CStone Pharmaceuticals — Interim / Quarterly Report 2011

Aug 19, 2011

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

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 ANNOUNCEMENT FOR THE SIX MONTHS ENDED 30 JUNE 2011

The Board of Directors (the “Board”) of Yanzhou Coal Mining Company Limited (the “Company”) is pleased to announce the unaudited 2011 interim results of the Company and its subsidiaries for the six months ended 30 June 2011. The interim results have been reviewed and approved by the audit committee of the Board of the Company. This announcement, containing the full text of the Interim Report of the Company for 2011, complies with the relevant requirements of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited in relation to information accompanied in the preliminary announcements of interim results. The interim results announcement is available for viewing on the websites of the Stock Exchange of Hong Kong at www.hkexnews.hk and of the Company at www.yanzhoucoal.com.cn.

1

DEFINITIONS

In this Interim Report, unless the context requires otherwise, the following expressions have the following meanings:

• “Yanzhou Coal”, “Company” or

• “the Company”

• Yanzhou Coal Mining Company Limited, a joint stock limited company incorporated under the laws of the PRC in 1997 and the H Shares, the ADSs and A Shares of which are listed on the Hong Kong Stock Exchange, New York Stock Exchange Inc. and the Shanghai Stock Exchange, respectively;

“Group” or “the Group” the Company and its subsidiaries;

• “Yankuang Group”or

• “the Controlling Shareholder”

• Yankuang Group Corporation Limited, a company with limited liability reformed and established in accordance with PRC laws in 1996, being the controlling shareholder of the Company holding 52.86% of the total share capital of the Company as at the end of this reporting period;

• “Yulin Neng Hua” Yanzhou Coal Yulin Neng Hua Company Limited, a company with limited liability incorporated under the laws of the PRC in 2004 and a wholly-owned subsidiary of the Company, mainly engages in the construction and operation of the 0.6 million tonnes of methanol project in Shaanxi province;

• “Heze Neng Hua” Yanmei Heze Neng Hua Company Limited, a company with limited liability incorporated under the laws of the PRC in 2004 and a 98.33% owned subsidiary of the Company, mainly engages in the development of Juye coal fi eld in Heze city, Shandong province.

• “Shanxi Neng Hua” Yanzhou Coal Shanxi Neng Hua Company Limited, a company with limited liability incorporated under the laws of the PRC in 2002 and a wholly-owned subsidiary of the Company, mainly engages in the management of the projects invested in Shanxi province by the Company;

• “Yancoal Australia” Yancoal Australia Pty Limited, a company with limited liability incorporated under the laws of Australia in 2004 and a wholly-owned subsidiary of the Company, mainly engages in the management of the projects invested by the Company in Australia;

• “Hua Ju Energy” Shandong Hua Ju Energy Co., Limited, a company with limited liability incorporated under the laws of the PRC in 2002 and a 95.14% owned subsidiary of the Company, mainly engages in the thermal power generation by gangue and slurry, and heating supply;

• “Ordos Neng Hua” Yanzhou Coal Mining Ordos Neng Hua Company Limited, a company incorporated under the laws of the PRC in 2009 and a wholly-owned subsidiary of the Company, mainly engages in the development of coal resources and chemical projects of the Company in the Inner Mongolia Autonomous Region;

• “Haosheng Company” Inner Mongolia Haosheng Coal Mining Company Limited, a limited company incorporated under the laws of the PRC in 2010 and a 61% owned subsidiary of the Company, mainly engages in the project application and mining rights approvals of Shilawusu coal fi eld in the Inner Mongolia Autonomous Region;

Yanzhou Coal Minning Company Limited Interim Report 2011 3

DEFINITIONS – CONTINUED

“Railway Assets”	The railway assets specif cally used for transportation of coal for the Company, which
	are located in Jining City, Shandong province;
“H Shares”	Overseas listed foreign invested shares in the ordinary share capital of the Company,
	with nominal value of RMB1.00 each, which are listed on the Hong Kong Stock
	Exchange;
“A Shares”	Domestic shares in the ordinary share capital of the Company, with nominal value of
	RMB1.00 each, which are listed on the Shanghai Stock Exchange;
“ADSs”	American depositary shares, each representing ownership of 10 H Shares, which are
	listed on New York Stock Exchange Inc.;
“PRC”	People’s Republic of China;
“CASs” or “ASBEs”	Accounting Standard for Business Enterprises (2006) and the relevant regulations and
	explanations issued by the Ministry of Finance of PRC;
“CSRC”	China Securities Regulatory Commission;
“Hong Kong Stock Exchange”	The Stock Exchange of Hong Kong Limited;
“Shanghai Stock Exchange”	The Shanghai Stock Exchange;
“Articles”	The articles of association of the Company
“Shareholders”	the shareholders of the Company;
“Directors”	the directors of the Company;
“Board”	the board of directors of the Company;
“Supervisors”	the supervisors of the Company;
“RMB”	Renminbi, the lawful currency of the PRC, unless otherwise specif ed.

4 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 1 GROUP PROFILE AND GENERAL INFORMATION

• (1) Statutory Chinese Name: 兖州煤业股份有限公司 Abbreviation of Chinese Name: 兖州煤业 Statutory English Name: Yanzhou Coal Mining Company Limited

• (2) Legal Representative: Li Weimin

• (3) Authorized Representatives of the Hong Kong Stock Exchange: Wu Yuxiang, Zhang Baocai Secretary to the Board/Company Secretary: Zhang Baocai

Address: Offi ce of the Secretary to the Board, 298 Fushan South Road, Zoucheng City, Shandong Province, PRC Tel: (86537) 5382319 Fax: (86537) 5383311 E-mail Address: yzc@yanzhoucoal.com.cn

Representative of the Shanghai Stock Exchange: Huang Xiaolong Address: Offi ce of the Secretary to the Board, 298 Fushan South Road, Zoucheng City, Shandong Province, PRC Tel: (86537) 5385343 Fax: (86537) 5383311 E-mail Address: huangxiaolong@yanzhoucoal.com.cn

• (4) Registered Address : 298 Fushan South Road, Zoucheng City, Shandong Province, PRC Offi ce Address: 298 Fushan South Road, Zoucheng City, Shandong Province, PRC Postal Code: 273500

Offi cial Website: http://www.yanzhoucoal.com.cn

E-mail: yzc@yanzhoucoal.com.cn

• (5) Newspapers for corporate information disclosure in PRC: China Securities Journal, Shanghai Securities News Website for publishing the Company’s Interim Report in PRC: http://www.sse.com.cn Website for publishing the Company’s Interim Report overseas: http://www.hkexnews.hk

http://www.sec.gov

Interim Reports of the Company are available at: Offi ce of the Secretary to the Board, Yanzhou Coal Mining Company Limited

Yanzhou Coal Minning Company Limited Interim Report 2011 5

CHAPTER 1 GROUP PROFILE AND GENERAL INFORMATION – CONTINUED

• (6) Places of Listing, Stock Abbreviation and Stock Code A Shares — Place of listing: The Shanghai Stock Exchange

• Stock Abbreviation: Yanzhou Mei Ye

• Stock Code: 600188

H Shares — Place of listing: The Stock Exchange of Hong Kong Limited

  - Stock Code: 1171

• ADR — Place of listing: The New York Stock Exchange, Inc. Ticker Symbol: YZC

• (7) Other relevant information

Date of Initial Business Registration : 25 September, 1997

• Place of Initial Business Registration: 40 Fushan South Road, Zoucheng City, Shandong Province, 273500, PRC Date of Change in Registration: 17 January, 2011

• Place of Change in Registration: 298 Fushan South Road, Zoucheng City, Shandong Province 273500, PRC Registration number of Corporate Business Licence of the Enterprise Legal Person: 370000400001016 Tax Registration Certifi cate Number: Jiguoshuizi 370883166122374 Organization Code: 16612237-4

Name of Certifi ed Public Accountants (Domestic) : Shine Wing Certifi ed Public Accountants Offi ce Address: 9/F, Block A, Fuhua Mansion, 8 Chaoyangmen Beidajie, Dongcheng District, Beijing 100027, PRC Certifi ed Public Accountants (International):

Name: Grant Thornton Jingdu Tianhua Offi ce Address: 20/F, Sunning Plaza, 10 Hysan Avenue, Causeway Bay, Hong Kong Name: Grant Thornton

Offi ce Address: 10/F, Scitech Place, 22 Jianguomen Wai Avenue, Chaoyang District, Beijing

6 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 2 BUSINESS HIGHLIGHTS

I. REVIEW OF OPERATIONS

				For the	For the
				six months	six months		Percentage
				ended 30	ended 30	Increase/	increase/
				June 2011	June 2010	Decrease	decrease (%)
1.	Coal business
	Raw coal production		Kiloton	25,728	22,886	2,842	12.42
	Salable coal production		Kiloton	23,587	21,562	2,025	9.39
	Salable coal sales volume		Kiloton	26,661	22,856	3,805	16.65
2.	Railway transportation	business
	Transportation volume		Kiloton	9,088	9,929	-841	-8.47
3.	Coal chemicals business
	Methanol production		Kiloton	248	245	3	1.22
	Methanol sales volume		Kiloton	246	250	-4	-1.60
4.	Electrical power business
	Power generation		10,000 kWh	69,440	70,459	-1,019	-1.45
	Electricity sold		10,000 kWh	46,944	24,218	22,726	93.84
5.	Heat business
	Heat generation	10,000 steam tonnes		91	94	-3	-3.19
	Heat sales volume	10,000 steam tonnes		15	15	0	0

II. FINANCIAL HIGHLIGHTS

(Prepared in accordance with the IFRS)

(1) OPERATING RESULTS

For the six months ended 30 June

			Changes as	For the
			compared with the	year ended
			corresponding	31 December
	2011	2010	period of last year	2010
	(RMB’000)	(RMB’000)	(%)	(RMB’000)
	(unaudited)	(unaudited)		(audited)
Sales income	20,224,012	15,218,688	32.89	33,944,252
Gross prof t	9,037,848	6,970,106	29.67	15,057,631
Interest expenses	(426,106)	(157,736)	170.14	(603,343)
Income before income tax	7,235,926	3,566,116	102.91	12,477,335
Net income attributable to
equity holders of the Company
for the reporting period	5,183,335	2,715,439	90.88	9,281,386
Earnings per share	RMB1.05	RMB 0.55	90.88	RMB1.89

Yanzhou Coal Minning Company Limited Interim Report 2011 7

CHAPTER 2 BUSINESS HIGHLIGHTS – CONTINUED

(2) ASSETS AND LIABILITIES

			As at
	As at 30 June		31 December
	2011	2010	2010
	(RMB’000)	(RMB’000)	(RMB’000)
	(unaudited)	(unaudited)	(audited)
Current Assets	31,682,102	22,511,936	24,281,354
Current Liabilities	24,065,256	10,365,134	10,133,862
Total Assets	89,613,919	64,010,379	72,755,864
Equity attributable to shareholders of the Company	39,845,365	30,520,418	37,331,886
Net assets per share	RMB 8.10	RMB 6.21	RMB 7.59
Return on Net Assets (%)	13.01	8.90	24.86

(3) SUMMARY STATEMENT OF CASH FLOWS

	For the six months ended 30 June	For the six months ended 30 June	For the six months ended 30 June
			Changes as	For the
			compared with the	year ended
			corresponding	31 December
	2011	2010	period of last year	2010
	(RMB’000)	(RMB’000)	(%)	(RMB’000)
	(unaudited)	(unaudited)		(audited)
Net Cash from Operating Activities	13,136,797	2,084,499	530.21	5,399,804
Net increase in Cash and Cash
Equivalents	5,379,199	(37,049)	—	(1,845,074)
Net Cash Flow per Share from
Operating Activities	RMB 2.67	RMB 0.42	530.21	RMB 1.10

8 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT

I. MANAGEMENT DISCUSSION AND ANALYSIS

(1) Management Analysis of the Operating Results by Business Segment

1. Coal business

2. Railway transportation business

3. Coal chemicals business

4. Electrical power business

5. Heat business

(2) Management Analysis of Major Financial Condition of the Group

1. Changes in consolidated balance sheet items

2. Changes in consolidated income statement items

3. Changes in consolidated cash fl ow statement items

4. Others

(3) Capital Expenditure Plan

(4) Investments made by the Group during the Reporting Period

(5) Outlook

• (i) Market outlook for second half of 2011

• (ii) Operational strategies

• (iii) Major Risks faced by the Company, Impacts and Measures

II. ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES OR AMENDMENTS ON SIGNIFICANT ACCOUNTING ERRORS

III. OTHERS

Yanzhou Coal Minning Company Limited Interim Report 2011 9

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

I. MANAGEMENT DISCUSSION AND ANALYSIS

(I) Management Analysis of Operating Results by Business Segment

The main business operations of the Group include mining, washing, processing, sales and railway transportation of coal, coal chemicals and electricity business.

The main business operations of the Group for this reporting period were set out in the following table:

				Increase/	Increase/	Increase/
				decrease in	decrease in	decrease in
	Sales Income	Cost of Sales	Gross Prof t	sales income	cost of sales	gross prof t
						Percentage
	(RMB’000)	(RMB’000)	(%)	(%)	(%)	point
1. Coal business	19,326,668	9,796,563	49.31	33.74	35.81	-0.77
2. Railway Transportation business	242,877	156,684	35.49	-5.95	4.33	-6.36
3. Coal Chemicals business	477,334	439,289	7.97	16.83	2.39	+12.98
4. Electrical power business	161,727	161,536	0.12	88.41	103.04	-7.20
5. Heat business	15,406	8,374	45.64	0.86	10.05	-4.54

10 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

1. Coal business

(1) Coal Production

In the fi rst half of 2011, the raw coal production of the Group was 25.73 million tonnes, representing an increase of 2.84 million tonnes or 12.4% compared with that of the fi rst half of 2010. Salable coal production of the Group for the reporting period was 23.59 million tonnes, representing an increase of 2.03million tonnes, or 9.4%, compared with that of the fi rst half of 2010. The increase of coal production was mainly due to: (1) consolidation of coal production by Ordos Neng Hua; and (2) coal production by Yancoal Australia increased as compared with that of the fi rst half of 2010;

The following table sets out the coal production of the Group for the fi rst half of 2011;

		For the six	For the six
	months ended		months ended	Increase/	Increase/
	30	June 2011	30 June 2010	decrease	decrease
		Kiloton	Kiloton	Kiloton	(%)
I.	Raw coal production	25,728	22,886	2,842	12.42
	1. The Company	16,703	17,020	-317	-1.86
	2. Shanxi Neng Hua	577	740	-163	-22.03
	3. Heze Neng Hua	1,371	662	709	107.10
	4. Ordos Neng Hua	1,308	—	1,308	—
	5. Yancoal Australia Pty	5,769	4,464	1,305	29.23
II.	Salable coal production	23,587	21,562	2,025	9.39
	1. The Company	16,604	16,986	-382	-2.25
	2. Shanxi Neng Hua	566	730	-164	-22.47
	3. Heze Neng Hua	717	498	219	43.98
	4. Ordos Neng Hua	1,308	—	1,308	—
	5. Yancoal Australia Pty	4,392	3,348	1,044	31.18

(2) Coal Prices and Sales

Benefi ting from the persistent strong demand for coal in the domestic and overseas markets, the average coal price of the Group increased in the fi rst half of 2011 as compared with that of the fi rst half of 2010.

The Group sold 26.66 million tonnes of coal in the fi rst half of 2011, of which 0.54 million tonnes were sold internally, and 26.12million tonnes externally. The sales volume increased by 3.81 million tonnes or 16.6% as compared with that of the fi rst half of 2010. This increase is mainly due to: (1) consolidation by the Company of coal sales volume of 1.3 million tonnes of Ordos Neng Hua; (2) coal sales volume by Yancoal Australia increased by 1.71 million tonnes as compared with the corresponding period of last year; and (3) the sales volume of externally purchased coal increased by 1.09 million tonnes as compared with that of the fi rst half of 2010

Yanzhou Coal Minning Company Limited Interim Report 2011 11

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

In the fi rst half of 2011, the Group realized a sales income of RMB19.4341 billion for its coal business, representing an increase, as compared with that of the fi rst half of 2010, of RMB4.8896 billion or 33.6%. The sales income comprises of RMB107.40 million of internal sales and RMB19.3267billion of external sales.

The following table sets out the Group’s sales of coal for the fi rst half of 2011:

	For the six months ended 30 June 2011	For the six months ended 30 June 2011	For the six months ended 30 June 2011	For the six months ended 30 June 2011	For the six	months ended 30	June 2010
	Sales volume		Sales Price Sales income		Sales volume	Sales Price	Sales income
		(Kiloton)	(RMB/tonne)	(RMB’000)	(Kiloton)	(RMB/tonne)	(RMB’000)
1.	The Company
	No. 1 Clean Coal	250	1,091.00	272,746	429	972.90	417,346
	No. 2 Clean Coal	4,705	1,018.75	4,793,537	4,129	987.19	4,076,099
	No. 3 Clean Coal	1,053	841.62	885,858	581	858.82	499,291
	Domestic Sales	1,045	841.40	879,126	576	861.97	496,356
	Export	8	871.08	6,732	5	531.00	2,935
	Lump Coal	859	1,023.10	878,851	717	927.26	664,734
	Subtotal for Clean Coal	6,867	994.77	6,830,992	5,856	966.07	5,657,470
	Domestic Sales	6,859	994.91	6,824,260	5,851	966.48	5,654,535
	Export	8	871.08	6,732	5	531.00	2,935
	Screened Raw Coal	6,600	486.60	3,211,712	8,771	476.83	4,182,151
	Mixed Coal & Others	2,734	341.21	932,882	1,865	275.56	513,945
	Total for the Company	16,201	677.45	10,975,586	16,492	627.80	10,353,566
	Domestic Sales	16,193	677.36	10,968,854	16,487	627.83	10,350,631
2.	Shanxi Neng Hua	544	454.44	247,163	781	360.50	281,596
	Screened Raw Coal	544	454.44	247,163	781	360.50	281,596
3.	Heze Neng Hua	722	869.37	627,709	485	741.39	360,166
	No. 2 Clean Coal	434	1,174.19	509,503	227	1,118.44	254,143
	Screened Raw Coal	22	521.79	11,551	89	528.57	47,173
	Mixed Coal & Others	266	401.01	106,655	169	347.57	58,850
4.	Ordos Neng Hua	1,303	299.78	390,562	—	—	—
	Screened Raw Coal	1,303	299.78	390,562	—	—	—
5.	Yancoal Australia	4,730	1,006.14	4,759,351	3,025	674.11	2,039,336
	Semi-hard coking coal	825	1,125.42	928,259	701	713.22	500,068
	Semi-soft coking coal	548	1,243.98	681,623	603	719.27	434,148
	PCI	1,240	1,397.00	1,732,027	846	782.13	661,333
	Steaming coal	2,117	669.32	1,417,442	875	507.24	443,787
6.	Sales of externally
	purchased coal	3,161	769.99	2,433,690	2,073	728.33	1,509,839
7.	Total for the Group	26,661	728.93	19,434,061	22,856	636.35	14,544,503

12 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

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

		Impact of
	Impact of	change in
	change in	the sales price
	coal sales	of coal
	(RMB’000)	(RMB’000)
The Company	-182,360	804,380
Shanxi Neng Hua	-85,536	51,103
Heze Neng Hua	175,141	92,402
Ordos Neng Hua	390,562	—
Yancoal Australia	1,149,513	1,570,502
Externally purchased coal	792,164	131,687

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

The following table sets out the Company’s sales in terms of geographical regions for the fi rst half of 2011:

		For the six months ended	For the six months ended	For the six months ended	For the six months ended
		30 June 2011		30 June 2010
		Sales volume	Sales income	Sales volume	Sales income
		(Kiloton)	(RMB’000)	(Kiloton)	(RMB’000)
1.	China	22,414	15,113,781	20,338	12,829,156
	Eastern China	18,693	12,652,793	14,018	9,585,503
	Southern China	88	81,048	34	29,444
	Northern China	1,701	664,186	530	232,446
	Other regions	1,932	1,715,754	5,756	2,981,763
2.	Japan	1,002	1,192,846	1,135	777,254
3.	South Korea	2,644	2,475,999	965	614,020
4.	Australia	105	128,396	100	70,733
5.	Others	496	523,039	318	253,340
6.	Total for the Group	26,661	19,434,061	22,856	14,544,503

Most of the Group’s coal products are sold to the electricity, metallurgy and chemical industries.

Yanzhou Coal Minning Company Limited Interim Report 2011 13

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

The following table sets out the Group’s sales volume and sales income of coal in terms of industries for the fi rst half of 2011:

		For the six months ended	For the six months ended	For the six months ended	For the six months ended
		30 June 2011		30 June 2010
		Sales volume	Sales income	Sales volume	Sales income
		(Kiloton)	(RMB’000)	(Kiloton)	(RMB’000)
1.	Electricity	8,920	4,441,126	7,528	3,544,457
2.	Metallurgy	3,343	3,349,870	3,071	2,305,379
3.	Chemical	1,188	1,167,310	733	676,222
4.	Others	13,210	10,475,755	11,524	8,018,445
5.	Total for the Group	26,661	19,434,061	22,856	14,544,503

(3) Cost of Sales of Coal

The Group’s cost of coal sales in the fi rst half of 2011 was RMB 9.7966 billion, representing an increase of RMB 2.5833 billion, or 35.8% as compared with that of the fi rst half of 2010.

The following table sets out the main cost of coal sales according to the business entities:

			For the	For the
			six months	six months		Percentage
			ended 30	ended 30	Increase/	increase/
		Unit	June 2011	June 2010	decrease	decrease
						(%)
The Company	Total cost of sales	RMB’000	4,636,844	4,188,830	448,014	10.70
	Cost of sales per tonne	RMB	286.20	253.99	32.21	12.68
Shanxi Neng Hua	Total cost of sales	RMB’000	170,050	168,780	1,270	0.75
	Cost of sales per tonne	RMB	312.66	216.07	96.59	44.70
Heze Neng Hua	Total cost of sales	RMB’000	516,583	279,044	237,539	85.13
	Cost of sales per tonne	RMB	715.47	574.41	141.06	24.56
Ordos Neng Hua	Total cost of sales	RMB’000	195,999	—	—	—
	Cost of sales per tonne	RMB	150.44	—	—	—
Yancoal Australia	Total cost of sales	RMB’000	2,146,874	1,328,679	818,195	61.58
	Cost of sales per tonne	RMB	453.85	439.20	14.65	3.34
Externally purchased coal	Total cost of sales	RMB’000	2,395,130	1,493,902	901,228	60.33
	Cost of salesper tonne	RMB	757.71	720.65	37.06	5.14

In the fi rst half of 2011, the cost of coal sales of the Company was RMB 4.6368 billion, representing an increase of RMB 448 million or 10.7% compared with that of the fi rst half of 2010. The cost of coal sales per tonne was RMB 286.20, representing an increase of RMB 32.21 or 12.7% compared with that of the fi rst half of 2010. This was due to: (1) an increase in material prices resulting in an increase in the cost of coal sales per tonne by RMB 6.72; and (2) an increase in employees’ wages resulting in an increase in the the cost of coal sales per tonne by RMB 22.14.

14 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

In the fi rst half of 2010, the cost of coal sales of Shanxi Neng Hua was RMB 170.1 million, representing an increase of RMB 1.27 million or 0.8% compared with that of the fi rst half of 2010; the cost of coal sales per tonne was RMB312.66, representing an increase of RMB96.59 or 44.7%. This was due to a decrease in the sales volume of saleable coal by 0.24 million tonnes or 30.3%, resulting in an increase in the fi xed unit cost per tonne.

In the fi rst half of 2011, the cost of coal sales of Heze Neng Hua was RMB 516.6 million, representing an increase of RMB 237.5 million or 85.1% compared with that of the fi rst half of 2010; the cost of coal sales per tonne was RMB 715.47, representing an increase of RMB 141.06 or 24.6% compared with that of the fi rst half of 2010. This was due to the fact that the coal mine is at its initial stage of commercial production with a relatively low rate of salable coal output and the increased equipment and material input and the number of employees deployed. Of which: (1) the increase of cost per raw coal production and amortized per sales volume of salable coal have led to an increase in the cost of coal sales per tonne by RMB49.04; (2) the increase of wages of employees have to an increase in the cost of coal sales per tonne by RMB40.39; (3) the increase of mining machinery leasing expenses has resulted in an increase in the cost of coal sales per tonne by RMB38.79.

2. Railway Transportation Business

In the fi rst half of 2011, the transportation volume of the Railway Assets for the fi nished products was 9.09 million tonnes, representing a decrease of 0.84 million tonnes or 8.5% as compared with that of the fi rst half of 2010. Income from railway transportation services of the Company (income from transported volume settled on the basis of off-mine prices and special purpose railway transportation fees borne by customers) was RMB242.9 million in the fi rst half of 2011, representing a decrease of RMB15.373 million or 6.0% as compared with that of the fi rst half of 2010. The cost of sales of railway transportation services was RMB 156.7 million, representing an increase of RMB 6.496 million or 4.3% as compared with that of the fi rst half of 2010.

3. Coal Chemicals Business

The following table sets out the state of operation of the Group’s methanol business for the fi rst half of 2011:

	Production volume	Production volume	(Kiloton)		Sales volume (Kiloton)	Sales volume (Kiloton)
	For the	For the		For the	For the
	six months	six months	Percentage	six months	six months	Percentage
	ended 30	ended 30	increase/	ended 30	ended 30	increase/
	June 2011	June 2010	decrease	June 2011	June 2010	decrease
			(%)			(%)
1. Yulin Neng Hua	214	212	0.94	213	216	-1.39
2. Shanxi Neng Hua	34	33	3.03	33	34	-2.94

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CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

	Sales	income (RMB’000)	income (RMB’000)	Cost of Sales (RMB’000)	Cost of Sales (RMB’000)	Cost of Sales (RMB’000)
	For the	For the		For the	For the
	six months	six months	Percentage	six months	six months	Percentage
	ended 30	ended 30	increase/	ended 30	ended 30	increase/
	June 2011	June 2010	decrease	June 2011	June 2010	decrease
			(%)			(%)
1. Yulin Neng Hua	410,710	350,207	17.28	399,115	389,590	2.44
2. Shanxi Neng Hua	66,624	58,361	14.16	64,346	63,599	1.17

4. Electricity Business

The following table sets out the state of operation of the Group’s electricity business for the fi rst half of 2011:

		Generation (10,000	Generation (10,000	kW/h)	Electricity	sold (10,000	kW/h)
		For the	For the		For the	For the
		six months	six months	Percentage	six months	six months	Percentage
		ended 30	ended 30	of increase/	ended 30	ended 30	of increase/
		June 2011	June 2010	decrease	June 2011	June 2010	decrease
				(%)			(%)
1. Hua Ju Energy	note	51,657	54,947	-5.99	44,790	21,310	110.18
2. Yulin Neng Hua		14,032	11,504	21.97	1,952	2,380	-17.98
3. Shanxi Neng Hua		3,751	4,008	-6.41	202	528	-61.74

Note: In the previous years, the electricity generated by Hua Ju Energy was fi rst consumed by the the Group and the remaining electricity was sold on the grid. Starting from 1 January 2011, all the electricity generated by Hua Ju Energy is sold on the grid.

	Sales	income (RMB	’000)	Cost of sales (RMB	Cost of sales (RMB	’000)
	For the	For the		For the	For the
	six months	six months	Percentage	six months	six months	Percentage
	ended 30	ended 30	increase/	ended 30	ended 30	increase/
	June 2011	June 2010	decrease	June 2011	June 2010	decrease
			(%)			(%)
1. Hua Ju Energy	156,679	79,358	97.43	151,988	62,961	141.40
2. Yulin Neng Hua	4,573	5,243	-12.78	7,675	13,226	-41.97
3. Shanxi Neng Hua	475	1,238	-61.63	1,874	3,370	-44.39

16 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

5. Heat Business

Hua Ju Energy generated heat energy of 0.91 million steam tonnes and sold 0.15 million steam tonnes in the fi rst half of 2011, generating a sales income of RMB 15.406 million, with the cost of sales at RMB 8.374 million.

(II) Analysis of Major Financial Conditions by the Management

1. Changes in Consolidated Balance Sheet Items

2. (1) Asset items

	As at 30	As at 31	Increase and
	June 2011	December 2010	decrease	Main reasons for the change
	(RMB’000)	(RMB’000)	(%)
Bank balances and cash	12,194,213	6,771,314	80.09	Increase in sales income and cash;
				Matured bills cashed.
Bank guarantee deposits	10,133,947	2,567,722	294.67	1 An increase of RMB 6.6362
				billion in the balance of f xed term
				deposits.
				2 An increase of RMB 930.1 million in
				the balance of bank guarantee funds.
Bills and accounts receivable	3,597,010	10,017,260	-64.09	1 The balance of bills receivable
				decreased by RMB 6.6276 billion
				due to the decrease of sales of coal
				settled by acceptance bills and the
				increase of bill discounting;
				2 Net accounts receivable increased
				by RMB 207.4 million.
Prepayments and other	3,688,720	2,613,686	41.13	The prepayment made by the Company
receivables				for externally purchased coal increased
				by RMB 296.9 million;
				The prepayment made by Ordos Neng
				Hua for equipment increased by RMB
				327.7 million;
				The prepaid removal/relocation expenses
				increased by RMB 316 million.

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CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

	As at 30	As at 31	Increase and
	June 2011	December 2010	decrease	Main reasons for the change
	(RMB’000)	(RMB’000)	(%)
Derivative f nancial	418,370	239,476	74.70	An increase of RMB 178.9 million in
instruments				the fair value measured f nancial assets
				from the forward foreign exchange
				contracts signed by Yancoal Australia.
Net value of property, plant	28,492,679	19,874,615	43.36	The consideration of RMB 7.8 billion for
and equipment				acquisition of Zhuanlongwan coal mine
				f eld.
Investment in associates	1,629,095	1,074,958	51.55	Capital investment of RMB 540 million
				in Shaanxi Future Energy Chemicals
				Co., Ltd.
Restricted cash	40,150	1,365,995	-97.06	RMB 1.2881 billion in cash from the
				disposal of equity interest in Minerva
				coal mine was adjusted to as Bank
				balances and cash.
Total assets	89,613,919	72,755,864	23.17	–

18 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

(2) Liabilities items

	As at 30	As at 31	Increase and
	June 2011	December 2010	decrease	Main reasons for the change
	(RMB’000)	(RMB’000)	(%)
Amounts due to Parent	1,825,544	438,783	316.05	RMB 1.534 billion of cash dividend due
Company and its				to the Controlling Shareholder for the
subsidiaries				year 2010.
Borrowings-due within one	10,164,000	614,925	1,552.88	1 The Company borrowed RMB 832
year				million for the payment of H share
				dividend of 2010;
				2 The Company borrowed RMB 6.62
				billion for the registered capital
				increase of Yancoal Australia;
				3 The Company borrowed RMB 3.05
				billion to supplement of working
				capital;
				4 Repayment of RMB 592.9 million of
				borrowings due within 1 year during
				the current reporting period.
Current portion of long term	2,343,459	6,536	35,754.64	The second installment of RMB 2.34
payables-due within one				billion for biding for Zhuanlongwan coal
year				mine f eld shall be paid in full before 30
				November 2011.
Non-current portion of long	2,360,244	28,917	8,062.13	The third installment of RMB 2.34
term payables-due after				billion for biding for Zhuanlongwan coal
one year				mine f eld shall be paid in full before 30
				November 2012.
Total liabilities	49,650,791	35,317,413	40.58	—

Yanzhou Coal Minning Company Limited Interim Report 2011 19

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

2. Changes in Consolidated Income Statement Items

	For the six months	For the six months
	ended 30 June		Increase and
	2011	2010	decrease	Main reasons for change
	(RMB’000)	(RMB’000)	(%)
Sales income	20,224,012	15,218,688	32.89	1	The increase of sales volume resulted
					in the increase of RMB 2.2468 billion of
					sales income of coal as compared with the
					corresponding period of last year;
				2	The rise in coal price resulted in the increase
					of RMB 2.6291 billion of sales income of coal
					as compared with the corresponding period
					of last year.
Cost of sales	10,562,446	7,879,654	34.05	The coal sales volume increased as compared
				with the corresponding period of last year.
Investment return	14,137	-7,962	—	The investment return on China HD Zouxian Co.,
on associates				Ltd. was RMB 7.078 million during the reporting
				period and the investment return was RMB-7.962
				million in the corresponding period of last year;
				The investment return on Yankuang Group
				Finance Co., Ltd was RMB 7.059 million.
Other income	1,509,646	127,560	1,083.48	Exchange gain of Yancoal Australia was RMB
				1.2322 billion.
Interest	426,106	157,736	170.14	1	The payment of the consideration for the
expenses					acquisition of mining rights in Zhuanlongwan
					coal mine field by instalment resulted in
					a payment of RMB 95.936 million fund
					possession cost by Ordos Neng Hua in the
					current reporting period;
				2	Interest expense of bank loan increased by
					RMB 156.7 million as compared with that of
					corresponding period of last year.
				3	Bill discounting expense of the Company
					increased by RMB 15.695 million as
					compared with the corresponding period of
					last year.
Income taxes	2,040,953	832,526	145.15	Taxable income increased as compared with the
				corresponding period of last year.
Net income	5,183,335	2,715,439	90.88	—
attributable to
shareholders
of the
Company for
the reporting
period

20 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

3. Changes in Consolidated Cash Flow Statement Items

4

For the six months ended 30 June Increase and decrease Main reasons for change 2011 2010 (RMB’000) (RMB’000) (%)

Net cash generated from operating activities 13,136,797 2,084,499 530.21 Cash flow generated from operating activities increased by RMB 11.2551 billion as compared to the same period of last year. Net cash for investing activities 13,748,249 1,936,076 610.11 The increase of RMB 5.1887 billion due to acquisition of assets and equities as compared with that of the corresponding period of last year; increase of bank guarantee deposits by RMB7.9994 billion as compared with that of the corresponding period of last year; decrease of restricted cash by RMB 1.6615 billion as compared with that of the corresponding period of last year. Net cash generated from (used in) f nancing activities 5,990,651 -185,472 — The bank loan received increased by RMB 10.5031 billion as compared with that of the corresponding period of last year; repayment of bank and other loans increased by RMB 2.9567 billion as compared with that of the corresponding period of last year; distribution of dividends for year 2010 of RMB1.3679 billion. Net increase (decrease) in cash and cash equivalents 5,379,199 -37,049 — — Others

• (1) Debt to Equity Ratio

As at 30 June 2011, the equity attributable to the equity holders of the Company and the total borrowings amounted to RMB 39.8454 billion and RMB 29.9587 billion, respectively, with a debt to equity ratio of 75.2%.

For detailed information on the debt borrowings, please refer to note 22 of the fi nancial statements prepared under IFRS or the note VIII.20, VIII.28 and VIII.29 of the fi nancial statement prepared under CASs.

• (2) Capital Resources and Use

In the fi rst half of 2011, the Group’s principal source of capital was the cash fl ow from operations and bank loans. The Group has utilized its capital mainly for payment of operating expenses, purchase of property, machinery and equipment, payment of dividends to its Shareholders, payment of the acquisition of assets and equity interests.

Yanzhou Coal Minning Company Limited Interim Report 2011 21

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

The Group’s capital expenditure for the purchase of property, machinery and equipment for the fi rst half of 2011 was RMB 8.8664 billion, representing an increase of RMB 7.6151 billion or 608.6% as compared with RMB 1.2513 billion in the fi rst half of 2010. This was mainly due to: (1) the expenditure of Ordos Neng Hua for the purchase of property, machinery and equipment increased by RMB 7.9991 billion as compared with that of the fi rst half of 2010; and (2) the expenditure of Yancoal Australia for the purchase of property, machinery and equipment decreased by RMB 486.3 million as compared with that of the fi rst half of 2010.

• (3) The Impacts of Exchange Rate Changes on the Company

China implements a regulated and managed fl oating exchange rate system based on market supply and demand by reference to a basket of currencies.

