
AMORTISATION AND IMPAIRMENT
At 1 January 2018	8,642,102	129,416	–	18,377	9,624	80,896	8,880,415
Exchange re-alignment	(340,068)	(265)	–	(110)	(385)	(5,279)	(346,107)
Provided for the year	1,368,374	–	–	8,029	4,010	13,269	1,393,682
Impairment loss	289,787	–	–	–	–	–	289,787
At 31 December 2018 and 1 January 2019	9,960,195	129,151	–	26,296	13,249	88,886	10,217,777
Exchange re-alignment	132,835	31	–	107	61	427	133,461
Provided for the year	1,543,039	–	–	5,517	3,819	32,592	1,584,967
Impairment loss	147,464	–	–	–	–	–	147,464

At 31 December 2019	11,783,533	129,182	–	31,920	17,129	121,905	12,083,669

CARRYING VALUES
At 31 December 2019	44,422,803	4,072,765	1,323,628	213,444	287,954	1,637,975	51,958,569
At 31 December 2018	42,103,236	3,960,418	1,300,016	216,705	276,882	11,732	47,868,989

Annual Report 2019 241

Chapter 12 Consolidated Financial Statements

23. INTANGIBLE ASSETS (Continued)

The mining rights (mining reserves) are amortised based on unit of production method.

The mining resources is reclassified to mining reserves when the reserves are reasonably proved to be commercial available, It is stated at cost less impairment.

The potash mineral exploration permit is reclassified to mining resources or mining reserves according to its progress of exploration. Technology has not yet reached the stage of commercial application and therefore is not amortised. Patent is also included in technology and it is amortised on a straight line basis of 10 years over the useful life.

Water licenses are amortised over the life of mine. If the mining activities of the relevant locations have not yet been started and the connections to water sources have not been completed, no amortisation will be provided.

Other intangible assets mainly represented computer software which is amortised on a straight line basis over the contractual term.

Amortisation expense of the mining rights for the year of RMB1,543,039,000 (2018: RMB1,368,374,000) has been included in cost of sales and services provided. Amortisation expense of other intangible assets for the year of RMB41,928,000 (2018: RMB25,308,000) has been included in selling, general and administrative expenses.

During the years ended 31 December 2019 and 2018, each cash generating unit’s recoverable amount has been determined using the value-in-use method.

Value-in-use has been determined using a discounted cash flow model. The key assumptions to which the model is most sensitive include:

Coal prices
Foreign exchange rates, if applicable
– Production and capital costs
Discount rate
– Coal reserves and resources

In determining the value assigned to each key assumption, management has used external sources of information and utilised the expertise of external consultants and experts within the Group to validate entity specific assumptions such as coal reserves and resources.

Production and capital costs are based on the Group’s estimate of forecasted geological conditions, stage of existing plant and equipment and future production levels. The information is obtained from internally maintained budgets, the five year business plan, life of mine models, life of mine plans and project evaluations performed by the Group in its ordinary course of business.

The Group has applied a pre-tax discount rate ranged from 10.74%-14% (2018: 10.74%-14%) to discount the forecast cash flows. The pre-tax discount rate applied to the future cash flow forecasts represent an estimate of the rate the market would apply having regard to the time value of money and the risks specific to the asset for which the future cash flow estimates have not been adjusted. This rate is also consistent with the Group’s five year business plan, life of mine models and project evaluations performed in ordinary course of business.

In relation to mining reserves, due to the underperformance of the cash generating unit, an impairment loss of RMB147,464,000 was recognised for Anyuan Mine (2018: RMB289,787,000 for Wenyu Mine). The recoverable amount for the Anyuan Mine as at 31 December 2019 was determined to be RMB0.2 billion (2018: RMB1.1 billion for Wenyu Mine).

242 Yanzhou Coal Mining Company Limited

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24. PROPERTY, PLANT AND EQUIPMENT

						Plant,
	Freehold land		Railway	Mining		machinery	Transportation
	in Australia	Buildings	structures	structures	and equipment			equipment	Total
	RMB’000	RMB’000	RMB’000	RMB’000		RMB’000		RMB’000	RMB’000
COST
At 1 January 2018	1,006,078	6,730,312	5,030,753	18,579,474		38,151,382		2,507,832	72,005,831
Exchange re-alignment	(51,924)	(53,691)	–	(422,107)		(931,075)		(16)	(1,458,813)
Additions	93,291	495,271	222,864	–		4,171,362		362,221	5,345,009
Acquisition of additional interests
in joint operations	–	26,247	–	391,227		669,282		–	1,086,756
Transfers from construction
in progress	–	192,214	623	1,220,172		374,086		39,558	1,826,653
Disposals	–	(192,701)	(131,958)	(14,760)		(3,817,560)		(87,475)	(4,244,454)
At 31 December 2018	1,047,445	7,197,652	5,122,282	19,754,006		38,617,477		2,822,120	74,560,982
Initial adoption of IFRS 16	–	–	–	–		(530,193)		–	(530,193)
At 1 January 2019 Exchange re-alignment Additions Transfers from construction in progress Disposals	1,047,445 12,346 – 59,317 –	7,197,652 12,624 94,255 33,325 (116,930)	5,122,282 – 612,134 12,240 (138,467)	19,754,006 107,690 582,949 147,138 (4,907)		38,087,284 200,227 2,294,996 917,721 (1,358,899)		2,822,120 36 19,031 9,715 (154,144)	74,030,789 332,923 3,603,365 1,179,456 (1,773,347)
At 31 December 2019	1,119,108	7,220,926	5,608,189	20,586,876		40,141,329		2,696,758	77,373,186
ACCUMULATED DEPRECIATION AND IMPAIRMENT At 1 January 2018 Exchange re-alignment Provided for the year Eliminated on disposals	– – – –	1,850,776 (18,815) 343,623 (47,827)	2,886,464 – 154,665 (69,727)	4,861,435 (120,133) 962,226 (1,509)		14,342,640 (506,053) 3,373,604 (562,630)		1,796,787 (935) 95,107 (74,836)	25,738,102 (645,936) 4,929,225 (756,529)
At 31 December 2018 Initial adoption of IFRS 16	– –	2,127,757 –	2,971,402 –	5,702,019 –		16,647,561 (185,021)		1,816,123 –	29,264,862 (185,021)
At 1 January 2019 Exchange re-alignment Provided for the year Eliminated on disposals	– – – –	2,127,757 5,288 293,714 (44,257)	2,971,402 – 232,959 (68,361)	5,702,019 30,537 1,136,291 (3,870)		16,462,540 120,370 2,068,906 (669,432)		1,816,123 26 301,036 (105,312)	29,079,841 156,221 4,032,906 (891,232)
At 31 December 2019	–	2,382,502	3,136,000	6,864,977		17,982,384		2,011,873	32,377,736
CARRYING VALUE At 31 December 2019	1,119,108	4,838,424	2,472,189	13,721,899		22,158,945		684,885	44,995,450
At 31 December 2018	1,047,445	5,069,895	2,150,880	14,051,987		21,969,916		1,005,997	45,296,120

Annual Report 2019 243

Chapter 12 Consolidated Financial Statements

24. PROPERTY, PLANT AND EQUIPMENT (Continued)

The following estimated useful lives are used for the depreciation of property, plant and equipment, other than freehold land:

Buildings	10 to 30 years
Railway structures	10 to 25 years
Plant, machinery and equipment	2.5 to 25 years
Transportation equipment	6 to 40 years

Transportation equipment includes vessels, harbor works and crafts which are depreciated over the estimated useful lives of 6 and 40 years respectively.

The mining structures include the main and auxiliary mine shafts and underground tunnels. Depreciation is provided to write off the cost of the mining structures using the units of production method based on the estimated production volume for which the structure was designed and the contractual period of the relevant mining rights.

At 31 December 2019, property, plant and equipment with carrying amount of approximately RMB7,453,220,000 (2018: RMB7,040,564,000) have been pledged to secure bank borrowings of the Group.

At 31 December 2018, the carrying amount of property, plant and equipment held under finance leases was approximately RMB345,172,000.

25. LEASES

(i) Right-of-use assets

	31/12/2019	1/1/2019
	RMB’000	RMB’000
Buildings	8,479	13,156
Land use right	1,332,910	1,304,747
Plant, machineryand equipment	398,049	684,557
At 31 December	1,739,438	2,002,460

As at 31 December 2019, right-of-use assets of approximately RMB1,332,910,000 represents land use rights located in the PRC.

In addition, the Group has lease arrangements for buildings and plant, machinery and equipment. The lease terms are generally ranged from two to five years.

In respect of lease arrangement for renting certain production equipments, the Group has options to purchase certain production equipments for a nominal amount at the end of the lease term. The Group’s obligations are secured by the lessors’ title to the leased assets for such lease.

Additions to the right-of-use assets for the year ended 31 December 2019 amounted to RMB136,404,000, due to new lease arrangements of land use right and, plant, machinery and equipment.

244 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

25. LEASES (Continued)

(ii) Lease liabilities

	31/12/2019	1/1/2019
	RMB’000	RMB’000
Non-current	328,072	418,222
Current	156,852	139,632
	484,924	557,854
	31/12/2019	1/1/2019
Amountspayable under lease liabilities	RMB’000	RMB’000
Within one year	156,852	139,632
After one year but within two years	153,969	201,360
After twoyears but within fiveyears	174,103	216,862
	484,924	557,854
Less: Amount due for settlement within 12 months (shown under current
liabilities)	(156,852)	(139,632)
Amount due for settlement after 12 months	328,072	418,222

During the year ended 31 December 2019, the Group entered into a number of new leases agreements in respect of renting plant, machinery and equipment and recognised lease liability of RMB98,304,000.

(iii) Amounts recognised profit or loss

			Year ended
			31/12/2019
			RMB’000
	Depreciation expense on right-of-use assets		212,027
	Interest expense on lease liabilities		33,894
	Expense relatingto short-term leases		115,398

(iv) Amounts recognised profit or loss

During the year ended 31 December 2019, the total cash outflow for leases amount to RMB339,090,000.

Annual Report 2019 245

Chapter 12 Consolidated Financial Statements

26. GOODWILL

GOODWILL
2019 RMB’000	2018 RMB’000
NET CARRYING VALUE At 1 January 1,651,211 Exchange re-alignment 3,879	1,668,727 (17,516)
At 31 December 1,655,090	1,651,211

Goodwill acquired in a business combination is allocated, at acquisition, to the cash generating units that are expected to benefit from that business combination. The carrying amount of goodwill had been allocated as follows:

	At 31 December	At 31 December
	2019		2018
	RMB’000	RMB’000
Mining
– Jining II	10,106		10,106
– Shandong Yanmei Shipping Co., Ltd	10,046		10,046
– Heze	35,645		35,645
– Shanxi Group	145,613		145,613
– Yancoal Resources	299,700		295,997
– Syntech	19,767		19,592
– Premier Coal and Wesfarmers Char	12,293		12,184
– Xintai	653,837		653,837
– Beisu and Yangcun	712,214		712,214
Coal Railway Transportation
– Railway Assets	97,240		97,240
Electricity and heat supply
– Hua Ju Energy	239,879		239,879
Machinery manufacturing
– Donghua	409,204		409,204
Corporate
– Yankuang Group Finance Co., Ltd (“Yankuang Finance”)	16,966		16,966
Impairment loss	(1,007,420)	(1,007,312)
	1,655,090	1,651,211

246 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

26. GOODWILL (Continued)

Business performance is reviewed by management on an individual business unit basis. In particular, each mine is considered to be a separate cash generating unit.

For the impairment testing of goodwill, the recoverable amounts of the cash generating units have been determined on the basis of value in use calculations. Value-in-use has been determined using a discounted cash flow model. Cash flow projections during the budget period are based on the budgeted revenue and expected gross margins during the budget period and the raw materials price inflation during the budget period. Expected cash inflows/outflows have been determined based on past performance and management’s expectations for the market development. The future cash flows are dependent on the following unobservable inputs: forecast sales volumes and coal prices.

In determining each of the key inputs, management has used external sources of information and utilised the expertise of external consultants and experts within the Group to validate entity specific assumptions such as mining reserves and mining resources. Furthermore, in estimating future coal prices, the Group receives long term forecast coal price data from multiple externally verifiable sources when determining its coal price forecasts, making adjustments for specific coal quality factors. The long term forecast exchange rate is based on externally verifiable sources. Production and capital costs are based on the Group’s estimate of forecasted geological conditions, stage of existing plant and equipment and future production levels. This information is obtained from internally maintained budgets, the five year business plan, life of mine models and project evaluations performed by the Group in its ordinary course of business.

The cash flow model was based on financial budgets approved by management covering a 5-year period with an assumption of pre-tax discount rate of ranged from 13% to 16% (2018: 12 % to 14 %). It represent an estimate of the rate the market would apply having regard to the time value of money and the risks specific to the asset. Externally verifiable data received by the Group validates this assumption. The recoverable amount is also dependent on the estimated lines of mines ranged from 4 to 38 years (2018: 4 to 38 years). This is calculated based on the Group’s annual coal production forecast for each mine and mining reserves and mining resources. The cash flows beyond the 5-year period are extrapolated using a zero percent growth rate. Management believes that any reasonably possible change in any of these assumptions would not cause the carrying amount of each of the above units to exceed the recoverable amount of each of the above units.

No impairment of goodwill is required to be recognised for the years ended 31 December 2019 and 2018.

Annual Report 2019 247

Chapter 12 Consolidated Financial Statements

27. CONSTRUCTION IN PROGRESS

	CONSTRUCTION IN PROGRESS
		RMB’000
	COST
	At 1 January 2018	4,516,288
	Exchange re-alignment	(82,630)
	Additions	8,289,282
	Transfer toproperty,plant and equipment	(1,826,653)
	At 31 December 2018 and 1 January 2019	10,896,287
	Exchange re-alignment	16,990
	Additions	6,554,580
	Transfer toproperty,plant and equipment	(1,179,456)
	At 31 December 2019	16,288,401

For the year ended 31 December 2019, the capitalised interest expense amounted to RMB378,009,000 (2018: RMB96,917,000). The annual interest rates used to determine the capitalised amount in 2019 are 4.35% to 6% (2018: 4.35% to 5.9%).

28. INTERESTS IN ASSOCIATES

INTERESTS IN ASSOCIATES
	At 31	December
	2019	2018
	RMB’000	RMB’000
Cost of investments in associates	12,810,183	13,140,038
Share of post-acquisition profit and other
comprehensive income, net of dividends	4,305,256	2,883,671
Carryingamount	17,115,439	16,023,709

248

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

28. INTERESTS IN ASSOCIATES (Continued)

Information of major associates is as follows:

	Place of
	establishment
Name of associate	and operation	Class of shares held	Principal activity		Interest held at 31 December 2019 2018
Huadian Zouxian Power Generation Company	PRC	Registered capital	Electricity generation business (i)		30%	30%
Limited (“Huandian Zouxian”)
Shaanxi Future Energy Chemical Corp. Ltd	PRC	Registered capital	Production and sales of chemical products,		25%	25%
(“Shaanxi Chemical”)				oil and coal (ii)
Shandong Shengyang Wood Co., Ltd	PRC	Registered capital	Artificial board, CCF processing		39.77%	39.77%
Jiemei Wall Materials Co., Limited	PRC	Registered capital	Coal refuse baked brick		20%	20%
Newcastle Coal Infrastructure Group Pty Ltd	Australia	Ordinary shares	Coal terminal		27%	27%
Shanghai CIFCO Futures Co., Limited	PRC	Registered capital	Trading and consultation futures		33%	33%
Watagan Mining Company Pty Limited	Australia	Ordinary shares	Coal Mining and sales		100%	100%
(“Watagan”) (note (viii))
Qilu Bank Co., Ltd. (“Qilu Bank”) (note (v))	PRC	Registered capital	Financial services		8.67%	8.67%
內蒙古伊泰准東鐵路有限責任公司(“伊泰”)	PRC	Registered capital	Railway construction and transportation		25%	25%
兗礦售電有限公司	PRC	Registered capital	Sales of electricity		25%	25%
Haichang Industry Co., Ltd. of Dongguan City	PRC	Registered capital	Port service		–	20.89%
(“Haichang”) (note (vii))
Port Waratah Coal Services Ltd (“PWCS”)	Australia	Ordinary shares	Provision of coal receivable, blending,		30%	30%
Zheshang Bank (note (iii),(v),(vi))	PRC	Registered capital	stockpiling and ship loading service Financial services		4.39%	4.99%
Linshang Bank (note (iv),(v))	PRC	Registered capital	Financial services		19.75%	19.75%
Shandong Yancoal Property Service Company	PRC	Registered capital	Property management, garden greening		35%	35%
Limited (“Yancoal Property Service”)				engineering, sewage treatment and rental housingagencyservice

All of the above associates have been accounted for using equity method in the consolidated financial statements. Except for 伊泰 , 兗礦售電有限公司 , Newcastle Coal Infrastructure Group Pty Ltd, Watagan, PWCS, Yancoal Property Service and Linshang Bank which are indirectly held by the Company, all associates are held by the Company directly. The interests held disclosed above for Newcastle Coal Infrastructure Group Pty Ltd, Watagan and PWCS represented the equity interests held by Yancoal Australia.

(i) Huadian Zouxian is a trategic partner of the Group.
(ii) Shaanxi Chemical is a strategic partner to develop future energy business of the Group.
(iii) On 23 March 2018, the Group entered into a placing agreement to subscribe for 420 million shares in Zheshang Bank for a cash consideration of approximately HK$2.02 billion (equivalent to approximately RMB1.61 billion). Following the completion of the subscription, the Group’s interest in Zheshang Bank was increased to 4.99%, with 20.51% interests in H shares of Zheshang Bank. On 29 March 2018, the placing was completed and the investment in Zheshang Bank amounted to approximately RMB3,781,120,000 representing the fair value of the investmemt as at 29 March 2018 was reclassified from financial assets at FVTPL to interest in an associate accordingly.

