CStone Pharmaceuticals - Interim / Quarterly Report 2007

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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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)

(Stock Code: 1171)

INTERIM RESULTS FOR THE SIX MONTHS

ENDED 30TH JUNE, 2007

Yanzhou Coal Mining Company Limited is pleased to announce the unaudited interim operating results of the Company for the six months ended 30th June, 2007:

Total net sales was RMB6,696.0 million (or approximately US$879.3 million, or HK$6,871.9 million), representing an increase of 13.0 % as compared with the total net sales of RMB5,923.4 million (or approximately US$740.8 million, or HK$5,754.2 million) for the same period last year.
Net income attributable to the equity holders of the Company for this reporting period was RMB1,502.4 million (or approximately US$197.3 million, or HK$1,541.9 million), representing an increase of 4.8% as compared with the net income attributable to the equity holders of the Company of RMB1,433.6 million (or approximately US$179.3 million, or HK$1,392.7 million) for the same period last year.

The board of directors (the 「Board」) of Yanzhou Coal Mining Company Limited (the

「「 Company」 or Yanzhou Coal」) is pleased to present the Company’s unaudited interim operating results for the six months ended 30th June, 2007, which have been reviewed by the Audit Committee of the Board.

In the first half of 2007, the raw coal production of the Company was 18.15 million tonnes, representing an increase of 0.30 million tonnes or 1.7% as compared to the same period last year; coal sales were 16.97 million tonnes, representing an increase of 0.11 million tonnes or 0.7% as compared to the same period last year. Total net sales were RMB6,696.0 million, representing an increase of RMB772.6 million or 13.0 % as compared to the same period last year. Net income attributable to the equity holders of the Company for this reporting period was RMB1,502.4 million, representing an increase of RMB68.748 million or 4.8% as compared to the same period last year.

SUMMARY OF UNAUDITED MAJOR FINANCIAL INFORMATION

(prepared in accordance with International Financial Reporting Standards (「IFRS」))

OPERATING RESULTS

	For the six months ended	For the six months ended	30th June	For the year ended 31st December
	2007 (RMB’000)	2006 (RMB’000)	change as compared to the same period of last year (+/-)	2006 (RMB’000)
	(unaudited)	(unaudited)	%	(audited)
Net sales
Net sales of coal	6,604,656	5,851,598	12.9	11,846,948
including: Headquarters	6,050,832	5,790,197	4.5	11,710,664
Domestic	5,616,290	4,447,290	26.3	9,365,857
Export	434,542	1,342,907	-67.6	2,344,807
Yancoal Australia Pty	442,145	61,401	620.1	114,409
Shanxi Nenghua	111,679	—	—	21,875
Net income of railway transportation services	91,296	71,754	27.2	160,399
Total net sales	6,695,952	5,923,352	13.0	12,007,347
Gross profit	3,306,336	3,276,428	0.9	5,817,278
Interest expenses	(14,851)	(7,780)	90.9	(26,349)
Income before income taxes	2,240,187	2,152,912	4.1	3,726,624
Income attributable to equity holders of the Company for this reporting period	1,502,360	1,433,612	4.8	2,372,985
Net cash income from operating activities	2,030,035	383,018	430.0	3,767,156
Earningsper share	RMB 0.31	RMB 0.29	4.8	RMB0.48

ASSETS AND LIABILITIES

SETS AND LIABILITIES
	30th June		31st December
	2007 (RMB’000)	2006 (RMB’000)	2006 (RMB’000)
	(unaudited)	(unaudited)	(audited)
Current assets	10,069,874	11,187,124	9,871,911
Current liabilities	3,609,567	3,777,113	3,828,048
Total assets	23,760,076	21,989,295	23,458,749
Equity attributable to equity holders of the Company	19,482,616	17,971,378	18,931,779
Net asset valueper share	RMB3.96	RMB3.65	RMB3.85
Return on net assets(%)	7.71	7.98	12.53

Note ：

The Company purchased 98% and 2% equity interest of Yanzhou Coal Shanxi Neng Hua 「 Company Limited ( Shanxi Nenghua」) respectively in November 2006 and February 2007. The Company has additionally consolidated the financial statements of Shanxi Nenghua in this reporting period as compared to the same period last year.

REVIEW OF OPERATIONS

The following discussion is based on the Company’s unaudited financial results for the first half of 2007 and 2006 respectively, which were prepared in accordance with IFRS.

Coal Production

In the first half of 2007, the raw coal production of the Company was 18.15 million tonnes, representing an increase of 0.30 million tonnes or 1.7% as compared to the same period last year, among which: (1) raw coal production of the Company’s six coal mines in the headquarters area was 16.47 million tonnes, representing a decrease of 1.27 million tonnes or 7.2%, as compared to the same period last year; (2) raw coal production of Yanzhou Coal Australia Pty Limited 「 ( Yancoal Australia Pty」) was 1.08 million tonnes. Austar Coal Mine, which is owned by Yancoal Australia Pty, started commercial operation in October, 2006; and (3) raw coal production of Shanxi Nenghua was 0.60 million tonnes. Tianchi coalmine, which is owned by Shanxi Nenghua, started commercial operation in November, 2006.

In the first half of 2007, salable coal production of the Company was 17.66 million tonnes, representing an increase of 0.46 million tonnes or 2.7% as compared to the same period last year, among which, (1) salable coal production of the Company’s six coal mines in the headquarters area was 16.15 million tonnes, representing a decrease of 0.95 million tonnes or 5.6%, as compared to the same period last year; (2) salable coal production of Yancoal Australia Pty was 0.91 million tonnes; (3) salable coal production of Shanxi Nenghua was 0.60 million tonnes.

Coal Sales and Price

The following table sets out the sales prices of the Company’s products for the six months ended

30th June, 2007, for the six months ended 30th June, 2006, for the six months ended 31st December, 2006 and for the year 2006:

	For the six months ended 30th June	For the six months ended 30th June	For the six months ended 31st December 2006	For the year ended 31st December 2006
	2007	2006
	Average price of coal products (RMB per tonne)	Average price of coal products (RMB per tonne)	Average price of coal products (RMB per tonne)	Average price of coal products (RMB per tonne)
1. Headquarters
Clean Coal
No. 1 Clean Coal	573.04	506.55	503.83	505.38
No. 2 Clean Coal	544.24	493.41	466.46	479.40
Domestic	555.89	489.32	495.68	493.02
Export	343.07	500.55	335.53	442.53
No. 3 Clean Coal	431.37	380.75	374.80	377.72
Domestic	459.87	379.01	395.11	387.10
Export	335.18	383.66	342.98	362.55
LumpCoal	535.96	422.29	433.25	427.88
Average Price for Clean Coal	479.53	420.61	408.76	414.58
Domestic	505.22	421.35	437.73	429.92
Export	336.15	419.19	341.63	382.13
Screened Raw Coal	330.55	296.71	284.27	289.89
Mixed Coal and Others	136.70	156.94	134.62	147.17
Average Coal Price of Headquarters	390.10	345.62	336.83	341.12
Domestic	395.00	328.23	335.86	332.19
2. Yancoal Australia Pty	498.52	558.34	642.83	594.55
3. Shanxi Nenghua	195.41	－	155.22	155.22

Note:

The sales price of coal products is the invoice price of coal sales of the Company minus sales taxes, transportation cost and various miscellaneous fees.
The historic average price of each type of coal products for the six months ended 31st

December, 2006 was calculated based on the following formula:

(Net sales of each type of coal products for the year ended 31st December, 2006) less (Net sales of each type of coal products for the six months ended 30th June 2006)

(Sales volume of each type of coal products for the year ended 31st December 2006) less (Sales volume of each type of coal products for the six months ended 30th June 2006)

The Company’s average coal sales price in the headquarters area for the first half of 2007 was RMB390.10/tonne, representing an increase of RMB44.48/tonne or 12.9%, as compared to the

same period last year. The average domestic coal sales price was RMB395.00/tonne, representing an increase of RMB66.77/tonne or 20.3%, as compared to the same period last year; while the average export coal sales price was RMB336.15/tonne, representing a decrease of RMB83.04/tonne or 19.8%, as compared to the same period last year.

「 Decrease in average export coal sales price of the Company headquarters (the Headquarters」) was mainly due to the export coal contract price in 2006 was adopted for the first quarter of 2007, which was decreased as compared to the same period of last year.

The average coal sales price of Yancoal Australia Pty for the first half of 2007 was RMB498.52/tonne.

The average coal sales price of Shanxi Nenghua for the first half of 2007 was RMB195.41/ tonne.

The following table sets out the sales volume and net sales in coal by product category for the six months ended 30th June, 2007 and the six months ended 30th June, 2006:

		For the six months ended 30th June	For the six months ended 30th June	For the six months ended 30th June	For the six months ended 30th June
		2007			2006
	Sales volume ’000 tones	net sales RMB’000	% to total net sales	Sales volume ’000 tones	net sales RMB’000	% to total net sales
1. Headquarters
Clean Coal
No. 1 Clean Coal	381.2	218,422	3.3	494.0	250,253	4.3
No. 2 Clean Coal	2,923.8	1,591,246	24.2	2,671.7	1,318,267	22.5
Domestic	2,763.8	1,536,371	23.3	1,697.8	830,759	14.2
Export	160.0	54,875	0.9	973.9	487,508	8.3
No. 3 Clean Coal	4,956.2	2,137,972	32.3	5,955.3	2,267,452	38.7
Domestic	3,823.5	1,758,305	26.6	3,725.7	1,412,053	24.1
Export	1,132.7	379,667	5.7	2,229.6	855,399	14.6
LumpCoal	244.8	131,225	2.0	272.1	114,892	2.0
Subtotal for Clean Coal	8,506.0	4,078,865	61.8	9,393.1	3,950,865	67.5
Domestic	7,213.3	3,644,323	55.2	6,189.6	2,607,957	44.6
Export	1,292.7	434,542	6.6	3,203.5	1,342,907	22.9
Screened Raw Coal	5,232.6	1,729,668	26.2	4,895.6	1,452,611	24.8
Mixed Coal and Others	1,772.5	242,299	3.7	2,464.2	386,722	6.6
Subtotal of Headquarters	15,511.1	6,050,832	91.6	16,752.9	5,790,197	99.0
Domestic	14,218.4	5,616,290	85.0	13,549.4	4,447,290	76.0
2. Yancoal Australia Pty	886.9	442,145	6.7	110.0	61,401	1.0

3. Shanxi Nenghua	571.5	111,679	1.7	—	—	—
Total	16,969.5	6,604,656	100.0	16,862.9	5,851,598	100.0

Coal sales of the Company were 16.97 million tones in the first half of 2007, representing an increase of 0.11 million tonnes or 0.7%, as compared to the same period last year. Among which, (1) coal sales of the Company’s six coal mines in the headquarters area were 15.51 million tonnes, representing a decrease of 1.24 million tonnes or 7.4%, as compared to the same period last year. Domestic coal sales were 14.22 million tonnes, representing an increase of 0.67 million or 4.9% as compared to the same period last year. Export coal sales were 1.29 million tonnes, representing a decrease of 1.91 million tonnes or 59.7% as compared to the same period last year. The change in sales structure is principally due to increase in domestic sales of coal products by the Company in light of market circumstances; (2) coal sales of Yancoal Australia Pty were 0.89 million tones; and (3) coal sales of Shanxi Nenghua were 0.57 million tones.

Realized net sales of coal of the Company were RMB6,604.7 million in the first half of 2007, representing an increase of RMB753.1 million or 12.9%, as compared to the same period last year. Among which, (1) realized net sales of coal of the Company’s six coal mines in the headquarters area were RMB6,050.8 million, representing an increase of RMB260.6 million or 4.5%, as compared to the same period last year. Net domestic coal sales were RMB5,616.3 million, representing an increase of RMB1,169.0 million or 26.3% as compared to the same period last year. Net export coal sales were RMB434.5 million, representing a decrease of RMB908.4 million or 67.6% as compared to the same period last year; (2) realized net sales of coal of Yancoal Australia Pty were RMB442.1 million; (3) realized net sales of coal of Shanxi Nenghua were RMB111.7 million.

Railway Assets

「 In the first half of 2007, coal delivered by the railway assets of the Company ( Railway Assets」) specifically used for coal transportation were 8.70 million tonnes, representing a decrease of 0.72 million tonnes or 7.6% as compared to the same period last year. Realized net income from railway transportation service of the Company was RMB91.296 million (realized income of transportation volume calculated on an ex-mine basis and on the basis that the transportation cost of the Railway Assets was borne by the customers), representing an increase of RMB19.542 million or 27.2% as compared to the same period last year. The increase was mainly due to the increase in transport volume with the transportation charges borne by the customers by 1.54 million tonnes.

Operating Expenses and Cost Control

Total operating expenses of the Company for the first half of 2007 were RMB4,546.1 million, representing an increase of RMB697.1 million or 18.1% as compared to the same period last year, among which, the cost of sales and railway transportation service increased by RMB742.7 million or 28.1% as compared to the same period last year, while selling, general and administration expenses decreased by RMB45.633 million or 3.8% as compared to the same period last year. The percentage of total operating expenses to total net sales increased from 65.0% in the same period last year to 67.9% in this reporting period.

The following table sets out the Company’s major operating expenses, which are also expressed as percentages to total net sales, for the six months ended 30th June, 2007 and the six months ended 30th June 2006 respectively:

	For the six months ended 30th June	For the six months ended 30th June	For the six months ended 30th June	For the six months ended 30th June
	2007	2006	2007	2006
	(RMB’000)		(% to total net sales)
Net sales
Net sales of coal	6,604,656	5,851,598	98.6	98.8
Net income of railway transportation service	91,296	71,754	1.4	1.2
Total net sales	6,695,952	5,923,352	100.0	100.0
Cost of sales and railway transportation service
Materials	560,611	587,966	8.4	9.9
Wages and employee benefits	1,141,120	707,753	17.0	11.9
Electricitysupply	200,149	163,435	3.0	2.8
Depreciation	529,481	469,837	7.6	7.9
Repairs and maintenance	204,144	157,698	3.0	2.7
Expenses for land subsidence, restoring, recoveryand environmentalprotection	419,471	209,264	6.3	3.5
Miningrights expenses and amortization	12,947	9,920	0.2	0.2
Other transportation fees	52,247	50,729	0.8	0.9
Other expenses	269,446	290,322	4.3	4.9
Total cost of sales and railway transportation service	3,389,616	2,646,924	50.6	44.7
Selling, general and administration expenses	1,156,437	1,202,070	17.3	20.3
Total operating expenses	4,546,053	3,848,994	67.9	65.0

MANAGEMENT DISCUSSION AND ANALYSIS

The following discussion and analysis should be read in conjunction with the unaudited interim financial statements for this year and the unaudited interim financial statements for the year 2006 and the notes thereto. Those financial reports have been prepared in accordance with IFRS. In respect of the differences between IFRS and accounting principles generally accepted in the United States of America (the 「US GAAP」), please refer to Supplemental Information II to the financial information prepared in accordance with IFRS contained herein.

THE SIX MONTHS ENDED 30TH JUNE, 2007 COMPARED WITH THE SIX MONTHS ENDED 30TH JUNE, 2006

In the first half of 2007, realized net sales of the Company were RMB6,696.0 million, representing an increase of RMB772.6 million or 13.0%, from RMB5,923.4 million over the same period in 2006. Among which (1) the net realized sales of coal were RMB6,604.7 million: (a) Net sales of coal of the Headquarters were RMB6,050.8 million, representing an increase of RMB260.6 million or 4.5%, from RMB5,790.2 million over the same period in 2006. The increase was mainly due to an increase of RMB689.9 million in net coal sales attributable to the increase in average coal price, and a decrease of RMB429.3 million in net coal sales attributable to the decrease in coal sales volume; (b) net sales of coal of Yancoal Australia Pty were RMB442.1 million; (c) net sales of coal of Shanxi Nenghua were RMB111.7 million; (2) net income realized from railway transportation service were RMB91.296 million, representing an increase of RMB19.542 million or 27.2%, from RMB71.754 million of the same period last year. The increase was mainly due to the transport volume with the railway charges borne by the customers increased by 1.54 million tonnes.

In the first half of 2007, cost of sales and railway transportation service was RMB3,389.6 million, representing an increase of RMB742.7 million or 28.1%, as compared to RMB2,646.9 million over the same period in 2006. Such amount includes: I coal sales cost was RMB3,299.6 million, among which, (1) the Headquarters’ coal sales cost was RMB2,908.7 million, representing an increase of RMB309.0 million or 11.9%, as compared to RMB2,599.7 million for the same period last year; while the unit cost of coal sales was RMB187.52, representing an increase of RMB32.34 or 20.8%, compared to RMB155.18 for the same period last year which was mainly due to (a) an increase of unit cost of coal sales by RMB2.18 as a result of the increase of employees’ wages; (b) the increase in land subsidence fees as a result of the strengthening measures to resettle the villages located above the coal field resulting in the increase of unit cost of coal sales by RMB14.55; (c) the accounting subentry of coal production workers’ pension fund was moved from selling, general and administration expenses to sales cost resulting in the increase of unit cost of coal sales by RMB18.17 and in the decrease of selling, general and administration expenses accordingly; (d) the partial set-off by the Company’s cost control measures of the cost-increasing factors above which resulted in the increase of unit cost of coal sales; (2) cost of coal sales of Yancoal Australia Pty was RMB307.0 million and the unit cost of coal sales of Yancoal Australia Pty was RMB346.15; and (3) cost of coal sales of Shanxi Nenghua was RMB84.712 million and the unit cost of coal sales of Shanxi Nenghua was RMB148.23; and II cost of railway transportation service was RMB89.976 million, representing an increase of RMB48.484 million or

116.9%, as compared to RMB41.492 million over the same period in 2006.

In the first half of 2007, selling, general and administration expenses of the Company were RMB1,156.4 million, representing a decrease of RMB45.633 million or 3.8%, from RMB1,202.1 million over the same period in 2006. Among which (1) selling, general and administration expenses of the Headquarters were RMB861.3 million, representing a decrease of RMB83.956 million or 8.9%, as compared to RMB945.2 million in the same period last year; (2) selling, general and administration expenses of Yancoal Australia Pty were RMB198.6 million, representing a decrease of RMB37.876 million or 16.0%, as compared to RMB236.5 million in the same period last year; and (3) selling, general and administration expenses of Shanxi Nenghua were RMB43.909 million.

In the first half of 2007, other operating income of the Company were RMB105.1 million, representing an increase of RMB18.805 million or 21.8%, compared to RMB86.334 million over the same period in 2006. This was primarily due to (1) the exchange rate income of RMB36.6 million in the reporting period; and (2) the decrease in interest income from bank deposits of RMB12.774 million as compared to the same period last year.

In the first half of 2007, interest expenses of the Company were RMB14.851 million, representing an increase of RMB7.071 million or 90.9%, compared to RMB7.780 million over the same period last year. The increase was primarily due to the increase in long-term bank loan resulting from the acquisition of Shanxi Nenghua.

In the first half of 2007, income before tax of the Company were RMB2,240.2 million, representing an increase of RMB87.275 million or 4.1%, compared to RMB2,152.9 million over the same period last year.

In the first half of 2007, net income attributable to the equity holders of the Company for the period were RMB1,502.4 million, representing an increase of RMB68.748 million or 4.8%, compared to RMB1,433.6 million for the same period last year.

Total assets of the Company increased from RMB23,458.7 million as at 31st December, 2006 to RMB23,760.1 million as at 30th June, 2007, representing an increase of RMB301.4 million or 1.3%. The increase was primarily due to the increase in assets’ value resulting from the Company’s operating activities.

Total liabilities of the Company decreased from RMB4,465.0 million as at 31st December, 2006 by RMB261.7 million or 5.9%, to RMB4,203.3 million as at 30th June, 2007.

Equity attributable to equity holders of the Company increased from RMB18,931.8 million as at 31st December 2006 to RMB19,482.6 million as at 30th June 2007, representing an increase of RMB550.8 million or 2.9%. The increase was principally attributable to the profits realized from the Company’s operating activities.

LIQUIDITY AND CAPITAL RESOURCES

In the first half of 2007, the Company’s principal source of capital was the cash flow from operations. The Company’s principal uses of the capital include payment for operating expenses, purchase of property, machinery and equipment, and increasing registered capital of Yanmei Heze 「 Neng Hua Company Limited ( Heze Nenghua」).

In the first half of 2007, the net cash flow from operating activities of the Company was RMB2,030 million, representing an increased of RMB1,647 million or 430.0%, as compared with RMB383 million for the same period last year, which is mainly due to: (1) cash received from sales of goods or rendering of services was RMB9,497.4 million, representing an increase of RMB2,465.7 million or 35.1%, as compared with RMB7,031.7 million for the same period last year; (2) cash paid for purchase of goods or accepting services was RMB2,714.3 million, representing an increase of RMB173.3 million or 6.8%, as compared with RMB2,541.0 million for the same period last year; (3) tax payment was RMB1,994.0 million, representing an increase of RMB405.5 million or 25.5%, as compared with RMB1,588.5 million for the same period last year.

As at 30th June, 2007, the balance of the Company’s bills and accounts receivable were RMB1,088.2 million, representing a decrease of RMB1,123.7 million or 50.8% from RMB2,211.9 million as at 31st December, 2006. Of this amount, (1) bills receivable accounted for RMB949.3 million, representing a decrease of RMB1,055.1 million or 52.6%, as compared to RMB2,004.4 million as at 31st December, 2006. Decrease in bills receivable was primarily due to the decrease of bank acceptance bills; (2) accounts receivable decreased from RMB207.5million as at 31st December, 2006 by RMB68.64 million or 33.1%, to RMB138.8 million as at 30th June, 2007, principally due to the reduction of newly occurred accounts receivable in this reporting period and the Company’s enhanced efforts of collecting previous accounts receivable.

As at 30th June, 2007, inventories of the Company increased from RMB579.6 million as at 31st December, 2006 by RMB110.9 million or 19.1%, to RMB690.5 million. The increase was mainly due to the increase of coal inventory.

Prepayments and other current assets increased from RMB231.5 million as at 31st December, 2006 by RMB57.08 million or 24.7%, to RMB288.6 million as at 30th June, 2007. The increase was mainly due to (1) the increase in advances to suppliers of RMB 32.708 million; (2) the prepayment of construction expenses for Yushuwan coalmine of RMB 20.5 million.

Bills and accounts payables decreased from RMB745.7 million as at 31st December, 2006 by RMB198.9 million or 26.7%, to RMB546.8 million as at 30th June, 2007. The decrease was mainly due to the decrease of advances to suppliers.

Other accounts payables and accrued expenses increased from RMB1,899.7 million as at 31st December, 2006 by RMB592.2 million or 31.2%, to RMB2,491.9 million as at 30th June, 2007. The increase was mainly due to the increase of accounts payables to related companies.

Long-term liabilities decreased from RMB637.0 million as at 31st December, 2006 by RMB43.199 million or 6.8%, to RMB593.8 million as at 30th June, 2007.

In the first half of 2007, the Company’s capital expenditure for purchase and replacement of plant, property and machinery equipment were RMB634.3 million, representing a decrease of RMB410.5 million, as compared to RMB1,044.8 million in the same period last year.

In the first half of 2007, the Company additionally contributed RMB876.0 million as the increased registered capital of Heze Nenghua. The capital came from RMB481.0 million raised from issuance of new H shares in 2004 and RMB395.0 million from the Company’s internal resources. The equity interests in Heze Nenghua held by the Company increased from 95.67% to 96.67% after the increase of the registered capital.

As at 30th June, 2007, the Company’s debt to equity ratio was 2.0%, which was calculated based on equity attributable to equity holders of the Company and total liabilities amounting to RMB19,482.6 million and RMB399.0 million respectively.

The Company believes that it will have sufficient capital to satisfy its operational and development requirements.

TAXATION

The Company and all of its subsidiaries registered in China are subject to an income tax rate of 33% on its taxable profits for the reporting period. Yancoal Australia Pty and its wholly-owned subsidies, Austar Coal Mining Pty Limited, are subject to an income tax rate of 30% on its taxable profits for the reporting period.

US GAAP RECONCILIATION

The Company’s unaudited interim financial statements are prepared in accordance with IFRS, which differs in certain aspects from the US GAAP. In respect of the differences between the IFRS and the US GAAP, please refer to Supplement Information II of this report.

OUTLOOK FOR THE SECOND HALF OF 2007

Demand and supply for coal in the domestic market remain strong. Coal price will remain at a high level. The economic development of the People’s Republic of China (the 「PRC」) is maintained at a rapid rate, which results in the strong demand for coal by primary industries, such as power, metallurgy, building materials and chemicals, etc. Newly constructed coalmines will gradually increase production capabilities. Increase in coal price will facilitate expansion in coal production capabilities. The PRC is changing from a net coal export country to a net coal import country which will increase the domestic supply of coal. The railway transportation capacity has been enhanced, however, it is still the bottleneck that restricts coal supply. The State is for the first time aware of the importance in energy saving and CO2 emission reduction, which will accelerate the consolidation of the coal industry. This will in turn improve the centralization of coal industry in the PRC and will enhance the competitive advantages of large-scale coal enterprises.

Supply of coal will be slightly tight in the international market, with an uprising trend in coal price. As the growth of global economy will remain at a rapid rate in the second half of 2007 with oil price breaking record level high and sea freight fee and spot price of Australia BJ steam coal remaining at a high level, international coal price will likely be increasing. Australia restraint port quota will hinder the growth of its coal supply volume. With China reducing its coal exports, coal export volume of Indonesia remaining stable and coal exports of South Africa and Vietnam increasing slightly, supply will be relatively tight in the international coal market. China and India will increase their coal imports. Japan will also increase its demand of coal due to the closure of nuclear plants. Thus, demand for coal will be strong in international coal market, especially in East Asia.

The Company has entered into contracts of coal export for a total of 0.55 million tones with the average contract price of USD71.88/tonne, representing an increase of 35.7% compared with the same period in 2006.

Operating strategies

The Company will continue to improve its profitability and shareholders’ return through operating strategies in development such as external expansion and internal organic growth. In the second half of 2007, the Company will continue to implement the following operating strategies:

Accelerate the construction of existing projects and continue to identify new acquisition

opportunities. The 100,000-tonnes methanol project of Shanxi Nenghua will commence operation at the end of 2007. Progress for the construction of Zhaolou Coal mine of Heze Nenghua and the acquisition of coal mine exploration rights will accelerate. More efforts will be devoted to speed up the establishment of Yushuwan Coalmine Company in Shannxi Province. Installation of key equipment for 600,000 tonnes methanol project of Yanzhou Coal Yulin Neng Hua Company Limited will be completed and ready for pilot production. The Company will continue to identify new acquisition opportunities in coal and other related industries both in China and overseas, so as to expand the scale of its coal mine assets and develop coal further processing business.

Improve operation and management and enhance the profitability of the existing coal mines. Firstly, the Company will stabilize the output and sales volume of the coalmine at its headquarters, and improve the output and sales volume of Austar Coalmine in Australia and Tianchi Coalmine of Shanxi Nenghua. Secondly, the Company will continue to implement the 「 Four Optimizations」 and the 「Three Nil Project」. Efforts will be devoted to achieve a optimised mix in domestic sales and export sales, adjust product structure, and increase the sales of more profitable coal products. Thirdly, more emphasis will be given to management and cost control, so as to strengthen the cost management for internal and external development projects of the Company. The Company will also continue to improve the financial control systems, strengthen capital budgeting management, and improve performance assessment systems , in order to ensure effective cost control.

Regulate the operations of the Company and improve the standard of governance in the Company. The Company will continue to improve its internal control over workflow and system. The Company will also strengthen training for its directors, supervisors, senior management and other senior working staff, so as to enhance self-discipline and sense of responsibility. The Company will also continue to improve corporate governance so as to further standardize its operations.

CHANGES IN SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDINGS

Changes in Share Capital during the Reporting Period

During this reporting period, the total number of shares and the capital structure of the Company remained unchanged.

As at 30th June, 2007, the share capital of the Company was as follows.

Unit: shares (Par value per share: RMB1.00)

	Number of shares	Percentage over the total capital of the Company
Domestic tradable shares with trading moratorium	2,600,000,000	52.86%
Domestic tradable shares without trading moratorium	360,000,000	7.32%
H shares	1,958,400,000	39.82%
Total numbers of shares	4,918,400,000	100.00%

Number of Shareholders as at the end of this Reporting Period

As at 30th June, 2007, the Company had a total of 90,019 Shareholders, of which one was the holder of A shares subject to a trading moratorium, 89,901 were holders of A shares without trading moratorium and 117 were holders of H shares.

SUBSTANTIAL SHAREHOLDERS

As at 30th June, 2007, the top ten Shareholders and the top ten Shareholders holding tradable shares without trading moratorium of the Company were as follows.

Name of shareholders	Class of shares	Number of shares held as at the end of this reporting period (shares)	Percentage holding of the total capital of the Company (%)
Shareholders holding tradable shares subject to a trading moratorium
Yankuang Group Corporation Limited	A shares	2,600,000,000	52.86
Shareholders holding tradable shares without trading moratorium
HKSCC Nominees Limited	H shares	1,956,247,680	39.77
Yi Fang Da Value Growing Combined Securities Investment Fund	A shares	13,421,014	0.27
Jiu Jia Securities Investment Fund	A shares	7,547,022	0.15

Name of shareholders	Class of shares	Number of shares held as at the end of this reporting period (shares)	Percentage holding of the total capital of the Company (%)
First State Cinda Leaders Growth Equity Fund	A shares	5,653,739	0.11
Nikko AM China RMB A Shares Fund	A shares	4,399,985	0.09
DEUTSCHE BANK AKTIENGESELLSCHAFT	A shares	4,224,455	0.09
Dow Jones 88 Selected Securities Investment Fund	A shares	3,199,943	0.07
Lion Stocks Securities Investment Fund	A shares	3,179,472	0.06
ING BANK N.V.	A shares	3,099,953	0.06
CICC Stocks Tactic Integrated Asset Management Plan	A shares	2,499,818	0.05

Note: The above number of shareholders as at the end of this reporting period and shareholding information of substantial shareholders were prepared according to the registers of shareholders of the Company as at 30th June, 2007, which were provided by Shanghai Branch of China Securities Depository and Clearing Corporation Limited and Hong Kong Securities Registrars Limited.

Pursuant to the Securities Law of the People’s Republic of China, save as disclosed above, no other shareholders were recorded in the register as at 30th June, 2007 as having an interest of 5% or more of the Company’s public shares.

「 None of the shares held by Yankuang Group Corporation Limited (the Yankuang Group」) were pledged, locked up or held under trust during this reporting period. It is uncertain as to whether the shares held by the other Shareholders as disclosed above were pledged, locked up or held under trust.

As the clearing and settlement agent for the Company’s H shares, HKSCC Nominees Limited held the Company’s H shares in a nominee capacity.

Save as disclosed above, related party relationships and concert actions among the shareholders are not known.

During this reporting period, there was no change in the controlling shareholders or actual controlling person of the Company.

SUBSTANTIAL SHAREHOLDERS

Save as disclosed below, as at 30 June 2007, no other person (other than a director, chief executive

or supervisor of the Company) had an interest or a short position in the shares and underlying shares of the Company as recorded in the register required to be kept under section 336 of the Securities and Futures Ordinance (the 「SFO」).

Name of substantial shareholder	Class of shares	Number of shares held (shares)	Capacity	Type of interest	Percentage in the relevant class of share capital	Percentage in total share capital
Yankuang Group Corporation Limited	Domestic Shares (state-owne d legal person shares)	2,600,000,000~~(L)~~	Beneficial Owner	Corporate	87.84%	52.86%
JP Morgan Chase & Co.	H Shares	122,506,449~~(L)~~ (including 56,930,899(P))	Beneficial owner, Investment manager and Custodian corporation / Approved lending agent	Corporate	9.16%	3.65%
Prudential plc	H Shares	140,886,000	Interests of controlled corporation s	Corporate	7.19%	2.86%
Templeton Asset Management Limited	H Shares	116,002,000~~(L)~~	Investment manager	Corporate	5.92%	2.36%

Notes:

The letter 「L」 denotes a long position. The letter 「S」 denotes a short position. The letter 「P」 denotes interest in a lending pool.

