AI assistant
CStone Pharmaceuticals Earnings Release 2001
Preview isn't available for this file type.
Download source file兗州煤業股份有限公司
YANZHOU COAL MINING COMPANY LIMITED
(a joint stock limited company incorporated in the People's Republic of China with limited liability)
Annual Results for the Year Ended 31st December, 2001
The Board of Directors of Yanzhou Coal Mining Company Limited (the "Company") is pleased to announce the operating results of the Company for the year ended 31st December, 2001:
* The Company's net sales for the year ended 31st December, 2001 was RMB4,876.0 million (approximately US$597.8 million, or HK$4,656.6 million), an increase of 35.5% as compared with the 2000 net sales of RMB3,599.7 million (approximately US$428.8 million, or HK$3,339.3 million).
* The Company's net income for the year ended 31st December, 2001 was RMB970.9 million (approximately US$119.0 million or HK$927.2 million), an increase of 29.7% as compared with the 2000 net income of RMB748.4 million (approximately US$89.2 million, or HK$694.4 million).
* The Board of Directors have decided to recommend a final cash dividend of RMB0.100 per share (before tax) (approximately US$0.012 per share, or HK$0.096 per share).
* The Company completed the acquisition of the special purpose coal transportation railway assets on 1st January, 2002, approved by Extraordinary Shareholder's Meeting.
The Company significantly improved its performance over 2001. Net income for the year ended 31st December, 2001 was RMB970.9 million, representing a 29.7% increase over that of 2000.
In 2001, we successfully took advantage of the strengthening domestic and overseas coal markets when the coal prices started to pick up and implemented operating strategies with increasing production and sales volume of coal, enlarging export volumes and upgrading product quality. The Company has also made progress in participating in the further business consolidation.
In 2001, we had carried out various measures to improve operation standards in coal production, preparation and transportation to promote the Company's reputation as a quality and reliable coal supplier. We had invested in improving auxiliary transportation systems, safety conditions and coal mining related facilities.
The Company purchased Jining III coal mine and special purpose coal transportation railway assets at the beginning of 2001 and 2002, respectively, after the acquisition of Jining II coal mine on 1st January, 1998. Through the above-mentioned three acquisitions, the Company was able to avoid competition with the Parent Company, reduce connected transactions with the Parent Company, and increase the Company's earnings ability. In addition, the Company's position as the most profitable coal enterprise in China was further strengthened. In 2001, Jining III coal mine produced 5.11 million tonnes of coal with net sales and profit before tax reached RMB722.5 million and RMB161.8 million, respectively, in line with the performance target we set for the acquisition.
To partially finance the acquisition of Jining III coal mine, the Company has issued 100 million A shares and 170 million H shares in 2001.
Directors of the Company are satisfied with the successful implementation of operating strategies, expansion of the Company's business scale and increasing profit in 2001.
Financial Highlights
(prepared in accordance with International Accounting Standards ("IAS"))
Operating Results
| Year ended 31st December | ||||
| 2001 | 2000 | |||
| (RMB'000) | (RMB'000) | |||
| Net Sales | ||||
| Domestic | 2,599,812 | 2,090,758 | ||
| Export | 2,276,198 | 1,508,979 | ||
| Total Net Sales | 4,876,010 | 3,599,737 | ||
| Gross Profit | 2,063,427 | 1,616,217 | ||
| Operating Income | 1,303,796 | 979,781 | ||
| Interest Expenses | (61,519 | ) | (5,012 | ) |
| Income Before Income Taxes | 1,360,173 | 1,035,652 | ||
| Net Income | 970,945 | 748,360 | ||
| Earnings per Share | RMB0.35 | RMB0.29 | ||
| Dividends per Share | RMB0.100 | RMB0.082 | ||
| Assets and Liabilities | ||||
| As at 31st December | ||||
| 2001 | 2000 | |||
| (RMB'000) | (RMB'000) | |||
| Net Current Assets | 1,166,187 | 1,270,728 | ||
| Land Use Rights and Net Value of | ||||
| Property, Plant and Equipment | 7,851,775 | 5,500,522 | ||
| Total Assets | 11,182,591 | 8,103,684 | ||
| Total Borrowings | - | - | ||
| Shareholders' Equity | 9,060,034 | 6,869,625 | ||
| Net Asset Value per Share | RMB3.16 | RMB2.64 | ||
| Return on Net Assets (%) | 10.72 | 10.89 | ||
| Summary Statement of Cash Flows | ||||
| Year ended 31st December | ||||
| 2001 | 2000 | |||
| (RMB'000) | (RMB'000) | |||
| Net Cash from Operating Activities | 1,610,239 | 1,023,152 | ||
| Net Increase in Cash and Cash Equivalent | 280,052 | 327,067 | ||
| Net Cash Flow per Share from Operating Activities | RMB0.56 | RMB0.39 |
Overview
The Company produced 34.02 million tonnes of raw coal and sold 31.04 million tonnes of coal in 2001, realizing net sales of RMB4,876.0 million and net income of RMB970.9 million in 2001.
Product Prices and Sales
The following table sets out the Company's net sales by product category for the years ended 31st December, 2000 and 2001:
(prepared in accordance with IAS)
| Year ended 31st December | ||||||||||||
| 2001 | 2000 | |||||||||||
| % of total | % of total | |||||||||||
| Sales volume | Net sales | net sales | Sales volume | Net sales | net sales | |||||||
| ('000 tonnes) | (RMB million) | ('000 tonnes) | (RMB million) | |||||||||
| Clean coal | ||||||||||||
| No. 1 | 257.9 | 56.2 | 1.2 | 250.0 | 54.2 | 1.5 | ||||||
| No. 2 | 3,782.4 | 715.5 | 14.7 | 2,500.3 | 432.4 | 12.0 | ||||||
| Domestic | 262.7 | 58.5 | 1.2 | 416.5 | 90.8 | 2.5 | ||||||
| Exports | 3,519.7 | 657.0 | 13.5 | 2,083.8 | 341.6 | 9.5 | ||||||
| Thermal coal | 11,838.4 | 2,053.7 | 42.1 | 9,289.4 | 1,364.2 | 37.9 | ||||||
| Domestic | 2,692.5 | 434.5 | 8.9 | 1,288.6 | 196.8 | 5.5 | ||||||
| Exports | 9,145.9 | 1,619.2 | 33.2 | 8,000.8 | 1,167.4 | 32.4 | ||||||
| Subtotal for clean coal | 15,878.7 | 2,825.4 | 58.0 | 12,039.7 | 1,850.8 | 51.4 | ||||||
| Domestic | 3,213.1 | 549.2 | 11.3 | 1,955.1 | 341.8 | 9.5 | ||||||
| Exports | 12,665.6 | 2,276.2 | 46.7 | 10,084.6 | 1,509.0 | 41.9 | ||||||
| Screened raw coal | 12,169.1 | 1,786.0 | 36.6 | 12,661.5 | 1,631.0 | 45.3 | ||||||
| Mixed coal and others | 2,987.6 | 264.6 | 5.4 | 1,814.0 | 117.9 | 3.3 | ||||||
| Total | 31,035.4 | 4,876.0 | 100.0 | 26,515.2 | 3,599.7 | 100.0 |
The Company has achieved substantial sales increases of coal in 2001 by successfully implementing its strategies to penetrate domestic and overseas markets. The Company sold 31.04 million tonnes of coal in 2001, representing an increase of 4.52 million tonnes, or 17.0%, from 26.52 million tonnes in 2000, among which, sales of export coal was 12.67 million tonnes, representing an increase of 2.58 million tonnes, or 25.6% over that of 2000. The increase in export sales was mainly due to the increase in export of No. 2 clean coal by 1.44 million tonnes or 68.9% and export of thermal coal by 1.14 million tonnes or 14.3%. Sales to the domestic market was 18.37 million tonnes, an increase of 11.8% over that of 2000. Sales increase in domestic market was mainly due to the sales increase of thermal coal and mixed coal and others by 108.9% and 64.7% over that of last year, respectively. The proportion of sales volume of export coal to sales volume of salable coal increased to 40.8% in 2001 from 38.0% in 2000.
The change in sales structure resulted from the timely adjustment of product mix by the Company to meet the market demand conditions.
The following table sets out the Company's product prices for the years ended 31st December, 2000 and 2001:
(prepared in accordance with IAS)
| Year ended 31st, December | ||||||
| 2001 | 2000 | % increase or | ||||
| Average price | Average price | decrease | ||||
| (RMB per tonne) | (RMB per tonne) | |||||
| Clean coal | ||||||
| No. 1 | 217.9 | 216.9 | 0.5 | |||
| No. 2 | 189.2 | 172.9 | 9.4 | |||
| Domestic | 222.7 | 217.9 | 2.2 | |||
| Exports | 186.7 | 163.9 | 13.9 | |||
| Thermal coal | 173.5 | 146.9 | 18.1 | |||
| Domestic | 161.4 | 152.8 | 5.6 | |||
| Exports | 177.0 | 145.9 | 21.3 | |||
| Subtotal for clean coal | 177.9 | 153.7 | 15.7 | |||
| Domestic | 170.9 | 174.8 | -2.2 | |||
| Exports | 179.7 | 149.6 | 20.1 | |||
| Screened raw coal | 146.8 | 128.8 | 13.9 | |||
| Mixed coal and others | 88.6 | 65.0 | 36.3 | |||
| Average price | 157.1 | 135.8 | 15.7 |
Note: The average prices represent the invoice prices minus sale taxes, transportation cost from the Company to ports, port charges and miscellaneous fees.