Annual Report 2019 249

Chapter 12 Consolidated Financial Statements

28. INTERESTS IN ASSOCIATES (Continued)

(iv) On 27 November 2018, the Group entered into a placing agreement to subscribe for 400,00,000 shares in Linshang Bank for a cash consideration of RMB1.2 billion. On the same date, the Group entered into a share transfer agreement with several former shareholders of Linshang Bank to acquire 317,697,143 shares in Linshang Bank for a cash consideration of approximately RMB953,901,000. The subscription and share transfer were completed on 4 December 2018. Following the completion of the subscription and share transfer, the Group has a total of 19.75% interests in Linshang Bank, being the joint top shareholder of Linshang Bank.
(v) The Group considered that it has the practical ability to exercise significant influence on the associates even though it owns less than 20% of the ownership interest and voting right and take into account 1) the Group’s ownership interest is significant relative to other shareholders due to the wide dispersion of shareholding interests; 2) the representation or right to appoint/nominate directors on the board of directors of the associates; and 3) the rights to participate in the policy-making process, including dividends and other distribution.
(vi) On 26 November 2019, Zheshang Bank issued 2,550,000,000 A Shares. Following the completion of the subscription, the Group’s interest in Zheshang Bank was decreased from 4.99% to 4.39%.
(vii) On 31 March 2019, the Group sold all of its interest in Haichang for a cash consideration of approximately RMB784,560,000 to an independent third party, resulting in a gain of RMB101 million (note 10).
(viii) On 18 February 2016, Yancoal Australia executed a bond subscription agreement, together with other agreements (the “Watagan Agreements”) that, on completion, transferred the Group’s interest in three of its 100% owned coal mines to Watagan for a purchase price of approximately AUD1.3 billion.

On completion, under the terms of the Watagan Agreements, it was determined that upon issuance of the bonds, Yancoal Australia lost control of Watagan. These powers were transferred to the bondholders under the terms of the Watagan Agreements as the Bondholders will be given control of Watagan’s board of directors via appointment of the majority of directors.

Given the Group maintains one seat on the Watagan board and has ongoing involvement under the terms of the Watagan Agreements, the Group was determined to have significant influence over Watagan. As a result, the Group equity accounts for its interests in Watagan thereafter.

250

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

28. INTERESTS IN ASSOCIATES (Continued)

As stipulated in the Watagan Agreements, the bondholders were granted a put option to transfer the bonds to the Parent Company. On 4 January 2019, one of the bondholders exercised its right and put US$200 million of bonds to the Parent Company. As a consequence, the Parent Company became a bondholder. As the put bond represented less than 50.1% of the face value of the bonds, Yancoal Australia had not regained accounting control of Watagan. Accordingly, the Group continues to equity account for its interest in Watagan.

Due to the declining operating results of Watagan, the Group’s interests in Watagan had reduced to nil (2018: nil) as at 31 December 2019. The Group had not recognised any losses that exceeded the value of the investment by the Group.

Under the Watagan Agreements, Yancoal Australia will regain accounting control of Watagan and need to reconsolidate the Watagan if (i) the bondholders exercised their rights to put the remaining bonds to the Parent Company; (ii) Watagan fully repaid the bonds or (iii) other changes of circumstance that re-establishes Yancoal Australia’s control of Watagan, including amendments or replacement of existing accounting standards.

The management of the Group will closely monitor the development of the circumstances surrounding Watgan and assess the impact to the Group should the Group re-consolidates Watagan.

Except for Qilu Bank and Zheshang Bank, all of the associates are private companies whose quoted market price is not available. As at 31 December 2019, the fair value of Qilu Bank and Zheshang Bank’s shares at 31 December 2019 were approximately RMB1,182,729,000 (2018: RMB1,482,397,000) and share of price RMB3,401,682,000 (2018: RMB3,567,703,000) respectively.

Summarised financial information in respect of the Group’s material associates is set out below:

	Huadian	Zouxian	Shaanxi Chemical	Shaanxi Chemical	Qilu	Bank
	2019	2018	2019	2018	2019	2018
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Current assets	236,415	348,095	1,974,766	1,705,068	301,905,062	259,349,958
Non-current assets	4,221,928	4,530,923	17,941,924	18,495,872	5,615,242	6,387,106
Current liabilities	(1,025,774)	(1,207,418)	(2,636,522)	(3,294,387)	(241,650,282)	(213,759,440)
Non-current liabilities	–	–	(5,960,000)	(6,330,000)	(43,213,634)	(31,100,486)
Revenue	3,280,600	3,836,765	8,753,118	6,564,337	7,407,192	6,402,410
Profit for the year	54,743	181,254	2,299,965	1,371,105	2,307,068	2,202,095
Other comprehensive income (expense) for the
year	–	–	–	26,128	187,416	1,018,501
Total comprehensive income for the year	54,743	181,254	2,299,965	1,397,233	2,494,484	3,220,596
Dividend shared by the Group and received from
the associate duringtheyear	88,132	–	424,000	–	56,099 2,494,484	55,385 3,220,596
					Annual	Report 2019	251

Chapter 12 Consolidated Financial Statements

28. INTERESTS IN ASSOCIATES (Continued)

				伊泰
				2019	2018
				RMB’000	RMB’000
Current assets				1,073,704	680,151
Non-current assets				6,175,816	6,436,382
Current liabilities				(792,498)	(494,383)
Non-current liabilities				(874,426)	(874,426)
Revenue				1,685,865	1,917,365
Profit for the year				587,381	781,106
Other comprehensive income for the year				–	–
Total comprehensive income for the year				587,381	781,106
Dividend shared bythe Groupand received from the associate duringtheyear				–	106,838

	Zheshang Bank 2019		2018	Linshang Bank 2019 2018
	RMB’000		RMB’000	RMB’000	RMB’000
Current assets	1,739,001,780	1,601,988,952		83,203,822	77,923,944
Non-current assets	61,784,087	44,705,792		5,092,865	3,977,684
Current liabilities	(1,449,773,690)	(1,279,803,486)		(78,774,486)	(70,869,966)
Non-current liabilities	(222,984,508)	(264,442,721)		(1,575,037)	(2,683,180)
Revenue	46,447,109	39,022,476*		2,489,394	2,278,390*
Profit for the year	13,142,983	11,560,337*		430,323	348,184*
Other comprehensive income (expense) for the
year	878,612	1,686,707*		(5,591)	12,921*
Total comprehensive income for the year	14,021,595	13,247,044*		424,732	361,105*
Dividend shared by the Group and received from
the associate duringtheyear	–		–	–	–

Representing the full year results of the associates

Reconciliation of the above summarised financial information to the carrying amount of the interest in the associates in respect of material associates recognised in the consolidated financial statements:

	Huadian	Zouxian	Shaanxi Chemical	Shaanxi Chemical	Shaanxi Chemical		Bank
	2019	2018	2019		2018	2019	2018
	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000
Net assets of the associate’s
attributable to owners	3,432,569	3,671,600	11,305,468	10,576,553		20,462,638	18,699,757
Proportion of the Group’s
ownership interest	30%	30%	25%		25%	8.67%	8.67%
Carrying amount of the Group’s
interest in the associate	1,029,771	1,101,480	2,826,367		2,644,138	1,797,674	1,621,268
						伊泰
						2019	2018
					RMB’000		RMB’000
Net assets of the associate’s attributable to owners					5,582,596		5,386,231
Proportion of the Group’s ownership interest						25%	25%
Carryingamount of the Group’s interest in the associate					2,177,991		2,031,146

252 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

28. INTERESTS IN ASSOCIATES (Continued)

	Zheshang Bank	Zheshang Bank	Linshang Bank	Linshang Bank
	2019	2018	2019	2018
	RMB’000	RMB’000	RMB’000	RMB’000
Net assets of the associate’s attributable to owners	111,288,747	85,927,834	7,947,164	8,348,482
Proportion of the Group’s ownership interest Carrying amount of the Group’s interest in the associate	4.39% 5,185,673	4.99% 4,298,831	19.75% 2,247,035	19.75% 2,163,150

Aggregate information of Huadian Zouxian and other associate (2018: Qilu Bank and other associates) that are not individually material.

	At 31	December
	2019	2018
	RMB’000	RMB’000
The Group’s share of profit and total comprehensive income Aggregate carryingamount of the Group’s interests in these associates	107,998 1,850,928	180,308 2,163,696

29. LONG-TERM RECEIVABLES

LONG-TERM RECEIVABLES
	At 31 December
	2019	2018
	RMB’000	RMB’000
Current assets – Loan receivables (i)	1,380,012	1,638,609
– Less: impairment loss recognised	(24,161)	(67,325)
	1,355,851	1,571,284
Non-current assets – Loan to an associate (ii)	4,398,756	4,028,373
– Loan to joint venture (iii) – Loan receivables (i)	989,901 1,842,932	1,051,126 2,384,121
– Others (iv)	1,740,804	1,320,627
– Less: impairment loss recognised(iv)	(210,193)	(129,605)
	8,762,200	8,654,642
	10,118,051	10,225,926

Annual Report 2019 253

Chapter 12 Consolidated Financial Statements

29. LONG-TERM RECEIVABLES (Continued)

(i) The loan receivables carry interest at 5.22% to 7.5% per annum and are secured by the machinery of the borrowers.
(ii) Loan to an associate represented an unsecured loan to Watagan of AUD900,590,879 (equivalent to approximately RMB4,398,756,000) (2018: AUD834,896,000 (equivalent to approximately RMB4,028,373,000)). The loan bearing interest of Bank Bill Swap Bid Rate (“BBSY”) plus 7.06% per annum with a maturity date of 1 April 2025.

Such loan was guaranteed by the Parent Company.

(iii) Loan to a joint venture represented an unsecured interest-free loan to Middlemount Joint Venture of AUD203,000,000 (equivalent to approximately RMB989,901,000) that are not repayable within 12 months from the end of the reporting period.
(iv) As at 31 December 2019, other long-term receivables include investment in the long term bonds of a company of AUD31,500,000 (equivalent to approximately RMB153,855,000) (2018: AUD31,500,000 (equivalent to approximately RMB151,988,000)) with floating interest rate.

As at 31 December 2019, in determining the ECL for these assets, the directors of the Company have taken into account the historical default experience, the financial position of the counterparties as well as the future prospects of the industries in which the debtors operate obtained from available market data considering various external sources of actual and forecast economic information, as appropriate, in estimating the probability of default of each of these financial assets occurring within their respective loss assessment time horizon, as well as the loss upon default in each case.

Due to the deterioration in the current and forecast operating results of Watagan, there had been a significant increase in credit risk of the loan at the reporting date compared to the credit risk at inception of the loan. On this basis, the Group has changed the ECL calculation for the Watagan loan from an allowance for 12 month ECL to an allowance for lifetime ECL. As at 31 December 2019, taking into account the enforceability of the guarantee provided by the Parent Company as well as the financial position of the Parent Company, directors of the Company considered that the expected credit loss on the loan to Watagan is not significant (2018: nil).

Other than the above, there has been no change in the estimation techniques or significant assumptions made during the current reporting period in assessing the loss allowance for these receivables.

254

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

29. LONG-TERM RECEIVABLES (Continued)

An analysis of the gross amount of long-term receivables is as follows:

12-month ECL RMB’000	Lifetime ECL	Lifetime ECL – credit impaired	Total
	RMB’000	RMB’000	RMB’000
Gross amount as at 31 December 2019 – Performing 5,402,693 – Doubtful – – Default –

	–	–	5,402,693
	4,801,316	–	4,801,316
	–	148,396	148,396
5,402,693
	4,801,316	148,396	10,352,405
12-month ECL RMB’000	Lifetime ECL RMB’000	Lifetime ECL – credit impaired RMB’000	Total RMB’000
Gross amount as at 31 December 2018 – Performing 9,948,110 – Doubtful – – Default –	– 400,379 –	– – 74,367	9,948,110 400,379 74,367
9,948,110	400,379	74,367	10,422,856

The movements in the impairment allowance for the long-term receivables during the year are as follows:

			Lifetime ECL –
	12-month ECL	Lifetime ECL	credit impaired	Total
	RMB’000	RMB’000	RMB’000	RMB’000
At 1 January 2018	23,797	–	–	23,797
Provided for theyear	70,322	91,030	11,781	173,133
At 31 December 2018 and 1 January 2019	94,119	91,030	11,781	196,930
Provided for the year	10,207	1,561	72,110	83,878
Impairment loss reversed	(46,454)	–	–	(46,454)
At 31 December 2019	57,872	92,591	83,891	234,354

Annual Report 2019 255

Chapter 12 Consolidated Financial Statements

30. DEPOSITS MADE ON INVESTMENTS

			At 31	December
			2019	2018
			RMB’000	RMB’000
Shaanxi Coal Mine Operating	Company	(note)	117,926	117,926

Note: During 2016, the Group entered into a co-operative agreement with two independent third parties to establish a company for acquiring a coal mine in Shaanxi province for operations. The Group will have to invest approximately RMB196,800,000 in order to obtain 41% equity interests. As at 31 December 2019, the Group made a deposit of RMB117,926,000 (2018: RMB117,926,000) in relation to this acquisition. As at 31 December 2019, the relevant registration procedures to establish the new company are still in progress, and the establishment has not yet been completed.

31. INTERESTS IN JOINT VENTURES

							At 31	December	December
							2019			2018
							RMB’000		RMB’000
Share of net assets							518,956			660,221
	Place of						At 31 December
	establishment					2019			2018
Name ofjoint venture	and operation	Class of shares held	Principal activity		Interest	held	Voting power	Interest Held		Voting power
Australian Coal Processing Holdings	Australia	Ordinary shares	Investment Holding			50%	90%		50%	90%
Pty Ltd (i)
Middlemount Joint Venture (i)	Australia	Ordinary shares	Coal mining and sales			50%	50%		50%	50%
Sheng Di Finlay Coal Processing	PRC	Registered capital	Consultancy services for deep			50%	50%		50%	50%
Technology(Tianjin) Co., Ltd				preprocess technology

The joint ventures are accounted for using equity method in the consolidated financial statements. All of the joint ventures are private companies and are not individually material to the Group.

Note (i): The interests held disclosed above represented the interests held by the Group through Yancoal Australia.

256

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

32. INTERESTS IN JOINT OPERATIONS

Information on major joint operations is as follows:

	Place of			At 31	December
	establishment			2019		2018
Name ofjoint operation	and operation	Principal activity		Interest held	Interest held
Boonal joint operation	Australia	Provision of a coal haul road and		50%		50%
			train load out facilities
Athena joint operation	Australia	Coal exploration		51%		51%
Moolarben joint operation (note 48(C))	Australia	Development and operation of open-cut		85%		85%
			and underground coal mines
Hunter Valley Australia Operation	Australia	Underground coal mines		51%		51%
(“HVO”) (note 48(A))
Warkworth Coal Sales Pty Ltd (“Warkworth	Australia	Development and operation		84.5%		84.5%
Joint Venture”) (note 48(B))			of open-cut mines

The above joint operations are established and operated as unincorporated businesses and are held indirectly by the Company. The interest held disclosed above represented the interest held by Yancoal Australia.

33. INVESTMENTS IN SECURITIES

INVESTMENTS IN SECURITIES
	At 31	December
	2019			2018
	RMB’000		RMB’000
Financial assets at FVTPL Unlisted equitysecurities, at fair value(i)	152,097			156,840
Financial assets at FVTOCI Equity securities listed on the SSE, at fair value (ii) Unlisted equitysecurities, at fair value(i)	350 4,273			277 4,969
	4,623			5,246
	156,720			162,086

(i) These unlisted equity investments represent investments in unlisted equity securities issued by private entities established in the PRC. Part of these investments in equity instruments, amounting to approximately RMB4,273,000 (2018: RMB4,969,000), are not held for trading. Instead, they are held for medium to long-term strategic purposes. Accordingly, the directors of the Company have elected to designate these investments in equity instruments as at FVTOCI as they believe that recognising short-term fluctuations in these investments’ fair value in profit or loss would not be consistent with the Group’s strategy of holding these investments for longterm purposes and realising their performance potential in the long run.

The remaining investments of approximately RMB152,097,000 (2018: RMB156,840,000) are classified and measured as at FVTPL.

(ii) As at 31 December 2019 and 2018, the investments in equity securities listed on the Shanghai Stock Exchange (the “SSE”) are carried at fair value which are determined based on the quoted market prices in active market.

Annual Report 2019 257

Chapter 12 Consolidated Financial Statements

34. ASSETS CLASSIFIED AS HELD FOR SALE

As at 31 December 2019, the Group had net assets classified as held for sale for which the relevant sales are expected to be completed in 2019 as follows:

	At 31	December
	2019	2018
	RMB’000	RMB’000
Land held for sale	217,644	272,902

The balance at 31 December 2019 and 2018 represented parcels of freehold non-mining land that is held for future sale in Australia which were acquired as part of the acquisition of Coal & Allied Industries Limited (“C&A”) and was stated at its fair value.

35. BILLS AND ACCOUNTS PAYABLES

BILLS AND ACCOUNTS PAYABLES
	At 31	December
	2019	2018
	RMB’000	RMB’000
Accounts payable	10,024,399	9,573,440
Billspayable	9,092,259	2,940,858
	19,116,658	12,514,298

The following is an aged analysis of bills and accounts payable based on the invoice dates at the reporting date:

	At 31	December
	2019	2018
	RMB’000	RMB’000
0 – 90 days	15,611,872	9,615,259
91 – 180 days	1,377,383	1,040,167
181 – 365 days	1,285,558	953,486
Over 1year	841,845	905,386
	19,116,658	12,514,298

The average credit period for accounts payable and bills payable is 90 days. The Group has financial risk management policies in place to ensure that all payables are within the credit timeframe.

258 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

36. OTHER PAYABLES AND ACCRUED EXPENSES AND CONTRACT LIABILITIES

Other payables and accrued expenses

	At 31	December
	2019	2018
	RMB’000	RMB’000
Accrued staff costs	1,453,978	1,680,981
Other taxes payable	468,177	742,479
Payables in respect of purchases of property, plant and equipment
and construction materials	195,615	727,729
Accrued freight charges	2,108	23,685
Security deposits received	390,615	1,077,107
Deposits received from customers in relation to financing business	17,846,659	11,284,197
Interest payable	462,144	744,857
Dividends payable	1,919,666	43,626
Payables for acquisition of subsidiaries/associates	304,063	1,998,501
Others	3,755,349	2,356,126
	26,798,374	20,679,288

	2019	2018
	RMB’000	RMB’000
Contract liabilities	2,717,475	2,207,641

Contract liabilities include advances received to deliver goods and advances received to render transportation services. The increase in contract liabilities was in line with the increase in sales transactions and consequently the Group received more deposits are received in 2019.