SHAREHOLDINGS OF DIRECTORS AND SUPERVISORS OF THE COMPANY

Save as disclosed below, as at 30th June, 2007, none of the directors, chief executive officer or supervisors of the Company had any interests or short positions in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part

XV of the SFO) (i) as recorded in the register required to be kept under section 352 of the SFO; or (ii) as otherwise notified to the Company and The Stock Exchange of Hong Kong Limited pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (which shall be deemed to apply to the Company’s supervisors to the same extent as it applies to the Company’s directors).

			Number of	Number of
			domestic shares	domestic shares
Name	Status	Title	held at the	held at the end
			beginning of this	of this reporting	Reasons for
			reporting period	period	change
			（shares）	（shares）
Wang Xin	－	Chairman of the Board	0	0	－
Geng Jiahuai	－	Vice Chairman of the Board	0	0	－
Yang Deyu	Beneficial	Vice Chairman of the			－
	owner	Board and General	20,000	20,000
		Manager
Shi Xuerang	－	Director	0	0	－
Chen Changchun	－	Director	0	0	－
Wu Yuxiang	Beneficial owner	Director and Chief Financial Officer	20,000	20,000	－
Wang Xinkun	－	Director and Vice General Manager	0	0	－
Zhang Baocai	－	Director and Secretary of the Board	0	0	－
Dong Yunqing	－	Director	0	0	－
Pu Hongjiu	－	Independent			－
		Non-executive	0	0
		Director
Cui Jianmin	－	Independent			－
		Non-executive	0	0
		Director
Wang	－	Independent			－
Xiaojun		Non-executive	0	0
		Director
Wang	－	Independent			－
Quanxi		Non-executive	0	0
		Director

Meng Xianchang	Beneficial owner	Chairman of the Supervisor Committee	20,000	20,000	－
Song Guo	Beneficial owner	Vice Chairman of the Supervisor Committee	3,000	1,800	traded at the secondary market
Zhang Shengdong	－	Supervisor	0	0	－
Liu Weixin	－	Supervisor	0	0	－
Xu Bentai	－	Supervisor	0	0	－

All the interests disclosed above represent long position in the shares of the Company. As at 30th June, 2007, the total number of domestic shares of the Company held by the directors and supervisors of the Company was 61,800 shares, representing 0.001% of the total share capital of the Company.

As at 30th June, 2007, none of the directors, chief executive officer or supervisors of the Company or their spouses or children under the age of 18 was given the right to acquire shares or debentures of the Company or any associated corporation.

DISCLOSURE OF SIGNIFICANT EVENTS

Final Dividends Distribution for Year 2006

At the 2006 annual general meeting of the Company held on 15th June, 2007, the shareholders of the Company approved the final dividends of RMB983.7 million ( tax included), or RMB0.20 (tax included) per share to be declared and paid to the shareholders of the Company, which include (1) cash dividends of RMB590.2 million (tax included) or RMB0.12 (tax included) per share for the year ended 2006 in accordance with the Company’s consistent dividend policy; and (2) 2006 special cash dividends of RMB393.5 million (tax included) or RMB0.08 (tax included) per share. As at this reporting date, the 2006 final cash dividends has been paid to the shareholders of the Company.

Interim Dividends Distribution

There will be no payment of interim dividends or issue of bonus shares for the first half-year of 2007.

Amendments to the Business Scope and the Articles of Association of the Company

Pursuant to the approval as at the 2006 annual general meeting held on 15th June, 2007, the Company amended the business scope and the articles of association of the Company (the 「Articles of Association」). Details of the amendments to the business scope and the Articles of Association were published in Wen Wei Po and South China Morning Post of Hong Kong dated 27th April, 2007, and posted on the websites of The Stock Exchange of Hong Kong Limited.

Acquisition of Mining Right of Zhaolou Coalmine

The Company acquired 95.67% equity interest in Heze Nenghua from Yankuang Group in December 2005. Pursuant to the related acquisition agreements, Heze Nenghua has the right to purchase mining rights from Yankuang Group at any time within 12 months from the grant of the mining rights of Zhaolou coalmine to Yankuang Group.

Yankuang Group has been granted the mining right certificate of Zhaolou Coalmine by the Ministry of Land and Resources on 28th June, 2006. The Company has started preliminary work for the acquisition of the mining rights of Zhaolou Coalmine pursuant to the terms of the relevant agreements, and the Company will make a public announcement on the acquisition as and when appropriate. The construction of Zhaolou Coalmine is expected to be completed in 2008.

Increase in Registered Capital of Heze Nenghua

As at the 10th meeting of the third session of the Board of the Company convened on 20th April, 2007, the registered capital of Heze Nenghua was approved to be increased to RMB1,500 million from RMB600 million, among which the Company has additionally contributed RMB876 million. The equity interest in Heze Nenghua held by the Company increased from 95.67% to 96.67% after the increase of the registered capital. The increased registered capital is to be mainly used for the construction of Zhaolou Coalmine.

Establishment of Yankuang Group Finance Company Limited

As at the 13th meeting of the third session of the Board of the Company convened on 3rd August, 2007, the resolution on the establishment of Yankuang Group Finance Company Limited (the name of which will be subject to the approval by China Banking Regulatory Commission and the verification by industry and commerce registration authorities) jointly by the Company with Yankuang Group and Zhongcheng Trust and Investment LLC was approved. The Company will contribute RMB125 million from internal resources, which will account for 25% of the registered capital to be contributed.

Please refer to the announcement dated 3rd August, 2007 on the resolution passed at the 13th meeting of the third session of the board of directors published on the website of The Stock Exchange of Hong Kong Limited. The Company will make an announcement pursuant to the listing rules requirement after the Investment Agreement of Yankuang Group Finance Company Limited is signed.

Material Litigation and Arbitration

On 13th December 2004, the Company made an entrusted loan of RMB640 million to Shandong Xin Jia Industria Company Limited (the 「Entrusted Loan」). The Higher People’s Court of Shandong Province arranged and auctioned the 289 million shares of the 360 million shares held by Lianda Group Limited, the guarantor of the Entrusted Loan, in Huaxia Bank Company Limited (「Huaxia Shares」) in accordance with the relevant laws on 6th September, 2005 to repay the

Company the principal, interest, penalty interest and relevant expenses of the Entrusted Loan (the 「 Creditor’s Rights and Interests」). The final auction price was RMB3.5 per Huaxia Share and the

total final auction amount was RMB1,011.5 million. As at the date of disclosure of this report, the successful bidder of Huaxia Shares is still undergoing the process of qualification review by China Banking Regulatory Commission (「CBRC」).

The Company was aware of that while the successful bidder of Huaxia Shares is undergoing the process of qualification review by CBRC, Shandong RunHua Group Company Limited (「RunHua Group」), a private enterprise started legal proceedings in another action for the transfer of 240 million shares in Huaxia Bank Company Limited held by Lianda Group Limited to it. It is reported that the Supreme People’s Court judged that 240 million of the 360 million shares in Huaxia Bank Company Limited held by Lianda Group Limited should be transferred to RunHua Group. In accordance with notice of the Supreme People’s Court, the Higher People’s Court of Shandong Province also informed the Company that the Entrusted Loan case should be continued to be enforced.

The State-owned Asset Supervision and Administration Commission of the State Council and the People’s Government of Shandong Province have respectively sent a letter to the Supreme People’s Court and have formally requested the Supreme People’s Court: (1) to support the Company’s proposition, clarify the priority of executing the Entrusted Loan case and repaying the Company from the sale proceeds through auctioning the Huaxia Shares held by Lianda Group Limited; (2) that if Lianda Group Limited transfers the Huaxia shares to RunHua Group, such transfer shall be proceeded in accordance with legally approved procedures. The letter also requested that without the asset valuation as well as approvals by the state-owned asset supervision and administration organizations and other related authorities, the Huaxia Shares held by Lianda Group shall not be transferred to RunHua Group so as to avoid loss of great amount of state-owned assets.

In view of the coincidence in the targeted matter in the two actions and that the Company has seized the Huaxia Shares in priority, the Supreme People’s Court is mediating between the two cases, and the People’s Government of Shandong Province is also trying to solve the disputes through negotiation by coordinating all related parties, so as to protect the state-owned assets and the interest of the listed company and safeguard the interests of related parties. No clear result is available yet.

Considering the comparatively significant rise in equity value of Huaxia Shares, the Company is confident that it can receive the Creditor’s Rights and Interests through disposal of the Huaxia Shares. Any significant progress concerning the Entrusted Loan will be promptly disclosed by the Company.

Save as disclosed above, the Company was not involved in any other significant litigation or arbitration during this reporting period.

Material Contracts

Besides the relevant agreements disclosed in the section headed 「Disclosure of Significant Events」, the Company was not a party to any material contract during this reporting period.

Use of Funds and External Guarantees by the Company

As at 30th June, 2007, no external guarantees have been made by the Company, and the Company’s controlling shareholders and the Company’s subsidiaries have not used the Company’s funds for non-operating items.

The above information concerning the use of funds and external guarantee by the Company constitutes a disclosure required under the relevant laws of China (excluding Hong Kong).

External Equity Investment

As at 30th June, 2007, the external equity investments made by the Company are as follows.

No.	Code of Stock	Brief Name of Stock	Number of shares held(shares)	Percentage of the company’s total equity interest	Initial investment cost (RMB)	Book value on 30th June, 2007(RMB)
1	600642	Shenergy Company Ltd.	22,323,900	0.77%	60,420,274	143,592,428
2	601008	Lianyungang	1,150,000	0.26%	1,760,419	1,760,419
Total					62,180,693	145,352,847

Save as disclosed above, the Company has made no other external equity investment as at this reporting date.

The above information concerning external equity investment is made pursuant to disclosure requirement under the relevant laws of China (excluding Hong Kong).

COMPANY GOVERNANCE

In accordance with requirements under special program on listed companies governance launched by China Securities Regulatory Commission, Shandong Securities Regulatory Bureau and Shanghai Stock Exchange, the 「Self-examination Report and Reform Plan relating to the Corporate Governance Activities of Yanzhou Coal Mining Company Limited」 was approved at the 12th meeting of the third session of the Board held on 15th June, 2007, and the Company is normally and orderly carrying out public assessment and improving work in stages.

2、During this reporting period, the Company is steadily promoting internal control system construction in pursuant to the US Sarbanes-Oxley Law, Guide on Internal Control of the Listed Companies of Shanghai Stock Exchange, and the Rules Governing the Listing of Securities on 「 The Stock Exchange Hong Kong Limited (the Listing Rules」).

In June 2007, the management completed its evaluation of the effectiveness of the Company’s internal control over financial reporting as of 31st December , 2006 using the criteria in the Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of

the Treadway Commission (COSO). A number of audit adjustments and reclassifications have been made to the Company’s 2006 consolidated financial statements, principally including: the adjustment to the construction in progress in two subsidiaries and one of the coal mines, the adjustment to income tax expense for the provision of tax liabilities for the year, and the reclassifications between certain short-term and long-term assets and liabilities. Management has determined that these adjustments and reclassifications are resulted from lack of financial accounting personnel and experts who have been adequately trained and who are familiar with the IFRS and the US GAAP to deal with matters relating to major transactions, complicated account handling and financial reporting from time to time.

The management has developed a correction plan intended to remediate such ineffectiveness and to strengthen our internal control over financial reporting through the implementation of certain remedial measures.

ENTRUSTED LOAN

Entrusted loans occurred during this reporting period and that occurred in the previous reporting period and continued in this reporting period are set out in the following table.

No.	Borrower	Amount of Entrusted Loan	Term of Loan	Annual Interest	Approval Process	Whether there is a provision for devaluation	Whether principal has been paid
1	Shandong Xinjia Industrial Co., Ltd	RMB640 million	From 20th December, 2004 to 19th January, 2005	7%	Reviewed and approved at board meeting on 13th December, 2004	No	No
2	Yancoal Australia Pty Limited	US$20 million	From 7th November, 2005 to 7th November,2007	6.31%	Reviewed and approved at board meeting dated on 28th June, 2005	No	No
		US$20 million	From 13th February 2006 to 7th November, 2007	6.57938%		No	No
		US$20 million	From 6th June, 2006 to 7th November, 2007	6.89438%		No	No

		US$20 million	From 22nd August, 2006 to 7th November, 2007	6.9625%		No	No
		US$5 million	From 31st October,2006 to 7th November, 2007	6.83063%		No	No
		US$5 million	From 27th November, 2006 to 7th November, 2007	6.7875%		No	No
3	Yanmei Heze Nenghua Company Limited	RMB30 million	From 3rd July, 2006 to 26th June, 2007	5.85%	Reviewed and approved at the daily operation meeting by the general manager dated 22nd June, 2006	No	Yes	RMB7,252,862.50
		RMB100 million	From 10th August, 2006 to 26th June, 2007	5.85%		No	Yes
		RMB35 million	From 17th October,2006 to 26th June, 2007	5.85%		No	Yes
		RMB23 million	From 29th November, 2006 to 26th June, 2007	5.85%		No	Yes
		RMB25 million	From 26th December, 2006 to 26th June, 2007	5.85%		No	Yes
		RMB37 million	From 16th January, 2007 to 26th June, 2007	5.85%		No	Yes
		RMB30 million	From 7th March, 2007 to 26th June, 2007	5.85%		No	Yes
		RMB20 million	From 5th April, 2007 to 26th June, 2007	5.85%		No	Yes

4	Yanzhou Coal Yulin Nenghua Company Limited	RMB 500 million	From 20th October, 2006 to 20th October, 2009	6.30%	Reviewed and approved at the daily operation meeting by the general managers dated 11th September, 2006	No	No	RMB15,925,000
5	Yanzhou Coal Yulin Nenghua Company Limited	RMB100 million	From 17th May, 2007 to 17th May, 2010	6.57%	Reviewed and approved at the board meeting dated on 25th October, 2006	No	No	RMB921,625
		RMB50 million	From 28th May,2007 to 17th May, 2010	6.57%		No	No
		RMB 50 million	From 14th June, 2007 to 17th May, 2010	6.57%		No	No
6	Yanmei Heze Nenghua Company Limited	RMB500 million	5 years since the withdrawing date (now the loan has not been withdrawn yet)	7.2%	Approved at the daily operation meeting by the general managers dated 27th July, 2007	No	No
7	Shanxi Tianhao Chemicals Company Limited	RMB190 million	5 years since the withdrawing date (now the loan has not been withdrawn yet)	7.2%	Approved at the daily operation meeting by the general managers dated 27th July, 2007	No	No
8	Yanzhou Coal Yulin Nenghua Company Limited	RMB1500 million	5 years since the withdrawing date (now the loan has not been withdrawn yet)	7.2%	Approved at the board meeting dated on 17th August, 2007	No	No

As at the daily operation meeting by the general managers held on 22nd January, 2007, Shanxi Nenghua, the Company’s wholly owned subsidiary, was approved to extend an entrusted loan of RMB200 million to Shanxi Tianhao Chemicals Company Limited, Shanxi Nenghua’ s controlling subsidiary. The details are shown as below：

No.	Borrower	Amount of Entrusted Loan	Term of Loan	Annual Interest	Approval Process	Whether there is a provision for devaluation	Whether principal has been paid	Accumulated interest income during this reporting period
1	Shanxi Tianhao Chemicals Company Limited	RMB80 million	From 29th March,2007 to 28th March,2012	6.48%	Reviewed and approved at the daily operation meeting by the general managers dated on 22nd January, 2007	No	No	RMB1,342,800
		RMB20 million	From 15th May,2007 to 14th May,2012	6.48%		No	No
		RMB100 million	From 28th June, 2007 to 27th June, 2012	6.48%		No	No

Upon approval at the board meeting convened on 28th June, 2005, the Company extended an entrusted loan of US$90 million to Yancoal Australia Pty Limited. Yancoal Australia Pty Limited should pay partial principal of US$4.5 million and its corresponding interests back to the Company on 21st September, 2007, and the remaining principal of US$85.5 million and its corresponding interests should be due on 7th November, 2007. As approved at the board meeting held on 17th August, 2007, the principal of US$85.5 million of the entrusted loan mentioned above and its corresponding interests shall be paid off on 7th November, 2008, with one year postponed in terms of repayment term.

During this reporting period, there is no other entrusted loans by the Company occurred. Save as disclosed above, the Company currently has no other plans to make entrusted loans. The above information concerning entrusted loans is made pursuant to disclosure requirement under the relevant laws of China (excluding Hong Kong).

CONNECTED TRANSACTION

Details of the connected transactions for the first half year of 2007 are set out in note 24 to the financial statements prepared in accordance with the IFRS contained herein.

BORROWINGS

Details of the borrowings are set out in note 35 to the financial statements prepared in accordance with the PRC GAAP contained herein.

PURCHASE, SALE OR REDEMPTION OF SHARES OF THE COMPANY

During this reporting period, the Company and its subsidiaries did not purchase, sell or redeem any of the shares of the Company.

COMPLIANCE WITH MODEL CODE

Having made specific enquiry of all directors of the Company, during this reporting period, the directors of the Company have strictly complied with the Model Code for Securities Transactions by Directors of Listed Issuers (the 「Model Code」) set out in Appendix 10 of the Rules Governing the Listing Rules. The Company has adopted a code of conduct regarding the securities transactions of the directors of the Company on terms no less than the required standard set out in the Model Code.

COMPLIANCE WITH CODE ON CORPORATE GOVERNANCE PRACTICES

During this reporting period, the Company has complied with the code provisions in the Code on Corporate Governance Practices set out in Appendix 14 of the Listing Rules (the 「Code Provision」).

There is no significant difference between the compliance with the Code Provision by the Company during this reporting period and that disclosed in the Company’s 2006 Annual Report.

IMPACT OF FLUCTUATIONS IN EXCHANGE RATES ON THE COMPANY

China implements a managed floating exchange rate regime based on market supply and demand with reference to a basket of currencies.

The impact of floating exchange rate to the Company is mainly reflected in (a) (coal exports of the Company are calculated in US dollar) impact on income through coal export which is calculated in RMB; (b) impact of conversion loss of foreign currency deposit; and (c) impact on the Company’s import costs of equipment and fittings.

The Company has no plans to make hedging arrangements for the exchange rates of RMB to foreign currencies.

EMPLOYEES

As at 30th June, 2007, the Company had 41,073 employees in total, of whom 2,697 were management personnel, 1,570 were technicians, 26,386 were directly involved in coal production and 10,420 were supporting staff.

POLICY OF REMUNERATION

The remunerations for the directors, the supervisors and the senior management of the Company shall be proposed by the Remuneration Committee of the Board to the Board. The remuneration for the directors and the supervisors of the Company has to be approved in the shareholders’ general meeting after review and approved by the Board; while the remuneration for the senior

management has to be approved by the Board.

The Company adopts a combined annual remuneration and risk control system for assessing and rewarding the directors and senior management of the Company. The annual remuneration consists of basic salary and benefit income: basic salary is determined according to the operational scale of the Company with reference to the market wages and the income of employees whereas benefit income is determined by the actual operational achievement of the Company. The annual remunerations for the directors and senior management of the Company are paid on a monthly basis and are confirmed after the performance review to be carried out in the following year.

The remuneration policy of the other employees of the Company is principally a position and skill remuneration system, which determines the remuneration of the employees on the basis of their positions and responsibilities and their quantified assessment results. Their rewards are linked to the Company’s overall economic efficiency.

AUDITORS

In this reporting period, the Company has retained Deloitte Touche Tohmatsu (Certified Public Accountants in Hong Kong) and Deloitte Touche Tohmatsu Certified Public Accountants Ltd. (Certified Public Accountants in the PRC (excluding Hong Kong)) as its international and domestic auditors, respectively.

DOCUMENTS AVAILABLE FOR INSPECTION

The following documents are available for inspection in the office of the secretary to the Board at 298 Fushan South Road, Zoucheng, Shandong Province, the PRC:

the full text of the interim report signed by the Chairman;
financial statements bearing the chop of the Company and signed by corporate representative, responsible person of the accounting work and responsible person of the accounting department;
all documents which were published during the reporting period in newspapers designated by the China Securities Regulatory Commission;
the Articles of Association of the Company;
the full text of the interim report released in other securities markets.

On behalf of the Board

Wang Xin

Chairman

17th August, 2007

Zoucheng, People’s Republic of China

Directors: As at the date of this announcement, the Directors of the Company are Mr. Wang Xin, Mr. Geng Jiahuai, Mr. Yang Deyu, Mr. Shi Xuerang, Mr. Chen Changchun, Mr. Wu Yuxiang, Mr. Wang Xinkun, Mr. Zhang Baocai and Mr. Dong Yunqing, and the independent non-executive Directors of the Company are Mr. Pu Hongjiu, Mr. Cui Jianmin, Mr. Wang Xiaojun, Mr. Wang Quanxi.

The interim report of the Company for the six-month period ended 30th June, 2007 containing all the information required by paragraphs 46(1) to 46(6) of Appendix 16 to the Listing Rules will be published on the website of The Stock Exchange of Hong Kong Limited

（http//www.hkex.com.hk） in due course.

YANZHOU COAL MINING COMPANY LIMITED

BALANCE SHEET

AT JUNE 30, 2007

NOTES	The Group The Company At June At December At June At December 30, 2007 31, 2006 30, 2007 31, 2006 RMB RMB RMB RMB (Unaudited (Unaudited (Unaudited) and restated) (Unaudited) and restated)
ASSETS CURRENT ASSETS: Bank balances and cash 9 Notes receivable 10 Accounts receivable 11 Prepayments 12 Interest receivable Dividends receivable Other receivables 13 Inventories 14 Entrust loan 15 Other current assets 16 TOTAL CURRENT ASSETS NON CURRENT ASSETS: Available-for-sale f nancial assets 17 Entrust loan 15 Long-term equity investments 18 Fixed assets and accumulated depreciation 19 Fixed assets under construction 20 Materials held for construction of f xed assets 21 Intangible assets 22 Goodwill 23 Long-term deferred expenses 24 Other non current assets 25 TOTAL NON CURRENT ASSETS TOTAL ASSETS	7,183,465,863 6,028,060,759 6,784,885,493 5,615,399,136 1,064,618,508 2,061,620,338 1,063,768,508 2,061,620,338 149,130,398 214,170,457 79,625,384 181,851,451 142,602,013 115,894,464 126,875,593 105,414,667 – – 54,233,914 31,457,046 – – – 298,582 286,083,794 192,373,095 895,178,833 563,655,156 690,505,173 579,560,747 523,907,390 417,815,789 640,000,000 640,000,000 777,079,000 923,278,300 230,780,387 240,199,375 230,780,387 239,949,381
	10,387,186,136 10,071,879,235 10,536,334,502 10,140,739,846
	103,110,844 53,900,039 103,110,844 53,900,039 – – 1,248,316,000 1,132,504,700 42,242,003 42,242,003 2,818,394,658 1,927,428,458 8,422,228,243 8,795,190,480 7,043,797,772 7,522,530,384 2,539,222,423 2,197,521,485 253,990,903 111,624,099 682,260,785 525,897,325 7,756,306 21,829,853 719,283,598 721,759,540 651,613,038 659,503,957 12,319,645 7,813,059 – – 23,446,656 121,344,906 – – 97,425,900 97,425,900 97,425,900 97,425,900
	12,641,540,097 12,563,094,737 12,224,405,421 11,526,747,390
	23,028,726,233 22,634,973,972 22,760,739,923 21,667,487,236

Interim Report 2007 25

YANZHOU COAL MINING COMPANY LIMITED

BALANCE SHEET – CONTINUED

AT JUNE 30, 2007

AT JUNE 30, 2007
NOTES	The Group The Company At June At December At June At December 30, 2007 31, 2006 30, 2007 31, 2006 RMB RMB RMB RMB (Unaudited (Unaudited (Unaudited) and restated) (Unaudited) and restated)
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES: Notes payable 27 89,347,166 168,945,054 89,347,166 137,843,036 Accounts payable 28 494,600,537 662,673,015 401,296,573 537,682,591 Advances from customers 29 528,289,020 732,812,102 510,962,744 722,618,722 Salaries and wages payable 30 264,123,040 210,216,780 203,871,674 211,571,061 Taxes payable 31 170,087,510 356,052,352 171,178,299 353,593,958 Dividends payable 32 983,680,000 – 983,680,000 – Other payables 33 1,246,468,760 1,760,353,295 1,409,027,083 1,394,339,284 Other current liabilities 34 98,813,112 – 98,813,112 – Long-term payable due within one year 35,36 245,006,113 93,455,596 167,140,392 35,593,610 TOTAL CURRENT LIABILITIES 4,120,415,258 3,984,508,194 4,035,317,043 3,393,242,262 NON CURRENT LIABILITIES Bank borrowings 35 319,000,000 330,000,000 – – Long-term payable 36 569,460,395 487,116,135 569,460,395 487,116,135 Deferred tax liabilities 37 27,446,811 11,207,245 27,446,811 11,207,245 TOTAL NON CURRENT LIABILITIES 915,907,206 828,323,380 596,907,206 498,323,380 TOTAL LIABILITIES 5,036,322,464 4,812,831,574 4,632,224,249 3,891,565,642 SHAREHOLDERS’ EQUITY: Share capital 38 4,918,400,000 4,918,400,000 4,918,400,000 4,918,400,000 Capital reserves 39 4,793,196,884 4,757,053,340 4,790,024,579 4,757,053,340 Surplus reserves 40 1,709,766,066 1,709,766,066 1,709,449,482 1,709,449,482 Unappropriated prof ts 41 6,507,068,902 6,381,830,403 6,710,641,613 6,391,018,772 Translation reserve (11,209,827) (10,395,923) – – Equity attributable to shareholders of the Company 17,917,222,025 17,756,653,886 18,128,515,674 17,775,921,594 Minority interest 75,181,744 65,488,512 – – TOTAL SHAREHOLDERS’ EQUITY 17,992,403,769 17,822,142,398 18,128,515,674 17,775,921,594 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 23,028,726,233 22,634,973,972 22,760,739,923 21,667,487,236 The accompanying notes are part of the f nancial statements. The f nancial statements on pages 25 to 104 were signed by the following: Head of the Company: Chief Financial Off cer: Head of Accounting Department: Wang Xin Wu Yu Xiang Zhao Qing Chun	89,347,166 168,945,054 89,347,166 137,843,036 494,600,537 662,673,015 401,296,573 537,682,591 528,289,020 732,812,102 510,962,744 722,618,722 264,123,040 210,216,780 203,871,674 211,571,061 170,087,510 356,052,352 171,178,299 353,593,958 983,680,000 – 983,680,000 – 1,246,468,760 1,760,353,295 1,409,027,083 1,394,339,284 98,813,112 – 98,813,112 – 245,006,113 93,455,596 167,140,392 35,593,610
	4,120,415,258 3,984,508,194 4,035,317,043 3,393,242,262
	319,000,000 330,000,000 – – 569,460,395 487,116,135 569,460,395 487,116,135 27,446,811 11,207,245 27,446,811 11,207,245
	915,907,206 828,323,380 596,907,206 498,323,380
	5,036,322,464 4,812,831,574 4,632,224,249 3,891,565,642
	4,918,400,000 4,918,400,000 4,918,400,000 4,918,400,000 4,793,196,884 4,757,053,340 4,790,024,579 4,757,053,340 1,709,766,066 1,709,766,066 1,709,449,482 1,709,449,482 6,507,068,902 6,381,830,403 6,710,641,613 6,391,018,772 (11,209,827) (10,395,923) – –
	17,917,222,025 17,756,653,886 18,128,515,674 17,775,921,594
	75,181,744 65,488,512 – –
	17,992,403,769 17,822,142,398 18,128,515,674 17,775,921,594
	23,028,726,233 22,634,973,972 22,760,739,923 21,667,487,236

26 Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

STATEMENT OF INCOME AND PROFITS APPROPRIATION

FOR THE PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007

NOTES	The Group The Company For the period ended June 30, For the period ended June 30, 2007 2006 2007 2006 RMB RMB RMB RMB (Unaudited (Unaudited (Unaudited) and restated) (Unaudited) and restated)
1. Operating income 42 Less: Operating cost 43 Operating taxes and surcharges 44 Selling expense 45 General and administrative expense Financial expense 46 Impairment loss of assets Add: Investment income 47 2. Operating prof t Add: Non-operating income Less: Non-operating expense Including: Loss on disposal of non current assets 3. Total prof t Less: Income tax 48 4. Net prof t Including: Attribute to shareholders of the Company Minority interest 5. Earning per share (1) Earning per share, basis 50 (2) Earning per share, diluted 50 The accompanying notes are part of the	7,778,210,254 7,031,703,858 7,162,658,571 7,026,835,893 4,249,847,298 3,444,741,395 3,840,005,245 3,446,266,263 141,916,649 138,120,360 139,118,045 138,120,360 401,762,863 519,847,693 308,175,534 521,726,223 1,141,364,185 909,072,584 789,079,053 896,011,508 (70,357,183) (22,588,101) 20,989,335 (16,540,560) – – – – – (558,076) 45,784,600 246,771
	1,913,676,442 2,041,951,851 2,111,075,959 2,041,498,870 4,890,331 4,625,033 4,766,708 4,622,533 31,790,839 2,584,664 30,965,745 2,584,664 933,903 689,739 933,903 689,739
	1,886,775,934 2,043,992,220 2,084,876,922 2,043,536,739 782,103,654 685,060,907 781,574,081 684,846,731
	1,104,672,280 1,358,931,313 1,303,302,841 1,358,690,008
	1,108,918,499 1,358,690,008 1,303,302,841 1,358,690,008 (4,246,219) 241,305 – –
	1,104,672,280 1,358,931,313 1,303,302,841 1,358,690,008
	0.23 0.28 0.23 0.28 0.23 0.28 0.23 0.28 f nancial statements.

Interim Report 2007 27

YANZHOU COAL MINING COMPANY LIMITED

CASH FLOW STATEMENT

FOR THE PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007

NOTES	The Group The Company For the period ended June 30, For the period ended June 30, 2007 2006 2007 2006 RMB RMB RMB RMB (Unaudited) (Unaudited) (Unaudited) (Unaudited)
1. CASH FLOW FROM OPERATING ACTIVITIES: Cash received from sales of goods or rendering of services Other cash received relating to operating activities 53 Sub-total of cash inf ows Cash paid for goods and services Cash paid to and on behalf of employees Taxes payments Other cash paid relating to operating activities 54 Sub-total of cash outf ows NET CASH FLOW FROM OPERATING ACTIVITIES 2. CASH FLOW FROM INVESTING ACTIVITIES: Cash received from return on investments Net cash received from disposal of f xed assets, intangible assets and other long-term assets Other cash received relating to investing activities 55 Sub-total of cash inf ows	9,497,401,974 7,031,662,818 8,896,779,966 7,031,197,296 74,002,369 142,179,712 327,260,363 140,400,103
	9,571,404,343 7,173,842,530 9,224,040,329 7,171,597,399
	2,714,328,904 2,540,971,941 2,400,967,039 2,541,579,149 1,201,419,729 1,067,737,643 1,009,086,334 1,033,273,832 1,993,751,570 1,588,484,781 1,968,014,619 1,585,240,853 1,626,325,649 1,586,264,360 1,621,494,721 1,730,582,253
	7,535,825,852 6,783,458,725 6,999,562,713 6,890,676,087
	2,035,578,491 390,383,805 2,224,477,616 280,921,312
	– – 213,000,000 – – – 23,306,314 – 5,389,105 4,382,496 4,040,767 4,377,463 56,252,869 – 5,207,360 –
	61,641,974 4,382,496 245,554,441 4,377,463

28 Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

CASH FLOW STATEMENT – CONTINUED

FOR THE PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007

NOTES	NOTES	The Group The Company For the period ended June 30, For the period ended June 30, 2007 2006 2007 2006 RMB RMB RMB RMB (Unaudited) (Unaudited) (Unaudited) (Unaudited) 880,996,204 1,085,581,870 204,372,140 211,886,190 14,966,200 – 1,090,966,200 321,600,000
Cash paid to acquire f xed assets, intangible assets and other long-term assets Cash paid for investments Including: Cash paid for the acquisition of Heze Cash paid for the acquisition of Shanxi Cash paid for additional investment in Australia Cash paid for additional investment in Yulin Other cash paid relating to investing activities Sub-total of cash outf ows NET CASH FLOW USED IN INVESTING ACTIVITIES 3. CASH FLOW FROM FINANCING ACTIVITIES: Cash received from investors Including: Investment from minority shareholders of a subsidiary Sub–total of cash inf ows Cash paid for distribution of dividends or prof ts, or cash paid for interest expenses Include: Dividends paid to minority shareholders of a subsidiary Sub-total of cash outf ows NET CASH FLOW USED IN FINANCING ACTIVITIES 4. EFFECT OF FOREIGN EXCHANGE RATE CHANGES 5. NET INCREASE(DECREASE) IN CASH AND CASH EQUIVALENTS 6. Cash and cash equivalents, ending 51 The accompanying notes are part of the
	Cash paid for the acquisition of Heze Cash paid for the acquisition of Shanxi Cash paid for additional investment in Australia Cash paid for additional investment in Yulin Other cash paid relating	– – 876,000,000 – 14,966,200 – 14,966,200 – – – – 321,600,000 – – 200,000,000 –
		– 13,086,665 – – 895,962,404 1,098,668,535 1,295,338,340 533,486,190 (834,320,430) (1,094,286,039) (1,049,783,899) (529,108,727) 24,000,000 – – – 24,000,000 – – –
	, paid for interest expenses Include: Dividends paid to minority shareholders	13,600,088 6,459,449 – 6,188,000
		– 271,449 – – 13,600,088 6,459,449 – 6,188,000 10,399,912 (6,459,449) – (6,188,000) – – – – 1,211,657,973 (710,361,683) 1,174,693,717 (254,375,415) 7,122,133,405 5,910,475,432 6,774,589,821 5,599,896,104 f nancial statements.