The Company's product prices in 2001 showed a continuous upward trend. The average coal price of the Company was RMB157.11/tonne in 2001, representing an increase of RMB21.35/tonne, or 15.7% as compared with that of 2000. The average domestic coal price increased by 11.2% and the average export coal price increased by 20.1%.
The increase in average coal price in 2001 was principally due to: i) the Chinese government had strengthened its measures to shut down and reorganize small coal mines and reduce coal production. In addition, the increase in coal exports has also assisted in restoring the demand and supply balance resulting in a recovery in domestic coal prices; ii) international coal price commenced its recovery in 2001 after five years of depressed prices; and iii) the sales volume of higher-priced clean coal increased significantly as the Company was able to adjust its product mix to meet changing market demand for different coal products.
The Company's major export customers are located in East Asian countries and regions, such as Japan, South Korea and Taiwan. The Company's realized net export sales accounted for 46.7% of total net sales, representing an increase of 4.8% over that of 2000.
Operating Expenses and Cost Control
The following table sets out the Company's principal operating expenses, which are also expressed as percentages of total net sales for the years ended 31st December, 2000 and 2001:
(prepared in accordance with IAS)
| Year ended 31st December | ||||||||
| 2001 | 2000 | 2001 | 2000 | |||||
| (RMB million) | (% of total net sales) | |||||||
| Net sales | 4,876.0 | 3,599.7 | 100.0 | 100.0 | ||||
| Cost of goods sold | ||||||||
| Materials | 643.7 | 484.3 | 13.2 | 13.5 | ||||
| Wages and employee benefits | 572.2 | 419.1 | 11.7 | 11.6 | ||||
| Electricity | 218.6 | 185.8 | 4.5 | 5.2 | ||||
| Depreciation | 784.5 | 487.6 | 16.1 | 13.5 | ||||
| Repairs and maintenance | 276.8 | 174.7 | 5.7 | 4.9 | ||||
| Land subsidence | 210.9 | 170.2 | 4.3 | 4.7 | ||||
| Other manufacturing costs | 105.9 | 61.8 | 2.2 | 1.7 | ||||
| Total cost of goods sold | 2,812.6 | 1,983.5 | 57.7 | 55.1 | ||||
| Selling, general and | ||||||||
| administrative expenses | 759.6 | 636.4 | 15.6 | 17.7 | ||||
| Total operating expenses | 3,572.2 | 2,619.9 | 73.3 | 72.8 | ||||
| Operating income | 1,303.8 | 979.8 | 26.7 | 27.2 |
In 2001, total operating expenses increased by RMB952.3 million, or 36.3% from that of 2000. Cost of goods sold and selling, general and administrative expenses increased by 41.8% and 19.4%, respectively, when compared with that in the same period of 2000, resulting in total operating expenses to net sales increasing to 73.3% in 2001 from 72.8% in 2000.
Management Discussion and Analysis
The following discussion and analysis should be read in conjunction with the audited financial statements of the Company for 2000 and 2001 and the notes thereto included elsewhere in this report. Such financial statements have been prepared in accordance with IAS.
Year Ended 31st December, 2001 Compared With Year Ended 31st December, 2000
Net sales increased by RMB1,276.3 million, or 35.5%, to RMB4,876 million in 2001 from RMB3,599.7 million in 2000. The increase in sales was principally due to a 17.0% increase in coal sales volume, resulting in an increase in the net sales of the Company by RMB613.7 million and a 15.7% increase in the average coal price, resulting in an increase in the net sales by RMB662.6 million.
Cost of goods sold increased by RMB829.1 million, or 41.8% from RMB1,983.5 million in 2000 to RMB2,812.6 million in 2001. This was mainly due to the increase in raw coal output, the increased proportion of clean coal, the increase in wages and expenditure to improve auxiliary production systems and accessories of production facilities. In 2001, unit cost of goods sold of the Company was RMB90.6, representing an increase of RMB15.8 compared with that of last year. The main reasons are as followings: i) the increased proportion of washed clean coal resulted in an increase of unit cost by around RMB4.0; ii) the increase in employees' income in relation to the increase in the Company's production and profitability resulted in an increase in unit cost by around RMB3.8; iii) Jining III had yet to achieve its economies of scale. Its unit cost of RMB99.7 in 2001 under the current production levels resulted in an increase of RMB3.9 in the Company's unit cost; and iv) the existing five coal mines reached total actual annual production capacity of approximately 30 million tonnes from the original designed annual capacity of 16.4 million tonnes by applying advanced mining techniques. The Company invested RMB110 million to improve auxiliary transportation systems, accessories of production facilities and operation safety standard to ensure the sustainability of the production capacity increase, resulted in an increase in unit cost by around RMB3.5.
Selling, general and administrative expenses increased by RMB123.2 million, or 19.4%, to RMB759.6 million in 2001 from RMB636.4 million in 2000. This is mainly attributable to the increase in contribution to the retirement benefit scheme and distribution expenses.
The Company's operating income increased by RMB324 million, or 33.1%, to RMB1,303.8 million in 2001 from RMB979.8 million in 2000, principally due to the increase in net sales .
Interest expenses increased by RMB56.507 million, to RMB61.519 million from RMB5.012 million in 2000. This was principally due to the increase in deemed interest expenses for the unpaid instalments for Jining III coal mine acquisition.
Other income increased by RMB57.013 million, or 93.6%, to RMB117.9 million in 2001 from RMB60.883 million in 2000. This was mainly due to amortization of negative goodwill for the acquisition of Jining III and the write-back of certain bad debt provisions.
Income before income taxes increased by RMB324.5 million, or 31.3%, to RMB1,360.2 million in 2001 from RMB1,035.7 million in 2000.
Net income increased by RMB222.5 million, or 29.7%, to RMB970.9 million in 2001 from RMB748.4 million in 2000.
Total assets increased by RMB3,078.9 million, or 38.0%, to RMB11,182.6 million as at 31st December, 2001 from RMB8,103.7 million as at 31st December, 2000. This was principally due to the increase in capital base, acquisition of Jining III coal mine and the assets increment arising from the Company's operating activities.
Total liabilities of the Company increased by RMB886 million, or 71.8%, to RMB2,120.1 million as at 31st December, 2001 from RMB1,234.1 million as at 31st December, 2000. This was principally due to the deferred payments of RMB742 million representing the balance of the consideration due for the Jining III acquisition.
Shareholders' equity increased by RMB2,190.4 million, or 31.9%, to RMB9,060 million as at 31st December, 2001 from RMB6,869.6 million as at 31st December, 2000. This is principally due to: i) increase in the Company's share capital by RMB270 million and capital reserve fund by RMB1,184.8 million, respectively, as a result of the new issues of A shares and H shares; ii) the Company's contribution of RMB141.7 million to the statutory reserve and public welfare fund from net income; and iii) an increase in retained earnings by RMB593.9 million.
Liquidity and Sources of Capital
In 2001, the Company's principal sources of capital were cash generated from operations and proceeds raised from the new issues of A shares and H shares. The Company's principal uses of capital were payment for the Jining III coal mine acquisition, purchase of property, plant and equipment and payment of dividends.
As at 31st December, 2001, the Company's accounts receivable and bills receivable totalled RMB694.3 million. This was RMB142.4 million, or 17%, less than the total accounts receivable and bills receivable of RMB836.7 million as at 31st December, 2000. This was principally due to the fact that the Company strengthened its effort in the collection of receivables, resulting in a significant decrease in accounts receivable.
As at 31st December, 2001, inventories of the Company had increased by RMB177 million, or 67.3%, to RMB439.9 million from RMB262.9 million as at 31st December 2000, principally due to the increase of coal stocks.
As at 31st December, 2001, prepayment and other current assets had increased by RMB292.8 million, or 52.2%, to RMB853.2 million from RMB560.4 million as at 31st December 2000, principally due to the increase in prepaid freight fee and VAT export rebate receivable.
As at 31st December, 2001, accounts payable increased by RMB88.0 million, or 16.0%, to RMB636.4 million from RMB548.4 million as at 31st December, 2000, principally due to the increase in bills payable.
As at 31st December, 2001, other payables and accrued expenses had increased by RMB271.2 million, or 103.6%, to RMB532.9 million from RMB261.7 million as at 31st December, 2000. This increase was principally due to the increase in advances from customers and others taxes payable.
Long-term liabilities were RMB72.456 million as at 31st December, 2001, which principally comprised accounts payable for the consideration for the mining right of Jining III coal mine.
The Company's capital expenditure for purchasing property, machinery and equipment was RMB477.4 million and RMB677.9 million in 2000 and 2001, respectively.
The consideration for Jining III coal mine acquisition has been partially paid off (totalling RMB1,828 million) by the Company with cash in hand of RMB867 million and the net proceeds of RMB961 million raised from the new issue of A shares as at 31st December, 2001. The balance of the purchase price in the amount of RMB623.0 million will be paid in full before 31st December, 2002. The consideration of the mining right of Jining III coal mine is approximately RMB132 million, which shall be paid in ten equal installments without interest before 31st December in each year commencing from 2001.