The impacts of exchange rate fl uctuations on the Group were mainly refl ected in:

• (i) the overseas coal sales income is calculated in U.S. dollars and Australian dollars which has an impact on the overseas coal sales of the Group;

• (ii) the exchange gains and losses of the foreign currency deposits and borrowings. The exchange rate of AUD to USD was 1.0739 as at 30 June 2011, compared to that of 1.0163 as at 31 December 2010. Affected by the change of exchange rate, Yancoal Australia had gains of foreign exchange of RMB1.2322 billion in the fi rst half of 2011. As at 17 August 2011, the exchange rate of AUD to USD was 1.0490.

• (iii) the cost of imported equipment and accessories of the Group.

To manage the foreign currency risk of the expected revenue, Yancoal Australia, the Group’s subsidiary in Australia, has entered into a foreign exchange hedging contract with a bank. For more details, please refer to note VIII.2 and note VIII.21 of the fi nancial statement prepared under CASs.

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

• (4) Contingent liabilities

For details of the contingent liabilities, please see note 31 of the fi nancial statements prepared under the IFRS.

• (5) Pledge of assets

The Company has not pledged any of its assets in the current reporting period.

22 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

(6) Taxation

In the current reporting period, the Company and all of its subsidiaries incorporated in the PRC are subject to an income tax rate of 25% and Yancoal Australia is subject to a tax rate of 30% on its taxable profi ts.

(III) Capital Expenditure Plan

The capital expenditure for the fi rst half of 2011 and the estimated capital expenditure for the second half of 2011 of the Group are set out in the following table:

		Second
	First half of 2011	half of 2011	2011
	(Estimated)	(Estimated)	(Estimated)
	(RMB100 million)	(RMB100 million)	(RMB100 million)
The Company	2.666	9.338	12.004
Shanxi Neng Hua	0.043	0.338	0.381
Yancoal Australia	5.406	10.962	16.368
Yulin Neng Hua	0.055	0.394	0.449
Heze Neng Hua	0.288	6.917	7.205
Hua Ju Energy	0.146	0.531	0.677
Ordos Neng Hua	80.060	11.475	91.535
Haosheng Company	—	0.412	0.412
Total	88.664	40.367	129.031

The Group possesses relatively suffi cient cash and fi nancial facilities such as bank loans which, is expected to meet its operation and development expenditures.

(IV) Investment made by the Group during the Reporting Period

There were no fund raising activities during the reporting period and no previous funds raised were used in the reporting period.

Investments of the Group with its own funds during the reporting period are as follows:

Yanzhou Coal Minning Company Limited Interim Report 2011 23

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

			Interest in
	Major Operating		Investee		Income from the
Project Name	activity	Project Amount	Company	Progress of the Project	Project
			(%)
Acquisition of	Production of coal	Total consideration for	90.00	Completed the relevant equity	–
30% equity		the acquisition was		interests transfer procedures on
interests in		USD250 million. All of the		13 May 2011
Ashton Coal		consideration was paid in
Mine		full.
Acquisition of	Application and	Total consideration for	61.00	Completed the relevant equity	–
10% equity	approval of mining	the acquisition was		interests transfer procedures on
interests in	rights for Shilawusu	RMB1.3138 billion, of		6 May 2011
Haosheng	coal mine f eld project	which RMB394.1 million
Company	in Inner Mongolia	has been paid as at the
	Autonomous Region.	end of the current reporting
		period. The balance of
		unpaid consideration was
		RMB919.7 million.
Acquisition of	Production and sales	Total consideration for the	100.00	As of the date of this Interim	Anyuan coal mine
Anyuan coal	of coal	acquisition was RMB1.435		Report, the ownership	realized a net
mine		billion. After the payment of		procedures for the change of	income of RMB
		RMB355 million during the		ownership of the assets and	104.5 million in the
		current reporting period, all		the expansion and acceptance	f rst half of 2011.
		the consideration was paid		inspection procedures of
		in full.		Anyuan coal mine are still in
				progress.
Acquisition of	–	Total consideration for	–	The application of mining rights	–
mining rights of		the acquisition was		for Zhuan Longwan coal mine
Zhuan Longwan		RMB7.8 billion, of which		f eld by Ordos Neng Hua is in
coal mine f eld		RMB3.12 billion has been		progress.
		paid during the reporting
		period. The balance of
		unpaid consideration was
		RMB4.68 billion.
Capital	Preparation and	RMB1.35 billion, of which	25.00	Shaanxi Future Energy Chemical	–
investment in	development of coal	RMB540 million was		Corp. Ltd was incorporated on
Shaanxi Future	liquefaction project	paid at the end of the		25 February 2011.
Energy Chemical	and compatible coal	current reporting period.
Corp. Ltd	mines in Shaanxi	The unpaid amount of
	province	investment was RMB810
		million.

24 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

(V) Outlook

1. Market outlook of the second half of 2011

Outlook for coal market

With an increase in supply in the domestic coal market and a stable but increasing demand, the supply and demand of coal will generally be in balance. The domestic economy maintains a stable development; with continued increase in investment by local governments at different levels and the commencement of low-income housing construction, the demand for coal for coal-consumption industries’ (mainly including steel, cement, glass industries) will increase. On the other hand, the demand for coal will to a certain extent be restrained by the implementation of stricter energy-saving and emission reduction measures, and elimination of outdated production facilities. The domestic coal supply will increase due to the continuous increase in coal production in Shanxi province and Inner Mongolia, the implementation of State government’s policy of keeping effi cient supply of coal and the decrease in coal export. Although the coal transportation capacity has increased, the structural bottle neck in production, transportation and demand is still constraining effective supply/delivery. It is possible that urgent demands for certain types of coal in certain geographical locations at a particular time. The coal price will have support due to the high imported coal prices and high seasonal demands during winter time. Further, uncertainty in the global economic growth may have an impact on coal price. The rapid formation of coal conglomerates and acceleration of integration of coal resources and reshuffl e of coal enterprises will further increase the centralization of the coal industry and enhance the market competitiveness of large coal enterprises. It is expected that the coal price will remain stable on the whole and may fl uctuate in small amplitude at a high level in the second half of the year.

The increasing demand for coal from the international market and the limited growth in supply will keep coal price hover at a high level. Among the major coal importing countries, the confl ict between demand and supply in India is prominent and import will continue to grow. China’s net import momentum will continue. Given the post-earthquake recovery and reconstruction, Japan’s demand will increase. The coal demand in Asia Pacifi c region is strong. The exporting capability of Australia is recovering. Despite their improved ability to supply, the volume of export coal from major exporters like Indonesia, South Africa and Russia are still restricted by their railway and port infrastructure facilities. The international coal prices will be further supported by the adjustment of coal export policies of countries such as Vietnam and Indonesia. The depreciation of US dollar will bolster the prices of dollar-denominated bulk commodities in the international market. It is predicted that international coal prices will continue to sway at a high level in the second half of the year.

Yanzhou Coal Minning Company Limited Interim Report 2011 25

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

Outlook for the methanol market in China

Affected by the supply and demand relationship, it is predicted that the domestic methanol market will be in a fl uctuating trend in the second half of the year. Due to the increase in operation rate of the domestic methanol plants and the stable import of methanol, the domestic supply of methanol shall further increase. Meanwhile, as the operation rates of plants producing downstream products such as formaldehyde, dimethyl ether and acetic acid slowly recovers, the demand for methanol will increase. Further, measures such as accelerated elimination of outdated production capacity of methanol, increased threshold for new methanol projects, promotion of methanol fuel for vehicles and production quota for methanol producing enterprises will be advantages to keep the domestic methanol market stable. The surge in prices of raw materials including coal and natural gas, costs of electricity and transportation and prices of oil products will provide a strong support for methanol prices. It is predicted that there will be no fundamental change in the overall domestic price of methanol.

2. Operational Strategies

In the second half of 2011, the Company will continue to consolidate and deepen the strategy of “Second Venture, Rapid Development” to sustainably enhance its profi tability and shareholders’ return. The Company will focus on the following operating strategies:

Strengthening production and operation management; enhancing its economies of scale. Firstly, the Company will enhance its fundamental safety management and precautionary safety measures to ensure a sustainable and stable development environment for the Company. Secondly, the Company will deepen the implementation of the production organization strategy of “Consolidating the Company, Establishing New Ventures and Overseas Expansion” to fully capitalize on coal as our principal business to ensure a new high for the Company’s total coal production. Thirdly, the Company will accelerate its integration into the international marketing system, in order to achieve synergy from the international and domestic markets. Flexible sales strategies in response to the market supply and demand will be implemented to maximize profi ts. Fourthly, the Company will strengthen its fi nancial control and establish a global cash management system. Focusing on cost control, the Company will engage in reduction of costs and energy consumption to ensure effective cost control. The Company will also further enhance capital budget management, strengthen cash fl ow control and improve the utilization of capital.

Combining industrial development and capital operation to push forward the Company’s expansion and development. Firstly, the Company will focus on strategic merger and acquisition of resources. Leveraging on the edges of resources integration at Yulin in Shaanxi province and Ordos City in Inner Mongolia and the increased efforts in merger and acquisition of external resources, the Company will continue to seek new investment opportunities in coal from overseas markets and related industries. Secondly, working capital effi ciency will be improved. The pre-listing work of Yancoal Australia Pty is underway. Direct fi nancing channels in different currencies are available by taking advantages of the listing platform, thus providing direct fi nancing at low cost. By speeding up the capitalization of fully-mechanized top coal caving technique and achieving production targets with the use of technology and intellectual properties, overall effi ciency will be increased.

26 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

The development and construction of existing projects will be expedited. Project investment and operations management will be enhanced to eliminate and control investment risks. Operations have been commenced in the following mines: Wanfu coal mine of Heze Neng Hua, Zhuan Longwan coal mine in Ordos City, Ashton southeastern open-cut mine of Yancoal Australia and the expansion project of Austar coal mine. The establishment of the 0.6 million tonnes methanol project of Ordos Neng Hua is underway. The approval procedure of the compatible coal resources of methanol project and the application procedure of mining rights of Shilawusu coal fi eld of Inner Mongolia Haosheng Company will be speeded up. The expansion and acceptance inspection procedures of Wenyu coal mine of Xintai Coal Company Mining Limited in Ordos City and Anyuan coal mine will be completed. The establishment of Yushuwan Coal Mine Company in Shaanxi Province will be accelerated.

The Company will strengthen the management and control system and improve the corporate governance system and operational mechanism to avoid operational risk after listing. It will establish a sound internal control system and implement the “Basic Norms of Internal Control”. The control system for its domestic and foreign subsidiaries will be comprehensively enhanced; operating and management activities will be standardized to improve management capability and profi tability. Comprehensive risk management is strengthened to increase the risk preventive capability of the Company. Informationalized management and control will be enhanced by integrating with existing information systems to share information resources.

The Company will actively perform its corporate social responsibilities and conduct business in compliance with laws and protect investors’ interests with honesty and integrity. The Company will enhance efforts in resource conservation and environmental protection, strengthen its efforts in developing low-carbon economy, implement clean production and to improve combined resource utilization effi ciency. Investments in research and development have been increased to enhance the Company’s innovation capability. Livelihood of employees is addressed and their legitimate rights and interests are safeguarded. Employees are also provided with working and living environments which comply with safety and health as well as sanitary requirements. The harmonious development of the regional economy is promoted by the Company’s active participation in public welfare and community development.

3. Major Risks faced by the Company, Impact and Measures

• (1) Risk arising from macro-economy fl uctuation

Factors such as the implementation of defl ationary monetary policy to curb infl ation by the State, downgrade of United State’s sovereignty credit rating, the fl aring-up of debt crisis in Europe, the lingering effect of the earthquake on the Japanese economy, have impacted the global economy. Recovery of the Group’s downstream products market will continue to be affected by fl uctuation of the macro-economy and the possibility of such impact is likely to increase, which in turn would have an impact on the operating results of the Group.

Counter-measures: closely monitor the changes of macro-economy and immediately implement response scheme.

Yanzhou Coal Minning Company Limited Interim Report 2011 27

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

• (2) Production safety risks

Recently, a number of major accidents have occurred in China. The State has further strengthened its supervision on coal mines safety. Given the high-risk nature of the coal and coal chemical industries and possibilities of extreme natural disasters, production safety risk remains to be the most signifi cant risk faced by the Group.

Counter-measures: comprehensively strengthen the safety measures, continuously intensify the safety alert education, focus on control management of safety risk, investigate and remediate major hidden dangers, carry out interactive inspection and evaluation for production safety.

• (3) Risk arising from product price volatility

Affected by factors such as the macro-economy environment and control policy of the State and changes in the supply and demand in domestic and overseas markets, prices of the Group’s products are subject to possible higher fl uctuations. Price volatility would have a direct impact on the operating results of the Group.

Counter-measures: adhere to the policies to stay close to both market and the practical situation of the Company as well as both international and domestic markets, we shall follow the macroeconomy trend and changes in both domestic and overseas market in a scientifi c way, further enhance the ability of responding to and adjusting marketing strategy to ensure maximum benefi t.

• (4) Risk arising from exchange rate fl uctuation

The fl uctuation of exchange rate will affect the operation results of the Group. The Group is exposed to the risk of signifi cant increase or decrease in exchange rate between Australian dollar and U.S. dollar, which may result in large foreign exchange gains or losses.

Counter-measures: establish and enhance exchange rate risk warning mechanism and improve the ability to managing exchange rate risk through various fi nancial tools and instruments.

II. ACCOUNTING POLICIES, CHANGES IN ACCOUNTING ESTIMATES OR AMENDMENTS OF SIGNIFICANT ACCOUNTING ERRORS

During the current reporting period, the Company made no changes in accounting policies and amendments of signifi cant accounting errors.

28 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 3 BOARD OF DIRECTORS’ REPORT – CONTINUED

III. OTHERS

(Prepared in accordance with the relevant laws, regulations and listing rules in PRC)

1. During the current reporting period, there were no signifi cant changes in the composition of profi ts, principal businesses and their structures, and profi tability of principal businesses of the Group.

2. During the current reporting period, other operations had no signifi cant impact on the net profi t of the Group attributable to the Controlling Shareholder.

3. During the current reporting period, there was no joint-stock company from whose investment income exceeded 10% of the net profi t of the Group attributable to the Controlling Shareholder.

Yanzhou Coal Minning Company Limited Interim Report 2011 29

CHAPTER 4 CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS

I. CHANGES IN SHARE CAPITAL

During the current reporting period, the total number of shares and the capital structure of the Company remained the same.

As at 30 June 2011, the share capital structure of the Company was as follows:

		Unit: share
	Shares	Percentage
		(%)
1. Listed shares with restricted trading moratorium	2,600,021,800	52.8632%
Shares held by state-owned legal person	2,600,000,000	52.8627%
Natural person shareholding in A Shares	21,800	0.0005%
2. Shares without trading moratorium	2,318,378,200	47.1368%
A Shares	359,978,200	7.3190%
H Shares	1,958,400,000	39.8178%
3. Total share capital	4,918,400,000	100.0000%

II. SHAREHOLDERS

(1) Total Number of the Shareholders as at the end of the reporting period

As of 30 June 2011, the Company had a total of 88,221 Shareholders, of which three were holders of A Shares subject to a trading moratorium, 88,045 were holders of A Shares without a trading moratorium and 173 were holders of H Shares.

30 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 4 CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS – CONTINUED

(2) Top Ten Shareholders and Top Ten Shareholders Holding Tradable Shares not Subject to Trading Moratorium

Based on the Register of Members provided by the China Securities Depository and Clearing Corporation Limited Shanghai Branch and Hong Kong Registrars Limited as at 30 June 2011, top ten Shareholders and top ten holders holding tradable shares not subject to a trading moratorium were as follows:

Unit: share Total number of Shareholders 88,221 Shareholdings of the Top Ten Shareholders

					Increase/
					decrease	Number of
			Percentage		during the	shares with	Number of
			holding of	Number of	current	selling	pledged or
		Class of	the total	shares	reporting	restrictions	locked
Name of Shareholder		shares	capital	held	period	held	shares
			(%)		(shares)
Yankuang Group		State-owned	52.86	2,600,000,000	0	2,600,000,000	0
Corporation Limited		legal person
HKSCC Nominees Limited		H Shares	39.62	1,948,522,746	–3,111,200	0	N/A
Great Wall Brand Selected		Others	0.18	8,654,030	8,654,030	0	0
Securities Investment Fund
(長城品牌優選股票型證券
投資基金)
Yinhua-Dow Jones 88 Selected		Others	0.13	6,579,954	6,579,954	0	0
Securities Investment Fund
(銀華－道瓊斯88精選證券
投資基金)
Xiangcai Securities	Domestic non-state		0.11	5,449,462	0	0	0
Co., Ltd	owned legal person
Manulife Teda Hongli		Others	0.11	5,199,961	5,199,961	0	0
Market Value Selected
Securities Investment Fund
(泰達宏利市值優選股票型證券
投資基金)
GF Jufu Open-end Securities		Others	0.10	5,106,837	5,106,837	0	0
Investment Fund
(廣發聚富開放式證券
投資基金)
Harvest Stable Open-end		Others	0.10	5,003,521	5,003,521	0	0
Securities Investment Fund
(嘉實穩健開放式證券
投資基金)
Bill & Melinda Gates Foundation Trust		Others	0.10	5,000,000	0	0	0
Da Rosa Jose Augusto		Overseas	0.10	5,000,000	2,000,000	0	N/A
Maria		nature person

Yanzhou Coal Minning Company Limited Interim Report 2011 31

CHAPTER 4 CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS – CONTINUED

Top Ten Shareholders Holding Tradable Shares not subject to Trading Moratorium

Name of Shareholder	Number of tradable shares held	Class of shares held
HKSCC Nominees Limited	1,948,522,746	Overseas listed
		foreign shares
Great Wall Brand Selected Stock	8,654,030	A-Shares
Investment Fund(長城品牌優選
股票型證券投資基金)
Yinhua-Dow Jones 88 Selected	6,579,954	A-Shares
Securities Investment Fund
(銀華－道瓊斯88精選證券投資基金)
Xiangcai Securities Co., Ltd	5,449,462	A-Shares
Manulife Teda Market Value Selected	5,199,961	A-Shares
Stock Investment Fund
(泰達宏利市值優選股票型證券投資基金)
GF Jufu Open-end Securities Investment Fund	5,106,837	A-Shares
(廣發聚富開放式證券投資基金)
Harvest Stable Open-end Securities	5,003,521	A-Shares
Investment Fund
(嘉實穩健開放式證券投資基金)
Bill & Melinda Gates Foundation Trust	5,000,000	A-Shares
Da Rosa Jose Augusto Maria	5,000,000	Overseas listed
		foreign shares
Huabao Xingye Industry Selected Securities	3,999,846	A-Shares
Investment Fund
(華寶興業行業精選股票型證券投資基金)
Connected relationship or concerted-party	Information regarding to shareholders connected-party
relationship among the above shareholders	relation, connected transactions and concerted
	actions remain unknown.

Notes:

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

32 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 4 CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS – CONTINUED

(3) Shareholdings of Top Ten Shareholders Holding Tradable Shares subject to Trading Moratorium

As at 30 June, 2011, the table sets out the shareholdings of the top ten Shareholders holding tradable shares subject to trading moratorium:

Unit: shares

					Unit: shares
	Name of	Number of
	Shareholders	shares subject		Number of
	subject	to trading		additional
	to trading	moratorium		tradable
No	moratorium	held	Listingand tradingdate	shares	Undertakings
1	Yankuang Group	2,600,000,000	–	0	Undertakings made
					by Yankuang Group
					in Yanzhou Coal’s
					share split have been
					performed, Yankuang
					Group may proceed
					with the transaction after
					f ling its application and
					obtaining the relevant
					approval from the
					relevant authorities.
2	Wu Yuxiang	20,000	In accordance with the relevant laws, Directors, Supervisors and senior management staff
3	Song Guo	1,800	can only transfer up to 25% of the total number of shares held by		them during each year of
			their employment. If the above persons sell any shares held by them within six months after
			purchasing, or make any purchase within six months after disposal, the gain resulted will be for
			the benef t of the Company.

Yanzhou Coal Minning Company Limited Interim Report 2011 33

CHAPTER 4 CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS – CONTINUED

(4) Shareholders’ information disclosed based on Hong Kong Listing Rules

SUBSTANTIAL SHAREHOLDERS

Save as disclosed below, as at 30 June 2011, no other person (other than a director, supervisor or chief executive 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”).

					Percentage in the	Percentage
Name of					relevant class of	in total
substantial		Number of			share capital	share capital
shareholders	Class of shares	shares held	Capacity	Type of interest	of the Company	of the Company
Yankuang Group	Domestic shares	2,600,000,000 (L)	Benef cial owner	Corporate	87.84% (L)	52.86% (L)
	(State-owned legal	(Note 1)
	person shares)
JPMorgan Chase & Co.	H shares	218,108,169 (L)	Benef cial owner,	Corporate	11.14% (L)	4.43% (L)
		4,130,213 (S)	investment manager,		0.21% (S)	0.08% (S)
		94,193,956 (P)	custodian		4.81% (P)	1.92% (P)
		(Note 2)	corporation/approved
			lending agent
Templeton Asset	H shares	234,944,000 (L)	Investment manager	Corporate	12.00% (L)	4.78% (L)
Management Ltd.
JPMorgan Chase Bank	H shares	77,443,900 (L)	Other	Corporate	3.95% (L)	1.57% (L)
		(Note 3)
BNP Paribas Investment	H shares	117,641,207 (L)	Investment manager	Corporate	6.00% (L)	2.39% (L)
Partners SA
Blackrock, Inc.	H shares	147,434,101 (L)	Interest of corporation	Corporate	7.53% (L)	3.00% (L)
		13,915,870 (S)	controlled by		0.71% (S)	0.28% (S)
			substantial shareholder

34 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 4 CHANGES IN SHARE CAPITAL AND SHAREHOLDINGS – CONTINUED

Notes:

1. The letter “L” denotes a long position. The letter “S” denotes a short position. The letter “P” denotes interests in a lending pool.

2. Among the aggregate interests in the long position of H shares, 9,298,745 H shares were held as benefi cial owner, 114,615,468 H shares were held as investment manager and 94,193,956 H shares were held as custodian corporation/approved lending agent.

The aggregate interests in the short position of H shares were held as benefi cial owner.

• Among the aggregate interests in the long position of H shares, 2,542,998 H shares were held as derivatives.

• Among the aggregate interests in the short position of H shares, 279,613 H shares were held as derivatives.

• The aggregate interests in the long position of H shares were held as interests of corporations controlled by substantial shareholder.

Pursuant to the PRC Securities Law and section 336 of the SFO, save as disclosed above, no other Shareholder was recorded in the register as at 30 June 2011 as having an interest of 5% or more of the Company’s issued shares.

During the reporting period, the Company’s controlling Shareholder or its actual controller remain unchanged.

Yanzhou Coal Minning Company Limited Interim Report 2011 35

CHAPTER 5 BOARD OF DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES

I. CHANGES IN SHARES HELD BY BOARD OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT

Save as disclosed below, as at 30 June 2011, none of the Directors, Supervisors and senior management had any interests or short positions in the shares, underlying shares or debentures of the Company or its associated corporations (as defi ned in Part XV of the SFO), nor had any of them been granted any rights or short positions to subscribe for any interest in the shares, underlying shares or debentures of the Company or any of its associated corporations (as defi ned in Part XV of the SFO) which (i) was required to be recorded in the register established and maintained in accordance with Section 352 of the SFO; or (ii) required to be notifi ed to the Company and the Hong Kong Stock Exchange in accordance with the Model Code for Securities Transactions by Directors of the Listed Issuers (the “Model Code”) (which shall be deemed to apply to the Supervisors to the same extent as it applies to the Directors).

		Number of	Increase	Decrease	Number of
	shares hold at		during the	during the	shares held
		the beginning	reporting	reporting	at the end of	Reasons for
Name	Title	of the period	period	period	the year	the change
		(shares)	(shares)	(shares)	(shares)
Wu Yuxiang	Director, Chief	20,000	0	0	20,000	unchanged
	Financial Off cer
Song Guo	Chairman of Supervisory	1,800	0	0	1,800	unchanged
	Committee

All of the above disclosed interests represent long positions in the Company’s shares.

As at 30 June 2011, the Directors, Supervisors and senior management together held 21,800 of the Company’s shares, representing 0.0005% of the share capital of the Company.

During the six months ended 30 June 2011, none of the Directors, Supervisors, senior management nor their respective spouses or children under the age of 18 were granted any rights by the Company for any interests in the shares, underlying shares or debentures of the Company or its associated corporations.

36 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 5 BOARD OF DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES – CONTINUED

• II. APPOINTMENT OR RESIGNATION OF DIRECTORS, SUPERVISORS AND SENIOR MANAGEMENT DURING THE REPORTING PERIOD

• (1) Changes of Directors of the Fourth Session of the Board and Senior Management of the Company

At the twentieth meeting of the fourth session of the Board of the Company held on 25 March 2011, Mr. Zhang Yingmin was appointed as the general manager of the Company and Mr. Zhang Baocai was appointed as the deputy general manager of the Company.

Mr. Chen Changchun, a former Director of the Fourth Session of the Board of the Company, submitted his resignation report to the Board on 9 March 2011. Following his resignation, Mr. Chen would no longer hold any offi ces as Director in the Company.

(2) Elections of Directors of the Fifth Session of the Board and Supervisors of the Fifth Session of the Supervisory Committee and Appointment of Senior Management of the Company

1. Elections of Directors of the Fifth Session of the Board and Supervisors of the Fifth Session of the Supervisory Committee of the Company

As approved at the 2010 annual general meeting held on 20 May 2011, Mr. Li Weimin, Mr. Wang Xin, Mr. Zhang Yingmin, Mr. Shi Xuerang, Mr. Wu Yuxiang and Mr. Zhang Baocai were elected as the nonindependent directors of the fi fth session of the Board of the Company; Mr. Wang Xianzheng, Mr. Cheng Faguang, Mr. Wang Xiaojun and Mr. Xue Youzhi were elected as the independent directors of the fi fth session of the Board of the Company; Mr. Song Guo, Mr. Zhou Shoucheng, Mr. Zhang Shengdong and Ms. Zhen Ailan were elected as the non-employee representative supervisors of the fi fth session of the supervisory committee of the Company.

On 22 March 2011, Mr. Dong Yunqing was democratically elected as the employee representative director of the fi fth session of the Board by the employees of the Company; Mr. Wei Huanmin and Mr. Xu Bentai were democratically elected as the employee representative supervisors of the fi fth session of the supervisory committee by the employees of the Company.

The directors of the fi fth session of the Board and supervisors of the fi fth session of the supervisory committee of the Company shall hold offi ce for a term of three years commencing on the date of the conclusion of the 2010 annual general meeting and ending on the date of the conclusion of the general meeting for the election of directors of the sixth session of the Board and supervisors of the sixth session of the supervisory committee.

Yanzhou Coal Minning Company Limited Interim Report 2011 37

CHAPTER 5 BOARD OF DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT AND EMPLOYEES – CONTINUED

2. Elections of Chairman and Vice Chairman of the Board of the Company

During the fi rst meeting of the fi fth session of the Board held on 20 May 2011, Mr. Li Weimin was elected as the chairman and Mr. Wang Xin was elected as the vice chairman of the Board.

3. Elections of Chairman and Vice Chairman of the Supervisory Committee of the Company

At the fi rst meeting of the fi fth session of the supervisory committee Board held on 20 May 2011, Mr. Song Guo was elected as the chairman and Mr. Zhou Shoucheng was elected as the vice chairman of the Supervisory Committee.

4. Appointment of Senior Management

At the fi rst meeting of the fi fth session of the Board held on 20 May 2011, Mr. Zhang Yingmin was appointed as the general manager of the Company. Mr. Jin Tai, Mr. Heye, Mr. Lai Cunliang, Mr. Tian Fengze, Mr. Zhang Baocai and Mr. Shi Chengzhong were appointed as the deputy general managers, Mr. Wu Yuxiang was appointed as the chief fi nancial offi cer, Mr. Zhang Baocai was appointed as the secretary of the Board and Mr. Ni Xinghua was appointed as the chief engineer.

Save as disclosed above, there was no other appointment or resignation of directors, supervisors and senior management during the current reporting period.

III. EMPLOYEES

As at 30 June 2011, the Group had a total of 51,254 employees, of whom 3,506 were administrative personnel, 1,817 were technicians, 36,550 were involved in production and 9,381 were other supporting staff.

As at June 30 2011, the total wages and allowances of the staff of the Group for the reporting period amounted to RMB2.3956 billion.

38 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS

I. CORPORATE GOVERNANCE

(1) Corporate Governance Status

Since the listing of the Company, in accordance with PRC Company Law, PRC Securities Law, foreign and domestic laws and regulations in places where the Company’s shares are listed, the Group has set up a relatively regulated, stable and established corporate governance system and has abided by the corporate governance principles of transparency, accountability and protection of the rights and interests of all Shareholders. There is no signifi cant difference between the corporate governance system of the Company and the requirements in relevant documents detailed by the CSRC.

The Company has closely monitored the securities market standards and rule of law, and has actively improved its corporate governance during the current reporting period:

As approved at the fi rst 2011 extraordinary general meeting of the Company held on 18 February 2011 and the 2010 annual general meeting of the Company held on 20 May 2011, the Company amended the Articles of Yanzhou Coal Mining Company Limited, the Rules of Procedures for the Shareholders’ Meeting of Yanzhou Coal Mining Company Limited and the Rules of Procedures for the Board of Yanzhou Coal Mining Company Limited. Amendments have been made to the procedure for proposing the general meeting by qualifi ed shareholders, as well as to the approval authority of the Board of Directors and the general manager working meeting, improving the setup of the Board of Directors.

For more details, please refer to the notice of the fi rst 2011 extraordinary general meeting of the Company dated 30 December 2010 and the notice of 2010 annual general meeting of the Company dated 25 March 2011. Such disclosed information was posted on the Shanghai Stock Exchange’ website, Hong Kong Stock Exchange’ website, the Company’s website, and/or China Securities and Shanghai Securities News in China.

(2) Compliance with the Code on Corporate Governance Practices

(Prepared under the Hong Kong Listing Rules)

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

The Board believes that good corporate governance is very important to the operation and development of the Group. The Board regularly reviews corporate governance practices to ensure that the company’s operation is compliance with the laws, regulations and regulatory requirements of the places where the shares of the Company are listed, continuing commitment, and enhance corporate governance standards.

Yanzhou Coal Minning Company Limited Interim Report 2011 39

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

The corporate governance rules implemented by the Group include, but are not limited to, the following: the Articles, the Rules of Procedure for Shareholders’ Meetings, the Rules of Procedure for Board Meetings, the Rules of Procedure for Supervisory Committee Meetings, the System of Work of the Independent Directors, the Rules for Disclosure of Information, the Rules for the Approval and the Disclosure of Connected Transactions of the Company, the Rules for the Management of Relationships with Investors, the Code for Securities Transactions of the Management, the Standard of Conduct and Professional Ethics for Senior Employees, the Measures on the Establishment of Internal Control System and the Measures on Overall Risk Management. For the fi rst half of 2011 ended 30 June 2011 and as of the date of this interim report, the corporate governance rules and practices of the Group are compliant with the principles and the code provisions set out in the Code on Corporate Governance Practices (the “Corporate Governance Code”) contained in Appendix 14 of the Hong Kong Listing Rules. The corporate governance practices adopted by the Group are more stringent than the Corporate Governance Code:

During the reporting period, there was no signifi cant difference between the Company’s compliance with the code provisions during the reporting period and that was disclosed in the Company’s 2010 annual report.

(3) Compliance with the Model Code

(Prepared under the regulatory rules of Hong Kong)

Having made specifi c enquiries to all Directors and Supervisors of the Company, during the reporting period, the Directors and Supervisors have strictly complied with the Model Code for Securities Transactions by Directors of Listing Issuers (the “Model Code”) set out in Appendix 10 to the Hong Kong Listing Rules. The Company has adopted a code of conduct regarding securities transactions of the Directors and Supervisors on terms no less than the required standard set out in the Model Code.

II. PROFIT DISTRIBUTION

(1) Implementation of cash dividend plan during the reporting period

The 2010 annual general meeting of the Company held on 20 May 2011 approved the Company’s dividend distribution plan, which allowed the Company to distribute 2010 cash dividends of RMB2.9019 billion (tax inclusive) to the Shareholders, i.e., RMB0.59 per share (tax inclusive).

As at the date of this interim report, the 2010 dividends have been distributed to the Shareholders.

The cash dividend policy was specifi ed in the Articles as follows: the profi t distribution policy of the Company shall remain continuous and steady. The Company will distribute fi nal dividends once per year. This dividend shall be distributed and paid off by the Board under the mandate of the annual meeting through an ordinary resolution. As approved by the Board and the annual meeting, the Company may distribute mid-term cash dividends. The Company shall distribute dividends in the form of cash and the amount should be approximately 35% of the net profi t of the corresponding accounting period after deducting the statutory reserves.

40 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

(2) Mid-term profi t distribution for 2011

The Company will not distribute any mid-term profi t nor will the Company increase its capital from capital reserve.

III. LITIGATION AND ARBITRATION

The Company was not involved in any signifi cant litigation or arbitration during the reporting period.

IV. EXTERNAL EQUITY INVESTMENTS

As at 30 June 2011, the external equity investments made by the Company are set out as follows:

Number % of share Stock of shares capital of the No Stock code abbreviation held (share) company	Investment Book value at cost at the Accounting the end of the Current beginning items reporting period income (RMB) (RMB) (RMB)
1 600642 Shenergy 36,499,577 0.77% 2 601008 Lianyungang 1,380,000 0.22% Total	60,420,274 Security investment 185,052,855 2,433,305 1,760,419 Security investment 13,800,000 0 62,180,693 198,852,855 2,433,305

Source of Shenergy shares: agreement for the transfer of public corporate shares in 2002, bonus issue shares in 2004 and subscription of placing shares of 2,009,151 on 15 October, 2010 with its own capital of RMB16,856,776.89; and 12,166,526 bonus issue shares in 2011.

Source of Lianyungang shares: subscription of shares as promoter upon establishment of the Company and bonus issue shares in 2007.

V. SIGNIFICANT ASSET ACQUISITIONS AND SALES, REORGANIZATION

1. Acquisition of 10% equity interests in Inner Mongolia Haosheng Coal Mining Company Limited

On 31 March 2011, the Company entered into the equity transfer agreement of Inner Mongolia Haosheng Coal Mining Company Limited for the acquisition of a 10% equity interest held by Ordos Jiutaimanlai Company Limited and Shandong Jiutai Chemical Industrial Technology Company Limited in Haosheng Company. Total consideration for the acquisition was RMB 1,313.8 million. The initial payment (30% of the total consideration) of RMB 394.1 million was paid by the Company in April 2011. The above equity interests transfer was completed on 6 May 2011, thereby, increasing the Company’s equity interests in Haosheng Company from 51% to 61%.

Yanzhou Coal Minning Company Limited Interim Report 2011 41

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

2. Acquisition of Anyuan Coal Mine

As approved at the general manager working meeting held on 12 November 2010, Ordos Neng Hua entered into “Anyuan Coal Mine Transfer Agreement” and the “Supplementary Agreement to Anyuan Coal Mine Transfer Agreement” (collectively referred to as “Anyuan Coal Mine Transfer Agreement”) dated on 20 November 2010 and 20 January 2011 respectively to acquire 100% of the assets of Anyuan Coal Mine for a total consideration of RMB 1,435 million.

Pursuant to the “Anyuan Coal Mine Transfer Agreement”, Ordos Neng Hua took over the Anyuan Coal Mine on 1 December 2010 thereby acquired all the coal produced and the related benefi ts acquired of Anyuan Coal Mine.

The procedures for the transfer of the assets of Anyuan coal mine have not been completed. The Department of Coal Industry of Inner Mongolia Autonomous Region has approved the increase in the annual production capacity of Anyuan Coal Mine to 1.2 million tonnes. At present, expansion and acceptance inspection procedures of the coal mine are in the process.

3. Bidding for Mining Rights of Zhuan Longwan Coal Mine Zone

As approved at the nineteenth meeting of the fourth session of the Board held on 28 January 2011, Ordos Neng Hua successfully bid the mining rights of Zhuan Longwan coal mine of Dongsheng Coal Field in Inner Mongolia Autonomous Region for a consideration of RMB 7.8 billion. The shareholders rectifi ed this bid at the 2010 annual general meeting of the Company held on 20 May 2011.