Interim Report 2007 29

YANZHOU COAL MINING COMPANY LIMITED

		Unit: RMB			Translation	reserve Total	RMB RMB		– 17,775,921,594		– 1,303,302,841					– 32,971,239	– –	– –	– –	– 19,112,195,674		– –	– –			– (983,680,000)	– –		– 18,128,515,674
			The Company		Surplus Unappropriated	reserves prof ts	RMB RMB		1,709,449,482 6,391,018,772		– 1,303,302,841					– –	– –	– –	– –	1,709,449,482 7,694,321,613		– –	– –			– (983,680,000)	– –		1,709,449,482 6,710,641,613
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY AND GROUP	FOR THE PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007		The Group	Attributable to	Share Capital Surplus Unappropriated Translation shareholders Minority Share Capital	capital reserves reserves prof ts reserve of the Company interest Total capital reserves	RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB	1. Balance at January 1, 2007	(unaudited and restated) 4,918,400,000 4,757,053,340 1,709,766,066 6,381,830,403 (10,395,923) 17,756,653,886 65,488,512 17,822,142,398 4,918,400,000 4,757,053,340	2. Addition/deduction of the period	(1) Net prof t – – – 1,108,918,499 – 1,108,918,499 (4,246,219) 1,104,672,280 – -–	(2) Gains and losses directly	recognized in owners’ equity	1. The variance of fair value of	available-for-sale f nancial	assets – 32,971,239 – – – 32,971,239 – 32,971,239 – 32,971,239	2. Wei Jian Fei transfer in – 2,928,375 – – – 2,928,375 673,119 3,601,494 – –	3. Translation reserve – – – – (813,904) (813,904) – (813,904) – –	4. Other – 243,930 – – – 243,930 56,070 300,000 – –	Sub-total of (1) and (2) 4,918,400,000 4,793,196,884 1,709,766,066 7,490,748,902 (11,209,827) 18,900,902,025 61,971,482 18,962,873,507 4,918,400,000 4,790,024,579	(3) Capital	1. Capital contributed by the owners – – – – – – 24,000,000 24,000,000 – –	2. Acquire minority interest – – – – – – (10,459,614) (10,459,614) – –	(4) Appropriations	1. Appropriations to reserves	2. Dividend – – – (983,680,000) – (983,680,000) – (983,680,000) – –	3. Dividend of subsidiaries – – – – – – (330,124) (330,124) – –	3. Balance at June 30, 2007	(unaudited) 4,918,400,000 4,793,196,884 1,709,766,066 6,507,068,902 (11,209,827) 17,917,222,025 75,181,744 17,992,403,769 4,918,400,000 4,790,024,579

30 Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

		Unit: RMB			Translation	reserve Total	RMB RMB		– 17,156,643,418	(93,357,700)	– 17,063,285,718		– 1,358,690,008					– –	– 106,464,036	– –	– 18,528,439,762		– –			– –	– (1,082,048,000)	– –		– 17,446,391,762		– 17,446,391,762		– 414,413,619				– 22,754,104	– 107,015,959	– –				– (214,653,850)	– 17,775,921,594		– –	– –		– –	– –		– 17,775,921,594
			The Company		Surplus Unappropriated	reserves prof ts	RMB RMB		1,528,474,119 5,844,288,508	3,665,000 32,985,000	1,532,139,119 5,877,273,508		– 1,358,690,008					– –	– –	– –	1,532,139,119 7,235,963,516		– –			– –	– (1,082,048,000)	– –		1,532,139,119 6,153,915,516		1,532,139,119 6,153,915,516		– 414,413,619				– –	– –	– –				– –	1,532,139,119 6,568,329,135		– –	– –		177,310,363 (177,310,363)	– –		1,709,449,482 6,391,018,772
STATEMENT OF CHANGES IN EQUITY OF THE COMPANY AND GROUP	FOR THE PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007		The Group	Attributable to	Share Capital Surplus Unappropriated Translation shareholders Minority Share Capital	capital reserves reserves prof ts reserve of the Company interest Total capital reserves	RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB	1. Balance at Dec 31, 2005	(audited) 4,918,400,000 4,865,480,791 1,528,790,703 5,843,971,924 (15,016,163) 17,141,627,255 53,912,439 17,195,539,694 4,918,400,000 4,865,480,791	Changes on accounting policies (130,007,700) 3,665,000 32,985,000 (93,357,700) (93,357,700) (130,007,700)	2. Balance at Jan 1, 2006 4,918,400,000 4,735,473,091 1,532,455,703 5,876,956,924 (15,016,163) 17,048,269,555 53,912,439 17,102,181,994 4,918,400,000 4,735,473,091	3. Addition/deduction of the period	(1) Net prof t – – – 1,358,690,008 – 1,358,690,008 241,305 1,358,931,313 – –	(2) Gains and losses directly	recognized in owners’ equity	1. The changes of fair value of	available-for-sale	f nancial assets – – – – – – – – – –	2. Wei Jian Fei transfer in – 106,464,036 – – – 106,464,036 – 106,464,036 – 106,464,036	3. Translation reserve – – – – 1,237,351 1,237,351 – 1,237,351 – –	Sub-total of (1) and (2) 4,918,400,000 4,841,937,127 1,532,455,703 7,235,646,932 (13,778,812) 18,514,660,950 54,153,744 18,568,814,694 4,918,400,000 4,841,937,127	(3) Capital	1. Capital contributed by the owners – – – – – – – – – –	2. Other	(4) Appropriations	1. Appropriations to reserves – – – – – – – – – –	2. Dividend – – – (1,082,048,000) – (1,082,048,000) – (1,082,048,000) – –	3. Dividend of subsidiaries – – – – – – (271,448) (271,448) – –	4. Balance at June 30, 2006	(unaudited and restated) 4,918,400,000 4,841,937,127 1,532,455,703 6,153,598,932 (13,778,812) 17,432,612,950 53,882,296 17,486,495,246 4,918,400,000 4,841,937,127	1. Balance at July 1, 2006	(unaudited and restated) 4,918,400,000 4,841,937,127 1,532,455,703 6,153,598,932 (13,778,812) 17,432,612,950 53,882,296 17,486,495,246 4,918,400,000 4,841,937,127	2. Addition/deduction of the period	(1) Net prof t – – – 405,541,834 – 405,541,834 100,206 405,642,040 – –	(2) Gains and losses directly	recognized in owners’ equity	1. The changes of fair value of	available-for-sale f nancial assets – 22,754,104 – – – 22,754,104 – 22,754,104 – 22,754,104	2. Wei Jian Fei transfer in – 107,015,959 – – – 107,015,959 141,012 107,156,971 – 107,015,959	3. Translation reserve – – – – 3,382,889 3,382,889 – 3,382,889 – –	4. Equity investment difference arise	form business combination	involving enterprises	under common control – (214,653,850) – – – (214,653,850) – (214,653,850) – (214,653,850)	Sub-total of (1) and (2) 4,918,400,000 4,757,053,340 1,532,455,703 6,559,140,766 (10,395,923) 17,756,653,886 54,123,514 17,810,777,400 4,918,400,000 4,757,053,340	(3) Capital	1. Capital contributed by the owners – – – – – – – – – –	2. Acquire Shanxi Group – – – – – – 11,364,998 11,364,998 – –	(4) Appropriations	1. Appropriations to reserves – – 177,310,363 (177,310,363) – – – – – –	2. Dividend – – – – – – – – – –	3. Balance at Dec 31, 2006	(unaudited and restated) 4,918,400,000 4,757,053,340 1,709,766,066 6,381,830,403 (10,395,923) 17,756,653,886 65,488,512 17,822,142,398 4,918,400,000 4,757,053,340

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

FOR THE PERIOD FROM JANUARY 1, 2007 TO JUNE 30, 2007

1. GENERAL

Yanzhou Coal Mining Company Limited (the “Company”) is a Sino-foreign joint stock company with limited liability established in the People’s Republic of China (the “PRC”). The Company was established on September 25, 1997 by Yankuang Group Corporation Limited (the “Yankuang Group”) and commenced operations on October 1, 1997. The A Shares, H Shares and American Depository Shares issued by the Company are listed on the stock exchanges in Shanghai, Hong Kong and New York, respectively. The principal operations of the Company are the mining and screening of coal, sales of coal products and coal transportation service.

The Company is one of the nineteenth batch of share reform companies designated by China Securities Regulatory Commission. As approved by the Lu State-owned Assets Ownership Letter [2006] No.32 issued by the State-owned Assets Supervision & Administration Commission (SASAC) of People’s Government of Shandong Province, as well as approved by the Company’s shareholder’s meeting regarding the share reform plan, the Company’s share reform plan is as follows: 2.5A shares for every existing 10 A shares would be offered by the non-tradable legal person shares on the share registration date (March 30, 2006) of share reform plan implemented. After the implementation of the plan, the Company’s total share capital as well as the Company’s fi nancial indicators such as assets, liabilities, shareholder’s equity, earnings per share, etc. will remain unchanged, and the shares owned by Yankuang Group would then be converted to tradable shares in 4 years time according to formula. The Share Reform Plan was further approved by the Ministry of Commerce of the PRC on March 21, 2006 and was implemented by April 3, 2006. See note 38 for share capital after share reform.

2. THE PREPARATION FOUNDATION OF FINANCIAL

First-time adoption of the Accounting Standards for Business Enterprise issued on February 15, 2006 (the “New Accounting Standards”).

The Company implements the New Accounting Standards issued by Ministry of Finance on February 15, 2006 from January 1, 2007. The company has prepared retrospective adjustment to the comparative fi nancial statements under Articles 5 to 19 of ASBE 38.The effort of these changes is disclosed in Note 6.Except items for which retrospective adjustment is required under Article 5 to 19 of ASBE 38,other items of the comparative fi nancial statements are based on the previous business accounting standards and accounting principles determined by the “Business Accounting Principles”. There are some differences between the previous accounting standards and the new accounting standards adopted in the 2007 mid-year fi nancial statement. See Note 6 for the differences.

The form and content of comparative fi nancial statements for the immediately preceding accounting period have been changed accordingly.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

3. DECLARATION OF COMPLIANCE WITH ACCOUNTING STANDARDS

The fi nancial statements have been prepared in accordance with the New Accounting Standards and other related regulations, and has been presented fairly, in all material respect, the fi nancial position of the Company as of 30 June 2007 and the results of its operations and cash fl ows for the period from January 1, 2007 to June 30, 2007.

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

The following accounting policies and accounting estimates systems are determined by the new accounting standards.

Accounting year

The Company has adopted the calendar year as its accounting year, i.e. from January 1 to December 31.

The accounting period of the fi nancial statement is from January 1, 2007 to June 30, 2007.

Recording currency

Renminbi (RMB) is the currency of the primary economic environment, in which the Company operates, and the recording currency of the Company is RMB.

Basis of accounting and principle of measurement

The Company has adopted the accrual basis of accounting and used the historical cost convention as the principle of measurements for assets and liabilities except for fi nancial assets and fi nancial liabilities, which are initially measured at their fair values. After initial recognition, the available-for-sale fi nancial assets are measured at fair value, while other assets are carried at historical cost or at amortized cost. If there is indication of impairment on assets which are recorded at historical costs or amortized cost, impairment loss will be provided on that basic accordingly.

Cash equivalents

Cash equivalents are short-term, highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignifi cant risk of changes in value.

Foreign currency translation

Foreign currency transactions identifi ed in the initial recognition is converted at the spot exchange rate of the day when the transaction occurred.

Interim Report 2007 33

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Foreign currency translation – continued

At the balance sheet date, foreign currency monetary items are translated using the spot exchange rate of the day. Exchange differences arising from the differences between the spot exchange rate prevailing at the balance sheet date and those spot rates used in initial recognition or at the previous balance sheet date are recognized in profi t or loss for the current period, except for the exchange differences arising on the borrowing costs eligible for capitalization, which could be capitalized as part of the assets.

Foreign currency non-monetary items measured at historical cost are translated at the spot exchange rates at the dates of the transactions. And foreign currency non-monetary items measured at fair value are translated using the exchange rates at the date when the fair value is determined. The differences between the amount of the recording currency before and after conversion are recognized in profi t or loss or interests of shareholders as changes of fair value.

Financial Instruments

A fi nancial instrument is a contract that give rise to a fi nancial asset of one entity and a fi nancial liability or equity instrument of another entity. The Company recognise the fi nancial asset or fi nancial liability when it acts as one part of the contract. Financial assets and fi nancial liabilities are initially recognized at fair value. In the case of a fi nancial asset or fi nancial liability at fair value through profi t or loss, transaction costs are charged to the profi t or loss for the current period. For other fi nancial assets or fi nancial liabilities, transaction costs are included in their initial recognition amounts

Fair Value

Fair value refers to the amount of money voluntarily exchanged by both parties, which is familiar to each other, in the exchange of assets or liquidation of the debt in the condition of a fair deal.

The fair value of the fi nancial assets or liabilities in the active market is determined by their prices in the active market. The fair value of the fi nancial assets of liabilities without an active market is determined by the consensus of the market or those estimating techniques that have been proved to be reliable by the market. The fair value of initial acquired or original fi nancial assets or liabilities is based on the market transaction price.

Amortized cost

The amortized cost of a fi nancial asset or fi nancial liability is the amount at which the fi nancial asset or fi nancial liability is measured at initial recognition after making the following adjustments:

(a) minus the principal repayments;
(b) plus or minus the cumulative amortization using the effective interest method of any difference between that initial amount and the maturity amount;
(c) minus any reduction for impairment (only applicable to fi nancial assets).

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Effective interest method

The effective interest method is a method of calculating the amortized cost of a fi nancial asset or a fi nancial liability (or a group of fi nancial assets or fi nancial liabilities) and of allocating the interest income or interest expense over the relevant period, using the effective interest rate. The effective interest rate is the rate that exactly discounts estimated future cash payments or receipts through the expected life of the fi nancial instrument or, when appropriate, a shorter period to the net carrying amount of the fi nancial asset or fi nancial liability.

When calculating the effective interest rate, an enterprise shall estimate future cash fl ows considering all contractual terms of the fi nancial asset or fi nancial liability (including prepayment, call and similar options) but shall not consider future credit losses. The calculation of the effective interest rate shall include all fees paid or received between the parties to the contract giving rise to the fi nancial asset and fi nancial liability that are an integral part of the effective interest rate, transaction costs, and premiums or discounts etc.

Financial assets

On initial recognition, based on its nature and purpose of holding, fi nancial assets shall be classifi ed into the four categories: fi nancial assets of fair value through profi t or loss, held-to-maturity investments, loans and receivables and available-for-sale fi nancial assets.

Financial assets at fair value through profi t and loss

It includes fi nancial assets held for trading and those designated as at fair value through profi t or loss. A fi nancial asset should be classifi ed as held for trading fi nancial assets if one of the following conditions is met:

(a) the fi nancial assets is acquired or incurred principally for the purpose of selling or repurchasing it in the near term.
(b) the fi nancial asset is part of a portfolio of identifi ed fi nancial instruments that are managed together and for which there is objective evidence of a recent pattern of short-term profi t-taking.
(c) the fi nancial asset is a derivative, except for a derivative that is a designated and effective hedging instrument, or a fi nancial guarantee contract, or a derivative that is linked to and must be settled by delivery of an unquoted equity instrument (without a quoted price from an active market) whose fair value cannot be reliably measured.

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YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Financial assets – continued

Financial assets at fair value through profi t and loss – continued

When any of the following conditions is met, a fi nancial asset maybe designated, on initial recognition, as at fair value through profi t or loss:

(a) the designation eliminates or signifi cantly reduces a measurement or recognition inconsistency of the related gains or losses that would otherwise result from measuring assets or liabilities on different bases.
(b) a group of fi nancial assets is managed and its performance is evaluated on a fair value basis, and the fi nancial assets are reported on that basis to the Company’s key management personnels. Formal documentation has been prepared with respect to such risk management or investment strategy.

A fi nancial assets classifi ed as at fair value through profi t or loss is measured using fair value, a gain or loss on it and its relevant dividends and interests are recognized in profi t or loss for the period.

Held-to-maturity investment

Held-to-maturity investments are non-derivative fi nancial assets with fi xed or determinable payments and fi xed maturity date that the enterprise has the clear intention and ability to hold to maturity.

The held-to-maturity investments are carried at the amortized cost using the effective interest rate method less the impairment provision, a gain or loss is recognize in profi t or loss when the fi nancial asset is derecognized or impaired, and through the amortization process.

Loans and account receivable

Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in an active market. Loans and receivables are carried at amortized cost using the effective interest method, less any identifi ed impairment losses, the interest income is recognized using the effective interest rate method, and recorded in the profi t or loss for the current period.

Available-for-sale fi nancial assets

It Includes non-derivative fi nancial assets that are, upon initial recognition designated as available for sale, and fi nancial assets at fair value through profi t or loss, loans and receivables or held-to-maturity investments.

A gain or loss on an available-for-sale fi nancial asset shall be recognized directly in owner’s equity, except for impairment losses and foreign exchange gains and losses resulted from monetary fi nancial assets, until the fi nancial asset is derecognized, at which time the cumulative gain or loss previously recognized in owner’s equity shall be recognized in profi t or loss accordingly. Dividends or interest income related to the available-for-sale fi nancial asset is recorded in the profi t or loss for the current period.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Impairment of fi nancial assets

The company has assessed at the balance sheet date the carrying amount of a fi nancial asset (other than those at fair value through profi t of loss). It there is objective evidence that the fi nancial asset is impaired, the company shall determine the amount of any impairment loss. Objective evidence that a fi nancial asset is impaired is [evidence arising from] one or more events that occurred after the initial recognition of the asset and that event has an impact on the estimated future cash fl ows of the fi nancial asset which can be reliably estimated.

When an available-for-sale fi nancial asset is impaired, the cumulative loss arising from decline in fair value that had been recognized directly in owner’s equity shall be removed from owner’s equity and recognized in profi t or loss even though the fi nancial asset has not been derecognized. The amount of the cumulative loss that is removed from owner’s equity shall be the difference between the acquisition cost (net of any principal repayment and amortization) and the current fair value, less any impairment loss on that fi nancial asset previously recognized in profi t or loss. If the fi nancial assets carried at amortized cost are impaired, the carrying amount of the fi nancial asset shall be reduced to the present value of estimated future cash fl ows. The amount of reduction shall be recognized as an impairment loss in profi t or loss.

The impairment loss on an investment in unquoted equity instrument (without a quoted price in an active market) whose fair value cannot be reliably measured, or on a derivative asset that is linked to and must be settled by delivery of such an unquoted equity instrument shall not be reversed. For other fi nancial assets, if, subsequent to the recognition of an impairment loss on a fi nancial asset, there is objective evidence of a recovery in value of the fi nancial asset which can be related objectively to an event occurring after the impairment was recognized, the previously recognized impairment loss shall be reversed and recognized in profi t or loss, excluding the available-forsale investment in an equity instrument. However, the reversal shall not result in a carrying amount of the fi nancial asset that exceeds what the amortized cost would have been had the impairment not been recognized at the date the impairment is reversed.

Derecognition of fi nancial assets

The company shall derecognize a fi nancial asset if one of the following conditions is met:

(a) The contractual rights to the cash fl ows from the fi nancial asset expire.
(b) The fi nancial asset has been transferred, including all the risks and revenues from the ownership.
(c) The fi nancial asset has been transferred, and the company has given up the control of the fi nancial assets, though it has neither transferred the ownership of the fi nancial assets nor retained almost all the risks and revenues from the ownership.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Inventories

Inventories are initially recorded at cost. The cost of inventories comprises all costs of purchase, costs of conversion and other costs incurred in bringing the inventories to their present location and condition. Inventories mainly include raw materials, and fi nished goods.

Inventories are accounted for using the actual costing method. In determining the cost of inventories transferred out or issued for use, the actual costs of raw materials and fi nished goods are determined by the moving average and weighted average method, respectively.

The Company adopts a perpetual inventory system to account for its inventory.

Provision for decline in value of inventories

Inventories are measured at the lower of cost and net realizable value at the end of a period. When the net realizable value is lower than the cost, the difference is recognized as a provision for decline in value. Provision for decline in value of inventories is made by comparing cost with net realizable value on an individual item basis.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs to completion and the estimated expenses and the related taxes necessary to make the sale.

Long-term equity investments

For a business combination involving enterprise under common control, the initial investment cost of the long-term equity investment is the absorbing party’ share of the owner’s equity of the party being absorbed at combination date. For a business combination not involving enterprises under common control, the initial investment cost of the longterm equity investment acquired is the aggregate of the fair value, at the acquisition date, of the acquiree’s identifi able assets, liabilities and contingent liabilities acquired. For a long-term equity investment acquired by cash payment, the initial investment cost shall be the actual purchase price that has been paid. Initial investment cost also includes those costs, taxes and other necessary expenditures directly attributable to the acquisition of the long-term equity investment. For a long-term equity investment acquired by the issue of equity securities, the initial investment cost shall be the fair value of the securities issued.

For a long-term equity investment where the investing enterprise can exercise control over the investee, and a longterm equity investment where the investing enterprise does not have joint control or signifi cant infl uence over the investee, the investment is not quoted in an active market and its fair value cannot be reliably measured, use cost method; For an investing enterprise which can exercise joint control or signifi cant infl uence over the investee, a longterm equity investment shall be accounted for using the equity method. Where an investing enterprise cannot exercise joint control or signifi cant infl uence over the investee and the fair value can be measured reliably, a long-term equity investment is accounted for as available-for-sale fi nancial assets.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Long-term equity investments – continued

Long-term equity investment is accounted for under the cost method

Under the cost method, a long-term equity investment shall be measured at its initial investment cost. When additional investment is made or the investment is recouped, the cost of the long-term equity investment shall adjust accordingly. Cash dividends or profi t distributions declared by the investee shall be recognized as investment income in the current period. Investment income recognized by the investing enterprise shall be limited to the amount distributed to it out of accumulated net profi ts of the investee arising after the investment was made. Any cash dividends or distributions received in excess of this amount shall be treated as a recovery of initial investment cost.

Long-term equity investment accounted for under the equity method

Under the equity method, where the initial investment cost of a long-term equity investment exceeds the investing enterprise’s interest in the fair values of the investee’s identifi able net assets at the acquisition date, no adjustment shall be made to the initial investment cost. Where the initial investment cost is less than the investing enterprise’s interest in the fair values of the investee’s identifi able net assets at the acquisition date, the difference shall be charged to profi t or loss for the current period, and the cost of the long-term equity investment shall be adjusted accordingly.

Under the equity method, the investment is initially recognized at cost and the carrying amount is increased on decreased to recognize the investor’s share of the profi t or loss of investee after the date of acquisition. The investor’s share of the profi t or loss of the investee is recognized in the investor’s profi t or loss. The investing enterprise shall recognize its share of the net profi ts or losses made by the investee in the fair values of the investee’s identifi able net assets in accordance with the accounting policy and accounting period that the Company has adopted. Recognize investment income or losses based on the adjusted fi nancial statements. The investing enterprise shall adjust the carrying amount of the long-term equity investment for other changes in owner’s equity of the investee (other than net profi ts or losses), and include the corresponding adjustment in equity.

When the Company discontinues recognizing its share of net losses of the investee after the carrying amount of the long-term equity investment together with any long-term interests that in substance from part of the investor’s net investment in the investee, if it is not suffi cient, until they are reduced to zero, except to the extent that the investing enterprise has incurred obligations to assume additional losses. The Company shall recognize the contingent liabilities according to the contracts or agreement that the investing enterprise has incurred obligations to assume additional losses.

Interim Report 2007 39

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Long-term equity investments – continued

Disposal of long-term equity investments

On disposal of a long-term equity investment, the difference between the proceeds actually received and the carrying amount shall be recognized in profi t or loss for the current period. For a long-term equity investment accounted for using the equity method, any changes in the owner’s equity of the investee included in the owner’s equity of the investing enterprise shall be transferred to profi t or loss for the current period on a pro-rata basis according to the proportion disposed of.

Fixed assets and depreciation

Fixed assets are intangible assets that are held for using the production or supply of goods or services, for rental to others, or for administrative purposes; and have useful lives more than one accounting year.

Fixed assets shall be initially measured at cost and shall consider the effect of any expected costs of abandoning the asset at the end of its use. Except for lands category for which no depreciation is provided, and mining structures, which are depreciated using the estimated production volume method, depreciation is provided over their estimated useful lives from the month after they have reached the working condition for their intended use using the straight-line method. The estimated residual rate, useful life and annual depreciation rate of each category of fi xed assets are as follows:

	Estimated		Annual
Category	residual value	Useful life	depreciation rate
Buildings	3%	15-30 years	3.23-6.47%
Railway structure	3%	15-25 years	3.88-6.47%
Harbor works and craft	3%	40 years	2.43%
Plant, machinery and equipment	3%	5-15 years	6.47-19.40%
Transportation equipment (Note)	3%	6-18 years	5.39-16.17%

Note: Vessels of Shandong Yanmei Shipping Co., Ltd. are depreciated over 18 years. All the other transportation equipments are depreciated over 6 to 9 years.

Mining structures are depreciated using production volume method at RMB2.5 per tonne of raw coal mined.

Land category only refers to that of Australian Southland coal mine and no depreciation is provided for as Austar enjoys the permanent ownership.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Fixed assets and depreciation – continued

Estimated net residual value of a fi xed asset is the estimated amount that an enterprise would currently obtain from disposal of the asset, after deducting the estimated costs of disposal, if the asset were already of the age and in the condition expected at the end of its useful life.

Subsequent costs incurred on an asset upon its initial recognition shall be recognised as addition to the asset provided economic benefi ts associated with the item will fl ow to the Company, and the revised carrying amount does not exceed the recoverable amount of the said asset.

The Company shall review the useful life and estimated net residual value of a fi xed asset and the depreciation method applied at least at each fi nancial year-end. A change in the useful life and or estimated net residual value of a fi xed asset or depreciation method used shall be accounted for as a change in an accounting estimate.

When a fi xed asset is sold, transferred, retired or damaged, the enterprise shall recognize the amount of any proceeds on disposal of the asset net of the carrying amount and related taxes in profi t or loss for the current period.

Fixed assets under construction

Fixed assets under construction are recorded at the actual cost incurred for the construction. Cost includes all expenditures incurred for construction projects, capitalized borrowing costs incurred on a specifi c borrowing for the construction of fi xed assets incurred before it has reached the working condition for its intended use, and other related expenses. A fi xed asset under construction is transferred to fi xed assets when it has reached the working condition for its intended use.

Intangible assets

An intangible asset is an identifi able non-monetary asset without physical substance owned or controlled by an enterprise.

An intangible asset shall be measured initially at cost. An intangible asset shall be recognized only when the economic benefi ts associated with the asset will fl ow to the enterprise and the cost of the asset can be measured reliably. All other expenditure on an intangible item shalol be recognized in profi t and loss in the period.

The land use rights purchased should be recognized as intangible assets. When the buildings and plants are acquired, if the cost can be distributed between and land use rights, the amount changed to land use right should be recognized as intangible assets and the amount changed to the plants should be recognized as fi xed assets. If the cost can not be reasonably distributed between the plants end the land use rights, all should be recognized as fi xed assets.

The depreciable amount of an intangible asset with a fi nite useful life shall refl ect the pattern in which the asset’s economic benefi ts are expected to be realized. If that pattern cannot be determined reliably, the straight-line method shall be used. An intangible asset with an indefi nite useful life shall not be amortized.

Land use rights are evenly amortized over 50 years since the certifi cate of land use rights are obtained.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Intangible asset – continued

Mining rights are evenly amortized over the useful life since the mining rights are obtained. The useful life is estimated based on the total proven and probable reserves of the coal mine.

For an intangible asset with a fi nite useful life, the Company shall review the useful life and the amortization method applied at least at each fi nancial year-end. A change in the useful life or amortization method used shall be accounted for as a change in an accounting estimate. For an intangible asset with an indefi nite useful life, the Company shall reassess the useful life of the asset in each accounting period. If there is evidence indicating that the useful life of that intangible asset is fi nite, the Company shall estimate the useful life of that asset and apply the accounting requirements of the Standard accordingly.

Long-term prepaid expenses

Long-term prepaid expenses are expenditures and other expenses has occurred which will be benefi ted over 1 year (excluding within 1 year). It will be amortized evenly over the estimated benefi t period.

Impairment of assets

The Company assesses at each balance sheet date whether there is any indication that the long-term equity investments measured by equity method, investment property, fi xed assets, construction in progress and intangible assets with fi nite useful life may be impaired. If there is objective evidence that one or more events that occurred after the initial recognition of the asset and that event has an impact on the estimated future cash fl ows of the fi nancial asset which can be reliably estimated, a fi nancial asset is impaired. If the result of the recoverable amount calculation indicates the recoverable amount of an asset is less than its carrying amount, the carrying amount of the asset shall be reduced to its recoverable amount. That reduction is recognized as an impairment loss and charged to profi t or loss for the current period and an impairment loss of the asset is recognized accordingly.

Goodwill acquired in a business combination and intangible assets with indefi nite paid shall be assessed for impairment at least at each fi nancial year-end. For the purpose of impairment assessment, goodwill shall be considered together with the related asset groups or sets of asset group allocated with goodwill should be assesed for impairment at each fi nancial year-end. If the recoverable amount of the asset groups or set of asset groups is less than the book value, the impairment loss will fi rstly be charged to the goodwill allocated to the asset groups or sets of asset groups, and then be charged proportionally to the book value of the asset groups or sets of asset groups.

The recoverable amount of an asset is the higher of its fair value cost of disposal and the present value of the future cash fl ows expected to be derived from the asset costs of disposal. An asset’s fair value less costs of disposal is the price in a sale agreement in an arm’s length transaction, adjusted for incremental costs that would be directly attributable to the disposal of the asset. If there is not sale agreement but an asset is traded in an active market, fair value shall be the asset’s market price less the costs of disposal. If there is not agreement or active market for an asset, fair value shall be based on the best available information.

Once an impairment loss is recognized, it shall not be reversed in a subsequent period.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Financial liability

Financial liability divided into fi nancial liability at fair value through profi t or loss and other fi nancial liabilities at initial measurement according to the holding purpose.

Financial liability at fair value through profi t or loss

It includes fi nancial liability held for trading and fi nancial liability designated by the entity as at fair value through profi t and loss. It is subsequently measured at fair value through profi t or loss.