The Company's major capital expenditures in 2002 will be the final payment for the acquisition of Jining III coal mine and the consideration for the acquisition of the special purpose coal transportation railway assets from the Parent Company. Details of the purchase of the special purpose coal transportation railway assets are set out in the "Acquisition of Railway Assets" section in this report.
The Company's Board of Directors had recommended a final dividend of RMB287.0 million to be paid out of the Company's cash revenue from operations on or before 30th June, 2002.
Taxation
The Company is still subject to an income tax rate of 33% on its taxable profits in 2001.
The Company paid the income tax together with the Parent Company before July 2001. From July 2001, the Company has begun to pay income tax independently. This alteration has no effect to the Company.
US GAAP Reconciliation
The Company's audited financial statements are prepared in compliance with IAS, which differs in certain respects from US GAAP. Please refer to note 12 to the financial statements contained herein for a description of the differences between IAS and US GAAP, and the adjusted net income for the year ended 31st December, 2001 and the shareholders' equity as at 31st December, 2001 after reconciliation made in accordance with US GAAP.
Outlook For 2002
In 2002, the demand for coal in domestic and overseas markets should increase which should translate into firmer coal prices compared to that of last year. The Company will benefit from the increase in coal demand.
In general supply and demand of coal in China will be in balance, and the price is estimated to be generally higher than that of last year. In 2001, the Chinese Government strengthened its measures to shut down small coal mines. From 1998 to the end of 2001, 58,000 small coal mines throughout China were shut down, reducing annual coal production capacity by approximately 300 million tonnes. This led to the rise of coal price and increase of coal import volume in areas such as East and South China. To alleviate the shortage of coal supply in these areas, the Chinese Government had approved 10,500 small coal mines with annual production capacity of 100 million tonnes to resume production at the end of 2001. Coal price in 2001 was in the rising trend. The Chinese government estimated GDP growth for the country will be 7% or higher. Stable and continuous growth of the economy will continue to support strong demand for coal. At the end of 2001, total national coal inventory had dropped to the lowest historical level of 115 million tonnes. In 2002, it is estimated that coal export volume and demand for thermal will further increase, demand and supply of coal in the domestic coal market will be in equilibrium, resulting in a stable price. Overall coal price in 2002 is likely to be higher than that of last year.
The Company will benefit from the stable international coal market. Coal retains its position as the leading power energy source in the world due to its low cost and stable supply, with a 44% share of the global electricity generation. As major coal importers in East Asia, Japan and South Korea increased their coal import requirements, and the market remained stable with an increasing price trend. On the basis of substantial increase in the coal export volume for the last 2 consecutive years, the Chinese government continues to encourage increase in coal export volume. It is estimated that the coal export from China in 2002 will exceed 90 million tonnes. The world coal industry is in the trend of consolidation and the controlling power of the top 10 suppliers will be further strengthened, which is beneficial to the stability of the coal price. The stabilization of the international coal market will also be beneficial for the Company's steady development.
The Company has received satisfactory orders. The Company has so far signed sales contracts and letters of intent for 35 million tonnes of coal, which is 12.8% higher than the total sales volume in 2001, of which approximately 14 million tonnes are earmarked for export. The composite average coal price of sale contracts implemented in the first quarter of 2002 was approximately 12% higher than that of 2001.
Operating Strategies
Promoting output, sales volumes and export volumes. Coal products of the Company are enjoying good reputation among East Asian customers and is benefiting from short transportation distances to the markets and low freight rates. The Company will further expand the sales volumes in East Asia markets, increase sales volumes to electricity customers in coastal areas in China and raise the sales ratio of clean coal.
Further innovation of the long-wall top coal caving ("LTCC") technology. Through integrating facilities and improving processes, the LTCC equipment will be upgraded to increase the annual output from a single working-panel from 3 to 4 million tonnes to 4 to 7 million tonnes, resulting in productivity improvement. This will be in addition to the improvement of hoisting systems, underground transportation systems, surface storage, loading and unloading and transportation systems and preparation systems that will enhance production capacity of the mines, reliability of systems and operation safety standards.
In 2002, the Company will take the following measures to reduce costs: i) increasing production capacity, coal output and unit efficiency through technology innovation to reduce unit fixed costs; ii) innovating roof support system and auxiliary transportation system, and enlarging bolting net utilisation to decrease consumption of materials and reduce labor costs; and iii) applying ERP management system to improve the management standard and keep costs and expenses under strict control.
Proactively seeking acquisition opportunities. The Company has successfully expanded its operating scale through acquisitions. Now, the Chinese government is actively promoting the implementation of the Tenth Five-Year Plan of Coal Industry, and promoting the acceleration of the coal industry consolidation. The Company will leverage on its advantages in technology, market position, management, etc. to seek further opportunities to acquire assets in line with the consolidation trend, to further improve its earnings and expand the business scale.
By taking the above measures, we endeavor to achieve a total raw coal output of 37 tonnes, a total sales volume exceeding 34 million tonnes in 2002, and a reduction in unit cost as compared with that of 2001.
Proposed Profit Appropriation
The profit appropriation of the Company for the year ended 31st December, 2001 as proposed by the Board of Directors is as follows:
| (Prepared in accordance with PRC GAAP) | RMB'000 |
| Net income | 1,000,387 |
| Unappropriated profits at beginning of year | 1,070,322 |
| Appropriation to statutory surplus reserve | 100,039 |
| Appropriation to statutory public welfare fund | 50,019 |
| Distributable profits | 1,920,651 |
| Dividends payable | 287,000 |
| Unappropriated profits | 1,633,651 |
The proposed profit appropriation will be presented to the shareholders of the Company (the "Shareholders") for approval at the forthcoming annual general meeting of the Company for 2001.
Pursuant to the Company's Articles of Association, the Company's financial statements should be prepared according to the PRC GAAP as well as the IAS or the accounting standards and regulations of the places in which its shares are listed. For the purpose of determining the final dividend payable to the Shareholders, the lower of the net income figures in these accounting standards will be applied for the relevant year. For this purpose, for the year ended 31st December, 2001, the profit audited in accordance with the IAS will apply to determine dividends payment.
Dividends
The Board of Directors of the Company have decided to recommend at the forthcoming AGM, scheduled to be held on 7th June, 2002, a payment in cash of a final dividend of RMB287.0 million (before tax) or RMB0.100 per share (before tax). Following approval by the shareholders at the AGM, the final dividend will be declared and paid to all shareholders on or before 30th June 2002.
Pursuant to the Company's Articles of Association, dividends payable to the shareholders shall be calculated and declared in Renminbi. Dividends payable to holders of the Company's domestic shares shall be paid in Renminbi, while dividends payable to holders of the Company's H shares shall be paid in Hong Kong dollars. The exchange rate will be the average of the closing exchange rates for Renminbi to Hong Kong dollars as announced by the People's Bank of China for the five working days prior to the announcement of payment of such dividends.
Borrowings
The Company entered into a long term borrowing contract (the "Borrowing Contract") with the Bank of China on 3rd December, 2001 and borrowed totalling RMB1.2 billion from the Bank of China on 4th January, 2002. The loans were applied to finance the acquisition of railway assets from the Parent Company.
The interest rate of the loans is 6.21% per annum, subject to adjustment in accordance with the adjustment of statutory interest rate or method of calculation of interest made by the State during the term of the Borrowing Contract. The term of the Borrowing Contract commenced on the date of signing of the Borrowing Contract and will expire on the date on which the last instalment of principal and interest is paid, which should be no more than 96 months.
Housing Scheme
According to the Materials and Services Supply Agreement, which was disclosed in the Company's offering prospectus dated 24th March, 1998 and issued in Hong Kong in connection with the Combined Offering, between the Company and the Parent Company on 17th October, 1997, the Parent Company is responsible for providing accommodation to its employees and the employees of the Company. The Company and the Parent Company share the incidental expenses relating to the provision of such accommodation on a pro-rata basis based on the prevailing head count and negotiation. Such expenses amounted to RMB29.7 million and RMB30.97 million for 2000 and 2001, respectively.
Connected Transactions
The Company's independent non-executive directors have reviewed and confirmed the connected transactions set out in note 9 and 10 to the financial statements contained herein.
Disclosure of Significant Events
Acquisition of Jining III Coal Mine
The Company completed the acquisition of Jining III coal mine on 1st January, 2001 with a purchase price of RMB2,451 million. The purchase price had been partially settled by the Company with its cash in hand of RMB867 million and the net proceeds of RMB961 million raised from the new issue of A Shares as at 31st December, 2001. The balance of the purchase price will be paid before 31st December, 2002 without interest.
The consideration of the mining right of Jining III coal mine is RMB132 million, of which RMB13.248 million had been partially settled by the Company during the period covered by this report in compliance with the agreement to pay ten equal installments without interest over ten years.
Acquisition of Railway Assets
The Company entered into the acquisition agreement for railway assets (the "Railway Agreement") with the Parent Company on 30th October, 2001, which was approved by the independent shareholders on 17th December, 2001.