The Department of Land and Resources of the Inner Mongolia Autonomous Region was entrusted by the Ministry of Land and Resources of the PRC to conduct this auction. At present, Ordos Neng Hua is applying for the mining rights of Zhuan Longwan coal mine zone.

For details, please refer to the “Announcements in relation to the resolution passed at the nineteenth meeting of the fourth session of the board of Yanzhou Coal Mining Company Limited”, “Announcements in relation to external investment and obtaining of the mining rights by wholly-owned subsidiary of Yanzhou Coal Mining Company Limited”, both dated 28 January 2011 and “Announcements in relation to the resolution passed at the annual general meeting of Yanzhou Coal Mining Company Limited for the year 2010” dated 20 May 2011. The above disclosures were also posted on the Shanghai Stock Exchange’s website, the Hong Kong Stock Exchange’s website, the Company’s website and/or China Securities and Shanghai Securities news in China.

42 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

4. Acquisition of 80% equity interest in Inner Mongolia Xintai Coal Mining Company Limited

As approved at the general manager working meeting held on 9 July 2011, Ordos Neng Hua entered into the equity transfer agreement of Inner Mongolia Xintai Coal Mining Company Limited (the “Equity Transfer Agreement”) dated on 11 July 2011 for the acquisition of a 80% equity interest in Inner Mongolia Xintai Coal Mining Company Limited (“Xintai Company”) for a total consideration of RMB 2,801.6 million.

Pursuant to the Equity Transfer Agreement, the initial payment of RMB2,470 million was paid on 18 July 2011 and Xintai Company was taken over on 20 July 2011 by Ordos Neng Hua and the above equity interests transfer procedures is in the process..

Xintai Company is responsible for the operation of Wenyu Coal Mine. Wenyu Coal Mine is 50 km southeast of Ordos City and covers an area of 9.36 km2. The type of coal produced is thermal and coal for gasifi cation. According to the “Report on Verifi ed Coal Resources of Wenyu Coal Mine of Manlailiang Coal Mine Zone of Dongsheng Coal Field in Inner Mongolia Autonomous Region” issued by No. 5 Institute of Geology and Mineral Resources of Inner Mongolia Autonomous Region in April 2010, as at 31 December 2009, Wenyu Coal Mine had available reserves of 108.77 million tonnes, industrial reserves of 106.34 million tonnes and designed recoverable reserves of 74.77 million.

The Department of Coal Industry of Inner Mongolia Autonomous Region has approved Wenyu Coal Mine to expand its annual production capacity to 3 million tonnes. At present, the mine is undergoing the post expansion combined trial operation.

The consideration for the acquisition was RMB2,801.6 million, representing approximately 23.13% of the Group’s total 2010 audited profi ts of RMB12,113.8 million under PRC accounting principles.

5. Acquisition of 100% Equity Interests in Syntech Holdings Pty Ltd and Syntech Holdings II Pty Ltd

As considered and approved at the general manager working meeting of the Company held on 6 April 2011, a subsidiary of Yancoal Australia acquired 100% equity interests in Syntech Holdings and Syntech Holdings II Pty Ltd, respectively (hereinafter “Syntech Project”) for a consideration of AUD202.5 million and the equity transfers were completed on 1 August 2011.

Syntech Project has ore coal mine in production and 5 exploration projects and is situated in the Surat Basin in Queensland, Australia which is approximately 380 km from the coal port terminal of Brisbane and 460 km from the terminal at the coal port of Gladstone. The type of coal is thermal coal with HHV of 6,300 kilocalorie/ kg. The Project consists of open cut mine resources totaling 1,732 million tonnes. Of the total resources, the coal resources conforming to the JORC Standard amounts to 723 million tonnes while the non-JORC Standard reserve subject to further inspection amounts to 1,009 million tonnes. The coal reserve confi rmed to be conforming to the JORC Standard is 440 million tonnes.

Yanzhou Coal Minning Company Limited Interim Report 2011 43

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

Currently, the operating coal mine of Syntech is the fi rst stage of the Cameby Downs coal mine project, which has with an annual production capacity of raw coal and salable coal of 2 million tonnes and 1.4 million tonnes respectively. In the second stage the annual production capacity is estimated to be increased to 16 million tonnes of raw coal and 11.4 million tonnes of salable coal. The total acquisition consideration of AUD 202.5 million (equivalent to approximately RMB1,429 million) represents approximately 11.80% of the Group’s 2010 audited total profi ts of RMB12,113.8 million under PRC accounting principles.

6. Acquisition of 30% Equity Interest in Ashton Coal Mine Joint Venture in Australia

As approved at the seventeenth meeting of the fourth session of the Board on 30 December 2010, Yancoal Australia, through a subsidiary company, paid USD250 million to acquire a 30% equity interest held indirectly by Singapore IMC Group in the Ashton Coal Mine Joint Venture. After the transfer of equity interest was completed on 13 May 2011, the Company’s control in the Ashton Coal Mine Joint Venture has increased from 60% to 90%.

7. Disposal of 51% Equity Interest in Minerva Coal Mine Joint Venture in Australia

As approved at the seventeenth meeting of the fourth session of the Board on 30 December 2010, a whollyowned subsidiary of Yancoal Australia disposed of its 51% equity interest in the Minerva Coal Mine Joint Venture to a subsidiary of Sojitz Corporation in Australia for a consideration of AUD201 million. Upon completion of such disposal, the Company ceased to have any interest in the Minerva Coal Mine Joint Venture.

8. Establishment of Yancoal International (Holding) Co., Limited

In order to establish a scientifi c and regulated overseas asset management structure and to build a multichannel overseas fi nancing platform, Yancoal International (Holding) Co., Limited, a wholly-owned subsidiary of the Company, was established in Hong Kong to act as the platform for overseas assets and business management, upon the consideration and approval by the general manager working meeting of the Company on 17 June 2011. Yancoal International (Holding) Co., Limited has three subsidiaries, namely Yancoal International Trading Co., Limited, Yancoal International Technology Development Co., Limited and Yancoal International Resources Development Co., Limited.

9. Increasing the Registered Capital of Yancoal Australia Pty Ltd

As considered and approved at the seventeenth meeting of the fourth session of the Board on 30 December 2010, the Company increased the capital investment in Yancoal Australia Pty Ltd by AUD 909 million. After completion of registered capital change procedure, the capital investment in Yancoal Australia will be increased from AUD 64 million to AUD 973 million.

44 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

10. Increasing the registered capital of Ordos Neng Hua

As approved at the eighteenth meeting of the fourth session of the Board held on 17 January 2011, the Company increased its capital investment in Ordos Neng Hua by RMB 2.6 billion with its own capital. The registered capital of Ordos Neng Hua increased from RMB 500 million to RMB 3.1 billion on 24 January 2011.

VI. CONNECTED TRANSACTIONS

The Group’s connected transactions were mainly continuing connected transactions entered into with its Controlling Shareholder (together with its subsidiaries) for the provision of materials and services and connected transactions for joint external investment of them.

(1) Continuing connected transactions

At the second extraordinary general meeting held on 23 December 2008, the fi ve continuing connected transaction agreements and the annual caps for such transactions from 2009 to 2011 had been approved. Prices of these transactions are mainly determined by the price fi xed by the State, and if there is no State price available, the market price is used. If there is no market price available, then the actual cost is applied. The charge for supplies can be settled in one lump sum or by installments. The continuing connected transactions made in a calendar month shall be settled in the following month, except for incomplete transactions or where the transaction amounts are in dispute.

As approved at the fourteenth meeting of the fourth session of the Board on 23 April 2010, the Company and Yankuang Group Finance Company Limited entered into the “Financial Service Agreement”. The parties agreed on the terms of the continuing connected transactions including the deposits, borrowings, settlement and the proposed annual caps for the transactions from 2010 to 2011. It has been agreed that the rates for the fees charged by Yankuang Group Finance for the fi nancial services to be provided to the Group shall equal to or more favorable than those charged by the major commercial banks in the PRC for the same kind of fi nancial services provided to the Group. Fund risk control measures were also established to safeguard the security of the fund from system’s perspective.

Yanzhou Coal Minning Company Limited Interim Report 2011 45

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

1. Continuing connected transaction of the supply of materials and services (The listed fi gures are under PRC CASs)

The sales of goods and rendering of services by the Group to its Controlling Shareholder amounted to RMB 1,161.8 million in the fi rst half of 2011. The goods and services provided by the Controlling Shareholder to the Group amounted to RMB 962.9 million.

The following table sets out the connected transactions of the supply of materials and services between the Group and the Controlling Shareholder in the fi rst half of 2011:

					Increase/
					decrease of
	the f rst half of 2011		the f rst half of 2010		connected
	Amount	Income	Amount	Income	transactions
	(RMB’000)	(%)	(RMB’000)	(%)	(%)
Sales of goods and rendering
of services by the Group to its
Controlling Shareholder	1,161,792	5.60	1,381,733	8.86	-15.92
Sales of goods and rendering
of services by the Controlling
Shareholder to the Group	962,856	4.64	758,618	4.86	26.92

The table below shows the effect on profi ts from sales of coal by the Group to the Controlling Shareholder in the fi rst half of 2011:

	Sales income	Operation cost	Gross Prof ts
	(RMB’000)	(RMB’000)	(RMB’000)
Coal sold to the Controlling Shareholder	826,567	360,053	466,514

2. Continuing transaction of pension fund

According to the Pension Fund Management Agreement, as approved at the 2008 second general Shareholders’ meeting, and the annual transaction caps from 2009 to 2011, the Controlling Shareholder shall provide free management and submission services of endowment insurance fund, medical insurance fund, supplementary medical insurance fund, unemployment insurance fund and maturity insurance fund (the “Insurance Fund”). The amount of the Insurance Fund paid by the Group in the fi rst half of 2011 was RMB 564.9 million.

46 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

The following table sets out in the details of the annual transaction caps for 2011 and actual transaction amounts in the fi rst half of 2011 for the above continuing transactions.

				Value of
			Annual	transaction for
	Type of connected		transaction cap	the f rst half
No	transaction	Agreement	for the year 2011	of 2011
			(RMB’000)	(RMB’000)
1	Material and facilities provided by Yankuang Group	Provision of Materials Agreement	726,000	343,589
2	Labor and services provided by Yankuang Group	Provision of Labor and Services Agreement	2,594,340	615,688
3	Pension fund management and payment services	Provision of Pension Fund Management	1,451,510	564,885
	provided by Yankuang Group for the Group’s staff	Service Agreement
4	Coal and material provided to Yankuang Group	Provision of Coal Products and Material Agreement	4,650,000	1,062,687
5	Electricity and heat provided to Yankuang Group	Provision of Electricity Agreement	360,400	96,035
6	Financial services provided by Yankuang Group:	Financial Services Agreement
	– deposit balances		1,400,000	1,400,000
	– loan facility		1,000,000	0
	– f nancial services fees		28,540	3,579

(2) External Connected Transactions entered into jointly by the Group and related parties

Establishment of Shaanxi Future Energy Chemical Corp. Ltd as a Joint Stock Company

As approved at the seventeenth meeting of the fourth session of the Board held on 30 December 2010, Shaanxi Future Energy Chemical Corp. Ltd (“Future Energy”) was jointly established by the Company, Yankuang Group and Shaanxi Yanchang Petroleum (Group) Corp. Ltd on 25 February 2011. The registered capital of Future Energy is RMB5.4 billion, in which Yanzhou Coal will contribute RMB1.35 billion in cash, representing an equity interest of 25%. The registered capital will be paid in full in 3 stages before August 2012. Future Energy will mainly engage in investment and participation in the coal-to-liquid project in Shaanxi Province as well as the preparation for development of ancillary coal mines.

For details, please refer to the “Announcements in relation to the Resolutions passed at the Seventeenth Meeting of the Fourth Session of the Board of Yanzhou Coal Mining Company Limited” and “Announcement in Relation to the Connected Transaction of Yanzhou Coal Mining Company Limited” on 30 December 2010 and 24 January 2011, respectively. The above announcements have also been posted on the Shanghai Stock Exchange’s website, the Hong Kong Stock Exchange’s website, the Company’s website and/or PRC newspaper, China Securities Journal and Shanghai Securities news.

Yanzhou Coal Minning Company Limited Interim Report 2011 47

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

• (3) Debt and debt obligations due between the Group and the Controlling Shareholder are mainly due to the mutual provisions of materials and services and the acquisition of assets

Balance due from/to the Controlling Shareholder between the Group and the Controlling Shareholder in the fi rst half of 2011 are listed as follows:

	Payable to related parties	Payable to related parties	Receivable from related parties	Receivable from related parties
Related parties	Amount involved	Remaining	Amount involved	Remaining
	(RMB’000)	(RMB’000)	(RMB’000)	(RMB’000)
Yankuang Group	1,718,392	486,924	2,700,041	2,312,467

As at 30 June 2011, the Controlling Shareholder or its subsidiaries have not used the Group’s funds for nonoperational matters in any circumstances.

(4) Entering into of a new “Financial Services Agreement”

As approved at the third meeting of the fi fth session of the Board on 19 August 2011, the Company and Yankuang Group Finance Company Limited entered into a new “Financial Services Agreement”, which provided for the continuing connected transactions for the provision of deposits, borrowings and settlement services. The fees charged by Yankuang Group Finance Company shall equal to or more favorable than those charged by the major commercial banks in the PRC for the provision of the same kind of fi nancial services.

Pursuant to this new “Financial Service Agreement” entered into between both parties, the annual transaction caps from 2011 to 2012 for the continuing connected transactions for the provision of fi nancial services by Yankuang Group Finance Company Limited to the Group are as follows:

• (1) The maximum daily balance (including accrued interests) of the Group on the settlement account with Yankuang Group Finance Company Limited shall not exceed RMB1.82 billion.

• (2) Yankuang Group Finance Company Limited shall provide a comprehensive credit facility limit RMB1.6 billion (including accrued interests) to the Group;

• (3) Total fees for the discounted note services and other fi nancial services such as settlement services: the annual cap shall not exceed RMB28.54 million.

The details of the Group’s connected transactions are set out in note 27 to the consolidated fi nancial statements prepared in accordance with the IFRS herein, or note 9 as prepared in accordance with PRC CASs. The various related transactions set out in Note 27 to the consolidated fi nancial statements prepared in accordance with the IFRS, or Note 9 as prepared in accordance with PRC CASs, also fall under the defi nition of continuing connected transactions in Chapter 14A of the Listing Rules of the Hong Kong Stock Exchange.

Other than the material connected transactions described in this Chapter, the Group was not a party to any other material connected transactions during the current reporting period.

48 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

VII. MATERIAL CONTRACTS AND PERFORMANCE

• (1) During the current reporting period, the Company was not involved in any trust arrangement, contract or lease of other’s assets or other’s trust arrangement, contract or lease involving the Company’s assets, nor such transactions that occurred in the previous period but were extended to this period.

• (2) Guarantee contracts arising during the current reporting period or occurred in the previous period but were extended to the current period:

Information on the outstanding guarantee contracts that were entered into in the previous period but was extended to the reporting period are as follows:

At the Company’s 2009 fi rst extraordinary general meeting held on 30 October 2009, the “Resolution relating to the fi nancing arrangement in respect of the acquisition of the equity interests in Felix Resources Limited” was approved.

The total fi nancing loan of Yancoal Australia Pty in 2009 for the acquisition of the equity interests in Felix Resources Limited by Austar Coal Mine Pty Limited, amounted to USD3,040 million and was guaranteed by the Company. The sum guaranteed represents 52.93% of the audited net asset value of the Company as at 31 December 2010 of RMB36.7217 billion, calculated in accordance with the PRC accounting principles. Yankuang Group counter-guaranteed the Company’s guarantee.

Yancoal Australia and Felix Resources Limited provided guarantees amounting to AUD27.7993 million to its subsidiaries and jointly controlled entities for production and operation purposes. The guarantees were extended and remained valid during the reporting period.

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

Yanzhou Coal Minning Company Limited Interim Report 2011 49

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

• (3) Entrusted loans provided during the current reporting period or entrusted loans previously provided which were carried forward to the reporting period are set out in the following table:

						Whether there is	Whether	Accumulated interest
		Amount of	Approved	Interest per	Approval	a provision for	principal has	income during the
No.	Borrower	Entrusted Loan	Period	annum	Process	devaluation	been recovered	reporting period
1	Yancoal Australia	USD90 million	From 7	2.26%~4.67%	Reviewed and approved at a	No	yes	RMB3629291.29
	Pty Limited		November		board meeting held on 28 June
			2005 to 7		2005.
			November 2010		Reviewed and approved
					extension of repayment date for
					one year at a board meeting held
					on 17 August 2007.
					Reviewed and approved
					extension of repayment date for
					two years at a board meeting
					held on 24 October 2008.
2	Yanzhou Coal Yulin	RMB500 million	From 17th May,	6.40%	Reviewed and approved at	No	No	No
	Neng Hua		2007 to 17th		a board meeting held on 25
	Company Limited		May, 2010		October 2006. Reviewed and
			Withdrawal		approved extension of repayment
			of RMB500 million		date for two years at a work
			via 10 draw downs		meeting of the general manager
					held on 24 May 2010. Reviewed
					and approved wavier of interest
					payments for the year 2010 at a
					meeting of the general manager
					held on June 7, 2011.
3	Shanxi Tianhao	RMB190 million	From 28 March	6.65%	Reviewed and approved at a	Approved at the	No	No
	Chemicals		2008 to 22		work meeting of the general	board meeting held
	Company Limited		November 2012.		manager held on 27 July 2007	on 25 March 2011,
			Withdrawal of			RMB182903552.35
			RMB182.90355235			accrued as a
			million via 12			provision for
			draw downs			devaluation
4	Yanzhou Coal Yulin	RMB1,500 million	From 15 October	6.65%	Reviewed and approved at a	No	No	No
	Neng Hua		2007 to 15		board meeting held on 17August
	Company Limited		October 2012.		2007. Reviewed and approved
			Withdrawal of		wavier of interest payments for
			RMB1,500 million		the year 2011 at a meeting of the
			via 29 draw downs		general manager held on 7 June
					2011.
5	Shanxi Heshun	RMB50 million	From 24 December	6.40%	Reviewed and approved at a	No	No	RMB1467461.11
	Tianchi Energy		2007 to 24		work meeting of the general
	Company Limited		June2012		manager held on 5November
					2007. Reviewed and approved
					extension of repayment date for
					1.5 years at a work meeting of
					the general manager held on 31
					December 2010.

50 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

						Whether there is	Whether	Accumulated interest
		Amount of	Approved	Interest per	Approval	a provision for	principal has	income during the
No.	Borrower	Entrusted Loan	Period	annum	Process	devaluation	been recovered	reporting period
6	Shanxi Heshun	RMB80 million	From 15 October	6.40%	Reviewed and approved at a	No	Recovered	RMB2347937.78
	Tianchi Energy		2008 to 15		work meeting of the general		RMB40 million
	Company Limited		October 2011.		manager held on 21 August
			Withdrawal of		2008. Reviewed and approved
			RMB80 million		extension of repayment date
			via 5 draw downs		for 1 years at a work meeting of
					the general manager held on 31
					December 2010.
7	Yanmei Heze Neng	RMB529 million	From 24 June 2009	6.65%	Reviewed and approved at a	No	Transferred to	RMB11690330.8
	Hua Company Limited		to 27 February		work meeting of the general		share capital of
			2014.		manager held on 23 February		RMB150 million
			Withdrawal of		2009. Approved transfer of
			RMB529 million		RMB150million to share capital
			via 8 draw downs		at the eleventh meeting of fourth
					session of the Board
8	Yanzhou Coal Yulin	RMB130 million	From 16 April	6.40%	Reviewed and approved at a	No	No	Nil
	Neng Hua		2009 to 16		work meeting of the general
	Company Limited		March 2012		manager held on 23 March 2009.
			Withdrawal of		Reviewed and approved waiver
			RMB130 million		of interest payment for the year
			via 8 draw downs		2011 at a meeting of the general
					manager held on 7 June 2011.
9	Yanzhou Coal Yulin	RMB200 million	From 19 January	6.40%	Reviewed and approved at a	No	Recovered	Nil
	Neng Hua		2010 to 9		work meeting of the general		RMB34million
	Company Limited		January 2013.		manager held on 31 December
			Withdrawal of		2009. Reviewed and approved
			RMB195 million		waiver of interest payment for the
			via 4 draw downs.		year 2011 at a work meeting of
					the general manager held on 7
					June 2011.
10	Yanmei Heze Neng	RMB600 million	From 3 June	6.65%	Reviewed and approved at a	No	No	RMB18,096,322.66
	Hua Company Limited		2010 to 3 June		work meeting of the general
			2015.		manager held on 24 May 2010.
			Withdrawal of
			RMB600 million
			via 4 draw downs.
11	Yanzhou Coal Yulin	RMB53 million	From 26 January	6.65%	Reviewed and approved at a	No	No	Nil
	Neng Hua		2011 to 26		work meeting of the general
	Company Limited		January 2014.		manager held on 31 December
					2010. Reviewed and approved
					waiver of interest payment for the
					year 2011 at a work meeting of
					the general manager held on 7
					June 2011.

Yanzhou Coal Minning Company Limited Interim Report 2011 51

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

						Whether there is	Whether	Accumulated interest
		Amount of	Approved	Interest per	Approval	a provision for	principal has	income during the
No.	Borrower	Entrusted Loan	Period	annum	Process	devaluation	been recovered	reporting period
12	Yanmei Heze Neng	RMB1,700million	From 15 March	6.65%	Approved at the Seventeenth	No	No	RMB2,546,046.68
	Hua Company Limited		2011 to 15		of the Forth Session Meeting of
			March 2016.		Board on 30 December 2010.
			Withdrawal of
			RMB150 million.
13	Yanzhou Coal Ordos	RMB1,950 million	From 28 February	6.45%	Reviewed and approved at a	No	No	RMB36,085,326.74
	Neng Hua		2011 to 28		work meeting of the general
	Copmany Limited		February 2016.		manager held on 22 February
			Withdrawal of		2011.
			RMB1,950 million
			via 4 draw downs.
14	Yanzhou Coal Ordos	RMB200 million	From 17 May	6.40%	Reviewed and approved at a	No	No	RMB1,174,755.55
	Neng Hua		2011 to 17		work meeting of the general
	Copmany Limited		May 2013.		manager held on 16 May 2011.

At a work meeting of the general manager held on 22 January 2007, Shanxi Neng Hua was approved to grant an entrusted loan of RMB200 million to Tianhao Chemicals, details of which are set out in the following table:

						Whether there is	Whether	Accumulated interest
		Amount of	Term	Interest per	Approval	a provision for	principal has	income during the
No.	Borrower	Entrusted Loan	of Loan	annum	Process	devaluation	been recovered	reporting period
1	Shanxi Tianhao	RMB 200 million	From 29 March,	6.65%	Reviewed and approved at a	No	No	—
	Chemicals		2007 to 28 March		work meeting of the general
	Company Limited		2012.		manager held on 22nd January
			Withdrawal		2007
			via 3 draw downs

During the reporting period, there was no other entrustment of loans provided by the Company. Save as disclosed in the above table, the Company currently has no other plans to provide entrusted loans.

The above entrusted loan is disclosed under the relevant PRC (other than Hong Kong) regulatory rules.

Save as the disclosed in this chapter, the Company has not been a party to any material contracts during the current reporting period.

52 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

VIII. OTHER EVENTS

(Prepared under the regulatory rules of Hong Kong)

Repurchase, sale or redemption of listed shares of the Company

The 2010 annual general meeting was convened by the Company on 20 May 2011, pursuant to which a general mandate was granted to the Board to issue additional H shares of the Company during the relevant authorized period. Depending on the needs and market conditions, upon obtaining approvals from the relevant PRC regulatory authorities and complying with the relevant laws, regulations and the articles of association of the Company, the issuance amount shall not exceed 20% of the total outstanding number of H shares of the Company as at the date of passing the resolution.

The 2010 annual general meeting, the 2011 fi rst class meeting of the holders of domestic shares and the 2011 fi rst class meeting of the holders of H shares were convened by Yanzhou Coal Mining Company Limited on 20 May 2011, pursuant to which a general mandate was granted to the Board to repurchase H Shares of the Company not exceeding 10% of the aggregate nominal value of H Shares of the Company in issue as at the date of passing the resolution. Under the general mandate, the Board is authorized to repurchase H Shares of the Company during the relevant authorized period and to determine the relevant matters in relation to the repurchase of H shares of the Company according to the needs and market conditions upon obtaining approvals from the relevant PRC regulatory authorities and complying with the relevant laws, regulations and the articles of association of the Company.

As at the date of this interim report, the Company has not exercised the above mentioned general mandates.

Remuneration policy

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

The Company adopts a combined annual remuneration and risk control system as the principal means for assessing and rewarding the Directors and senior management. The annual remuneration consists of basic salary and benefi t income. The basic salary is determined according to the operational scale of the Company with reference to the market wages and the income of employees, whereas benefi t income is determined by the actual operational achievement of the Company. The annual remuneration for the Directors and senior management of the Company are pre-paid on a monthly basis and are cashed after the assessment to be carried out in the following year.

The remuneration policy for the other employees of the Group 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 quantifi ed assessment results. Rewards are linked to the Company’s overall economic effi ciency.

Yanzhou Coal Minning Company Limited Interim Report 2011 53

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

Auditors

During the reporting period, the Company engaged Grant Thornton Jingdu Tianhua (i.e. Grant Thornton and Grant Thornton Jingdu Tianhua) in Hong Kong and Shine Wing Certifi ed Public Accountants Ltd. in the PRC (excluding Hong Kong) as its international and domestic auditors, respectively.

As approved at the 2009 annual general meeting of Yanzhou Coal Mining Company Limited on 25 June 2010, Grant Thornton (the “Grant Thornton”) and Shine Wing Certifi ed Public Accountants (the “Shine Wing”) were appointed as the Company’s international and domestic auditors, respectively, for the year ended 31 December 2010.

As approved at the 2011 fi rst extraordinary general meeting on 18 February 2011, Grant Thornton Jingdu Tianhua (i.e. Grant Thornton and Grant Thornton Jingdu Tianhua) was appointed as the international auditors of the Company and its subsidiaries and should hold offi ce until the conclusion of the 2010 annual general meeting of the Company.

As approved at the 2010 annual general meeting of Yanzhou Coal Mining Company Limited on 20 May 2011, Grant Thornton Jingdu Tianhua (i.e. Grant Thornton and Grant Thornton Jingdu Tianhua) and Shine Wing Certifi ed Public Accountants (the “Shine Wing”) were appointed as the Company’s international and domestic auditors, respectively, for the year ended 31 December 2011.

IX. DURING THE REPORTING PERIOD, THE COMPANY AND ITS DIRECTORS, SUPERVISORS, SENIOR MANAGEMENT, SHAREHOLDERS, ACTUAL CONTROLLING PERSONS HAVE NOT BEEN INVESTIGATED BY THE RELEVANT AUTHORITIES, JUDICIAL DEPARTMENTS HAVE NOT BEEN IMPOSED ANY COMPULSORY MEASURES BY JUDICIAL DEPARTMENTS, HAVE NOT BEEN TRANSFERRED TO JUDICIAL ORGANISATION OR PROSECUTED FOR CRIMINAL LIABILITY, HAVE NOT BEEN AUDITED BY THE CSRC, PUNISHED BY CSRC, BANNED FROM ENTRY INTO THE SECURITIES MARKET, HAVE NOT BEEN PUBLICLY CRITICISED OR CONFIRMED AS NON-FIT AND PROPER PERSONS, OR PUBLICLY REPRIMANDED BY OTHER ADMINISTRATIVE DEPARTMENTS OR THE STOCK EXCHANGES.

54 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

X. THE INDEX OF OTHER SIGNIFICANT DISCLOSED INFORMATION

Item	Date	Printed papers and areas
Announcement of Ordinary Connected	10 January 2011	A027 Page,China Securities Journal
Transactions of Yanzhou Coal Mining		A30 Page,Shanghai Securities News
Company Limited
Announcement in Relation to the	18 January 2011	B006 Page,China Securities Journal
Resolutions Passed at the Eighteenth		A27 Page,Shanghai Securities News
Meeting of the Fourth Session of the
Board of Yanzhou Coal Mining Company
Limited
Announcement in Relation to the 2011	18 January 2011	B006 Page,China Securities Journal
Provincial Thermal Coal Sales Contract by		B27 Page,Shanghai Securities News
Yanzhou Coal Mining Company Limited
Announcement of Connected Transactions	25 January 2011	B003 Page,China Securities Journal
of Yanzhou Coal Mining Company Limited		B16 Page,Shanghai Securities News
Announcement in Relation to the	31 January 2011	B002 Page,China Securities Journal
Resolutions Passed at the Nineteenth		A27 Page,Shanghai Securities News
Meeting of the Fourth Session of the
Board of Yanzhou Coal Mining Company
Limited
Announcement in Relation to Investment by	31 January 2011	B002 Page,China Securities Journal
a wholly-owned subsidiary of Yanzhou		A27 Page,Shanghai Securities News
Coal Mining Company Limited for
Successful Bidding for Mining Rights
Materials on the First 2011 Extraordinary	12 February 2011
General Meeting of Yanzhou Coal Mining
Company Limited
Announcement in Relation to the	21 February 2011	A17 Page,China Securities Journal
Resolutions Passed at the First 2011		A18 Page,Shanghai Securities News
Extraordinary General Meeting of
Yanzhou Coal Mining Company Limited
Legal Opinions of the First 2011	21 February 2011
Extraordinary General Meeting of
Yanzhou Coal Mining Company Limited
Announcement of Yanzhou Coal Mining	11 March 2011	B006 Page,China Securities Journal
Company Limited		B25 Page,Shanghai Securities News

Yanzhou Coal Minning Company Limited Interim Report 2011 55

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

Item	Date	Printed papers and areas
Summary of the Annual Report of Yanzhou	28 March 2011	B165 Page,_China Securities Journa_l
Coal Mining Company Limited		A183 Page,Shanghai Securities News
Notice of the 2010 Annual General Meeting	28 March 2011	B166 Page,_China Securities Journa_l
of Yanzhou Coal Mining Company Limited		A182 Page,Shanghai Securities News
Notice of the First 2011 General Meeting	28 March 2011	B166 Page,_China Securities Journa_l
for holders of A Shares and holders of H		A183 Page,Shanghai Securities News
Shares of Yanzhou Coal Mining Company
Limited
Announcement in Relation to the	28 March 2011	B167 Page,_China Securities Journa_l
Resolutions Passed at the Twentieth		A184 Page,Shanghai Securities News
Meeting of the Fourth Session of the
Board of Yanzhou Coal Mining Company
Limited
Announcement in Relation to the	28 March 2011	B167 Page,_China Securities Journa_l
Resolutions Passed at the Eleventh		A184 Page,Shanghai Securities News
Meeting of the Fourth Session of the
Supervisory Committee of Yanzhou Coal
Mining Company Limited
2010 Annual Social Responsibility Report of	28 March 2011	—
Yanzhou Coal Mining Company Limited
Annual Report of Yanzhou Coal Mining	28 March 2011	—
Company Limited
2010 Specif cation for the Funds Occupied	28 March 2011	—
by the Controlling Shareholder and Other
Connected Parties of Yanzhou Coal
Mining Company Limited
2010 Annual Report of the Internal Control	28 March 2011	—
Evaluation of Yanzhou Coal Mining
Company Limited
2010 Continuous Supervision Report for	15 April 2011	—
Significant Assets Reorganization of
Yanzhou Coal Mining Company Limited
First Quarterly Report for the Year 2011 of	27 April 2011	—
Yanzhou Coal Mining Company Limited

56 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

Item	Date	Printed papers and areas
Supplemental Notice of 2010 Annual	28 April 2011	B134 Page,China Securities Journal
General Meeting in Relation to the		B135 Page,Shanghai Securities News
Addition of a New resolution of Yanzhou
Coal Mining Company Limited
Materials on the 2010 Annual General	14 May 2011	—
Meeting of Yanzhou Coal Mining
Company Limited
Materials on the First 2011 General Meeting	14 May 2011	—
for holders of A Shares and holders of H
Shares of Yanzhou Coal Mining Company
Limited
Announcement on Resolutions Passed	23 May 2011	A19 Page,China Securities Journal
at the First Meeting of the Fifth Session		A12 Page,Shanghai Securities News
of the Board of Yanzhou Coal Mining
Company Limited
Announcements in Relation to the	23 May 2011	A19 Page,China Securities Journal
Resolutions Passed at the First 2011		A12 Page,Shanghai Securities News
Annual General Meeting for holders of
A Shares and holders of H Shares of
Yanzhou Coal Mining Company Limited
Announcements in Relation to the	23 May 2011	A19 Page,China Securities Journal
Resolutions Passed at the 2010 Annual		A12 Page,Shanghai Securities News
General Meeting of Yanzhou Coal Mining
Company Limited
Announcement on Resolutions Passed at	23 May 2011	A19 Page,China Securities Journal
the 1st Meeting of the Fifth Session of the		A12 Page,Shanghai Securities News
Supervisory Committee of Yanzhou Coal
Mining Company Limited
Legal Opinions of the First 2011 General	23 May 2011	—
Meeting for holders of A Shares and
holders of H Shares of Yanzhou Coal
Mining Company Limited
Legal Opinions of 2010 General Meeting of	23 May 2011	—
Yanzhou Coal Mining Company Limited

Yanzhou Coal Minning Company Limited Interim Report 2011 57

CHAPTER 6 SIGNIFICANT EVENTS – CONTINUED

Item	Date	Printed papers and areas
Announcement to Creditors of the Company	23 May 2011	A19 Page,China Securities Journal
in Relation to General Mandate to the		A12 Page,Shanghai Securities News
Board to Repurchase H Shares of the
Company
Second Announcement to Creditors of the	26 May 2011	A28 Page,China Securities Journal
Company in Relation to General Mandate		B14 Page,Shanghai Securities News
to the Board to Repurchase H Shares of
the Company
Third Announcement to Creditors of the	30 May 2011	B008 Pages,China Securities Journal
Company in Relation to General Mandate		A25 Pages,Shanghai Securities News
to the Board to Repurchase H Shares of
the Company
Announcement of Distribution of the 2010	16 June 2011	B013 Page,China Securities Journal
Final Dividend for A Shares of Yanzhou		B14 Page,Shanghai Securities News
Coal Mining Company Limited
Announcement on the Resolutions Passed	5 July 2011	A10 Page,China Securities Journal
at the Second Meeting of the Fifth		B29 Page,Shanghai Securities News
Session of the Board of Yanzhou Coal
Mining Company Limited
Announcement in Relation to Acquisition	2 August 2011	B51 Page,China Securities Journal
of 100% Equity Interests in Syntech		B53 Page,Shanghai Securities News
Holdings Pty Ltd and Syntech Holdings
II Pty Ltd by Yanzhou Coal Mining
Company Limited

Note: The information disclosed in this table is in accordance with the regulatory rules of PRC (excluding Hong Kong) and has been posted on the Shanghai Stock Exchange’s website (http://www.sse.com.cn), Hong Kong Stock Exchange’s website (http:// www.hkexnews.hk) and the Company’s website (http://www.yanzhoucoal.com.cn).