Revenue recognised during the year ended 31 December 2019 and 2018 that was included in the contract liabilities as at 31 December 2018 and 1 January 2018 is RMB2,207,641,000 and RMB2,569,384,000 respectively. There was no revenue recognised that related to performance obligations that were satisfied in prior year.

Annual Report 2019 259

Chapter 12 Consolidated Financial Statements

37. PROVISION FOR LAND SUBSIDENCE, RESTORATION, REHABILITATION AND ENVIRONMENTAL COSTS

ENVIRONMENTAL COSTS
2019 RMB’000	2018 RMB’000
Balance at 1 January 3,752,230 Exchange re-alignment 74,128 Additional provision in the year 492,872 Utilisation ofprovision (2,276,508)	3,975,612 (54,463) 1,096,973 (1,265,892)
Balance at 31 December 2,042,722	3,752,230
Presented as: Current portion 50,940 Non-currentportion 1,991,782	2,327,177 1,425,053
2,042,722	3,752,230

Provision for land subsidence, restoration, rehabilitation and environmental costs has been determined by the management of the Group based on their best estimates. However, in so far as the effect on the land and the environment from current mining activities becomes apparent in future periods, the estimate of the associated costs may be subject to change in the near term.

38. PROVISION

PROVISION
	At 31	December
	2019	2018
	RMB’000	RMB’000
Current provision – Take or pay provision (note (i)) – Onerous contract provision (note (ii)) – Others	32,961 21,407 –	58,727 72,438 4,711
	54,368	135,876
Non-current provision – Take or pay provision (note (i)) – Onerous contract provision (note (ii)) – Employee benefits (note (iii)) – Others	104,604 228,910 420,482 337,644	161,183 271,974 382,713 371,359
	1,091,640	1,187,229
	1,146,008	1,323,105

260 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

38. PROVISION (Continued)

Notes:

(i) Take or pay provision, which arose from business combination in prior years, is the assessment of forecast excess capacity for port and rail contracts. A provision was recognised for the discounted estimated excess capacity. The provision is released to profit or loss over the period in which excess capacity is realised.
(ii) The onerous contract provision, which arose from the acquisition of C&A, is the assessment of a coal supply and transportation agreement to supply coal at below market prices. A provision was recognised for the discounted estimated variance between contract and market prices. The provision has a finite life and will be released to profit or loss over the contract term.
(iii) The balance mainly included provision for long-term employee entitlements and other employee incentives, which arose mainly from the acquisition of C&A.

39. BORROWINGS

BORROWINGS
	At 31	December
	2019	2018
	RMB’000	RMB’000
Current liabilities
Bank borrowings
– Unsecured borrowings (i)	8,750,202	7,646,000
– Secured borrowings (ii)	4,458,453	4,811,175
Loans pledged by machineries (iii)	–	600,000
Finance lease liabilities (iv)	–	63,727
Guaranteed notes(v)	2,998,800	6,948,783
	16,207,455	20,069,685
Non-current liabilities
Bank borrowings
– Unsecured borrowings (i)	16,711,000	12,531,432
– Secured borrowings (ii)	17,889,763	21,436,627
Finance lease liabilities (iv)	–	141,586
Guaranteed notes(v)	14,567,273	14,498,593
	49,168,036	48,608,238
Total borrowings	65,375,491	68,677,923

Annual Report 2019 261

Chapter 12 Consolidated Financial Statements

39. BORROWINGS (Continued)

(i) Unsecured borrowings are repayable as follows:

At 31 December 2019 2018 RMB’000 RMB’000	At 31 December 2019 2018 RMB’000 RMB’000
Within one year 8,750,202 More than one year, but not exceeding two years 2,828,000 More than two years, but not more than five years 4,883,000 More than fiveyears 9,000,000	7,646,000 749,242 2,782,190 9,000,000
25,461,202	20,177,432

At 31 December 2019, included in unsecured borrowing are short-term borrowings amounting to approximately RMB7,624,000,000 (2018: RMB5,850,000,000) which carrying interest at 3.43% to 5.00% per annum (2018: 4.35% to 5.00% per annum). In addition, included in short-term borrowing are foreign currency borrowing of approximately RMB145,002,000 (USD54,599,000) carrying interest at 3.43% to 3.90% (2018: nil).

Long-term borrowings of the Group amounting to approximately RMB17,837,202,000 (2018: RMB14,327,432,000) carrying interest at 4.51% to 5.9% per annum (2018: 4.31% to 5.9% per annum and 12 months loan prime rate (“LPR”) plus a margin of 0.45%).

(ii) Secured borrowings are repayable as follows:

	At 31	December
	2019	2018
	RMB’000	RMB’000
Within one year	4,458,453	4,811,175
More than one year, but not exceeding two years	9,573,642	4,145,799
More than two years, but not more than five years	8,206,921	16,105,530
More than fiveyears	109,200	1,185,298
Total	22,348,216	26,247,802

At 31 December 2019, secured borrowings of Yancoal Australia were amounting to RMB10,939,244,000 (approximately USD1,575,000,000) (2018: RMB12,411,944,000 (approximately USD1,825,000,000)). Such borrowings carried interest at three-month LIBOR plus a margin of 3.1% of six-month LIBOR plus a margin of 2.75% (2018: three-month LIBOR plus a margin of 2.8% to 3.1% and six-month LIBOR plus a margin of 2.75%) per annum, approximately 4.96% to 5.24% (2018: 4.66% to 5.24%) per annum as at 31 December 2019.

At 31 December 2018, the secured borrowings of Yancoal International were amounting to approximately RMB1,366,988,000 (approximately HKD1,560,132,000) and RMB3,431,593,000 (USD500,000,000). These secured borrowings carried interest at three-month LIBOR plus a margin of 1.1%, approximately 2.96% per annum or fixed rate of 2.16% to 4.58% per annum as at 31 December 2018. During the year ended 31 December 2019, secured borrowings of RMB1,366,988,000 (approximately HKD1,560,132,000) were fully repaid and as at 31 December 2019, the secured borrowings were amounting to approximately RMB2,307,347,000 (approximately USD330,228,000) which carried interest at 2.74% to 4.58% per annum. RMB2,304,347,000 (USD330,228,000) (2018: RMB4,798,581,000 (USD2,060,132,000)).

262 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

39. BORROWINGS (Continued)

(ii) Secured borrowings are repayable as follows: (Continued)

At 31 December 2019, secured borrowings of Premier Coal Limited and Premier Holdings Pty., Ltd., were amounted to RMB109,199,000 (AUD22,357,000) (2018: RMB77,191,000 (AUD15,872,000)) which carried interest at 8.7% (2018: 8.7%) per annum.

Other than the above, at 31 December 2019, secured borrowings of the Group amounting to RMB8,995,426,000 (2018: RMB8,960,086,000) of which RMB5,772,042,000 (USD827,143,000) (2018: RMB5,710,449,000 (approximately USD833,000,000)) and RMB3,254,000 (EUR385,000) were denominated in foreign currency. Such borrowings carried interest at 12-months LPR plus a margin of 0.4% per annum or at fixed rate of 2.65% to 6.00% (2018: six-month LIBOR plus a margin of 2.1%), approximately 4.59% (2018: 4.59%) per annum.

As at 31 December 2019 and 2018, certain of the borrowings of the Group were secured by the Group’s interests in certain overseas subsidiaries and joint operations.

(iii) Loans pledged by machineries are repayable as follows:

	At 31	December
	2019	2018
	RMB’000	RMB’000
Within oneyear	–	600,000

At 31 December 2018, a loan of RMB600,000,000 carried interest at lending rate of 3-5 years loan published by the People’s bank of China’s Rate (“PBOC”) plus a margin of 4% per annum, approximately 8.75% per annum. The amount is fully repaid during the year ended 31 December 2019.

(iv) Finance lease liabilities are repayable as follows:

			At	31 December
				2018
				RMB’000
	Minimum lease payments
	Within one year			73,662
	More than one year, but not exceeding two years			48,578
	More than twoyears, but not more than fiveyears			103,288
				225,528
	Less: Future finance charges			(20,215)
	Present value of leasepayments			205,313

Annual Report 2019 263

Chapter 12 Consolidated Financial Statements

39. BORROWINGS (Continued)

(iv) Finance lease liabilities are repayable as follows: (Continued)

			At 31 December
			2018
			RMB’000
	Present value of minimum lease payments
	Within one year		63,727
	More than one year, but not exceeding two years		42,447
	More than two years, but not more than five years		99,139
			205,313
	Less: Amounts due within oneyear and included in current liabilities		(63,727)
	Amounts due after oneyear and included in non-current liabilities		141,586

As at 31 December 2018, finance lease liabilities of RMB205,313,000 (AUD42,552,000) carried interest ranged from 4.98%-5.49% per annum.

The Group has initially applied IFRS 16 using the modified retrospective approach and adjusted the opening balances at 1 January 2019 to recognise lease liabilities relating to leases which were previously classified as operating leases under IAS 17. These liabilities have been aggregated with the brought forward balances relating to leases previously classified as finance leases and disclosed in note 25. Comparative information as at 31 December 2018 has not been restated and relates solely to leases previously classified as finance leases. Further details on the impact of the transition to IFRS 16 are set out in note 3.

(v) Guaranteed notes are detailed as follows:

		At 31	December
		2019	2018
		RMB’000	RMB’000
Guaranteed notes denominated in RMB repayable	within one year	2,998,800	6,948,783
Guaranteed notes denominated in USD repayable	within two to five years	3,048,607	2,992,227
Guaranteed notes denominated in RMB repayable	within two to five years	11,518,666	8,472,124
Guaranteed notes denominated in RMB repayable	after fiveyears	–	3,034,242
		17,566,073	21,447,376

264

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Consolidated Financial Statements Chapter 12

39. BORROWINGS (Continued)

(v) Guaranteed notes are detailed as follows: (Continued)

On 16 May 2012, USD guaranteed notes with par value of USD1,000,000,000 in aggregate were issued by a subsidiary of the Company. As at 31 December 2019, guaranteed notes with par value of USD103,954,000 (approximately RMB725,204,000) (2018: USD103,954,000 (approximately RMB708,625,000)) will mature in 2022 with interest rate of 5.730% per annum. The notes are unconditionally secured by the Company and the respective security is non-cancellable.

In 2012, with the approval from China Securities Regulatory Commission, the Company had issued RMB notes with aggregate par value of RMB5,000,000,000 to the public and institutional investors. An unconditional and irrecoverable corporate guarantee was provided by the Parent Company on the RMB notes. At 31 December 2019, RMB notes of RMB3,990,000,000 (2018: RMB3,986,000,000) will mature in 2022 with interest rate of 4.95% per annum.

In 2014, with the approval from China Securities Regulatory Commission, the Company was allowed to issue 5-year RMB notes at RMB1,950,000,000 with interest rate of 5.20% per annum and 10-year RMB notes at RMB3,050,000,000 with interest rate of 6.15% per annum. In 2019, the 5-year RMB notes were fully redeemed by the Company. At 31 December 2019, the 5-year RMB notes and 10-year notes amounted to nil (2018: RMB1,949,350,000) and RMB3,037,291,000 (2018: RMB3,034,242,000) respectively.

In 2018, the Company issued 2018 five tranches short-term notes at par value of RMB7,500,000,000 with 6 months to 9 months maturity at an average interest rate ranging from 4.83% to 4.96% per annum. In 2018, such shortterms notes with par value of RMB2,500,000,000 were redeemed by the Company. As at 31 December 2018, the remaining amount of short-term notes is RMB4,999,433,000 which were fully redeemed by the Company in 2019.

In 2018, the Company issued 2018 two tranches medium-term notes at par value of RMB4,500,000,000 which will mature in 2021 at an average interest rate ranging from 4.39% to 4.89% per annum. As at 31 December 2019, the remaining amount of medium-term notes is RMB4,491,375,000 (2018: RMB4,486,124,000).

In November 2018, USD guaranteed notes with par value of USD335,000,000 in aggregate were issued by a subsidiary of the Company. As at 31 December 2019, guaranteed notes with par value of USD335,000,000 (approximately RMB2,323,403,000) (2018: USD335,000,000 (approximately RMB2,283,602,000)) will mature in 2021 with interest rate of 6% per annum. The notes are unconditionally guaranteed by the Company.

In 2019, the Company issued 2019 three tranches short-term notes at par value of RMB8,000,000,000 with 3 months to 9 months maturity at an average interest rate ranging from 2.98% to 3.35% per annum. In 2019, such short-terms notes with par value of RMB5,000,000,000 were redeemed by the Company. As at 31 December 2019, the remaining amount of short-term notes is RMB2,998,800,000.

Annual Report 2019 265

Chapter 12 Consolidated Financial Statements

40. DERIVATIVE FINANCIAL INSTRUMENTS

DERIVATIVE FINANCIAL INSTRUMENTS
	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Current asset Derivatives not for hedge – Forward foreign exchange contracts	36,114	–
Current liability Derivatives not for hedge – Forward foreign exchange contracts – Interest swaps	– 148,554	1,254 –
	148,554	1,254

41. LONG-TERM PAYABLES

LONG-TERM PAYABLES
	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Intangible assets payable (i) Non-contingent royalty payable(ii)	2,347,154 73,266	– 251,974
	2,420,420	251,974
Analysed for financial reporting purpose: Current Portion	4,070	122,388
Non-currentportion	2,416,350	129,586
Total	2,420,420	251,974

Notes:

(i) Intangible assets payable represented the consideration for acquisition of mining right. The amount is payable by the Group by installments from 2019 to 2049.

(ii) Non-contingent royalty payable arose from the acquisition of C&A. The amount is payable by the Group by installments from 2017 to 2021.

266 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

42. DEFERRED TAXATION

Deferred tax assets (liabilities) of the Group and the movements thereon for both reporting periods are:

			Temporary
	Financial	Mining rights	differences on
	assets at	(mining	income and		Cash flow
	fair value	reserves)	expenses	Tax losses	hedge reserve	Total
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Balance at 1 January 2018	(25,818)	(7,588,249)	2,221,896	4,736,991	509,955	(145,225)
Exchange re-alignment	–	250,544	(97,245)	(221,982)	(26,815)	(95,498)
Acquisition of additional interests in joint operations	–	–	50,233	–	–	50,233
Credit to other comprehensive income	37	–	–	–	125,174	125,211
Credit (charge) to the consolidated statement
ofprofit or loss	25,734	207,660	(591,254)	(1,039,865)	–	(1,397,725)
Balance at 31 December 2018 and 1 January2019	(47)	(7,130,045)	1,583,630	3,475,144	608,314	(1,463,004)
Exchange re-alignment	–	(38,308)	15,381	199,511	32,571	209,155
Credit (charge) to other comprehensive income	156	–	–	–	(209,311)	(209,155)
Credit (charge) to the consolidated statement
ofprofit or loss	–	1,743,538	(928,562)	(1,145,578)	–	(330,602)
Balance at 31 December 2019	109	(5,424,815)	670,449	2,529,077	431,574	(1,793,606)

The temporary differences on income and expenses recognised mainly arose from unpaid provision of salaries and wages, provisions of compensation fees for mining rights and land subsidence, restoration, rehabilitation and environmental costs and also included payments on certain expenses such as exploration costs and certain income in Australia.

The following is the analysis of the deferred tax balances for financial reporting purposes:

	At 31 December	At 31 December
	2019	2018
	RMB’000	RMB’000
Deferred tax assets	1,620,590	6,545,102
Deferred tax liabilities	(3,414,196)	(8,008,106)
	(1,793,606)	(1,463,004)

At the reporting date, the Group has unused tax losses of RMB12,284 million (2018: RMB16,093 million) available for offset against future profits. RMB2,529 million deferred tax asset has been recognised (2018: RMB3,475 million) for such tax losses. No deferred tax asset has been recognised in respect of tax losses of RMB3,830 million (2018: RMB4,271 million) due to the unpredictability of future profit streams. Included in unrecognised tax losses are losses of RMB78 million, RMB86 million and RMB888 million, RMB2,218 million and RMB560 million (2018: RMB1,001 million, RMB78 million, RMB86 million, RMB888 million and RMB2,218 million) that will be expiring in 2020, 2021, 2022, 2023 and 2024 (2018: 2019, 2020, 2021, 2022 and 2023) respectively.

By reference to financial budgets, management believes that there will be sufficient future profits for the realisation of deferred tax assets which have been recognised in respect of tax losses.

Annual Report 2019 267

Chapter 12 Consolidated Financial Statements

43. SHAREHOLDERS’ EQUITY

Share capital

The Company’s share capital structure at the reporting date is as follows:

		Domestic		Foreign
		invested shares		invested shares
		A shares		H shares		Total
Number of shares
At 1 January 2018, 31 December 2018,
1 January2019 and 31 December 2019		2,960,000,000		1,952,016,000		4,912,016,000
		Domestic		Foreign
		invested shares		invested shares
		A shares		H shares		Total
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
Registered, issued and fully paid
At 1 January 2018, 31 December 2018,
1 January2019 and 31 December 2019		2,960,000		1,952,016		4,912,016

Each share has a par value of RMB1.

Capital reserve

During the year ended 31 December 2018, Yancoal Australia launched a global offering in connection with its dual listing on HKEX which commenced on 6 December 2018. On 6 December 2018 Yancoal Australia issued 59,441,900 new shares under the global offering and on 28 December 2018, 563,881 new shares were issued under the retail entitlement offer and on 3 January 2019, 4,361,900 new shares under partial exercise of the overallotment option, all in connection with the global offering for HK$23.48 per new share. Following the global offering, the Group’s equity interests in Yancoal Australia was first diluted to 62.47% as at 31 December 2018 and then further diluted to 62.26% under partial exercise of the overallotment option on 3 January 2019 without any change to the Group’s control over Yancoal Australia. A loss arising from such dilution of interests of approximately RMB49,000 (2018: gain of approximately RMB27,495,000 was credited to capital reserve) was debited to capital reserve.