In accordance with the Railway Agreement, the Company completed the acquisition of Railway Assets on 1st January, 2002. The purchase price of approximately RMB1,221 million was determined based on the valuation as at 30th June, 2001 being the Valuation Date, and confirmed by the Department of Finance of the Shandong province. After adjustment based on the current assets value of the Railway Assets on 31st December, 2001, the purchase price after adjustment was RMB1,243 million. In addition, the annual transportation volume of the Railway Assets reaches the volume milestones targets of 25 million tonnes, 28 million tonnes and 30 million tonnes for the year 2002, 2003 and 2004, respectively, the Company will pay the Parent Company an amount of RMB40 million for each year before 30th June in the three years from 2003.
The purchase price has been partially settled by the Company with the long term loan of RMB1.2 billion on 4th January, 2002. The balance of the purchase price will be paid before 30th June, 2002 from the Company's cash in hand.
Issue of New Shares
The Issues of 100,000,000 new A shares and 170,000,000 new H shares were completed on 3rd January, 2001 and 11th May, 2001 respectively. Details are as follows:
| A Shares | H Shares | ||
| Par value | RMB1.00 per share | RMB1.00 per share | |
| Quantities of new issue shares | 100,000,000 | 170,000,000 | |
| Issue price | RMB10.00 per share | HK$2.925 per share | |
| Net proceeds | RMB961 million | RMB494 million | |
| Use of proceeds | Finance the acquisition of | Finance the acquisition of | |
| Jining III coal mine | Jining III coal mine |
Amendments to the Articles of Association and Change of Board of Directors and Supervisory Committee
The Company's board of directors held a meeting on 4th March, 2002, at which it has passed resolutions to propose amendment to the Articles of Association of the Company and proposed changes to the composition of board directors.
The Company's supervisory committee held a meeting on 4th March, 2002, at which it passed a resolution to change the composition of the supervisory committee.
The above mentioned proposals will be submitted to the first extraordinary general meeting in 2002 for approval (the details of which were published in "Wen Wei Po" and "South China Morning Post" on 5th March, 2002).
Appropriation Rate to Endowment Insurance Fund
In accordance with the "Agreement for Endowment Insurance Fund" entered into by the Company and the Parent Company on 17th October, 1997, the Parent Company and the Company agreed that the contribution rate for endowment insurance fund should still be 45% of the employees' total wages from 1st January, 2002 to 31st December, 2006.
Compliance with Code of Best Practice
As at 31st December, 2001, the Board of Directors of the Company had not established an audit committee. However, the Company's organizational structure has, in lieu, a supervisory committee which carries out functions similar to that of an audit committee. The differences being that the Company's supervisory committee comprises five members (one of which shall be an employee representative) who are elected and removed in the general meeting of shareholders, and which reports to the general meeting of shareholders instead of the Board of Directors, whereas an audit committee is appointed amongst the non-executive directors of a company.
Except for the above mentioned, so far as the directors of the Company are aware, the Company has complied with the Code of Best Practice set out in Appendix 14 of the Rules Governing the Listing of Securities (the "Listing Rules") issued by the Hong Kong Stock Exchange in 2001.
The Influence of China'S accession to WTO to the Company
After China's entry into WTO, coal import tariffs of China and the major coal importers the Company sells to will not be materially changed. Tariffs variations after China's entry into WTO therefore impose very limited influence over coal imports and exports into and out of China.
With China's entry into the WTO, the Chinese government and industrial regulatory authorities will further encourage Chinese companies to compete and expand in the international markets. This will facilitate the Company's obtaining of a direct coal export license. Located in the largest coal consumption centers of both internationally and in China, the Company is better positioned in transportation compared with other international coal suppliers. Leveraging on the world leading long-wall top coal caving technology and advanced management, the Company will become increasingly competitive in domestic and overseas markets.
As the purchasing cost of domestic coal products is generally lower than that of imported products. Chinese coal suppliers who can supply a full range of coal products at competitive prices are unlikely to be adversely affected by overseas coal suppliers.
Material Litigation and Arbitration
The Company was not involved in any material litigation or arbitration during the year ended 31st December, 2001.
Annual Results
The Board of Directors of Yanzhou Coal Mining Company Limited (the "Company") has the pleasure of presenting the audited annual operating results of the Company for the year ended 31st December, 2001 prepared in conformity with (i) the relevant accounting principles and regulations applicable to PRC enterprises ("PRC GAAP") and (ii) the International Accounting Standards ("IAS").
(i) Financial information under IAS
CONSOLIDATED STATEMENT OF INCOME
| Year ended December 31, | |||||
| 2001 | 2000 | ||||
| NOTES | RMB'000 | RMB'000 | |||
| GROSS SALES | 2 | 6,369,649 | 4,704,201 | ||
| TRANSPORTATION COSTS | 2 | (1,493,639 | ) | (1,104,464 | ) |
| NET SALES | 2 | 4,876,010 | 3,599,737 | ||
| COST OF GOODS SOLD | (2,812,583 | ) | (1,983,520 | ) | |
| GROSS PROFIT | 2,063,427 | 1,616,217 | |||
| SELLING, GENERAL AND ADMINISTRATIVE EXPENSES | 3 | (759,631 | ) | (636,436 | ) |
| OPERATING INCOME | 1,303,796 | 979,781 | |||
| INTEREST EXPENSES | (61,519 | ) | (5,012 | ) | |
| OTHER INCOME | 117,896 | 60,883 | |||
| INCOME BEFORE INCOME TAXES | 1,360,173 | 1,035,652 | |||
| INCOME TAXES | 4 | (389,228 | ) | (287,292 | ) |
| NET INCOME | 970,945 | 748,360 | |||
| APPROPRIATIONS TO RESERVES | 141,698 | 114,627 | |||
| DIVIDEND | 235,340 | 231,400 | |||
| EARNINGS PER SHARE | 5 | RMB0.35 | RMB0.29 | ||
| EARNINGS PER ADS. | 5 | RMB17.29 | RMB14.39 |
CONSOLIDATED BALANCE SHEET
| At December 31, | |||||
| 2001 | 2000 | ||||
| NOTES | RMB'000 | RMB'000 | |||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Bank balances and cash | 1,124,806 | 844,754 | |||
| Restricted cash | 30,000 | - | |||
| Bills and accounts receivable | 6 | 694,252 | 836,712 | ||
| Investments in securities | 49,997 | - | |||
| Inventories | 7 | 439,882 | 262,902 | ||
| Prepayments and other current assets | 853,213 | 560,419 | |||
| Taxes receivable | 21,674 | - | |||
| TOTAL CURRENT ASSETS | 3,213,824 | 2,504,787 | |||
| MINING RIGHTS | 125,855 | - | |||
| LAND USE RIGHTS | 372,020 | 290,979 | |||
| PROPERTY, PLANT AND EQUIPMENT, NET | 7,479,755 | 5,209,543 | |||
| GOODWILL | 12,437 | 13,214 | |||
| NEGATIVE GOODWILL | (110,481 | ) | - | ||
| INVESTMENTS IN SECURITIES | 1,760 | - | |||
| DEFERRED TAX ASSET | 87,421 | 85,161 | |||
| TOTAL ASSETS | 11,182,591 | 8,103,684 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Accounts payable | 636,387 | 548,387 | |||
| Other payables and accrued expenses | 532,874 | 261,735 | |||
| Provision for land subsidence, restoration, | |||||
| rehabilitation and environmental costs | 120,196 | 136,724 | |||
| Amounts due to Parent Company and its subsidiary companies | 757,387 | 137,487 | |||
| Taxes payable | 793 | 149,726 | |||
| TOTAL CURRENT LIABILITIES | 2,047,637 | 1,234,059 | |||
| AMOUNTS DUE TO PARENT COMPANY AND ITS | |||||
| SUBSIDIARY COMPANIES - DUE AFTER ONE YEAR | 72,456 | - | |||
| TOTAL LIABILITIES | 2,120,093 | 1,234,059 | |||
| COMMITMENTS | |||||
| SHAREHOLDERS' EQUITY | 8 | 9,060,034 | 6,869,625 | ||
| MINORITY INTEREST | 2,464 | - | |||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 11,182,591 | 8,103,684 |
CONSOLIDATED STATEMENT OF CASH FLOWS
| Year ended December 31, | |||||
| 2001 | 2000 | ||||
| RMB'000 | RMB'000 | ||||
| CASH FLOW FROM OPERATING ACTIVITIES | |||||
| Net income | 970,945 | 748,360 | |||
| Adjustments to reconcile net income to | |||||
| net cash provided by operating activities: | |||||
| Depreciation of property, plant and equipment | |||||
| and the land use rights | 819,638 | 514,203 | |||
| Amortization of goodwill | 777 | 777 | |||
| Release of negative goodwill to income | (27,620 | ) | |||
| Amortisation of mining rights | 6,624 | - | |||
| (Recognition) utilization of deferred tax asset | (2,260 | ) | (8,315 | ) | |
| Loss on disposal of property, plant and equipment | 5,811 | 11,601 | |||
| (Increase) decrease in assets: | |||||
| Bills and accounts receivable | 145,380 | 26,929 | |||
| Inventories | (157,373 | ) | 47,547 | ||
| Prepayments and other current assets | (282,451 | ) | (259,693 | ) | |
| Taxes receivable | (21,674 | ) | - | ||
| Increase (decrease) in liabilities: | |||||
| Accounts payable | 79,275 | 38,485 | |||
| Other payables and accrued expenses | 186,763 | 8,851 | |||
| Provision for land subsidence, restoration, | |||||
| rehabilitation and environmental costs | (16,528 | ) | (51,881 | ) | |
| Amounts due to Parent Company and its subsidiary companies | 52,658 | 110,577 | |||
| Taxes payable | (149,726 | ) | (164,289 | ) | |
| Net cash provided by operating activities | 1,610,239 | 1,023,152 | |||
| CASH FLOW FROM INVESTING ACTIVITIES | |||||
| Acquisition of Jining III | (1,204,133 | ) | - | ||
| Purchase of property, plant and equipment | (677,936 | ) | (477,421 | ) | |
| Acquisition of investments in securities | (51,757 | ) | - | ||
| Increase in restricted cash | (30,000 | ) | - | ||
| Proceeds on disposal of property, plant and equipment | 13,686 | 12,736 | |||
| Acquisition of a subsidiary | 1,941 | - | |||
| CASH FLOW FROM INVESTING ACTIVITIES | (1,948,199 | ) | (464,685 | ) | |
| CASH FLOW FROM FINANCING ACTIVITIES | |||||
| Acquisition of Jining III | (601,452 | ) | - | ||
| Issues of shares, net of share issue expenses | 1,454,804 | - | |||
| Dividend paid | (235,340 | ) | (231,400 | ) | |
| Repayment of borrowings | - | - | |||
| CASH FLOW FROM FINANCING ACTIVITIES | 618,012 | (231,400 | ) | ||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 280,052 | 327,067 | |||
| CASH AND CASH EQUIVALENTS, BEGINNING | 844,754 | 517,687 | |||
| CASH AND CASH EQUIVALENTS, ENDING | 1,124,806 | 844,754 | |||
| Additional cash flow information: | |||||
| Cash paid during the year for | |||||
| Interest | 37,109 | 5,012 | |||
| Income taxes | 562,888 | 459,896 |
NOTES TO THE FINANCIAL STATEMENTS
1. SIGNIFICANT ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements incorporate the financial statements of the Company and its subsidiaries made up to December 31 each year.