Financial liability held for trading and fi nancial liability designated as at fair value meet the same condition as that for fi nancial assets at fair value through profi t and loss.

Other fi nancial liabilities

Other fi nancial liabilities are subsequently measured by amortized cost using the effective interest method according to the difference between the net amount received and the amount to be repaid on the date of maturity.

Employee benefi ts

In the accounting period in which an employee has rendered service to the company, the company shall recognize the employee benefi ts payable [for that service] as a liability.

The company participates in social security systems required by the government. Payments of social security contributions for employees, such as premiums or contributions on medical insurance, pension insurance, payments of housing funds and other security system shall be recorded into related assets or current profi t or loss.

When the company terminates the employment relationship with employees before the end of the employment contracts or provides compensation as an offer to encourage employees to accept voluntary redundancy, if the company has a formal plan for termination of employment relationship or has made an offer for voluntary redundancy, which will be implemented immediately, and the company cannot unilaterally withdraw from the termination plan or the redundancy offer, a compensation liability arising from the termination of employment relationship with employees should be charged to the profi t or loss for the current period.

Internal union retirement plan adopts the same principles of benefi ts above. The company recognizes the social security fees paid which is calculated from the date that the employee stops offer services to the date that the employee retires as employee benefi ts payable for the current period.

Interim Report 2007 43

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Contingent Liability

The obligation related to a contingency is recognized as a liability when it meets the following conditions:

(1) the obligation is a present obligation of the Company;
(2) it is probable that an outfl ow of economic benefi ts from the Company will be required to settle the obligation;
(3) a reliable estimate can be made of the amount of the obligation.

At the balance sheet date, factors pertaining to a contingency such as the risks, uncertainties and time value of money are taken into accounting a provision is initially measured at the best estimate of the out-fl ow of economic benefi ts required to settle the related present obligation.

Where some or all of the expenditure required to settle a liability that meets the above recognition criteria is expected to be reimbursed by a third party or other parties, the reimbursement is separately recognized as an asset when, and only when, it is virtually certain that the reimbursement will be received. The amount recognized for the reimbursement is limited to the carrying amount of the liability recognized.

Wei Jian Fei

According to the relevant regulations, Wei Jian Fei is accrued at RMB6 per tonne of raw coal mined and is recorded in cost of sales and other current liabilities. Wei Jian Fei is used for purchase of coal production equipment and refurbishment of coal mining structure and the corresponding amounts are transferred from other current liabilities to capital reserves when the construction facilities are put into use. Pursuant to the relevant regulations, the capital reserve can only be used for the future development of the coal mining business.

Work safety expense

Pursuant to “Method for Accrual and Usage of Work Safety Expense” Caijian [2004] No. 119, which was jointly issued by States Finance Bureau, National Development and Reform Commission and State Administration of Coal Mine Safety, Work Safety Expense is accrued at RMB8 per ton raw coal mined and recorded in cost of sales and long-term liability from May1,2004. Work Safety Expense is used for purchase of coal production equipment and safety expense of coal mining structure. Relevant expenditure should offset with long-term payable when actually incurs and related fi xed assets should be fully depreciated and no further depreciation is provided afterwards.

Reform and specifi c development fund

Pursuant to “Notice of setting up reform and specifi c Development Fund for provincial key corporations” Caiqi [2004] No.28, which was jointly issued by Shandong Province Finance Bureau, State-owned Assets Supervision and Administration Commission of Shandong Municipal Government, Shandong Province Coal Mine Industry Bureau, Reform and Specifi c Development Fund is accrued at RMB5.00 per tonne of raw coal mined from July1, 2004 and is used for related expenditures on mine construction.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Division of liability and equity

The Company divides the fi nancial instruments or parts of them into fi nancial assets, liabilities and equity instruments at the initial recognition in accordance with the substance of the fi nancial instruments and the defi nitions of fi nancial assets, liabilities and equity instruments.

Equity instruments

Equity instruments are any contract that evidences a residual interest in the assets of an entity after deducting all of its liabilities.

The transaction fees arising from the issue of equity instruments by one party in the corporate merger shall be reduced in the premium income. If the transaction fees overweight the premium income, the company shall reduce them in the retained revenue. For other equity instruments, the price received during the issue shall be added to shareholder’s equity after reducing the transaction fees. If the company repurchase the equity instrument, the price paid and transaction fees shall reduce the shareholder’s equity. When issuing, repurchasing, selling, or cancelling the equity instrument, the company shall not recognize the profi t or loss.

The distribution (excluding the dividend) to the equity instrument holders by the company shall reduce the shareholder’s equity. The company shall not recognize the changes of the equity instruments’ fair value.

Revenue recognition

Revenue from sales of goods:

Revenue is recognized when the Company has transferred to the buyer the signifi cant risks and rewards of ownership of the goods, retains neither continuing managerial involvement to the degree usually associated with ownership nor effective control over the goods sold, will receive the economic benefi ts associated with the transaction, and can reliably measure the relevant amount of revenue and costs.

Revenue from rendering of services:

When the provision of services is started and completed within the same accounting year, revenue is recognized at the time of completion of the services. When the provision of services is started and completed in different accounting years and the outcome of a transaction involving the rendering of services can be estimated reliably, revenue is recognized at the balance sheet date by the use of the percentage of completion method. Revenue is otherwise recognized at the balance sheet date only to the extent of the costs incurred that are recoverable and service costs are recognized as expenses in the period in which they are incurred. If the service costs incurred are not expected to be recovered, revenue is not recognized.

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YANZHOU COAL MINING COMPANY LIMITED

SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Revenue recognition – continued

Interest income:

Interest income is measured based on the length of time for which the enterprise’s cash is used by others and the applicable interest rate.

Government grant

Government grants are transfer of monetary assets or non-monetary assets from the government to the Company at no consideration, excluding capital considerations from the government as an owner of the Company to the Company. Government grants are classifi ed into government grants related to assets and government grants related to income. Government grant shall be recognized when, and only when the conditions are met.

If a government grant is in the form of a transfer of a monetary asset, the item shall be measured at the amount received or receivable. If a government grant is in the form of a transfer of a non-monetary asset, the item shall be measured at fair value. If fair value is not reliably determinable, the item shall be measured at a nominal amount and recognized immediately in profi t or loss for the current period.

A government grant related to an asset shall be recognized as deferred income, and evenly amortized to profi t or loss over the useful life of the related asset.

A government grant related to income shall be accounted for as follows:

if the grant is a compensation for related expenses or losses to be incurred by the enterprise in subsequent periods, the grant shall be recognized as deferred income, and recognized in profi t or loss over the periods in which the related costs are recognized.
if the grant is a compensation for related expenses or losses already incurred by the enterprise, the grant shall be recognized immediately in profi t or loss for the current period.

Repayment of a government grant already recognized shall be accounted for as follows:

if there is any related deferred income, the repayment shall be offset against the carrying amount of the deferred income, and any excess shall be recognized in profi t or loss for the current period.
if there is no related deferred income, the repayment shall be recognized immediately in profi t or loss for the current period.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Borrowing costs

Borrowing costs include interest, amortization of discount or premiums related to borrowings, ancillary costs incurred in connection with the arrangement of borrowings, and exchange differences arising from foreign currency borrowings. Borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset (that necessarily take a substantial period of time for acquisition, construction or production go get ready for their intended use or sale), when expenditures for the asset and borrowing costs are being incurred, activities relating to the acquisition, construction or production of the asset that are necessary to prepare the asset for its intended use or sale have commenced shall be capitalized as part of the cost of that assets discontinue the capitalization when acquired and constructed production is available for use. The actual amounts of ancillary costs incurred after the qualifying asset becomes ready for its intended use or sale shall be recognized as an expense in the period in which they are incurred.

Qualifying assets are assets (fi xed assets, investment property, inventories, etc) that necessarily take a substantial period of time for acquisition, construction or production to get ready for their intended use or sale.

Capitalization of borrowing costs shall be suspended during periods in which the acquisition, construction or production of a qualifying asset is interrupted abnormally, when the interruption is for a continuous period of more than 3 months. The borrowing costs incurred during these periods shall be recognized as expenses for the current period until the acquisition, construction or production of a qualifying asset is resumed.

Income tax

Income tax for the current period

Income taxes for the current period is measured based on current period taxable income. Taxable income is the accounting profi t before tax adjusted in accordance with requirements of tax laws, the Company’s liability for current tax is calculated using tax rates that have been enacted or substantively enacted by the balance sheet date.

Deferred tax assets and liabilities

The differences between the carrying amount of an asset or liability and its tax base. For those items that have a tax base but are not recognized as assets or liabilities in the balance sheet that can be determined according to tax laws, the difference between the tax base of such an item and its carrying amount is also a temporary differences.

Deferred tax is recognized on differences between the carrying amounts of assets and liabilities in the fi nancial statements and the corresponding tax bases used in the computation of taxable profi t, and its accounted for using the balance sheet liability method. Deferred tax liabilities are generally recognized for all deductible temporary difference and deferred tax assets are generally recognized for all deductible temporary differences can be utilized. Such assets and liabilities are not recognized if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assts and liabilities in a transaction that affects neither the taxable profi t nor the accounting profi t.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Income tax – continued

Deferred tax assets and liabilities – continued

Deferred tax liabilities are recognized for taxable temporary differences associated with investments in subsidiaries and associates, and interests in 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. Deferred tax assets arising from deductible temporary differences associated with such investments and interests are only recognized to the extent that it is probable that there will be suffi cient taxable profi ts against which to utilize the benefi ts of the temporary differences and they are expected to reverse in the foreseeable future.

The carrying amount of deferred tax assets is reviewed at each balance sheet date and reduced to the extent that it is not longer probable that suffi cient taxable profi ts will be available to allow all or part of the asset to be recovered.

Deferred tax assets and liabilities are measured at the tax rates that are expected to apply in the period in which the liability is settled or the asset realized, according to the requirement of tax laws

Deferred tax assets and liabilities should not be discounted.

Income tax expense

Income tax expense includes current tax and deferred tax.

Except for those transactions or events that are recognized directly in owner’s equity which cause the relevant current tax and deferred tax expense (income) being recorded in capital reverse and deferred tax adjusting the book value of goodwill arising from business combinations, current tax and deferred tax expense or income are included in profi t or loss for the current period.

Business combinations

A business combination is a transaction or event that brings together of separate enterprises into one reporting entity. Business combinations are classifi ed into business combinations involving enterprises under common control and business combinations not involving enterprises under common control.

The company recognize the assets and liabilities arise from the business combinations at the combinations date or acquisition date. Combinations date or acquisition date is the date on which the absorbing party effectively obtains control of the party being absorbed.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Business combinations – continued

Business combinations involving enterprises under common control

A business combination involving enterprise under common control is a business combination in which all of the combining enterprises are ultimately controlled by the same party or parties both before and after the combination, and that control is not transitory. On the combination date, obtains control of another enterprise participating in the combination is the absorbing party, while that other enterprise participating in the combination is a party being absorbed.

Assets and liabilities that are obtained by the absorbing party in a business combination are measured at their carrying amounts at the combination date as recorded by the party being absorbed. The difference between the carrying amount of the net assets obtained and the carrying amount of the consideration paid for the combination (or the aggregate face value of shares issued as consideration) is adjustment to capital reserve. If the capital reserve is not suffi cient to absorb the difference, any excess shall be adjusted against retained earnings.

The cost of a combination incurred by the absorbing party includes any costs directly attributable to the combination is recognized as expenses when incurred.

Business Combinations not Involving Enterprises Under common Control and Goodwill

A business combination not involving enterprises under common control is a business combination in which all of the combining enterprises are not ultimately controlled by the same party or parties before and after the combination. For a business combination not involving enterprises under common control, the party that, on the acquisition date, obtains control of another enterprise participating in the combination is the acquirer, while that other enterprise participating in the combination is the acquiree.

The cost of combination for a business combination not involving enterprises under common control is the aggregate of the fair values, at the acquisition date, of the assets given, liabilities incurred or assumed, equity securities issued by the acquirer and costs incurred that are directly attributable to the business combination in exchange for control of the acquiree. For a business combination achieved in stages that involoves multiple exchang transactions, the costof combination is the aggregate of the costs of individual transactions.

The acquirer shall, at the acquisition date, recognizes the acquiree’s identifi able assets, liabilities and contingent liabilities acquired at fair value.

Interim Report 2007 49

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Business combinations – continued

Business Combinations not Involving Enterprises Under common Control and Goodwill – continued

Where the cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifi able assets, liabilities and contingent liabilities acquired, the difference shall be recognized as goodwill. Where the cost of combination is less than the acquiree’s interest in the fair value of the acquiree’s identifi ed assets, liabilities and contingent liabilities acquired, the difference should be accounted for according to the following requirements: (1) the acquirer shall reassess the measurement of the fair values of the acquiree’s identifi able assets, liabilities and contingent liabilities and measurement of the cost of combination (2) if after the assessment,the cost of combination is still less than the acquirer’s interest in the fair value of the acquiree’s identifi able net assets,the acquirer shall recognize the remaining difference immediately in profi t or loss for the current period.

Lease

A fi nance lease is a lease that transfers substantially all the risks and rewards incident to ownership of an asset. All other leases are classifi ed as operating leases. Lease payments under operating leases are recognized as an expense in the income statement on a straight-line basis over the lease term.

The Company as lessee under operating leases

Lease payments under operating leases are recognized as an expense in the income statement on a straight-line basis over the lease term. Initial direct costs incurred by the lessee shall be charged to profi t and loss for the current period. Contingent rents shall be charged to profi t or loss in the period in which they are actually incurred.

Preparation methods for consolidated fi nancial statements

Consolidated fi nancial statements are fi nancial statements which consolidate the Company and the subsidiaries which directly or indirectly controlled by the Company or specifi c purpose entities. Control is the power to govern the fi nancial and operating policies of any entity so as to obtain benefi ts from its operating activities.

The Company recognize the time it substantially transferred the risks and benefi ts related to the shares of the subsidiaries acquired or disposed as the date of acquisition or disposal. For those subsidiaries acquired or disposed not controlled by the same parent, the operating results and cash fl ows after the acquisition date and before disposal date have been properly included in the consolidated income statements and consolidated cash fl ow statements. For those subsidiaries acquired or disposed controlled by the same parent company, the operating results and cash fl ows from the opening of the consolidation period to the consolidation date are also presented in the consolidated income statement and the consolidated cash fl ow statements. The comparative consolidated fi nancial statements amount is also adjusted respectively.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Preparation methods for consolidated fi nancial statements – continued

If the accounting policy applied by the subsidiary is different from that of the Company, the fi nancial statements of the subsidiary will be adjusted respectively according to the Company’s accounting policy, when preparing the consolidated fi nancial statements. For those subsidiaries not controlled by the same parent, the fi nancial statements are respectively adjusted according to the fair value of identifi able assets, liabilities and contingencies at the acquisition date.

All intra-group transactions, balances, income and expenses are eliminated in full on consolidation.

Minority interests in the net assets (excluding goodwill) of consolidated subsidiaries are identifi ed separately from the Group’s equity therein. Minority interests consist of the amount of those interests at the date of the original business combination (see below) and the minority’s share of changes in equity since the date of the combination. Loss applicable to the minority in excess of the minority interest in the subsidiary’s equity are allocated against the interests of the Group except to the extent that that the minority has a binding obligation and is able to make an additional investment to cover the losses.

Translation of foreign currency fi nancial statements

The foreign currency fi nancial statements of a foreign operation are translated to RMB as following.

Assets and liabilities on the balance sheet are translated at the spot exchange rate prevailing at the balance sheet date. All equity items except for unappropriated profi ts (or accumulated losses) are translated at the spot exchange rates at the dates on which such items arose. Income and expenses in the income statement are translated at the spot exchange rates at the dates of the transactions.

The unappropriated profi ts (or accumulated losses) brought forward are reported at the prior year’s closing balance. The unappropriated profi ts (or accumulated losses) carried forward are calculated, based on the translated amounts of profi ts (or losses) and other profi t appropriation items. All exchange differences resulting from the translation are recognized as “translation reserve” in the equity on the balance sheet.

Cash fl ows of foreign currency or from a foreign subsidiary are translated at the spot exchange rates at the date of transaction. The effect of exchange in exchange rates on cash and cash equivalents is presented separately as a reconciling item in the cash fl ow statement.

The opening balances and prior year’s fi gures are presented according to the translated amounts of the prior year.

Interim Report 2007 51

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Segment reporting

In disclosing segment information, the Company identifi es business segments and geographical segments. A business segment is a distinguishable component of the Company that is engaged in providing an individual or a group of related products or services and that is subject to risks and returns that are different from those of other components. A geographical segment is a distinguishable component of the Company that is engaged in providing products or services within a particular economic environment and that is subject to risks and returns that are different from those of components operating in other economic environments.

The Company identifi es primary reporting format and secondary reporting format in disclosure of segment information. Since the risks and returns of the Company are affected predominantly by differences in the products and services it products, the primary format in disclosure of segment information is business segments, and the secondary format is geographical segments.

Inter-segment transfers are measured on the basis of actual transaction price for such transfers.

Earnings per share

Basic earnings per share

Basic earnings per share are net profi t or loss for the current period attributable to ordinary shareholders divided by the weighted average number of ordinary shares outstanding.

The number of new issued ordinary stock shares shall be calculated since the date of price receivable in accordance with the specifi c provisions of the issue contract.

Diluted Earnings per share

Diluted earnings per share takes the dilutive potential ordinary shares into consideration, and relevantly adjust both the net profi t and loss for the current period attributable to ordinary shareholders and the weighted average number of ordinary shares outstanding.

Dilutive potential ordinary shares are those potential ordinary shares that would reduce earnings per share if they were converted into ordinary shares in the current period.

When the company adjusts the net profi t attributable to ordinary shareholders, any interest recognized as expenses in the current period related to dilutive potential ordinary shares, any income or expenses that would result from the conversion of dilutive potential ordinary shares, and the associated tax effects should be considered.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Earnings per share – continued

Diluted Earnings per share – continued

For the purpose of calculating diluted earnings per share, the weighted average number of ordinary shares outstanding shall be the sum of the weighted average number of ordinary shares determined for the purpose of calculating basic earnings per share and the weighted average number of ordinary shares that would be issued on the conversion of dilutive potential ordinary shares into ordinary shares.

For the purpose of calculating the weighted average number of ordinary shares that would be issued on the conversion of dilutive potential ordinary shares, dilutive potential ordinary shares issued in previous periods shall be deemed to have been converted at the beginning of the current period. Dilutive potential ordinary shares issued during the current period shall be deemed to have been converted on their issue date.

Offset of Financial Assets and Financial Liabilities

If the company owns the legitimate rights of offsetting the fi nancial assets and fi nancial liabilities recognized, which are enforceable currently, and the company plans to realize the fi nancial assets or to clear off the fi nancial liabilities by net amount method, the amount of the offsetting fi nancial assets and fi nancial liabilities shall be reported in the balance sheep. Moreover, fi nancial assets and fi nancial liabilities shall be refl ected in the balance sheet respectively without offsetting.

FOUNDATION OF THE IDENTIFICATION OF SIGNIFICANT ACCOUNTING POLICIES AND THE KEY ASSUMPTIONS AND UNCERTAINTIES ADOPTED IN ACCOUNTING ESTIMATES

Depreciation and amortization

The coal well constructions are accrued depreciation by the methods of production. The production is the production estimated according to the design of the coal well constructions. The authorities estimates the remaining years usable of the assets depreciated and the production of the coal wells.

The right for coal mining

The right for coal mining is amortized by the straight-line method in accordance with the shorter one between the mineable period estimated and the contract year. The mineable period is estimated by the storage of coal in the wells, and the storage is estimated by the relative authorities.

Accounts receivables and bad debt impairment estimates

The relative authorities regularly review the recyclability of the accounts receivable and its ages. The bad debt impairment is estimated by the present value of the future cash fl ow converted by the discount rate.

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YANZHOU COAL MINING COMPANY LIMITED

FOUNDATION OF THE IDENTIFICATION OF SIGNIFICANT ACCOUNTING POLICIES AND THE KEY ASSUMPTIONS AND UNCERTAINTIES ADOPTED IN ACCOUNTING ESTIMATES – CONTINUED

Estimated goodwill impairment

In deciding whether the goodwill should be impaired, the goodwill will be assessed to the value of related assets or group of assets. The goodwill calculated by the value needs to be estimated by the company in accordance with the present value of future cash fl ow, which is produced by the assets group of the combination of the assets group, converted by appropriate discount rate. Up to June 30, 2007, the goodwill to the book value is of RMB12,319,645.

The cash fl ow estimates of the above assets group or assets group combinations during the budgeting period are based on the revenue estimates in the period, expected gross margin and the expected increases of the raw material prices. The cash fl ow estimates include expected revenue, gross margin and raw material assumption. The management believes that the appropriate changes of the assumptions will not lead to the situation that the book value of the assets group or assets group combinations above exceeds their recyclable amount.

6. CHANGES IN ACCOUNTING POLICIES

First-time adoption of the new accounting standards since January 1, 2007. From this day on, recognize, calculate, and report the company’s transactions or events in accordance with the new accounting standards. For the changes of the accounting policies, our company uses the following methods.

6.1 Changes in accounting policies accounted for using petrospective application

Long-term Equity Investment

Before the implementation of the new accounting standards, long-term equity investments are calculated by the equity accounting method, and the difference between the initial investment cost and the equity share possessed by the unit being invested should be calculated as the borrower’s balance of the investor’s equity, which would be averagely shared to a certain period and recorded into loss and gain. Initial investment costs are less than the equity share possessed by the unit being invested, and the differences occurred before the publication of the Finance-accounting [2003] No. 10 Documents are calculated as the lender’s balance of equity investment, shared averagely to a certain period, and recorded into loss and gain. Those differences occurred after the publication of Finance-accounting [2003] No. 10 Documents are recorded into capital surplus.

See Note 4 “long-term equity investment” for the accounting policies related to long-term equity investment in the new accounting standards. For the fi rst-time adoption date of the new accounting standards, the balance of the equity investment caused by the unshared long-term equity investment, which occurred under the control of corporate consolidation, should be completely amortized. Other equity investment lender’s balance measured by equity method is also amortized. Adjust the retained earnings of the fi rst adoption date.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

6. CHANGES IN ACCOUNTING POLICIES – CONTINUED

6.1 Changes in accounting policies accounted for using petrospective application – continued

Income Tax

Income tax is provided under the tax payable method before the adoption of the new accounting standards.

See Note 4 “Income Tax” for the accounting policies related to income tax in the new accounting standards.

Goodwill

Before the adoption of the new accounting standards, under the corporate merger under the same control, the differences between the merger costs and the shareholder’s equity book value of the combined party should be regard as goodwill, and amortized averagely into a certain period.

See Note 4 “Business Combination” for the accounting policies of the merger of corporate under the same control in the new accounting standards. For the fi rst-time adoption date, the value of the merger corporate under the same control should be all amortized if the value has been confi rmed as goodwill but not been amortized completely.

Goodwill Impairment

Before the adoption of the new accounting standards, under the corporate merger not under the same control, the differences between the merger costs and the shareholder’s equity book value of the combined party should be regard as goodwill, and amortized averagely into a certain period. Goodwill usually does not accrue impairment preparation.

See Note 4 “Business Combination” for the accounting policies of the merger of corporate under the same control in the new accounting standards.

Financial Assets

Before the adoption of the new accounting standards, short-term investments are priced according to their initial investment costs, and calculated according to the lower one between costs and market price at the end of the period. The long-term stock investment acquired which is within an active market, but is not controlled, commonly controlled, or greatly infl uenced by the invested units will be calculated according to the initial investment costs, and will be calculated by costs method when on hand.

After the adoption of the new accounting standards, the investments above are divided into 2 parts-the fi nancial assets, which are calculated according to the fair value with their changes recorded into current loss and gains, and fi nancial assets for sale, respectively. See Note 4 “Financial Assets” for the corresponding accounting policies.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

6. CHANGES IN ACCOUNTING POLICIES – CONTINUED

6.1 Changes in accounting policies accounted for using petrospective application – continued

Consolidated Financial Statement

Before the adoption of the new accounting standards, minority shareholder’s equity is reported individually in the liabilities and shareholder interests items of the consolidated fi nancial statement, and minority shareholder’s loss and gain are refl ected as deduction before net profi ts.

See Note 4 “Consolidated Financial Statement” for the corresponding accounting policies of the new accounting standards.

For the modifi cation of the accounting policies, according to the provisions of No.38 standards, the company has traced back to and adjusted the numbers at the beginning of the period (or contrast numbers of last year) of the fi nancial statements, and has restated the comparable period fi nancial statement. The infl uences of the medication of accounting policies above on the fi nancial statement from January 1, 2006 to December 31, 2006 are as follows:

	Inf uences on shareholder’s equity of the group at Jan	Inf uences on shareholder’s equity of the group at Jan	Inf uences on shareholder’s equity of the group at Jan	Inf uences on shareholder’s equity of the group at Jan	1,2006	Inf uence	on shareholder’s equity of the	on shareholder’s equity of the	group at Dec	31,2006
	Unappropriated	Surplus	Capital	Minority		Unappropriated	Surplus	Capital	Minority
	prof t	reserves	reserves	interest	Total	prof t	reserves	reserves	interest	Total
	RMB	RMB	RMB	RMB	RMB	RMB	RMB	RMB	RMB	RMB
(1) Equity investment difference
arise form business combination
involving enterprises under
common control	–	–	(10,007,700)	–	(10,007,700)	900,693	100,077	(224,661,550)	–	(223,660,780)
(2) Income tax	–	–	–	–	–	–	–	(11,207,245)	–	(11,207,245)
(3) Goodwill arise form business
combination involving enterprises
under common control	32,985,000	3,665,000	(120,000,000)	–	(83,350,000)	45,486,000	5,054,000	(120,000,000)	–	(69,460,000)
(4) Available-for-sale f nancial assets	–	–	–	–	–	–	–	33,961,349	–	33,961,349
(5) Minority interest presented as
Shareholders’ equity	–	–	–	53,912,439	53,912,439	–	–	–	65,488,512	65,488,512
Total	32,985,000	3,665,000	(130,007,700)	53,912,439	(39,445,261)	46,386,693	5,154,077	(321,907,446)	65,488,512	(204,878,164)

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

6. CHANGES IN ACCOUNTING POLICIES – CONTINUED

6.1 Changes in accounting policies accounted for using petrospective application – continued

Consolidated Financial Statement – continued

The infl uences of the medication of accounting policies above on net profi ts of the year 2006 are as follows:

	Amount RMB
1. Equity Investment differences occurred by the corporate merger under the same control 2. Goodwill occurred by the corporate merger under the same control 3. Minority prof t and loss recorded as shareholder’s prof t and loss Total	1,000,770 13,890,000 341,511
	15,232,281

6.2 Changes in accounting policies accounted for using prospective application

Except for the modifi ed accounting polices stated above, the company occurred the following modifi cation of accounting polices because of the fi rst-time adoption of new accounting standards, and the modifi cation has been adjusted by Future Applicable Method. Including:

Pre-operation Expenses

Before the adoption of the new accounting standards, the fees occurred during preparation are recorded into current period loss and gain from the fi rst-time operation month except the fees for purchasing and constructing fi xed assets. After the adoption of the new accounting standards, the fees occurred during preparation are recorded into current loss and gain.

Employee Welfare

Before the adoption of the new accounting standards, the company accrues employee welfare by 14% of the total amount of wages, and records it into current loss and gain. After the adoption of the new accounting standards, the company stops accruing employee welfare by 14%, but recognizes the wages payable by the actual situation and employee welfare plan, and records it into current loss and gain.

Interim Report 2007 57

YANZHOU COAL MINING COMPANY LIMITED

7. TAXES

Value added tax

Value added tax (“VAT”) on sales is calculated at 13% on revenue from sales of coal products and 17% on other types of sales, and paid after deducting input VAT.

Pursuant to the “Notice of the adjustment of export refund rate”(Caishui [2003] No.222), which was jointly issued by the Ministry of Finance and the State Administration, all the tax refund rate of coal exported by the Company was reduced from 13% to 11% from January 1, 2004. Pursuant to the notice “Notice of the adjustment of export refund rate” (Caishui[2005] No.75) which was jointly issued by the Ministry of Finance and the State Administration, all the tax refund rate of coal exported by the Company was refund fro, 11% to 8% from May 1, 2005. Pursuant to Caishui[2006] No.139, for export contracts signed on or before September 14, 2006, if they can be fi led for record before September 30, 2006 and the exports are made before December 14, 2006 (inclusive), the business can claim refund from the authorities using the old export refund rates. Businesses that fail to fi le the export contracts before the prescribed date or fail to declare the export before 15 December 2006, must apply the new export refund rate.

Income tax

Income tax, including both national and domestic income tax, is calculated at 33% of the total assessable income of the Company.

Income tax for Yancoal Australia Pty Limited and Austar Coal Mine Pty Limited is calculated at 30% of the total assessable income of the company.

Business tax

Business tax is paid at the 5% of the corresponding revenue, except for the business tax on revenue from coal transportation service is calculated at 3%.

Resource tax

Pursuant to the “Notice of the adjustment of resource tax amount of Shandong province” (Caishui [2005] No.86), which was jointly issued by the Ministry of Finance and the State Administration, resource tax of Shandong province is calculated and paid at the amount of RMB3.60 per tonne of raw coal sold and consumed in clean coal production from May 1, 2005. Meanwhile, pursuant to the “Notice of the adjustment of resource tax amount of Shanxi province” (Caishui [2004] No.187), which was jointly issued by the Ministry of Finance and the State Administration, resource tax of Shanxi province is calculated and paid at the amount of RMB3.20 per tonne of raw coal sold and consumed in clean coal production from July 1, 2004.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

7. TAXES – CONTINUED

City construction tax & education fee

Although the Company was changed to a Sino-foreign joint stock limited company, it is still subject to all taxes applicable to domestic enterprise according to the “Reply Letter to Yanzhou Coal Mining Co., Ltd.” issued by State Taxes Bureau (Guoshuihan [2001] No.673). The Company continues to calculate and pay the taxes under the tax law applicable to domestic companies. Therefore, the city construction tax and education fee are still calculated and paid at 7% and 3%, respectively, on the total amount of VAT payable and business tax payable.

According to “Notice of issues on collection of city construction tax & education fee after application of “Exemption, counteract and refund by exporting enterprises” issued by Shandong Local Taxes Bureau (Ludishuifa [2002] No.108), the amount of VAT exemption and counteract declared by the Company is also deemed as the basis for city construction tax & education fee calculation.

8. SCOPE OF CONSOLIDATION AND DETAILS OF SUBSIDIARIES

The Company owns the following subsidiaries:

		Registered capital/	Equity indirectly	Equity indirectly	Type of	Consolidation
Name of subsidiaries	Place of registration	Paid-in capital	held by the company		enterprise	not
			Directly	Indirectly
Qingdao Free Trade Zone Zhongyan	Qingdao, Shandong	RMB2,100,000	52.38%	–	Company limited	Yes
Trade Co., Ltd. (“Zhongyan Trade”)
Shangdong Yanmei Shipping Co., Ltd.	Jining, Shandong	RMB5,500,000	92%	–	Company limited	Yes
(“Yanmei Shipping”)
Yanzhou Coal Yulin Power Chemical	Yulin, Shanxi	RMB800,000,000	97%	–	Company limited	Yes
Co., Ltd (“Yulin Power”)
Yancoal Australia Pty Limited Zhongyan	Australia	AUD 30,000,000	100%	–	Company limited	Yes
Trade Co., Ltd. (“Yanmei Australia”)
Austar Coal Mine Pty Limited.	Australia	AUD 30,000,000		100%	Company limited	Yes
(“Austar Coal Mine”)
Yancoal Heze Power Chemical	Heze, Shandong	RMB600,000,000	96.67%	–	Company limited	Yes
Co., Ltd. (“Heze Power”)
Shanxi Power Co, Ltd (“Shanxi Power”)	Jingzhong, Shanxi	RMB600,000,000	100%	–	Company limited	Yes
Heshun Tianchi Energy Co, Ltd	Jingzhong, Shanxi	RMB90,000,000	–	81.31%	Company limited	Yes
(“Heshun Tianchi”)
Shanxi Tianhao Chemical Co, Ltd	Xiaoyu, Shanxi	RMB150,000,000	–	99.85%	Company limited	Yes
(“Tianhao Chemical”)

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

8. SCOPE OF CONSOLIDATION AND DETAILS OF SUBSIDIARIES – CONTINUED

Nature of business of Zhongyan Trade: international trade, processing and matching, trimming, exhibiting and storage in Qingdao Free Trade Zone (except for project subjected to special approval according to national regulations).