58 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS

I. THE INTERIM FINANCIAL STATEMENT AND THE NOTES UNDER THE IFRS

CONDENSED CONSOLIDATED INCOME STATEMENT

FOR THE SIX MONTHS ENDED 30 JUNE 2011

Notes	Six months ended 30 June 2011 2010 RMB’000 RMB’000 (unaudited) (unaudited)
Gross sales of coal 5 Railway transportation service income Gross sales of electricity power Gross sales of methanol Gross sales of heat supply Total revenue Transportation costs of coal 5 Cost of sales and service provided 6 Cost of electricity power Cost of methanol Cost of heat supply Gross prof t Selling, general and administrative expenses Share of income (loss) of associates 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 Non-controlling interests Earnings per share, basic 12 Earning per ADS, basic 12	19,326,668 14,450,757 242,877 258,250 161,727 85,839 477,334 408,568 15,406 15,274
	20,224,012 15,218,688 (623,718) (368,928) (9,953,247) (7,363,472) (161,536) (79,557) (439,289) (429,016) (8,374) (7,609)
	9,037,848 6,970,106 (2,899,599) (3,365,852) 14,137 (7,962) 1,509,646 127,560 (426,106) (157,736)
	7,235,926 3,566,116 (2,040,953) (832,526)
	5,194,973 2,733,590
	5,183,335 2,715,439 11,638 18,151
	5,194,973 2,733,590
	RMB1.05 RMB0.55
	RMB10.54 RMB5.52

Yanzhou Coal Minning Company Limited Interim Report 2011 59

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONDENSED CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED 30 JUNE 2011

	Six months ended 30 June 2011 2010 RMB’000 RMB’000 (unaudited) (unaudited)
Prof t for the period Other comprehensive income (after income tax): Available-for-sale investments: Change in fair value Deferred taxes Cash f ow hedges: Cash f ow hedge reserve recognized Reclassif cation adjustments for amounts transferred to income statement (Included in selling, general and administrative expenses) Deferred taxes Exchange difference arising on translation of foreign operations Other comprehensive income/(loss) for the period Total comprehensive income for the period Attributable to: Equity holders of the Company Non-controlling interests	5,194,973 2,733,590 4,594 (85,243) (1,148) 21,311
	3,446 (63,932) 138,404 (53,476) 3,725 (3,805) (43,522) 14,731
	98,607 (42,550) 129,947 (7,747)
	232,000 (114,229)
	5,426,973 2,619,361
	5,415,335 2,602,642 11,638 16,719
	5,426,973 2,619,361

60 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONDENSED CONSOLIDATED BALANCE SHEET

AT 30 JUNE 2011

Notes	At 30 June At 31 December 2011 2010 RMB’000 RMB’000 (unaudited) (unaudited)
ASSETS CURRENT ASSETS Bank balances and cash Term deposits Restricted cash 13 Bills and accounts receivable 14 Inventories Prepayments and other receivables 15 Prepaid lease payments Prepayment for resources compensation fees 16 Derivative f nancial instruments Taxes recoverable Overburden in advance TOTAL CURRENT ASSETS NON-CURRENT ASSETS Intangible assets 18 Prepaid lease payments Prepayment for resources compensation fees 16 Property, plant and equipment 19 Goodwill Investments in securities 20 Interests in associates Interests in jointly controlled entities Restricted cash 13 Deposits made on investments Deferred tax assets 23 TOTAL NON-CURRENT ASSETS TOTAL ASSETS	12,194,213 6,771,314 10,133,947 2,567,722 66,420 85,188 3,597,010 10,017,260 1,293,617 1,646,116 3,688,720 2,613,686 18,416 18,280 3,948 3,948 418,370 239,476 79,801 169,013 187,640 149,351
	31,682,102 24,281,354 22,003,099 19,633,164 736,571 728,082 6,516 8,072 28,492,679 19,874,615 1,266,503 1,196,586 229,036 224,442 1,629,095 1,074,958 20,996 751 40,150 1,365,995 2,557,807 3,243,679 949,365 1,124,166
	57,931,817 48,474,510
	89,613,919 72,755,864

Yanzhou Coal Minning Company Limited Interim Report 2011 61

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONDENSED CONSOLIDATED BALANCE SHEET – CONTINUED

AT 30 JUNE 2011

Notes	At 30 June At 31 December 2011 2010 RMB’000 RMB’000 (unaudited) (unaudited)
LIABILITIES AND SHAREHOLDERS’ EQUITY CURRENT LIABILITIES Bills and accounts payable 21 Other payables and accrued expenses Provision for land subsidence, restoration, rehabilitation and environmental costs 17 Amounts due to Parent Company and its subsidiary companies Borrowings-due within one year 22 Current portion of long term payable-due within one year Derivative f nancial instruments Tax payable TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES Borrowings-due after one year 22 Deferred tax liability 23 Provision for land subsidence, restoration, rehabilitation and environmental costs 17 Non-current portion of long term payable-due within one year Total non-current liabilities Total liabilities Capital and reserves 24 Share capital Reserves Equity attributable to equity holders of the Company Non-controlling interests TOTAL EQUITY TOTAL LIABILITIES AND EQUITY	1,404,078 1,554,444 4,035,428 3,820,971 2,767,775 2,300,637 1,825,544 438,783 10,164,000 614,925 2,343,459 6,536 191,697 166,178 1,333,275 1,231,388
	24,065,256 10,133,862 19,794,664 22,400,833 3,244,106 2,601,207 186,521 152,594 2,360,244 28,917
	25,585,535 25,183,551
	49,650,791 35,317,413
	4,918,400 4,918,400 34,926,965 32,413,486
	39,845,365 37,331,886 117,763 106,565
	39,963,128 37,438,451
	89,613,919 72,755,864

62 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY FOR THE SIX MONTHS ENDED 30 JUNE 2011

	Statutory Attributable to Future common Investment Cash f ow equity holders Non- Share Share development reserve Translation revaluation hedge Retained of the controlling capital premium fund fund reserve reserve reserve earnings Company interests Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (note 24) (note 24) (note 24)
Balance at 1 January, 2010 Prof t for the period (unaudited) Other comprehensive income: (unaudited) – Fair value change of available-for-sale investments – Cash f ow hedge reserve recognized – Exchange difference arising on translation of foreign operations Total comprehensive income for the period (unaudited) Transactions with owners (unaudited) – Appropriations to reserves – Dividends – Acquisition of non-controlling interests Total transactions with owners (unaudited) Balance at 30 June, 2010	4,918,400 2,981,002 3,261,874 3,204,455 19,015 151,868 6,882 14,608,311 29,151,807 102,486 29,254,293 – – – – – – – 2,715,439 2,715,439 18,151 2,733,590 – – – – – (63,932) – – (63,932) – (63,932) – – – – – – (42,550) – (42,550) – (42,550) – – – – (6,315) – – – (6,315) (1,432) (7,747)
	– – – – (6,315) (63,932) (42,550) 2,715,439 2,602,642 16,719 2,619,361 – – 269,481 – – – – (269,481) – – – – – – – – – – (1,229,600) (1,229,600) – (1,229,600) – – – – – – – (4,431) (4,431) 4,417 (14)
	– – 269,481 – – – – (1,503,512) (1,234,031) 4,417 (1,229,614)
	4,918,400 2,981,002 3,531,355 3,204,455 12,700 87,936 (35,668) 15,820,238 30,520,418 123,622 30,644,040

Yanzhou Coal Minning Company Limited Interim Report 2011 63

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN EQUITY – CONTINUED

FOR THE SIX MONTHS ENDED 30 JUNE 2011

Statutory Attributable to Future common Investment Cash f ow equity holders Non- Share Share development reserve Translation revaluation hedge Retained of the controlling capital premium fund fund reserve reserve reserve earnings Company interests Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 (note 24) (note 24) (note 24)

Balance at 1 January, 2011 Prof t for the period (unaudited) Other comprehensive income (unaudited): – Fair value change of available-for-sale investments – Cash f ow hedge reserve recognized – Exchange difference arising on translation of foreign operations Total comprehensive income for the period (unaudited) Transactions with owners (unaudited) – Appropriations to reserves – Dividends Total transactions with owners (unaudited) Balance at 30 June, 2011

4,918,400 2,981,002 3,660,624 3,870,420 192,478 87,523 30,488 21,590,951 37,331,886 106,565 37,438,451 – – – – – – – 5,183,335 5,183,335 11,638 5,194,973 – – – – – 3,446 – – 3,446 – 3,446 – – – – – – 98,607 – 98,607 – 98,607 – – – – 129,947 – – – 129,947 – 129,947 – – – – 129,947 3,446 98,607 5,183,335 5,415,335 11,638 5,426,973 – – 294,870 – – – – (294,870) – – – – – – – – – – (2,901,856) (2,901,856) (440) (2,902,296) – – 294,870 – – – – (3,196,726) (2,901,856) (440) (2,902,296) 4,918,400 2,981,002 3,955,494 3,870,420 322,425 90,969 129,095 23,577,560 39,845,365 117,763 39,963,128

64 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

FOR THE SIX MONTHS ENDED 30 JUNE 2011

Notes	Six months ended 30 June 2011 2010 RMB’000 RMB’000 (unaudited) (unaudited)
NET CASH FROM OPERATING ACTIVITIES NET CASH USED IN INVESTING ACTIVITIES Purchase of property, plant and equipment Purchase of intangible assets Purchase of land use rights (Increase) decrease in term deposits Acquisition of subsidiaries Acquisition of non-controlling interests of Tianhao Acquisition of An Yuan Coal Mine 25 Establishment of an associate Acquisition of additional interests in joint venture Decrease (increase) in restricted cash Increase in deposits made on investments Proceeds on disposal of property, plant and equipment NET CASH FROM (USED IN) FINANCING ACTIVITIES Dividend paid Proceeds from bank loans Repayments of bank borrowings Repayments of other borrowings (Note) Dividend paid to non-controlling interests of subsidiaries Net increase (decrease) in cash and cash equivalents CASH AND CASH EQUIVALENTS, AT 1 JANUARY Effect of foreign exchange rate changes CASH AND CASH EQUIVALENTS, AT 30 JUNE REPRESENTED BY BANK BALANCES AND CASH	13,136,797 2,084,499
	(4,709,415) (1,843,859) (33,948) (977) (876) (442) (7,566,224) 433,178 – (133,000) – (14) (355,000) – (540,000) – (1,527,708) – 1,366,964 (294,511) (394,128) (125,000) 12,086 28,549
	(13,748,249) (1,936,076)
	(1,367,856) – 11,182,894 679,774 (3,821,979) (280,768) – (584,478) (2,408) –
	5,990,651 (185,472)
	5,379,199 (37,049)
	6,771,314 8,522,399 43,700 (35,802)
	12,194,213 8,449,548

Note: To assist with the funding of the dividend paid to Felix’s shareholders prior to the acquisition by the Group, certain Felix’s directors, through their related entities, loaned unsecured funds to Felix.

Yanzhou Coal Minning Company Limited Interim Report 2011 65

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

FOR THE SIX MONTHS ENDED 30 JUNE 2011

1. GENERAL

Organization 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 grid. 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 10 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. (“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 Neng Hua 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 2008, the Company acquired the remaining 3% equity in Yulin, and then the Company made further investment of RMB600,000,000 in Yulin in the same year.

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 Australia”) and Austar Coal Mine Pty Limited (“Austar”), in 2004 for the Group’s future operations in Southland.

66 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

1. GENERAL – CONTINUED

Organization and principal activities – continued

In 2004, the Company acquired a 95.67% equity interest in Yanmei Heze 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. The equity interests held by the Company increased to 96.67% after the increase of the registered capital of Heze in 2007. The equity interests held by the Company increased to 98.33% after the increase of the registered capital of RMB 1.5 billion in 2010.

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 99.89% equity interest in Shanxi Tianhao Chemical Company Limited (“Shanxi Tianhao”). Shanxi Neng Hua acquired approximate 0.04% equity interest of Shanxi Tianhao at cash consideration of RMB14,000. 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 commenced production in 2008. In 2007, the Company further acquired the remaining 2% equity interest in Shanxi Neng Hua at cash consideration of RMB14,965,000.

In 2009, the Company acquired 74% equity interest in Shandong Hua Ju Energy Company Limited (“Hua Ju Energy”) with a consideration of RMB593,243,000. Hua Ju Energy is a joint stock limited company established in the PRC, the principal business is the supply of electricity and heat by utilizing coal gangue and coal slurry produced from coal mining process. In July 2009, the Company entered into acquisition agreements with three shareholders of Hua Ju Energy, pursuant to which, the Company agrees to acquire 21.14% equity interest in Hua Ju Energy with the consideration of RMB173,007,000.

In 2009, the Company entered into a binding scheme implementation agreement with Felix Resource Limited (“Felix”), a corporation incorporated in Australia with shares listed on the Australian Securities Exchange, to acquire all the shares of Felix in cash of approximately AUD3,333 million. The principle activities of Felix are exploring and extracting coal resources, operating, identifying, acquiring and developing resource related projects that primarily focus on coal in Australia. The acquisition was completed in 2009.

In 2009, the Company invested RMB500 million to set up a wholly owned subsidiary located in Inner Mongolia, Yanzhou Coal Ordos Company Limited (“Ordos”). Ordos is a limited liability company incorporated in the PRC with the objectives of production and sale of methanol and other chemical products. The Company invested additional equity in the registered capital of Ordos by RMB2.6 billion during the period.

Yanzhou Coal Minning Company Limited Interim Report 2011 67

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

1. GENERAL – CONTINUED

Organization and principal activities – continued

In 2010, the Company acquired 100% equity interest of Inner Mongolia Yize Mining Investment Co., Ltd (“Yize”) and other two companies with consideration of RMB190,095,000. The main purpose of this acquisition is to facilitate the business of methanol and other chemical products in Inner Mongolia Autonomous Region.

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 31 December 2010, except a number of accounting policies that are adopted by the Company and effective for annual periods beginning on or after 1 January 2011.

In the current period the Group had applied, for the fi rst time, the new standards and interpretations and revised/ amended standards and interpretations (the new “IFRSs”) 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 1 January 2011. The new IFRSs relevant to these interim fi nancial statements are as follows:

• IAS 24 (Revised) simplifi es the disclosure requirements for government-related entities and clarifi es the defi nition of a related party. Government-related entities are now defi ned as entities that are controlled, jointly controlled or signifi cant infl uenced by the government. The revised standards still requires disclosures that are important to users of fi nancial statements but eliminates requirements to disclose information that is costly to gather and of less value to users. It achieves the balance by requiring disclosure about these transactions only if they are signifi cant.

The adoption of the new IFRSs 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.

68 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

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”) or Shanxi Coal Imp. & Exp Group Corp. (“Shanxi Coal Corporation”). The fi nal customer destination of the Company’s export sales is determined by the Company, National Coal Corporation, Minmetals Trading or Shanxi Coal Corporation. Certain of the Company’s subsidiaries and associates are engaged in trading and processing of mining machinery and the transportation business via rivers and lakes and fi nance services 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. Certain of the Company’s subsidiaries are engaged in production of methanol and other chemical products, and invest in heat and electricity.

For management purposes, the Group is currently organized into three operating divisions-coal mining, coal railway transportation and methanol, electricity and heat supply. These divisions are the basis on which the Group reports its primary segment information.

Principal activities are as follows:

Coal mining	–	Underground and open-cut mining, preparation and sales of coal
Coal railway transportation	–	Provision of railway transportation services
Methanol, electricity and	–	Production and sales of methanol and electricity and related heat
heat supply		supply services

Segment profi t represents the profi t earned by each segment without allocation of corporate expenses and directors’ emoluments, results of associates, interest income, interest expenses and income tax expenses. This is the measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance.

Yanzhou Coal Minning Company Limited Interim Report 2011 69

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

4. SEGMENT INFORMATION – CONTINUED

Segment information about these businesses is presented below:

INCOME STATEMENT

	For the six months ended 30 June 2011 Methanol, Coal railway electricity and Coal mining transportation heat supply Eliminations Consolidated RMB’000 RMB’000 RMB’000 RMB’000 RMB’000	For the six months ended 30 June 2011 Methanol, Coal railway electricity and Coal mining transportation heat supply Eliminations Consolidated RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
GROSS REVENUE External sales 19,326,668 242,877 654,467 – Inter-segment sales 107,394 25,695 176,272 (309,361) Total 19,434,062 268,572 830,739 (309,361) Inter-segment revenue is charged at prices pre-determined by the relevant governmental authority. RESULT Segment results 6,505,567 31,230 (68,823) – Unallocated corporate expenses Unallocated corporate income Share of prof ts of associates 7,059 – 7,078 – Interest income Interest expenses Prof t before income taxes Income taxes Prof t for the period	19,326,668 242,877 654,467 – 107,394 25,695 176,272 (309,361)	20,224,012 – 20,224,012
	19,434,062 268,572 830,739 (309,361)
	6,505,567 31,230 (68,823) –	6,467,974 (239,648) 1,248,394 14,137 171,175 (426,106) 7,235,926 (2,040,953) 5,194,973

70 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

4. SEGMENT INFORMATION – CONTINUED

INCOME STATEMENT – CONTINUED

	For the six months ended 30 June 2010 Methanol, Coal railway electricity and Coal mining transportation heat supply Eliminations Consolidated RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
GROSS REVENUE External sales Inter-segment sales Total	14,450,757 258,250 509,681 – 15,218,688 93,745 23,783 300,119 (417,647) –
	14,544,502 282,033 809,800 (417,647) 15,218,688

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

RESULT Segment results 4,024,401 41,276 (151,162) – Unallocated corporate expenses Unallocated corporate income Share of loss of associates – – (7,962) – Interest income Interest expenses Prof t before income taxes Income taxes Prof t for the period	4,024,401 41,276 (151,162) –	3,914,515
		(276,425) 11,956 (7,962) 81,768 (157,736)
		3,566,116 (832,526)
		2,733,590

Yanzhou Coal Minning Company Limited Interim Report 2011 71

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

5. SALES OF COAL AND TRANSPORTATION COSTS OF COAL

	For the six months ended 30 June 2011 2010 RMB’000 RMB’000
Coal sold in the PRC, gross Less: Transportation costs Coal sold in the PRC, net Coal sold outside the PRC, gross Less: Transportation costs Coal sold outside the PRC, net Net sales of coal	15,006,388 12,449,951 175,909 94,755
	14,830,479 12,355,196
	4,320,280 2,000,806 447,809 274,173
	3,872,471 1,726,633
	18,702,950 14,081,829

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

6. COST OF SALES AND SERVICE PROVIDED

	For the six months ended 30 June 2011 2010 RMB’000 RMB’000
Materials Wages and employee benef ts Electricity Depreciation Land subsidence, restoration, rehabilitation and environmental costs Annual fee and amortization of mining rights (note 18) Other transportation cost Costs of traded coal Business tax and surcharges Others	1,211,129 929,345 2,774,468 2,179,922 83,675 134,181 778,195 766,648 766,815 717,257 332,996 181,674 34,294 37,072 2,395,130 1,493,902 282,307 241,796 1,294,238 681,675
	9,953,247 7,363,472

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7. OTHER INCOME

	For the six months ended 30 June 2011 2010 RMB’000 RMB’000
Interest income from bank deposits Exchange gain Others	171,175 81,768 1,242,793 – 95,678 45,792
	1,509,646 127,560

8. INTEREST EXPENSES

	For the six months ended 30 June 2011 2010 RMB’000 RMB’000
Interest expenses on: – bank borrowings wholly repayable within 5 years – bank borrowings not wholly repayable within 5 years – bills receivable discounted without recourse Deemed interest expenses in respect of acquisition of Jining III Interest expenses in respect of acquisition of Zhuan Longwan	309,819 149,656 1,960 5,085 18,390 2,695 – 300 95,937 –
	426,106 157,736

No interest was capitalized during the periods.

9. PROFIT BEFORE INCOME TAXES

	For the six months ended 30 June 2011 2010 RMB’000 RMB’000
Prof t before income taxes has been arrived at after charging (crediting): Depreciation of property, plant and equipment Amortization of intangible assets – Included in cost of sales and service provided – Included in selling, general and administrative expenses Total depreciation and amortization Amortization of prepaid lease payments Loss on disposal of property, plant and equipment Exchange (gain) loss, net	1,124,654 1,140,842 264,048 111,969 7,857 4,023
	1,396,559 1,256,834
	5,352 8,783 7,777 6,987 (1,242,793) 1,059,914

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10. INCOME TAXES

	For the six months ended 30 June 2011 2010 RMB’000 RMB’000
Income tax: Current taxes Under provision in prior years Deferred tax charge (note 23): Current period	1,395,889 1,345,548 4,821 –
	1,400,710 1,345,548
	640,243 (513,022)
	2,040,953 832,526

The Company and its subsidiaries incorporated in the PRC are subject to an income tax rate of 25% and subsidiaries established in Australia are subject to a tax rate of 30%. The effective income tax rate of the Group for the current period is 28% (six months ended 30 June, 2010: 23%).

11. DIVIDENDS

	For the six months ended 30 June 2011 2010 RMB’000 RMB’000
Final dividend approved, RMB0.59 per share (2010: RMB0.25)	2,901,856 1,229,600

Pursuant to the annual general meeting held on 20 May, 2011, a fi nal dividend in respect of the year ended 31 December, 2010 was 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 30 June 2011 and 30 June 2010 is based on the profi t for the period of RMB5,183,335,000 and RMB2,715,439,000 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 10 H shares.

No diluted earning per share has been presented as there are no dilutive potential shares in issue during the periods ended 30 June 2011 and 2010.

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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 costs of Southland as required by the Australian government and as guarantee for borrowings.

14. BILLS AND ACCOUNTS RECEIVABLE

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Accounts receivable – From third parties – From a jointly controlled entity Less: Impairment loss Total bills receivable Total bills and accounts receivable, net	638,913 439,646 61,885 53,450
	700,798 493,096 (5,744) (5,406)
	695,054 487,690 2,901,956 9,529,570
	3,597,010 10,017,260

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 based on the invoice dates at the balance sheet date:

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
1-90 days 91-180 days	1,888,818 4,738,930 1,708,192 5,278,330
	3,597,010 10,017,260

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15. PREPAYMENTS AND OTHER RECEIVABLES

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000 700,064 243,210 199,634 115,480 261,093 254,193 2,025,875 1,709,872 502,054 290,931 3,688,720 2,613,686
Advances to suppliers Due from a jointly controlled entity (note) Deposit for environment protection Prepaid relocation costs of inhabitants Others

Note: The amount due from a jointly controlled entity is unsecured, interest-free and has no fi xed repayment term.

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. During the year 2006, Shanxi Group was requested by the relevant government to prepay the fees based on production volume of 10 million tonnes. At the balance sheet date, the amount represented the prepayment for resources compensation fees not yet utilized. The current portion represents the amount to be utilized in the coming year which is estimated based on expected production volume.

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

	At 30 June 2011 RMB’000
At the beginning of period Exchange re-alignment Acquisition of additional interests in joint venture Additional provision in the period Utilization of provision At the end of period Presented as: Current portion Non-current portion	2,453,231 5,192 15,139 763,482 (282,748) 2,954,296 2,767,775 186,521 2,954,296

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

17. PROVISION FOR LAND SUBSIDENCE, RESTORATION, REHABILITATION AND ENVIRONMENTAL COSTS – CONTINUED

The provision for land subsidence, restoration, rehabilitation and environmental costs has been determined by the directors based on their best estimates. However, in so far as the effect on the land and the environment from current mining activities becomes apparent in future periods, the estimate of the associated costs may be subject to change in the near term.

18. INTANGIBLE ASSETS

	Port Coal Coal Rail access Water access reserves resources Technology rights licenses licenses Others Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Cost At 1 January 2011 Exchange re-alignment Acquisition of additional interests in joint venture Acquisition of An Yuan Coal Mine Additions for the period At 30 June 2011 Amortization At 1 January 2011 Exchange re-alignment Provided for the period At 30 June 2011 Carrying values At 30 June 2011 At 31 December 2010	15,834,711 3,905,285 167,848 3,565 132,620 – 19,944 20,063,973 449,443 126,809 5,085 226 244 344 425 582,576 207,792 539,096 – 7,907 – 23,052 23 777,870 1,258,433 – – – – – – 1,258,433 – 30,285 – – – – 3,663 33,948
	17,750,379 4,601,475 172,933 11,698 132,864 23,396 24,055 22,716,800
	426,884 – – 252 – – 3,673 430,809 10,807 – – 17 – 15 148 10,987 264,048 – – 609 – 981 6,267 271,905
	701,739 – – 878 – 996 10,088 713,701
	17,048,640 4,601,475 172,933 10,820 132,864 22,400 13,967 22,003,099
	15,407,827 3,905,285 167,848 3,313 132,620 – 16,271 19,633,164

The Company and the Parent Company have entered into a mining rights agreement pursuant to which the Company has agreed to pay the Parent Company, effective from 25 September, 1997, 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. Up to the date of this interim report, compensation fee of RMB5 per tonne for raw coal mined amounting to RMB68,948,000 for the period has been preliminary agreed. The revised compensation is to be settled with the relevant governmental authority directly. The actual amount of compensation fee payable each year is still to be confi rmed by the governmental authority.

At 30 June 2011, intangible assets with a carrying amount of approximately RMB19,836,543,000 (31 December 2010: RMB18,297,975,000) have been pledged to secure the banking facilities of the Australian subsidiaries.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

19. PROPERTY, PLANT AND EQUIPMENT

	Freehold Plant, land Harbor works Railway Mining machinery and Transportation Construction in Australia Buildings and 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 1 January 2011 292,808 3,941,298 253,678 1,414,596 5,712,927 20,091,382 388,931 930,600 33,026,220 Exchange re- alignment 9,229 5,811 – – 31,903 155,192 – 20,497 222,632 Acquisition of additional interests in joint venture – 6,427 – – 90,199 502,494 – 52,282 651,402 Acquisition of An Yuan Coal Mine – 47,524 – – 112,016 16,429 98 – 176,067 Additions – – – – 15,306 2,188 969 8,727,472 8,745,935 Transfers 25,516 7,583 – 7,476 1,225 314,355 8,386 (364,541) – Disposals (1,473) – – – (18,113) (1,209,663) (18,645) (8,476) (1,256,370) At 30 June 2011 326,080 4,008,643 253,678 1,422,072 5,945,463 19,872,377 379,739 9,357,834 41,565,886 Accumulated depreciation At 1 January 2011 – 1,651,777 83,286 583,354 2,155,130 8,403,696 274,362 – 13,151,605 Exchange re- alignment – 538 – – 5,339 27,578 – – 33,455 Provided for the period – 46,883 2,909 77,402 81,061 900,160 16,239 – 1,124,654 Eliminated on disposals – – – – (18,032) (1,200,024) (18,451) – (1,236,507) At 30 June 2011 – 1,699,198 86,195 660,756 2,223,498 8,131,410 272,150 – 13,073,207 Carrying values At 30 June 2011 326,080 2,309,445 167,483 761,316 3,721,965 11,740,967 107,589 9,357,834 28,492,679 At 31 December 2010 292,808 2,289,521 170,392 831,242 3,557,797 11,687,686 114,569 930,600 19,874,615	292,808 3,941,298 253,678 1,414,596 5,712,927 20,091,382 388,931 930,600 33,026,220 9,229 5,811 – – 31,903 155,192 – 20,497 222,632 – 6,427 – – 90,199 502,494 – 52,282 651,402 – 47,524 – – 112,016 16,429 98 – 176,067 – – – – 15,306 2,188 969 8,727,472 8,745,935 25,516 7,583 – 7,476 1,225 314,355 8,386 (364,541) – (1,473) – – – (18,113) (1,209,663) (18,645) (8,476) (1,256,370)
	326,080 4,008,643 253,678 1,422,072 5,945,463 19,872,377 379,739 9,357,834 41,565,886
	– 1,699,198 86,195 660,756 2,223,498 8,131,410 272,150 – 13,073,207
	326,080 2,309,445 167,483 761,316 3,721,965 11,740,967 107,589 9,357,834 28,492,679
	292,808 2,289,521 170,392 831,242 3,557,797 11,687,686 114,569 930,600 19,874,615

At 30 June 2011, property, plant and equipment with a carrying amount of approximately RMB5,368,070 (31 December 2010: RMB4,361,373,000) have been pledged to secure banking facilities of the Australian subsidiaries .

In addition, no property, plant and equipment has been pledged to secure the fi nance leases of the Group. (31 December 2010: RMB856,876,000).

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

20. INVESTMENTS IN SECURITIES

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

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Investment in equity securities listed on the SSE – Stated at fair value Unlisted equity securities	198,852 194,258 30,184 30,184
	229,036 224,442

The unlisted equity securities 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.

21. BILLS AND ACCOUNTS PAYABLE

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Accounts payable – To the third parties – To a jointly controlled entity Bills payable	1,376,281 1,420,042 – 7,943
	1,376,281 1,427,985 27,797 126,459
	1,404,078 1,554,444

The following is an aged analysis of bills and accounts payable based on the invoice dates at the reporting date:

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
1-90 days 91-180 days 181-365 days 1-2 years Over 2 years	782,594 1,321,149 110,397 78,647 353,874 23,607 148,980 131,041 8,233 –
	1,404,078 1,554,444

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

22. BORROWINGS

		At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Current liabilities Bank borrowings – Unsecured borrowings (i) – Secured borrowings (ii) Finance leases (iii) Non-current liabilities Bank borrowings – Unsecured borrowings (i) – Secured borrowings (ii) Finance leases (iii) Total borrowings (i) Unsecured borrowings are repayable as follows: Within one year More than one year, but not exceeding two years More than two years, but not more than f ve years More than f ve years Total		10,164,000 156,278 – 375,978 – 82,669
		10,164,000 614,925 121,000 789,962 19,673,664 20,871,536 – 739,335
		19,794,664 22,400,833
		29,958,664 23,015,758
		At 30 June At 31 December 2011 2010 RMB’000 RMB’000
	Within one year More than one year, but not exceeding two years More than two years, but not more than f ve years More than f ve years Total	10,164,000 156,278 22,000 679,962 66,000 66,000 33,000 44,000
		10,285,000 946,240

The balance as of 30 June 2011 represented a borrowing obtained by Shanxi Tianchi before the Company acquired it and new short term borrowings obtained by the Company during the period. The loan of Shanxi Tianchi is repayable by 20 instalments over a period of 12 years, with the fi rst instalment due in May 2008 and carried interest at 5.94% (2010: 5.94%) per annum. The amount is also guaranteed by the Parent Company.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

22. BORROWINGS – CONTINUED

(ii) Secured borrowings are repayable as follows:

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Within one year More than one year, but not exceeding two years More than two years, but not more than f ve years Total	– 375,978 6,557,888 6,925,847 13,115,776 13,945,689
	19,673,664 21,247,514

Included in the balance as of 30 June 2011 are loans amounting to RMB19,673,664,000 (USD3,040,000,000) (31 December 2010: RMB20,133,007,000) obtained by the Group for the purpose of settling the consideration in respect of acquisition of Felix. The borrowings of RMB18,767,640,000 (USD2,900,000,000) (31 December 2010: RMB19,205,829,000) and of RMB906,024,000 (USD140,000,000) (31 December 2010: RMB927,178,000) carried interest at three-month LIBOR plus a margin of 0.75% (approximately 0.94%) and at three-month LIBOR plus a margin of 0.8% (approximately 0.99%) respectively. The borrowings are guaranteed by the Company, counter-guaranteed by the Parent Company and secured by the Group’s term deposit.

(iii) Finance leases are repayable as follows:

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Minimum lease payments Within one year More than one year, but not exceeding two years More than two years, but not more than f ve years Less: Future f nance charges Present value of lease payments	– 152,740 – 150,125 – 747,900
	– 1,050,765 – (228,761)
	– 822,004

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

22. BORROWINGS – CONTINUED

(iii) Finance leases are repayable as follows: – CONTINUED

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Present value of minimum f nance lease payments Within one year More than one year, but not exceeding two years More than two years, but not more than f ve years Less: amounts due within one year and included in current liabilities Amounts due after one year and included in non-current liabilities	– 82,669 – 88,144 – 651,191
	– 822,004 – (82,669)
	– 739,335

During the period, all the fi nance leases liabilities has been repaid.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

23. DEFERRED TAXATION

	Fair value Temporary adjustment differences Available- Accelerated on mining on Cash f ow for-sale tax rights (coal expenses hedge investment depreciation reserves) recognized Tax losses reserve Total RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000 RMB’000
Balance at 1 January 2010 Exchange re-alignment Disposal of a joint venture and subsidiaries (Charge) Credit to other comprehensive income Charge to the consolidated income statement Balance at 31 December 2010 and 1 January 2011 Exchange re-alignment Acquisition of additional interests in joint venture Charge to other comprehensive income Charge to the consolidated income statement (note 10) Balance at 30 June 2011	(50,623) (301,226) (633,033) (331,950) 563,671 (4,267) (757,428) – (3,897) (40,040) (30,255) 53,752 – (20,440) – – 2,229 (5,653) – – (3,424) 21,818 – – – – (24,350) (2,532) – (230) (32,738) (406,304) (253,945) – (693,217)
	(28,805) (305,353) (703,582) (774,162) 363,478 (28,617) (1,477,041) – (2,502) (50,423) (36,994) 6,378 – (83,541) – – (49,246) – – – (49,246) (1,148) – – – – (43,522) (44,670) – (92,228) (105,770) (142,481) (299,764) – (640,243)
	(29,953) (400,083) (909,021) (953,637) 70,092 (72,139) (2,294,741)

The analysis of deferred tax balances in the fi nancial statements is as follows:

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Deferred tax assets Deferred tax liabilities	949,365 1,124,166 (3,244,106) (2,601,207)
	(2,294,741) (1,477,041)

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

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

24. SHAREHOLDERS’ EQUITY

Share capital

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

		Foreign Domestic invested shares invested shares State legal H shares person shares (including H shares (held by the represented Parent Company) A shares by ADS) Total
Number of shares At 31 December 2010 and 30 June 2011 Registered, issued and fully paid At 31 December 2010 and 30 June 2011		2,600,000,000 360,000,000 1,958,400,000 4,918,400,000
		(RMB’000) (RMB’000) (RMB’000) (RMB’000) 2,600,000 360,000 1,958,400 4,918,400

Each share has a par value of RMB1.

There is no movement in share capital during the period.

Reserves

Future Development Fund

Pursuant to regulation in the PRC, the Company, Shanxi Tianchi and Heze are required to transfer an annual amount to a future development fund at RMB6 per tonne of raw coal mined. The fund can only be used for the future development of the coal mining business and is not available for distribution to shareholders.

Shanxi Tianchi is required to transfer an additional amount at RMB5 per tonne of raw coal mined from 2008 onwards as coal mine transformation fund.

Pursuant to the regulations of the Shandong Province Finance Bureau, State-owned Assets Supervision and Administration Commission of Shandong Province and the Shandong Province Coal Mining Industrial Bureau, the Company is required to transfer an additional amount at RMB5 per tonne of raw coal mined from 1 July 2004 to the reform specifi c development fund for the future improvement of the mining facilities and is not distributable to shareholders. No further transfer to the reform specifi c development fund is required from 1 January 2008.

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24. SHAREHOLDERS’ EQUITY – CONTINUED

In accordance with the regulations of the State Administration of Work Safety, the Company has a commitment to incur RMB8 (Shanxi Tianchi: RMB15) for each tonne of raw coal mined from 1 May 2004 which will be used for enhancement of safety production environment and improvement of facilities (“Work Safety Cost”). The Company, Heze and Shanxi Tianchi make appropriation to the future development fund in respect of unutilized Work Safety Cost. In accordance with the regulations of the State Administration of Work Safety, the Company’s subsidiaries, Hua Ju Energy and Yulin, have a commitment to incur Work Safety Cost at the rate of: 4% of the sales income for the year below RMB10 million; 2% of the actual sales income for the year between RMB10 million and RMB100 million (included); 0.5% of the actual sales income for the year between RMB100 million and RMB1 billion (included); 0.2% of the actual sales income for the year above RMB1 billion. The unutilized Work Safety Cost at 30 June 2011 was RMB603,361,000.

Statutory Common Reserves Fund

The Company and its subsidiaries in the PRC has to set aside 10% of its profi t for the statutory common reserve fund (except where the fund has reached 50% of its registered capital). The statutory common reserve fund can be used for the following purposes:

• to make good losses 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.

Retained earnings

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 30 June 2011 is the retained earnings computed under PRC GAAP which amounted to approximately RMB20,051,423,000 (31 December 2010: RMB19,727,074,000).

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

25. ACQUISITION OF AN YUAN COAL MINE

In 2010, the Group signed a co-operation agreement with an independent third party for the acquisition of Yijinhuoluo Qi Nalin Tao Hai Town An Yuan Coal Mine (“An Yuan Coal Mine”) at a consideration of RMB1,435 million. The acquisition was completed during this period.

The acquisition of An Yuan Coal Mine was classifi ed as purchase of assets and liabilities of which no goodwill was recognized.