On acquisition, the assets and liabilities of a subsidiary are measured at their fair values at the date of acquisition. The interest of minority shareholders is stated at the minority's proportion of the fair values of the assets and liabilities recognized.
The results of subsidiaries acquired or disposed of during the year are included in the consolidated income statement from the effective date of acquisition or up to the effective date of disposal, as appropriate.
Where necessary, adjustments are made to the financial statements of subsidiaries to bring the accounting policies used into line with those used by other members of the Group.
All significant intercompany transactions and balances between group enterprises are eliminated on consolidation.
2. SALES AND TRANSPORTATION COSTS
| Year ended December 31, | |||
| 2001 | 2000 | ||
| RMB'000 | RMB'000 | ||
| Domestic sales, gross | 3,014,933 | 2,414,826 | |
| Less: Transportation costs | 415,121 | 324,068 | |
| Domestic sales, net | 2,599,812 | 2,090,758 | |
| Export sales, gross | 3,354,716 | 2,289,375 | |
| Less: Transportation costs | 1,078,518 | 780,396 | |
| Export sales, net | 2,276,198 | 1,508,979 | |
| Net sales | 4,876,010 | 3,599,737 |
Net sales represent the invoiced value of coal sold and are net of returns, discounts, sales taxes and transportation costs if the invoiced value includes transportation costs to its customers.
3. SELLING, GENERAL AND ADMINISTRATIVE EXPENSES
| Year ended December 31, | |||
| 2001 | 2000 | ||
| RMB'000 | RMB'000 | ||
| Retirement benefits scheme contributions | 265,825 | 189,372 | |
| Wages and employee benefits | 75,717 | 74,946 | |
| Depreciation | 35,161 | 26,580 | |
| Amortization of goodwill | 777 | 777 | |
| Distribution charges | 57,970 | 64,569 | |
| Provision for doubtful debts | 2,508 | - | |
| Resource compensation fees | 31,240 | 28,409 | |
| Repairs and maintenance | 8,247 | 6,518 | |
| Research and development | 23,026 | 24,290 | |
| Others | 259,160 | 220,975 | |
| 759,631 | 636,436 |
4. INCOME TAXES
| Year ended December 31, | ||||
| 2001 | 2000 | |||
| RMB'000 | RMB'000 | |||
| Income taxes | 391,488 | 295,607 | ||
| Deferred tax (credit) charge | (2,260 | ) | (8,315 | ) |
| 389,228 | 287,292 |
The Company is subject to an income tax rate of 33% on its taxable income. A reconciliation between the provision for income taxes computed by applying the standard PRC income tax rate to income before taxes and the actual provision for income taxes is as follows:
| Year ended December 31, | ||||
| 2001 | 2000 | |||
| RMB'000 | RMB'000 | |||
| Standard income tax rate in the PRC | 33% | 33% | ||
| Standard income tax rate applied to income | ||||
| before income taxes | 448,857 | 341,765 | ||
| Reconciling items: | ||||
| Deduction claimed on the deemed appropriation | ||||
| to future development fund which is no longer | ||||
| charged to income under PRC accounting | ||||
| regulations but continues to be eligible for | ||||
| tax deduction | (67,364 | ) | (54,363 | ) |
| Amortization of the revaluation surplus of | ||||
| low-priced consumables deductible for tax | ||||
| purposes but not for accounting purposes | ||||
| under IAS | (1,212 | ) | (606 | ) |
| Release of negative goodwill not subject to tax | (9,115 | ) | - | |
| Deemed interest not deductible for tax purposes | 19,666 | - | ||
| Others | (1,604 | ) | 496 | |
| Income taxes | 389,228 | 287,292 | ||
| Effective income tax rate | 29% | 28% |
5. EARNINGS PER SHARE AND PER ADS
The calculation of the earnings per share for the years ended December 31, 2001, 2000 and 1999 is based on the net income for the year of RMB970,945,000, RMB748,360,000 and RMB825,120,000 and on the weighted average of 2,807,507,000 shares, 2,600,000,000 shares and 2,600,000,000 shares in issue, respectively, during the year.
The earnings per ADS have been calculated based on the net income for the relevant periods and on one ADS being equivalent to 50 shares.
6. BILLS AND ACCOUNTS RECEIVABLE
| THE GROUP AND | ||||
| THE COMPANY | ||||
| At December 31, | ||||
| 2001 | 2000 | |||
| RMB'000 | RMB'000 | |||
| Total bills receivable | 155,883 | 16,799 | ||
| Total accounts receivable | 596,233 | 906,957 | ||
| Less: Provision for doubtful debts | (57,864 | ) | (87,044 | ) |
| Total bills and accounts receivable, net | 694,252 | 836,712 |
Bills receivable represent 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 Group made provisions for doubtful debts of RMB55,954,000 for the year ended December 31, 1999. No provisions for doubtful debts had been made for the year ended December 31, 2000 while RMB29,180,000 of the provision was written back in the year ended December 31, 2001.
According to the credit rating of different customers, the Group 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 at the reporting date:
| THE GROUP AND | |||
| THE COMPANY | |||
| At December 31, | |||
| 2001 | 2000 | ||
| RMB'000 | RMB'000 | ||
| 1 - 180 days | 513,080 | 529,457 | |
| 181 - 365 days | 119,096 | 198,180 | |
| 1 - 2 years | 105,443 | 178,003 | |
| 2 - 3 years | 8,258 | 10,262 | |
| Over 3 years | 6,239 | 7,854 | |
| 752,116 | 923,756 |
7. INVENTORIES
| THE GROUP | THE COMPANY | |||||||
| At December 31, | At December 31, | |||||||
| 2001 | 2000 | 2001 | 2000 | |||||
| RMB'000 | RMB'000 | RMB'000 | RMB'000 | |||||
| COST | ||||||||
| Auxiliary materials, spare parts | ||||||||
| and small tools | 269,510 | 215,517 | 255,981 | 215,517 | ||||
| Coal products | 170,372 | 47,385 | 170,372 | 47,385 | ||||
| 439,882 | 262,902 | 426,353 | 262,902 |
8. SHAREHOLDERS' EQUITY
The Company shall set aside 10% of its net income for the statutory common reserve fund (except where the fund has reached 50% of the Company's registered capital) and 5% to 10% of its net income for the statutory common welfare fund.
| Statutory | Statutory | |||||||||||||
| Future | common | common | ||||||||||||
| Share | Share | development | reserve | welfare | Retained | |||||||||
| capital | premium | fund | fund | fund | earnings | Total | ||||||||
| RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | RMB'000 | ||||||||
| Balance at January 1, 2001 | 2,600,000 | 2,087,723 | 111,748 | 244,631 | 122,315 | 1,703,208 | 6,869,625 | |||||||
| Additional issue of shares, net of | ||||||||||||||
| share issue expenses of | ||||||||||||||
| RMB77,253,000 | 270,000 | 1,184,804 | - | - | - | - | 1,454,804 | |||||||
| Net income | - | - | - | - | - | 970,945 | 970,945 | |||||||
| Appropriations to reserves | - | - | - | 94,465 | 47,233 | (141,698 | ) | - | ||||||
| Dividends | - | - | - | - | - | (235,340 | ) | (235,340 | ) | |||||
| Balance at December 31, 2001 | 2,870,000 | 3,272,527 | 111,748 | 339,096 | 169,548 | 2,297,115 | 9,060,034 |
9. RELATED PARTY TRANSACTIONS
The amounts due to Parent Company and its subsidiary companies are non-interest bearing and unsecured.