During the year ended 31 December 2019, the non-controlling shareholders of certain non-wholly owned subsidiaries made capital injection to certain non-wholly owned subsidiary, amounted to approximately RMB2,928,000 in aggregate from equity holders other than the Group. Following such, the Group’s equity interests were diluted without any change to the Group’s control over these subsidiaries. A loss arising from such dilution of interests of approximately RMB600,483,000 was charged to capital reserve.

268

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

43. SHAREHOLDERS’ EQUITY (Continued)

Reserves

Future Development Fund

Pursuant to regulation in the PRC, the Company, Shanxi Tianchi and Heze are required to transfer an annual amount to a future development fund at RMB6 per tonne of raw coal mined (Xintai and Ordos: RMB6.5 per tonne of raw coal mined). The fund can only be used for the future development of the coal mining business and is not available for distribution to shareholders.

From 2008 onwards, Shanxi Tianchi is required to transfer an additional amount at RMB5 per tonne of raw coal mined as coal mine transformation fund. Pursuant to the Shanxi Provincial Government’s decision, coal mine transformation fund was suspended since 1 August 2013.

Pursuant to the regulations of the Shandong Province Finance Bureau, State-owned Assets Supervision and Administration Commission of Shandong Province and the Shandong Province Coal Mining Industrial Bureau, the Company is required to transfer an additional amount at RMB5 per tonne of raw coal mined from 1 July 2004 to the reform specific development fund for the future improvement of the mining facilities and is not distributable to shareholders. No further transfer to the reform specific development fund is required from 1 January 2008.

In accordance with the regulations of the State Administration of Work Safety, the Company has a commitment to incur RMB15 per tonne of raw coal mined from 1 February 2012 onwards (Shanxi Tianch RMB30 per tonne of raw coal mined from 1 October 2013 onwards, Xintai and Ordos RMB15 per tonne of raw coal mined from 1 February 2012 onwards) for each tonne of raw coal mined which will be used for enhancement of safety production environment and improvement of facilities (“Work Safety Cost”). In prior years, the work safety expenditures are recognised only when acquiring the assets or incurring other work safety expenditures. The Company, Heze, Shanxi Tianchi, Xintai and Ordos make appropriation to the future development fund in respect of unutilised Work Safety Cost from 2008 onwards.

In accordance with the regulations of the State Administration of Work Safety, the Company’s subsidiaries, Hua Ju Energy, Shanxi Tianhao and Yulin, have a commitment to incur Work Safety Cost at the rate of: 4% of the actual sales income for the year below RMB10 million; 2% of the actual sales income for the year between RMB10 million and RMB100 million (included); 0.5% of the actual sales income for the year between RMB100 million and RMB1 billion (included); 0.2% of the actual sales income for the year above RMB1 billion.

Annual Report 2019 269

Chapter 12 Consolidated Financial Statements

43. SHAREHOLDERS’ EQUITY (Continued)

Reserves (Continued)

Statutory Common Reserve Fund

The Company and its subsidiaries in the PRC have to set aside 10% of its profit for the statutory common reserve fund (except where the fund has reached 50% of its registered capital). The statutory common reserve fund can be used for the following purposes:

to make good losses of the previous years; or
to convert into capital, provided such conversion is approved by a resolution at a shareholders’ general meeting and the balance of the statutory common reserve fund does not fall below 25% of the registered capital.

Retained earnings

In accordance with the Company’s Articles of Association, the profit for the purpose of appropriation will be deemed to be the lesser of the amounts determined in accordance with (i) PRC accounting standards and regulations and (ii) IFRS or the accounting standards of the places in which its shares are listed.

The Company can also create a discretionary reserve in accordance with its Articles of Association or pursuant to resolutions which may be adopted at a meeting of shareholders.

The Company’s distributable reserve as at 31 December 2019 is the retained earnings computed under IFRS which amounted to approximately RMB45,879,106,000 (2018: RMB44,635,365,000).

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Consolidated Financial Statements Chapter 12

44. PERPETUAL CAPITAL SECURITIES

PERPETUAL CAPITAL SECURITIES
	Perpetual capital	Perpetual capital
	securities issued	securities issued
	by the Company	by a subsidiary	Total
	RMB’000	RMB’000	RMB’000
	(notes(i)to(iii))	(note(iv))
At 1 January 2018	9,249,649	3,417,351	12,667,000
Issuance of perpetual capital securities	4,962,500	–	4,962,500
Redemption of perpetual capital securities	(3,964,000)	–	(3,964,000)
Dividend to holders of perpetual capital security	607,095	202,733	809,828
Distributionpaid to holders ofperpetual capital security	(538,800)	(202,733)	(741,533)
At 31 December 2018 and 1 January 2019 Dividend to holders of perpetual capital security Distributionpaid to holders ofperpetual capital security	10,316,444 580,181 (585,014)	3,417,351 200,566 (200,566)	13,733,795 780,747 (785,580)
At 31 December 2019	10,311,611	3,417,351	13,728,962

Notes:

(i) The Company issued 6.50% and 6.19% perpetual capital securities with par value of RMB2,000,000,000 and RMB2,000,000,000 on 10 April 2015 and 30 April 2015 respectively. Coupon payments of 6.50% and 6.19% per annum, which will be reset every 3 years, on the perpetual capital securities are paid in arrears. These perpetual capital securities have no fixed maturity and are redeemable at the discretion of the Group at their principal amounts together with any accrued, unpaid or deferred coupon interest payments. In addition, while any coupon payments are unpaid or deferred, the Company undertakes not to declare, pay any dividends nor to make any distributions or similar periodic payments in respect of, or repurchase, redeem or otherwise acquire any securities of lower or equal rank. Since the perpetual capital security does not include any payment of cash or other contractual obligation of financial instrument, it is categorised as equity under IFRS. In 2018, the Company redeemed such perpetual capital securities.
(ii) The Company issued 5.7% perpetual capital securities with par value RMB5,000,000,000, on 18 August 2017. Coupon payments of 5.7% per annum, which will be reset every 3 years, on the perpetual capital securities are paid in arrears. These perpetual capital securities have no fixed maturity and are redeemable at the discretion of the Group at their principal amounts together with any accrued, unpaid or deferred coupon interest payments. In addition, while any coupon payments are unpaid or deferred, the Company undertakes not to declare, pay any dividends nor to make any distributions or similar periodic payments in respect of, or repurchase, redeem or otherwise acquire any securities of lower or equal rank. Since the perpetual capital security does not include any payment of cash or other contractual obligation of financial instrument, it is categorised as equity under IFRS.
(iii) The Company issued 6% perpetual capital securities with par value of RMB5,000,000,000 on 26 March 2018. Coupon payments of 6% per annum on the perpetual capital securities are paid once a year. The perpetual capital securities has no fixed maturity and are redeemable at the discretion of the Group at their principal amounts together with any accrued, unpaid or deferred coupon interest payments. In addition, while any coupon payments are unpaid or deferred, the Company undertakes not to declare, pay any dividends nor to make any distributions or similar periodic payments in respect of, or repurchase, redeem or otherwise acquire any securities of lower or equal rank. Since the perpetual capital security does not include any payment of cash or other contractual obligation of financial instrument, it is categorised as equity under IFRS.

Annual Report 2019 271

Chapter 12 Consolidated Financial Statements

44. PERPETUAL CAPITAL SECURITIES (Continued)

(iv) On 13 April 2017, Yancoal International Resources Development Co., Limited issued 5.75% perpetual capital securities with par value of USD500,000,000, which is guaranteed by the Company. Coupon payments of 5.75% per annum on the perpetual capital securities are paid semi-annually in arrears. These perpetual capital securities have no fixed maturity and are redeemable at the discretion of the Group at their principal amounts together with any accrued, unpaid or deferred coupon interest payments. In addition, while any coupon payments are unpaid or deferred, the Company undertakes not to declare, pay any dividends nor to make any distributions or similar periodic payments in respect of, or repurchase, redeem or otherwise acquire any securities of lower or equal rank. Since the perpetual capital security does not include any payment of cash or other contractual obligation of financial instrument, it is categorised as equity under IFRS.

45. CAPITAL RISK MANAGEMENT

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to shareholders through the optimisation of the debt and equity balance. The Group’s overall strategy remains unchanged from prior year.

The capital structure of the Group consists of debt, which includes the borrowings, perpetual capital securities and equity attributable to equity holders of the Company, comprising issued share capital and reserves.

The directors of the Company review the capital structure regularly. As part of this review, the directors of the Company assess the annual budget prepared by the accounting and treasury department and consider and evaluate the cost of capital and the risks associated with each class of capital. The Group will balance its capital structure through the payment of dividends, issue of new shares and new debts or the repayment of existing debts.

46. FINANCIAL INSTRUMENTS

46a. Categories of financial instruments

	At 31	December
	2019	2018
	RMB’000	RMB’000
Financial assets Financial assets at amortised cost	58,571,636	61,264,619
Financial assets at FVTOCI – Listed equity instruments at FVTOCI – Unlisted equity instruments at FVTOCI Financial assets at FVTPL – Unlisted equity instruments at FVTPL – Royalty receivable – Derivative financial instruments	350 4,273 152,097 1,143,090 36,114	277 4,969 156,840 931,256 –
Financial liabilities Financial liabilities at amortised cost	114,336,473	102,105,345
Financial liabilities at FVTPL – Derivative financial instruments	148,554	1,254

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Consolidated Financial Statements Chapter 12

46. FINANCIAL INSTRUMENTS (Continued)

46b. Financial risk management objectives and policies

The Group’s major financial instruments include investments in securities, bills and accounts receivable, royalty receivables, other receivables, bank balances and cash, pledged term deposits, restricted cash, long-term receivables, derivative financial instruments, bills and accounts payables, other payables, long-term payables, borrowings, amounts due to Parent Company and its subsidiaries. Details of these financial instruments are disclosed in respective notes. The risks associated with these financial instruments and the policies on how to mitigate these risks are set out below. The management manages and monitors these exposures to ensure appropriate measures are implemented on a timely and effective manner. There has been no significant change to the Group’s exposure to market risk or the manner in which it manages and measures the risk.

Credit risk

Credit risk refers to the risk that counterparty will default on its contractual obligations resulting in financial loss to the Group. As at 31 December 2019 and 2018, the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure to discharge an obligation by the counterparties and financial guarantees provided by the Group is arising from the carrying amount of the respective recognised financial assets as stated in the consolidated statement of financial position and the amount of contingent liabilities in relation to financial guarantee issued by the Group as disclosed in note 56.

In order to minimise the credit risk, the management of the Group has delegated a team responsible for determination of credit limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Group reviews the recoverable amount of each individual trade debt at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced. The Group maintains its cash and cash equivalents with reputable banks. Therefore, the directors consider that the credit risk for such is minimal.

The Group generally grants the customers with long-relationship credit terms not exceeding 180 days, depending on the situations of the individual customers. For small to medium sized new customers, the Group generally requires them to pay for the products before delivery.

For accounts and bills receivables, the Group has applied the simplified approach in IFRS 9 to measure the loss allowance at lifetime ECL. The Group determines the ECL collectively by using a provision matrix, estimated based on historical credit loss experience, as well as the general economic conditions of the industry in which the debtors operate. In this regard, the directors of the Company consider that the Group’s credit risk is significantly reduced.

For other non-trade related receivables, the Group has assessed whether there has been a significant increase in credit risk since initial recognition. If there has been a significant increase in credit risk, the Group will measure the loss allowance based on lifetime rather than 12-month ECL.

Annual Report 2019 273

Chapter 12 Consolidated Financial Statements

46. FINANCIAL INSTRUMENTS (Continued)

46b. Financial risk management objectives and policies (Continued)

Credit risk (Continued)

The credit risk on liquid funds is limited because the counterparties are banks with high credit ratings assigned by international credit-rating agencies.

In order to minimise credit risk, the Group has tasked its operation management committee to develop and maintain the Group’s credit risk grading to categorise exposures according to their degree of risk of default. The credit rating information is supplied by independent rating agencies where available and, if not available, the operation management committee uses other publicly available financial information and the Group’s own trading records to rate its major customers and other debtors. The Group’s exposure and the credit ratings of its counterparties are continuously monitored and the aggregate value of transactions concluded is spread amongst approved counterparties.

The Group’s current credit risk grading framework comprises the following categories:

		Bills and accounts	Other financial assets/
Category	Description	receivables	other items
Performing	For financial assets where there has low risk of	Lifetime ECL-not	12-month ECL
	default or has not been a significant increase in	credit impaired
	credit risk since initial recognition and that are
	not credit impaired (refer to as Stage 1)
Watch list	Debtor frequently repays after due dates but	Lifetime ECL-not	12-month ECL
	usually settle after due date (refer to as Stage 1)	credit impaired
Doubtful	For financial assets where there has been a	Lifetime ECL-not	Lifetime ECL-not
	significant increase in credit risk since initial	credit impaired	credit impaired
	recognition but that are not credit impaired (refer
	to as Stage 2)
Default	Financial assets are assessed as credit impaired	Lifetime ECL-credit	Lifetime ECL-credit
	when one or more events that have a detrimental	impaired	impaired
	impact on the estimated future cash flows of that
	asset have occurred (refer to as Stage 3)
Write-off	There is evidence indicating that the debtor is in	Amount is written	Amount is written
	severe financial difficulty and the Group has no	off	off
	realistic prospect of recovery

The credit quality of the Group’s financial assets as well as the Group’s maximum exposure to credit risk by credit risk rating grades are disclosed in respective notes

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Consolidated Financial Statements Chapter 12

46. FINANCIAL INSTRUMENTS (Continued)

46b. Financial risk management objectives and policies (Continued)

Credit risk (Continued)

Details of the accounts receivable from the five customers with the largest gross receivable balances at 31 December 2019 and 2018 are as follows:

		Percentage of accounts receivable	Percentage of accounts receivable
		At 31 December
		2019	2018
Five largest	receivable balances	30.74%	26.43%

The management considers the strong financial background and good creditability of these customers, and there is no significant uncovered credit risk.

The table below shows the credit limit and balance of 5 major counterparties at the reporting date:

		31 December 2019	31 December 2019	31 December	2018
			Carrying		Carrying
Counterparty	Location	Credit limit RMB’000	amount RMB’000	Credit limit RMB’000	amount RMB’000
Company A	PRC	Not applicable	345,979	Not applicable	N/A
Company B	PRC	Not applicable	325,307	Not applicable	N/A
Company C	PRC	Not applicable	309,080	Not applicable	127,603
Company D	PRC	Not applicable	286,810	Not applicable	N/A
Company E	PRC	Not applicable	274,500	Not applicable	N/A
Company F	AUS	Not applicable	N/A	Not applicable	578,246
Company G	AUS	Not applicable	N/A	Not applicable	307,134
Company H	AUS	Not applicable	N/A	Not applicable	176,683
CompanyI	PRC	Not applicable	N/A	Not applicable	164,990
			1,541,676		1,354,656

Other than PRC, the Group’s geographical concentration of credit risk is mainly in East Asia and Australia (2018: East Asia and Australia). As at 31 December 2019 over 34% (2018: 46%) of the Group’s total trade receivables were from customers, located in Australia and East Asia (excluding the PRC).

Annual Report 2019 275

Chapter 12 Consolidated Financial Statements

46. FINANCIAL INSTRUMENTS (Continued)

46b. Financial risk management objectives and policies (Continued)

Market risk

(i) Currency risk

The Group’s sales are denominated mainly in the functional currency of the relevant group entity making the sale, whilst costs are mainly denominated in the group entity’s functional currency. Accordingly, there is no significant exposure to transactional foreign currency risk.

The carrying amounts of the Group’s foreign currency denominated monetary assets and monetary liabilities in currencies other than the functional currencies of the relevant group entities at the reporting date are as follows:

	Liabilities	Liabilities	Assets
	2019	2018	2019	2018
	RMB’000	RMB’000	RMB’000	RMB’000
USD	23,752,429	27,276,294	9,857,443	9,378,142
EUR (“EUR”)	–	–	18,763	16,768
Hong Kong Dollar (“HKD”) Australian Dollar (“AUD”)	– –	1,366,988 –	444,323 10,623	164,229 358,447

The sales of the Group’s subsidiaries in Australia are mainly export sales and some of their fixed assets are imported from overseas. Their foreign exchange exposures are hedged by foreign currency denominated borrowings. The Group’s operations in the PRC do not adopt any foreign exchange hedging policy.

Sensitivity analysis

The Group is mainly exposed to the fluctuation against the currency of USD.

The following table details the Group’s sensitivity to a 5% increase and decrease in RMB against relevant foreign currencies. 5% represents management’s assessment of reasonably possible changes in foreign exchange rates over the period until the next reporting date. The sensitivity analysis includes only outstanding foreign currency denominated monetary items and adjusts their translation at the year end for a 5% change in foreign currency rates and also assumes all other risk variables remained constant. The sensitivity analysis includes loans of foreign operations within the Group where the denomination of the loan is in a currency other than the functional currency of the lender or the borrower.

276 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

46. FINANCIAL INSTRUMENTS (Continued)

46b. Financial risk management objectives and policies (Continued)

Market risk (Continued)

(i) Currency risk (Continued)

Sensitivity analysis (Continued)

	USD Impact (note (i)) 2019 2018	USD Impact (note (i)) 2019 2018
	RMB’000	RMB’000
(Decrease) increase in profit – if RMB weakens against respective foreign currency – if RMB strengthens against respective foreign currency	(91,553) 91,553	(171,239) 171,239

	USD Impact (note ii) 2019 2018
	RMB’000	RMB’000
(Decrease) increase in profit – if RMB weakens against respective foreign currency – if RMB strengthens against respective foreign currency	400,875 (400,875)	474,412 (474,412)

Notes:

(i) This is mainly attributable to the exposure of the Group’s outstanding bank deposit and loans denominated in USD.
(ii) This is mainly attributable to the exposure of the Group’s outstanding bank borrowings in foreign currency designated as cash flow hedge.

In management’s opinion, the sensitivity analysis is unrepresentative of the inherent foreign exchange risk as the year end exposure does not reflect the exposure during the year.

Annual Report 2019 277

Chapter 12 Consolidated Financial Statements

46. FINANCIAL INSTRUMENTS (Continued)

46b. Financial risk management objectives and policies (Continued)

Market risk (Continued)

(ii) Interest rate risk

The Group is exposed to cash flow interest rate risk in relation to variable-rate bank balances, pledged term deposits, restricted cash (note 17) and variable rate borrowings (note 39).