Net book values of the acquired net assets at acquisition date is as follow:

	Carrying amounts RMB’000
Property, plant and equipment, net Intangible assets Other current assets Net assets acquired Considerations: Cash paid on acquisition Investment deposit paid for acquisition in prior year Net cash outf ow arising on acquisition	176,067 1,258,433 500
	1,435,000
	355,000 1,080,000
	1,435,000
	355,000

26. ACQUISITION OF ADDITIONAL INTERESTS IN JOINT VENTURE

The Australia subsidiaries of the Group originally held 60% equity interests in Ashton joint venture. During the period, the Group acquired additional 30% equity interests in Ashton joint venture from another venturer at a consideration of USD250 million. This included the acquisition of 30% equity interests in the jointly controlled entities, Ashton Coal Mines Limited and Australian Coal Processing Holdings Pty Ltd. Upon completion of the acquisition, the Group held 90% equity interest in Ashton joint venture. Under the shareholders agreement, the 90% equity interest held in Ashton remained classifi ed as a joint venture.

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27. RELATED PARTY TRANSACTIONS

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

The amounts due to Parent Company and its subsidiary companies have no specifi c terms of repayment but are expected to be repaid within one year.

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

	Six months ended 30 June 2011 2010 RMB’000 RMB’000
Income Sales of coal Sales of heat and electricity Sales of auxiliary materials Expenditure Utilities and facilities Purchases of supply materials and equipment Repair and maintenance services Social welfare and support services Technical support and training Road transportation services Construction services	826,567 1,069,801 96,035 122,988 236,120 188,944
	14,258 14,656 343,589 198,954 131,546 90,247 125,912 149,937 13,000 13,000 27,099 30,435 48,813 43,009

Certain expenditures for social welfare and support services (excluding medical and child care expenses) of RMB113,900,000 and RMB134,300,000 for each of the six months ended 30 June 2011 and 2010 respectively, and for technical support and training of RMB13,000,000 and RMB13,000,000 for each of the six months ended 30 June 2011 and 2010 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 29).

During the current period, the sale of coal from subsidiaries of the Group in Australia to the Group’s jointly controlled entity amounted to RMB726,957,049 (2010: RMB500,070,000).

As at 30 June 2011, the Company has deposited RMB1,400,000,000 in the Company’s associate, YanKuang Group Finance Company Limited. The interest income received and fi nance cost paid during the current period amounted to RMB3,070,000 and RMB3,580,000 respectively.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

27. RELATED PARTY TRANSACTIONS – CONTINUED

Transactions/balances 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 its 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.

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

	Six months ended 30 June 2011 2010 RMB’000 RMB’000
Trade sales Trade purchases Material balances with other state-controlled entities are as follows:	3,005,282 5,369,772
	1,062,581 495,670
	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Amounts due to other state-controlled entities Amounts due from other state-controlled entities	555,687 443,403
	702,454 1,320,801

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.

88 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

27. RELATED PARTY TRANSACTIONS – CONTINUED

Compensation of key management personnel

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

	Six months ended 30 June 2011 2010 RMB’000 RMB’000
Directors’ fee Salaries, allowance and other benef ts in kind Retirement benef t scheme contributions	197 217 3,606 3,577 638 707
	4,441 4,501

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

28. COMMITMENTS

	At 30 June, At 31 December, 2011 2010 RMB’000 RMB’000
Capital expenditure contracted for but not provided in the f nancial statements Acquisition of property, plant and equipment – the Group – share of joint ventures Acquisition of intangible asset – the Group Exploration and evaluation expenditure – the Group – share of joint ventures	791,936 814,800 520,447 207,111 610 – 2,878 – 5,592 –
	1,321,463 1,021,911

The Company entered into a co-operative agreement with two independent third parties to establish a company for acquiring a coal mine in Shanxi province for operations. In addition to the deposit on investment, the Company is committed to invest a further RMB78.8 million.

Pursuant to the regulations issued by the Shandong Province Finance Bureau, the Group has to pay a deposit to the relevant government authority, which secured for the environmental protection work done by the Company. As at 30 June 2011, the Company is committed to further make security deposit of RMB1,758 million.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

28. COMMITMENTS – CONTINUED

In 2010, the Company entered into a co-operative agreement with three independent companies to acquire 51% equity interest of Inner Mongolia Haosheng Coal Mining Limited (“Hao Sheng”) at a consideration of RMB6,649 million and to obtain the mining rights of the Shilawusu Coal Field in name of Hao Sheng. During the period, the Company entered into a co-operative agreement with two independent companies to acquire additional 10% shareholding of Hao Sheng at a consideration of RMB1,313,760,000. The Company also agreed to increase the registered capital of Hao Sheng by RMB51 million. Up to the date of these fi nancial statements, the Company has invested RMB2,439,880,000 in relation to this acquisition.

On 24 January 2011, the Company, the Parent Company, and Shaanxi Yanchang Petroleum (Group) Corp. Ltd (“Yanchang Petroleum”) entered into an agreement for the formation of Shaanxi Future Energy Chemical Corp. Ltd. Upon completion of the agreement, the Parent Company, the Company and Yanchang Petroleum will contribute RMB2.7 billion, RMB1.35 billion and RMB1.35 billion as capital contribution and will hold 50%, 25% and 25% equity interest in the investee company respectively. Up to the date of these fi nancial statements, Shaanxi Future Energy Chemical Corp. Ltd. has been incorporated and the Company has invested RMB540,000,000 as capital contribution.

29. RETIREMENT BENEFITS

Qualifying employees of the Company are entitled to a 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 Insurance Fund Administrative Services Agreement entered into by the Company and the Parent Company on 7 November 2008, the monthly contribution rate is set at 20% of the total monthly basic salaries and wages of the Company’s employees for the period from 1 January 2009 to 31 December 2011. Retirement pension and other welfare benefi ts will be provided by the Parent Company on the actual cost basis, which will be reimbursed by the Company after the actual payment made by the Parent Company.

The Company’s subsidiaries are participants in a state-managed retirement scheme pursuant to which the subsidiaries pay a fi xed percentage of its 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 employer’s contribution. The Group’s overseas subsidiaries pay fi xed contribution pension under the law and regulation of the corresponding country.

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

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

30. HOUSING SCHEME

The Parent Company is responsible for providing accommodation to its employees and the domestic employees of the Company. The Company and the Parent Company share the incidental expenses relating to the accommodation at a negotiated amount for each of the six months ended 30 June, 2011 and 2010. Such expenses, amounting to RMB70,000,000 and RMB70,000,000 for each of the six months ended 30 June, 2011 and 2010, have been included as part of the social welfare and support services expenses summarized in note 27.

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.

31. CONTINGENT LIABILITIES

	At 30 June At 31 December 2011 2010 RMB’000 RMB’000
Guarantees (a) The Group Guarantees secured over deposits Performance guarantees provided to external parties Guarantees provided in respect of the cost of restoration of certain mining leases, given to government departments as required by statute (b) Joint ventures Guarantees secured over deposits Performance guarantees provided to external parties Guarantees provided in respect of the cost of restoration of certain mining leases, given to government departments as required by statute	45,302 43,970 289,487 248,763 207,262 201,167 602 504 716 463 34,082 37,740
	577,451 532,607

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

32. OPERATING LEASE COMMITMENTS

	At 30 June, At 31 December, 2011 2010 RMB’000 RMB’000
Within one year More than one year, but not more than f ve years	7,686 6,043 3,199 4,922
	10,885 10,965

Operating leases have average remaining lease terms of 2 years. Items that are subject to operating leases include mining equipment, offi ce space and small items of offi ce equipment.

33. POST BALANCE SHEET EVENT

After the balance sheet date, Austar Coal Mine Pty Limited (“Austar”), a wholly-owned subsidiary of the Group, entered into an equity sale & purchase agreement to acquire 100% equity interests in Syntech Resources Pty Ltd (“Syntech”) and Syntech Holdings II Pty Ltd (“Syntech Holdings II”) at a cash consideration of AUD202.5 million. The principal business of Syntech and Syntech Holdings II include exploration, production, sorting and processing of coal. The acquisition was completed on 1 August 2011. Up to the date of these fi nancial statements, the fair values of identifi able assets, liabilities and contingent liabilities of Syntech and Syntech Holdings II have not yet been determined.

On 11 July 2011, Ordos entered into an agreement with independent third party to acquire 80% equity interests in Inner Mongolia Xintai Coal Mining Company Limited (“Xintai”) at a cash consideration of RMB2,801,556,000. Xintai owns and operate Wenyu Coal Mine situated in Inner Mongolia. Up to the date of these fi nancial statements, the acquisition has not yet been completed.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

SUPPLEMENTAL INFORMATION

• I. SUMMARY OF DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS) AND THOSE UNDER THE PRC ACCOUNTING RULES AND REGULATIONS (“PRC GAAP”)

The Group has also prepared a set of consolidated fi nancial statements in accordance with relevant accounting principles and regulations applicable to PRC enterprises.

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

• (1) Future development fund and safety work expense

• (1a) Appropriation of future development fund is charged to income before income taxes under PRC GAAP. Depreciation is not provided for plant and equipment acquired by utilizing the future development fund under PRC GAAP but charge to expenses when acquired;

• (1b) Appropriation of the work safety cost is charged to income before taxes under PRC GAAP. Depreciation is not provided for plant and equipment acquired by utilizing the provision of work safety cost under PRC GAAP but charge to expenses when acquired.

• (2) Consolidation using purchase method under IFRS and using common control method under PRC GAAP

• (2a) Under IFRS, the acquisitions of Jining II, Railway Assets, Heze, Shanxi Group and Hua Ju Energy have been accounted for using the purchase method which accounts for the assets and liabilities of Jining II, Railway Assets, Heze, Shanxi Group and Hua Ju Energy 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.

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

• (2b) Under IFRS, the mining rights of Shanxi Group are stated at purchase consideration less amortization. Mining rights (coal reserves) are amortized on unit of production basis. Under PRC GAAP, as both the Group and Shanxi Group 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.

• (3) Deferred taxation due to differences between the fi nancial statements prepared under IFRS and PRC GAAP.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

I. SUMMARY OF DIFFERENCES BETWEEN CONSOLIDATED FINANCIAL STATEMENTS PREPARED UNDER INTERNATIONAL FINANCIAL REPORTING STANDARDS (“IFRS) AND THOSE UNDER THE PRC ACCOUNTING RULES AND REGULATIONS (“PRC GAAP”) – CONTINUED

The following table summarizes the differences between consolidated fi nancial statements prepared under IFRS and those under PRC GAAP:

	Net income attributable to Net assets equity holders attributable to of the Company equity holders For six months of the Company ended 30 June As at 30 June 2011 2011 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 – reversal of work safety cost – fair value adjustment on mining rights of Shanxi Group and related amortization – goodwill arising from acquisition of Jining II, Railway Assets, Heze, Shanxi Group and Hua Ju Energy – deferred tax – others As per f nancial statements prepared under PRC GAAP	5,183,335 39,845,365 (116,945) – (79,086) (506,162) 3,027 (111,157) – (528,483) 41,043 688,536 2,357 (2,355)
	5,033,731 39,385,744

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

94 Yanzhou Coal Minning Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

II. THE INTERIM FINANCIAL STATEMENT AND THE NOTES PREPARED UNDER PRC GAAP

CONSOLIDATED BALANCE SHEET

June 30, 2011

Prepared by: Yanzhou Coal Mining Company Limited LIABILITIES AND SHAREHOLDERS’EQUITY NOTES	Unit: RMB June 30,2011December 31,2010
CURRENT ASSET: Cash at bank and on hand VIII.1 Excess reserve settlement Lending to banks and other f nancial institutions Tradable f nancial assets VIII.2 Notes receivable VIII.3 Accounts receivable VIII.4 Prepayments VIII.5 Premiums receivable Due from reinsurers Reserve for reinsurance contract receivable Interest receivable Dividends receivable Other receivables VIII.6 Purchase of resold f nancial assets Inventories VIII.7 Non-current assets due within one year Other current assets VIII.8 TOTAL CURRENT ASSETS NON CURRENT ASSETS: Loans and advances to customers Available-for-sale f nancial assets VIII.9 Held-to-maturity investments Long-term accounts receivable Long-term equity investments VIII.10 Investment properties Fixed assets VIII.11 Construction in progress VIII.12 Construction materials VIII.13 Disposal of f xed assets Productive biological assets Oil gas assets Intangible assets VIII.14 Development expenditure Goodwill VIII.15 Long-term deferred assets VIII.16 Deferred tax assets VIII.17 Other non-current assets VIII.18 TOTAL NON-CURRENT ASSETS TOTAL ASSETS	22,434,730,573 10,790,218,826 418,369,600 239,475,434 3,218,677,843 10,408,903,124 695,817,830 487,769,647 825,855,338 243,210,171 4,544,427 2,989,330 2,433,305 – 3,049,712,737 3,542,642,379 1,293,617,005 1,646,115,512 2,474,607,681 2,113,416,315
	34,418,366,339 29,474,740,738
	198,853,830 194,259,526 1,680,273,591 1,105,891,526 18,628,681,678 18,333,247,229 9,496,989,792 1,027,571,451 18,296,471 17,667,665 22,458,797,993 20,119,008,635 738,019,502 668,102,483 15,594,448 18,166,954 1,613,441,781 1,751,958,422 117,925,900 117,925,900
	54,966,874,986 43,353,799,791
	89,385,241,325 72,828,540,529

The accompanying notes are parts of the fi nancial statements.

The fi nancial statements form page 95 to page 107 are signed by the following responsible offi cers:

Head of the Company: Chief Financial Offi cer: Head of Accounting Department: Li Weimin Wu Yuxiang Zhao Qingchun

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONSOLIDATED BALANCE SHEET – CONTINUED

June 30, 2011

Prepared by: Yanzhou Coal Mining Company Limited LIABILITIES AND SHAREHOLDERS’ EQUITY NOTES	Unit: RMB June 30,2011December 31,2010
CURRENT LIABILITIES: Short-term borrowings VIII.20 Borrowings from central bank Deposits absorption and intercompany deposits Borrowings from banks or other f nancial institutions Tradable f nancial liabilities VIII.21 Notes payable VIII.22 Accounts payable VIII.23 Advances from customers VIII.24 Amounts from sale of repurchased f nancial assets Service charges and commissions payable Salaries and wages payable VIII.25 Taxes payable VIII.26 Interest payable Dividends payable Other payables VIII.27 Due to reinsurers Reserve for insurance contract Acting trading securities Acting underwriting securities Non-current liabilities due within one year VIII.28 Other current liabilities VIII.8 TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES: Long-term borrowings VIII.29 Bonds payables Long-term payables VIII.30 Special accounts payable Provisions VIII.31 Deferred tax liabilities VIII.17 Other non-current liabilities VIII.32 TOTAL NON CURRENT LIABILITIES TOTAL LIABILITIES SHAREHOLDERS’ EQUITY: Share capital VIII.33 Capital reserves VIII.34 less: treasury stock Special reserves VIII.35 Surplus reserves VIII.36 General risk reserves Retained earnings VIII.37 Translation reserve Equity attributable to shareholders of the Company Minority interest VIII.38 TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	10,142,000,000 295,411,600 191,696,949 166,177,927 29,794,247 126,958,580 1,409,289,881 1,516,920,701 1,321,070,347 1,473,772,452 1,029,451,523 823,654,677 1,481,568,432 1,347,129,196 108,726,481 12,732,426 – 1,968,323 3,496,860,370 2,466,223,721 2,371,488,149 329,267,885 2,761,897,045 2,297,502,144
	24,343,843,424 10,857,719,632
	19,794,664,000 21,661,499,200 2,352,263,972 752,325,971 186,520,982 152,594,177 3,219,005,254 2,580,863,887 7,980,020 15,926,109 25,560,434,228 25,163,209,344 49,904,277,652 36,020,928,976 4,918,400,000 4,918,400,000 4,604,432,076 4,502,379,121 2,220,554,920 1,920,406,954 3,895,859,339 3,895,859,339 23,424,072,446 21,292,197,345 322,425,046 192,476,489
	39,385,743,827 36,721,719,248
	95,219,846 85,892,305
	39,480,963,673 36,807,611,553
	89,385,241,325 72,828,540,529

The accompanying notes are parts of the fi nancial statements.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

BALANCE SHEET OF THE PARENT COMPANY

June 30, 2011

Prepared by: Yanzhou Coal Mining Company Limited ASSET NOTES	Unit: RMB June 30,2011December 31,2010
CURRENT ASSET: Cash at bank and on hand Tradable f nancial assets Notes receivable Accounts receivable XV.1 Prepayments Interests receivable Dividends receivable Other receivables XV.2 Inventories Non-current assets due within one year Other current assets TOTAL CURRENT ASSETS NON CURRENT ASSETS: Available-for-sale f nancial assets Hold-to-maturity investment Long-term accounts receivable Long-term equity investments XV.3 Investment properties Fixed assets Construction in progress Construction materials Disposal of f xed assets Productive biological assets Oil gas assets Intangible assets Development expenditure Goodwill Long-term deferred assets Deferred tax assets Other non current assets TOTAL NON CURRENT ASSETS TOTAL ASSETS	16,638,798,312 7,943,940,336 3,218,517,843 10,407,303,124 181,257,985 77,019,800 379,077,172 64,339,670 – 2,433,305 529,766 8,914,853,336 3,419,185,058 544,343,993 741,057,004 1,665,821,380 1,460,318,462
	31,545,103,326 24,113,693,220
	198,852,855 194,258,579 5,733,000,000 3,683,786,850 10,577,736,378 7,423,598,915 6,079,517,877 6,523,775,012 286,742,869 53,942,258 1,445,556 1,259,017 582,341,145 590,754,069 70,625 74,375 1,405,774,603 1,258,874,815 117,925,900 117,925,900
	24,983,407,808 19,848,249,790
	56,528,511,134 43,961,943,010

The accompanying notes are parts of the fi nancial statements.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

BALANCE SHEET OF THE PARENT COMPANY – CONTINUED

June 30, 2011

Prepared by: Yanzhou Coal Mining Company Limited ASSET NOTES	Unit: RMB June 30,2011December 31,2010
CURRENT LIABILITIES: Short-term borrowings Tradable f nancial liabilities Notes payable Accounts payable Advances from customers Salaries and wages payable Taxes payable Interest payable Dividends payable Other payables Non-current liabilities due within one year Other current liabilities TOTAL CURRENT LIABILITIES NON-CURRENT LIABILITIES: Long-term loans Bonds payable Long-term payable Special accounts payable Provisions Deferred tax liabilities Other non-current liabilities TOTAL NON-CURRENT LIABILITIES TOTAL LIABILITIES SHAREHOLDERS’ EQUITY: Share capital Capital reserves less: Treasury stock Special reserves Surplus reserves General risk reserves Returned earnings TOTAL SHAREHOLDERS’ EQUITY TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	10,142,000,000 – 185,128,993 150,649,643 29,794,247 126,958,580 666,897,570 904,338,181 1,213,177,267 1,379,301,752 744,540,578 627,461,316 1,600,145,551 1,527,916,187 3,790,424,218 2,039,520,323 2,623,587,869 2,238,201,863
	20,995,696,293 8,994,347,845
	29,953,846 28,805,277
	29,953,846 28,805,277
	21,025,650,139 9,023,153,122
	4,918,400,000 4,918,400,000 4,606,864,315 4,603,418,608 2,066,859,990 1,830,584,098 3,859,313,383 3,859,313,383 20,051,423,307 19,727,073,799
	35,502,860,995 34,938,789,888
	56,528,511,134 43,961,943,010

The accompanying notes are parts of the fi nancial statements.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONSOLIDATED INCOME STATEMENT

January-June, 2011

Prepared by: Yanzhou Coal Mining Company Limited ITEM NOTES	Unit: RMB January-June,2011 January-June,2010
1. TOTAL OPERATING REVENUE Including: Operating revenue VIII.39 Interest income Premiums income Income from service charges and commissions 2. TOTAL OPERATING COST Including: Operating cost VIII.39 Interests expenses Service charges and commissions expenditure Cash surrender value Net amount of claims payment Net amount of provisions for insurance contract guarantee fund Policyholder dividend expense Reinsurance expenses Operating taxes and surcharges VIII.40 Selling expense VIII.41 General and administrative expenses VIII.42 Finance costs VIII.43 Impairment loss of assets VIII.44 Add: Gain or loss on fair value change (The loss is listed beginning with “-“) Investment income(The loss is listed beginning with “-“) VIII.45 Including: Investment income of associates and joint ventures Foreign exchange gain or loss (The loss is listed beginning with “-“) 3. Operating prof t (The loss is listed beginning with “-“) Add: Non-operating revenue VIII.46 Less: Non-operating cost VIII.47 Including: Losses on disposal of non-current assets 4. Total prof t (The total loss is listed beginning with “-“) Less: Income tax expense VIII.48 5. Net prof t (The net loss is listed beginning with “-“) Net prof t attributed to shareholders of the Company Minority interest 6. Earnings per share (1) Earnings per share, basis VIII.49 (2) Earnings per share, diluted VIII.49 7. Other comprehensive income VIII.50 8. Total comprehensive income Total comprehensive income attributable to shareholders of the parent company Total comprehensive income attributable to minority shareholders	20,757,126,245 15,601,343,956 20,757,126,245 15,601,343,956
	13,725,351,814 12,151,246,990 11,163,831,239 8,323,738,833 292,806,238 247,822,838 1,176,264,366 652,225,641 1,918,072,635 1,690,975,045 -826,611,273 1,236,618,072 988,609 -133,439 16,570,768 -3,159,520 14,137,463 -7,663,616
	7,048,345,199 3,446,937,446 28,732,552 12,992,069 34,156,341 26,412,585 9,849,858 10,593,608
	7,042,921,410 3,433,516,930 1,999,910,583 793,685,578
	5,043,010,827 2,639,831,352 5,033,731,101 2,632,967,798 9,279,726 6,863,554
	1.02 0.54 1.02 0.54
	232,001,512 -112,797,019
	5,275,012,339 2,527,034,333 5,265,732,613 2,520,170,779 9,279,726 6,863,554

The accompanying notes are parts of the fi nancial statements.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

INCOME STATEMENT OF THE PARENT COMPANY

January-June, 2011

Prepared by: Yanzhou Coal Mining Company Limited

Prepared by: Yanzhou Coal Mining Company Limited ITEM NOTES	Unit: RMB January-June, 2011 January-June, 2010
1. TOTAL OPERATING REVENUE XV.4 Less: Operating cost XV.4 Operating taxes and surcharges Selling expense General and administrative expense Finance costs Impairment loss of assets Add: Gain or loss from the fair value changes (The loss is listed beginning with “-“) Investment income(The loss is listed beginning with “-“) XV.5 Including: Investment income of associates and joint ventures 2. Operating prof t (The loss is listed beginning with “-“) Add: Non-operating income Less: Non-operating cost Including: Loss on disposal of non-current assets 3. Total prof t (The total loss is listed beginning with “-“) Less: Income tax expense 4. Net prof t (The net loss is listed beginning with “-“) 5. Earnings per share (1) Earnings per share, basis (2) Earnings per share, diluted 6. Other comprehensive income 7. Total comprehensive income	14,304,921,177 12,570,900,500 7,910,162,298 6,384,374,824 261,561,221 233,319,605 171,887,180 146,425,309 1,516,903,975 1,336,944,941 69,620,253 -419,627 -34,479,350 – 84,554,267 106,878,420 14,137,463 -7,962,542
	4,424,861,167 4,577,133,868 2,435,202 3,729,227 10,857,219 6,794,174
	4,416,439,150 4,574,068,921 1,190,233,642 1,144,594,301
	3,226,205,508 3,429,474,620
	0.66 0.70 0.66 0.70
	3,445,707 -63,932,364
	3,229,651,215 3,365,542,256

The accompanying notes are parts of the fi nancial statements.

100 Yanzhou Coal Miming Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONSOLIDATED CASH FLOW STATEMENT

January-June, 2011

Prepared by: Yanzhou Coal Mining Company Limited ITEM NOTES	Unit: RMB January-June,2011 January-June,2010
1. CASH FLOW FROM OPERATING ACTIVITIES: Cash received from sales of goods or rendering of services Net increase in customer’s deposits and f nancial institution deposits Net increase in borrowings from central bank Net increase in borrowings from other f nancial institutions Cash received from former-insurance contract premiums Net cash received from reinsurance business Net increase of policyholders savings and investment Net increase from disposal of tradable f nancial assets Cash received from interests, fee and commissions Net increase in borrowings from f nance institutions Net increase in repurchasing businesses Tax refunding Other cash received relating to operating activities VIII.51 Sub-total of cash inf ows from operating activities Cash paid for goods and services Net increase in loans and advance from customers Net increase in deposits in central bank and other f nance institutions Cash paid for former insurance contracts claims Cash paid for interests, fees and commissions Cash paid for policyholder dividends Cash paid to and on behalf of employees Taxes payments Other cash paid relating to operating activities VIII.51 Sub-total of cash outf ows from operating activities NET CASH FLOW FROM OPERATING ACTIVITIES 2. CASH FLOW FROM INVESTING ACTIVITIES: Cash received from recovery of investments Cash received from return of investments income Net cash received from disposal of f xed assets, intangible assets and other long-term assets Net cash received from disposal of subsidiaries and business units Other cash received relating to investing activities VIII.51 Sub-total of cash inf ows from investing activities Cash paid to acquire f xed assets, intangible assets and other long-term assets Cash paid for investments Net increase of pledge loans Net cash amounts paid by subsidiaries and other business units Other cash paid relating to investing activities VIII.51 Sub-total of cash outf ows from investing activities NET CASH FLOW USED IN INVESTING ACTIVITIES	30,283,540,498 15,337,873,397 324,731,450 211,680,279 422,554,163 191,140,921
	31,030,826,111 15,740,694,597
	7,238,754,319 5,071,863,413 3,558,942,108 2,938,020,073 4,086,846,188 3,990,401,045 2,659,949,529 1,455,686,682
	17,544,492,144 13,455,971,213
	13,486,333,967 2,284,723,384
	– 126,167 3,418,124 26,018,320 1,347,076,105 165,490,213
	1,350,494,229 191,634,700
	4,864,056,472 1,845,278,166 954,052,548 184,411,537 1,507,783,264 132,493,677 7,678,047,221 8,367,934
	15,003,939,505 2,170,551,314
	-13,653,445,276 -1,978,916,614

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONSOLIDATED CASH FLOW STATEMENT – CONTINUED

January-June, 2011

Prepared by: Yanzhou Coal Mining Company Limited ITEM NOTES	Unit: RMB January-June,2011 January-June,2010
3. CASH FLOW FROM FINANCING ACTIVITIES: Cash received from investors Including: Cash received from minority shareholders of subsidiaries Cash received from borrowings Cash received from issuing bonds Other cash received relating to f nancing activities Sub–total of cash inf ows from f nancing activities Repayments of borrowings and debts Cash paid for distribution of dividends or prof ts, or cash paid for interest expenses Including: Cash paid for distribution of dividends or prof ts by subsidiaries to minority shareholders Other cash paid relating to f nancing activities VIII.51 Sub-total of cash outf ows from f nancing activities NET CASH FLOW USED IN FINANCING ACTIVITIES 4. EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 5. NET INCREASE (DECREASE) ON CASH AND CASH EQUIVALENTS VIII.51 Add: Cash and cash equivalent, opening VIII.51 6. Cash and cash equivalents, closing VIII.51	11,182,893,600 679,774,400
	11,182,893,600 679,774,400
	2,962,585,760 216,518,320 1,836,097,529 157,383,395 837,898,189 648,727,796
	5,636,581,478 1,022,629,511
	5,546,312,122 -342,855,111
	43,700,288 -35,801,958
	5,422,901,101 -72,850,299 6,771,312,424 8,522,398,899
	12,194,213,525 8,449,548,600

The accompanying notes are parts of the fi nancial statements.

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CASH FLOW STATEMENT OF THE PARENT COMPANY

January-June, 2011

Prepared by: Yanzhou Coal Mining Company Limited ITEM NOTES	Unit: RMB January-June,2011 January-June,2010
1. CASH FLOW FROM OPERATING ACTIVITIES: Cash received from sales of goods and rendering of services Tax refunding Other cash received relating to operating activities Sub-total of cash inf ows from operating activities Cash paid for goods and services Cash paid to and on behalf of employees Taxes payments Other cash paid relating to operating activities Sub-total of cash outf ows from operating activities NET CASH FLOW FROM OPERATING ACTIVITIES 2. CASH FLOW FROM INVESTING ACTIVITIES: Cash received from recovery of investments Cash received from return of investments Net cash received from disposal of f xed assets, intangible assets and other long-term assets Net cash amount received from the disposal of subsidiaries and other business units Other cash received relating to investing activities Sub-total of cash inf ows from investing activities Cash paid to acquire f xed assets, intangible assets and other long-term assets Cash paid for investments Net cash amounts paid by subsidiaries and other business units Other cash paid relating to investing activities Sub-total of cash outf ows from investing activities NET CASH FLOW USED IN INVESTING ACTIVITIES 3. CASH FLOW FROM FINANCING ACTIVITIES: Cash received from investors Cash received from borrowings Cash received from issuance of bonds Cash received relating to other f nancial activities Sub–total of cash inf ows from f nancing activities Repayments of borrowings Cash paid for distribution of dividends or prof ts, or cash paid for interest expenses Other cash payment relating to f nancial activities Sub-total of cash outf ows from f nancing activities NET CASH FLOW USED IN FINANCING ACTIVITIES 4. EFFECT OF FOREIGN EXCHANGE RATE CHANGES ON CASH AND CASH EQUIVALENTS 5. NET INCREASE (DECREASE) ON CASH AND CASH EQUIVALENTS Add: Cash and cash equivalent, opening 6. Cash and cash equivalents, closing	23,507,963,419 12,061,762,558 143,490,896 203,675,701
	23,651,454,315 12,265,438,259
	5,913,047,279 4,074,282,823 2,701,664,256 2,287,822,297 3,487,382,625 3,583,999,699 1,227,289,608 747,526,434
	13,329,383,768 10,693,631,253
	10,322,070,547 1,571,807,006
	453,786,850 74,000,000 63,453,265 177,915,217 2,865,563 2,070,133 – 161,390,720
	520,105,678 415,376,070
	262,691,982 232,155,980 4,957,128,000 731,970,000 7,547,063,209 –
	12,766,883,191 964,125,980
	-12,246,777,513 -548,749,910
	4,882,000,000 – 590,353,582
	5,472,353,582 –
	1,000,000,000 1,403,883,653 1,067,949
	2,404,951,602 –
	3,067,401,980 –
	5,099,750 -4,731,663
	1,147,794,764 1,018,325,433 5,336,180,576 6,724,043,764
	6,483,975,340 7,742,369,197

The accompanying notes are parts of the fi nancial statements.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

January-June, 2011

Prepared by: Yanzhou Coal Mining Company Limited

Unit: RMB

ITEM	January-June,2011
	Attribute to shareholders of the Parent Company General Foreign currency Total of shareholders’ Share capital Capital reserves Less: treasury stock Special reserves Surplus reserves risk reserves Retained earnings translation difference Minority interest interest
I. Balance at December 31, 2010 4,918,400,000 4,502,379,121 – 1,920,406,954 3,895,859,339 – 21,292,197,345 192,476,489 85,892,305 36,807,611,553 Add: Change in accounting policies – Correction of errors in the early stage – Others – II. Balance at January 1, 2011 4,918,400,000 4,502,379,121 – 1,920,406,954 3,895,859,339 – 21,292,197,345 192,476,489 85,892,305 36,807,611,553 III. Changes for the year (The decrease is listed beginning with “-“) – 102,052,955 – 300,147,966 – – 2,131,875,101 129,948,557 9,327,541 2,673,352,120 (I) Net prof t 5,033,731,101 9,279,726 5,043,010,827 (II) Other comprehensive income 102,052,955 129,948,557 232,001,512 Sub-total of (I) and (II) – 102,052,955 – – – – 5,033,731,101 129,948,557 9,279,726 5,275,012,339 (III) Owner’s contributions and reduction in capital – – – – – – – – – – 1. Capital from shareholders – – 2. The amount listed in shareholders equity from share payment – 3. Acquisition of minority equity in subsidiaries – (IV) Prof t distribution – – – – – – -2,901,856,000 – -440,000 -2,902,296,000 1. Transfer to surplus reserve – – 2. General risk reserves – 3. Distribution to shareholders -2,901,856,000 -440,000 -2,902,296,000 4. Others – (V) Internal settlement and transfer of owners’ equities – – – – – – – – – – 1. Capital reserve transferred to share capital – 2. Surplus reserve transferred to share capital – 3. Provision of surplus reserve for loss – 4. Others – (VI) Special reserves – – – 300,147,966 – – – – 487,815 300,635,781 1. Provision of the year 302,218,697 487,815 302,706,512 2. Usage of the year -2,070,731 -2,070,731 (VII) Others – IV. Balance at June 30, 2011 4,918,400,000 4,604,432,076 – 2,220,554,920 3,895,859,339 – 23,424,072,446 322,425,046 95,219,846 39,480,963,673	4,918,400,000 4,502,379,121 – 1,920,406,954 3,895,859,339 – 21,292,197,345 192,476,489 85,892,305 36,807,611,553 – – –
	4,918,400,000 4,502,379,121 – 1,920,406,954 3,895,859,339 – 21,292,197,345 192,476,489 85,892,305 36,807,611,553
	4,918,400,000 4,604,432,076 – 2,220,554,920 3,895,859,339 – 23,424,072,446 322,425,046 95,219,846 39,480,963,673

The accompanying notes are parts of the fi nancial statements.