The amounts due to Parent Company and its subsidiary companies as at December 31, 2001 included the present value of the outstanding balance that arose from the funding of the acquisition of Jining III and its mining right as of January 1, 2001 discounted using the market rate of bank borrowings.
| At December 31, | ||||
| 2001 | 2000 | |||
| RMB'000 | RMB'000 | |||
| Within one year | 757,387 | 137,487 | ||
| More than one year, but not exceeding five years | 40,630 | - | ||
| Exceeding five years | 31,826 | - | ||
| Total due | 829,843 | 137,487 | ||
| Less: amount due within one year | 757,387 | 137,487 | ||
| Amount due after one year | 72,456 | - | ||
Except for the amounts disclosed above, the amounts due to Parent Company and/or its subsidiary companies have no specific terms of repayments.
During the periods, the Group had the following significant transactions with the Parent Company and/or its subsidiary companies:
| Year ended December 31, | |||||
| 2001 | 2000 | 1999 | |||
| RMB'000 | RMB'000 | RMB'000 | |||
| Income | |||||
| Sales of coal | 73,675 | 66,434 | 60,698 | ||
| Sales of auxiliary materials | 11,586 | 9,429 | 8,580 | ||
| Utilities and facilities | 5,810 | 5,179 | 5,828 | ||
| Expenditure | |||||
| Utilities and facilities | 600 | 600 | 600 | ||
| Annual fee for mining rights | 12,980 | 12,980 | 12,980 | ||
| Purchases of supply materials | 143,213 | 67,845 | 150,201 | ||
| Railway transportation services | 248,876 | 209,842 | 168,040 | ||
| Repair and maintenance services | 207,550 | 79,316 | 90,477 | ||
| Social welfare and support services | 150,860 | 125,519 | 115,699 | ||
| Technical support and training | 15,130 | 15,130 | 15,130 | ||
| Road transportation services | 6,302 | 10,474 | 13,124 |
During the periods, the Group had the following significant transactions with a related party, certain management members of which are also management members of the Group:
| Year ended December 31, | |||||
| 2001 | 2000 | 1999 | |||
| RMB'000 | RMB'000 | RMB'000 | |||
| Sales of coal | 35,440 | 23,470 | 24,962 |
Certain expenditure for social welfare and support services (excluding medical and child care expenses) of RMB56,220,000 for the year ended December 31, 2001 and RMB54,950,000 for each of the two years ended December 31, 1999 and 2000, and for technical support and training of RMB15,130,000 for each of the three years ended December 31, 1999, 2000 and 2001, have been charged by the Parent Company at a negotiated amount per annum, subject to changes every year.
The above transactions were charged either at market prices or based on terms agreed by both parties.
On January 1, 2001, the Company acquired Jining III from the Parent Company.
In addition to the above, the Company participates in a multi-employer scheme of the Parent Company in respect of retirement benefits.
10. SIGNIFICANT RELATED PARTY TRANSACTIONS (prepared under PRC GAAP)
(1) Related parties who can exercise control over the Company
| Name of | Status | ||||
| related parties | Address | Major business | Relationship | Quality | Representative |
| Yankuang Group | 40 Fu Shan Road | Industry | Common | State-owned | Zhao Jing Che |
| Corporation Limited | Shandong | Processing | director | ||
| ("Yankuang Group") | |||||
| Qingdao Free Trade | No.1 Industry Zone, | International | Subsidiary | Limited | Shao Hua Zhen |
| Zone Zhongyan | Qingdao Free | Trade | |||
| Trade Co., Ltd. | Trade Zone | ||||
| ("Zhongyan Trade") |
(2) Status and charges of the Paid-in Capital owned by related parties who can exercise control over the Company
| Opening and | |
| Closing balance | |
| RMB | |
| Zhongyan Trade | 2,100,000 |
(3) Status and changes of the shares and equity owned by related parties who can exercise control over the Company
| Opening balance | Addition | Deduction | Closing balance | |||||
| RMB | % | RMB | % | RMB | % | RMB | % | |
| Yankuang Group | 1,670,000,000 | 64 | - | - | 1,670,000,000 | 58 |
(4) Nature of relationship with related parties who cannot exercise control over the Company
| Name of related parties | Relationship with the Company |
| Zoucheng Nanmei Shipping Co. Ltd. | Common key management members |
(5) Significant transactions entered with the Company and above-mentioned related parties in current year:
(a) Acquisition of Jining III
On January 1, 2001, the Company exercised the "Agreement for Acquisition of Jining III", which was signed with Yankuang Group. The Company acquired Jining III from Yankuang Group at the consideration of RMB 2,450,900,000 and mining rights of RMB 132,480,000.
The Company will pay the interest-free consideration of RMB 623,380,000 prior to December 31, 2002. The consideration for the costs of the mining rights of RMB 13,248,000 is to be settled over ten years by equal installments before December 31 each year, commencing from 2001.
By the end of December 31, 2001, the Company had paid RMB 1,840,770,000 to Yankaung Group for the above acquisition.
The consideration for the acquisition is determined according to revaluation price.
(b) Purchases and sales
| 2001 | 2000 | ||
| RMB | RMB | ||
| SALES | |||
| Zoucheng Nanmei Shipping Co., Ltd. | 35,440,000 | 23,470,000 | |
| Yankuang Group | 73,675,000 | 66,434,000 | |
| 109,115,000 | 89,904,000 | ||
| PURCHASES | |||
| Yankuang Group | 143,213,000 | 67,845,000 |
The price of the above transaction is determined according to market price.
(c) Amount due to or from related parties
| Amount by | Amount at | |||
| the end | the beginning | |||
| Account | Company | of the period | of the year | |
| RMB | RMB | |||
| Accounts receivable | Yankuang Group | 12,416,512 | 51,058,471 | |
| Prepayments | Yankuang Group | 26,547,580 | 17,137,999 | |
| Other receivables | Yankuang Group | 160,504,483 | 239,928,198 | |
| 199,468,575 | 308,124,668 | |||
| Notes payable | Yankuang Group | 160,000,000 | 308,400,000 | |
| Accounts payable | Yankuang Group | 33,456,343 | 29,911,711 | |
| Advances from customers | Yankuang Group | - | 15,660,304 | |
| Other payables | Yankuang Group | 29,308,749 | 76,094,425 | |
| Long-term payable | ||||
| within one year | 636,633,816 | - | ||
| Long-term payable | 105,983,040 | - | ||
| 965,381,948 | 430,066,440 |
(d) Other transactions
(1) Pursuant to an agreement signed between the Company and Yankuang Group, Yankuang Group manages the retirement benefits, medical benefits and other benefits of the two companies and makes combined payments of the total retirement benefits of the two companies, and the total retirement benefits to the government department in charge of the related funds. Amount included as expenses of the Company for the year ended December 31, 2000 and 2001 are RMB 247,828,000 and RMB 347,145,000, respectively.
(2) Pursuant to an agreement signed by the Company and Yankuang Group, the department and subsidiaries of Yankuang Group provided the following services and charged related service fees during the year:
| 2001 | 2000 | ||
| RMB | RMB | ||
| Repairs and maintenance | 207,550,000 | 79,316,000 | |
| Technical support and training fee | 15,130,000 | 15,130,000 | |
| Mining rights fees | 12,980,000 | 12,980,000 | |
| Railway transportation fee | 248,876,000 | 209,842,000 | |
| Public utilities expenses | 600,000 | 600,000 | |
| Road transportation fee | 6,302,000 | 10,474,000 | |
| Gases and eructate expenses | 11,020,000 | 11,020,000 | |
| Buildings management fee | 30,970,000 | 29,700,000 | |
| Children tuition fee | 13,320,000 | 12,550,000 | |
| Others | 14,230,000 | 14,230,000 |
The price of the transaction is determined according to market price or negotiated price.
(3) Total amount of salaries paid to key management, including salaries paid in the form of cash, goods and salaries, welfare and subsidies, for the year ended December 31, 2000 and 2001 are RMB 1,143,000 and RMB 1,341,265, respectively.