The Group’s exposures to interest rate risk on financial assets and financial liabilities are detailed in the liquidity risk section of this note. The Group’s cash flow interest rate risk is mainly concentrated on the fluctuation of the PBOC arising from the Group’s RMB borrowings and the LIBOR arising from the Group’s USD borrowings.

Sensitivity Analysis

The following table details the Group’s sensitivity to a change of 100 basis points in the interest rate, assuming the financial instruments outstanding at the end of the reporting period were outstanding for the whole year and all the variables were held constant. It includes the interest rate fluctuation of the abovementioned PBOC rate, LIBOR and LPR.

		2019	2018
		RMB’000	RMB’000
	(Decrease) increase in profit or loss – if increases by 100 basis points – if decreases by100 basispoints	(151,292) 151,292	(103,409) 103,409

(iii) Other price risk

In addition to the above risks relating to financial instruments, the Group is exposed to equity price risk through investment in listed equity securities. The Group currently does not have any arrangement to hedge the price risk exposure of its investment in equity securities. The Group’s exposure to equity price risk through investment in listed equity securities is not significant.

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Consolidated Financial Statements Chapter 12

46. FINANCIAL INSTRUMENTS (Continued)

46b. Financial risk management objectives and policies (Continued)

Liquidity risk

In the management of the liquidity risk, the Group monitors and maintains a level of cash and cash equivalents deemed adequate by the management to finance the Group’s operations and mitigate the effects of fluctuations in cash flows. The management monitors the utilisation of bank borrowings and ensures compliance with loan covenants.

The following table details the Group’s remaining contractual maturity for its financial liabilities. For nonderivative financial liabilities, the table has been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Group can be required to pay. The table includes both interest and principal cash flows.

Liquidity and interest risk tables

	Within 1 years or on demand RMB’000	1-5 years RMB’000	5+ years RMB’000	Total undiscounted cash flow RMB’000	Carrying amount at 31 December RMB’000
2019 Non-derivative financial liabilities Bills and accounts payable Other payables Amounts due to Parent Company and its subsidiary companies USD guaranteed note RMB guaranteed note Bank borrowings Longtermpayable	19,116,658 26,330,197 1,093,707 180,958 3,643,625 17,671,998 156,193	– – – 3,233,704 12,567,843 27,074,204 312,954	– – – – – 9,555,593 1,955,962	19,116,658 26,330,197 1,093,707 3,414,662 16,211,468 54,301,795 2,425,109	19,116,658 26,330,197 1,093,707 3,048,607 14,517,466 47,809,418 2,420,420
	68,193,336	43,188,705	11,511,555	122,893,596	114,336,473
Lease liabilities Derivative financial liabilities	197,109 148,554	350,174 –	– –	547,283 148,554	484,924 148,554
Financial guarantees issued Maximum amountguaranteed (note)	4,497,031	–	–	4,497,031	–

Note: the amount presented is the maximum contractual presented under guarantees issued.

Annual Report 2019 279

Chapter 12 Consolidated Financial Statements

46. FINANCIAL INSTRUMENTS (Continued)

46b. Financial risk management objectives and policies (Continued)

Liquidity risk (Continued)

Liquidity and interest risk tables (Continued)

				Total	Carrying
	Within 1 years			undiscounted	amount at
	or on demand	1-5 years	5+ years	cash flow	31 December
	RMB’000	RMB’000	RMB’000	RMB’000	RMB’000
2018
Non-derivative financial liabilities
Bills and accounts payable	12,514,298	–	–	12,514,298	12,514,298
Other payables	19,936,809	–	–	19,936,809	19,936,809
Amounts due to Parent Company and its
subsidiary companies	929,654	–	–	929,654	929,654
USD guaranteed note	177,606	3,351,560	–	3,529,166	2,992,227
RMB guaranteed note	7,598,124	10,074,301	3,068,495	20,740,920	18,455,149
Bank borrowings	14,391,920	27,876,218	11,180,176	53,448,314	46,425,234
Loan pledged by machineries	610,206	–	–	610,206	600,000
Longtermpayable	130,221	146,704	–	276,925	251,974
	56,288,838	41,448,783	14,248,671	111,986,292	102,105,345
Finance lease liabilities	73,662	151,866	–	225,528	205,313
Derivative financial liabilities	1,254	–	–	1,254	1,254
Financial guarantees issued
Maximum amount guaranteed
(note)	4,221,989	–	–	4,221,989	–

Note: the amount presented is the maximum contractual presented under guarantees issued.

46c. Fair values

The fair value of listed equity investment is determined with reference to quoted market price. The fair values of the forward foreign exchange contracts are estimated based on the discounted cash flows between the contract forward rate and spot forward rate. The fair value of other financial assets and financial liabilities are determined in accordance with generally accepted pricing models based on discounted cash flow analysis.

The directors of the Company consider that the carrying amounts of financial assets and financial liabilities recorded at amortised cost in the consolidated financial statements approximate their fair values.

The following table presents the carrying value of financial instruments measured at fair value across the three levels of the fair value hierarchy:

280 Yanzhou Coal Mining Company Limited

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46. FINANCIAL INSTRUMENTS (Continued)

46c. Fair values (Continued)

	Level 1 RMB’000	Level 2 RMB’000	Level 3 RMB’000	At 31 December Total RMB’000
2019 Assets Financial assets at FVTPL: – Unlisted equity investments – Royalty receivables – Derivative financial instruments Financial assets at FVTOCI: – Investments in securities listed on the SSE – Unlisted equitysecurities	– – 32,016 350 –	– – 4,098 – –	152,097 1,143,090 – – 4,273	152,097 1,143,090 36,114 350 4,273
	32,366	4,098	1,299,460	1,335,924
Liabilities Financial assets at FVTPL: – Derivative financial instruments	–	85,598	62,956	148,554
				At 31 December
	Level 1	Level 2	Level 3	Total
	RMB’000	RMB’000	RMB’000	RMB’000
2018
Assets
Financial assets at FVTPL:
– Unlisted equity investments	–	–	156,840	156,840
– Royalty receivables	–	–	931,256	931,256
Financial assets at FVTOCI:
– Investments in securities listed on
the SSE	277	–	–	277
– Unlisted equitysecurities	–	–	4,969	4,969
	277	–	1,093,065	1,093,342
Liabilities
Financial assets at FVTPL:
– Derivative financial instruments	–	1,254	–	1,254

During the years ended 31 December 2019 and 2018, there are no change in categories between level 1 and level 2 and no movement from or into level 3. For more information about royalty receivable, please refer to note 19.

Annual Report 2019 281

Chapter 12 Consolidated Financial Statements

46. FINANCIAL INSTRUMENTS (Continued)

46c. Fair values (Continued)

The fair value of the royalty receivable is determined using the discounted future cash flows that are dependent on the following unobservable inputs: forecast sales volumes, coal prices and fluctuations in foreign exchange rates. The forecast sales volumes are based on the internally maintained budgets, five year business plan and life of mine models. The forecast coal prices and long term exchange rates are based on external data consistent with the data used for impairment assessments. The risk-adjusted post-tax discount rate used to determine the future cash flows is 11.0% (2018: 10.5%). The estimated fair value would increase if the sales volumes and coal prices were higher and if the AUD weakens against the USD. The estimated fair value would also increase if the risk adjusted discount rate was lower.

47. SHARE-BASED PAYMENTS

(a) The Company:

In February 2019, a scheme of the Company (the “Share Option Scheme”) was approved. The principal terms are as follows:

(i) Purpose

The Share Option Scheme is for the purpose to further establish and improve the long-term incentive mechanism of the Company, attract and retain talents, fully mobilise the directors, senior management, mid-level management and core employees of the Company, effectively align the interests of shareholders, the Company and the management personally, and enable all parties to take interest in the long-term development of the Company.

(ii) Scope of participants

The participants include the directors, senior management, mid-level management and core employees of the Company. In respect of the abovementioned participants, any such directors and senior management must have been elected at the General Meeting or appointed by the Board. A participant must be employed by and have entered into a labor contract or an employment contract with the Company, the wholly-owned subsidiaries or controlled subsidiaries of the Company as at the date of grant and during the assessment years.

The participants do not include the external directors (including the independent directors), the supervisors and any shareholder or actual controller individually or jointly holding more than 5% of the shares of the Company and their respective spouse, parents and children. The participants shall not also be participants of share incentive schemes of any other listed companies, and persons who are already participants of such incentive schemes of any other listed companies shall not take part in the Share Option Scheme.

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47. SHARE-BASED PAYMENTS (Continued)

(a) The Company: (Continued)

(iii) Total number of the options involved in the Share Option Scheme

The number of A Share Options granted under the scheme is 46,320,000. Upon satisfaction of the conditions of exercise of the share options, each share option shall provide its holder with a right to purchase one A Share at the exercise price during the validity period. The share options shall not be transferred, mortgaged or used to set-off.

(iv) Validity Period

The validity period of the share options granted under the Share Option Scheme commences from the Date of Grant, and such period must not exceed 60 months.

(v) Vesting Period

The share options will have vesting periods of 24 months, 36 months and 48 months commencing from the date of grant respectively.

(vi) Exercise Price, exercisable Period and Exercise Conditions

The exercise of the share options under the Share Option Scheme are subject to the performance targets in the assessment years from the financial year of 2019 through the financial year of 2021. Assessment will be made once a financial year.

Under the premise that conditions of exercise of the share options have been fulfilled, the share options are exercisable in three tranches upon expiry of 24 months of the date of grant.

The participants shall exercise their share options during the validity period of the share options. If the conditions of exercise of share options are not fulfilled, the share options for that period shall not be exercised. If the conditions of the share options are fulfilled but not all of the relevant share options for that period have been exercised, such portion of the unexercised share option shall be cancelled by the Company.

During the year ended 31 December 2019, 46,320,000 share options were granted and no options were exercised or cancelled under the Share Option Scheme up to the end of the reporting period.

Annual Report 2019 283

Chapter 12 Consolidated Financial Statements

47. SHARE-BASED PAYMENTS (Continued)

(a) The Company: (Continued)

(vi) Exercise Price, Exercise Period and Exercise Conditions

As at 31 December 2019, the Company had 46,320,000 share options outstanding under the Share Option Scheme. The exercise in full of the outstanding share options would, under the present capital structure of the Company, result in the issue of 46,320,000 (2018: nil) additional ordinary shares of the Company. No option is exercisable as at 31 December 2019.

The fair value per share option at the date of grant amounted to RMB2.12. The fair value of the share options granted was estimated on the date of grant using the Black Scholes model, taking into account of the terms and conditions pon which the options were granted. The inputs used in the model was as follow:

Share price at date of grant	RMB9.37
Exercise price	RMB9.64
Risk-free interest rate	2.77%
Expected life	4 years
Expected volatility	25.52%

(vii) Exercise Price and basis of determination

The expected volatility reflects the assumption that the historical volatility is indicative of future trends, which may also not necessarily be the actual outcome.

No other feature of the options granted was incorporated into the measurement of fair value.

The Black Scholes model has been used to estimate the fair value of the share options. The variables and assumptions used in computing the fair value of the share options are based on the directors’ best estimate. The value of an share option varies with different variables of certain subjective assumptions.

284

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

47. SHARE-BASED PAYMENTS (Continued)

(b) Equity incentive plan of a subsidiary

Yancoal Australia, a non-wholly owned subsidiary of the Company, had adopted a share incentive scheme and the principal terms of the incentive plan (the “Plan”) are as follows:

(i) Purpose

The purpose of the Plan is to:

(1) attract, retain and motivate eligible employees essential for the continued growth and development of Yancoal Australia;
(2) provide a strategic, value based reward for eligible employees who make a key contribution to the success of Yancoal Australia;
(3) align the interests of eligible employees more closely with the interests of shareholders by providing an opportunity for eligible employees to receive an equity interest in the form of awards;
(4) provide eligible employees with the opportunity to share in any future growth in value of Yancoal Australia; and
(5) provide greater incentive for eligible employees to focus on Yancoal Australia’s longer term goals.

(ii) Scope of participants

Those employees that the Board of Yancoal Australia (the”Board”) determine are eligible to participate in the Plan (the “Participants”). Eligible employee may receive, at the absolute discretion of the Board, options or rights (a conditional right to receive shares of Yancoal Australia) (“Rights”) or a Share (each, an “Award”) under the Plan.

(iii) Maximum number of shares

Where an offer is made under the Plan, the Board of Yancoal Australia must, at the time of making the offer, have reasonable grounds to believe that the total number of Shares (or, in respect of Options or Rights, the total number of Shares which would be issued if those Options or Rights were exercised) will not exceed 5% of the total number of Shares on issue when aggregated with the number of Shares issued or that may be issued as a result of offers made at any time during the previous 3 year period under: (a) the Plan or any other employee incentive scheme covered by the ASIC Class Order [CO 14/1000] (or any amendment to or replacement of that Class Order) (“Class Order”); or (b) a ASIC exempt arrangement of a similar kind to an employee incentive scheme, (“5% limit”)

Annual Report 2019 285

Chapter 12 Consolidated Financial Statements

47. SHARE-BASED PAYMENTS (Continued)

(b) Equity incentive plan of a subsidiary (Continued)

The Rights are redeemable on a one-for-one basis for Yancoal Australia’s shares.

During the year ended 31 December 2018, 4,309,438 Rights were granted, 1,185,203 Rights were exercised and 31,225 Rights were forfeited. During the year ended 31 December 2019, 2,161,669 Rights were granted, 1,609,198 Rights were cancelled and 45,642 Rights were forfeited.

The fair value of share options granted was estimated on the date of grant using the Black Scholes model, taking into account of the terms and conditions upon which the options were granted. The inputs used in the model was as follow:

Grant date	31/12/2018	1/1/2019	30/5/2018
Post-consolidation share price at grant date ($)	AUD3.66	AUD3.35	AUD4.94
Risk-free interest rate	N/A	2.77%	2.77%
Dividend yield	8%	8%	0%
Value per performance right	AUD3.36	AUD2.66	AUD4.94

The Rights has been valued using the volume weighted average price of Yancoal Australia’s ordinary shares across a 10 day trading period before grant date.

286

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Consolidated Financial Statements Chapter 12

47. SHARE-BASED PAYMENTS (Continued)

(b) Equity incentive plan of a subsidiary (Continued)

There are a maximum of 3,599,839 shares available for issue, which, if issued as new shares of Yancoal Australia, would represent 0.2% of share capital in issue at 31 December 2019 (31 December 2018: 3,093,010 shares representing 0.2% of share capital of Yancoal Australia).

48. OTHER ACQUISITION AND DISPOSALS

(A) Disposal of Hunter Valley Operation to Glencore Coal Pty Ltd

On 4 May 2018, 16.6% interest in HVO, a joint operation, was disposed to Glencore Coal Pty Ltd at a cash consideration of USD429 million, subject to certain adjustments. As at 31 December 2017, the assets and liabilities relating to the 16.6% interest were presented as assets and liabilities associated with assets classified as held for sale. There is a gain on disposal of HVO, amounted to approximately RMB388,607,000. Following the partial disposal, HVO was still accounted for as a joint operation of the Group.

			RMB’000
	Cash consideration		2,767,218
	Non-contingent royalties		423,107
	Working capital and shares of net cash outflows adjustment
	(included in otherpayables and accrued expenses)		(170,264)
	Total disposal consideration		3,020,061
	Net cash inflow arising on disposals
	Cash received on disposal		2,767,218
	Less: Bank balances and cash derecognised		(63,223)
			2,703,995

Annual Report 2019 287

Chapter 12 Consolidated Financial Statements

48. OTHER ACQUISITION AND DISPOSALS (Continued)

(B) Acquisition of Warkworth Joint Venture

On 1 March 2018, the Group has completed the acquisition of 28.898% interest in Warkworth Joint Venture for USD230 million (equivalent to approximately RMB 1,716,745,000). Upon the completion of the acquisition, the interest of Yancoal Australia in Warkworth Joint Venture increased to approximately 84.5%, and Yancoal Australia’s share of coal production from Mount Thorley Warkworth operations increased from 64.1% to 82.9%. Before and after the acquisition, Warkworth Joint Venture was accounted for as a joint operation of the Group.

			RMB’000
	Consideration transferred
	Cash consideration		1,716,745

Assets acquired and liabilities recognised at the date of acquisition are as follows:

			RMB’000
	Bank balances and cash		29,180
	Bills and accounts receivables		350,158
	Inventories		63,223
	Property, plant and equipment, net		843,658
	Intangible assets		707,735
	Prepayments and other receivables		9,726
	Bills and accounts payables		(209,122)
	Provisions		(77,813)
	Net assets acquired		1,716,745

The fair value of bills and accounts receivables at the date of acquisition amounted to RMB350,158,000. The gross contractual amounts of those bills and accounts receivables acquired amounted to RMB350,158,000 at the date of acquisition. The best estimate at acquisition date of the contractual cash flows not expected to be collected amounted to RMB nil.

Net cash outflow arising on acquisition
Cash paid on acquisition	1,716,745
Less: Bank balance and cash acquired	(29,180)
	1,687,565

288

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Consolidated Financial Statements Chapter 12

48. OTHER ACQUISITION AND DISPOSALS (Continued)

(C) Acquisition of 4% of Moolarben

On 30 November 2018, Moolarben Coal Mine Pty Ltd, a 100% owned subsidiary of Yancoal Australia acquired a 4% interest in Moolarben Coal Joint Venture (“Moolarben JV”) from Kores Australia Moolarben Coal Pty Ltd (“Kores”). The Moolarben JV is accounted for as a joint operation. With the 4% acquisition the Group now holds an 85% interest in the Moolarben JV. The cash consideration paid and payable was AUD84 million (equivalent to approximately RMB 405,300,000), split over four instalments of AUD21 million each, and reduced by a AUD21 million effective date adjustment whereby the cash consideration was reduced by 4% of the Moolarben JV’s net cash inflow from the date of the sales agreement (15 April 2018) to the completion.