104 Yanzhou Coal Miming Company Limited Interim Report 2011

CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY – CONTINUED

For the year 2010

Prepared by: Yanzhou Coal Mining Company Limited

Unit: RMB

ITEM	January-December,2010
	Attribute to shareholders of the Parent Company General Foreign currency Total of shareholders’ Share capital Capital reserves Less: treaury stock Special reserves Surplus reserves risk reserves Retained earnings translation difference Minority interest interest
I. Balance at December 31, 2009 4,918,400,000 4,547,651,740 – 1,463,683,312 3,241,001,770 – 14,168,033,687 19,014,914 101,710,973 28,459,496,396 Add: Change in accounting policies – Correction of errors in the early stage – Others – II. Balance at January 1, 2010 4,918,400,000 4,547,651,740 – 1,463,683,312 3,241,001,770 – 14,168,033,687 19,014,914 101,710,973 28,459,496,396 III. Changes for the year (The decrease is listed beginning with “-“) – -45,272,619 – 456,723,642 654,857,569 – 7,124,163,658 173,461,575 -15,818,668 8,348,115,157 (I) Net prof t 9,008,621,227 4,452,289 9,013,073,516 (II) Other comprehensive income -41,847,039 173,461,575 131,614,536 Sub-total of (I) and (II) – -41,847,039 – – – – 9,008,621,227 173,461,575 4,452,289 9,144,688,052 (III) Owner’s contributions and reduction in capital – -4,532,580 – – – – – – -18,852,705 -23,385,285 1. Increase of the registered capital to Heze Neng Hua -4,518,430 4,518,430 – 2. Impact of Yancoal Australia Pty -23,371,135 -23,371,135 3. Acquisition of minority equity in subsidiaries -14,150 -14,150 (IV) Prof t distribution – – – – 654,857,569 – -1,884,457,569 – -1,870,818 -1,231,470,818 1. Transfer to surplus reserve 654,857,569 -654,857,569 – 2. General risk reserves – 3. Distribution to shareholders -1,229,600,000 -1,870,818 -1,231,470,818 4. Others – (V) Internal settlement and transfer of owners’ equities – – – – – – – – – – 1. Capital reserve transferred to share capital – 2. Surplus reserve transferred to share capital – 3. Provision of surplus reserve for loss – 4. Others – (VI) Special reserves – – – 456,723,642 – – – – 452,566 457,176,208 1. Provision of the year 610,381,314 452,566 610,833,880 2. Usage of the year -153,657,672 -153,657,672 (VII) Others 1,107,000 1,107,000 IV. Balance at December 31, 2010 4,918,400,000 4,502,379,121 – 1,920,406,954 3,895,859,339 – 21,292,197,345 192,476,489 85,892,305 36,807,611,553	4,918,400,000 4,547,651,740 – 1,463,683,312 3,241,001,770 – 14,168,033,687 19,014,914 101,710,973 28,459,496,396 – – –
	4,918,400,000 4,547,651,740 – 1,463,683,312 3,241,001,770 – 14,168,033,687 19,014,914 101,710,973 28,459,496,396
	4,918,400,000 4,502,379,121 – 1,920,406,954 3,895,859,339 – 21,292,197,345 192,476,489 85,892,305 36,807,611,553

The accompanying notes are parts of the fi nancial statements.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

STATEMENT OF CHANGES IN EQUITY OF THE PARENT COMPANY January-June, 2011

Prepared by: Yanzhou Coal Mining Company Limited Unit: RMB January-June,2011 Less: General Total of shareholders’ ITEM Share capital Capital reserves treasury stock Special reserves Surplus reserves risk reserves Retained earnings interest	Prepared by: Yanzhou Coal Mining Company Limited Unit: RMB January-June,2011 Less: General Total of shareholders’ ITEM Share capital Capital reserves treasury stock Special reserves Surplus reserves risk reserves Retained earnings interest	Prepared by: Yanzhou Coal Mining Company Limited Unit: RMB January-June,2011 Less: General Total of shareholders’ ITEM Share capital Capital reserves treasury stock Special reserves Surplus reserves risk reserves Retained earnings interest
		Less: General Total of shareholders’ Share capital Capital reserves treasury stock Special reserves Surplus reserves risk reserves Retained earnings interest
I. Balance at December 31, 2010 Add: Change in accounting policies Correction of errors in the early stage Others II. Balance at January 1, 2011 III. Changes for the year(The loss is listed beginning with “-“) (I) Net prof t (II) Other comprehensive income Sub-total of (I) and (II) (III) Owner’s contributions and reduction in capital 1. Capital from shareholders 2. The amount listed in shareholders equity from share payment 3. Others (IV) Prof t distribution 1. Transfer to surplus reserve 2. General risk reserves 3. Distribution to shareholders 4. Others (V) Internal settlement and transfer of owners’ equities 1. Capital reserve transferred to share capital 2. Surplus reserve transferred to share capital 3. Provision of surplus reserve for loss 4. Others (VI) Special reserves 1. Provision of the year 2. Usage of the year (VII) Others IV. Balance at June 30, 2011		4,918,400,000 4,603,418,608 – 1,830,584,098 3,859,313,383 – 19,727,073,799 34,938,789,888 – – –
		4,918,400,000 4,603,418,608 – 1,830,584,098 3,859,313,383 – 19,727,073,799 34,938,789,888
		– 3,445,707 – 236,275,892 – – 324,349,508 564,071,107 3,226,205,508 3,226,205,508 3,445,707 3,445,707 – 3,445,707 – – – – 3,226,205,508 3,229,651,215 – – – – – – – – – – – – – – – – – -2,901,856,000 -2,901,856,000 – – – -2,901,856,000 -2,901,856,000 – – – – – – – – – – – – – – – – 236,275,892 – – – 236,275,892 236,275,892 236,275,892 – –
		4,918,400,000 4,606,864,315 – 2,066,859,990 3,859,313,383 – 20,051,423,307 35,502,860,995

The accompanying notes are parts of the fi nancial statements.

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STATEMENT OF CHANGES IN EQUITY OF THE PARENT COMPANY – CONTINUED

January-June, 2011

Prepared by: Yanzhou Coal Mining Company Limited

Unit: RMB

ITEM		January-December,2010
		Less: General Total of shareholders’ Share capital Capital reserves treasury stock Special reserves Surplus reserves risk reserves Retained earnings interest
I. Balance at December 31, 2009 Add: Change in accounting policies Correction of errors in the early stage Others II. Balance at January 1, 2010 III. Changes for the year(The loss is listed beginning with “-“) (I) Net prof t (II) Other comprehensive income Sub-total of (I) and (II) (III) Owner’s contributions and reduction in capital 1. Capital from shareholders 2. The amount listed in shareholders equity from share payment 3. Others (IV) Prof t distribution 1. Transfer to surplus reserve 2. General risk reserves 3. Distribution to shareholders 4. Others (V) Internal settlement and transfer of owners’ equities 1. Capital reserve transferred to share capital 2. Surplus reserve transferred to share capital 3. Provision of surplus reserve for loss 4. Others (VI) Special reserves 1. Provision of the year 2. Usage of the year (VII) Others IV. Balance at December 31, 2010		4,918,400,000 4,667,764,243 – 1,463,683,312 3,204,455,814 – 15,062,955,683 29,317,259,052 – – –
		4,918,400,000 4,667,764,243 – 1,463,683,312 3,204,455,814 – 15,062,955,683 29,317,259,052
		– -64,345,635 – 366,900,786 654,857,569 – 4,664,118,116 5,621,530,836 6,548,575,685 6,548,575,685 -65,452,635 -65,452,635 – -65,452,635 – – – – 6,548,575,685 6,483,123,050 – – – – – – – – – – – – – – – 654,857,569 – -1,884,457,569 -1,229,600,000 654,857,569 -654,857,569 – – -1,229,600,000 -1,229,600,000 – – – – – – – – – – – – – – – – 366,900,786 – – – 366,900,786 479,940,003 479,940,003 -113,039,217 -113,039,217 1,107,000 1,107,000
		4,918,400,000 4,603,418,608 – 1,830,584,098 3,859,313,383 – 19,727,073,799 34,938,789,888

The accompanying notes are parts of the fi nancial statements.

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

I. GENERAL

Yanzhou Coal Mining Company Limited (the “Company”) is a stock company with limited liability established in the People’s Republic of China (the “PRC”). The Company was established in September, 1997 by Yankuang Group Corporation Limited (the “Yankuang Group”) in accordance with the Tigaisheng (1997) No. 154 document issued by “National Economic System Reform Commission of People’s Republic of China. The address of the registered offi ce is Zoucheng City, Shandong Province. The total share capital was RMB1,670 million with Par value per share of RMB1.00 when the Company was set up.

As approved by Zhengweifa (1997) No.12 document issued by Securities Committee of State Council, the Company issued H shares with face value of RMB820 million to Hong Kong and international investors in March 1998. The American underwriters exercised the excessive issue option and the Company issued additional H Shares of RMB30 million. The above shares were listed and traded on Stock Exchange of Hong Kong Limited on April 1, 1998, and the American Depository Shares was listed in the New York Stock Exchange on March 31, 1998. The total share capital has changed to RMB2,520 million after these issues. The company issued 80 million new A shares in June 1998. The above shares went public and were traded on Shanghai Stock Exchange since July 1, 1998. After many issues and bonus shares, the share capital of the Company increased to RMB4,918.40 million by 30 June 2011.

The Company and its subsidiary companies (hereinafter collectively referred to as the “Group”) are mainly engaged in the coal mining and preparation, coal sales, cargo transportation by self-operated railways, road transportation, port operation, comprehensive scientifi c and technical service for coal mines, methanol production and sales etc.

II. THE PREPARATION FOUNDATION OF FINANCIAL STATEMENTS

The Group takes going concern as the basis of fi nancial statements. The fi nancial statements are prepared in according with the Accounting Standards for Business Enterprises (hereinafter referred to as “new CASs” or “ASBEs”) and No.38 specifi c accounting standard issued by the Ministry of Finance (MOF) on February 15, 2006, and later issued application guide to the ASBE, the interpretation of ASBE and relevant regulations, and Information Disclosure and Presentation Rules for Companies Making Public Offering No. 15 – General Provisions on Financial Reporting (Revised 2010) issued by China Securities Regulatory Commission.

III. DECLARATION OF COMPLIANCE WITH ASBES

The fi nancial statements of the Group have been prepared in accordance with the new ASBEs and have been presented completely and genuinely with the fi nancial information of the Group such as its fi nancial position, operating results and cash fl ows and so on.

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IV. SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND PREPARATION METHODS FOR CONSOLIDATED FINANCIAL STATEMENTS

1. Accounting period

The accounting period is from the Calendar year January 1st to December 31st.

2. Functional currency

• The functional currency of the Company except overseas subsidiaries is Renminbi (RMB). As the primary economic environment for overseas subsidiaries of the Company, Yancoal Australia Pty Limited and its subsidiaries are in Australia, the functional currency of the two Companies is AUD. On the conversion method from AUD to RMB, please refers to �.5.

• 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 tradable fi nancial assets, available-for-sale fi nancial assets and hedging instruments, which are measured at their fair values.

4. Cash and cash equivalents

Cash in cash fl ow are cash on hand and deposits available for payment at any time. Cash equivalents in cash fl ow are investments which are short-term (normally become due within 3 months after purchasing date), highly liquid, readily convertible to known amounts of cash, and subject to an insignifi cant risk of changes in value.

5. Foreign currency and the translation of fi nancial statements denominated in foreign currency

(1) Foreign currency translation

Foreign currency transactions are converted to the functional currency at the spot exchange rate of the day when the transaction occurs. At the balance sheet date, foreign currency monetary items are translated to the functional currency using the spot exchange rate of the day. Exchange differences arising are recognized in profi t or loss for the current period, except for the exchange differences arising on the borrowing costs eligible for acquisition, construction or production of assets which are qualifi ed for capitalization. Foreign currency non-monetary items measured at fair value are translated using the exchange rates at the date when the recognized fair value is determined. The differences between the amount of the functional currency before and after conversion are recognized in profi t or loss or interests of shareholders as changes of fair value. Foreign currency non-monetary items measured at historical cost are translated at the spot exchange rates at the date of the transactions, and do not change the RMB amount.

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IV. SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND PREPARATION METHODS FOR CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

5. Foreign currency and the translation of fi nancial statements denominated in foreign currency – continued

(2) Translation of fi nancial statements denominated in foreign currency

The asset and liability items on the balance sheet of foreign currency are converted to RMB at the spot exchange rate of the balance sheet date; other items are converted at the sport exchange rate of the day when the transaction occurs, except retained earnings on shareholders’ equity. The revenue and expense items on the income statement of overseas subsidiaries are converted to RMB at the approximate rate of the spot exchange rate of the day when the transaction occurs. Exchange differences arising from the above issues are presented separately under the shareholders’ equity items.

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

6. Financial assets and fi nancial liabilities

(1) Financial assets

Upon initial recognition, fi nancial assets are classifi ed into the following categories: fi nancial assets at ‘fair value through profi t or loss’ (FVTPL), ‘held-to-maturity’ investments, ‘available-for-sale’ (AFS) fi nancial assets and ‘loans and receivables’.

1) Financial assets at FVTPL:

A fi nancial asset is held for trading if it has been acquired principally for the purpose of selling in the short term and presented as the tradable fi nancial assets in the balance sheet. Except for the purpose of hedging, derivative fi nancial instruments are classifi ed into fi nancial assets or liabilities at FVTPL.

2) Held-to-maturity investment

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

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IV. SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND PREPARATION METHODS FOR CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

6. Financial assets and fi nancial liabilities – continued

(1) Financial assets – continued

• 3) Receivables:

• Non-derivative fi nancial assets with fi xed or determinable payments are not quoted in an active market.

4) AFS fi nancial assets

AFS fi nancial assets are those non-derivative fi nancial assets that are designated as available for sale or are not classifi ed as (1) fi nancial assets at FVTPL, (2) loans and receivables, or (3) held-tomaturity investments.

Financial assets are initially measured at fair value. Transaction costs that are directly attributable to the acquisition or issue of fi nancial assets and fi nancial liabilities (other than fi nancial assets at fair value through profi t or loss) are added to or deducted from the fair value of the fi nancial assets, as appropriate, on initial recognition. Transaction costs directly attributable to the acquisition of fi nancial assets at fair value through profi t or loss are recognized directly in profi t or loss. Financial assets are no longer recognised when the rights to receive cash fl ows from the assets expire or, the fi nancial assets are transferred and the Group has transferred substantially all the risks and rewards of ownership of the fi nancial assets.

Financial assets and AFS fi nancial assets at FVTPL are subsequently measured at fair value. The receivables and held-to-maturity investments are carried at the amortized cost using the effective interest rate method.

Changes in fair value of fi nancial assets at FVTPL are included in profi t or loss for the period at fair value. The received interest during the period holding assets shall be recognized as investment income. On disposing of it, the difference between fair value and initial accounting value shall be recognized as in profi t or loss statements on investment, and the profi t or loss at the fair value is also adjusted accordingly.

The changes in fair value of AFS fi nancial assets are recorded in the shareholder’s equity. The interest calculated by actual interest rate during the period holding assets shall be recognized as investment income. The cash dividends on investments in an available-for-sale equity instrument shall be recorded into the investment income when cash dividends are declared and issued by the investee. On disposing it, the difference after changing the fair value accumulated amount from the amount received and the carrying amount deducting the original shareholder’s equity shall be recorded into the investment profi t and loss.

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IV. SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND PREPARATION METHODS FOR CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

6. Financial assets and fi nancial liabilities – continued

(1) Financial assets – continued

The Company estimates the carrying amount of a fi nancial asset at the balance sheet date (other than those at FVTPL). If there is objective evidence that the fi nancial asset is impaired, the Company shall determine to accrue the amount of any impairment loss. If the fair value of an AFS fi nancial asset declines substantially or non-temporarily, the accumulated loss arising from this decline that had been recognized directly in shareholders’ equity shall be recognized in the profi t or loss statement.

(2) Financial liabilities

Upon initial recognition, fi nancial liabilities are classifi ed as either fi nancial liabilities ‘at fair value through profi t or loss’ (FVTPL) or ‘other fi nancial liabilities’.

Financial liabilities are classifi ed as at FVTPL where the fi nancial liability is either held for trading or it is designated as at FVTPL. Financial liabilities at FVTPL are subsequently measured at fair value, with gains or losses arising from changes in fair value as well as dividends and interest income related to such fi nancial liabilities recognized in profi t or loss for the period.

Other fi nancial liabilities are subsequently measured at unamortized cost using the effective interest method.

• (3) Method of fair values recognition of fi nancial assets and fi nancial liabilities

If there is an active market for fi nancial instrument, the quoted market price in an active market is used to determine the fair value of the fi nancial instrument. In the active market, fi nancial assets held or fi nancial liabilities intending to bear by the Group take the current quoted price as the fair value of the relevant assets and liabilities. Financial assets intending to buy or fi nancial liabilities borne by the Group take the current offer price as the fair value of the relevant assets and liabilities. If there are no quoted price and offer price for fi nancial assets and liabilities, and the economic conditions do not change signifi cantly after the latest transaction, the latest quotation is used to determine the fair value of such fi nancial assets or liabilities.

If there no active market for fi nancial instrument, the fair values are determined by evaluation method, including to consult the latest prices in the marketing transaction by the parties who are familiar with the market and make the transaction Voluntarily, the current fair values of the other identifi ed fi nancial assets, discounted method of cash fl ow and options pricing modes.

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IV. SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND PREPARATION METHODS FOR CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

6. Financial assets and fi nancial liabilities – continued

• (3) Method of fair values recognition of fi nancial assets and fi nancial liabilities – continued

The fair values of forward foreign exchange contracts of the Company and its overseas subsidiaries shall be determined by the market exchange rate at balance sheet date. Fair values of coal swap contracts shall be determined by the market price of forward coal market at balance sheet date. Fair values of interest swap contracts of the Company and its overseas subsidiaries shall be determined by the present value of estimated future cash fl ows.

7. Accounting method for bad debt provisions of the receivables

The following situations are considered as criterion of recognizing bad debt as loss of receivables: revocation, bankruptcy, insolvency, seriously shortage of cash fl ows, out of business caused by serious natural disaster and unable to pay off the debt within the foreseeable time, other solid evidence indicating that debt can’t be recovered or be of a slim chance.

The allowance method is applied to the possible loss of bad debt, the impairment shall be assessed separately or in combination, the Company shall be determined to accrue the bad debt provisions which shall be calculated into the current profi ts and losses. If there is defi ned evidence for the receivables not to or not likely to be received, which shall be classifi ed into the loss of bad debt and write off the accrued bad debts provisions after going through the approval procedure of the Company.

(1) The receivables with individual signifi cant amount accruing bad debts provisions

Judgment basis or amount standards of The receivables with more than RMB 8 million individual signifi cant amount individual amount shall be classified into the signifi cant receivables; The accruing method of the receivables with The bad debt provisions shall be accrued based on individual signifi cant amount the difference between current value of future cash fl ow and the carrying amount.

(2) Accruing the bad debt provision according to the portfolio

The basis of portfolio Accounting aging Use the accounting aging of the receivables as the credit risk characteristics to classify the portfolio Risk-free Use the amount characteristics of the receivables, the relation with transaction party and its credit as characteristics to classify the portfolio

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IV. SIGNIFICANT ACCOUNTING POLICIES, ACCOUNTING ESTIMATES AND PREPARATION METHODS FOR CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

1. Accounting method for bad debt provisions of the receivables – continued (2) Accruing the bad debt provision according to the portfolio – continued

The accrual method Accounting aging

Accrue the bad debt provision by accounting aging analysis method

Risk-free

Not accrue the bad debt provision

The percentage of bad debt provision is as followings according to accounting aging:

	Accrual percentage Accrual percentage	Accrual percentage Accrual percentage
Accounting aging	of the receivables of other receivables
Within 1 year	4%	4%
1-2 years	30%	30%
2-3 years	50%	50%
Over 3 years	100%	100%

• (3) The individually insignifi cant receivables accruing the bad debt provision

Accrual reason

The individual amount is not significant, but the accrued bad debt provision on the basis of portfolio can not refl ect its risk.

Accrual method

The bad debt provisions shall be accrued based on the difference between current value of future cash fl ow and the carrying amount.

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8. Inventories

• (1) the classifi cation of inventories: The inventories include the raw materials, coal stock, methanol stock, low value consumables and so on.

• (2) the pricing method of receiving and issuing inventories: The Company adopts a perpetual inventory system to calculate its inventory, using the actual cost pricing for procurement and inventories, and weighted average approach for consumptions and delivery of inventories.

• (3) The end-of-period inventories are measured at the lower one between the cost and the convertible net value. If the inventories are damaged, become partially or completely obsolete or sold at price lower than cost, unrecoverable cost shall be estimated and recognized as a provision for decline in value. The excess of cost over the convertible net value is generally recognized as provision for decline in value of inventories on a separate inventory item basis.

• (4) Net realisable value of inventories directly for sale, such as commodity stocks and materials for sale, is the estimated selling price less the estimated costs necessary to make the sale and other related taxes; Net realisable value of material stocks for product is the estimated selling price less the estimated costs, the estimated marketing cost and other related taxes of the fi nished production occurred

9. Long-term equity investments

Long-term equity investments mainly includes equity investments held by the Group which exercise control, joint control or signifi cant infl uence on the investee, which has no control, joint control or signifi cant infl uence on the investee, and which has no offer in active market and whose fair values cannot be reliable measured.

Joint control means mutual control over certain economic activities under contract. The main basis to defi ne joint control is that any party of the joint venture cannot control the production and business operations of the venture individually, and the decisions involving the basic production and business operations need the unanimous consent from all parties.

Signifi cant infl uence means that the investor has the right to participate decision-making for the fi nance and operating policies of investee and has no control or joint control with other parties on policies-making. The main basis to defi ne signifi cant infl uence is that the Group holds directly or indirectly through subsidiaries above 20% (included) but less than 50% voting shares of investee. Signifi cant infl uence cannot be recognized if there is solid evidence indicating that the investor cannot participate the decision-making of investee.

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9. Long-term equity investments – continued

For a business combination involving enterprise under common control, the initial investment cost of the long-term equity investment is the carrying amount of the owner’s equity of the party being absorbed at the combination date. For a business combination not involving enterprises under common control, the initial investment cost of the long-term 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. A long-term equity investment invested by investors, the initial investment cost use the values described in investment contract or agreement. For a long-term equity investment acquired by debts reorganization or non-currency assets transaction, the initial investment cost shall be recognized in accordance with relevant accounting standards.

The cost method is applied in calculating the subsidiaries investment, equity method used in adjusting the consolidated fi nancial statements. If the Company 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, a longterm equity investment shall be calculated using the cost method. If the Company does not have control, joint control or signifi cant infl uence over the investee and the fair value of the long-term equity investment can be reliably measured, the investment shall be calculated as an available-for-sale fi nancial asset.

Under the cost method, long-term equity investments are measured at initial investment cost, and the investment cost shall be adjusted when the investments are added and recovered. Under the equity method, the current investment profi t and loss are the net profi ts and losses created by the investee and shared by the Company. The share of net profi ts or losses from the investee should be confi rmed, based on the fair values of identifi able assets on the acquisition date, according to the accounting policies and accounting period of the Group, offsetting inter-segment transactions profi t and loss created by joint venture and associated enterprises which belong to the investor in terms of shares proportion, and after adjusting the net profi t from investee. The Group shall, if there is debt balance relating to the long-term equity investment on the joint venture and associates hold before the executing date, deduct the debt balance which should amortize within remaining term, and recognise the investment profi ts and losses.

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9. Long-term equity investments – continued

For the reason of decreasing investment, the Group no longer has any joint control or signifi cant infl uence on the investee, and in active market the long-term equity investment, which has no offer and fair values and cannot be reliably measured, shall be measured by cost method. For the reason of increasing investment, the Group is able to exercise control over the investee, the measurement shall be changed into cost method. For the reason of increasing investment, the Group is able to exercise joint control or signifi cant infl uence but unable to exercise control on the investee, or for the reason of disposal of investment, the Group is unable to exercise control but able to exercise joint control or signifi cant infl uence over the investee, the measurement shall be changed into cost method.

When long-term equity investment is disposed, the difference between the carrying value and the actual consideration is recognized as investment return of the period; under equity method, the long-term equity investments, which is recognized as shareholder’s equity of the investor arising on the change of investee’s shareholder equity (other than net loss and profi t), is included in investment return of the period according to the relevant proportion.

10. Fixed assets

• (1) Recognition of fi xed assets: Fixed assets are tangible assets that are held for production or operation, and have a service life more than one accounting year.

• (2) Category of fi xed assets: Buildings, coal mine buildings, ground buildings, railway structure, harbour works and craft, plant, machinery and equipment, transportation equipment, land etc.

• (3) Measurement of fi xed assets: The fi xed assets shall be initially measured at actual cost of acquisition considering the effect of any expected costs of disposing the asset. Among these, the costs of outsourcing fi xed assets include duties and expenses such as purchasing cost, VAT, import tariff, other expenses incurred to ensure estimated usage of the fi xed assets that can be directly included in the assets. The costs to build the fi xed assets include necessary expenses incurred to ensure the usage status of the assets. The accounting value of the fi xed assets invested by the investors shall be accordance with the values specifi ed in the investment contract or agreement, while for not fair value specifi ed in the contract or agreement, shall be regarded as fair value in accounting value. Fixed assets by fi nancial lease are recognized at the lower of fair value of such assets at leasing date and the present value of minimum lease payment.

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10. Fixed assets – continued

• (4) Subsequent expenditure of fi xed assets: the subsequent expenditure includes expenses for repair, renovation and improvement, which shall be recognized as fixed asset cost provided that the expenditures confi rm to the conditions of fi xed assets recognition. With regard to the replaced parts, the carrying value shall not be recognized and other subsequent costs incurred shall be recognized in the gain and loss in the period.

• (5) Depreciation approach of fi xed assets: The depreciation is provided to all fi xed assets except those that have already accrued depreciation and lands category. The mining structures are depreciated using the estimated production capacity method, and other fi xed assets using the average service life method, calculating depreciation rate by month and record it into the current cost or expenses of relevant assets according to their various purposes. The Group’s estimated residual value for fi xed assets is 0-3%, the estimated residual rate; useful life and annual depreciation rate of each category of fi xed assets using the composite life method are as follows:

			Estimated	Annual
			residual	depreciation
No.	Category	Useful life	value rate	rate
		(years)	(%)	(%)
1	House Buildings	10-30	0-3	3.23-10.00
2	Ground buildings	10-25	0-3	3.88-10.00
3	Port works and vessels	40	0	2.50
4	Plant, machinery and equipment	2.5-25	0-3	3.88-40.00
5	Transportation equipment	6-18	0-3	5.39-16.67

The vessels of Shandong Yancoal Shipping Co., Ltd. are depreciated over 18 years. All the other transportation equipments are depreciated over 6 to 9 years.

Land category refers to that of overseas subsidiaries and no depreciation is provided for as the subsidiaries enjoy the permanent ownership.

(6) 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 or estimated net residual value of a fi xed asset or depreciation method used shall be treated as a change in an accounting estimate.

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10. Fixed assets – continued

• (7) Fixed assets that cannot bring economic returns after treatment or are not expected to bring economic returns after use or treatment shall be no longer recognized. When a fi xed asset is sold, transferred, scraped or damaged, the enterprise shall recognize the amount of any proceeds on disposal of the asset net of the carrying value and related taxes in profi t or loss for the current period.

• (8) Recognition basis and measurement method of fi xed assets by fi nancial lease: Finance lease is a lease that substantially transfers all risks and rewards relating to ownership of an asset. Fixed assets by fi nancial lease are recognized at the lower of fair value of the assets and the present value of minimum lease payment. The leased assets shall be depreciated at a straight-line basis over the shorter of service life and leasing term. The net income, from sales and leaseback transaction which has been recognized as fi nancial lease, shall be recorded as deferred revenue on balance sheet, be amortized at a straight-line basis over the leasing term and recognized in the income statements.

11. Construction in progress

• (1) the pricing approach of the construction in progress: To be measured at the actual costs incurred for the construction. The self-operated construction is recorded at all cost of direct materials, direct salary, and direct construction expenditures etc. And the contracting construction is recorded at the payable construction cost and so on. The equipment installation cost is measured at value of the installed equipment, installation cost, all expenses incurred for project test-run. The cost of construction in progress includes capitalized borrowing costs, gain and loss from currency exchange.

• (2) Standard and time of transfer from the construction in progress to the fi xed assets: The construction in progress shall be transferred to the fi xed assets from the date of starting its estimated usable condition based on their construction budget, construction pricing or project actual cost and so on, and its depreciation will begin from the next month. The difference of the fi xed assets original values shall be adjusted upon the resolution procedures of the project completion.

12. Borrowing costs

Borrowing costs include loan interests, amortization of premiums or discounts, auxiliary expenses and exchange differences arising on foreign currency borrowing. 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, borrowing costs, which are directly attributable to the acquisition, construction or production of a qualifying asset, shall be capitalized. Capitalization of borrowing costs shall be discontinued when acquired and constructed production is available for use or sale. Other borrowing costs shall be recognized as costs for the current period.

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12. Borrowing costs – continued

The amount of interest of specifi c borrowings occurred for the period shall be capitalized after deducting bank interest earned from depositing the unused borrowings or any investment income on the temporary investment. The capitalized amount of general borrowings shall to be determined at the basis that the weighted average (of the excess amounts of cumulative assets expenditures above the specifi c borrowings) times capitalization rate (of used general borrowings). The capitalization rate shall be determined according to the weighted average interest rates of general borrowings.

Assets eligible for capitalization represent fi xed assets, investment property, inventories, etc, which shall take a long time (generally above one year) for acquisition, construction or production to be ready for the specifi c use or sale.

If an asset eligible for capitalization is interrupted abnormally and continuously more than 3 months during the purchase, construction or production, capitalization of borrowing costs shall be suspended until the above interrupted activities restart.

13. Intangible assets

• (1) The pricing method of intangible assets: The intangible assets of the Group include mainly mining rights, unproved mining interests, expenditure for the exploration and evaluation, the land use rights, patents and techniques etc. For purchased intangible assets, actual paid cost and other relevant expenses are used as the actual cost. For intangible assets invested by investors, the actual cost is determined according to the values specifi ed in the investment contract or agreement, while for the unfair agreed value in contract or agreement, the actual cost is determined at the fair value.

• (2) The land use rights are evenly amortized over the transferred term since the rights are obtained. The mining rights are amortized under straight line or units of production method. The patent and technology with limited life shall be amortized under composite life method. The patent and technology with unsure life shall not be amortized. The amortized amounts shall be included in the cost of related assets or profi t or loss for the period in which they are incurred based on the benefi ciary objects.

• (3) For an intangible asset with a fi nite useful life, the Company shall review the useful life and the amortization method applied 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 amortize that intangible asset over the estimated useful life.

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14. Exploration and evaluation expenditures

Exploration and evaluation activities include the search for mineral resources, identifi cation of the technical feasibility and evaluation of the commercial feasibility of the distinguished resource. Exploration and evaluation expenditures includes the direct costs of the following activities: research and analysis of historical exploration data; data collection from the topography, geochemical and geophysical exploration and research; exploration drilling, trenching and sampling; identifying and reviewing the amount and level of resources; measuring transport and infrastructure requirements; and conducting market and fi nancial research.

In the early stages of projects exploration, exploration and evaluation expenditures occurred is credited to profi t or loss are incurred. When the project has the technical feasibility and commercial viability, the exploration and evaluation expenditure (including the costs incurred for purchase of exploration permit) are capitalised into exploration and evaluation assets by a single item.

Exploration and evaluation assets are allocated to construction in progress. These assets shall be converted into fi xed assets or intangible assets when getting ready for their intended use, and accrued depreciation or amortization within operating life. The related unrecoverable cost shall be immediately written off and credited as profi t or loss when projects are abandoned.

15. Impairment of non-fi nancial 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, and 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. Goodwill arising in a business combination and an intangible asset with an indefi nite useful life shall be tested for impairment annually, irrespective of whether there is any indication that the asset may be impaired. 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 assessed 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 difference will be recognized as impairment loss and once an impairment loss is recognized, it shall not be reversed in a subsequent period. 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.

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15. Impairment of non-fi nancial assets – continued

The signs of impairment are as follows:

• (1) The current market price of an asset substantially declines, exceeding obviously the expected decline caused by time changes or normal application.

• (2) The current or future signifi cant changes in the economic, technical or legal environment of the enterprise and in the market of an asset shall have adverse impacts on the enterprise.

• (3) The improved market rate or other return on investment in the period shall have an effect on the discount rate used by enterprise to calculate estimated cash fl ow present value, leading to substantial decline in recoverable amount of assets.

• (4) There is evidence to demonstrate that the assets have already gone absolute or its entity has already been damaged.

• (5) the assets have already been or will be left unused, or will stop using, or are under the plan to be disposed in advance.

• (6) the evidences of internal reports demonstrate that economic returns of assets have already been lower or will be lower than expectations, for example, net cash fl ow created by assets or operating profi t (or loss) realized by assets are much lower (or higher) than expected amounts.

• (7) Other signs to indicate that assets value have already been impaired.

16. Goodwill

Goodwill means equity investment cost or the differences between the merger costs and the shareholder’s equity book value of the combined party under the corporate merger not under the same control.

Goodwill related to subsidiaries shall be presented separately in consolidated fi nancial statements, to joint ventures or associated companies shall be included in the book value of long-term equity investment.

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17. Long-term deferred expenses

The Group’s long-term deferred expenses means mining rights compensations, project maintenance expense and other expense, which should be undertaken in more than 1 year of amortization period (not including 1 year) of the current and future periods, the expenses shall be amortized averagely in the benefi t period. If the project of long-term deferred expenses cannot make benefi t in the future accounting periods, the unamortized value of the project will be transferred to the profi ts or losses for the period.

18. 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, and recorded into related assets or current profi t or loss in accordance with the objects that benefi ted from the service rendered by employees. Any compensation liability arising from the termination of employment relationship with employees should be charged to the profi t or loss for the current period.

Mainly include salary, bonus, allowance and subsidy, employee welfare expenses, social insurance cost, public accumulation fund for housing construction, labour union expenditures, employee education funds and other expenses associated with service rendered by employees.

19. Estimated liability

• (1) The recognition principles of the estimated liability: the Company recognizes it as a provision when an obligation related to an contingency such as reclamation, disposal and environment restoring caused by mining, external guarantee, pending litigation or arbitration, product quality warranty, downsizing scheme, loss contract, restructuring obligation and so on satisfy all of 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) The amount of the obligation can be measured reliably.

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19. Estimated liability – continued

(2) The measurement approaches of the estimated liability: the estimated liability is primarily measured according to the estimated optimal value paid to implement the relevant present obligations considering the factors such as the risks, uncertainties and currency time values related to the contingencies. If the currency time value has major effects, the estimated optimal value is determined after the discounting of the relevant future cash fl ow. If any change happens to the estimated optimal value during reviewing the carrying amount of the estimated liabilities on the balance sheet date, the adjustment will be made to the carrying amount to refl ect the current estimated optimal value.

20. Special reserves

• (1) Provision for production maintenance and production safety expenses

Pursuant to the rules and regulations jointly issued by Ministry of Finance, State Administration of Coal Mine Safety and related government authorities in PRC, the Company has to accrue for production maintenance expenses (Wei Jian Fei) at RMB6 per ton of raw coal mined, which is used to maintain production and technical improvement of coal mines. The Company also accrues for production safety expenses at RMB8 per ton raw coal mined (standards for the Company’s subsidiary Shanxi Heshun Tianchi Energy Company Limited is RMB15 per ton raw coal mined) and is used for purchase of coal production equipment and safety expense of coal mining structure.

In accordance with the regulations of “the Interim Measures of fi nancial management of costs of safety in the high-risk industries and enterprises “ (Caiqi [2006] No. 478) of the Ministry of Finance and the State Administration of Work Safety, as the subsidiaries of the Group, Hua Ju Energy has a commitment to incur Work Safety Cost at the rate of: 4% of the sales income for the year below RMB10 million; 2% of the actual sales income for the year between RMB10 million and RMB100 million (included); 0.5% of the actual sales income for the year between RMB100 million and RMB1 billion (included); 0.2% of the actual sales income for the year above RMB1 billion.

The above accrued amounts, which have been charged in cost and unused, shall be presented separately in special reserves of shareholder’s equity. Production safety expenses, which belong to cost of expenses, directly offset of special reserves. The accrued production safety expenses, which is used by enterprises and formed into fi xed assets, shall be charged in “construction in progress”, and recognised as fixed asset when safety project is completed and reaches the expected operation condition; meanwhile, offset the special reserves according to the cost forming into fi xed asset, and recognise the same amount of accumulated depreciation. This fi xed asset shall no longer accrue depreciation in the following period.

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20. Special reserves – continued

• (2) Shanxi coal mines switching to other business development fund

Pursuant to Shanxi Coal Mine Switching to Other Business Development Fund Provision and Use Management Methods (Pilot) (Jinzhengfa [2007] No.40), since May 1, 2008, the subsidiary Shanxi Heshun Tianchi Energy Co., Ltd. accrues RMB5 per ton ROM for Coal Mine Switching to Other Business Development Fund.

(3) Shanxi environment management guarantee deposit

• Pursuant to Notice of Provision and Use Management Method of Shanxi Coal Mine Environment Rehabilitation Management Guarantee Deposit (Pilot) (Jinzhengfa [2007] No.41) issued by Shanxi Provincial People’s Government, the subsidiary Shanxi Heshun Tianchi Energy Co., Ltd. Accrues RMB10 per ton ROM for the Environment Rehabilitation Management Guarantee Deposit since May 1st, 2008. The provision and use of the deposit will abide by the following principals of “owned enterprises, used only for special purpose, saved in special account and supervised by government”.

21. The Principles of Revenue recognition

• The business revenues are generated mainly from sales of goods, rendering of services and alienating the right to use assets. The principles of revenue recognition are as follows:

(1) Revenue from sales of goods:

Revenue is recognized when the Company has transferred to the buyer the main risks and rewards of ownership of the goods, neither retains continuing management usually associated with ownership nor effectively controls over the goods sold, and the amount of revenue can reliably measured, the associated economic benefi ts are likely to fl ow into the enterprise, and the related to costs incurred can be reliably measured.

(2) 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.

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21. The Principles of Revenue recognition – continued

(3) Revenue from alienating the right to use assets

The revenue is recognized when the Company has received the economic benefi ts associated with the transaction, and can reliably measure the relevant amount of revenue.