11. SUMMARY OF DIFFERENCES BETWEEN IAS AND PRC GAAP
The following table summarizes the differences between IAS and PRC GAAP:
| Net income for | Net assets | |||||||
| the year ended December 31, | as at December 31, | |||||||
| 2001 | 2000 | 2001 | 2000 | |||||
| RMB'000 | RMB'000 | RMB'000 | RMB'000 | |||||
| As per consolidated financial statements | ||||||||
| prepared under IAS | 970,945 | 748,360 | 9,060,034 | 6,869,625 | ||||
| Impact of IAS adjustments in respect of: | ||||||||
| - revaluation surplus on low-priced | ||||||||
| consumables recognized on the | ||||||||
| establishments of the Company | ||||||||
| under PRC GAAP | (3,672 | ) | (1,835 | ) | - | 3,672 | ||
| - deferred tax effect on temporary differences | ||||||||
| not recognized under PRC GAAP | (2,260 | ) | (8,315 | ) | (87,421 | ) | (85,161 | ) |
| - release of negative goodwill to income | (27,620 | ) | - | (27,620 | ) | - | ||
| - deemed interest expenses | 59,595 | - | 59,595 | - | ||||
| - proposed final dividend | - | - | (287,000 | ) | (235,340 | ) | ||
| - others | 3,399 | 777 | 5,740 | 2,341 | ||||
| As per consolidated financial statements | ||||||||
| prepared under PRC GAAP | 1,000,387 | 738,987 | 8,723,328 | 6,555,137 |
12. SUMMARY OF DIFFERENCES BETWEEN IAS AND US GAAP
The adjustments necessary to restate net income and shareholders' equity in accordance with US GAAP are shown in the tables set out below.
| Year ended December 31, | ||||
| 2001 | 2000 | |||
| RMB'000 | RMB'000 | |||
| Net income as reported under IAS | 970,945 | 748,360 | ||
| US GAAP adjustments: | ||||
| Depreciation charged on revalued property, | ||||
| plant and equipment and land use rights | 164,684 | 165,103 | ||
| Additional deferred tax charge due to a higher tax base | ||||
| resulting from the revaluation of property, plant and equipment | ||||
| and land use rights and capitalization of mining rights | (56,532 | ) | (54,484 | ) |
| Loss of Jining III included in the Company using | ||||
| the pooling of interest method | - | (47,433 | ) | |
| Amortization of negative goodwill on acquisition of Jining III | (27,620 | ) | - | |
| Amortization of mining rights of Jining III | 6,624 | - | ||
| Others | 777 | 777 | ||
| Net income under US GAAP | 1,058,878 | 812,323 | ||
| Earnings per share under US GAAP | RMB0.38 | RMB0.31 | ||
| Earnings per ADS under US GAAP | RMB18.86 | RMB15.62 | ||
| At December 31, | ||||
| 2001 | 2000 | |||
| RMB'000 | RMB'000 | |||
| Shareholders' equity as reported under IAS | 9,060,034 | 6,869,625 | ||
| US GAAP adjustments: | ||||
| Revaluation of property, plant and equipment | ||||
| and land use rights | (1,982,444 | ) | (1,912,164 | ) |
| Depreciation charged on revalued property, plant and | ||||
| equipment and land use rights | 749,151 | 584,467 | ||
| Additional deferred tax asset due to a higher tax base | ||||
| resulting from the revaluation of property, plant and | ||||
| equipment and land use rights | 406,987 | 438,141 | ||
| Goodwill arising on acquisition of Jining II | (12,437 | ) | (13,214 | ) |
| Net asset of Jining III incorporated under pooling of interest | ||||
| - current assets | - | 12,504 | ||
| - property, plant and equipment and land use rights, net | - | 2,461,454 | ||
| - deduct: revaluation surplus of property, plant and | ||||
| equipment and land use rights | - | (70,280 | ) | |
| - current liabilities | - | (20,909 | ) | |
| - | 2,382,769 | |||
| Negative goodwill arising on acquisition of Jining III, net | 110,481 | - | ||
| Mining rights of Jining III | (125,855 | ) | - | |
| Additional deferred tax asset due to a higher tax base | ||||
| resulting from capitalization of mining rights | 41,532 | - | ||
| Shareholders' equity under US GAAP | 8,247,449 | 8,349,624 | ||
| Under US GAAP, the Group's total assets would have been RMB9,604,592,000 and RMB10,370,006,000 at December 31, 2000 and 2001, respectively. |
(ii) Financial information under PRC GAAP
BALANCE SHEET
| December 31, 2001 | December 31, 2000 | ||||
| The Group | The Company | ||||
| RMB | RMB | ||||
| ASSETS | |||||
| CURRENT ASSETS | |||||
| Bank balances and cash | 1,154,806,342 | 844,754,367 | |||
| Short-term investments | 49,997,305 | - | |||
| Bills receivable | 155,883,666 | 16,798,987 | |||
| Accounts receivable | 550,784,838 | 870,971,641 | |||
| Other receivables | 401,119,702 | 491,401,223 | |||
| Prepayments | 88,165,432 | 63,858,468 | |||
| VAT refundable | 419,145,249 | 221,500,273 | |||
| Inventories | 439,882,298 | 262,901,887 | |||
| Deferred expenditures | 111,048,395 | 34,732,327 | |||
| TOTAL CURRENT ASSETS | 3,370,833,227 | 2,806,919,173 | |||
| Long-term investments | 1,760,419 | - | |||
| FIXED ASSETS | |||||
| Fixed assets at cost | 11,702,052,041 | 8,756,556,850 | |||
| Less: Accumulated depreciation | 4,492,985,894 | 3,796,796,179 | |||
| FIXED ASSETS, NET | 7,209,066,147 | 4,959,760,671 | |||
| Construction materials | 1,697,068 | 4,651,893 | |||
| Construction in progress | 268,991,536 | 245,130,684 | |||
| TOTAL FIXED ASSETS | 7,479,754,751 | 5,209,543,248 | |||
| Intangible and other assets | |||||
| Intangible assets | 497,874,780 | 290,979,405 | |||
| Pre-operating expenses | - | 3,671,461 | |||
| Long-term deferred expenditures | - | 5,992,615 | |||
| TOTAL INTANGIBLES AND OTHER ASSETS | 497,874,780 | 300,643,481 | |||
| TOTAL ASSETS | 11,350,223,177 | 8,317,105,902 | |||
| LIABILITIES AND SHAREHOLDERS' EQUITY | |||||
| CURRENT LIABILITIES | |||||
| Notes payable | 275,860,000 | 318,400,000 | |||
| Accounts payable | 553,982,959 | 568,290,178 | |||
| Advance from customers | 122,908,153 | 93,740,947 | |||
| Payroll payable | 36,130,872 | 34,727,203 | |||
| Dividend payable | 287,000,000 | 235,340,000 | |||
| Taxes payable | 104,422,929 | 159,409,303 | |||
| Other payables | 381,314,134 | 215,337,981 | |||
| Provision for land subsidence costs | 120,196,012 | 136,724,035 | |||
| Long-term payable within one year | 636,633,816 | - | |||
| TOTAL CURRENT LIABILITIES | 2,518,448,875 | 1,761,969,647 | |||
| Long-term payable | 105,983,040 | - | |||
| TOTAL LIABILITIES | 2,624,431,915 | 1,761,969,647 | |||
| MINORITY INTEREST | 2,463,683 | - | |||
| SHAREHOLDERS' EQUITY | |||||
| Share capital | 2,870,000,000 | 2,600,000,000 | |||
| Capital reserves | 3,711,032,804 | 2,526,228,929 | |||
| Surplus reserve | 508,643,940 | 358,585,824 | |||
| Including: Welfare fund | 169,547,980 | 119,528,609 | |||
| Unappropriated profits | 1,633,650,835 | 1,070,321,502 | |||
| SHAREHOLDERS' EQUITY | 8,723,327,579 | 6,555,136,255 | |||
| TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY | 11,350,223,177 | 8,317,105,902 |
STATEMENT OF INCOME AND PROFITS APPROPRIATIONS
| 2001 | |||||
| The Group and | 2000 | ||||
| The Company | The Company | ||||
| RMB | RMB | ||||
| Net revenue from principal operations | 6,469,352,955 | 4,780,580,876 | |||
| Less: Cost of principal operations | 2,812,583,737 | 1,983,519,916 | |||
| Sales taxes on principal operations | 99,704,041 | 76,380,272 | |||
| Income from principal operations | 3,557,065,177 | 2,720,680,688 | |||
| Add: Income from other operations | 26,483,329 | 27,559,433 | |||
| Less: Operating expenses | 1,551,609,369 | 1,168,691,771 | |||
| Administrative expenses | 665,965,451 | 554,130,939 | |||
| Financial expenses | (34,833,265 | ) | (20,768,987 | ) | |
| Operating profit | 1,400,806,951 | 1,046,186,398 | |||
| Add: Subsidies | - | 188,579 | |||
| Non-operating income | 7,880,206 | 2,996,491 | |||
| Less: Non-operating expenses | 16,812,063 | 14,777,978 | |||
| Profit before income taxes | 1,391,875,094 | 1,034,593,490 | |||
| Less: Income taxes | 391,487,645 | 295,607,377 | |||
| Net profit | 1,000,387,449 | 738,986,113 | |||
| Add: Unappropriated profits at the beginning of the year | 1,070,321,502 | 677,523,306 | |||
| Profits available for appropriation | 2,070,708,951 | 1,416,509,419 | |||
| Less: Appropriations to statutory common fund | 100,038,745 | 73,898,611 | |||
| Appropriations to common welfare fund | 50,019,371 | 36,949,306 | |||
| Profits available for appropriation to shareholders | 1,920,650,835 | 1,305,661,502 | |||
| Less: Appropriation to discretionary surplus fund Dividends | 287,000,000 | 235,340,000 | |||
| Unappropriated profits at the end of the year | 1,633,650,835 | 1,070,321,502 | |||
| SUPPLEMENTAL INFORMATION: | |||||
| Total profit decreased due to accounting policy changes | 8,686,931 | 25,195,858 |
STATEMENT OF CASH FLOWS
| 2001 | 2000 | ||||
| The Group | The Company | ||||
| RMB | RMB | ||||
| CASH FLOW FROM OPERATING ACTIVITIES | |||||
| Cash received from sales of goods and rendering of services | 7,185,415,721 | 5,471,433,780 | |||
| Taxes refunded | 214,033,232 | 143,824,382 | |||
| Other cash received relating to operating activities | 666,944,161 | 137,529,989 | |||
| SUB-TOTAL CASH INFLOW | 8,066,393,114 | 5,752,788,151 | |||
| Cash paid for goods and services | 2,060,777,762 | 528,230,068 | |||
| Cash paid to and on behalf of employees | 994,990,361 | 496,584,496 | |||
| Taxes paid | 1,096,236,752 | 1,017,016,621 | |||
| Other cash paid relating to operating activities | 2,262,708,458 | 2,635,770,982 | |||