			RMB’000
	Consideration transferred
	Purchase price		405,300
	Effective date adjustment		(101,672)
			303,628

Assets acquired and liabilities recognised at the date of acquisition are as follows:

			RMB’000
	Bank balances and cash		7,315
	Bills and accounts receivables		7,266
	Inventories		14,784
	Property, plant and equipment, net		243,098
	Intangible assets		7,387
	Prepayments and other receivables		3,295
	Bills and accounts payables		(21,317)
	Provisions		(8,433)
	Deferred tax assets		50,233
	Net assets acquired		303,628
	Goodwill		–
	Consideration transferred		303,628

The fair value of bills and accounts receivables at the date of acquisition amounted to approximately RMB7,266,000. The gross contractual amounts of those bills and accounts receivables acquired amounted to approximately RMB7,266,000 at the date of acquisition. The best estimate at acquisition date of the contractual cash flows not expected to be collected amounted to RMB nil.

			RMB’000
	Net cash outflow arising on acquisition:
	Cash paid on acquisition		303,628
	Less: Bank balance and cash acquired		(7,315)
			296,313

Annual Report 2019 289

Chapter 12 Consolidated Financial Statements

49. NON-CONTROLLING INTERESTS

Summarised financial information of material non-controlling interests of subsidiaries is set out below.

	Yancoal Australia	Yancoal Australia	Haosheng
	At 31 December		At 31 December
	2019	2018	2019	2018
	RMB’000	RMB’000	RMB’000	RMB’000
Non-controlling interests percentage
– 1 January	37.53%	34.54%	22.26%	N/A
– 31 December	37.74%	37.53%	40.62%	22.26%
Summarised financial information
Current assets	8,653,988	9,270,771	1,800,416	286,577
Non-current assets	44,777,384	49,655,299	10,450,812	4,091,265
Current liabilities	(10,308,273)	(4,379,462)	(1,518,949)	(959,817)
Non-current liabilities	(13,716,792)	(27,100,406)	(5,900,027)	(2,423,268)
Net assets	29,406,307	27,446,202	4,832,252	994,757
Carryingamounts of non-controllinginterests	11,097,940	10,300,560	1,962,861	221,433
Revenue	21,887,315	23,271,056	1,169,804	1,009,071
Profit (loss) for the year	3,524,844	4,272,873	(273,285)	(532,486)
Other comprehensive income(expense)	854,867	(947,270)	–	–
Total comprehensive income(expense)	4,379,711	3,325,603	(273,285)	(532,486)
Total comprehensive income (expense) allocated
to non-controllinginterests	1,652,827	1,148,663	(68,646)	(118,531)
Cash flows generated from (used in) operating
activities	7,560,896	9,541,201	226,567	(455,387)
Cash flows (used in) from investing activities	(1,914,646)	735,909	(2,169,605)	(380,394)
Cash flows(used in)from financingactivities	(5,905,119)	(6,376,098)	1,953,452	632,537
Net (decrease) increase in cash and cash
equivalents	(258,869)	3,901,012	10,414	(203,244)
Dividendspaid to non-controllinginterests	239,634	285,877	–	–

The amount of above financial information is before elimination of intra-group transactions.

290 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

49. NON-CONTROLLING INTERESTS (Continued)

	Jinan	Jinan	Jinang
	Duanxin Mingren	Duanxin Mingli	Duanxin Mingzhi
	At December	At December	At December
	2018	2018	2018
	RMB’000	RMB’000	RMB’000
	(Note)	(Note)	(Note)
Non-controlling interests percentage	80%	80%	80%
Summarised financial information
Current assets	12,740	7,455	3,283
Non-current assets	5,000,000	5,000,000	1,250,000
Current liabilities	(4,349)	–	–
Non-current liabilities	–	–	–
Net assets	5,008,391	5,007,455	1,253,283
Carryingamounts of non-controllinginterests	4,006,713	4,005,964	1,002,626
Revenue	–	–	–
Profit for the year	263,252	260,252	66,311
Other comprehensive income	–	–	–
Total comprehensive income	263,252	260,252	66,311
Total comprehensive income allocated to
non-controllinginterests	210,602	208,201	53,049
Cash flows (used in) generated from
operating activities	(1,553)	2,578	(3,607)
Cash flows from investing activities	–	–	–
Cash flows from financingactivities	–	–	–
Net (decrease) increase in cash and cash
equivalents	(1,553)	2,578	(3,607)
Dividendspaid to non-controllinginterests	204,400	205,911	55,878

Note: During the year ended 31 December 2019, the Group acquired additional interests in these subsidiaries and these subsidiaries became wholly-owned subsidiaries of the Group thereafter. As these subsidiaries made insignificant contribution to the Groups profit or loss of 2019, the relevant details for 2019 were not disclosed.

Annual Report 2019 291

Chapter 12 Consolidated Financial Statements

50. RELATED PARTY BALANCES AND TRANSACTIONS

Transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed. In accordance with Main Board Listing Rules Chapter 14A, continuing connected transactions are disclosed below:

Balances and transactions with related parties

	At 31	December
	2019		2018
	RMB’000	RMB’000
Nature of balances (other than those already disclosed)
Bills and accounts receivable
– Parent Company and its subsidiaries	584,454		890,182
– Joint ventures	362,167		45,370
– Associates	–		45,437
Prepayments and other receivables
– Parent Company and its subsidiaries	327,392		142,695
– Joint ventures	122,107		–
– Associates	72,819		92,943
Long-term receivables
– Parent Company and its subsidiaries	8,689		42,893
– Joint ventures	989,901	1,051,126
– Associates	4,398,756	4,028,373
Bills and accounts payable
– Joint ventures	–		2,509
– Associates	8,151		6
– Parent Company and its subsidiaries	1,093,259		929,654
Other payables and accrued expenses
– Parent Company and its subsidiaries	10,599,970	11,394,349
– Associates	17,272		574

The amounts due from/to the Parent Company and its subsidiaries, excluding the Group, joint ventures and associates are non-interest bearing, unsecured and repayable on demand.

292 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

50. RELATED PARTY BALANCES AND TRANSACTIONS (Continued)

Balances and transactions with related parties (Continued)

During the years, the Group had the following significant transactions with the Parent Company and/or its subsidiaries (excluding the Group):

	Year ended	31 December
	2019 RMB’000	2018 RMB’000
Income
Sales of coal	2,860,293	2,269,360
Sales of auxiliary materials	805,598	1,154,088
Supply of power and heat	31,138	73,448
Sales of methanol	5,456	1,588
Equipment leasing	29,450	9,202
Professional services	5,553	4,279
Provision of repair and maintenance services	17,196	3,220
Provision of road transportation services	74,010	41,408
Expenditure
Utilities and facilities	49,133	14,399
Purchases of materials and facilities	275,204	296,747
Repair and maintenance services	102,834	25,323
Labour and services	958,016	1,099,136
Construction services	896,497	1,044,908
Coal train escort services	50,476	51,550
Financial services	852	1,670
Insurance fund management and payment services (free of charge)	961,616	900,552
Purchase of bulk commodities	561,586	160,656
Commissioned management services	5,790	17,550

Expenditures for social welfare and support services (excluding medical and child care expenses) are approximately RMB103,439,000 (2018: RMB193,398,000) for the year ended 31 December 2019. These expenses will be negotiated with and paid by the Parent Company each year.

As at 31 December 2019, the Parent Company and its subsidiaries, excluding the Group, had deposited approximately RMB10,129,682,000 (2018: RMB9,985,986,000) to Yankuang Finance. For the year ended 31 December 2019, interest income from and interest expense to the Parent Company and its subsidiaries (excluding the Group), joint ventures and associates amounted to approximately RMB207,191,000 and RMB105,623,000 respectively (2018: RMB199,352,000 and RMB104,380,000).

In addition to the above, the Company participates in a retirement benefit scheme of the Parent Company in respect of retirement benefits (note 52).

Annual Report 2019 293

Chapter 12 Consolidated Financial Statements

50. RELATED PARTY BALANCES AND TRANSACTIONS (Continued)

Balances and transactions with other state-controlled entities in the PRC

The Group operates in an economic environment currently predominated by entities directly or indirectly owned or controlled by the PRC government (“state-controlled entities”). In addition, the Group itself is part of a large group of companies under the Parent Company which is controlled by the PRC government. Apart from the transactions with the Parent Company and its subsidiaries disclosed above, the Group also conducts business with other state-controlled entities. The directors of the Company consider those state-controlled entities are independent third parties so far as the Group’s business transactions with them are concerned.

Material balances with other state-controlled entities are as follows:

	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Trade sales	3,366,596	3,820,529
Tradepurchases	861,501	550,141

Material transactions with other state-controlled entities are as follows:

	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Amounts due to other state-controlled entities	712,270	655,120
Amounts due from other state-controlled entities	49,211	180,750

Amounts due from and to state-controlled entities are trade nature of which terms are not different from other customers and suppliers.

In addition, the Group has entered into various transactions, including deposits placements, borrowings and other general banking facilities, with certain banks and financial institutions which are state-controlled entities in its ordinary course of business. In view of the nature of those banking transactions, the directors of the Company are of the opinion that separate disclosure would not be meaningful.

Except as disclosed above, the directors of the Company are of the opinion that transactions with other state-controlled entities are not significant to the Group’s operations and no other transaction, arrangement or contract of significance to which the Company was a party and in which a director of the Company or a connected entity of the director of the Company had a material interest, whether directly or indirectly, subsisted at the end of the year or at any time during the year.

294

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

50. RELATED PARTY BALANCES AND TRANSACTIONS (Continued)

Balances and transactions with joint ventures/associates

		At 31	December
		2019	2018
		RMB’000	RMB’000
Loan to ajoint venture and an associate (note	29)	5,388,657	5,079,499

Interest recognised by the Group in the current year amounting to approximately RMB397,683,000 (2018: RMB423,318,000).

Compensation of key management personnel

The remuneration of directors and other members of key management were as follows:

	Year ended	31 December
	2019	2018
	RMB’000	RMB’000
Directors fee	568	520
Salaries, allowance and other benefits in kind	9,797	9,486
Retirement benefit scheme contributions	1,722	1,666
	12,087	11,672

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

51. COMMITMENTS

Save as disclosed elsewhere is the consolidated financial statements, the Group had the following capital commitments.

	At 31	December
	2019	2018
	RMB’000	RMB’000
Capital expenditure contracted for but not provided in the consolidated financial statements Acquisition of property, plant and equipment and intangible assets – the Group – share of joint operations – others	8,397,556 215,197 26,234	8,904,861 219,185 10,866
Intangible assets – share of joint operations Exploration and evaluation – share of joint operations – others	9,764 22,766 9,156	12,509 2,538 –
	8,680,673	9,149,959

Annual Report 2019 295

Chapter 12 Consolidated Financial Statements

52. RETIREMENT BENEFITS

Qualifying employees of the Company are entitled to pension, medical and other welfare benefits. The Company participates in a scheme of the Parent Company and pays a monthly contribution to the Parent Company in respect of retirement benefits at an agreed contribution rate based on the monthly basic salaries and wages of the qualified employees. The Parent Company is responsible for the payment of all retirement benefits to the retired employees of the Company.

Pursuant to the Provision of Insurance Fund Administrative Services Agreement entered into by the Company and the Parent Company on 21 March 2014, the monthly contribution rate is at 20% (2018: 20%) of the total monthly basic salaries and wages of the Company’s employees for the period from 1 January 2015 to 31 December 2017. Other welfare benefits will be provided by the Parent Company, which will be reimbursed by the Company.

The amount of contributions paid to the Parent Company were approximately RMB961,616,000 and RMB900,552,000 for the years ended 31 December 2019 and 2018 respectively.

The Company’s subsidiaries are participants in a state-managed retirement scheme pursuant to which the subsidiaries pay a fixed percentage of its qualifying staff’s wages as a contribution to the scheme. The subsidiaries’ financial obligations under this scheme are limited to the payment of the employer’s contribution. During the year, contributions paid and payable by the subsidiaries pursuant to this arrangement were insignificant to the Group. The Group’s overseas subsidiaries pay fixed contribution as pensions under the laws and regulations of the relevant countries.

During the year and at the balance sheet date, there were no forfeited contributions which arose upon employees leaving the above schemes available to reduce the contributions payable in future years.

53. HOUSING SCHEME

A The Parent Company is responsible for providing accommodation to its employees and the domestic employees of the Company. The Company and the Parent Company share the incidental expenses relating to the accommodation at a negotiated amount for each of the two years ended 31 December 2019 and 2018. Such expenses, amounting to RMB6,333,000 the year ended 31 December 2019 (2018: RMB137,200,000) respectively, have been included as part of the social welfare and support services expenses summarised in note 50.
B The Company currently makes a fixed monthly contribution for each of its qualifying employees to a housing fund which is equally matched by a contribution from the employees. The contributions are paid to the Parent Company which utilises the funds, along with the proceeds from the sales of accommodation and, if the need arises, from loans arranged by the Parent Company, to construct new accommodation.

296

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Consolidated Financial Statements Chapter 12

54. POST BALANCE SHEET EVENTS

(a) Subsequent to the end of the reporting period, in March 2020, the Group completed the acquisition of 10% interest in the Moolarben JV from Sojitz Moolarben Resources Pty Ltd for a consideration of approximately AUD300 million (RMB1,456 million). Further details of the transaction are set out in the Yancoal Australia’s announcement dated 31 March 2020. Upon completion of the transaction, Yancoal Australia holds 95% in the Moolarben JV and it continues to be accounted for as a joint venture of the Group.
(b) Subsequent to the end of the reporting period, the outbreak of COVID-19 in January 2020 has caused disruptions to many industries. These disruptions have inevitably posed a significant threat to the global economy in 2020. Despite the challenges, governments and international organizations have implemented a series of measures to contain the pandemic. The time duration and scope of these disruptions cannot be accurately assessed at this point in time. Given the dynamic nature of these circumstances, the financial impact will be reflected in the Group’s subsequent financial statements. The Group will closely monitor the development of the pandemic and assess its impact on its operations.

55. OPERATING LEASE COMMITMENTS

The Group as lessee

		31/12/2018
		RMB’000
	Within one year	160,184
	In the second to fifthyears inclusive	297,436
		457,620

As at 31 December 2018, operating lease payments represent rentals payable by the Group for certain of its mining equipment, office space and small items of office equipment. Leases are negotiated for an average term of 1 to 5 years.

The Group is the lessee in respect of buildings and plant, machinery and equipment which the leases were previously classified as operating leases under IAS 17. The Group has initially applied IFRS 16 using the modified retrospective approach. Under this approach, the Group adjusted the opening balances at 1 January 2019 to recognise lease liabilities relating to these leases (see note 3). From 1 January 2019 onwards, future lease payments are recognised as lease liabilities in the consolidated statement of financial position in accordance with the policies set out in note 4, and the details regarding the Group’s future lease payments are disclosed in note 25.

Annual Report 2019 297

Chapter 12 Consolidated Financial Statements

56. CONTINGENT LIABILITIES

(i) Guarantees

		At 31	December
		2019	2018
		RMB’000	RMB’000
(a)	The Group Performance guarantees provided to daily operations Guarantees provided in respect of the cost of restoration of certain mining leases, given to government departments as required by statute	736,989 661,600	1,005,073 546,196
(b)	Joint operations Performance guarantees provided to external parties Guarantees provided in respect of the cost of restoration of certain mining leases, given to government departments as required by statute	780,700 1,390,318	693,983 1,137,861
(c)	Related parties Performance guarantees provided to external parties Guarantees provided in respect of the cost of restoration of certain mining leases, given to government departments as required by statute	515,714 411,710	571,979 266,897
		4,497,031	4,221,989

57. NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS

During the year ended 31 December 2018, investment in securities of approximately RMB3,781,200,000 was reclassified to interests in associates.

Additions to the Group’s intangible assets, property, plant and equipment and construction-in-progress amounted to approximately RMB1,000,000,000, RMB2,000,000,000 and Nil respectively were settled through bills during the year ended 31 December 2019 (2018: Nil, RMB1,000,000,000 and RMB3,000,000,000).

During the year ended 31 December 2019, the Group entered into several new arrangement in respect of buildings, and plant, machinery and equpment. Right-of-use assets and lease liabilities of approximately RMB98,304,000 were recognised at the commencement of the lease.

During the year ended 31 December 2019, the Group acquired mining rights of which approximately RMB2,347,154,000 intangible assets payable will be settled over the mining period.

298

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

58. RECONCILIATION OF LIABILITIES ARISING FROM FINANCING ACTIVITIES

The table below details changes in the Group’s liabilities arising from financing activities, including both cash and noncash changes. Liabilities arising from financing activities are those for which cash flows were, or future cash flows will be, classified in the consolidated statement of cash flows as cash flows from financing activities.