22. Government grants

Government grants are recognized when there is reasonable assurance that the grants will be received and the Group is able to comply with the conditions attaching to them. Government grants in the form of monetary assets are recorded based on as the amount received, whereas quota subsidies are measured as the amount receivable. Government grants in the form of non-monetary assets are measured at fair value or nominal amount (RMB1) if the fair value cannot be reliably obtained.

Government grants received in relation to assets are recorded as deferred income, and recognised evenly in the income statement over the assets’ useful lives. Government grants received in relation to revenue are recorded as deferred income, and recognised as income in future periods as compensation when the associated future expenses or losses arise; or directly recognised as income in the current period as compensation for past expenses or losses.

23. Deferred income tax assets and liabilities

The deferred income tax assets and liabilities are recognized based on the differences arising from the difference between the carrying amount of an asset or liability and its tax base (temporary differences). For any deductible loss or tax deduction that can be deducted the amount of the taxable income the next year according to the taxation regulations, the corresponding deferred income tax asset shall be determined considering the temporary difference. On the balance sheet date, the deferred income assets and deferred income tax liabilities shall be measured at the tax rate applicable to the period during which the assets are expected to be recovered or the liabilities are expected to be settled.

The Group shall recognize the deferred income tax liability arising from a deductible temporary difference to the extent of the amount of the taxable income which it is most likely to obtain and which can be deducted from the deductible temporary difference. For the recognized deferred income tax asset, if it is unlikely to obtain suffi cient taxable income to offset against the benefi t of the deferred income tax asset, the carrying amount of the deferred income tax assets shall be written down. Any such write-down should be subsequently reversed where it becomes probable that suffi cient taxable income will be available.

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24. Leases

The Company classifi es the leases into fi nance lease and operating lease on the lease beginning date.

Finance lease is a lease that substantially transfers all the risks and rewards incident to ownership of an assets. On the lease beginning date, as the leaseholder, the Company recognizes the lower of fair value of lease assets and the present value of minimum lease payment as fi nancial leased fi xed assets; recognizes the minimum lease payment as long-term payable, and recognizes the difference between the above two as unverifi ed fi nancing costs.

Operating lease is the other lease except fi nance lease. As the leaseholder, the Company records lease payments into the related assets cost or the profi t or loss for the period on a straight-line basis over the lease term and; records lease income into revenue in the income statement on a straight-line basis over the lease term.

25. Accounting calculation of the income tax

The accounting calculation of the income tax adopts the balance sheet liabilities approach. The income taxes include the current and deferred income tax. The current income tax and deferred income tax expenses and earnings are recorded into the current profi t and loss, except those related to the transactions and events are recorded directly into the shareholder’s equity and the deferred income tax is adjusted into the carrying amount of goodwill arising from the business combination.

The current income tax expense is the income tax payable, that is, the amount of the current transactions and events calculated according to the taxation regulations paid to the taxation authorities by the enterprises. The deferred income tax is the difference between the due amounts of the deferred income tax assets and liabilities to be recognized according to the balance sheet liabilities approach in the period end and the amount recognized originally.

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26. Segment reporting

Reportable segments are identifi ed based on operating segments which are determined based on the structure of the Group’s internal organization, management requirements and internal reporting system. An operating segment is a component of the Group that meets the following respective conditions:

• (1) Engage in business activities from which it may earn revenues and incur expenses;

• (2) Whose operating results are regularly reviewed by the Group’s management to make decisions about resource to be allocated to the segment and assess its performance; and

• (3) For which fi nancial information regarding fi nancial position, results of operations and cash fl ows are available.

27. Operation Method of Hedges Business

The Group’s overseas subsidiaries use derivative fi nancial instruments such as forward foreign exchange contracts, coal swap contracts, interest rate swaps contracts to hedge cash fl ow for foreign exchange risks, fl uctuations in coal prices and interest rate risk.

The relationship between hedging instrument and hedged item is recorded by the Group on hedging transaction date, including the target of risk management and various hedging transaction strategies. The Group will regularly assess whether the derivatives can continuously and effectively hedge cash fl ows of the hedged item during the period of hedging transactions. The Group uses the comparative method of the principle terms of the contract to do the expected evaluation on the effectiveness of hedging, and uses ratio analysis method to do the retrospective evaluation on the effectiveness of hedging at the end of the reporting period.

Net amounts receivable or payable of hedging transactions is recorded into the balance sheet as assets or liabilities from hedging transaction date. The unrealized gain or loss shall be recorded into hedging reserve under equity. The change of fair values of forward foreign currency contract, coal swap contract or interest swap contract shall be recognized through hedging reserve until the expected transactions occur. Accumulated balance in equity shall be included in the income statement or be recognized as part of the cost in relation of its assets.

When a hedging instrument expires or is sold, terminated or exercised, or the hedge no longer meets the criteria for hedge accounting, the hedge accounting shall not be applicable. Accumulated gain or loss of hedging instruments is recorded in the equity and recognized when transaction happens. Accumulated gain or loss, which is recorded in shareholder’s equity, shall be transferred in the profi t or loss for the period if transaction is not expected to make.

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28. Business combinations

A business combination is a transaction or event that brings together of separate enterprises into one reporting entity. The Company recognizes the assets and liabilities arising 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.

• (1) Business combinations involving enterprises under common control: 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 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.

• (2) Business combinations not Involving enterprises under common control: 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, and equity securities issued by the acquirer. 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, after the reviewing, the acquirer shall recognize the remaining difference immediately in profi t or loss for the current period.

29. Preparation methods for consolidated fi nancial statements

• (1) The consolidated scope recognition principles: the Company takes the subsidiaries owning the actual controlling power and the main bodies for the special purpose into the scope of the consolidated fi nancial statements.

• (2) The accounting methods introduced in the consolidated fi nancial statements: The consolidated fi nancial statements are prepared pursuant to Enterprises accounting criteria No.33 – consolidated fi nancial statements and relevant provisions. All major inter-segment transactions, balances, income and expenses in the consolidation scope are eliminated in full on consolidation. Unrealized loss from inter-segment transactions shall, if there is evidence that the loss is part of the related impairment, be recognized in full. Shareholder’s equity in the net assets of consolidated subsidiaries is identifi ed separately from the Group’s equity therein.

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29. Preparation Methods For Consolidated Financial Statements – continued

If the losses to the minority shareholders exceed their shares in the subsidiary’s equity, in addition to the part that minority shareholders have an obligation to bear according to the articles of association or agreement and the minority shareholders have the ability to bear, the remaining part shall offset the shareholders’ equity of the parent company. If the subsidiary subsequently reports profi ts, all profi ts are attributable to shareholders equity of the parent company before compensating the losses to the minority shareholders which were borne by the shareholders’ equity of the parent company.

If any confl icts between the accounting policies or the accounting period introduced in the subsidiaries and those of the Company, the necessary adjustment shall be made to the fi nancial statements of the subsidiaries according to the accounting policies or the accounting period in the Company during the preparation of the consolidated fi nancial statements.

For those subsidiaries acquired not under common control, some few fi nancial statements are adjusted based on the fair values of the identifi able net assets after the acquisition date in preparing consolidated fi nancial statements. For those subsidiaries acquired under common control, which are considered to be existed at the opening of the consolidation period, the assets, liabilities, the operating results and cash fl ows from the opening of the consolidation period are presented in the consolidated fi nancial statement according to the original carrying amounts.

30. Common control operation

There is common control operation in overseas subsidiaries of the Company. Common control operation means that a company uses its assets or other economic resources with other cooperative parties to jointly do coal exploration, development, operation, or other economic activities, and jointly control these economic activities in accordance with contracts or agreements.

The overseas subsidiaries are entitled to the profi ts created by joint controlled assets as per the shares controlled by them, and they shall recognize revenue and costs in relation to common control operation in light of contracts or agreements.

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31. Signifi cant accounting policies and accounting estimates

When use the above mentioned accounting policies and accounting estimate, because of the uncertainty of operation, the Group needs to apply the judgments, estimates and assumptions to book value of inaccurate measured items, which was made on the basis of experiences of the management and consideration of other related factors. However, the actual conditions are possibly different from the estimates.

The Group makes regulatory check on above mentioned judgments, estimates and assumptions. The Company confi rms the infl uences of the accounting modifi cations in the current and future of the modifi cation time, dependently.

On balance sheet date, the key assumptions and the uncertainties leading to the possible major adjustments for the carrying amounts of the assets, liabilities in the future are as follows:

(1) Depreciation and amortization

Fixed assets and intangible assets are depreciated and amortized on the straight-line or production basis over their useful lives. The Group shall regularly review the useful lives and economically recoverable coal reserves to determine the total amount of depreciation and amortization which will be included in each period. Useful lives are calculated on the basis of the experience from similar assets and expected change of technology. Economically recoverable coal reserves are calculated by the economically recoverable coal resources based on actual measurement. If the past estimates change signifi cantly, the depreciation and amortization shall be adjusted during future periods.

Estimates of coal reserves are involved in subjective judgment, because the estimating technology is inaccurate, so the coal reserves are only approximate value. The recent production and technology documents shall be considered for the estimates of economically recoverable coal reserves which will be updated regularly, the inherent inaccuracy of technical estimating exists.

(2) Land subsidence, restoration, rehabilitation and environmental obligations

The Company needs to relocate the villages on the surface due to the underground coal mining, and bear the cost of relocation of villages, ground crops (or attachments) compensation, land rehabilitation, restructuring and environmental management and other obligations. The performance of obligation is likely to lead to outfl ow of resources, when the amount of the obligation can be measured reliably, it is recognized as an environmental reclamation obligations. Depending on the relevance with the future production activities and the reliability of the estimated determination, the fl ow and non-fl ow reclamation provision should be recognized as the profi t and loss for the period or credited to the relevant assets.

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31. Signifi cant accounting policies and accounting estimates – continued

(2) Land subsidence, restoration, rehabilitation and environmental obligations

After taking into account existing laws and regulations and according to the past experience and the best estimate of future expenditures, management determines Land subsidence, restoration, rehabilitation and environmental obligations. If the time value of money is material, the expected future cash outfl ows will be discounted to its net present value. Following the current coal mining activities and under the condition that the future impact on land and the environment has become evident, Land subsidence, restoration, rehabilitation and environmental costs may be amended from time to time. Discount rate used by the Group may change due to assessment on the time value of money market and debt specifi c risks, when the estimate of the expected costs changed, it will be adjusted accordingly by the appropriate discount rate.

(3) Impairment of non-fi nancial long-term assets

As described in note 4 (16), at the date of the balance sheet the Group assesses impairment of nonfi nancial assets to determine whether the recoverable amount of assets fell less than its carrying value. If the carrying value of the asset exceeds its recoverable amount, the difference is recognized as impairment loss.

The recoverable amount is the higher between the net amounts of fair value of the assets (or assets group) less disposal costs and the estimated present value of future cash fl ow of the assets (or assets group). As the Group cannot reliably access the open market price of the assets (or asset group), it is not reliable and accurate to estimate the fair value of assets. When estimating the present value of future cash fl ows, the company needs to make signifi cant judgments on the future useful life, the product yield, price, the related operating costs of the assets (or assets group) and the discount rate used for calculating the present value. When estimating the recoverable amount, the Group will use all possibly available information, including the product yield, price from the reasonable and supportable assumption and the forecast related to operating costs.

(4) Impairment of goodwill

Determining whether goodwill is impaired requires an estimation of the value in use of the cash-generating units to which goodwill has been allocated. The value in use calculation requires the Group to estimate the future cash fl ows expected to arise from the cash-generating unit and a suitable discount rate in order to calculate the present value. Expectation has been determined based on past performance and management’s expectations for the market development.

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V. CHANGE OF ACCOUNTING POLICIES AND ACCOUNTING ESTIMATES AND CORRECTION OF ERALY ERRORS

1. Changes of accounting policies and the impact

During the reporting period, the Group made no changes in accounting policies.

2. Changes in accounting estimates

During the reporting period, the Group made no Changes in accounting estimates.

3. Amendments of signifi cant retrospective errors and the impact During the reporting period, the Group made no amendments of signifi cant retrospective accounting errors.

VI. TAXES

1. The major tax categories and tax rate applicable to the Group and domestic subsidiaries are as follows:

(1) Income tax

Income tax is calculated at 25% of the total assessable income of the companies of the Group that registered in PRC.

(2) Value added tax

The value added tax is applicable to the product sales income of the Company and domestic subsidiaries. The value added tax is paid at 17% of the corresponding revenue on coal and other commodities sales, except for the value added tax on revenue from heating supply is calculated at 13%. The value added tax payable on purchase of raw materials and so on can offset the tax payable on sales at the tax rate of 17%, 13%, 7%, 3%. The value added tax payable is the balance between current tax payable on purchase and current tax payable on sales.

Pursuant to State Council Regulation No.538 “PRC Value Added Tax Temporary Statute” (Revised), value added tax paid for the purchase of machinery and equipments can offset the tax payable on sales from January 1, 2009.

Pursuant to the Document (Caishui [2006] No.139) which was jointly issued by the Ministry of Finance and the State Administration of Taxation, the coal product export refund tax preferential was cancelled and the value added tax export refund rate was 0%.

According to the approval of “Ji Guo Shui Liu Pi Zi (2009) Document No.1 of State Administration of Taxation in Jining City”, as the subsidiary of the Company, Hua Ju Energy adopts the taxation policy of levy and refund 50% on VAT of electricity power and heating.

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VI. TAXES – CONTINUED

1. The major tax categories and tax rate applicable to the Group and domestic subsidiaries are as follows – continued:

(2) Value added tax – continued

According to the approval of “Ji Guo Shui Liu Pi Zi (2010) Document No.1 of State Administration of Taxation in Jining City”, as the subsidiary of the Company, Hua Ju Energy adopts the taxation policy of levy and refund 50% on VAT of electricity power and heating.

(3) Business tax

Business tax is applicable to coal transportation service income of the Group and domestic subsidiaries. Business tax is paid at the 5% of the corresponding revenue, except the business tax on revenue from coal transportation service is calculated at 3%.

(4) City construction tax & education fee

Subject to all taxes applicable to domestic enterprise according to the “Reply Letter to Yanzhou Coal Mining Co., Ltd.” issued by State Administration of Taxation (Guoshuihan [2001] No.673), 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.

(5) 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 of Taxation, resource tax in Shandong province is calculated and paid at the amount of RMB3.60 per tonne.

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 of Taxation, resource tax of Shanxi province is calculated and paid at the amount of RMB3.20 per tonne of raw coal.

Resource taxes of the Group and domestic subsidiaries thereof are paid as the total of sold raw coal tonnes plus received raw coal multiplying applicable tax rate.

(6) Real estate tax

The tax calculation is based on the 70% of original value of real estate of the Group and domestic subsidiaries thereof with the applicable tax rate of 1.2%.

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VI. TAXES – CONTINUED

1. Main taxes and rates applicable to the company and subsidiaries thereof as following:

Taxes	Taxation basis	Rate
Income tax (note)	Taxable income	30%
Goods and services tax	Taxable added value	10%
Fringe benef ts tax	Salary and wages	4.75%-9%
Resource tax	Sales revenue of coal	7%-8.2%

Note: Income tax for overseas subsidiaries of the Company is calculated at 30% of the total income. Yancoal Australia Pty Limited (as referred to “Yancoal Australia Pty) and its 100% owned Australian subsidiaries are a taxation consolidated group pursuant to the rules of taxation consolidation in Australia. Yancoal Australia Pty is responsible for recognizing the current taxation assets and liabilities for the taxation consolidated group (including deductible loss and deferred taxation assets of subsidiaries in the taxation consolidated group). Each entity in the tax consolidated group recognizes its own deferred tax assets and liabilities.

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VII. BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENTS

i. Subsidiaries

Name of	Place of	Registered	Business	Investment	Proportion Voting right held	Proportion Voting right held
subsidiaries	registration	capital	scope	capital of share holding by the company
I. Subsidiaries established by investment
Qingdao Free Trade Zone	Qingdao, Shandong	RMB2,100,000	Trade and storage	RMB2,710,000	52.38%	52.38%
Zhongyan Trade Co., Ltd			in free trade zone
Yanzhou Coal Mining Yulin	Yulin, Shaanxi	RMB1,400,000,000	Production and	RMB1,400,000,000	100.00%	100.00%
Neng Hua Co., Ltd			sales of methanol
			and acetic acid
Yancoal Australia Pty Limited	Australia	AUD 64,000,000	Investment and	RMB403,280,000	100.00%	100.00%
			shareholding
Austar Coal Mine Pty Limited	Australia	AUD 64,000,000	Coal mining and sales	RMB403,280,000	100.00%	100.00%
Yanzhou Coal Mining Heze	Heze, Shandong	RMB3,000,000,000	Coal mining and sales	RMB2,924,340,000	98.33%	98.33%
Neng Hua Co., Ltd
Yanzhou Coal Mining Ordos	Inner Mongolia	RMB3,100,000,000	Production and	RMB3,100,000,000	100.00%	100.00%
Neng Hua Co., Ltd			sales of methanol
			(600,000 tons)
II. Subsidiaries acquired under common control
Yanzhou Coal Mining Shanxi	Jinzhong, Shanxi	RMB600,000,000	Thermoelectricity	RMB508,210,000	100.00%	100.00%
Neng Hua Co., Ltd			investment, coal
			technology service
Shanxi Heshun Tianchi Energy	Jinzhong, Shanxi	RMB90,000,000	Intensive process of	RMB73,180,000	81.31%	81.31%
Co., Ltd			coal product
Shanxi Tianhao Chemicals Co., Ltd	Xiaoyi, Shanxi	RMB150,000,000	Production and sales of	RMB149,790,000	99.89%	99.89%
			methanol and coals
Shandong Hua Ju Energy Co., Ltd	Zoucheng, Shandong	RMB288,590,000	Production and sales of	RMB766,250,000	95.14%	95.14%
			thermal power and
			comprehensive utilization
			of waste heat
III. Subsidiaries acquired not under	common control
Shandong Yanmei Shipping	Jining, Shandong	RMB5,500,000	Freight transportation	RMB10,570,000	92.00%	92.00%
Co., Ltd.			and coal sales
Felix Resources Ltd	Australia	AUD446,410,000	Exploring and extracting	AUD3,354,180,000	100.00%	100.00%
			coal resources
Inner Mongolia Yize Mining	Ordos	RMB136,260,000	Investment	RMB179,690,000	100.00%	100.00%
Investment Co., Ltd
Inner Mongolia Rongxin	Ordos	RMB3,000,000	Methanol production	RMB4,400,000	100.00%	100.00%
Chemicals Co., Ltd
Inner Mongolia Daxin	Ordos	RMB4,110,000	Industrial gas production	RMB6,000,000	100.00%	100.00%
Industrial Gas Co., Ltd

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i. Subsidiaries – continued

1. Qingdao Free Trade Zone Zhongyan Trade Co., Ltd

• Qingdao Free Trade Zone Zhongyan Trade Co., Ltd. (as referred to “Zhongyan Trade’), established in the end of 1997 with the registered capital of RMB2,100,000, was fi nanced RMB700, 000 respectively by the Zhongyan Trade, Qingdao Free Trade Huamei Industrial Trade Company (as referred to “Huamei Industrial Trade”), China Coal Mine Equipment & Mineral Imports and Exports Corporation (hereinafter referred to as “Zhongmei Company”). In the year 2000, Huamei Industrial Trade withdrew the investment and Zhongyan Trade and Zhongmei Company hold respectively 52.38% and 47.62% of the total fund after purchasing the investment of Huamei Industrial Trade. The corporation business licence code is 370220018000118, and the legal representative is Mr. Fan Qingqi. The company is mainly engaged in the international trade in free trade zone of Qingdao, product machining, commodity exhibition and storage, and so on.

2. Yanzhou Coal Mining Yulin Neng Hua Co., Ltd

Yanzhou Coal Mining Yulin Neng Hua Co., Ltd (as referred to “Yulin Neng Hua”) was fi nanced and established by Yulin Neng Hua, Shandong Chuangye Investment Development Co. Ltd, China Hualu Engineering Co., Ltd in Feb. 2004. Yulin Neng Hua occupied 97% of the total investment capital of RMB800 million. In April 2008, Yulin Neng Hua held 100% of equity after assignment of equity from Shandong Chuangye Investment Development Co., Ltd, China Hualu Engineering Co., Ltd. In May 2008, the Company injected RMB600 million into Yulin Neng Hua and the registered capital of Yulin Neng Hua reached RMB1.4 billion. The corporation business license code is 612700100003307, and the legal representative is Mr. Wang Xin. The company is mainly engaged in the methanol production with the capacity of 600 thousand tons per year, acetic acid production with the capacity of 200 thousand tons per year and its compatible coal mine, power plant, and so on.

3. Yancoal Australia Pty Limited

Yancoal Australia Pty Limited (as referred to “Yancoal Australia Pty”), a wholly owned subsidiary of the Company, was established in Nov. 2004 with the paid-in capital of AUD 64 million. The Australian Business Number is 111859119 and it mainly takes responsibility of the activities such as operating, budgeting, investing and fi nancing of the Company in Australia.

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i. Subsidiaries – continued

4. Austar Coal Mine Pty Limited

Austar Coal Mine Pty Limited (as referred to “Austar Company”), a wholly owned subsidiary of Yancoal Australia Pty Ltd., was established in Dec. 2004 with the paid-in capital of AUD 64 million. The Australian Business Number is 111910822, and it is mainly engaged in the coal production, processing, washing, sales and so on in Southland Coal Mine in Australia.

5. Yanmei Heze Neng Hua Co., Ltd

Yanmei Heze Neng Hua Co., Ltd (as referred to “Heze Neng Hua”) was established and fi nanced jointly by the Company, Coal Industry Jinan Design &Research Co., Ltd (as referred to “design institute”) and Shandong Provincial Bureau for Coal Geology in Oct. 2002 with the registered capital of RMB600 million, of which, the Company held 95.67%. In July, 2007, Heze Neng Hua increased the registered capital to RMB1.5 billion, of which, this company held 96.67%. In May 2010, the Company solely injected RMB1.5 billion into Heze Neng Hua. The registered capital of Heze Neng Hua increased to RMB3 billion and Yanzhou Coal’s stake increased to 98.33%. The corporation business license code is 370000018086629, and the legal representative is Mr. Wang Yongjie. The company is mainly engaged in the coal mining and coal sales of Juye Coal fi eld.

6. Yanzhou Coal Mining Ordos Energy and Chemical Co., Ltd

Yanzhou Coal Mining Ordos Energy and Chemical Co., Ltd (as referred to Ordos) is a wholly owned subsidiary of the Company which was established on December 18, 2009 with regisered capital of RMB500 million. In January 2011, the Company injected RMB 2.6 billion into Ordos, and the registered capital of Ordos reached RMB 3.1 billion. The corporation business license code is 152700000024075(11), and the legal representative is Mr. Wang Xin. The company is mainly engaged in production and sales of 600,000 tons methanol. The project is under preparation stage.

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i. Subsidiaries – continued

7. Yanzhou Coal Mining Shanxi Neng Hua Co., Ltd

The former of Yanzhou Coal Mining Shanxi Neng Hua Co., Ltd (as referred to “Shanxi Neng Hua”) was Yankuang Jinzhong Neng Hua Co., Ltd established jointly by Yankuang Group, Yankuang Lunan Fertilizer Plant in 2002. In Nov. 2006, Yankuang Group and Yankuang Lunan Fertilizer Plant transferred the equities of Shanxi Neng Hua to the Company and thus the Company held 100% in the total registered capital of RMB600 million. The corporation business license code is 140700100002399, and the legal representative is Mr. Qu Tianzhi. The company is mainly engaged in thermoelectricity investment, sales of mining machinery and electronic products, and the development service in coal comprehensive technology, etc.

8. Shanxi Heshun Tianchi Energy Co., Ltd

The former of Shanxi Heshun Tianchi Energy Co., Ltd (as referred to “Heshun Tianchi’) was Guyao Coal Mine founded in Heshun County in 1956. In July 2003, Heshun Tianchi was fi nanced and established jointly by Shanxi Neng Hua, Heshun County State-Owned Assets Managing Co., Ltd and Jinzhong City State-Owned Assets Managing Co., Ltd with the registered capital of RMB90 million, of which, Shanxi Neng Hua held equity of 81.31%. Tianchi Coal Field in Heshun occupies an area of 17.91 km2, and the designing capacity is 1.20 million tons per year. The Coal Mine was put into operation in Nov. 2006. The corporation business license code is 40000105861137, and the legal representative is Mr. Ren Yi. The company is mainly engaged in raw coal exploitation, extensive coal process, production and sales of other mining products and so on.

9. Shanxi Tianhao Chemicals Co., Ltd

• Shanxi Tianhao Chemicals Co., Ltd (as referred to “Tianhao Chemicals”) was established jointly by six shareholders of Xiaoyi City Township Enterprise Supplying & Marketing Company, Shanxi Jinhui Coke Chemical Co., Ltd, Xiaoyi City Jinda Coke Co., Ltd and 3 local natural people in Jan. 2002 with the registered capital of RMB10.01 million. In Feb. 2004, Shanxi Neng Hua increased investment to Tianhao Chemical by RMB60 million, held 60% of total equity, the total shares of other shareholders occupies 40%. In Oct. 2005, the registered capital was raised to RMB150 million but the equity held by Shanxi Neng Hua was raised to 99.85% because of the withdrawal of other shareholders. In March 2010, Shanxi Neng Hua purchased 0.04% shares of the minority interests of Tianhao Chemicals and the equity held by Shanxi Neng Hua was raised to 99.89%. The corporation business license code is 140000100095998, and the legal representative is Mr. Yin Mingde. The company is mainly engaged in the production, development and sales of methanol, chemical products, and coke as well as inland transportation service.

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i. Subsidiaries – continued

10. Shandong Hua Ju Energy Co., Ltd

Shandong Hua Ju Energy Co., Ltd. (Hua Ju Energy) was approved by Shandong Economic System Reform Offi ce in 2002, and established by fi ve shareholders, i.e. Yankuang Group, Shandong Chuangye Investment Development Company, Shandong Honghe Mining Group Co., Limited and Shandong Jining Luneng Shengdi Electricity Group. Yankuang Group transferred its operational net assets of RMB235.94 million, including Nantun Power Plant, Xinglongzhuang Power Plant, Baodian Power Plant, Dongtan Power Plant, Xincun Power Plant, Jier Power Plant and Electricity Company, into 174.98 million shares, i.e. 65.80% of the total shares in Hua Ju Energy. The other shareholders invested currency following the above ration, and the number of total shares was 250 million shares. In 2005, Shandong Jining Luneng Shengdi Electricity Group transferred its equity interest in Hua Ju Energy to Jining Shengdi Investment Management Co., Ltd. In 2008, Yankuang Group increased 38.59 million shares in Hua Ju Energy with appraised value of land use right of 12 pieces of land. After the increase of share capital, the total capital was 288.59 million shares, and Yankuang Group held 74% of the total equity interest. In early 2009, Yankuang Group transferred all its equity interest in Hua Ju Energy to the Company. In July 2009, the total shares held by Shandong Chuangye Investment Development Company, Jining Shengdi Investment Management Co., Ltd and Wu Zenghua were transferred to the Company, and then the shares held by the Company increased to 95.14%. The Business License code is 370000018085042; and the legal person representative is Hao Jingwu. The business is mainly engaged in thermal power generation by coal slurry and gangue, sales of electricity on the grid and comprehensive use of waste heat.

11. Shandong Yanmei Shipping Co., Ltd.

The former of Shandong Yanmei Shipping Co., Ltd. (as referred to “Yanmei Shipping“) was Zoucheng Nanmei Shipping Co., Ltd established in May 1994 with the registered capital of RMB5.5 Million. The company name was changed into “Yanmei Shipping” after spending RMB10.57 million and purchasing 92% of the registered capital in 2003, and Shandong Chuangye Investment and Development Co., Ltd. attained the other 8%. The corporation business license code is 370811018006234, and the legal representative is Mr. Wang Xinkun. The company is mainly engaged in provincial cargo transportation along the middle and down streams, branches of Yangtze River.

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i. Subsidiaries – continued

12. Felix Resources Limited

Felix Resources Limited (“Felix”), was incorporated in January 1970 in Brisbane, Queensland, Australia, as a limited liability company and mainly engaged in businesses such as coal mining and exploration. The Australian Business Number is 000 754 174.

Austar, a subsidiary of the Company, is the registered holder of 196.46 million shares representing 100% of the issued share of Felix.

(1) As of the reporting period, subsidiaries owned by Felix are as follows:

	Registered	Registered	Business Proportion of share	Business Proportion of share
Subsidiaries	address	capital (AUD)	scope	holding (%)
White Mining Limited	Australia	3,300,200	Holding company &	100
			Coal business
			management
Yarrabee Coal Company Pty Ltd	Australia	92,080	Coal mining and sales	100
Auriada Limited	Northern Ireland	5	No business, to be liquidated	100
Ballymoney Power Limited	Northern Ireland	5	No business, to be liquidated	100
Balhoil Nominees Pty Ltd	Australia	7,270	No business, to be liquidated	100
SASE Pty Ltd	Australia	9,650,564	No business, to be liquidated	90
Athena Coal Pty Ltd	Australia	2	Coal exploration	100
Proserpina Coal Pty Ltd	Australia	1	Coal mining and sales	100
White Mining Services Pty Limited	Australia	2	No business, to be liquidated	100
Tonford Pty Ltd	Australia	2	Coal exploration	100
Moolarben Coal Operations Pty Ltd	Australia	2	Coal business management	100
Moolarben Coal Mines Pty Limited	Australia	1	Coal business development	100
Ashton Coal Operations Pty Limited	Australia	5	Coal business management	100
White Mining (NSW) Pty Limited	Australia	10	Coal mining and sales	100
UCC Energy Pty Limited	Australia	2	Ultra Clean Coal Technology	100
Agrarian Finance Pty Ltd	Australia	2	No business, to be liquidated	100
Advanced Clean Coal	Australia	0	No business, to be liquidated	100
Technology Pty Limited
White Mining Research Pty Limited	Australia	2	No business, to be liquidated	100
Felix NSW Pty Limited	Australia	2	Holding company	100
Moolarben Coal Sales Pty Ltd	Australia	2	Coal sales	100

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VII. BUSINESS COMBINATIONS AND CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

i. Subsidiaries – continued

12. Felix Resources Limited – continued

• (2) Although Felix holds more than 50% stake in the joint venture, it is not included in the consolidation:

Subsidiary of Felix, White Mining Limited, holds 90% shares of Australian Coal Processing Holding Pty Ltd. Pursuant to the shareholders agreement of this company, all signifi cant fi nance and operating decisions shall be approved by all shareholders. So the Group has 50% voting shares in Australian Coal Processing Holding Pty Ltd, which is not included in the consolidation because of no control over it.

Subsidiary of Felix, White Mining Limited, holds 90% shares of Ashton Coal Mines Limited. Pursuant to the shareholders agreement of this company, all signifi cant fi nance and operating decisions shall be approved by all shareholders. So the Group has 50% voting shares in Ashton, which is not included in the consolidation because of no control over it.

• (3) Jointly controlled entities of Felix

			Interests
Entities	Address	Main business	proportion (%)
Boonal Joint Venture	Australia	Coal transportation and equipments	50
Athena Joint Venture	Australia	Coal exploration	51
Ashton Joint Venture	Australia	Coal mine development and operation	90
Moolarben Joint Venture	Australia	Coal mine development and operation	80

Note: As approved by the resolution at the seventeenth meeting of the fourth session of the board of directors of the Company, at 1 February 2011, White Mining Limited, a wholly-owned subsidiary of Yancoal Australia of the Company, entered into an agreement with a wholly-owned subsidiary of Singapore IMC Group in Australia to acquire the 30% equity interests in Ashton Joint Venture, Ashton Coal Mines Limited and Australian Coal Processing Holding Pty Ltd held by a wholly-owned subsidiary of Singapore IMC Group in Australia, for a consideration of USD250 million. Upon completion of the acquisition at 13 May 2011, the equity interests owned in Ashton Joint Venture, Ashton Coal Mines Limited and Australian Coal Processing Holding Pty Ltd held by White Mining Limited increases to 90% from 60%

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i. Subsidiaries – continued

13. Inner Mongolia Yize Mining Investment Company Limited Inner Mongolia Yize Mining Investment Company Limited(as referred to Yize Company)is invested by Guangjing Investment Company Limted (a subsidiary of Hong Kong Jiantao Chemicals Group) which was established on November 2004 with registered capital of RMB 136.2605 million. In April 2010, Ordos Neng Hua, a subsidiary of the Company, purchased Yize Company, after which, Yize Company has become a wholly-owned subsidiary of Ordos Neng Hua. The corporation business license code is 150000400000390, and the legal representative is Mr. Wang Xin. The company is mainly engaged in investment on mining and chemicals projects, public projects, water and electricity supply, waste water treatment and so on.

14. Inner Mongolia Rongxin Chemicals Company Limited Inner Mongolia Rongxin Chemicals Company Limited(as referred to Rongxin Company)is invested by Inner Mongolia Qisheng Mining Company Limted (a subsidiary of Hong Kong Jiantao Chemicals Group) which was established on July 2008 with registered capital of RMB 3 million. In April 2010, the Ordos Neng Hua, a subsidiary of the Company, purchased Rongxin Company, after which, Rongxin Company has become a wholly-owned subsidiary of Ordos Neng Hua. The corporation business license code is 152722000005151, and the legal representative is Mr. Wang Xin. The company is mainly engaged in methanol production and sales.

15. Inner Mongolia Daxin Industrial Gas Company Limited Inner Mongolia Daxin Industrial Gas Company Limited (as referred to Daxin Company) is jointly invested by Mingsheng Investment Company and Inner Mongolia Qisheng Mining Company Limited which are all the subsidiaries of Hong Kong Jiantao Chemicals Group on August 2008, with registered capital of RMB 4.11 million. In April 2010, the Ordos Neng Hua, a subsidiary of the Company, purchased Daxin Company, after which, Daxin Company has become a wholly-owned subsidiary of the Ordos Neng Hua. The corporation business license code is 150000400002131, and the legal representative is Mr. Wang Xin. The company is mainly engaged in industrial gas supplies.

ii. Translation of fi nancial statements denominated in foreign currency Translation exchange rates of overseas subsidiaries’ fi nancial statements

Items	Foreign currency	Translation exchange rates
Assets and liabilities	AUD	spot exchange rate on balance sheet date 6.9173
The income statement	AUD	approximate spot exchange rate on
and cash f ow statement		transaction date, average of the year 6.8156
The equity	AUD	spot exchange rate on arising, except
		for retained earnings

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VIII. NOTES TO CONSOLIDATION FINANCIAL STATEMENTS

1. Bank balance and cash

Items	At June 30, 2011 At January 1, 2011 Original Exchange RMB Original Exchange RMB currency rate equivalent currency rate equivalent
Cash on hand Including: RMB USD AUD Subtotal Cash in bank Including: RMB USD AUD HKD EUR GBP Subtotal Other monetary items Including: RMB USD AUD Subtotal Total	808,081 1.0000 808,081 483,056 1.0000 483,056 20,264 6.4716 131,141 20,264 6.6227 134,202 9,631 6.9173 66,621 10,531 6.7139 70,704
	1,005,843 687,962
	16,738,493,986 1.0000 16,738,493,986 7,168,812,301 1.0000 7,168,812,301 31,256,686 6.4716 202,280,769 56,078,834 6.6227 371,393,294 568,032,130 6.9173 3,929,248,653 189,332,602 6.7139 1,271,160,157 2,563,152 0.8316 2,131,517 7,124,320 0.8509 6,062,084 25,139 9.3612 235,331 25,178 8.8065 221,730 1,053 10.3986 10,950 1,040 10.2182 10,627
	20,872,401,206 8,817,660,193
	1,469,863,933 1.0000 1,469,863,933 534,714,566 1.0000 534,714,566 2,302,269 6.4716 14,899,364 5,416,460 6.6227 35,871,590 11,067,935 6.9173 76,560,227 208,713,939 6.7139 1,401,284,515
	1,561,323,524 1,971,870,671
	22,434,730,573 10,790,218,826

(1) At the end of the reporting period, bank balance and cash increased by 108% compared with the beginning of the reporting period, mainly due to the accumulation of business, the borrowed working capital, the increase of capital recovery and the decrease of bill clearing.