| SUB-TOTAL CASH OUTFLOW | 6,414,713,333 | 4,677,602,167 | |||
| NET CASH FLOW FROMOPERATING ACTIVITIES | 1,651,679,781 | 1,075,185,984 | |||
| CASH FLOW FROM INVESTING ACTIVITIES | |||||
| Net cash received from disposal of fixed assets, | |||||
| intangible assets and other non-current assets | 13,685,621 | 12,736,286 | |||
| Cash received from purchase of a subsidiary | 1,940,515 | - | |||
| SUB-TOTAL CASH INFLOW | 15,626,136 | 12,736,286 | |||
| Cash paid for purchases of fixed assets, | |||||
| intangible assets and other long-term assets | 684,193,133 | 529,454,877 | |||
| Cash paid for investments | 51,757,724 | - | |||
| Cash paid for purchase of Jining III | 1,204,133,000 | - | |||
| Increase in restricted cash | 30,000,000 | - | |||
| SUB-TOTAL CASH OUTFLOW | 1,970,083,857 | 529,454,877 | |||
| NET CASH FLOW FROM INVESTING ACTIVITIES | (1,954,457,721 | ) | (516,718,591 | ) | |
| CASH FLOW FROM CAPITAL RAISING ACTIVITIES | |||||
| Cash received from issue of share capital | 1,454,803,875 | - | |||
| SUB-TOTAL CASH INFLOW | 1,454,803,875 | - | |||
| Cash paid for purchase of Jining III | 636,633,960 | - | |||
| Cash paid for distribution of dividends | 235,340,000 | 231,400,000 | |||
| SUB-TOTAL CASH OUTFLOW | 871,973,960 | 231,400,000 | |||
| NET CASH OUTFLOW FROM CAPITAL RAISING ACTIVITIES | 582,829,915 | (231,400,000 | ) | ||
| EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH | - | - | |||
| NET INCREASE IN CASH AND CASH EQUIVALENTS | 280,051,975 | 327,067,393 | |||
| SUPPLEMENTAL INFORMATION: | |||||
| RECONCILIATION OF NET PROFIT TO | |||||
| NET CASH FLOW FROM OPERATING ACTIVITIES | |||||
| Net profit | 1,000,387,449 | 738,986,113 | |||
| Add: Provision for loss on assets | (26,671,722 | ) | (472,461 | ) | |
| Depreciation of fixed assets | 811,750,331 | 507,989,738 | |||
| Amortization of intangible assets and other assets | 30,433,568 | 8,470,335 | |||
| Loss on disposal of fixed assets, | |||||
| intangible assets and other long-term assets | 5,811,569 | 11,600,850 | |||
| Decrease in deferred expenditures (or deduct: increase) | (76,316,068 | ) | (53,787 | ) | |
| Decrease in inventories (or deduct: increase) | (163,450,978 | ) | 47,547,674 | ||
| Decrease in operating receivables (or deduct: increase) | 19,945,412 | (219,403,075 | ) | ||
| Increase in operating payables (or deduct: decrease) | 49,790,220 | (19,479,403 | ) | ||
| Net cash flow from operating activities | 1,651,679,781 | 1,075,185,984 | |||
| Net increase in cash and cash equivalents: | |||||
| Cash at end of the year | 1,124,806,342 | 844,754,367 | |||
| Less: Cash at beginning of the year | 844,754,367 | 517,686,974 | |||
| Net increase in cash and cash equivalents | 280,051,975 | 327,067,393 |
Notice of Annual General Meeting
Notice is hereby given that an annual general meeting (the "Annual General Meeting") of Yanzhou Coal Mining Company Limited (the "Company") will be held at 8:00 am on 7th June, 2002 at 2nd Floor Conference Room, Zong He Building, 40 Fushan Road, Zoucheng, Shandong Province 273500, People's Republic of China ("PRC"):
-
to consider and approve the working report of the Board of Directors of the Company for the year ended 31st December, 2001;
-
to consider and approve the working report of the Supervisory Committee of the Company for the year ended 31st December, 2001;
-
to consider and approve the audited financial statements of the Company as at and for the year ended 31st December, 2001;
-
to consider and approve the proposed profit distribution plan and the final dividend distribution plan of the Company for the year ended 31st December, 2001, and to authorize the Board of Directors of the Company to distribute such dividend to shareholders;
-
to determine the remuneration of the Directors and Supervisors of the Company for the year ending 31st December, 2002;
-
to consider and approve the appointment of Deloitte Touche Tohmatsu (certified public accountants in Hong Kong) and Deloitte Touche Tohmatsu Shanghai CPA (registered accountants in the PRC (excluding Hong Kong)) as the Company's international and domestic auditors for the year 2002, respectively, to hold office until the conclusion of the following annual general meeting, and to determine their remuneration;
-
to consider and, by way of special resolution, authorise the Board of Directors of the Company to, inter alia:
(a) issue, allot, and deal with additional H shares of the Company (not exceeding 20 per cent of the aggregate nominal amount of each of the H Shares in issue as at the date of passing of the shareholders' special resolution); and
(b) amend the Company's Articles of Association accordingly, subject to the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limtied and the PRC Company Law (including all the amendments implemented from time to time) as well as approval from the relevant PRC government authorities;
- to consider and approve proposals (if any) put forward at such meeting by any shareholder(s) holding 5 per cent or more of the shares carrying the right to vote at such meeting.
By Order of the Board of Directors
Zhao Jingche
Chairman
Zoucheng, Shandong, PRC, 8th April, 2002
Notes:
(A) Holders of the Company's overseas listed foreign invested shares (in the form of H Shares) whose names appear on the Company's Register of Members which is maintained by Hong Kong Securities Registrars Limited at the close of business on 8th May, 2002 are entitled to attend the Annual General Meeting after completing the registration procedures for attending the meeting.
(B) Holders of H shares, who intend to attend the Annual General Meeting, must deliver the written replies for attending the Annual General Meeting to the Office of the Secretary of the Board of Directors of the Company no later than 17th May 2002. In addition to the foregoing:
(1) Such holders of H shares shall deliver copies of instruments of transfer, share certificates and their own identity cards to the Office of Secretary of Board of Directors of the Company; and
(2) In case such holders are represented by authorized representatives, they shall also deliver their powers of attorney and copies of the attorney's documents of identity to the registered address of the Company.
Shareholders can deliver the necessary documents for registration by the Company in person, by post or by facsimile. Upon receipt of such documents, the Company will complete the registration procedures for attending the Annual General Meeting and despatch copies of Annual General Meeting admission cards to shareholders by post or facsimile. When attending the Annual General Meeting, shareholders or their proxies may exchange copies or facsimile copies of the Annual General Meeting admission cards for the original Annual General Meeting admission cards.
(C) Details of the Office of the Secretary to the Board of Directors of the Company are as follows:
40 Fushan Road
Zoucheng
Shandong Province 273500
PRC
Tel: 86-537-538-3310
Fax: 86-537-538-3311
(D) Each shareholder of H shares who has the right to attend and vote at the Annual General Meeting is entitled to appoint in writing one or more proxies, whether a shareholder or not, to attend and vote on his behalf at the Annual General Meeting. A proxy of a shareholder who has appointed more than one proxy may only vote on a poll. The instrument appointing a proxy must be in writing under the hand of the appointor or his attorney duly authorized in writing. If that instrument is signed by an attorney of the appointor, the power of attorney authorizing that attorney to sign, or other documents of authorization, must be notarially certified. For holders of H shares, the power of attorney or other documents of authorization and proxy forms must be delivered to Hong Kong Securities Registrars Limited no less than 24 hours before the time appointed for the holding of the Annual General Meeting in order for such documents to be valid.
(E) The H share Register will be closed from 9th May 2002 to 7th June 2002 (both days inclusive), during which time no transfer of H shares will be registered. Holders of H shares who wish to attend the Annual General Meeting and qualify for entitlement to the 2001 dividend of RMB0.100 per share (including taxation) referred to above must deliver their duly stamped instruments of transfer, accompanied by the relevant share certificates, to Hong Kong Securities Registrars Limited by no later than 4:00 p.m. on 8th May, 2002.
Hong Kong Securities Registrars Limited's address is as follows:
2nd Floor, Vicwood Plaza
199 Des Voeux Road Central
Hong Kong
(F) The Annual General Meeting is expected to last half a day. Shareholders attending the Annual General Meeting are responsible for their own transportation and accommodation expenses.
Disclosure of information on the website of the Stock Exchange of Hong Kong Limited (HKSE)
A detailed results announcement containing all the information required by paragraphs 45(1) to 45(3) inclusive of Appendix 16 of the Rules Governing the Listing of Securities on HKSE will be subsequently published on HKSE's website in due course.
Please also refer to the published version of this announcement in the South China Morning Post dated 9/4/2002