Nature of business of Yanmei Shipping: transportation service via river and lakes within the province of Shandong, Jiangsu, Anhui, Zhejiang and Shanghai and sales of coal.

Nature of business of Yulin Power Chemical: development of methanol and acetic acid construction for 600,000 ton methanol, 200,000 ton acetic acid and coal mine, electric project.

Nature of business of Yanmei Australia: investment holding company.

Nature of business of Austar Coal Mine: coal mining and sales of coal.

Nature of business of Heze power: the third industry and Pre-operation preparation for construction of Juye coal mine.

Nature of business of Shanxi Power: Investment in heat and electricity, manufacture and sale of mining machinery and engine products and the development of integrated coal technology.

Nature of business of Heshun Tianchi: Exploration and sale of coal from Tianchi Coal Mine.

Nature of business of Tianhao Chemical: Engagement in the production of methanol and other chemical products (except for those are restricted by the government), coke production, exploration and sales.

Note 1 On May, 2007, Heze’s shareholders increased Heze’s capital by RMB 900 million. Among all, the company invested RMB874 million, raising the percentage of its investment from 95.67% to 96.67%.

Note 2 On January, 2007, the company signed agreement with Yankuang Runan Fertilizer Plant who holds 2% shares of Shanxi Power that the company would buy the 2% shares at the price of RMB14,966,200. Since then, the company owns 100% shares of Shanxi Power.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

9. BANK BALANCES AND CASH

The Group The Group At June 30,2007 At December 31, 2006 Foreign Exchange RMB Foreign Exchange RMB currency rate equivalent currency rate equivalent	The Group The Group At June 30,2007 At December 31, 2006 Foreign Exchange RMB Foreign Exchange RMB currency rate equivalent currency rate equivalent	The Group The Group At June 30,2007 At December 31, 2006 Foreign Exchange RMB Foreign Exchange RMB currency rate equivalent currency rate equivalent
Cash on hand RMB – – Cash in bank RMB – – USD 97,587,227 7.6155 EUR 3,286,136 10.2337 AUD 30,912,572 6.4607 HKD 108,077,376 0.9744 GBP – – Other monetary assets RMB – –	371,558 – – 6,100,062,158 – – 743,227,313 102,675,776 7.8087 33,629,317 6,676,043 10.2665 199,716,855 11,401,669 6.1599 105,310,595 455,405,431 1.0047 – 184,695 15.3232 1,148,067 – – 7,183,465,863	966,211 4,624,342,664 801,764,334 68,539,592 70,233,141 457,545,836 2,830,125 1,838,856
		6,028,060,759

10. NOTES RECEIVABLE

	The Group The Group At 30 June,At December 31, 2007 2006 RMB RMB
Bank acceptance bills	1,064,618,508 2,061,620,338

See note 57 4(d) for notes receivable due from shareholders of the Company holding more than 5% of the total shares of the Company.

Interim Report 2007 61

YANZHOU COAL MINING COMPANY LIMITED

11. ACCOUNTS RECEIVABLE

The aging analysis of accounts receivable is as follows:

The Group

Aging	At June 30, 2007 At December 31, 2006 Bad debt Net Bad debt Net Amount % provision book value Amount % provision book value RMB RMB RMB RMB RMB RMB
Within 1 year 1 to 2 years Over 3 years Total The Company Aging	155,214,585 86 6,560,300 148,654,285220,214,701 90 6,512,361 213,702,340 872,070 – 395,957 476,113 868,832 – 400,715 468,117 24,490,807 14 24,490,807 – 24,533,988 10 24,533,988 –
	180,577,462 100 31,447,064 149,130,398245,617,521 100 31,447,064 214,170,457
	At June 30, 2007 At December 31, 2006 Bad debt Net Bad debt Net Amount % provision book value Amount % provision book value RMB RMB RMB RMB RMB RMB
Within 1 year 1 to 2 years Over 3 years Total	85,679,382 77 6,530,111 79,149,271187,865,506 88 6,482,172 181,383,334 872,070 1 395,957 476,113 868,832 – 400,715 468,117 24,490,807 22 24,490,807 – 24,533,988 12 24,533,988 –
	111,042,259 100 31,416,875 79,625,384213,268,326 100 31,416,875 181,851,451

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

11. ACCOUNTS RECEIVABLE – CONTINUED

The disclosure of accounts receivable by category is as follows:

The Group

Item		At June	30, 2007			At December	31, 2006
			Bad debt	Net			Bad debt	Net
	Amount	%	provision	book value	Amount	%	provision	book value
	RMB		RMB	RMB	RMB		RMB	RMB
Individually signif cant
amount	82,170,874	46	6,389,771	75,781,103	176,361,500	72	6,022,011	170,339,489
Individually insignif cant
amount with high
risks after the
combination of
credit risk
characteristics	25,362,877	14	24,886,764	476,113	25,402,820	10	24,934,704	468,116
Other insignif cant
amount	73,043,711	40	170,529	72,873,182	43,853,201	18	490,349	43,362,852
Total	180,577,462	100	31,447,064	149,130,398	245,617,521	100	31,447,064	214,170,457
The Company
Item		At June	30, 2007			At December	31, 2006
			Bad debt	Net			Bad debt	Net
	Amount	%	provision	book value	Amount	%	provision	book value
	RMB		RMB	RMB	RMB		RMB	RMB
Individually signif cant
amount	82,170,874	74	6,389,771	75,781,103	176,361,500	83	6,022,011	170,339,489
Individually insignif cant
amount with high
risks after the
combination of
credit risk
characteristics	25,362,877	23	24,886,764	476,113	25,402,820	12	24,934,704	468,116
Other insignif cant
amount	3,508,508	3	140,340	3,368,168	11,504,006	5	460,160	11,043,846
Total	111,042,259	100	31,416,875	79,625,384	213,268,326	100	31,416,875	181,851,451

Interim Report 2007 63

YANZHOU COAL MINING COMPANY LIMITED

11. ACCOUNTS RECEIVABLE – CONTINUED

The individually signifi cant amount refers to the accounts receivable above RMB8,000,000.

The individually insignifi cant amount with high risks after combination of credit risk characteristics refers to the insignifi cant accounts receivable which is aging over one year.

The Group balance of the 5 largest debtors is as follows:

Total balance of		Percentage in
the 5 largest debtors	Aging	accounts receivable balance
RMB		%
82,170,874	Within 1 year	45
The Company balance of the 5 largest debtors is as follows:
Total balance of		Percentage in
the 5 largest debtors	Aging	accounts receivable balance
RMB		%
82,170,874	Within 1 year	74

See note 57(4)d for accounts receivable due from shareholders of the Group and the Company holding more than 5% of the total shares of the Company.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

12. PREPAYMENTS

Aging	The Group The Group At June 30, 2007 At December 31, 2006 RMB % RMB %
Within 1 year 130,192,933 91 101,141,006 87 1 to 2 years 12,409,080 9 14,753,458 13 Total 142,602,013 100 115,894,464 100 The Group balances of the 5 largest debtors is as follows: Total balance of Percentage in the 5 largest debtors prepayments balance RMB %	130,192,933 91 101,141,006 87 12,409,080 9 14,753,458 13
	142,602,013 100 115,894,464 100
44,792,949 31

See note 57(4)d for prepayments to shareholders of the Group holding more than 5% of the total shares of the Company.

13. OTHER RECEIVABLES

Aging analysis of other receivables is as follows:

The Group

	At June 30, 2007 At December 31, 2006 Bad debt Net Bad debt Net Amount % provision book value Amount % provision book value RMB RMB RMB RMB RMB RMB
Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total	230,214,793 72 3,109,425 227,105,368135,977,544 60 6,387,178 129,590,366 41,905,857 13 1,840,876 40,064,981 55,197,068 25 2,719,717 52,477,351 17,976,845 6 852,200 17,124,645 9,444,907 4 1,447,336 7,997,571 28,636,258 9 26,847,458 1,788,800 24,403,535 11 22,095,728 2,307,807
	318,733,753 100 32,649,959 286,083,794225,023,054 100 32,649,959 192,373,095

Interim Report 2007 65

YANZHOU COAL MINING COMPANY LIMITED

13. OTHER RECEIVABLES – CONTINUED

The Company

The Company
	At June 30, 2007 At December 31, 2006 Bad debt Net Bad debt Net Amount % provision book value Amount % provision book value RMB RMB RMB RMB RMB RMB
Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total	520,200,464 56 3,109,425 517,091,039263,248,768 43 16,273,597 246,975,171 361,015,225 39 1,840,876 359,174,349309,386,419 51 2,719,717 306,666,702 17,976,845 2 852,200 17,124,645 9,444,907 2 1,447,336 7,997,571 28,636,258 3 26,847,458 1,788,800 24,111,440 4 22,095,728 2,015,712
	927,828,792 100 32,649,959 895,178,833606,191,534 100 42,536,378 563,655,156

The group balance of the 5 largest debtors is as follows:

Total balance of	Percentage in
the 5 largest debtors	other receivables balance
RMB	%
141,817,968	45
The Company balance of the 5 largest debtors is as follows:
Total balance of	Percentage in
the 5 largest debtors	other receivables balance
RMB	%
141,817,968	15

See note 57(4)d for other receivables due from shareholders of the Group holding more than 5% of the total shares of the Company.

14. INVENTORIES AND PROVISION FOR DECLINE IN VALUE OF INVENTORIES

	The Group The Group At June 30,2007 At December 31, 2006 Net book Net book Amount Provision value Amount Provision value RMB RMB RMB RMB RMB RMB
Raw materials Finished goods	221,958,815 – 221,958,815 265,122,102 – 265,122,102 468,546,358 – 468,546,358 314,438,645 – 314,438,645
	690,505,173 – 690,505,173 579,560,747 – 579,560,747

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

15. ENTRUST LOAN

The Group	At June 30,2007 At December 31, 2006 Net book Net book Amount Provision value Amount Provision value RMB RMB RMB RMB RMB RMB
Shandong Xinjia Industry Co., Ltd. (“Shandong Xinjia”) (Note 1) Less: Entrust loan due within one year Entrust loan due after one year The Company	640,000,000 – 640,000,000 640,000,000 – 640,000,000
	640,000,000 – 640,000,000 640,000,000 – 640,000,000
	– – – – – –
	At June 30,2007 At December 31, 2006 Net book Net book Amount Provision value Amount Provision value RMB RMB RMB RMB RMB RMB
Shandong Xinjia (Note 1) Yanmei Australia (Note 2) Yulin Power (Note 2) Heze Power Total Less: Entrust loan due within one year Including: – Shandong Xinjia – Yanmei Australia – Heze Power Entrust loan due after one year Including: – Yanmei Australia – Yulin Power	640,000,000 – 640,000,000 640,000,000 – 640,000,000 685,395,000 – 685,395,000 702,783,000 – 702,783,000 700,000,000 – 700,000,000 500,000,000 – 500,000,000 – – – 213,000,000 – 213,000,000
	2,025,395,000 – 2,025,395,000 2,055,783,000 – 2,055,783,000
	777,079,000 – 777,079,000 923,278,300 – 923,278,300 640,000,000 – 640,000,000 640,000,000 – 640,000,000 137,079,000 – 137,079,000 70,278,300 – 70,278,300 – – – 213,000,000 – 213,000,000
	1,248,316,000 – 1,248,316,000 1,132,504,700 – 1,132,504,700
	548,316,000 – 548,316,000 632,054,700 – 632,504,700 700,000,000 – 700,000,000 500,000,000 – 500,000,000

Interim Report 2007 67

YANZHOU COAL MINING COMPANY LIMITED

15. ENTRUST LOAN – CONTINUED

Note 1: The designated deposit represents an instructed deposit of RMB640,000,000 with Bank of China Jining Branch to Shandong Xinjia Industry Co., Ltd. at interest rate of 7% per annum for one month period from. Related obligations are secured by Lianda Group Co., Ltd(“Lianda Group”) with its 170 million state legal person shares of Huaxia bank and its 66.7% of interest in Xi’an international golf club Co., Ltd..

The above designated deposits were due on January 19, 2005. Shandong Xinjia failed to pay off the principal and interest. As Lianda Group bore the security responsibility of the designated deposits, an auction on the frozen 289,000,000 shares of Huaxia Bank owned by Lianda Group was held on March 28, 2005 by the Supreme Court of Shandong Province and completed successfully on September 6, 2005 according to relevant laws. After the completion of the auction, the buyer applied to the China Banking Regulatory Commission for its eligibility of investing in China domestic commercial bank. Up to the fi nancial statement signing date, related formalities are still in process.

On December 4, 2006, Shan Dong Runhua Group (“Runhua Group”) won in the lawsuit in which it implead Lianda Group and Huaxia Bank on stock ownership dispute. Lianda Group only retained 49,000,000 shares of Huaxia Bank total issued shares. However due to some obstacles related to the transfer of state-owned assets, the 240,000,000 shares could not be ultimately transferred to Runhua Group. Now the Company is actively seeking measures to retain the stateowned assets via certain administrative departments. A request on the case of designated deposit between the Company and Lianda Group is sent to the Supreme Court respectively by Shandong Provincial Government, State-owned Assets Supervision and Administration Commission of Shandong Municipal Government and the State Department. Given the current situation, the Company is confi dent of calling back the principal, interest and fi ned interest of the loan. So the Company does not recognize provision for impairment loss on this designated deposit this year.

Note 2: The designated deposit represents the instructed deposits with Bank of China Jining Branch to Yanmei Australia and Yulin Power by the Company. The instructed deposit to Yanmei Australia, whose due date is from Sep 2007 to June 2012, is at interest rate of 6.31% to 6.96 % per annum. In addition, the instructed deposit to Yulin Power will due in May 2010 at interest rate of 6.57% per annum.

16. OTHER CURRENT ASSETS

Items	The Group The Group At 30 June,At December 31, 2007 2006 RMB RMB
Prepaid land, subsidence cost (Note 1) Prepaid freight and handling changes (Note 2)	213,098,746 212,912,430 17,681,641 27,286,945
	230,780,387 240,199,375

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

16. OTHER CURRENT ASSETS – CONTINUED

(1) The consequence of coal mining activities is land subsidence caused by the resettlement of the land above the underground mining sites. Depending on the circumstances, the Company may relocate inhabitants from the land above the underground mining sites prior to mining those sites or the Company may compensate the inhabitants for losses or damages from land subsidence after the underground sites have been mined.

Based on their past experiences, the management provides reserves according to the best estimation as they could make on the likely expenditures in the future, and reverse the accruals after payment. Considering the payment to those residents in the local mine is generally earlier than mining, if the accumulated payment is more than the accruals provided in a year, such excess of payment would be presented under current assets at the year end.

(2) The freight and handling charges of coal handled by ports and coal in transit have been paid.

17. AVAILABLE FOR SALES OF FINANCIAL ASSETS

Items	The Group The Group At 30 June,At December 31, 2007 2006 RMB RMB
Available for sales of – Shanghai Shenergy Co.Ltd (“Shenergy”)	103,110,844 53,900,039

As the initial issuing shareholder of Shenergy legal person shares, the Company holds 22,323,900 non-tradable shares of Shenergy legal person shares (at a purchase price of RMB2.70 per share). Pursuant to the notice of Share Reform Plan and “Notice of Alteration in Share Construction of Shenergy Co., Ltd.” issued by Shenergy Group on July 11, 2005, the non-tradable shares held by the Company would then be converted to tradable shares from August 17, 2006. As of June 30, 2007, the market value of Shenergy share is RMB13.99 per share. In the meantime the Company promised that the amount of shares it sold within 12 months since it got the tradable right would not exceed 1/3 of the total amount of its currently hold shares, while 2/3 within 24 months.

The above fair value was based on the 1/3 of the total amount of shares currently held by the Company and the closing price of the Shanghai Stock Exchange on June 29, 2007.

Interim Report 2007 69

YANZHOU COAL MINING COMPANY LIMITED

18. LONG-TERM EQUITY INVESTMENTS

The Group	At June 30,At December 31, 2007 2006 RMB RMB
Equity investments under cost method (1) Less: Impairment loss Long-term equity investments – net The Company	42,242,003 42,242,003 – –
	42,242,003 42,242,003
	At June 30,At December 31, 2007 2006 RMB RMB
Investment in subsidiaries (2) Other equity investments under cost method (1) Sub-total Less: Impairment loss Long-term equity investments – net	2,776,152,655 1,885,186,455 42,242,003 42,242,003
	2,818,394,658 1,927,428,458 – –
	2,818,394,658 1,927,428,458

(1) Other equity investments under cost method

Share in the registered capital Name of investees Investment period of the investee %	At June 30, 2007 and December 31, 2006 RMB
Jiangsu Lianyungang Port Co., Ltd. (Note 1) Inf nity 0.26 Shenergy Company Limited (Note 2) Inf nity 0.77	1,760,419 40,481,584
	42,242,003

Note 1 As the shareholder of Jiangsu Lianyuangang Port Co., Ltd., the Company holds 1,150,000 shares of legal person shares, the acquisition price was RMB1.53 per share. On April 30, 2007, the share of Lianyungang Port Co., Ltd. came into the Shanghai Stock Exchange Market. The Company and other shareholders promised that within the 12 months since it came into the market, the Company would not transfer shares, consign others to manage the shares or allow the issuer to buy-back the shares. Therefore the above investment can not be sold at June 30, 2007.

Note 2 As the initial issuing shareholder of Shenergy legal person shares, the Company holds 22,323,900 shares with restricted trading condition of Shenergy legal person shares (at a purchase price of RMB2.70 per share). Pursuant to the notice of Share Reform Plan and “Notice of Alteration in Share Construction of Shenergy Co., Ltd.” issued by Shenergy Group on July 11, 2005, the shares with restricted trading condition held by the Company would then be converted to tradable shares from August 17, 2006. As of June 30, 2007, the market value of Shenergy share is RMB13.99 per share. In the meantime the Company promised that the amount of shares it sold within 12 months since it got the tradable right would not exceed 1/3 of the total amount of its currently hold shares, while 2/3 within 24 months.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

18. LONG-TERM EQUITY INVESTMENTS – CONTINUED

(2) Details of investments in subsidiaries are as follows:

Name of investees	January 1, 2007 Addition June 30, 2007 RMB RMB RMB
Qingdao Zhongyan Yanmei Shipping Heze Power Yulin Power Shanxi Power	4,807,864 – 4,807,864 17,857,519 – 17,857,519 574,000,000 876,000,000 1,450,000,000 776,000,000 – 776,000,000 512,521,072 14,966,200 527,487,272 1,885,186,455 890,966,200 2,776,152,655

19. FIXED ASSETS AND ACCUMULATED DEPRECIATION

	The Group
	Harbor Plant, Mining Railway works machinery Transportation Lands (Note) Buildings structure structure and craft and equipment equipment Total RMB RMB RMB RMB RMB RMB RMB RMB
Cost At January 1, 2007 55,254,302 2,456,418,212 4,021,873,364 884,696,922 250,348,889 9,155,750,332 368,383,834 17,192,725,855 Additions – 2,113,426 – – – 43,138,643 1,346,765 46,598,834 Exchange realignment 2,698,176 441,929 – – – 49,003,263 26,891 52,170,259 Transfer from f xed assets under construction – 15,089,238 – – – 79,470,979 2,660,000 97,220,217 Disposals – – – – – (6,712,493) (1,519,086) (8,231,579) At June 30, 2007 57,952,478 2,474,062,805 4,021,873,364 884,696,922 250,348,889 9,320,650,724 370,898,404 17,380,483,586 Accumulated depreciation At January 1, 2007 – 1,246,663,229 1,688,012,427 419,575,119 18,205,720 4,787,386,325 237,692,555 8,397,535,375 Provided for the year – 63,704,681 44,461,913 26,904,063 3,035,480 408,853,955 18,257,465 565,217,557 Disposals – – – – – (4,136,009) (361,580) (4,497,589) At June 30, 2007 – 1,310,367,910 1,732,474,340 446,479,182 21,241,200 5,192,104,271 255,588,440 8,958,255,343 Net book value At January 1, 2007 55,254,302 1,209,754,983 2,333,860,937 465,121,803 232,143,169 4,368,364,007 130,691,279 8,795,190,480 At June 30, 2007 57,952,478 1,163,694,895 2,289,399,024 438,217,740 229,107,689 4,128,546,453 115,309,964 8,422,228,243 Include Fully depreciated F.A net book value – 1,908,780 – 832,529 – 29,950,319 1,948,088 34,639,716 Note: The item represents the land of the Australia Southland coal mine, which Austar enjoys the permanent owernship.

The Group

Harbor
Plant,
Mining
Railway
works
machinery Transportation
Lands (Note)
Buildings
structure
structure
and craft and equipment
equipment
Total
RMB
RMB
RMB
RMB
RMB
RMB
RMB
RMB

Cost
At January 1, 2007
55,254,302
2,456,418,212
4,021,873,364
884,696,922
250,348,889
9,155,750,332
368,383,834 17,192,725,855
Additions
–
2,113,426
–
–
–
43,138,643
1,346,765
46,598,834
Exchange realignment 2,698,176
441,929
–
–
–
49,003,263
26,891
52,170,259
Transfer from f xed
assets under
construction
–
15,089,238
–
–
–
79,470,979
2,660,000
97,220,217
Disposals
–
–
–
–
–
(6,712,493)
(1,519,086)
(8,231,579)
At June 30, 2007
57,952,478
2,474,062,805
4,021,873,364
884,696,922
250,348,889
9,320,650,724
370,898,404 17,380,483,586
Accumulated depreciation
At January 1, 2007
–
1,246,663,229
1,688,012,427
419,575,119
18,205,720
4,787,386,325
237,692,555
8,397,535,375
Provided for the year
–
63,704,681
44,461,913
26,904,063
3,035,480
408,853,955
18,257,465
565,217,557
Disposals
–
–
–
–
–
(4,136,009)
(361,580)
(4,497,589)
At June 30, 2007
–
1,310,367,910
1,732,474,340
446,479,182
21,241,200
5,192,104,271
255,588,440
8,958,255,343
Net book value
At January 1, 2007
55,254,302
1,209,754,983
2,333,860,937
465,121,803
232,143,169
4,368,364,007
130,691,279
8,795,190,480
At June 30, 2007
57,952,478
1,163,694,895
2,289,399,024
438,217,740
229,107,689
4,128,546,453
115,309,964
8,422,228,243
Include
Fully depreciated F.A
net book value
–
1,908,780
–
832,529
–
29,950,319
1,948,088
34,639,716
Note: The item represents the land of the Australia Southland coal mine, which Austar enjoys the permanent owernship.

Interim Report 2007 71

YANZHOU COAL MINING COMPANY LIMITED

20. FIXED ASSETS UNDER CONSTRUCTION

Items	The Group At January Transfers upon At June Proportion Source of 1, 2007 Additions completion 30, 2007 Budget to budget funds RMB RMB RMB RMB RMB %
Equipment to 667,753,191 73,732,799 (16,775,186) 724,710,804 1,179,910,000 61 Internally be installed generated fund Buildings under 1,302,648,855 332,999,746 (79,573,422) 1,556,075,179 2,107,760,000 74 Internally construction generated fund Others 227,119,439 32,188,610 (871,609) 258,436,440 500,640,000 52 Internally generated fund Total 2,197,521,485 438,921,155 (97,220,217) 2,539,222,423 3,788,310,000

Items

The Group
At January
Transfers upon
At June
Proportion
Source of
1, 2007
Additions
completion
30, 2007
Budget
to budget
funds
RMB
RMB
RMB
RMB
RMB
%

Equipment to
667,753,191
73,732,799
(16,775,186)
724,710,804
1,179,910,000
61
Internally
be installed
generated fund
Buildings under
1,302,648,855
332,999,746
(79,573,422)
1,556,075,179
2,107,760,000
74
Internally
construction
generated fund
Others
227,119,439
32,188,610
(871,609)
258,436,440
500,640,000
52
Internally
generated fund
Total
2,197,521,485
438,921,155
(97,220,217)
2,539,222,423
3,788,310,000

No interest was capitalized for the year.

21. MATERIALS HELD FOR CONSTRUCTION OF FIXED ASSETS

Item	The Group The Group At June 30, At December 31, 2007 2006 RMB RMB
Materials held for construction	682,260,785 525,897,325

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

22. INTANGIBLE ASSETS

	Land use Land use Land use Land rights of Mining rights rights of Mining rights rights of use rights Jining III of Jining III Railway Assets of Southland Heshun Tanchi Total RMB RMB RMB RMB RMB RMB RMB
Cost At January 1, 2007 310,242,143 88,928,996 132,478,800 259,378,500 56,277,886 11,378,132 858,684,457 Addition – – – 2,030,154 4,690,468 – 6,720,622 At June 30, 2007 310,242,143 88,928,996 132,478,800 261,408,654 60,968,354 11,378,132 865,405,079 Accumulated amortization At January 1, 2007 55,171,419 10,671,480 39,743,734 25,937,850 5,051,432 349,003 136,924,917 Provided for the period 3,126,027 889,290 3,311,970 2,593,785 1,742,677 34,303 11,698,052 Exchange realignment – – – – (2,501,488) – (2,501,488) At June 30, 2007 58,297,446 11,560,769 43,055,704 28,531,635 4,292,621 383,306 146,121,481 Net book value At January 1, 2007 255,070,724 78,257,516 92,735,066 233,440,650 51,226,455 11,029,129 721,759,540 At June 30, 2007 251,944,697 77,368,227 89,423,096 232,877,019 56,675,733 10,994,826 719,283,598 Remaining amortization period 40 years 5 months 43 years 6 months 13 years 6 months 44 years 6 months 18 years 6 months 45 years 5 months	310,242,143 88,928,996 132,478,800 259,378,500 56,277,886 11,378,132 858,684,457 – – – 2,030,154 4,690,468 – 6,720,622
	310,242,143 88,928,996 132,478,800 261,408,654 60,968,354 11,378,132 865,405,079
	251,944,697 77,368,227 89,423,096 232,877,019 56,675,733 10,994,826 719,283,598
	40 years 5 months 43 years 6 months 13 years 6 months 44 years 6 months 18 years 6 months 45 years 5 months

The original land use rights are injected by Yankuang Group. The land use rights of Jining III and Railway Assets and mining rights of Jining III were acquired from Yankuang Group at revaluated amount. On June 30, 2007, the registration process in respect of the land use rights of Railway Assets has not yet been completed.

Interim Report 2007 73

YANZHOU COAL MINING COMPANY LIMITED

22. INTANGIBLE ASSETS – CONTINUED

The original land use rights of the Company are revaluated by reference to the revaluation report [97] Zhongdizi [zong] zi No.032 of China Land Consultation and Evaluation Centre with the method of cost approaching and coeffi cientrevising of benchmark land price to determine the value of the land. Land use rights of Jining III are revaluated by reference to the revaluation report Ludijia [2000] No.7 of Shandong Land Evaluation Offi ce with the method of cost approaching and coeffi cient-revising of benchmark land price. Mining rights of Jining III are revaluated by reference to the revaluation report Haidiren Pingbaozi [2000] No.11 Zong No.24 of Beijing Haidiren Resource Consulting Co., Ltd. with the method of discounting cashfl ow. Land use rights of Railway Assets are revaluated by reference to the revaluation report [2001] Luzhengkuai Pingbaozi No. 10041 of Shandong Zhengyuan Hexin Limited Liability CPA with the method of cost revaluation.

Austar acquired mining rights of Southland through Southland Coal Pty limited at market value.

The land use right of Heshun Tianchi is purchased from the local government.

23. GOODWILL

At January 1, 2007 AdditionAt June 30, 2007 RMB RMB RMB	At January 1, 2007 AdditionAt June 30, 2007 RMB RMB RMB
Acquisition of Yanmei Shipping (Note 1) Acquisition of remaining 2% of Shanxi Power (Note 2) Total Less: Impairment of goodwill Goodwill – Net	7,813,059 – 7,813,059 – 4,506,586 4,506,586 7,813,059 4,506,586 12,319,645 – – – 7,813,059 4,506,586 12,319,645

Note 1 The company acquire the 92% equity interest in Yanmei Shipping at the end of 2003.

The excess of RMB11,162,512 of the cost of acquisition over the Yanmei Shipping ‘s interest in the fair value of the identifi able net assets at the date of acquisition was recognized as goodwill, which would be amortized using the straight-line method for 10 years from 2004.As stated in Note 6,the company adopt new accounting standards from Jan 1,2007,the amortized cost of the goodwill stated above which arose from a business combination not involving enterprises under common control shall be treated as deemed cost and shall not be further amortized in subsequent periods pursuant to the “ASBE 38”

Note 2 The company paid RMB14,966,200 for the 2% equity interest in Shanxi Power Chemical Co., Ltd. from its minority shareholders for RMB at Jan, 2007. The excess of 4,506,586 of the cost of acquisition over the 2% Shanxi Power Chemical Co., Ltd’s interest in the fair value of the identifi able net assets at the date of acquisition was recognized as goodwill in consolidated fi nancial statements.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

24. LONG-TERM DEFERRED EXPENSES

Category	The Group The Group At June 30,At December 31, 2007 2006 RMB RMB – 44,293,413 – 23,253,300 – 28,730,865 23,446,656 25,067,328 23,446,656 121,344,906
Pre-operating expenses: Heze Power (Note 1) Tianhao Chemical (Note 1) Yulin Power (Note 1) Prepayment for resource compensation fees of Heshun Tianchi (Note 2) Total

Note 1 As stated in Note 6.2 pre-operation expenses shall be adjusted by future applicable method after adoption of new accounting standards. The pre-operation expenses as at Jan 1,2007 was charged to the profi t and losses of current period.

Note 2 In accordance with the relevant regulations, Heshun Tianchi is required to pay resources compensation fees to the Heshun Municipal Coal Industry Bureau at a rate of RMB2.7 per tonne of raw coal mined. Heshun Tianchi has prepaid the fees based on production volume of 10 million tonnes which would be amortized according to the actual production.

25. OTHER NON CURRENT ASSETS

Included in the group and company balance, there is a investment deposit amount to RMB97,425,900 relating to Yushuwan Coal Ming. Pursuant to agreements the Company entered into with other two parties, the three parties plan to establish Yushuwan Coal Mine in Yulin, Shanaxi. Related formalities are still in progress as at June 30, 2007.

26. IMPAIRMENT OF ASSETS

The Group

	At January 1, 2007 Provision RMB RMB	Deduction At June 30, Reversals Write-off 2007 RMB RMB RMB
Provision for bad debts Accounts receivables Other receivables Total	31,447,064 – 32,649,959 –	– – 31,447,064 – – 32,649,959 – – 64,097,023
	64,097,023 –

Interim Report 2007 75

YANZHOU COAL MINING COMPANY LIMITED

26. IMPAIRMENT OF ASSETS – CONTINUED

The Company

	At January 1, 2007 Provision RMB RMB	Deduction At June 30, Reversals Write-off 2007 RMB RMB RMB
Provision for bad debts Accounts receivables Other receivables Total	31,416,875 – 42,536,378 –	– – 31,416,875 (9,886,419) – 32,649,959
	73,953,253 –	(9,886,419) – 64,066,834

27. NOTES PAYABLE

Item	The Group The Group At June 30,At December 31, 2007 2006 RMB RMB
Commercial notes payable Bank notes payable	89,347,166 137,843,036 – 31,102,018
	89,347,166 168,945,054

28. ACCOUNTS PAYABLE

See note 57(4)d for accounts payable due to shareholders of the Group holding more than 5% of the total shares of the Company.