	Dividends payable (Note 36) RMB’000	Customers’ deposits in relation to financial services (Note 36) Borrowings (Note 39) Lease liabilities (Note 25) RMB’000 RMB’000 RMB’000	Customers’ deposits in relation to financial services (Note 36) Borrowings (Note 39) Lease liabilities (Note 25) RMB’000 RMB’000 RMB’000	Customers’ deposits in relation to financial services (Note 36) Borrowings (Note 39) Lease liabilities (Note 25) RMB’000 RMB’000 RMB’000	Customers’ deposits in relation to financial services (Note 36) Borrowings (Note 39) Lease liabilities (Note 25) RMB’000 RMB’000 RMB’000	Total RMB’000
At 31 December 2018	43,626	11,284,197 68,677,923			–	80,005,746
Adoption of IFRS 16	–	–		(205,313) 557,854		352,541
At 1 January 2019	43,626	11,284,197 68,472,610 557,854				80,358,287
Dividends declaration	8,788,347	–		–	–	8,788,347
Finance cost incurred	–	–		– 33,894		33,894
Cash flows	(6,912,307)	6,562,462	(3,538,407) (185,592)			(4,073,844)
New lease arranements	–	–		– 98,304		98,304
Termination of lease	–	–		– (21,732)		(21,732)
Exchange adjustment	–	–		441,288 2,196		443,484
At 31 December 2019	1,919,666	17,846,659 65,375,491 484,924				85,626,740
		Customers’
		deposits in
		relation to
	Dividends	financial
	payable	services		Borrowings
	(Note 36)	(Note 36)		(Note 39)		Total
	RMB’000	RMB’000		RMB’000		RMB’000
At 1 January 2018	41,706	9,457,594		70,278,726		79,778,026
Dividends declaration	3,477,891	–		–		3,477,891
Cash flows	(3,475,971)	1,826,603		(1,927,906)		(3,577,274)
Exchange adjustment	–	–		327,103		327,103
At 31 December 2018	43,626	11,284,197		68,677,923		80,005,746

Annual Report 2019 299

Chapter 12 Consolidated Financial Statements

59. INFORMATION OF THE COMPANY

The Company’s statement of financial position is disclosed as follows:

	At 31	December
	2019	2018
	RMB’000	RMB’000
Current assets
Bank balances and cash	4,588,562	13,653,633
Pledged term deposits	210,000	1,823,231
Restricted cash	722,320	1,629,645
Bills and accounts receivable	3,754,703	4,904,199
Inventories	630,263	578,184
Prepayments and other receivables	43,419,371	39,472,294
Prepaid leasepayments	–	13,388
	53,325,219	62,074,574
Non-current assets
Intangible assets	828,784	989,558
Prepaid lease payments	–	381,019
Property, plant and equipment	7,237,158	9,757,349
Right-of-use assets	4,362,050	–
Investments in subsidiaries (note a)	65,982,294	62,219,428
Investments in securities	4,623	5,246
Investments in associates	8,801,123	8,745,421
Investment in joint venture	28,290	28,762
Deposit made on investments	117,926	117,926
Deferred tax assets	1,233,628	1,193,597
	88,595,876	83,438,306
Total assets	141,921,095	145,512,880

300 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

59. INFORMATION OF THE COMPANY (Continued)

INFORMATION OF THE COMPANY (Continued)
	At 31	December
	2019	2018
	RMB’000	RMB’000
Current liabilities
Bills and accounts payable	4,683,330	3,425,208
Other payables and accrued expenses	19,207,165	13,526,037
Contract liabilities	635,148	749,246
Provision for land subsidence, restoration, rehabilitation and environmental costs	–	1,844,810
Borrowings – due within one year	13,248,800	11,899,433
Lease liabilities	1,083,566	–
Long term payable – due within one year	2,367,430	16,588,063
Derivative financial instruments	85,598	–
Taxpayable	330,165	261,345
	41,641,202	48,294,142
Non-current liabilities
Borrowings – due after one year	32,415,387	29,349,927
Lease liabilities	3,671,227	–
Longtermpayable – due after oneyear	60,755	2,771,712
	36,147,369	32,121,639
Total liabilities	77,788,571	80,415,781
Capital reserves
E quity (note b)	53,820,913	54,780,655
Perpetual capital securities	10,311,611	10,316,444
	64,132,524	65,097,099
Total liabilities and equity	141,921,095	145,512,880

Annual Report 2019 301

Chapter 12 Consolidated Financial Statements

59. INFORMATION OF THE COMPANY (Continued)

(a) Details of the Company’s major subsidiaries at 31 December 2019 and 2018 are as follows:

	Country of
	incorporation/	Issued and fully
	registration	paid capital/	Proportion of registered capital/issued				Proportion of voting
Name of subsidiary	and operation	registered capital	share capital held 2019 Directly Indirectly		by the Company 2018 Directly Indirectly		power controlled 2019 2018		Principal activities
Shanxi Neng Hua (note 1)	PRC	RMB600,000,000	100%	–	100%	–	100%	100%	Investment holding
Shanxi Tianchi (note 1)	PRC	RMB90,000,000	–	81.31%	–	81.31%	81.31%	81.31%	Coal mining business
Shanxi Tianhao (note 1)	PRC	RMB150,000,000	–	99.89%	–	99.89%	99.89%	99.89%	Methanol and electricity
										power business
Beisheng Industry and Trade	PRC	RMB2,404,000	100%	–	100%	–	100%	100%	Coal Mining and sales
(note 1)
Shandong Yanmei Shipping Co.,	PRC	RMB5,500,000	92%	–	92%	–	92%	92%	Transportation via rivers
Ltd. (“Yanmei Shipping”)										and lakes and the sales
(note 1)										of coal and construction
										materials
Inner Mongolia Haosheng Coal	PRC	RMB1,184,620,000	59.38%	–	77.74%	–	59.38%	77.74%	Sales of coal mine
Mining Co., Ltd(“Haosheng”)		(2018:								machinery equipment
(note 1)		RMB904,900,000)								and accessories
Zhongyan Trade Co., Ltd	PRC	RMB50,000,000	100%	–	100%	–	100%	100%	Trade and storage in free
(“Zhongyan”) (note 1)										trade zone
Yanzhou Coal Mining Yulin Neng	PRC	RMB1,400,000,000	100%	–	100%	–	100%	100%	Methanol and electricity
Hua Co., Ltd (“Yulin”) (note 1)										power business
Heze (note 1)	PRC	RMB3,000,000,000	98.33%	–	98.33%	–	98.33%	98.33%	Coal mining and sales
Ordos (note 1)	PRC	RMB8,100,000,000	100%	–	100%	–	100%	100%	Investment holding, coal
										mining and sales
Yize (note 1)	PRC	RMB675,000,000	–	100%	–	100%	100%	100%	Development of methanol
										project
Inner Mongolia Rongxin Chemicals	PRC	RMB648,360,000	–	100%	–	100%	100%	100%	Development of methanol
Co., Ltd (“Rongxin”) (note 1)										project
Inner Mongolia Daxin Industrial	PRC	RMB209,992,568	–	100%	–	100%	100%	100%	Development of methanol
Gas Co., Ltd (“Daxin Industrial”)										project
(note 1)
Xintai (note 1)	PRC	RMB5,000,000	–	100%	–	100%	100%	100%	Coal mining and sales
Ordos Zhuanlongwan Coal	PRC	RMB5,050,000,000	–	100%	–	100%	100%	100%	Coal mining and sales,
Mining Company Limited										manufacturing and sales
(“Zhuanlongwan”)										of mining equipment
										and machinery
Ordos Yingpanhao Coal	PRC	RMB300,000,000	–	100%	–	100%	100%	100%	Coal mining and sales,
Mining Company Limited										manufacturing and sales
(“Yingpanhao”) (note 1)										of mining equipment
										and machinery

302

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

59. INFORMATION OF THE COMPANY (Continued)

(a) Details of the Company’s major subsidiaries at 31 December 2019 and 2018 are as follows: (Continued)

	Country of
	incorporation/	Issued and fully
	registration	paid capital/	Proportion of registered capital/issued				Proportion of voting
Name of subsidiary	and operation	registered capital	share capital held 2019 Directly Indirectly		by the Company 2018 Directly Indirectly		power controlled 2019 2018		Principal activities
Hua Ju Energy (note 1)	PRC	RMB288,589,774	95.14%	–	95.14%	–	95.14%	95.14%	Electricity and heat supply
Rizhao (note 1)	PRC	RMB300,000,000	51%	–	51%	–	51%	51%	Coal wholesale
										management and others
Qingdao Yanmei Dongqi Energy	PRC	RMB50,000,000	–	51%	–	51%	100%	100%	Coal and Related Products
Co., Ltd (“Dongqi”) (note 1)										Wholesale
Trading Centre (note 1)	PRC	RMB100,000,000	51%	–	51%	–	51%	51%	Coal Mining and sales
Shandong Zhongyin International	PRC	RMB300,000,000	100%	–	100%	–	100%	100%	Coal and non-ferrous metal
Trade Co., Ltd. (note 1)										wholesale
Zhongyin Logistics (note 1)	PRC	RMB300,000,000	–	100%	–	100%	100%	100%	Trade Broker and Agent
Zhongyin Financial (note 1)	PRC	RMB7,060,000,000	90%	9%	90%	9%	99%	99%	Financial leasing
Duanxin (note 1)	PRC	RMB:3,310,000,000	100%	–	100%	–	100%	100%	Investment and assets
										management
Shandong Duanxin Supply Chain	PRC	RMB200,000,000	100%	–	100%	–	100%	100%	Logistics storage and
Management Co., Ltd (“Supply										leasing
Chain”) (note 1)
Heze Duanxin Supply Chain	PRC	RMB10,000,000	–	100%	–	100%	100%	100%	Logistics storage and
Management Co., Ltd (“Heze										leasing
Duanxin”) (note 1)
Dalateqi Duanxin Supply	PRC	RMB5,000,000	–	100%	–	100%	100%	100%	Logistics storage and
Chain Management Co., Ltd										leasing
(“Dalateqi”) (note 1)
Ejin Horo Qi Duanxin Supply Chain	PRC	RMB10,000,000	–	100%	–	100%	100%	100%	Logistics storage and
Management Co., Ltd. (note 1)										leasing
Ruifeng (note 1)	PRC	RMB200,000,000	51%	–	51%	–	51%	51%	Trading
Yancoal International (Singapore)	Singapore	USD10,000,000	–	100%	–	100%	100%	100%	Trading
Pte. Ltd.
Yancoal Australia (note 2)	Australia	AUD6,482,144,000	62.26%	–	62.47%	–	62.26%	62.47%	Investment holding
Austar Coal Mine Pty, Limited	Australia	AUD64,000,000	–	62.26%	–	62.47%	100%	100%	Coal mining business in
(“Austar”)										Australia
Gloucester	Australia	AUD719,720,808	–	62.26%	–	62.47%	100%	100%	Coal resource exploration
										development
Yancoal Australia Sales Pty Ltd	Australia	AUD100	–	62.26%	–	62.47%	100%	100%	Coal sales
Yancoal SCN Ltd	Australia	AUD5	–	62.26%	–	62.47%	100%	100%	Issue subordinated capital
										note

Annual Report 2019 303

Chapter 12 Consolidated Financial Statements

59. INFORMATION OF THE COMPANY (Continued)

(a) Details of the Company’s major subsidiaries at 31 December 2019 and 2018 are as follows: (Continued)

	Country of
	incorporation/	Issued and fully
	registration	paid capital/	Proportion of registered capital/issued				Proportion of voting
Name of subsidiary	and operation	registered capital	share capital held by the Company 2019 2018 Directly Indirectly Directly Indirectly				power controlled 2019 2018		Principal activities
Yancoal Mining Services Ltd	Australia	AUD100	–	62.26%	–	62.47%	100%	100%	Provide management
										services to the
										underground mines
Yancoal Resources Ltd	Australia	AUD446,409,065	–	62.26%	–	62.47%	100%	100%	Coal mining business in
										Australia
Westralian Prospectors NL	Australia	AUD93,001	–	62.26%	–	62.47%	100%	100%	No business in Australia
Eucla Mining NL	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	Coal mining
CIM Duralie Pty Ltd	Australia	AUD665	–	62.26%	–	62.47%	100%	100%	No business in Australia
Duralie Coal Marketing Pty Ltd	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	No business in Australia
Duralie Coal Pty Ltd	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	Coal mining
Gloucester (SPV) Pty Ltd	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	Holding company
Gloucester (Sub Holdings 1) Pty Ltd	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	Holding company
Gloucester (Sub Holdings 2) Pty Ltd	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	Holdings company
SASE Pty Limited	Australia	AUD9,650,564	–	56.03%	–	56.22%	90%	90%	No business in Australia, to
										be liquidated
Proserpina Coal Pty Ltd	Australia	AUD1	–	62.26%	–	62.47%	100%	100%	Coal mining and sales
Yarrabee Coal Company Pty Ltd	Australia	AUD92,080	–	62.26%	–	62.47%	100%	100%	Coal mining and sales
White Mining Limited	Australia	Ordinary shares	–	62.26%	–	62.47%	100%	100%	Investment holding
		AUD3,300,000								and management of
		A Shares AUD200								operations
Moolarben Coal Operations Pty Ltd	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	Management of coal
										operations
Moolarben Coal Mines Pty Limited	Australia	AUD1	–	62.26%	–	62.47%	100%	100%	Coal business development
Felix NSW Pty Ltd	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	Investment holding
Moolarben Coal Sales Pty Ltd	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	Coal sales
CIM Mining Pty Ltd	Australia	AUD30,180,720	–	62.26%	–	62.47%	100%	100%	No business in Australia
Donaldson Coal Holdings Limited	Australia	AUD204,945,942	–	62.26%	–	62.47%	100%	100%	Holdings company
Monash Coal Holdings Pty Ltd	Australia	AUD100	–	62.26%	–	62.47%	100%	100%	Dormant
Athena Coal Operation Pty Ltd	Australia	AUD1	–	62.26%	–	62.47%	100%	100%	Dormant
Athena Coal sales Pty Ltd	Australia	AUD1	–	62.26%	–	62.47%	100%	100%	Dormant
Paway Limited	British Virgin	AUD1	–	62.26%	–	62.47%	100%	100%	Dormant
	Islands

304

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

59. INFORMATION OF THE COMPANY (Continued)

(a) Details of the Company’s major subsidiaries at 31 December 2019 and 2018 are as follows: (Continued)

	Country of
	incorporation/	Issued and fully
	registration	paid capital/	Proportion of registered capital/issued				Proportion of voting
Name of subsidiary	and operation	registered capital	share capital held by the Company 2019 2018 Directly Indirectly Directly Indirectly				power controlled 2019 2018		Principal activities
White Mining Services Pty Limited	Australia	AUD2	–	62.26%	–	62.47%	100%	100%	No business in Australia, to
										be liquidated
Ashton Coal Operations Pty Limited	Australia	AUD5	–	62.26%	–	62.47%	100%	100%	Management of operations
Ashton Coal mines Limited	Australia	AUD5	–	62.26%	–	62.47%	100%	100%	Coal sales
White Mining (NSW) Pty Limited	Australia	AUD10	–	62.26%	–	62.47%	100%	100%	Coal mining and sales
CIM Stratford Pty Ltd	Australia	AUD21,558,606	–	62.26%	–	62.47%	100%	100%	Dormant
CIM Services Pty Ltd	Australia	AUD8,400,002	–	62.26%	–	62.47%	100%	100%	Dormant
Donaldson Coal Pty Ltd	Australia	AUD6,688,782	–	62.26%	–	62.47%	100%	100%	Coal mining and sales
Donaldson Coal Finance Pty Ltd	Australia	AUD10	–	62.26%	–	62.47%	100%	100%	Investment company
Monash Coal Pty Ltd	Australia	AUD200	–	62.26%	–	62.47%	100%	100%	Coal mining and sales
Stradford Coal Pty Ltd	Australia	AUD10	–	62.26%	–	62.47%	100%	100%	Coal mining
Stradford Coal Marketing Pty Ltd	Australia	AUD10	–	62.26%	–	62.47%	100%	100%	Coal sales
Abakk Pty Ltd	Australia	AUD6	–	62.26%	–	62.47%	100%	100%	Liquidated
Newcastle Coal Company Pty Ltd	Australia	AUD2,300,999	–	62.26%	–	62.47%	100%	100%	Coal mining and sales
Primecoal International Pty Ltd	Australia	AUD1	–	62.26%	–	62.47%	100%	100%	No business in Australia, to
										be liquidated
Coal & Allied Industries Limited	Australia	AUD3,724,000,000	–	62.26%	–	62.47%	100%	100%	Coal mining business
(“C&A”)
Australian Coal Resources Ltd	Australia	AUD5	–	62.26%	–	62.47%	100%	100%	Coal Mining Business
Kalamah Pty Ltd	Australia	AUD1	–	62.26%	–	62.47%	100%	100%	Investment, holding
										company
RioTinto Coal (NSW) Pty Ltd	Australia	AUD1	–	62.26%	–	62.47%	100%	100%	Employment, management
										company
Coal & Allied Operations Pty Ltd	Australia	AUD17,147,500	–	62.26%	–	62.47%	100%	100%	Coal mining, processing
										and sales
CNA Investments (UK) Pty Ltd	Australia	AUD202,000	–	62.26%	–	62.47%	100%	100%	Investment Management
CNA Resources Holdings Pty Ltd	Australia	AUD405	–	62.26%	–	62.47%	100%	100%	Investment holding
HV Operations Pty Ltd	Australia	AUD1	–	62.26%	–	62.47%	100%	100%	Management company
Lower Hunter Land Holdings Pty	Australia	AUD6	–	62.26%	–	62.47%	100%	100%	Management, holding
Ltd										company
Oaklands Coal Pty Ltd	Australia	AUD5,005,000	–	62.26%	–	62.47%	100%	100%	Management company
Novacoal Australia Pty Ltd	Australia	AUD530,000	–	62.26%	–	62.47%	100%	100%	Management company

305

Annual Report 2019

Chapter 12 Consolidated Financial Statements

59. INFORMATION OF THE COMPANY (Continued)

(a) Details of the Company’s major subsidiaries at 31 December 2019 and 2018 are as follows: (Continued)

	Country of
	incorporation/	Issued and fully
	registration	paid capital/	Proportion of registered capital/issued				Proportion of voting
Name of subsidiary	and operation	registered capital	share capital held by the Company 2019 2018 Directly Indirectly Directly Indirectly				power controlled 2019 2018		Principal activities
Yancoal International (Holding) Co.,	Hong Kong	USD689,313,091	100%	–	100%	–	100%	100%	Investment holding
Ltd
Yancoal International Resources	Hong Kong	USD600,000	–	100%	–	100%	100%	100%	Coal resource exploration
Development Co., Limited										development
Yancoal International Technology	Hong Kong	USD1,000,000	–	100%	–	100%	100%	100%	Coal mining technology
Development Co., Limited										development, transfer
										and consultation
Yancoal International Trading Co.,	Hong Kong	USD1,000,000	–	100%	–	100%	100%	100%	Entrepot trade
Limited
Yancoal Luxembourg Resources	Luxembourg	USD500,000	–	100%	–	100%	100%	100%	Investment holding
Holding Co., Ltd
Yancoal Canada Resources Holding	Canada	USD290,000,000	–	100%	–	100%	100%	100%	Potash exploration
Co., Ltd
Athena Holdings P/L	Australia	AUD24,450,405	–	100%	–	100%	100%	100%	Holding company
Premier Coal Holdings Pty Ltd	Australia	AUD321,613,108	–	100%	–	100%	100%	100%	Holding company
Tonford Holdings Pty Ltd	Australia	AUD46,407,917	–	100%	–	100%	100%	100%	Holding company
Wilpeena Holdings Pty Ltd	Australia	AUD3,457,381	–	100%	–	100%	100%	100%	Holding company
Yancoal Energy Pty Ltd	Australia	AUD202,977,694	–	100%	–	100%	100%	100%	Holding company
Yancoal International Technology	Australia	AUD75,407,506	–	100%	–	100%	100%	100%	Holding company
Development Pty Ltd
Athena Coal Mine Pty Ltd	Australia	AUD2	–	100%	–	100%	100%	100%	Coal exploration
Premier Coal Limited	Australia	AUD8,779,250	–	100%	–	100%	100%	100%	Coal mining and sales
Tonford Pty Ltd	Australia	AUD2	–	100%	–	100%	100%	100%	Coal exploration
Syntech Holdings Pty Ltd	Australia	AUD223,470,552	–	100%	–	100%	100%	100%	Investment holding and
										management of coal
										operation
Syntech Holdings II Pty Ltd	Australia	AUD6,318,490	–	100%	–	100%	100%	100%	Investment holding
UCC Energy Pty Limited	Australia	AUD2	–	100%	–	100%	100%	100%	Ultra clean coal technology
Premier Char Pty Ltd	Australia	AUD1,000,000	–	100%	–	100%	100%	100%	Charcoal Product
										Development
Yancoal Technology Development	Australia	AUD2	–	100%	–	100%	100%	100%	LTCC technology
Pty Ltd										development and
										equipment rental
AMH (Chinchilla Coal) Pty Ltd	Australia	AUD2	–	100%	–	100%	100%	100%	Coal exploration