29. ADVANCES FROM CUSTOMERS

See note 57(4)d for amounts advanced from shareholders of the Group holding more than 5% of the total shares of the Company.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

30. SALARIES AND WAGES PAYABLE

The Group
At January 1,
Provision
Payment
At June 30,
2007
for the period
for the period
2007
RMB
RMB
RMB
RMB

Salary, bonus, allowance
and subsidies
Staff welfare
Social insurance
Including:
Medical insurance
Unemployment insurance
Fertility insurance
Injury insurance
Housing fund
Union fund
Staff education fund
Total

181,365,575
1,024,250,547
(988,220,206)
217,395,916
3,541,655
91,221,677
(89,518,606)
5,244,726
2,309,939
34,873,211
(33,690,034)
3,493,116
832,784
17,436,411
(16,232,457)
2,036,738
427,621
8,711,483
(7,901,650)
1,237,454
1,315,361
17,673,901
(7,283,866)
11,705,396
757,425
31,202,046
(30,428,937)
1,530,534
7,663,870
15,300,797
(14,453,684)
8,510,983
12,002,550
14,655,916
(13,690,289)
12,968,177
210,216,780
1,255,325,989
(1,201,419,729)
264,123,040

31. TAXES PAYABLE

	The Group The Group At June 30,At December 31, 2007 2006 RMB RMB 79,268,260 150,333,137 114,523,797 134,232,491 (13,936,990) 24,252,668 (15,449,312) 22,909,986 5,681,755 24,324,070 170,087,510 356,052,352
Income tax Value added tax City construction tax Resource Tax Others

Interim Report 2007 77

YANZHOU COAL MINING COMPANY LIMITED

32. DIVIDEND PAYABLE

	The Group The Group At June 30,At December 31, 2007 2006 RMB RMB
A-Shares shareholders H-Shares shareholders	592,000,000 – 391,680,000 –
	983,680,000 –

33. OTHER PAYABLES

See note 57 (4)d for other payables due to shareholders of the Group holding more than 5% of the total shares of the Company.

34. OTHER CURRENT LIABILITIES

	The Group The Group At June 30,At December 31, 2007 2006 RMB RMB
Wei Jian Fei	98,813,112 –

According to the relevant regulation, Wei Jian Fei is accrued at RMB6 per ton raw coal mined, and has not been used on production expenditure or coal mining structure expenditure. Thus the balance has not been transferred to capital reserve.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

35. LONG-TERM LOAN

Lender	The Group The Group At June 30,At December 31, Annual 2007 2006 Period Interest Rate Condition for Loan RMB RMB
China Minsheng Bank State Development Bank Less: Long-term loan due within one year Long-term loan due after one year	160,000,000 160,000,000 From December Note1 Guaranteed by 28, 2005 to Yankuang Group December 22, 2009 220,000,000 220,000,000 From March Note2 Guaranteed by 15, 2006 to Yankuang Group February 19, 2018 61,000,000 50,000,000 319,000,000 330,000,000 380,000,000 380,000,000

Note1: The loan initially carries interest at 5.85% per annum and is subject to adjustment based on interest rate stipulated by the People Bank of China (“PBOC”).

Note2: The loan carries interest subject to adjustment based on interest rate stipulated by the PBOC.

Interim Report 2007 79

YANZHOU COAL MINING COMPANY LIMITED

36. LONG-TERM PAYABLE

	The Group The Group At June 30,At December 31, 2007 2006 RMB RMB
Payable for acquisition of Jining III’s mining rights (Note 1) Reform and Specif c Development Fund (Note 2) Work Safety Expense (Note 3) Work Safety Expense of Shanxi (Note 4) Less: Long-term payable due within one year Long-term payable due after one year	52,991,760 52,991,760 529,716,435 447,372,175 153,892,592 22,345,810 16,865,721 7,861,986
	753,466,508 530,571,731
	184,006,113 43,455,596 569,460,395 487,116,135
	753,466,508 530,571,731

Note 1: The amount represents the remaining balances of payable to Yankuang Group for acquisition of Jining III’s mining rights, details of which are set out in note 57(4)a.
Note 2: According to the joint regulation of Shandong Province Finance Bureau, State-owned Assets Supervision and Administration Commission of Shandong Municipal government, form July 1, 2004, Reform and Specifi c Development Fund is accrued at RMB5 per ton raw coal mined and will be used for related expenditures on mine construction.
Note 3: According to the relevant regulation of State Administration of Coal Mine Safety, from May 21, 2004, Work Safety Expense is accrued at RMB8 per ton raw coal mined, and will be used on work safety related expenditure for coal mines. The Company expects to fully use the remaining balance before the end of 2007.
Note 4: Pursuant to “Administration of Coal Mine Safety” released by State-owned Assets Supervision and Administration Commission of Shanxi Municipal government according to the relevant regulations, Work Safety Expense is accrued at RMB15 per ton raw coal mined of Heshun Tianchi, and will be used on work safety related expenditure for coal mines. Heshun Tianchi expects to fully use the remaining balance before the end of 2007.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

37. DEFERRED TAX LIABILITY

Temporary difference		The Group Deferred tax liability At January 1, At June 30, 2007 Addition 2007 RMB RMB RMB
	Taxable temporary difference At January 1, At June 30, 2007 2007 RMB RMB
Changes on fair value of available-for-sale f nancial assets	33,961,349 83,172,154	11,207,245 16,239,566 27,446,811

The company has taxable losses of RMB 615 millions could be used to deduct the taxable profi t in the future periods. The taxable losses arose from the subsidiaries. The company did not recognize the corresponding deferred tax assets for the unassured profi tability of subsidiaries in the future.

38. SHARE CAPITAL

Changes in share capital from January 1, 2007 to June 30, 2007 are as follow:

At January 1, 2007 and June 30, 2007	At January 1, 2007 and June 30, 2007
(1) Listed shares with restricted trading condition Initiation shares Subtotal (2) Listed shares 1. A shares 2. H-Shares Total list shares (3) Total share capital	2,600,000,000
	2,600,000,000
	360,000,000 1,958,400,000
	4,918,400,000
	4,918,400,000

Interim Report 2007 81

YANZHOU COAL MINING COMPANY LIMITED

38. SHARE CAPITAL – CONTINUED

Changes in share capital from January 1, 2006 to December 31, 2006 are as follow:

	Addition (Reducetion) At January 1, Share At December 31, 2006 Reform 2006
(1) Unlisted shares Initiation shares Sub-total (2) Listed shares with restricted trading condition Initiation shares Sub-total (3) Listed shares 1. A-shares 2. H-shares Total of listed shares (4) Total share capital	2,672,000,000 (2,672,000,000) –
	2,672,000,000 (2,672,000,000) –
	– 2,600,000,000 2,600,000,000
	– 2,600,000,000 2,600,000,000
	288,000,000 72,000,000 360,000,000 1,958,400,000 – 1,958,400,000
	2,246,400,000 72,000,000 2,318,400,000
	4,918,400,000 – 4,918,400,000

The share reform plan has been implemented by April 3, 2006. On the fi rst trading day after the completion of the share reform, the shares owned by Yankuang Group, the sole unlisted share holder of the Company, became tradable. However, Yankuang Group committed that it will not sell these shares in 48 months after the implementation of the reform.

The share capital has been verifi ed by Deloitte Touche Tohmatsu Certifi ed Public Accountants Ltd. (formerly known as Deloitte Touche Tohmatsu Shanghai CPA) on capital verifi cation report Deshibao (Yan)zi No. 588, capital verifi cation Deshibao (Yan)zi (98) No. 439, capital verifi cation Deshibao (Yan)zi (01) No. 006 and capital verifi cation Deshibao (Yan)zi (01) No.040, and Deshibao (Yan)zi (04) No.037, and Deshibao (Yan)zi (05) No.0031.

Each share has a par value of RMB1.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

39. CAPITAL RESERVES

Changes in capital reserves from January 1, 2007 to June 30, 2007 are as follows:

	The Group At January At June 1, 2007 Additions Reversals 30, 2007 RMB RMB RMB RMB
Share premium Transfer from Wei Jian Fei (Note) Gains or losses arise from changes of fair value of available-for-sale f nancial assets Others Total	2,913,072,688 – – 2,913,072,688 1,821,226,548 2,928,375 – 1,824,154,923 22,754,104 32,971,239 – 55,725,343 – 243,930 – 243,930 4,757,053,340 36,143,544 – 4,793,196,884

Changes in capital reserves from January 1, 2006 to December 31, 2006 are as follows:

	The Group
	At January At December 1, 2006 Additions Reversals 31, 2006 RMB RMB RMB RMB
Share premium Transfer from Wei Jian Fei (Note) Gains or losses arise from changes of fair value of available-for-sale f nancial assets Total	3,127,726,538 – (214,653,850) 2,913,072,688 1,607,746,553 213,479,995 – 1,821,226,548 – 22,754,104 – 22,754,104
	4,735,473,091 236,234,099 (214,653,850) 4,757,053,340

Note: Wei Jian Fei is used for purchase of coal production equipment and refurnishment of coal mining structure and the corresponding amounts are transferred from other current liabilities to capital reserves when the construction facilities are put into use.

Interim Report 2007 83

YANZHOU COAL MINING COMPANY LIMITED

40. SURPLUS RESERVES

Changes in surplus reserves from January 1, 2007 to June, 2007 are as follows:

						The Group
						Surplus Reserves
						RMB
At January	1,	2007	and June	30,	2007	1,709,766,066

Changes in surplus reserves from January 1, 2006 to December 31, 2006 are as follows:

	The Group
	Statutory Statutory common common reserve fund welfare fund Total RMB RMB RMB
At January 1, 2006 Additions Transferred in (out) At December 31, 2006	1,022,806,038 509,649,665 1,532,455,703 177,310,363 – 177,310,363 509,649,665 (509,649,665) –
	1,709,766,066 – 1,709,766,066

The statutory common reserve fund can be used to make up the losses incurred in previous years, expand the business scale of the Company or convert it into share capital.

According to the policy of “Solution of company fi nancial problems after the implement of “Company Law”” which was released by the Ministry of Finance on March 15, 2006, the Company stopped appropriating the statutory common welfare fund from 2006, the remaining balance of the statutory common welfare fund was transferred to the statutory common reserve fund.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

41. UNAPPROPRIATED PROFITS

	The Group The Group From January 1,From January 1, 2007 to 2006 to June 30, December 31, 2007 2006 RMB RMB
Opening balance(Restated, see Note 6) Add: Net prof t for the period/year Less: Appropriations to statutory common reserve fund (1) Prof t available for distribution Less: Dividend – cash dividend of last year approved by the shareholders’ meeting (2) Closing balance Including: cash dividend proposed after the balance sheet date (2)	6,381,830,403 5,876,956,924 1,108,918,499 1,764,231,842 – 177,310,363
	7,490,748,902 7,463,878,403 983,680,000 1,082,048,000
	6,507,068,902 6,381,830,403
	– 983,680,000

(1) Appropriations to statutory common reserve fund

Pursuant to the Company’s Article of Association, 10% of its net profi t is appropriated as statutory common reserve fund. Such appropriations can be ceased when the accumulated amount of the fund reaches 50% of the Company’s registered capital.

(2) Cash dividend of last year approved by the shareholders’ meeting

According to the minute of Board of Directors date April 20, 2007, fi nal dividend of RMB1.2 and special dividend of RMB 0.8 for every ten shares issued, is proposed based on the total issued shares of 4,918,400,000 (each share with a par value of RMB1). The proposal was approved by the shareholders’ meeting of the Company at June 15,2007.

Interim Report 2007 85

YANZHOU COAL MINING COMPANY LIMITED

42. OPERATION INCOME

The Group	For the period ended June 30, 2007 2006 RMB RMB
Principal operations Domestic sales of coal products Export sales of coal products Railway transportation services Other operations Sales of materials Sales of coals Others Total	5,986,963,419 4,739,805,484 1,079,248,963 1,672,245,859 94,381,231 74,100,899
	7,160,593,613 6,486,152,242
	431,028,758 474,801,396 152,576,028 42,664,442 34,011,855 28,085,778
	617,616,641 545,551,616
	7,778,210,254 7,031,703,858

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

42. OPERATION INCOME – CONTINUED

The Company

The Company
	For the period ended June 30, 2007 2006 RMB RMB
Principal operations Domestic sales of coal products Export sales of coal products Railway transportation services Other operations Sales of materials Sales of coals Others Total	5,872,533,751 4,739,805,484 588,102,994 1,672,245,859 94,381,231 74,100,899
	6,555,017,976 6,486,152,242
	431,028,758 474,801,396 152,576,028 42,664,442 24,035,809 23,217,813
	607,640,595 540,683,651
	7,162,658,571 7,026,835,893

Total sales amount of the 5 largest customers is RMB1,752,200,241, which accounts for 23% in total revenue.

The Company exports coal through China National Coal Group Corporation, Minerals Trading Co., Ltd. Currently, the Company does not have direct export rights, so has to export coals through trading companies, and the fi nal decision on customer selection of the Company’s export sales is jointly determined by the Company and the above-mentioned trading companies. Therefore the sales amounts of sales made through these companies are excluded from sales of the 5 largest customers.

Interim Report 2007 87

YANZHOU COAL MINING COMPANY LIMITED

43. COST OF PRINCIPAL OPERATIONS

The Group

The Group
	For the period ended June 30, 2007 2006 RMB RMB
Principal operations Cost of sales of coal products (Note) Cost of the railway transportation services Other operation Sales of materials Sales of coals purchased from other companies Others Total	3,559,056,014 2,898,982,011 89,976,013 41,491,630
	3,649,032,027 2,940,473,641
	436,926,799 450,699,066 145,124,851 42,157,658 18,763,621 11,411,030
	600,815,271 504,267,754
	4,249,847,298 3,444,741,395

Note: analysis of cost of sales of coal products is as follows:

The Group

The Group
	For the period ended June 30, 2007 2006 RMB RMB
Materials Wages and retirement benef ts Employee welfare Electricity Depreciation Land subsidence, restoration, rehabilitation and environmental costs Repairs and maintainance Safety work expenses Reform Specif c Development Fund VAT-input transfer out Transportation fee Others Subtotal Wei Jian Fei Total	553,224,305 582,757,785 1,007,656,109 543,170,988 88,462,822 76,043,938 197,304,755 162,131,930 425,320,281 376,004,244 419,471,378 209,264,082 200,896,189 154,639,160 140,550,517 141,952,048 82,344,260 88,720,030 21,350,667 83,612,293 51,376,976 50,272,615 268,683,149 323,948,862
	3,456,641,408 2,792,517,975 102,414,606 106,464,036
	3,559,056,014 2,898,982,011

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

43. COST OF PRINCIPAL OPERATIONS – CONTINUED

The Company

The Company
	For the period ended June 30, 2007 2006 RMB RMB
Principal operation Cost of sales of coal products Cost of the railway transportation services Other operations Cost of sales of coal products Cost of sales of coal purchased from other companies Others Total	3,157,624,574 2,900,506,878 89,976,013 41,491,630
	3,247,600,587 2,941,998,508
	436,926,799 450,699,065 145,124,851 42,157,658 10,353,008 11,411,032
	592,404,658 504,267,755
	3,840,005,245 3,446,266,263

44. OPERATING TAXES AND SURCHARGES

	The Group For the period ended June 30, 2007 2006 RMB RMB
Business tax City construction tax Education fee Resource tax	3,619,649 2,005,990 49,733,677 46,627,104 27,533,175 26,662,824 61,030,148 62,824,442
	141,916,649 138,120,360

Interim Report 2007 89

YANZHOU COAL MINING COMPANY LIMITED

45. SELLING EXPENSES

	The Group For the period ended June 30, 2007 2006 RMB RMB
Selling expense of domestic sales of coal products Selling expense of export sales of coal products Others	132,270,581 182,705,320 237,576,683 303,375,568 31,915,599 33,766,805
	401,762,863 519,847,693

46. FINANCIAL EXPENSES

	The Group For the period ended June 30, 2007 2006 RMB RMB
Interest expenses Less: interest income Exchange loss (Less: gain) Others	13,600,088 6,188,000 48,557,046 54,884,200 (35,107,087) 20,300,604 (293,138) 5,807,495
	(70,357,183) (22,588,101)

47. INVESTMENT INCOME

The Group

The Group
	For the period ended June 30, 2007 2006 RMB RMB
Long-term investment income – Amortization of long-term equity investment difference Total	– (558,076)
	– (558,076)

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

47. INVESTMENT INCOME – CONTINUED

The Company

The Company
	For the period ended June 30, 2007 2006 RMB RMB
Interest income from designated deposits Long-term investment income – Amortization of long-term equity investment difference – Prof ts declared by investee under equity method Total	45,784,600 9,658,915 – (558,076) – (8,854,068)
	45,784,600 246,771

48. INCOME TAXES

	The Group For the period ended June 30, 2007 2006 RMB RMB
Income tax of the Company (1)/(2) Overprovision of income tax Income tax of subsidiaries	803,048,595 684,846,730 (21,922,410) – 977,469 214,177
	782,103,654 685,060,907

(1) Income tax is provided at 33% of the taxable income which is calculated by adjusting the accounting profi ts before tax for the year in accordance with the relevant tax laws.
(2) The relevant tax authorities have not yet assessed the cap for total wages of the Company that would be deductible under PRC income tax. As a subsidiary of Yankuang Group, the directors of the Company are in the opinion that the same basis for determining the deductible wages cap applicable to Yankuang Group and assessed by the tax authority would be equally applicable to the Company.

Interim Report 2007 91

YANZHOU COAL MINING COMPANY LIMITED

49. NET PROFIT DEDUCTED NON-RECURRING GAIN AND LOSS

	The Group For the period ended June 30, 2007 2006 RMB RMB
Net prof t Add/less: Extraordinary gain and loss – Loss (gains) on disposal of f xed assets – Other deductible non-operating expenditure – Other deductible non-operating revenue Income tax effect for non-recurring gain and loss Net prof t after non-recurring prof t and loss	1,108,918,499 1,358,690,008 (1,655,115) (249,263) 30,856,936 1,894,924 (2,301,313) (3,686,030) 363,892 1,072,866
	1,136,182,899 1,357,722,505

50. EARNING PER SHARE

The calculation of the earnings per share attributable to equity holders of the Company for the six months ended June 30, 2007 and 2006 is based on the profi t for the period of RMB1,108,918,499 and RMB1,358,690,009 and on 4,918,400,000 shares in issue during both periods.

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

51. CASH AND CASH EQUIVALENTS

The Group

The Group
	At June 30,At December 31, 2007 2006 RMB RMB
Bank balances and cash (Note 9) Less: Restricted cash (Note 1) Cash balance	7,183,465,863 6,028,060,759 61,332,458 117,585,327
	7,122,133,405 5,910,475,432

Note 1: The amounts represent the deposits placed in banks secured for the future payment of land subsidence, restoration, rehabitation and environmental costs of Austar under the request of Australia government and for issuing letter of credit and cash acceptance.

The Company

The Company
	At June 30,At December 31, 2007 2006 RMB RMB
Bank balances and cash Less: Restricted cash (Note 2) Cash balance	6,784,885,493 5,615,399,136 10,295,672 15,503,032
	6,774,589,821 5,599,896,104

Note 2: The amounts represent the deposits placed in banks secured for issuing letter of credit.

Interim Report 2007 93

YANZHOU COAL MINING COMPANY LIMITED

52. SUPPLEMENTAL INFORMATION OF CASH FLOW

Unit: RMB

	The Group The Company For the period ended June 30, For the period ended June 30, 2007 2006 2007 2006
Reconciliation of net prof t to net cash f ow from operating activities Net prof t Add: Provision (reversal) of impairment of assets Depreciation of f xed assets Provision for Wei Jian Fei Provision for Work Safety Expense Provision for Reform and Specif c Development Fund Amortization of intangible assets Decrease (increase) in long-term deferred expenses Decrease (increase) in other current assets Decrease (increase) in deferred expense Losses (gains) on disposal of f xed assets and other long-term assets Financial expenses Gain arising from investments Decrease (increase) in inventories Decrease (increase) in receivables under operating activities Increase (decrease) in payables under operating activities Net cash f ow from operating activities Net increase in cash and cash equivalents Cash at the end of the year Less: Cash at the beginning of the year Net increase in cash and cash equivalents	1,104,672,280 1,358,931,313 1,303,302,841 1,358,690,008 – – (9,886,419) 565,217,557 507,492,918 505,517,693 494,971,057 102,414,606 106,464,036 98,813,112 106,464,036 140,550,517 141,952,048 131,546,782 141,952,048 82,344,260 88,720,030 82,344,260 88,720,030 11,698,052 9,907,024 7,890,918 9,907,024 97,898,250 (185,775,699) – – 9,418,988 – 9,168,994 – – 27,750,061 – 28,036,877 (1,655,115) (249,263) (1,655,115) (249,263) 13,600,088 6,188,000 64,029,866 6,188,000 – 558,076 (45,784,600) (246,771) (110,944,426) (42,323,456) (106,091,601) (41,439,401) 941,623,641 (968,064,477) 710,337,849 (1,218,949,603) (921,260,207) (661,166,806) (525,056,964) (693,122,730)
	2,035,578,491 390,383,805 2,224,477,616 280,921,312
	7,122,133,405 6,532,059,913 6,774,589,821 6,043,266,234 5,910,475,432 7,242,421,596 5,599,896,104 6,297,641,649
	1,211,657,973 (710,361,683) 1,174,693,717 (254,375,415)

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

53. OTHER CASH RECEIVED RELATING TO OPERATING ACTIVITIES

	The Group For the period ended June 30, 2007 2006 RMB RMB
Other operating income Non operating income Interest income Received cash from funds paid on other’s behalf Total	25,144,010 70,750,220 301,313 3,686,030 48,557,046 39,993,401 – 27,750,061
	74,002,369 142,179,712

54. OTHER CASH PAID RELATING TO OPERATING ACTIVITIES

	The Group For the period ended June 30, 2007 2006 RMB RMB
Payments for operating and administrative expenses Payments for pre-operating expense of subsidiaries Other operating expenses Others Total	851,208,552 934,242,836 90,888,944 150,959,096 668,559 53,568,690 683,559,594 447,493,738
	1,626,325,649 1,586,264,360

55. OTHER CASH RECEIVED RELATING TO INVESTING ACTIVITIES

	The Group For the period ended June 30, 2007 2006 RMB RMB
CASH RECEIVED FROM RESTRICTED CASH TOTAL	56,252,869 –
	56,252,869 –

Interim Report 2007 95

YANZHOU COAL MINING COMPANY LIMITED

56. SEGMENT INFORMATION

Business Segment		Coal mining business Railway transportation business Inter-segment elimination Unlocated items Total For the period ended June 30, For the period ended June 30, For the period ended June 30, For the period ended June 30, For the period ended June 30, 2007 2006 2007 2006 2007 2006 2007 2006 2007 2006 RMB RMB RMB RMB RMB RMB RMB RMB RMB RMB
Operating revenue External Inter-segment Total Operating expense – Cost of sales – External – Inter-segment – Operating expense Total operating prof t Total assets Total liabilities Additional information		7,683,829,023 6,957,602,959 94,381,231 74,100,899 – – – – 7,778,210,254 7,031,703,858 – – 62,351,251 110,554,075 (62,351,251) (110,554,075) – – – –
		7,683,829,023 6,957,602,959 156,732,482 184,654,974 (62,351,251) (110,554,075) – – 7,778,210,254 7,031,703,858
		4,159,871,285 3,403,249,765 89,976,013 41,491,630 – – – – 4,249,847,298 3,444,741,395 – – 49,930,694 75,499,682 (49,930,694) (75,499,682) – – – – 1,377,128,606 1,358,069,485 78,460,493 52,015,664 (12,420,557) (35,054,393) 171,517,972 169,979,856 1,614,686,514 1,545,010,612
		5,536,999,891 4,761,319,250 218,367,200 169,006,976 (62,351,251) (110,554,075) 171,517,972 169,979,856 5,864,533,812 4,989,752,007
		2,146,829,132 2,196,283,709 (61,634,718) 15,647,998 – – (171,517,972) (169,979,856) 1,913,676,442 2,041,951,851 15,212,084,027 14,742,002,743 826,550,791 933,986,515 – – 6,990,091,415 6,958,984,714 23,028,726,233 22,634,973,972 4,398,039,071 3,786,555,051 17,508,313 20,367,522 – – 620,775,080 1,005,909,001 5,036,322,464 4,812,831,574 Coal mining business Railway transportation business Others Total For the period ended June 30, For the period ended June 30, For the period ended June 30, For the period ended June 30, 2007 2006 2007 2006 2007 2006 2007 2006 RMB RMB RMB RMB RMB RMB RMB RMB

Depreciation and amortization Impairment losses Captial additions Including: Fixed assets under construction additions Fixed assets additions Intangible assets additions Geographical Segment		526,006,020 469,712,599 41,880,719 41,691,675 9,028,870 5,995,668 576,915,609 517,399,942 – – – – – – – – 822,976,887 873,526,903 2,795,782 238,000 18,669,066 21,584,805 844,441,735 895,349,708 771,687,586 836,227,112 765,628 238000 18,669,006 21,247,209 791,122,280 857,712,32 46,598,833 37,299,791 – – – 337,596 46,598,833 37,637,387 4,690,468 – 2,030,154 – – – 6,720,622 – China Australia Inter-segment elimination Total For the period ended June 30, For the period ended June 30, For the period ended June 30, For the period ended June 30, 2007 2006 2007 2006 2007 2006 2007 2006 RMB RMB RMB RMB RMB RMB RMB RMB

Operating revenue External Inter-segment Total Total segment assets		7,287,047,107 6,917,294,412 491,163,147 114,409,446 – – 7,778,210,254 7,031,703,858 – – – – – – – –
		7,287,047,107 6,917,294,412 491,163,147 114,409,446 – – 7,778,210,254 7,031,703,858
		21,479,211,572 21,219,522,130 1,549,514,661 1,415,451,842 – – 23,028,726,233 22,634,973,972

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

57. SIGNIFICANT RELATED PARTY TRANSACTIONS

(1) The followings are related parties where a control relationship exists:

Name of related parties	Registration address	Major business	Relationship	Nature	Statutory representative
Yankuang Group	Zoucheng, Shandong	Industry processing	Major shareholder	State-owned	Geng Jia Huai
Zhongyan Trade	Qingdao, Shandong	International trade	Subsidiary	Limited company	Shao Hua Zhen
Yanmei Shipping	Jining, Shandong	Transportation service	Subsidiary	Limited company	Wang Xin Kun
		via river and lakes
Yulin Power	Yulin, Shanxi	Prepare for construction	Subsidiary	Limited company	Wang Xin
Heze Power	Heze, Shandong	Prepare for construction	Subsidiary	Limited company	Wang Xin
Yanmei Australia	Australia	Investment holding	Subsidiary	Limited company	–
Austar Coal Mine	Australia	Coal exploitation	Subsidiary’s sub	Limited company	–
Shanxi Power	Jinzhong, Shanxi	Investment holding	Subsidiary	Limited company	Wang Xisuo
Heshun Tianchi	Jinzhong, Shanxi	Coal mining business	Subsidiary’s sub	Limited company	Wang Xisuo
Tianhao Chemical	Xiaoyi, Shanxi	Development of methane	Subsidiary’s sub	Limited company	Wang Xisuo
		project

Interim Report 2007 97

YANZHOU COAL MINING COMPANY LIMITED

57. SIGNIFICANT RELATED PARTY TRANSACTIONS – CONTINUED

(2) For the related parties where a control relationship exists, the registered capital and paid-in capital and the changes therein are as follows:

Name of related parties	At January 1, 2007	Additions At June 30, 2007	Additions At June 30, 2007
	RMB	RMB	RMB
Yankuang Group	3,353,387,627	–	3,353,387,627
Zhongyan Trade	2,100,000	–	2,100,000
Yanmei Shipping	5,500,000	–	5,500,000
Yulin Power	800,000,000	–	800,000,000
Yanmei Australia	403,281,954	–	403,281,954
Austar Coal Mine	403,281,954	–	403,281,954
Heze Power	600,000,000	900,000,000	1,500,000,000
Shanxi Power	600,000,000	–	600,000,000
Heshun Tianchi	90,000,000	–	90,000,000
Tianhao Chemical	150,000,000	–	150,000,000

(3) For the related parties where a control relationship exists, the proportion and changes of equity interest are as follows:

Name of related parties	AtJanuary 1, 2007	AtJanuary 1, 2007	Addition		Reversal		AtJune 30,	2007
	RMB	%	RMB	%	RMB	%	RMB	%
Yankuang Group	2,600,000,000	52.86	–	–	–	–	2,600,000,000	52.86
Zhongyan Trade	1,100,000	52.38	–	–	–	–	1,100,000	52.38
Yanmei Shipping	5,060,000	92.00	–	–	–	–	5,060,000	92.00
Yulin Power	776,000,000	97.00	–	–	–	–	776,000,000	97.00
Yanmei Australia	4,032,819,954	100.00	–	–	–	–	403,281,954	100.00
Austar Coal Mine	4,032,819,954	100.00	–	–	–	–	403,281,954	100.00
Heze Power	574,000,000	95.67	876,000,000	1.00	–	–	1,450,000,000	96.67
Shanxi Power	588,000,000	98.00	12,000,000	2.00	–	–	600,000,000	100.00
Heshun Tianchi	73,179,000	81.31	–	–	–	–	73,179,000	81.31
Tianhao Chemical	149,775,000	99.85	–	–	–	–	149,775,000	99.85

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

57. SIGNIFICANT RELATED PARTY TRANSACTIONS – CONTINUED

(4) Signifi cant transactions entered with the Company and above-mentioned related parties in current year:

(a) Acquisition of Jining III

On January 1, 2001, the Company acquired Jinjing III according to the “Agreement for Acquisition of Jining III” signed with Yankuang Group at the consideration of RMB2,450,900,000 and mining rights of RMB132,480,000, totally RMB2,583,380,000.

By December 31, 2006, the Company had paid RMB2,530,390,000 to Yankaung Group for the above acquisition, including the consideration of RMB2,450,900,000 and the mining rights of RMB79,490,000.

According to the agreement, the Company will pay the interest-free consideration for the cost of mining rights over ten years by equal installments before December 31 of each year commencing from year 2001. The Company is scheduled to pay for the mining rights of RMB13,248,000 as the seventh installment before December 31, 2007.

The consideration for the acquisition is determined according to revaluation price.

(b) Sales and purchases

	For the period ended June 30, 2007 2006 RMB’000 RMB’000
Sales and service provided Sales of coal – Yankuang Group and its aff liates Material and spare parts sales – Yankuang Group and its aff liates Purchases-Yankuang Group and its aff liates	478,902 448,703 190,588 232,521
	669,490 681,224
	256,123 214,235

The price of the above transaction is determined according to market price or negotiated price.

Interim Report 2007 99

YANZHOU COAL MINING COMPANY LIMITED

57. SIGNIFICANT RELATED PARTY TRANSACTIONS – CONTINUED

(4) Signifi cant transactions entered with the Company and above-mentioned related parties in current year: – continued

(c) Construction services

	For the period ended June 30, 2007 2006 RMB’000 RMB’000
Yankuang Group provide construction services for the company and its aff liates Mining construction for Heze Power Construction of methane project in Yulin Others	14,353 37,918 12,409 19,288 – 23,436
	26,762 80,642

The price of the above transaction is determined according to market price or negotiated price.

(d) Amount due to or from related parties

Amount due to or from related parties
Account Company	At June 30, At Decembe 31, 2007 2006 RMB RMB
Notes receivable Yankuang Group and its aff liates Accounts receivable Yankuang Group and its aff liates Other receivables (Note) Yankuang Group and its aff liates Prepayments Yankuang Group and its aff liates Accounts payable Yankuang Group and its aff liates Advances from customers Yankuang Group and its aff liates Other payables (Note) Yankuang Group and its aff liates Long-term payable due within one year (Note 36 and 57(4)a) Yankuang Group and its aff liates Long-term payables (Note 36 and 57(4)a) Yankuang Group and its aff liates	115,293,109 57,195,006 10,286,542 9,655,076 132,441,815 39,919,268 1,740,135 1,570,374
	259,761,601 108,339,724
	36,988,800 76,620,248 44,275,619 58,022,475 580,130,252 955,249,117 13,247,800 13,247,800 39,743,960 39,743,960
	714,386,431 1,142,883,600

Note: Other receivables due from Yankuang Group and its affi liates are interest free and receivable on demand.

Other payables due to Yankuang Group and its affi liates are interest free and repayable on demand.

100

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YANZHOU COAL MINING COMPANY LIMITED

57. SIGNIFICANT RELATED PARTY TRANSACTIONS – CONTINUED

(4) Signifi cant transactions entered with the Company and above-mentioned related parties in current year: – continued
(e) Other transactions
- (1) Pursuant to an agreement signed between the Company and Yankuang Group, Yankuang Group manages the retirement benefi ts, medical benefi ts and other benefi ts of the two companies and makes combined payments of the total retirement benefi ts of the two companies to the government department in charge of the related funds. Amount charged to expenses of the Company for the period ended June 30, 2007 and 2006 are RMB497,781,000 and RMB 400,593,000 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:

	For the period ended June 30, 2007 2006 RMB’000 RMB’000
Electricity Repairs and maintenance Technical support and training fee Mining rights fees (Note) Public utilities expenses Road transportation fee Gases and eructate expenses Buildings management fee Children tuition fee Others Total	186,892 156,463 98,258 81,847 10,000 10,000 6,490 6,490 3,644 6,131 32,375 32,915 13,000 13,000 43,100 43,100 20,400 20,400 26,850 26,850
	441,009 397,196

Note: the Parent Company and the Company have entered into a mining rights agreement pursuant to which the Company has agreed to pay to the Parent Company, effective from February 1998, an annual fee of RMB12,980,000 as compensation for the Parent Company’s agreement to give up the mining rights associated with the Xinglongzhuang coal mine, Baodian coal mine, Nantun coal mine, Dongtan coal mine and Jining II. The annual fee is subject to change after a ten-year period.

Interim Report 2007 101

YANZHOU COAL MINING COMPANY LIMITED

57. SIGNIFICANT RELATED PARTY TRANSACTIONS – CONTINUED

(4) Signifi cant transactions entered with the Company and above-mentioned related parties in current year: – continued
(e) Other transactions – continued
- (3) Total amount of salaries paid to key management, including salaries, welfare and subsidies paid in the form of cash, goods and others, for the period ended June 30, 2007 and 2006 are RMB2,070,618 and RMB2,245,065 respectively.
- (4) During the period ended June 30, 2007 and 2006, the Company and Yankuang Group have made payments or collected receipts to or from individual third party or government authorities on behalf of each other, in respect of goods purchased, services received, other expenses and insurances. These payments and receipts made on behalf of the other have been recorded in other payables.

58. CONCENTRATION OF CREDIT RISK

The Company maintains its cash and cash equivalents with reputable banks in the PRC, therefore the directors consider that the credit risk for such is minimal.

The Company generally grants long-term customers credit terms with a range from one to four months, depending on the situations of the individual customers. For small to medium size new customers, the Company generally requires them to pay for the products before delivery.

Most of the Company’s domestic sales are sales to electric power plants, metallurgical companies, construction material producers and railway companies. The Company generally has established long-term and stable relationships with these companies. The Company also sells its coal to provincial and city fuel trading companies.

As the Company does not currently have direct export rights, all of its export sales must be made through National Coal Corporation or Minmetals Trading. The quality, prices and fi nal customer destination of the Company’s export sales are determined by the Company, National Coal Corporation or Minmetals Trading.

For the six months ended June 30, 2007 and 2006, operating income to the Company’s fi ve largest domestic customers accounted for approximately 23% and 20%, respectively, of the Company’s total operating income. Operating income to the Company’s largest domestic customer, Huadian Power International Corporation Limited, accounted for 10% and 8% of the Company’s operating income for the six months ended June 30, 2007 and 2006, respectively.

102

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

58. CONCENTRATION OF CREDIT RISK – CONTINUED

Details of the amounts receivable from the fi ve customers with the largest receivable balances at June 30, 2007 and December 31, 2006 are as follows:

	Percentage of	Percentage of
	accounts receivable
	At June 30,	At December 31,
	2007	2006
Five largest receivable balances	45%	72%

As at 30 June 2006, the Company has exposure to credit risk in the event of the counterparties failure to perform their obligation in relation to the Default Loan In order to minimize the credit risk, the management of the Company has monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In addition, the Company reviews the recoverable amount of other loan receivables at each balance sheet date to ensure that adequate impairment losses are made for irrecoverable amounts. In this regard, the Company considered that the Company’s credit risk is signifi cantly reduced.

59. CAPITAL COMMITMENTS

	At June 30,At December 31, 2007 2006 RMB’000 RMB’000
Capital expenditure contracted for but not provided in the f nancial statements in respect of: – Purchase of assets	1,067,544 1,221,884

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YANZHOU COAL MINING COMPANY LIMITED

60. OTHER IMPORTANT EVENTS

Pursuant to the supplementary agreement between Yankuang Group and the Company on the acquisition of Heze Power share, Yankuang Group made an irrevocable claim that as soon as it got the mining rights of Zhaolou Mine and Wanfu Mine, the Company had the rights to acquire the mining rights within 12 months from that specifi c date. Furthermore, if any of the following matters occurred before June 30, 2006: (1) Heze Power failed to obtain the land use rights of Zhaolou Mine and its coal cleaning factory; (2) Yankuang Group failed to obtain the mining rights of Zhaolou Mine; (3) Any other factors led to the Group’s failure in acquiring Zhaolou Mine’s mining rights; the Company had the rights to send back its 95.67% share of Heze Power to the Group. Yankuang Group should pay back the Company the acquisition price, the net capital investment made by the Company to Heze Power, and the interest at a rate of 10% per annum for a twelve-month period. As at March 5, 2007, Yankuang Group had already obtained certain approval from the government on the land use rights of Heze Power coal cleaning factory with some procedures still in the process. And the mining rights of Zhaolou Mine was also successfully obtained on June 28, 2006. The remaining procedures on transferring of the land use rights and mining rights will complete within the year 2007.

61. COMPARATIVE FIGURES

The comparable numbers in the June 30, 2007 fi nancial statement have been adjusted in accordance with Note 6. In addition, part of the comparable data has been reclassifi ed in accordance with the June, 2007 recording format.

62. APPROVE OF FINANCIAL STATEMENTS

The Company and the Group fi nancial statements have been approved by board of directors on August 17, 2007.

104

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YANZHOU COAL MINING COMPANY LIMITED

SUPPLEMENT

FOR THE PERIOD ENDED JUNE 30, 2007

1. SUMMARY OF DIFFERENCES BETWEEN IFRS AND PRC GAAP

For the period ended June 30, 2007, under PRC GAAP net profi t is RMB1,108,918 thousand and net assets is RMB17,917,222 thousand. The summary of differences of net profi t and net assets between PRC GAAP and IFRS in this year is as follows:

Net assets at
Net prof t
June
for the period
30, 2007
RMB’000
RMB’000

As per the f nancial statements prepared under PRC GAAP
Adjustments under IFRS:
– Reversal of Wei Jian Fei
– Reversal of Work Safety Expense
– Reversal of Reform and Specif c Development Fund
– Deferred tax effect
– Release of negative goodwill to income
– Deemed interest expenses
– Reversal of long-term equity investment difference arising
from business combination involving enterprises under common control
– Reversal of amortization of goodwill
– Write-off of pre-operating expenses of subsidiaries
– Others
As per f nancial statements prepared under IFRS which belongs
to Shareholders of the Company

1,108,918
17,917,222
101,742
98,813
74,903
727,726
82,344
529,716
41,677
(173,623)
–
138,101
(1,250)
(117,641)
–
339,753
–
31,013
93,490
–
536
(8,464)

1,502,360
19,482,616

RETURN ON SHAREHOLDERS’ EQUITY AND EARNINGS PER SHARE CALCULATED BY DILUTED METHOD AND WEIGHTED AVERAGE METHOD

		Return on
Prof t for the reporting period	shareholders’ equity		Earnings per share RMB
		Weighted		Weighted
	Diluted	average	Diluted	average
Operating prof ts	10.68%	10.49%	0.39	0.39
Net prof t	6.19%	6.08%	0.23	0.23
Net prof t excluding extraordinary gain	6.34%	6.23%	0.23	0.23

Interim Report 2007 105

YANZHOU COAL MINING COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2007

Notes	Six months ended June 30, 2007 2006 RMB’000 RMB’000 (unaudited) (unaudited)
Gross sales of coal 5 Railway transportation service income Total revenue Transportation costs of coal 5 Cost of sales and service provided 6 Gross prof t Selling, general and administrative expenses Other income 7 Interest expenses 8 Prof t before income taxes 9 Income taxes 10 Prof t for the period Attributable to: Equity holders of the Company Minority interests Dividends 11 Earnings per share, basic 12 Earnings per ADS, basic 12	6,928,217 6,337,679 91,296 71,754
	7,019,513 6,409,433 (323,561) (486,081) (3,389,616) (2,646,924)
	3,306,336 3,276,428 (1,156,437) (1,202,070) 105,139 86,334 (14,851) (7,780)
	2,240,187 2,152,912 (737,757) (719,407)
	1,502,430 1,433,505
	1,502,360 1,433,612 70 (107)
	1,502,430 1,433,505
	983,680 1,082,048
	RMB0.31 RMB0.29
	RMB15.27 RMB14.57

106 Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

CONDENSED CONSOLIDATED BALANCE SHEET

AT JUNE 30, 2007

Notes	At June 30, At December31, 2007 2006 RMB’000 RMB’000 (unaudited) (audited)
ASSETS CURRENT ASSETS Bank balances and cash Term deposits Restricted cash 13 Bills and accounts receivable 14 Inventories Other loans receivable 15 Prepayments and other current assets Prepaid lease payments Prepayment for resources compensation fees 16 Prepayment for land subsidence, restoration, rehabilitation and environmental costs 17 TOTAL CURRENT ASSETS Mining rights 18 Prepaid lease payments Prepayment for resources compensation fees 16 Property, plant and equipment 19 Goodwill Investments in securities 20 Restricted cash 13 Deposit made on investment TOTAL ASSETS	5,531,096 4,715,945 1,591,038 1,194,531 10,296 68,562 1,088,170 2,211,909 690,505 579,561 640,000 640,000 288,585 231,505 13,845 13,746 3,240 3,240 213,099 212,912
	10,069,874 9,871,911 307,020 307,909 577,032 578,988 20,207 21,827 12,193,477 12,139,939 298,650 295,584 145,353 96,142 51,037 49,023 97,426 97,426
	23,760,076 23,458,749

Interim Report 2007 107

YANZHOU COAL MINING COMPANY LIMITED

CONDENSED CONSOLIDATED BALANCE SHEET — CONTINUED

AT JUNE 30, 2007

Notes	At June 30, At December31, 2007 2006 RMB’000 RMB’000 (unaudited) (audited)
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Bills and accounts payable 21 Other payables and accrued expenses Amounts due to Parent Company and its subsidiary companies 24 Unsecured bank borrowings – due within one year Taxes payable TOTAL CURRENT LIABILITIES Amounts due to parent company and its Subsidiary companies – due after one year 24 Unsecured bank borrowings – due after One year Deferred tax liability 22 TOTAL LIABILITIES CAPITAL AND RESERVES SHARE CAPITAL 23 RESERVES EQUITY ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY MINORITY INTEREST TOTAL EQUITY TOTAL LIABILITIES AND EQUITY	546,750 745,685 2,491,885 1,899,684 430,664 982,347 61,000 50,000 79,268 150,332
	3,609,567 3,828,048 19,046 23,138 319,000 330,000 255,716 283,823
	4,203,329 4,465,009 4,918,400 4,918,400 14,564,216 14,013,379
	19,482,616 18,931,779 74,131 61,961
	19,556,747 18,993,740
	23,760,076 23,458,749

108 Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

FOR THE SIX MONTHS ENDED JUNE 30, 2007

	Statutory Statutory Attributable Future common common Investment to equity Share Share development reserve welfare Translation revaluation Retained holders of Minority capital premium fund fund fund reserve reserve earnings the Company interest Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (note 23) (note 23) (note 23)
Balance at January 1, 2006 4,918,400 2,981,002 1,827,667 1,019,141 509,649 (15,016) – 6,377,734 17,618,577 28,731 17,647,308 Exchange difference arising on translation of foreign operations recognised directly in equity (unaudited) – – – – – 1,237 – – 1,237 – 1,237 Prof t for the period (unaudited) – – – – – – – 1,433,612 1,433,612 (107) 1,433,505 Total recognised income and expense for the period (unaudited) – – – – – 1,237 – 1,433,612 1,434,849 (107) 1,434,742 Appropriations to reserves (unaudited) – – 195,184 – – – – (195,184) – – – Transfer (unaudited) – – – 509,649 (509,649) – – – – – – Dividend (unaudited) – – – – – – – (1,082,048) (1,082,048) (271) (1,082,319) Balance at June 30, 2006 (unaudited) 4,918,400 2,981,002 2,022,851 1,528,790 – (13,779) – 6,534,114 17,971,378 28,353 17,999,731 Balance at July 1, 2006 (unaudited) 4,918,400 2,981,002 2,022,851 1,528,790 – (13,779) – 6,534,114 17,971,378 28,353 17,999,731 Gain on fair value change of available- for-sale investment (unandited) – – – – – – 33,961 – 33,961 – 33,961 Deferred tax on fair value change of available-for-sale investment (unaudited) – – – – – – (11,207) – (11,207) – (11,207) Exchange difference arising on translation of foreign operations (unaudited) – – – – – (1,726) – – (1,726) – (1,726) Net income recognized directly in equity – – – – – (1,726) 22,754 – 21,028 – 21,028 Prof t for the period (unaudited) – – – – – – – 939,373 939,373 (910) 938,463 Total recognised income and expense for the period (unaudited) – – – – – (1,726) 22,754 939,373 960,401 (910) 959,491 Appropriations to reserves (unaudited) – – 195,723 175,821 – – – (371,544) – – – Dividend (unaudited) – – – – – – – – – – – Acquisition of a subsidiary (unaudited) – – – – – – – – – 34,518 34,518 Balance at December 31, 2006 4,918,400 2,981,002 2,218,574 1,704,611 – (15,505) 22,754 7,101,943 18,931,779 61,961 18,993,740 Balance at January 1, 2007 4,918,400 2,981,002 2,218,574 1,704,611 – (15,505) 22,754 7,101,943 18,931,779 61,961 18,993,740 Gain on fair value change of available- for-sale investment (unandited) – – – – – – 49,211 – 49,211 – 49,211 Deferred tax on fair value change of available-for-sale investment (unaudited) – – – – – – (16,240) – (16,240) – (16,240) Exchange difference arising on translation of foreign operations (unaudited) – – – – – (814) – – (814) – (814) Net income recognized directly in equity – – – – – (814) 32,971 – 32,157 – 32,157 Prof t for the period (unaudited) – – – – – – – 1,502,360 1,502,360 70 1,502,430 Total recognized income and expense for the period (unaudited) – – – – – (814) 32,971 1,502,360 1,534,517 70 1,534,587 Appropriations to reserves (unaudited) – – 184,086 – – – – (184,086) – – – Dividend (unaudited) – – – – – – – (983,680) (983,680) – (983,680) Acquisition of a subsidiary (unaudited) – – – – – – – – – (11,900) (11,900) Capital contributed by minority equity holders of a subsidiary (unaudited) – – – – – – – – – 24,000 24,000 Balance at June 30, 2007 (unaudited) 4,918,400 2,981,002 2,402,660 1,704,611 – (16,319) 55,725 7,436,537 19,482,616 74,131 19,556,747	4,918,400 2,981,002 1,827,667 1,019,141 509,649 (15,016) – 6,377,734 17,618,577 28,731 17,647,308 – – – – – 1,237 – – 1,237 – 1,237 – – – – – – – 1,433,612 1,433,612 (107) 1,433,505
	– – – – – 1,237 – 1,433,612 1,434,849 (107) 1,434,742 – – 195,184 – – – – (195,184) – – – – – – 509,649 (509,649) – – – – – – – – – – – – – (1,082,048) (1,082,048) (271) (1,082,319)
	4,918,400 2,981,002 2,022,851 1,528,790 – (13,779) – 6,534,114 17,971,378 28,353 17,999,731
	4,918,400 2,981,002 2,022,851 1,528,790 – (13,779) – 6,534,114 17,971,378 28,353 17,999,731 – – – – – – 33,961 – 33,961 – 33,961 – – – – – – (11,207) – (11,207) – (11,207) – – – – – (1,726) – – (1,726) – (1,726)
	– – – – – (1,726) 22,754 – 21,028 – 21,028 – – – – – – – 939,373 939,373 (910) 938,463
	– – – – – (1,726) 22,754 939,373 960,401 (910) 959,491 – – 195,723 175,821 – – – (371,544) – – – – – – – – – – – – – – – – – – – – – – – 34,518 34,518
	4,918,400 2,981,002 2,218,574 1,704,611 – (15,505) 22,754 7,101,943 18,931,779 61,961 18,993,740
	4,918,400 2,981,002 2,218,574 1,704,611 – (15,505) 22,754 7,101,943 18,931,779 61,961 18,993,740 – – – – – – 49,211 – 49,211 – 49,211 – – – – – – (16,240) – (16,240) – (16,240) – – – – – (814) – – (814) – (814)
	– – – – – (814) 32,971 – 32,157 – 32,157 – – – – – – – 1,502,360 1,502,360 70 1,502,430
	4,918,400 2,981,002 2,402,660 1,704,611 – (16,319) 55,725 7,436,537 19,482,616 74,131 19,556,747

Interim Report 2007 109

YANZHOU COAL MINING COMPANY LIMITED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED JUNE 30, 2007

	Six months ended June 30, 2007 2006 RMB’000 RMB’000 (unaudited) (unaudited)
NET CASH GENERATED BY OPERATING ACTIVITIES NET CASH USED IN INVESTING ACTIVITIES Purchase of property, plant and equipment and mining right Decrease in term deposits Acquisition of additional interest of Shanxi Group Decrease (increase) in restricted cash Proceeds on disposal of property, plant and equipment NET CASH GENERATED BY (USED IN) FINANCING ACTIVITIES Capital contribution from a minority equity holder of a subsidiary Dividend paid to a minority equity holder of a subsidiary NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENT CASH AND CASH EQUIVALENTS, BEGINNING Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS, ENDING, REPRESENTED BY BANK BALANCES AND CASH	2,030,035 383,018
	(876,028) (1,085,260) (396,507) (1,831,829) (14,966) – 58,646 (21,297) 5,389 4,381
	(1,223,466) (2,934,005)
	24,000 – – (271)
	24,000 (271)
	830,569 (2,551,258)
	4,715,945 5,885,581 (15,418) 856
	5,531,096 3,335,179

110 Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED JUNE 30, 2007

1. GENERAL

Organisation and principal activities

The Group represents Yanzhou Coal Mining Company Limited (the “Company”) and its consolidated subsidiaries.

The Company is established as a joint stock company with limited liability in the People’s Republic of China (the “PRC”) and operates six coal mines, namely the Xinglongzhuang coal mine, Baodian coal mine, Nantun coal mine, Dongtan coal mine, Jining II coal mine (“Jining II”) and Jining III coal mine (“Jining III”) as well as a regional railway network that links these mines with the national railway gird. These six coal mines and the railway were originally divisions of the Company’s ultimate holding company, Yankuang Group Corporation Limited (the “Parent Company”), a state-owned enterprise in the PRC. The Parent Company contributed the assets and liabilities of the Xinglongzhuang coal mine, Baodian coal mine, Nantun coal mine and Dongtan coal mine into the Company upon its formation.

The Company acquired from the Parent Company Jining II, Jining III and the assets of the special purpose coal railway transportation business (“Railway Assets”) in 1998, 2001 and 2002, respectively.

In April 2001, the status of the Company was changed to that of a sino-foreign joint stock limited company.

The Company’s A shares are listed on the Shanghai Securities Exchange (“SSE”), its H shares are listed on The Stock Exchange of Hong Kong Limited (the “SEHK”), and its American Depositary Shares (“ADS”, one ADS represents 50 H shares) are listed on the New York Stock Exchange, Inc.

The Company holds a 52.38% interest in the registered capital of Qingdao Free Trade Zone Zhongyan Trade Co., Ltd. (“Zhongyan”), a limited liability company established and operated in the PRC. Zhongyan is engaged in the trading and processing of mining machinery.

The Company holds a 92% interest in the registered capital of Shandong Yanmei Shipping Co., Ltd. (formerly known as Zoucheng Nanmei Shipping Co., Ltd.) (“Yanmei Shipping”), a limited liability company established and operated in the PRC which is principally engaged in the transportation business via rivers and lakes and sale of coal and construction materials.

In 2004, the Company established Yanzhou Coal Yulin Power Chemical Co., Ltd. (“Yulin”), a 97% owned subsidiary, for the future development of the methanol projects of the Group in the Shaanxi Province in the PRC.

In 2004, the Company acquired the entire interest in the Southland coal mine located in New South Wales, Australia (“Southland”) from independent third parties in 2004 for aggregate cash consideration of AUD29,377,000 (equivalent to RMB187,312,000 then). The Company has also established two wholly-owned subsidiaries in Australia, namely Yancoal Australia Pty Limited (“Yancoal”) and Austar Coal Mine Pty Limited (“Austar”), in 2004 for the Group’s future operations in Southland.

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YANZHOU COAL MINING COMPANY LIMITED

1. GENERAL — CONTINUED

Organisation and principal activities – continued

In 2005, the Company acquired a 95.67% equity interest in Yankuang Heze Power Chemical Company Limited (“Heze”) from the Parent Company at cash consideration of RMB584,008,000. The principal activities of Heze are to conduct the initial preparation of the coal mines at the juye coalfi eld which includes obtaining the approvals for the coal mine projects, applying rights to explore for coal and preparing the construction work of the coal mines. At June 30, 2007, Heze has commenced construction works for the Zhaolou coal mine.

In 2006, the Company acquired a 98% equity interest in Yankuang Shanxi Neng Hua Company Limited (“Shanxi Neng Hua”) and its subsidiaries (collectively referred as the “Shanxi Group”) from the Parent Company at cash consideration of RMB733,346,000. The principal activities of Shanxi Group are to invest in heat and electricity, manufacture and sale of mining machinery and engine products, coal mining and the development of integrated coal technology.

Shanxi Neng Hua is an investment holding company, which holds 81.31% equity interest in Shanxi Heshun Tianchi Energy Company Limited (“Shanxi Tianchi”) and approximately 99.85% equity interest in Shanxi Tianhao Chemical Company Limited (“Shanxi Tianhao”). The principal activities of Shanxi Tianchi are to exploit and sale of coal from Tianchi Coal Mine, the principal asset of Shanxi Tianchi. Shanxi Tianchi has completed the construction of Tianchi Coal Mine and commenced production by the end of 2006. Shanxi Tianhao is established to engage in the production of methanol and other chemical products, coke production, exploration and sales. The construction of the methanol facilities by Shanxi Tianhao commenced in March 2006 and it has not yet commenced production as at June 30, 2007. Shanxi Group has no signifi cant impact to the Group’s results for the year.

In 2007, the Company further acquired the remaining 2% equity interest in Shanxi Neng Hua at cash consideration of RMB14,966,000, which resulted in an additional goodwill of RMB3,066,000.

2. BASIS OF PREPARATION

The condensed consolidated fi nancial statements have been prepared in accordance with International Accounting Standard (“IAS”) 34 “Interim Financial Reporting” and with the applicable disclosure requirements of Appendix 16 of the Rules Governing the Listing of Securities on the SEHK.

3. SIGNIFICANT ACCOUNTING POLICIES

The condensed consolidated fi nancial statements have been prepared on the historical cost basis except for certain fi nancial instruments, which are measured at fair value, as appropriate.

The accounting policies adopted are consistent with those followed in the preparation of the Group’s annual fi nancial statements for the year ended December 31, 2006.

In the current interim period, the Group had applied, for the fi rst time, the new and revised standards and interpretations issued by the International Accounting Standards Board (the “IASB”) and the International Financial Reporting Interpretations Committee (the “IFRIC”) of the IASB, which are effective for the Group’s fi nancial year beginning on January 1, 2007.

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3. SIGNIFICANT ACCOUNTING POLICIES — CONTINUED

The adoption of these new and revised standards and interpretations had no material effect on the results or fi nancial position of the Group for the current or prior accounting periods. Accordingly, no prior period adjustment has been recognized.

The Group has not early applied the new standards or interpretations that have been issued but are not yet effective. The directors of the Company anticipate that the application of these standards or interpretations will have no material impact on the results and the fi nancial position of the Group.

However, for the adoption of IFRS 8 Operating Segments, which will be effective for annual periods beginning on or after January 1, 2008, the directors of the Company expect that the disclosure on the segmental information will be different from the current information disclosed as required by International Accounting Standard 14 Segment Reporting. IFRS 8 requires the identifi cation of operating segments on the basis of internal reports that are regularly reviewed by the entity’s chief operating decision maker in order to allocate resources to the segment and assess its performance. In contrast IAS 14 requires identifi cation of two sets of segments (business and geographical) using a risk and rewards approach, the entity’s “system of internal fi nancial reporting to key management personnel” serving only as the starting point for identifi cation of such segments. In addition IFRS 8 requires the amount reported for each segment item to be the measure reported to the chief operating decision maker for the purposes of allocating resources to that segment and assessing its performance. IAS 14 required segment information to be prepared in conformity with the accounting policies adopted for the preparation and presentaton of the consolidated fi nancial statements. The directors anticipate that The adoption of IFRS 8 may change the identifi cation of segments and the measurement of the related segment assets and results.

4. SEGMENT INFORMATION

The Group is engaged primarily in the coal mining business and the coal railway transportation business. The Company does not currently have direct export rights in the PRC and all of its export sales must be made through China National Coal Industry Import and Export Corporation (“National Coal Corporation”) or Minmetals Trading Co., Ltd. (“Minmetals Trading”). The fi nal customer destination of the Company’s export sales is determined by the Company, National Coal Corporation or Minmetals Trading. Certain of the Company’s subsidiaries are engaged in trading and processing of mining machinery and the transportation business via rivers and lakes in the PRC. No separate segment information about these businesses is presented in these fi nancial statements as the underlying gross sales, results and assets of these businesses, which are currently included in the coal mining business segment, are insignifi cant to the Group.

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YANZHOU COAL MINING COMPANY LIMITED

4. SEGMENT INFORMATION — CONTINUED

Business segments

For management purposes, the Group is currently organised into two operating divisions – coal mining and coal railway transportation. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Coal mining – Underground mining, preparation and sales of coal Coal railway transportation – Provision for railway transportation services

Segment information about these businesses is presented below:

INCOME STATEMENT

INCOME STATEMENT
	For the six months ended June 30, 2007 Coal railway Coal mining transportation Eliminations Consolidated RMB’000 RMB’000 RMB’000 RMB’000
GROSS REVENUE External Inter-segment Total	6,928,217 91,296 – 7,019,513 – 62,351 (62,351) –
	6,928,217 153,647 (62,351) 7,019,513

Inter-segment revenue is charged at prices pre-determined by the relevant governmental authority.

RESULT Segment results Unallocated corporate expenses Unallocated corporate income Interest expenses Prof t before income taxes Income taxes Prof t for the period	2,453,855 (43,071) –	2,410,784 (204,372) 48,626 (14,851)

		2,240,187 (737,757)
		1,502,430

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YANZHOU COAL MINING COMPANY LIMITED

4. SEGMENT INFORMATION — CONTINUED

	For the six months ended June 30, Coal railway Coal mining transportation Eliminations RMB’000 RMB’000 RMB’000	2006 Consolidated RMB’000
GROSS REVENUE External 6,337,679 71,754 – Inter-segment – 110,554 (110,554) Total 6,337,679 182,308 (110,554) Inter-segment revenue is charged at prices pre-determined by the relevant governmental authority. RESULT Segment results 2,309,592 13,300 – Unallocated corporate expenses Unallocated corporate income Interest expenses Prof t before income taxes Income taxes Prof t for the period	6,337,679 71,754 – – 110,554 (110,554)	6,409,433 –
	6,337,679 182,308 (110,554)	6,409,433
		2,322,892 (223,600) 61,400 (7,780)

		2,152,912 (719,407)
		1,433,505

Interim Report 2007 115

YANZHOU COAL MINING COMPANY LIMITED

5. SALES OF COAL AND TRANSPORTATION COSTS OF COAL

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Domestic sales of coal, gross Less: Transportation costs Domestic sales of coal, net Export sales of coal, gross Less: Transportation costs Export sales of coal, net Net sales of coal	5,860,240 4,629,995 132,271 182,705
	5,727,969 4,447,290
	1,067,977 1,707,684 191,290 303,376
	876,687 1,404,308
	6,604,656 5,851,598

Net sales of coal represents the invoiced value of coal sold and is net of returns, discounts, sales taxes and transportation costs if the invoiced value includes transportation costs to the customers.

6. COST OF SALES AND SERVICE PROVIDED

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Materials Wages and employee benef ts Electricity Depreciation Land subsidence, restoration, rehabilitation and environmental costs Repairs and maintenance Annual fee and amortization of mining rights Transportation costs Others	560,611 587,966 1,141,120 707,753 200,149 163,435 529,481 469,837 419,471 209,264 204,144 157,698 12,947 9,920 52,247 50,729 269,446 290,322
	3,389,616 2,646,924

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YANZHOU COAL MINING COMPANY LIMITED

7. OTHER INCOME

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Interest income from bank deposits Gain on exchange difference Others	48,626 61,400 36,600 – 19,913 24,934
	105,139 86,334

8. INTEREST EXPENSES

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Interest expenses on bank borrowing wholly repayable within 5 years Deemed interest expenses in respect of acquisition of Jining III No interest was capitalized during the periods.	13,601 6,196 1,250 1,584
	14,851 7,780

9. PROFIT BEFORE INCOME TAXES

PROFIT BEFORE INCOME TAXES
	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Prof t before income taxes has been arrived at after charging (crediting): Depreciation of property, plant and equipment Amortization of mining rights (Included in cost of sales and services provided) Total depreciation and amortization Amortization of prepaid lease payments Gain on disposal of property, plant and equipment	615,511 518,039 8,081 3,312
	623,592 521,351
	6,826 6,595 (1,655) (249)

Interim Report 2007 117

YANZHOU COAL MINING COMPANY LIMITED

10. INCOME TAXES

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Income tax: Current taxes (Over) under provision in prior year Deferred tax (note 22): Current period Attributable to change in tax rate	804,026 709,295 (21,922) (24,233)
	782,104 685,062
	24,256 34,345 (68,603) –
	(44,347) 34,345
	737,757 719,407

The Group is subject to a standard income tax rate of 33%. The effective income tax rate of the Group for the current period is 33% (six months ended June 30, 2006: 33%). The major reconciling items are the amount claimed on the appropriation to future development fund for which a tax deduction is granted and certain expenses not deductible for tax purposes.

On March 16, 2007, the PRC promulgated the Law of the People’s Republic of China on Enterprise Income Tax by Order No. 63 of the President of the People’s Republic of China, which will change the tax rate from 33% to 25% for the Company and its subsidiaries established in the PRC from January 1, 2008. The deferred tax balance has been adjusted, as appropriate, to refl ect the tax rates that are expected to apply to the respective periods when the asset is realized or the liability is settled.

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YANZHOU COAL MINING COMPANY LIMITED

11. DIVIDENDS

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Final dividend approved, RMB0.120 per share (2006: RMB0.150) Special dividend approved, RMB0.080 per share (2006:RMB0.070)	590,208 737,760 393,472 344,288
	983,680 1,082,048

Pursuant to the annual general meeting held on June 15, 2007, a fi nal dividend and special dividend in respect of the year ended December 31, 2006 were approved.

12. EARNINGS PER SHARE AND PER ADS

The calculation of the earnings per share attributable to equity holders of the Company for the six months ended June 30, 2007 and 2006 is based on the profi t for the period of RMB1,502,360,000 and RMB1,433,612,000 and on 4,918,400,000 shares in issue during both periods.