306

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

59. INFORMATION OF THE COMPANY (Continued)

(a) Details of the Company’s major subsidiaries at 31 December 2019 and 2018 are as follows: (Continued)

	Country of
	incorporation/	Issued and fully
	registration	paid capital/	Proportion of registered capital/issued				Proportion of voting
Name of subsidiary	and operation	registered capital	share capital held by the Company 2019 2018 Directly Indirectly Directly Indirectly				power controlled 2019 2018		Principal activities
Syntech Resources Pty Ltd	Australia	AUD1,251,431	–	100%	–	100%	100%	100%	Coal mining and sales
Mountfield Properties Pty Ltd	Australia	AUD100	–	100%	–	100%	100%	100%	Investment holding
Donghua (note 1)	PRC	RMB1,277,888,000	100%	–	100%	–	100%	100%	Manufacturing of coal
										mining and excavating
										equipment
Yankuang Group Tangcun	PRC	RMB51,000,000	–	100%	–	100%	100%	100%	Manufacturing and repair
Industrial Co., Ltd (“Tangcun”)										of machinery and cable
(note 1)
Shandong Yankuang Group	PRC	RMB20,000,000	–	95%	–	95%	95%	95%	Manufacturing and sale of
Changlong Cable Manufacturing										cable, rubber products
Co., Ltd (“Changlong”) (note 1)
Zhoucheng Chengyan Material	PRC	RMB300,000	–	100%	–	100%	100%	100%	Mining products
Inspection and Testing Co., Ltd										supporting materials
(“Chengyan”) (note 1)										testing
Yankuang Group Mainland	PRC	RMB50,000,000	–	79.69%	–	79.69%	79.69%	79.69%	Manufacturing of special
Machinery Co. Ltd (“Mainland										coal mining equipment
Machinery”) (note 1)
Yankuang Group Yanzhou	PRC	RMB8,000,000	–	62.50%	–	62.50%	62.50%	62.50%	Production and processing
Sanfanggang Structural										of steel engineering
Engineering (“Sanfanggang”)										components
(note 1)
Yankuang Group Zoucheng Jinming	PRC	RMB50,000,000	–	100%	–	100%	100%	100%	Manufacturing, installation
Electrical Company Limited										and repair of electrical
(“Jinming”) (note 1)										equipments
Yankuang Group Zoucheng	PRC	RMB860,000	–	41.86%	–	41.86%	41.86%	41.86%	Processing and sale of
Dehailan Rubber Product Co.,										composite pipe and
Ltd (“Dehailan”) (note 1)										plastic profile products
Yanzhou Dongfang Electrical Co.,	PRC	RMB50,000,000	–	94.34%	–	94.34%	94.34%	94.34%	Manufacturing and
Ltd (“Dongfang”) (note 1)										installation of mining
										equipments
Yankuang Group Jintong Rubber	PRC	RMB6,600,000	–	54.55%	–	54.55%	54.55%	54.55%	Manufacturing and sale of
Co., Ltd (“Jintong”) (note 1)										rubber products
Jinan Duanxin Mingren Financial	PRC	RMB5,000,000,000	–	100%	–	20%	100%	100%	Financial advisory;
Consulting Partnership (LP)										Asset management
(“Jinan Duanxin Mingren”)										consultancy service;
(notes 1 and 3)										Business advisory;
										Business service; Market
										information consultation
										and investigation

307

Annual Report 2019

Chapter 12 Consolidated Financial Statements

59. INFORMATION OF THE COMPANY (Continued)

(a) Details of the Company’s major subsidiaries at 31 December 2019 and 2018 are as follows: (Continued)

	Country of
	incorporation/	Issued and fully
	registration	paid capital/	Proportion of registered capital/issued				Proportion of voting
Name of subsidiary	and operation	registered capital	share capital held by the Company 2019 2018 Directly Indirectly Directly Indirectly				power controlled 2019 2018		Principal activities
Jinan Duanxin Mingli Financial	PRC	RMB5,000,000,000	–	100%	–	20%	100%	100%	Management
Consulting Partnership (LP)										consulting service,
(“Jinan Duanxin Mingli”)										Asset management
(note 1)										consultancy service;
										Business advisory;
										Business service; Market
										information consultation
										and investigation
Jining Duanxin Mingzhi Financial	PRC	RMB1,250,000,000	–	100%	–	20%	100%	100%	Investment holding
Consulting Partnership (LP)
(“Jining Duanxin Mingzhi”)
(notes 1 and 3)
Qingdao Duanxin Asset	PRC	RMB500,000,000	100%	–	100%	–	100%	100%	Equity investment
Management Company Limited										fund management,
										Management of
										corporate asset, Foreign
										investment funds,
										Import and export
										service, International
										Trading, Export
Yancoal Property Service (note 1)	PRC	RMB12,000,000	–	35%	–	35%	35%	35%	Property management,
										Garden greening
										engineering, Sewage
										treatment and rental
										housing agency service
Duanxin Investment Holding	PRC	RMB1,100,000,000	–	100%	–	100%	100%	100%	Equity investment, the
(Shenzhen) Company Limited										entrusted assets and
(note 1)										investment management,
										corporate management
										and investment advisory
Zhongyin Finance Lease Company	PRC	RMB5,790,800,000	–	100%	–	100%	100%	100%	Investment Holding
Limited (note 1)
Yankuang Finance	PRC	RMB1,703,000	90%	N/A	90%	N/A	90%	90%	Financial services

Unless otherwise specified, the capital of the above subsidiaries are registered capital (those established in the PRC) or ordinary shares (those established in other countries).

Note 1: The companies are established in the PRC as limited liability companies.

Note 2: The investment cost of RMB21,425,119,000 (2018: RMB21,425,119,000) in respect of investment in Yancoal Australia, a subsidiary dually listed on the Australia Stock Exchange and SEHK, was included in investment in subsidiaries. As at 31 December 2019, the market value of these shares was approximately RMB11,645,428,000 (AUD2,384,257,000) (2018: approximately RMB15,550,291,000 (AUD3,222,858,000)).

Note 3: Pursuant to the respective partnership agreements, the Group is able to control 100% of the voting power of these partnerships in relation to the respective relevant activities. Thus, these partnerships are accounted for as subsidiaries of the Group.

308

Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

59. INFORMATION OF THE COMPANY (Continued)

(b) The Company’s equity is as follows:

											Perpetual
			Share		Future	Statutory	Investment				capital
	Share	Share	option	development		common	revaluation		Retained		securities
	capital	premium	reserve		fund reserve	fund	reserve		earnings		(note 44)	Total
	RMB’000	RMB’000	RMB’000		RMB’000	RMB’000	RMB’000		RMB’000		RMB’000	RMB’000
As at 1 January2018	4,912,016	2,967,947	–		780,222	5,855,024	287		37,903,506		9,249,649	61,668,651
Profit for the year	–	–	–		–	–	–		4,719,532		607,095	5,326,627
Other comprehensive expense
– Fair value changes of financial assets at FVTOCI	–	–	–		–	–	(111)		–		–	(111)
Total comprehensive income (expense) for the year	–	–	–		–	–	(111)		4,719,532		607,095	5,326,516
Transactions with owners:
– Distribution paid to holders of perpetual capital securities	–	–	–		–	–	–		–		(538,800)	(538,800)
Dividends	–	–	–		–	–	–		(2,357,768)		–	(2,357,768)
Redemption of perpetual capital securities	–	–	–		–	–	–		–		(3,964,000)	(3,964,000)
Issuance ofperpetual capital securities	–	–	–		–	–	–		–		4,962,500	4,962,500
Total transactions with owners	–	–	–		–	–	–		(2,357,768)		459,700	(1,898,068)
Balance at 31 December 2018	4,912,016	2,967,947	–		780,222	5,855,024	176		40,265,270		10,316,444	65,097,099
As at 1 January2019	4,912,016	2,967,947	–		780,222	5,855,024	176	40,265,270		10,316,444		65,097,099
Profit for the year	–	–	–		–	–	–		6,572,677		580,181	7,152,858
Other comprehensive expense
– Fair value changes of financial assets at FVTOCI	–	–	–		–	–	(467)		–		–	(467)
Total comprehensive income (expense) for the year	–	–	–		–	–	(467)		6,572,677		580,181	7,152,391
Transactions with owners:
– Distribution paid to holders of perpetual capital securities	–	–	–		–	–	–		–		(585,014)	(585,014)
Dividends	–	–	–		–	–	–		(7,564,505)		–	(7,564,505)
Recognition of share basedpayment expense (note 47)	–	–	32,553		–	–	–		–		–	32,553
Total transactions with owners	–	–	32,553		–	–	–		(7,564,505)		(585,014)	(8,116,966)
Balance at 31 December 2019	4,912,016	2,967,947	32,553		780,222	5,855,024	(291)	39,273,442		10,311,611		64,132,524

Annual Report 2019 309

Chapter 12 Consolidated Financial Statements

SUPPLEMENTAL INFORMATION

I. SUMMARY OF DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”) AND THOSE UNDER THE PRC ACCOUNTING RULES AND REGULATIONS (“PRC GAAP”)

The Group has also prepared a set of consolidated financial statements in accordance with relevant accounting principles and regulations applicable to PRC enterprises.

The consolidated financial statements prepared under IFRS and those prepared under PRC GAAP have the following major differences:

(1) Future development fund and work safety cost

(1a) Appropriation of future development fund is charged to profit before income taxes under PRC GAAP. Depreciation is not provided for plant and equipment acquired by utilising the future development fund under PRC GAAP but charged to expenses when acquired.
(1b) Appropriation of the work safety cost is charged to profit before taxes under PRC GAAP. Depreciation is not provided for plant and equipment acquired by utilising the provision of work safety cost under PRC GAAP but charged to expenses when acquired.

(2) Consolidation using acquisition method under IFRS and using common control method under PRC GAAP

(2a) Under IFRS, the acquisitions of Jining II, Railway Assets, Heze, Shanxi Group, Hua Ju Energy, Beisu and Yangcun, Donghua and Yankuang Finance have been accounted for using the acquisition method which accounts for their assets and liabilities at their fair value at the date of acquisition. Any excess of the purchase consideration over the fair value of the net assets acquired is capitalised as goodwill.

Under PRC GAAP, as the entities above are under the common control of the Parent Company, their assets and liabilities of are required to be included in the consolidated balance sheet of the Group at historical cost. The difference between the historical cost of their assets and liabilities acquired and the purchase price paid is recorded as an adjustment to shareholders’ equity.

(3) Deferred taxation due to differences between the financial statements prepared under IFRS and PRC GAAP

(4) Reversal of impairment loss on intangible assets in Yancoal Australia

(4a) Under IFRS, the reversal of impairment loss on mining reserves was classified as other income in income statement.

Under PRC GAAP, no reversal of impairment loss on mining reserves was recognised.

310 Yanzhou Coal Mining Company Limited

Consolidated Financial Statements Chapter 12

SUPPLEMENTAL INFORMATION (continued)

1. SUMMARY OF DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS”) AND THOSE UNDER THE PRC ACCOUNTING RULES AND REGULATIONS (“PRC GAAP”) (continued)

(5) Classification of perpetual capital security due to differences between the financial statements prepared under IFRS and PRC GAAP.
- (5a) Under IFRS, the perpetual capital security issued by the company was classified as equity instrument and separated from net assets attributable to equity holders of the Company.

Under PRC GAAP, the perpetual capital security issued by the Company was classified as owners’ equity.

The following tables summarises the differences between consolidated financial statements prepared under IFRS and those under PRC GAAP:

	Net income	attributable	Net assets attributable	Net assets attributable	Net assets attributable
	to the equity holders of		to the equity holders of
	the Company for		the Company as at
	the year ended 31 December 2019 2018		31 December 2019		2018
	RMB’000	RMB’000	RMB’000	RMB’000
As per consolidated financial statements
prepared under IFRS	9,388,645	8,582,556	54,119,800	52,077,360
*Impact of IFRS adjustments in respect of:*
– Future development fund charged to
income before income taxes	(983,241)	(992,958)	–		–
– Reversal of provision of work safety cost	12,056	73,195	(48,332)		(60,388)
– Fair value adjustment and amortisation	10,000	10,000	(230,052)		(240,052)
– Goodwill arising from acquisition of
Jining II, Railway Assets, Heze,
Shanxi Group, Hua Ju Energy,
Beisu and Yangcun	–	–	(899,403)		(899,403)
– Acquisition of Donghua	2,043	2,042	(420,674)		(422,717)
– Goodwill arising from acquisition
of Yankuang Finance	–	–	(16,966)		(16,966)
– Deferred tax	228,165	223,869	578,467		350,302
– Perpetual capital security	–	–	10,311,611	10,316,444
– Reversal of impairment loss on intangible
assets in Yancoal Australia	10,200	10,199	(750,259)		(760,459)
– Others	–	–	647,648		647,648
As per consolidated financial statements
prepared under PRC GAAP	8,667,868	7,908,903	63,291,840	60,991,769

Annual Report 2019 311

Chapter 13 Documents Available for Inspection

Documents available for inspection	The financial statements sealed and signed by the Chairman the Company, the chief
	financial officer and the director of the financial management department of the
	Company respectively.
Documents available for inspection	The original copy of the auditor’s report sealed by the accounting firm, and sealed
	and signed by the certified public accountants.
Documents available for inspection	The original copies of all documents and announcements published during the
	reporting period in websites designated by the CSRC.
Documents available for inspection	The annual report released in other securities markets.

Li Xiyong

Chairman

Approved by the Board for the submission on 22 April 2020

Revised information Not applicable.

312

Yanzhou Coal Mining Company Limited

For further details about information disclosure, please visit the website of Yanzhou Coal Mining Company Limited at

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AI assistant

CStone Pharmaceuticals — Annual Report 2019

50715_rns_2020-04-22_9fc8d7d0-b5cb-4736-a968-ce0879f06d72.pdf

Important Notice

Contents

Chapter 01 Definitions

Company Information and Major Financial Indicators

I. INFORMATION OF THE COMPANY

II. CONTACT DETAILS

III. GENERAL INFORMATION

IV. INFORMATION DISCLOSURE AND PLACE FOR DOCUMENT INSPECTION

V. CORPORATE STOCKS

VI. OTHER INFORMATION

VII. FINANCIAL HIGHLIGHTS OF THE LAST FIVE YEARS

(I) Operating Results

(II) Assets and Liabilities

(III) Summary of Cash Flow Statement

(I) Main Businesses and Business Model

1. Coal business

2. Coal chemicals business

3. Mechanical and electrical equipment manufacturing business

4. Power generation and heat business

(II) Industry Situation Analysis

II. STATEMENTS OF SIGNIFICANT CHANGES OF MAJOR ASSETS DURING THE REPORTING PERIOD

III. CORE COMPETITIVENESS ANALYSIS DURING THE REPORTING PERIOD

Respected Shareholders,

Chapter 04 Chairman’s Statement

Chairman’s Statement Chapter 04

I. MANAGEMENTDISCUSSION AND ANALYSIS

Main business by industries

II. MAIN BUSINESS DURING THE REPORTING PERIOD

(I) The Operation of Business Segments

1. Coal Business

(1) Coal Production

(2) Coal Prices and Marketing

Chapter 05 Board of Directors’ Report

(3) The Cost of Coal Sales

2. Railway Transportation Business

3. Coal Chemicals Business

4. Power Generation Business

Chapter 05 Board of Directors’ Report

5. Heat Business

6. Electrical and Mechanical Equipment Manufacturing Business

7. Equity Investment Business

(II) Analysis of Main Business

1. Analysis of changes in consolidated income statement items and consolidated statement of cash flow items

2. Analysis on income and cost

(1) Main business analysis by industries, products or regions

Main business by products

Chapter 05 Board of Directors’ Report

(2) Production and sales volume analysis

(3) Cost analysis

Other explanations

(4) Major Customers and Suppliers

3. Expenses and Others

4. Research and Development Expenditure

(1) Table on Research and Development Expenditure

5. Cash Flow

(III) Elaboration of Significant Profit Changes in Non-Major Business

Chapter 05 Board of Directors’ Report

(IV) Assets and Liabilities

Chapter 05 Board of Directors’ Report

2. Major assets restrictions as at the end of reporting period

3. Other explanations

(V) Analysis of Industrial Business Information

1. Analysis of Coal Business

2. Coal Reserves

3. Other Explanations

(1) The surrounding transportation of main mining areas

(2) Coal exploration, development and mining during the reporting period

(3) Major mine construction project

(VI) Analysis of Investment

1. Significant equity investment

2. Major non-equity investment

3. Financial assets measured at fair value

Chapter 05 Board of Directors’ Report

(VII) Disposal of Material Assets and Equity

(VIII) Analysis of Major Controlled Companies and Invested Companies

1. Major controlled companies

Yancoal Australia

CStone Pharmaceuticals Annual Report 2019