The earnings per ADS have been calculated based on the profi t for the relevant periods and on one ADS, being equivalent to 50 shares.

13. RESTRICTED CASH

At the balance sheet date, the short-term restricted cash represents the bank deposits pledged to certain banks to secure banking facilities granted to the Group. The long-term amount represents the bank deposits placed as guarantee for the future payments of rehabilitation cost of Southland as required by the Australian government. The long-term restricted cash carries interest at 5.31% per annum.

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YANZHOU COAL MINING COMPANY LIMITED

14. BILLS AND ACCOUNTS RECEIVABLE

	At At June 30, December 31, 2007 2006 RMB’000 RMB’000
Bills receivable Accounts receivable Total bills and accounts receivable Less: Allowance for doubtful debts Bills and accounts receivable, net	949,326 2,004,425 170,291 238,931
	1,119,617 2,243,356
	(31,447) (31,447)
	1,088,170 2,211,909

Bills receivable represent unconditional orders in writing issued by or negotiated with customers of the Group for completed sale orders which entitle the Group to collect a sum of money from banks or other parties.

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 receivable at the balance sheet date:

	At At June 30, December 31, 2007 2006 RMB’000 RMB’000
1 – 180 days 181 – 365 days 1 – 3 years Over 3 years	1,089,382 2,216,935 4,872 1,018 872 869 24,491 24,534
	1,119,617 2,243,356

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YANZHOU COAL MINING COMPANY LIMITED

15. OTHER LOAN RECEIVABLE

At the balance sheet dates, the amount represents a loan granted to an independent third party, which carries interest at 7.00% per annum and is guaranteed by other independent third parties. The loan (the “Default Loan”) is secured by certain state legal person shares of a company listed on the SSE (“the Secured Shares”) and certain equity interest in another unlisted company held by the guarantor. The Default Loan was defaulted in January 2005 and the Company had applied to the People’s Supreme Court of the Shangdong province (the “Court”) to freeze the Secured Shares. The Company has also applied to the Court to dispose the Secured Shares by way of a public auction and the proceeds would be applied to repay the Default Loan and the associated interests to the Company. The public auction was held successfully in September 2005. Up to the date of the report, the legal procedure for the transfer of ownership of the Secured Shares has not yet been completed.

In December 2006, Shandong Runhua Group Company Limited has also claimed for a portion of the Secured Shares. To protect the Company’s priority rights in the Secured Shares to recover the Default Loan, the Company sought support from the Shandong provincial government and the State-owned Assets Supervision and Administrative Committee (the “SASAC”). In January 2007, these government authorities in Shandong province and the SASAC rendered a formal written request to the Supreme Court to protect the Company’s priority right on the Secured Shares.

After considering the advice from their legal counsel, the directors are in the opinion that, based on the result of the auction, the support from the government authorities in Shandong province and the SASAC and the fair value of the underlying Secured Shares, the amount to be recovered by the Company from the Secured Shares would be suffi cient to cover the principal and interest of the Default Loan.

16. PREPAYMENT FOR RESOURCES COMPENSATION FEES

In accordance with the relevant regulations, the Shanxi Group is required to pay resources compensation fees to the Heshun Municipal Coal Industry Bureau at a rate of RMB2.70 per tonne of raw coal mined. At June 30, 2007, the amount represented the prepayment for resources compensation fee based on production volume of approximately 8.7 million tonnes. The current portion represents the amount to be utilized in the coming year which is estimated based on expected production volume.

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YANZHOU COAL MINING COMPANY LIMITED

17. PREPAYMENT FOR LAND SUBSIDENCE, RESTORATION, REHABILITATION AND ENVIRONMENTAL COSTS

	Six months ended June 30, 2007 RMB’000
At January 1, 2007 Additional provision in the period Utilization of provision At June 30, 2007	212,912 (427,633) 427,820 213,099

The provision for land subsidence, restoration, rehabilitation and environmental costs has been determined by the directors based on their best estimates. The payment during the period included mainly rehabilitation costs paid on mining areas relating to mining activities in the future periods and therefore the balance is presented as a prepayment at the balance sheet dates. 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.

18. MINING RIGHTS

	RMB’000 353,098 2,743 4,690 360,531 45,189 241 8,081 53,511 307,020 307,909
COST At January 1, 2007 Exchange re-alignment Addition At June 30, 2007 AMORTIZATION At January 1, 2007 Exchange re-alignment Provided for the period At June 30, 2007 NET BOOK VALUES At June 30, 2007 At December 31, 2006

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19. PROPERTY, PLANT AND EQUIPMENT, NET

	Harbour Plant, Freehold works machinery land in and Railway Mining and Transportation Construction Australia Buildings crafts structures structures equipment equipment in progress Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
COST At January 1, 2007 Exchange re-alignment Additions Transfers Disposals At June 30, 2007 DEPRECIATION At January 1, 2007 Exchange re-alignment Provided for the period Eliminated on disposals At June 30, 2007 NET BOOK VALUES At June 30, 2007 At December 31, 2006	55,255 2,430,319 250,349 734,801 4,017,442 9,001,883 323,695 2,712,797 19,526,541 2,698 442 – – – 49,003 27 – 52,170 – 2,113 – – – 43,137 1,347 587,738 634,335 – 15,089 – – – 79,471 2,660 (97,220) – – – – – – (6,712) (1,519) – (8,231)
	57,953 2,447,963 250,349 734,801 4,017,442 9,166,782 326,210 3,203,315 20,204,815
	– 1,110,807 18,206 269,679 1,683,367 4,111,539 193,004 – 7,386,602 – 68 – – – 2,090 15 – 2,173 – 63,636 3,035 26,904 44,462 470,781 18,242 – 627,060 – – – – – (4,136) (361) – (4,497)
	– 1,174,511 21,241 296,583 1,727,829 4,580,274 210,900 – 8,011,338
	57,953 1,273,452 229,108 438,218 2,289,613 4,586,508 115,310 3,203,315 12,193,477
	55,255 1,319,512 232,143 465,122 2,334,075 4,890,344 130,691 2,712,797 12,139,939

Interim Report 2007 123

YANZHOU COAL MINING COMPANY LIMITED

20. INVESTMENTS IN SECURITIES

The investment in securities represent available-for-sale equity investments:

	At At June 30, December 31, 2007 2006 RMB’000 RMB’000
Equity securities of Shenergy Company Limited listed on the SSE – Restricted portion stated at cost less impairment – Unrestricted portion stated at fair value Unlisted equity securities	40,281 40,281 103,312 54,101 1,760 1,760
	145,353 96,142

Pursuant to the share reform plan carried out by Shenergy Company Limited in 2006, the non-tradable legal person shares held by the Company were converted into tradable shares on August 17, 2006. Under this share reform plan, the Company has committed that the Company will not sell more than one-third of the shares held as of August 17, 2005 within one year after August 17, 2006; and two-third of the shares held as of August 17, 2005 within two years after August 17, 2006. This investment is presented as listed securities as at December 31, 2006 and June 30, 2007. The unrestricted portion is carried at fair value determined by reference to bid prices quoted in active markets.

The unlisted equity securities and the restricted portion of the shares of Shenergy Company Limited are stated at cost less impairment at each balance sheet date because the range of reasonable fair value estimates is so signifi cant that the directors of the Company are of the opinion that their fair value cannot be measured reliably.

124

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

21. BILLS AND ACCOUNTS PAYABLE

The following is an aged analysis of bills and accounts payable at the balance sheet date:

	At At June 30, December 31, 2007 2006 RMB’000 RMB’000
1 – 180 days 181 – 365 days Over 1 years	388,803 564,995 134,804 139,974 23,143 40,716
	546,750 745,685

22. DEFERRED TAX LIABILITY

	Available-for- Accelerated sale tax Mining investment depreciation rights Total RMB’000 RMB’000 RMB’000 RMB’000
Balance at January 1, 2006 Acquisition of Shanxi Group Charge to reserve (Charge) credit to income for the year Balance at December 31, 2006 and January 1, 2007 Charge to reserve (Charge) credit to income for the period (note 10) Effect of change in tax rate Balance at June 30, 2007	– (146,279) – (146,279) – (2,962) (54,269) (57,231) (11,207) – – (11,207) – (69,272) 166 (69,106)
	(11,207) (218,513) (54,103) (283,823) (16,240) – – (16,240) – (25,255) 999 (24,256) – 53,974 14,629 68,603
	(27,447) (189,794) (38,475) (255,716)

There was no material unprovided deferred tax for the period or at the balance sheet date.

Interim Report 2007 125

YANZHOU COAL MINING COMPANY LIMITED

23. SHAREHOLDERS’ EQUITY

Share capital

The Company’s share capital structure at the balance sheet date is as follows:

	Domestic invested shares State legal person Shares (held by the Parent Company) A shares (Note 1)	Foreign invested shares H shares (including H share represented by ADS) Total (Note 1)
Numbers of shares At December 31, 2006 and June 30, 2007 Registered, issued and fully paid (RMB’000) At December 31, 2006 and June 30, 2007 Each share has a par value of RMB1.	2,600,000,000 360,000,000	1,958,400,000 4,918,400,000
	2,600,000 360,000	1,958,400 4,918,400

There is no movement in share capital during the period.

Reserves

Pursuant to regulation in the PRC, the Company is required to transfer an annual amount to a future development fund at RMB6 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.

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 July 1, 2004 to the future development fund for the future improvement of the mining facilities.

Pursuant to the relevant regulations from the Ministry of Finance, the Company is no longer required to set aside net income to the statutory common welfare fund effective from January 1, 2006 and the balance of statutory common welfare fund as at January 1, 2006 was transferred to statutory common reserve fund.

126

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

23. SHAREHOLDERS’ EQUITY – CONTINUED

The Company has to set aside 10% of its profi t for the statutory common reserve fund (except where the fund has reached 50% of the Company’s registered capital). The statutory common reserve fund can be used for the following purposes:

to make good losses in 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.

In accordance with the Company’s Articles of Association, the profi t 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 June 30, 2007 is the retained earnings computed under PRC GAAP which amounted to approximately RMB6,710,642,000 (as at December 31, 2006: RMB6,391,019,000).

Interim Report 2007 127

YANZHOU COAL MINING COMPANY LIMITED

24. RELATED PARTY TRANSACTIONS

The amounts due to Parent Company and its subsidiary companies are non-interest bearing and unsecured.

The amounts due to the Parent Company and its subsidiary companies as at June 30, 2007 included the present value of outstanding balance that arose from the funding of the acquisition of the mining rights of Jining III as of January 1, 2001 discounted using the market rate of bank borrowings.

The consideration for the cost of the mining rights of approximately RMB132,479,000 is to be settled over ten years by equal annual instalments before December 31 of each year, commencing from 2001.

	At At June 30, December 31, 2007 2006 RMB’000 RMB’000
Amounts due to Parent Company and its subsidiary companies: Within one year More than one year, but not exceeding two years More than two years, but not exceeding three years More than three years, but not exceeding four years Total Less: amount due within one year Amount due after one year	430,664 982,347 7,942 8,181 7,478 7,704 3,626 7,253
	449,710 1,005,485 (430,664) (982,347)
	19,046 23,138

Except for the outstanding consideration as described above, the amounts due to Parent Company and its subsidiary companies have no specifi c terms of repayment but is expected to be repaid within one year.

128

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

24. RELATED PARTY TRANSACTIONS – CONTINUED

During the periods, the Group had the following signifi cant transactions with the Parent Company and its subsidiary companies:

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Income Sales of coal Sales of auxiliary materials Expenditure Utilities and facilities Annual fee for mining rights Purchases of supply materials and equipment Repairs and maintenance services Social welfare and support services Technical support and training Road transportation services Construction services	478,902 448,702 190,588 232,521 190,536 162,594 6,490 6,490 256,123 214,230 98,258 81,847 209,712 198,406 10,000 10,000 32,375 32,915 26,762 80,642

Certain expenditures for social welfare and support services (excluding medical and child care expenses) of RMB82,950,000 and RMB31,875,000 for each of the six months ended June 30, 2007 and 2006 respectively, and for technical support and training of RMB10,000,000 and RMB7,565,000 for each of the six months ended June 30, 2007 and 2006 respectively, have been charged by the Parent Company at a negotiated amount per annum, subject to changes every year.

In addition to the above, the Company participates in a retirement benefi t scheme of the Parent Company in respect of retirement benefi ts (note 26).

Transactions/balance 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 larger group of companies under the Parent company which is controlled by the PRC government. Apart from the transactions with the Parent Company and fellow subsidiaries and other related parties disclosed above, the Group also conducts business with other state-controlled entities. The directors consider those state-controlled entities are independent third parties so far as the Group’s business transactions with them are concerned.

In establishing its pricing strategies and approval process for transactions with other state-controlled entities, the Group does not differentiate whether the counter-party is a state-controlled entity or not.

Interim Report 2007 129

YANZHOU COAL MINING COMPANY LIMITED

24. RELATED PARTY TRANSACTIONS – CONTINUED

Material transactions with other state-controlled entities are as follows:

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Trade sales Trade purchases Material balances with other state-controlled entities are as follows:	431,030 681,224
	309,291 214,235
	At June 30,At December 31, 2007 2006 RMB’000 RMB’000
Amounts due from other state-controlled entities Amounts due to other state-controlled entities	137,011 345,914
	124,747 301,117

In addition, the Group has entered into various transactions, including deposits placements, borrowings and other general banking facilities, with certain banks and fi nancial institutions which are state-controlled entities in its ordinary course of business. In view of the nature of those banking transactions, the directors are of the opinion that separate disclosure would not be meaningful.

Except as disclosed above, the directors are of the opinion that transactions with other state-controlled entities are not signifi cant to the Group’s operations.

Compensation of key management personnel

The remuneration of directors and other members of key management was as follows:

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Directors’ fee Salaries, allowance and other benef t in kind Retirement benef t scheme contribution	145 179 1,448 828 478 373
	2,071 1,380

The remuneration of directors and key executives is determined by the remuneration committee having regard to the performance of individuals and market trends.

130

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

25. COMMITMENTS

	At At June 30, December 31, 2007 2006 RMB’000 RMB’000
Capital expenditure contracted for but not provided in the f nancial statements in respect of acquisition of property, plant and equipment Capital expenditure authorised but not contracted for in respect of development of new coal mines	1,067,544 1,221,884 147,000 600,000
	1,214,544 1,821,884

In accordance with the regulations of the State Administration of Work Safety, the Group has a commitment to incur RMB8 per tone of raw coal mined from May 1, 2004 which will be used for enhancement of safety production environment and improvement of facilities (“work safety cost”). The unutilized work safety cost at June 30, 2007 was RMB170,758,000 (December 31, 2006: RMB 30,208,000)

26. RETIREMENT BENEFITS

Qualifying employees of the Company are entitled to pension, medical and other welfare benefi ts. The Company participates in a scheme of the Parent Company and pays a monthly contribution to the Parent Company in respect of retirement benefi ts at an agreed contribution rate based on the monthly basic salaries and wages of the qualifi ed employees. The Parent Company is responsible for the payment of all retirement benefi ts to the retired employees of the Company.

Pursuant to the Provision of Administrative Services for Pension Fund and Retirement Benefi ts Agreement entered into by the Company and the Parent Company on January 10, 2006, the monthly contribution rate is set at 45% of the aggregate monthly basic salaries and wages of the Company's employees for the period from January 1, 2006 to December 31, 2008.

The Company's subsidiaries are participants in a state-managed retirement scheme pursuant to which the subsidiaries pay a fi xed percentage of the qualifying staff's wages as a contribution to the scheme. The subsidiaries' fi nancial obligations under this scheme are limited to the payment of the employees’ contribution. During the period, contributions payable by the subsidiaries pursuant to this arrangement were insignifi cant to the Group.

At the balance sheet date, there were no forfeited contributions which arose upon employees leaving the above schemes, available to reduce the contribution payable in the future years.

Interim Report 2007 131

YANZHOU COAL MINING COMPANY LIMITED

27. HOUSING SCHEME

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 accommodation at a negotiated amount for each of the six months ended June 30, 2007 and 2006. Such expenses, amounting to RMB43,100,100 for each of the six months ended June 30, 2007 and 2006, have been included as part of the social welfare and support services expenses summarized in note 24.

The Company currently makes a fi xed 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 utilizes 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.

132

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

SUPPLEMENT

I. SUMMARY OF DIFFERENCES BETWEEN CONDENSED CONSOLIDATED FINANCIAL STATEMENT PREPARED UNDER IFRS AND THOSE UNDER PRC GAAP

The Group has also prepared a set of condensed consolidated fi nancial statement in accordance with relevant accounting principles and regulations applicable to PRC enterprises. In the current period, the Group has applied, for its fi rst time, the Accounting Standards for Business Enterprises (“ASBEs”) issued by the Ministry of Finance of the People’s Republic of China that are effective for accounting periods beginning on or after January 1, 2007. The application of the ASBEs has resulted in the changes in presentation of the fi nancial statement and in the accounting policies which prior periods adjustments have been made.

The condensed fi nancial statements prepared under IFRS and those prepared under PRC GAAP have the following major differences:

(i) adjustment of future development fund, which is charged to income before income taxes under PRC GAAP, to shareholders' equity;
(ii) reversal of the Work Safety Cost provided but not yet utilized for the enhancement of safety production environment and facilities, which is charged as an expense when provided under PRC GAAP;
(iii) depreciation provided for plant and equipment acquired by utilizing the provision of Work Safety Cost, which under PRC GAAP, Work Safety Cost have been charged as expenses when provision was made;
(iv) negative goodwill arising under IFRS for the acquisition of Jining III is recognized as income in the statement of income on a systematic basis over the remaining weighted average useful life of the identifi able acquired depreciable/amortizable assets prior to January 1, 2005. No negative goodwill arose from the above transaction under PRC GAAP;
(v) the installments payable to the Parent Company for the acquisition of Jining III have been stated at present value discounted using market rates under IFRS while under PRC GAAP, the installments payable are stated at gross amount. Accordingly, deemed interest expense arises on the installments payable to the Parent Company under IFRS and no such interest expenses are recognized under PRC GAAP;
(vi) Prior to January 1, 2007, pre-operating expenses were capitalized in subsidiaries of the Company as a long term asset under PRC GAAP; Such pre-operating expenses were written off under IFRS. Subsequent to January 1, 2007, such pre-operating expenses were charged to expense as included. With the initial adoption of ASBE, the amount of carrying operating expense at January 1, 2007 has been derecognized. The adjustment is to reverse the pre-operating expenses at January 1, 2007 which charged to income statement in current period under PRC GAAP;
(vii) adjustment for recognition of goodwill arising on acquisition of businesses from Parent Company, which is not recognized under PRC GAAP; and

Interim Report 2007 133

YANZHOU COAL MINING COMPANY LIMITED

I. SUMMARY OF DIFFERENCES BETWEEN CONDENSED CONSOLIDATED FINANCIAL STATEMENT PREPARED UNDER IFRS AND THOSE UNDER PRC GAAP – CONTINUED

(viii) recognition of a deferred tax asset/liability under IFRS for the tax consequence of temporary differences by applying enacted statutory tax rates applicable to future years to differences between the fi nancial statement carrying amounts and the tax basis of existing assets and liabilities, which are not recognized under PRC GAAP.

The following table summarizes the differences between IFRS and PRC GAAP:

Net income attributable
Net assets attributable
to equity holders
to equity holders
of the Company for
of the Company as at
six months ended June 30,
June 30, December 31,
2007
2006
2007
2006
RMB’000
RMB’000
RMB’000
RMB’000

As per condensed f nancial statements prepared
under IFRS
Impact of IFRS adjustments in respect of:
– transfer to future development fund which is
charged to income before income taxes
under PRC GAAP
– reversal of Work Safety Cost
– release of negative goodwill to income
– deemed interest expenses
– write-off of pre-operating expenses of subsidiaries
– derecognitions of goodwill
– deferred tax effect on temporary differences
not recognized under PRC GAAP
– others
As per f nancial statements prepared
under PRC GAAP (restated for 2006)

1,502,360
1,433,612
19,482,616
18,931,779
(184,086)
(195,184)
(628,529)
(447,372)
(74,903)
(104,079)
(727,726)
(652,823)
–
–
(138,101)
(138,101)
1,250
1,587
117,641
116,391
(93,491)
185,428
–
46,860
–
(559)
(370,765)
(324,134)
(41,677)
34,345
173,623
215,300
(535)
3,540
8,463
8,754

1,108,918
1,358,690
17,917,222
17,756,654

Note: There are also differences in other items in the condensed fi nancial statements due to differences in classifi cation between IFRS and PRC GAAP.

The condensed fi nancial statements are prepared in accordance with IFRS, which differ in certain signifi cant respects from US GAAP. The signifi cant differences relate principally to the accounting for the acquisitions of Jining II, Jining III and Railway Assets, the cost bases of property, plant and equipment and land use rights and related adjustments to deferred taxation.

134

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

II. SUMMARY OF DIFFERENCES BETWEEN CONDENSED CONSOLIDATED FINANCIAL STATEMENT PREPARED UNDER IFRS AND THOSE UNDER US GAAP

Under IFRS, the acquisitions of Jining II, Jining III, Railway Assets , Heze and Shanxi Group have been accounted for using the purchase method which accounts for the assets and liabilities of Jining II, Jining III, Railway Assets, Heze and Shanxi Group 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 capitalized as goodwill. Prior to January 1, 2005, such goodwill was amortized over a period of ten to twenty years. Subsequent to January 1, 2005, such goodwill is tested for impairment at least annually. Prior to January 1, 2005, any excess of the fair value of the net assets acquired over the purchase consideration is recorded as negative goodwill, which was presented as a deduction from the assets of the Group in the condensed consolidated balance sheet, and such negative goodwill was released to the statement of income on a systematic basis over the remaining weighted average useful life of the identifi able acquired depreciable/amortizable assets. The carrying amount of negative goodwill at January 1, 2005 has been derecognized.

Under US GAAP, as the Group, Jining II, Jining III, Railway Assets, Heze and Shanxi Group are entities under the common control of the Parent Company, the assets and liabilities of Jining II, Jining III, Railway Assets, Heze and Shanxi Group are required to be included in the condensed consolidated balance sheet of the Group at historical cost. The difference between the historical cost of the assets and liabilities of Jining II, Jining III, Railway Assets, Heze and Shanxi Group acquired and the purchase price paid is recorded as an adjustment to shareholders' equity.

Under IFRS, the mining rights of Jining III and Shanxi Group are stated at purchase consideration less amortization. Mining rights are amortized on a straight line basis over twenty years and twenty-seven years, respectively, being the useful life estimated based on the total proven and probable reserves of the coal mine. Under US GAAP, as both the Group and Jining III are entities under the common control of the Parent Company, the mining rights have to be restated at nil cost and no amortization on mining rights will be recognized. However, a deferred tax asset relating to the capitalization of mining rights is required to be recognized under US GAAP as a higher tax base resulting from the capitalization is utilized for PRC tax purposes.

Under IFRS, property, plant and equipment and land use rights are stated at their respective fair values at the date of acquisition even including transactions between entities under common control. The fair value amount becomes the new cost basis of the assets of the Company formed from the reorganization and depreciation is based on such new basis. Under US GAAP, when accounting for a transfer of assets or exchange of shares between entities under common control, the entity that receives the net assets or equity interests shall initially recognize the assets and liabilities transferred at their carrying amounts in the accounts of the transferring entity at the date of transfer. Accordingly, property, plant and equipment and land use rights are restated at the historical cost and no additional depreciation on the fair value amounts will be recognized under US GAAP. However, a deferred tax asset relating to the difference in cost bases between the fair value at the date of acquisition and historical cost is required to be recognized under US GAAP as the tax basis of the assets is the fair value amount at the date of acquisition.

Under IFRS, the acquisition of Yanmei Shipping has been accounted for using purchase method which accounted for the assets and liabilities of Yanmei Shipping at their fair value at the date of acquisition. The excess of the purchase consideration over the value of the net assets acquired is capitalized as a goodwill and was, prior to January 1, 2005, amortized over a period of ten years. After January 1, 2005, such goodwill is tested for impairment at least annually. Under US GAAP, goodwill is not amortized but instead tested for impairment at least annually starting from the initial recognition of goodwill in 2003, when Yanmei Shipping was acquired by the Group.

Interim Report 2007 135

YANZHOU COAL MINING COMPANY LIMITED

II. SUMMARY OF DIFFERENCES BETWEEN CONDENSED CONSOLIDATED FINANCIAL STATEMENT PREPARED UNDER IFRS AND THOSE UNDER US GAAP – CONTINUED

Goodwill is tested for impairment annually or more frequently if events or changes in circumstances indicate that it might be impaired. The Group completes a two-step goodwill impairment test. The fi rst step compares the fair value of each reporting unit to its carrying amount, including goodwill. If the fair value of each reporting unit exceeds its carrying amount, goodwill is not considered to be impaired and the second step will not be required. If the carrying amount of a reporting unit exceeds its fair value, the second step compares the implied fair value of goodwill to the carrying value of a reporting unit’s goodwill. The implied fair value of goodwill is determined in a manner similar to accounting for a business combination with the allocation of the assessed fair value determined in the fi rst step to the assets and liabilities of the reporting unit. The excess of the fair value of the reporting unit over the amounts assigned to the assets and liabilities is the implied fair value of goodwill. This allocation process is only performed for purposes of evaluating goodwill impairment and does not result in an entry to adjust the value of any assets or liabilities. An impairment loss is recognized for any excess in the carrying value of goodwill over the implied fair value of goodwill.

The cost of mining structure is depreciated using the unit of production method based on the estimated production volume for proven and probable reserves, of which the structure was designed.

The adjustments necessary to restate net income and shareholders' equity in accordance with US GAAP are shown in the tables set out below.

	Six months ended June 30, 2007 2006 RMB’000 RMB’000
Income attributable to equity holders of the Company as reported under IFRS US GAAP adjustments: Additional depreciation/amortization charged on fair valued property, plant and equipment and prepaid lease payments Additional deferred tax charge due to a higher tax base resulting from the difference in cost bases of property, plant and equipment and prepaid lease payments and capitalization of mining rights Amortization of mining rights of Jining III Amortization of mining rights of Shanxi Group, net of minority interest Additional deferred tax charge due to change in tax rate, net of minority interest Income under US GAAP Earnings per share under US GAAP Earnings per ADS under US GAAP	1,502,360 1,433,612 93,858 93,925 (32,880) (32,088) 3,312 3,312 2,461 – (73,553) –
	1,495,558 1,498,761
	RMB0.30 RMB0.30
	RMB15.20 RMB15.24

136

Interim Report 2007

YANZHOU COAL MINING COMPANY LIMITED

II. SUMMARY OF DIFFERENCES BETWEEN CONDENSED CONSOLIDATED FINANCIAL STATEMENT PREPARED UNDER IFRS AND THOSE UNDER US GAAP – CONTINUED

At
At
June 30,
December 31,
2007
2006
RMB’000
RMB’000

Equity attributable to the equity holders of the Company
as reported under IFRS
US GAAP adjustments:
Difference in cost bases of property, plant and equipment
and prepaid lease payments
Additional depreciation/amortization charged on fair valued property,
plant and equipment and prepaid lease payments
Additional deferred tax asset due to a higher tax base
resulting from the difference in cost bases of property,
plant and equipment and prepaid lease payments
Goodwill arising on acquisition of Jining II
Mining rights of Jining III
Additional deferred tax asset due to a higher tax base
resulting from capitalization of mining rights of Jining III
Difference in cost base of mining rights of Shanxi Group,
net of minority interest
Additional deferred tax charge due to a higher tax base
resulting from capitalization of mining rights of
Shanxi Group, net of minority interest
Goodwill arising on acquisition of Railway Assets
Goodwill arising on acquisition of Heze
Amortization of goodwill on acquisition of Yanmei Shipping
Goodwill arising on acquisition of Shanxi Group
Additional deferred tax charge due to change in tax rate,
net of minority interest
Shareholders’ equity under US GAAP

19,482,616
18,931,779
(2,561,032)
(2,561,032)
1,782,540
1,688,682
256,900
287,876
(10,106)
(10,106)
(89,423)
(92,735)
29,510
30,602
(128,179)
(130,640)
42,299
43,112
(97,240)
(97,240)
(35,645)
(35,645)
1,116
1,116
(142,547)
(142,547)
(73,553)
–

18,457,256
17,913,222

Note: There are also differences in other items in the condensed fi nancial statements due to differences in classifi cation between IFRS and US GAAP.

Interim Report 2007 137

AI assistant

CStone Pharmaceuticals — Interim / Quarterly Report 2007

50715_rns_2007-08-17_907bb305-49ab-4e36-8b57-5bafe22c2f3f.pdf

兗州煤業股份有限公司

YANZHOU COAL MINING COMPANY LIMITED

(Stock Code: 1171)

INTERIM RESULTS FOR THE SIX MONTHS

ENDED 30TH JUNE, 2007

SUMMARY OF UNAUDITED MAJOR FINANCIAL INFORMATION

OPERATING RESULTS

ASSETS AND LIABILITIES

REVIEW OF OPERATIONS

Coal Production

Coal Sales and Price

Note:

Railway Assets

Operating Expenses and Cost Control

MANAGEMENT DISCUSSION AND ANALYSIS

THE SIX MONTHS ENDED 30TH JUNE, 2007 COMPARED WITH THE SIX MONTHS ENDED 30TH JUNE, 2006

116.9%, as compared to RMB41.492 million over the same period in 2006.

LIQUIDITY AND CAPITAL RESOURCES

TAXATION

US GAAP RECONCILIATION

OUTLOOK FOR THE SECOND HALF OF 2007

Operating strategies

Accelerate the construction of existing projects and continue to identify new acquisition

CHANGES IN SHARE CAPITAL AND SUBSTANTIAL SHAREHOLDINGS

Changes in Share Capital during the Reporting Period

Number of Shareholders as at the end of this Reporting Period

SUBSTANTIAL SHAREHOLDERS

SUBSTANTIAL SHAREHOLDERS

SHAREHOLDINGS OF DIRECTORS AND SUPERVISORS OF THE COMPANY

DISCLOSURE OF SIGNIFICANT EVENTS

Final Dividends Distribution for Year 2006

Interim Dividends Distribution

Amendments to the Business Scope and the Articles of Association of the Company

Acquisition of Mining Right of Zhaolou Coalmine

Increase in Registered Capital of Heze Nenghua

Establishment of Yankuang Group Finance Company Limited

Material Litigation and Arbitration

Material Contracts

Use of Funds and External Guarantees by the Company

External Equity Investment

COMPANY GOVERNANCE

ENTRUSTED LOAN

CONNECTED TRANSACTION

BORROWINGS

PURCHASE, SALE OR REDEMPTION OF SHARES OF THE COMPANY

COMPLIANCE WITH MODEL CODE

COMPLIANCE WITH CODE ON CORPORATE GOVERNANCE PRACTICES

IMPACT OF FLUCTUATIONS IN EXCHANGE RATES ON THE COMPANY

EMPLOYEES

POLICY OF REMUNERATION

AUDITORS

DOCUMENTS AVAILABLE FOR INSPECTION

BALANCE SHEET

BALANCE SHEET – CONTINUED

STATEMENT OF INCOME AND PROFITS APPROPRIATION

CASH FLOW STATEMENT

CASH FLOW STATEMENT – CONTINUED

YANZHOU COAL MINING COMPANY LIMITED

YANZHOU COAL MINING COMPANY LIMITED

NOTES TO THE FINANCIAL STATEMENTS

1. GENERAL

2. THE PREPARATION FOUNDATION OF FINANCIAL

First-time adoption of the Accounting Standards for Business Enterprise issued on February 15, 2006 (the “New Accounting Standards”).

YANZHOU COAL MINING COMPANY LIMITED

3. DECLARATION OF COMPLIANCE WITH ACCOUNTING STANDARDS

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES

Accounting year

Recording currency

Basis of accounting and principle of measurement

Cash equivalents

Foreign currency translation

4. SIGNIFICANT ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES – CONTINUED

Foreign currency translation – continued

Financial Instruments

Fair Value

Amortized cost

YANZHOU COAL MINING COMPANY LIMITED

CStone Pharmaceuticals Interim / Quarterly Report 2007