(2) As at June 30 2011, the Group held time deposits of RMB8,669.47 million; RMB14.88 million of letter of credit deposit; RMB1,464.48 million of guarantee contract with priority to transfer money; RMB32.14million of environmental deposit; RMB59.55 million of other deposit, respectively. The total above value amounted to RMB10,240.52 million.

• (3) As at June 30 2011, overseas cash and bank balance of the Group was RMB5,737.74 million, owned by overseas subsidiary of the Company.

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2. Tradable fi nancial assets

• (1) Category of tradable fi nancial assets

Items	Fair value at Fair value at the the end of the beginning of the reporting period reporting period
Hedging instrument – forward exchange contract Total	418,369,600 239,475,434
	418,369,600 239,475,434

Note: To avoid the risk of foreign exchange rate fl uctuation, overseas subsidiaries of the Company enter into forward exchange contracts to hedge foreign currency risks: to exchange USD into AUD on the agreed date in the future at the agreed exchange rate range, or the spot rate. At the date of the balance sheet, derivative fi nancial assets or liabilities refl ect the fair value of related outstanding contracts. The fair value will be calculated based on the difference between the forward exchange contract exchange rate on the balance sheet date and on the contract signing date.

3. Notes receivable

• (1) Notes receivable category

Notes category	At June 30, At January 1, 2011 2011
Bank acceptance bills Total	3,218,677,843 10,408,903,124
	3,218,677,843 10,408,903,124

(2) For the current period, notes receivable decrease by 69%, mainly due to decrease of sales settled by notes and increase of discounted notes.

(3) As at 30 June 2011, the Group had no immature discounted notes of RMB 905.34 million.

4. Accounts receivable

• (1) Accounts receivable category

Items	At June 30, 2011 At January 1, 2011 Carrying amount Provision for bad debt Carrying amount Provision for bad debt Provision for Provision for Amount bad debt Amount bad debt RMB % RMB % RMB % RMB %
Accounts receivables accrued bad debt provision as per portfolio Accounting aging portfolio Risk-free portfolio The subtotal of portfolio Total	– – – – – – – – 50,214,215 7 5,743,877 100 44,122,701 9 5,406,430 100 651,347,492 93 – –449,053,376 91 – – 701,561,707 100 5,743,877 100493,176,077 100 5,406,430 100
	701,561,707 100 5,743,877 100493,176,077 100 5,406,430 100

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4. Accounts receivable – continued

• (1) Accounts receivable category – continued

• (1) There was no individually signifi cant amount of accounts receivables accrued the provision for bad debt separately for the period.

• (2) Accounts receivables in the portfolio accrued the provision for bad debt as per accounting aging analysis method.

Items	At June 30, 2011 At January 1, 2011 Amount Provision for Amount Provision for RMB % bad debt RMB % bad debt
Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total	45,107,533 4 1,804,301 39,376,735 4 1,575,069 1,667,295 30 500,189 1,306,579 30 391,974 – 50 – – 50 – 3,439,387 100 3,439,387 3,439,387 100 3,439,387
	50,214,215 – 5,743,877 44,122,701 – 5,406,430

• (3) Account receivables in the portfolio accruing the provision for bad debt in other method

Items	Provision for Carrying amount bad debt
Risk-free portfolio Total	651,347,492 –
	651,347,492 –

Note: As at 30 June 2011, accounts receivable in risk-free portfolio included RMB517.29 million from overseas subsidiaries of the Company which did not accrue bad debt provision because of claims still in the normal credit period and RMB130 million of L/C issued by the bank.

• (2) There is no provision for bad debt to recover during the reporting period.

• (3) There is no write-off of accounts receivables during the reporting period.

• (4) Accounts receivables arising on shareholders of the Company holding more than 5% (including 5%) shares are excluded as at the end of period; accounts receivables arising on related parties was RMB62.65 million, accounting for 9% of the total accounts receivables. See Note “IX, (3), 2”.

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4. Accounts receivable – continued

• (5) The fi ve largest accounts receivables

Relationship with Company name the Company	Proportion of total accounts Amounts Age receivables (%)	Proportion of total accounts Amounts Age receivables (%)
POSCO Third party Shandong Jinneng letter of credit Third party Citi Australia Commodity Trading Pty Ltd. Third party Korea Southern Power Co. Ltd. Third party Ashton Coal Mines Ltd. Joint venture company Total	139,205,564 Within 1 year 130,000,000 Within 1 year 74,284,387 Within 1 year 71,411,549 Within 1 year 61,885,043 Within 1 year 476,786,543	20 19 11 10 9
		69

(6) Balance of foreign currency in accounts receivables

Foreign currency	At June 30, 2011 At January 1, 2011 Foreign Exchange RMB Foreign Exchange RMB currency rate equivalent currency rate equivalent
USD AUD Total	70,844,430 6.4716 458,476,813 73,531,008 6.6227 486,973,807 8,502,208 6.9173 58,812,323 2,544,595 6.7139 17,084,156
	517,289,136 504,057,963

• (7) There were no accounts receivables to derecognize for this reporting period.

5. Prepayments

• (1) The aging analysis of prepayments

Items	At June 30, 2011 At January 1, 2011 RMB % RMB %
Within 1 year 1 to 2 years 2 to 3 years Over 3 years Total	675,834,084 82 242,331,377 100 149,779,654 18 391,194 – – – 369,866 – 241,600 – 117,734 –
	825,855,338 100 243,210,171 100

Note: As at June 30, 2011, the prepayments of the Group increased by 240% comparing with that of the beginning of the reporting period, mainly due to the increased prepayments of external coal purchase by the Company and equipments of Ordos Neng Hua. Prepayments with aging over 1 year are for equipment purchase, which have been settled by the Group.

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5. Prepayments – continued

• (2) Main companies of prepayments

Company name Relationship with the Company Amounts Age Reasons	Company name Relationship with the Company Amounts Age Reasons
Yankuang Boyang Foreign Under the common Economic and Trading Co.,Ltd. controlling shareholder Linde Engineering Hangzhou Co. Ltd. Third party Zhaoqing Bohai Energy Co. Ltd. Third party Tengzhou Hengji Coal Handling Third party and Marketing Co. Ltd Shanghai Zhenzhong Fuel Co. Ltd Third party Total	125,792,063 Within 1 year Goods to arrival, under executing 65,910,000 1-2 years Goods to arrival, under executing 58,453,957 Within 1 year Goods to arrival, under executing 50,014,727 Within 1 year Goods to arrival, under executing 50,000,000 Within 1 year Goods to arrival, under executing 350,170,747

• (3) Prepayments due from shareholders of the Group holding more than including 5% of the total shares are not included for the period.

• (4) Balance of foreign currency in prepayments

Items	At June 30, 2011 At January 1, 2011 Foreign Exchange RMB Foreign Exchange RMB currency rate equivalent currency rate equivalent
USD EUR AUD Total	452,367 6.4716 2,927,538 1,403,411 6.6227 9,294,370 – – – – – – 4,008,697 6.9173 27,729,360 2,673,886 6.7139 17,952,203
	30,656,898 27,246,573

6. Other receivables

• (1) The category of other receivables

Items	At 30 June 2011 At 1 January 2011 Carrying amount Provision for bad debt Carrying amount Provision for bad debt RMB % RMB % RMB % RMB %
Accounts receivables accrued Provision for bad debt as per portfolio Accounting aging portfolio Risk-free portfolio The subtotal of portfolio Total	– – – – – – – – 24,552,457 1 16,718,161 100 20,405,766 1 16,066,999 100 3,041,878,441 99 – –3,538,303,612 99 – – 3,066,430,898 100 16,718,161 1003,558,709,378 100 16,066,999 100
	3,066,430,898 100 16,718,161 1003,558,709,378 100 16,066,999 100

148

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6. Other receivables – continued

• (1) The category of other receivables – continued

• 1) There was no individually signifi cant amount of other receivables that accrued the provision for bad debt separately for the reporting period.

• 2) Other receivables in the portfolio that accrued the provision for bad debt as per accounting aging analysis method.

Items	At June 30, 2011 At January 1, 2011 Amount Provision for Amount Provision for RMB % bad debt RMB % bad debt
within 1 year 1 to 2 years 2 to 3 years Over 3 years Total	4,446,857 4 177,874 82,892 4 3,316 5,010,000 30 1,503,000 5,010,931 30 1,503,279 116,627 50 58,314 1,503,078 50 751,539 14,978,973 100 14,978,973 13,808,865 100 13,808,865
	24,552,457 – 16,718,161 20,405,766 – 16,066,999

• 3) Other receivables in the portfolio accruing the bad debt provision in other method

Items	Provision for Carrying amount bad debt
Risk-free portfolio Total	3,041,878,441 –
	3,041,878,441 –

Note: As at the end of the period, risk-free portfolio included RMB2, 439.88 million of the investment prepayment.

• (2) There is no provision for bad debt of other receivables to recover during the reporting period.

• (3) As at June 30, 2011, accounts receivable due from the parent company of the Company is RMB17.13million (the balance at the end of last year: 16.89million); accounts receivable due from related parties is RMB243.28 million. See note IX(3), 3.

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6. Other receivables – continued

• (4) The top fi ve debtors

Relationship Company name with the Company	Proportion of total accounts Amounts Age receivables (%) Nature or Contents	Proportion of total accounts Amounts Age receivables (%) Nature or Contents
Prepayment for investment Third party Ashton Coal Mines Limited Joint Venture Newcastle Coal Infrastructure Group Third party Korea Participants in the Moolarben Joint Venture Third party WICET Share Controlling Co. Third party Total	2,439,880,800 Within 1 year 199,633,652 Within 1 year 163,205,441 Within 1 year 83,485,101 Within 1 year 37,650,428 Within 1 year 2,923,855,422	80 Prepayment for investment 7 Dealing amounts 5 Borrowings 3 Dealing amounts 1 Borrowings 96

• (5) Foreign currency balance of other receivables

Foreign currency	At June 30, 2011 At January 1, 2011 Foreign Exchange RMB Foreign Exchange RMB currency rate equivalent currency rate equivalent
AUD Total	70,544,757 6.9173 487,979,248 42,890,268 6.7139 287,960,970
	487,979,248 287,960,970

(6) There are no other receivables to derecognize for the reporting period.

7. Inventory and Provision for inventory impairment

• (1) Inventory by category

Items	At June 30, At January 1, 2011 2011
Raw materials Coal stock Methanol stock Low value consumables Total	277,639,984 293,536,949 904,802,923 1,263,790,633 11,574,794 10,279,356 99,599,304 78,508,574
	1,293,617,005 1,646,115,512

Note: During the reporting period, the inventory of the Group decreased by 21% which was mainly due to the decrease of coal stocks of Yancoal Australia and externally purchased coal by the Company.

(2) No provision for inventory impairment as at 30 June, 2011.

(3) Inventory excludes the amount of capitalized interest.

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8. Other current assets and other current liabilities

(1) Other current assets

Items	At June 30, At January 1, 2011 2011
Land subsidence, restoration, rehabilitation and environment costs (Note 1) Removal costs (note 2) Environment management guarantee deposit TOTAL Other current liabilities Items	2,025,874,557 1,709,871,744 187,639,627 149,351,075 261,093,497 254,193,496
	2,474,607,681 2,113,416,315
	At June 30, At January 1, 2011 2011
Land subsidence, restoration, rehabilitation and environment costs (Note1) TOTAL	2,761,897,045 2,297,502,144
	2,761,897,045 2,297,502,144

(2) Other current liabilities

Note 1: The consequence of coal mining activities is land subsidence caused by the exploitation of 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 the past experience, the management accrued the reserve according to the coal exploitation during the reporting period, which may generate the likely result of land subsidence, restoration, rehabilitation, and environment costs in the future.

Considering the time difference between the payment of relocation, land subsidence, etc. and the underground mining below the corresponding land, if the accumulated payment is more than the accruals provided, such excess of payment would be presented under current assets at the period end; if the accumulated payment is less than the accruals provided, and such shortage of payment would be presented under current liabilities at the period end.

For the current reporting period, other current liabilities increased by 20%, mainly due to that actual accrued land subsidence, restoration, rehabilitation and environment costs exceed actual payment.

Note 2: The overburden on the coal seam of open-pits owned by overseas subsidiaries shall be removed, which will result in removal costs. Removal costs shall be recorded as profi ts or losses when respective coal seam is mined.

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9. Available-for-sale fi nancial assets

Items	Fair value at Fair value at June 30, 2011 anuary 1, 2011
Available-for-sale equity instruments TOTAL	198,853,830 194,259,526
	198,853,830 194,259,526

• (1) Available-for-sale equity instrument, mainly are shares of Shanghai Shenergy Co., Ltd and Jiangsu Lianyungang Port Co., Ltd listed in Shanghai Stock Exchange, which are held by the Company from the past years. The above fair value was ascertained based on the closing price of Shanghai Stock Exchange on the balance sheet date.

• (2) Available-for-sale fi nancial assets increased during the reporting period, which is mainly due to the increased share price of available-for-sale shares.

10. Long-term equity investments

• (1) Long-term equity investments

Items	At June 30, At January 1, 2011 2011
Equity investments under cost method Equity investments under equity method Long-term equity investments – Total Less: provision for impairment Long-term equity investments – Net	30,182,550 30,182,550 1,650,091,041 1,075,708,976
	1,680,273,591 1,105,891,526 – –
	1,680,273,591 1,105,891,526

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10. Long-term equity investments – continued

(2) Under cost method and equity method

Shares Ratio of Name of investees proportion (%) voting (%)	Original Opening Closing Cash amount balance Addition Reversals balance dividends
Under cost method Yankuang Group Zoucheng Ziyuan Construction Co., Ltd 8.33 8.33 Yankuang Group Zoucheng Hua Ming company. 8.00 8.00 Yankuang Group Zoucheng Fuhui Company. 16.00 16.00 Shenzhen Weier Loriculture Co., Ltd – – Yankuang Group Guohong Chemical Co., Ltd 5.00 5.00 Subtotal Under equity method China HD Zouxian Co., Ltd. 30.00 30.00 Yankuang Group Finance Co. Limited 25.00 25.00 Shaanxi Future Energy Chemical Co.. Ltd 25.00 25.00 Australian Coal Processing Holding Pty Ltd 90.00 50.00 Ashton Coal Mines Limited 90.00 50.00 Subtotal Total	500,000 500,000 – – 500,000 – 100,000 100,000 – – 100,000 – 80,000 80,000 – – 80,000 – 100,000 100,000 – – 100,000 – 29,402,550 29,402,550 – – 29,402,550 –
	30,182,550 30,182,550 – – 30,182,550 –
	900,000,000 947,855,961 7,078,491 – 954,934,452 – 125,000,000 127,102,408 7,058,972 – 134,161,380 – 540,000,000 – 540,000,000 – 540,000,000 – 616 – 616 – 616 – 20,221,654 750,607 20,243,986 – 20,994,593 –
	1,585,222,270 1,075,708,976 574,382,065 – 1,650,091,041 –
	1,615,404,820 1,105,891,526 574,382,065 – 1,680,273,591 –

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10. Long-term equity investments – continued

(3) Investment in joint venture and associates

Name of investees	Registered Registered Proportion of Ratio of Type of company location Business nature capital share holding (%) voting rights (%)
Associates China HD Zouxian Co., Ltd. Yankuang Group Finance Company Limited Shaanxi Future Energy Chemical Corp. Ltd Joint venture enterprises Australian Coal Processing Holding Pty Ltd Ashton Coal Mines Limited(Note) Name of investees	Limited liability Shandong Electricity energy and RMB3 billion 30 30 related development Limited liability Shandong Finance RMB500 million 25 25 Limited liability Shaanxi Coal mining and RMB5.4 billion 25 25 liquefaction of coal Limited liability Australia No operating company – 90 50 in Australia Limited liability Australia Holding and sales AUD100 90 50 of real estate Total assets Total liabilities Net assets by the end of by the end of by the end of the period the period the period Operating revenue Net prof t
Associates China HD Zouxian Co., Ltd. Yankuang Group Finance Company Limited Shaanxi Future Energy Chemical Co. Ltd Joint venture enterprises Australian Coal Processing Holding Pty Ltd Ashton Coal Mines Limited (Note) Total	6,826,559,128 3,643,444,290 3,183,114,838 1,975,236,880 23,594,970 6,428,623,083 5,891,978,079 536,645,004 63,112,553 28,235,888 2,227,742,831 67,742,831 2,160,000,000 – – – – – – – 90,269,222 89,184,147 1,085,075 1,172,790,274 –
	15,573,194,264 9,692,349,347 5,880,844,917 3,211,139,707 51,830,858

Note: There is variance on shares proportion and voting shares proportion caused by the items as described in note VII, (1), 12, (2)”. The Group cannot exercise control over the items, they shall be recognized under equity method, and the fi nancial data of the joint venture is not included in the consolidated fi nancial statements of the group.

(4) There is no indication that the Company’s long-term equity investment may be impaired, so that no provision for impairment of long-term equity investment was accrued.

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11. Fixed assets

(1) Fixed assets by category

Items	FX translation At January 1, 2011 Addition Decrease difference At June 30, 2011
Cost Land Buildings Mining structure Ground structure Harbour works and craft Plant, machinery and equipments Transportation equipment Others Items	33,252,380,319 1,158,628,662 1,248,331,826 202,135,670 33,364,812,825 258,378,070 25,515,466 1,472,872 8,274,606 290,695,270 4,147,063,705 61,534,301 – 6,765,400 4,215,363,406 5,670,874,949 218,745,785 18,112,730 32,037,444 5,903,545,448 1,687,274,025 7,476,400 – – 1,694,750,425 253,677,455 – – – 253,677,455 20,248,683,867 832,465,682 1,209,832,905 155,058,220 20,026,374,864 438,608,341 9,454,343 18,646,819 – 429,415,865 547,819,907 3,436,685 266,500 – 550,990,092
	FX translation At January 1, 2011 Addition Accrued Decrease differenceAt June 30, 2011
Accumulated depreciation Land Buildings Mining structure Ground buildings Harbour works and craft Plant, machinery and equipments Transportation equipment Others Provision for impairment Land Buildings Mining structure Ground buildings Harbour works and craft Plant, machinery and equipments Transportation equipment Others	14,821,574,463 – 1,020,125,736 1,236,584,244 33,456,565 14,638,572,520 – – – – – – 2,006,646,958 – 50,956,853 1,877 537,820 2,058,139,754 2,161,812,813 – 80,932,451 18,032,128 5,473,296 2,230,186,432 731,701,054 – 83,975,022 5,517 – 815,670,559 83,168,822 – – – – 83,168,822 9,397,753,396 – 760,245,292 1,199,999,133 27,445,449 8,985,445,004 336,088,622 – 15,147,100 18,452,423 – 332,783,299 104,402,798 – 28,869,018 93,166 – 133,178,650 97,558,627 97,558,627 – – 15,886,116 15,886,116 – – 5,945,342 5,945,342 – – 75,568,475 75,568,475 74,828 74,828 83,866 83,866

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11. Fixed assets – continued

• (1) Fixed assets by category – continued

Items	FX translation At January 1, 2011 Addition Decrease difference At June 30, 2011
Net book Value Land Buildings Mining structure Ground structure Harbour works and craft Plant, machinery and equipments Transportation equipment Others	18,333,247,229 18,628,681,678 258,378,070 290,695,270 2,124,530,631 2,141,337,536 3,509,062,136 3,673,359,016 949,627,629 873,134,524 170,508,633 170,508,633 10,775,361,996 10,965,361,385 102,444,891 96,557,738 443,333,243 417,727,576

• (2) As at the end of this reporting period, there is no fi xed asset acquired under fi nance lease.

• (3) Among the increased amount of fi xed assets, RMB 364.54 million is transferred from construction in progress. Among the increased amount of depreciation, RMB1,020.13 million is accrued in the current period.

• (4) There is no depreciation of lands, as overseas subsidiaries enjoy the permanent ownership of the land.

• (5) As at the end of the reporting period, there was no idle fi xed asset.

• (6) As at the end of the reporting period, the cost of the fully depreciated fi xed assets still in use is RMB 5,729.56 million in the Group.

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12. Construction in progress

(1) Construction in progress by category

Items	At June 30, 2011 At January 1, 2011 Provision for Net book Provision for Net book Book value impairment value Book value impairment value
1. Wei jian construction 2. Technical revamping 3. Infrastructure construction 4. Safety construction 5. Repairing construction 6. Exploration construction TOTAL	556,975,333 – 556,975,333 532,676,319 – 532,676,319 148,983,224 – 148,983,224 71,639,943 – 71,639,943 8,604,466,947 – 8,604,466,947 308,617,173 – 308,617,173 17,336,747 – 17,336,747 – – – 11,777,177 – 11,777,177 – – 157,450,364 – 157,450,364 114,638,016 – 114,638,016
	9,496,989,792 – 9,496,989,7921,027,571,451 – 1,027,571,451

Note: For the current reporting period, the construction in progress increased by 824%, mainly due to the addition of Zhuan Longwen Coal Mine Project amounting RMB 7,878.66 million.

(2) Changes of signifi cant construction in progress projects

Including: Rate of Accumulated capitalized capitalized Reversals amount of interests interests for Transferred into At June 30, Budgeted Investment/ capitalized during the the reporting Project name At January 1, 2011 Addition f xed assets Others 2011 amount budget ratio interests reporting period period Capital sources (%) (%)	Including: Rate of Accumulated capitalized capitalized Reversals amount of interests interests for Transferred into At June 30, Budgeted Investment/ capitalized during the the reporting Project name At January 1, 2011 Addition f xed assets Others 2011 amount budget ratio interests reporting period period Capital sources (%) (%)
Zhuan Longwan coal mine project Ordos methanol project Wanfu coal mine project Zhaolou power plant project Total	– 7,878,655,000 – – 7,878,655,00010,082,224,900 78.14% – – – Self-raised 121,390,054 98,086,447 561,158 – 218,915,343 5,114,900,000 4.28% – – – Self-raised 50,768,424 284,000 – – 51,052,424 3,309,000,000 1.54% – – – Self-raised 32,039,515 13,872,136 – – 45,911,651 1,767,000,000 2.60% – – – Self-raised
	204,197,993 7,990,897,583 561,158 – 8,194,534,41820,273,124,900

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13. Construction materials

Items	At January 1, At June 30, 2011 Addition Reversals 2011
Construction materials Construction equipments TOTAL	14,381,552 31,004,605 30,375,799 15,010,358 3,286,113 – – 3,286,113 17,667,665 31,004,605 30,375,799 18,296,471

14. Intangible assets

(1) Intangible assets

Items

At January 1, Reversal FX translation At June 30, 2011 Addition and transfer difference 2011

Cost Mining rights Unproved mining equity interest Land use rights Exploration and evaluation expenditures Patents and know-how Rail access right Software Water access right Port use rights Accumulated amortization Mining rights Unproved mining equity interest Land use rights Exploration and evaluation expenditures Patents and know-how Rail access right Software Water access right Port use rights Net book value Mining rights Unproved mining equity interest Land use rights Exploration and evaluation expenditures Patents and know-how Rail access right Software Water access right Port use rights

20,681,389,395 2,047,964,634 – 580,422,365 23,309,776,394 15,667,397,202 1,464,572,795 – 451,095,625 17,583,065,622 3,772,910,084 524,936,415 – 122,134,577 4,419,981,076 906,862,368 18,126,360 – 245,815 925,234,543 17,737,674 5,683,795 – 622,180 24,043,649 167,847,500 – – 5,085,000 172,932,500 3,565,497 7,906,614 – 225,998 11,698,109 12,449,559 3,686,408 – 425,112 16,561,079 132,619,511 – – 244,080 132,863,591 – 23,052,247 – 343,978 23,396,225 562,380,760 277,601,544 10,996,097 850,978,401 397,623,039 260,626,807 10,752,479 669,002,325 – – 160,500,264 9,739,649 7,674 170,247,587 1,681,087 394,357 56,814 2,132,258 – – 251,771 609,240 16,718 877,729 2,324,599 5,250,515 147,774 7,722,888 – – – 980,976 14,638 995,614 20,119,008,635 – – – 22,458,797,993 15,269,774,163 – – – 16,914,063,297 3,772,910,084 – – – 4,419,981,076 746,362,104 – – – 754,986,956 16,056,587 – – – 21,911,391 167,847,500 – – – 172,932,500 3,313,726 – – – 10,820,380 10,124,960 – – – 8,838,191 132,619,511 – – – 132,863,591 – – – – 22,400,611

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14. Intangible assets – continued

• (2) The cost of intangible asset and the net book value were increased by RMB1,258.43 million and RMB1,258.43 million respectively, which was due to the purchase of Anyuan Coal Mine.

• (3) The cost of intangible asset and the net book value were increased by RMB785.87 million, and RMB785.87 million respectively, which was due to the acquisition of 30% equity interests of Ashton Joint Venture.

• (4) All of the increased accumulated amortization in the reporting period is the normal amortization of intangible assets.

15. Goodwill

Items	At June 30, At January 1, 2011 2011
Acquisition of Yanmei Shipping Acquisition of Felix Acquisition of Ashton Joint Venture Total	10,045,361 10,045,361 677,993,197 658,057,122 49,980,944 –
	738,019,502 668,102,483

• Note 1: Felix and Yanmei Shipping are the subsidiaries of the business combination other than common control of the Company. The goodwill is the excess of the cost of acquisition over the interest of Felix and Yanmei Shipping in the fair value of the identifi able net assets at the date of acquisition. Goodwill increased by RMB19.94 million is due to exchange rate fl uctuation.

Note 2: Goodwill increased by RMB49.98 million is due to acquisition of 30% equity interests of Ashton Joint Venture.

Note 3: As at the end of the reporting period, after the test, the Group confi rmed that there is no impairment of cash generating units which carry the goodwill.

16. Long-term deferred assets

Items	At June 30, At January 1, 2011 2011
Prepayment for resource compensation fees Project operation and maintenance fees Parking fees in underground parking lot of Luhua Yuan Total	10,464,073 12,020,879 5,059,750 6,071,700 70,625 74,375
	15,594,448 18,166,954

Note: 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 ROM. Heshun Tianchi has prepaid resources compensation fees equivalent to 10 million ton ROM coals which would be amortized according to the actual production.

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17. Deferred tax assets and deferred tax liabilities

• (1) Confi rmed deferred tax assets and deferred tax liabilities

Items	At June 30, At January 1, 2011 2011
1. Deferred tax assets Deferred tax assets of the parent company Deferred tax assets of Yancoal Australia Deferred tax assets of Hua Ju Energy Co., Ltd. 2. Deferred tax liabilities Deferred tax liabilities of the parent company Deferred tax liabilities of Yancoal Australia	1,613,441,781 1,751,958,422
	1,362,596,827 1,214,315,872 247,440,613 534,480,749 3,404,341 3,161,801 3,219,005,254 2,580,863,887
	29,953,846 28,805,278 3,189,051,408 2,552,058,609

• (2) Temporary differences

• 1) Temporary differences of the Company and its domestic subsidiaries

Items	At June 30, At January 1, 2011 2011
1. Deductible temporary differences items Land subsidence, restoration, rehabilitation and environmental costs Accrued and unpaid salaries Hedging instrument liabilities Mining rights access fees Safety fees Wei jian fees Development fund Provision for bad debt Termination benef t Total 2. Taxable temporary differences items Fair value adjustment of available-for-sale f nancial assets Total	1,952,752,701 2,238,201,862 746,777,250 628,910,704 195,321,443 155,317,423 481,867,000 412,918,565 553,699,564 – 901,647,511 801,427,315 611,512,916 611,512,916 19,078,259 19,186,352 1,348,026 2,435,556
	5,464,004,670 4,869,910,693
	119,815,385 115,221,110
	119,815,385 115,221,110

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17. Deferred tax assets and deferred tax liabilities – continued

• (2) Temporary differences – continued

• 2) Temporary differences of overseas subsidiaries

Items	At June 30, At January 1, 2011 2011
1. Deductible temporary differences items Unrecovered loss Accrued and unpaid salaries Amortization of assets Accrued expenses Reclamation costs Others Total 2. Taxable temporary differences items Unrealized foreign currency gain or loss Amortization and recognition of assets Hedging instruments assets Others Total	233,639,163 1,211,592,117 176,639,090 129,543,000 7,758,650 3,239,030 175,250,487 173,085,214 192,550,470 155,812,610 38,964,183 108,330,524
	824,802,043 1,781,602,495
	3,821,400,243 2,739,050,404 6,390,698,037 5,443,426,962 411,801,650 224,819,797 6,271,430 99,564,866
	10,630,171,360 8,506,862,029

18. Other non-current assets

Items	At June 30, At January 1, 2011 2011
Prepayment for investment Total Note: For prepayment for investment, please refer to Note XI,1 (1).	117,925,900 117,925,900
	117,925,900 117,925,900

19. Provision for impairment of assets

Items	At January 1, Provision of Decrease At June 30, 2011 this period Reversal Others 2011
Provision for bad debt Provision for impairment of f xed assets Total	21,473,429 988,609 – – 22,462,038 97,558,627 – – – 97,558,627 119,032,056 988,609 – – 120,020,665

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20. Short-term loans

Items	At June 30, At January 1, 2011 2011
Debt of honour Guaranteed debt Total	10,142,000,000 134,278,000 – 161,133,600
	10,142,000,000 295,411,600

Note: The short-term loans increased by 3333% during this reporting period, which is mainly due to:

• (1) RMB3.05 billion of current capital was borrowed for the needs of business development of the Company.

• (2) Taking the reduction of the cost of funds into account, Zoucheng Kuangqu Sub-Branch of China Construction Bank and Jining Branch of Bank of China Limited provided fi nancing to the Company, for the amount of RMB832 million and RMB6, 260 million respectively for payment of dividends of H shares for the year 2010 and capital injection of Yancoal Australia. The fi nancing terms are 1 year and 9 months respectively at the annual interest rates of 2.52% each.

21. Tradable fi nancial liabilities

Items	Fair value Fair value At June 30, at January 1, 2011 2011
Hedging instrument—forward exchange contracts Hedging instrument—interest rate swap contracts Total	268,315 12,269,276 191,428,634 153,908,651
	191,696,949 166,177,927

• Note 1: To meet the requirement of the acquisition of Felix, Yancoal Australia borrowed a bank loan of USD3 billion. In July 2010, the Company entered into interest rate swap contracts amounting USD1.5 billion with Bank of China (BOC), China Construction Bank (CCB) and China Development Bank (CDB). Pursuant to the contracts, the Company should pay interest expenses to BOC, CCB and CDB at the annual rate of 2.755%, 2.42% and 2.41% respectively, BOC, CCB and CDB should quarterly pay interest expenses to the Company at the annual rate of LIBOR plus 0.75% on the agreed date quarterly. All the contracts terms are within four years. As at June 30, 2011, the fair value of the Contracts was RMB185.13 million. Through the retrospective review, the Company considers that the hedge is effective and there is no invalid hedge had been recognized in the income statement.

• Note 2: Except for the description in Note1, all the other hedging are forward exchange contracts to hedge foreign currency risks signed by overseas subsidiaries of the Company to avoid the risk of foreign currency rate fl uctuation and interest rate swaps contracts to hedge cash fl ow risks signed by overseas subsidiaries of the Company to avoid the risk of interest rate fl uctuation.

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22. Notes payable

Items	At June 30, At January 1, 2011 2011
Commercial acceptance bill Total Note: All the notes payable will be due within 6 months.	29,794,247 126,958,580
	29,794,247 126,958,580

23. Accounts payable

(1) Accounts payable

Items	At June 30, At January 1, 2011 2011
Total Including: over 1 year	1,409,289,881 1,516,920,701
	119,450,841 148,450,510

• (2) Large amount accounts payable aging over 1 year mainly is last payment payable for equipments and materials, and there is no large amount of subsequent payments after the period end.

• (3) Accounts payable at the end of the reporting period due to the controlling shareholder of the Company is RMB0.34 million.

• (4) Foreign currency balance in accounts payable

Items	At June 30, 2011 At January 1, 2011 Foreign Exchange Equivalent Foreign Exchange Equivalent currency rate RMB currency rate RMB
USD AUD Total	803,422 6.4716 5,199,426 713,013 6.6227 4,722,071 79,946,412 6.9173 553,013,316 71,243,679 6.7139 478,322,936
	558,212,742 483,045,007

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24. Advances from customers

• (1) Advances from customers

Items	At June 30, At January 1, 2011 2011 1,321,070,347 1,473,772,452 72,730,349 40,068,591
Total Including: over 1 year

• (2) Advances aging over 1 year are RMB72.73million, mainly due to the unrealized sales, caused by the decline of demand by the customers or disagreement on the price, so that customers did not pick up coals after advance payments.

• (3) Advances from customers in the end of the current period payable to shareholders of the Group holding more than 5% (including 5%) shares are excluded for the period.

25. Salaries and wages payable

Items

Foreign currency At January 1, Addition for Payment for translation At June 30, 2011 this period the period difference 2011

Salary (including bonus, allowance and subsidies) Staff welfare Social insurance Including: 1. Medical insurance 2. Basic pension insurance 3. Unemployment insurance 4. Injury insurance 5. Maternity insurance Housing fund Union fund and Staff education fund Compensation for terminating labour relations Others Total

498,228,191 2,395,639,273 2,347,710,528 469,130 546,626,066 – 357,669,021 357,669,021 – – 53,348,018 680,962,234 614,509,420 – 119,800,832 37,625,763 190,050,262 158,345,546 – 69,330,479 5,303,204 393,272,461 385,468,469 – 13,107,196 7,031,681 38,996,802 37,902,405 – 8,126,078 96,298 39,100,980 16,484,760 – 22,712,518 3,291,072 19,541,729 16,308,240 – 6,524,561 9,898,422 83,001,396 85,689,021 – 7,210,797 140,523,558 82,574,511 49,256,861 – 173,841,208 2,435,556 6,255,637 1,087,530 93,344 7,697,007 119,220,932 134,736,747 84,050,234 4,368,168 174,275,613 823,654,677 3,740,838,819 3,539,972,615 4,930,642 1,029,451,523

Note: During the reporting period, salary and wages payables increased by 25%, mainly due to salary and wages accrued by the enterprises in June are unpaid; there is no payment in arrears of the balance at the end of period.

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25. Salaries and wages payable – continued

The amount of compensation for terminating labor relations accrued is RMB6.26million which is accrued by the overseas subsidiaries. The amount of such payment in this period is RMB1.09 million by Hua Ju Energy, a subsidiary of the Company in China.

“Others” are employees benefi ts accrued for overseas subsidiaries, such as annual leave, sick leave, etc.

26. Taxes payable

Items	At June 30, At January 1, 2011 2011
Value added tax Business tax Income tax Price reconciliation fund Goods and service tax Others Total	175,436,599 82,953,456 6,588,008 11,856,854 1,253,529,186 1,062,374,981 39,882,533 36,030,697 -118,752,112 -26,592,549 124,884,218 180,505,757
	1,481,568,432 1,347,129,196

27. Other payable

(1) Other payables

Items	At June 30, At January 1, 2011 2011
Total Including: aging over 1 year	3,496,860,371 2,466,223,721
	967,841,862 701,072,332

Note: Other payables for the current period increased by 42%, mainly due to the unpaid dividends to Yankuang Group for the year 2010.

(2) As at June 30, 2011, amounts of other payable due to the controlling shareholder of the Company is totaling up to RMB1,927.9 million.

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27. Other payable – continued

(3) Other payables with large amount by the end of the period

Items	Payable RMB Age Nature or content
Yankuang Group Co., Ltd Mining right Ministry of Railways Fund Settlement Centre Yankuang Keao Aluminium Co., Ltd Gladstone Port Group Total	1,927,904,501 Within 1 year Dividends, material and project funds 481,867,000 1 to 3 years Resource compensation fees 35,782,006 Within 1 year Railway freight fees 19,293,864 Within 1 year Gas supply 12,112,552 Within 1 year Borrowings 2,476,959,923

(4) Foreign currency balance in other payables

Items	At June 30, 2011 At January 1, 2011 Foreign Exchange Equivalent Foreign Exchange Equivalent currency rate RMB currency rate RMB
AUD USD Total	1,726,627 6.9173 11,943,597 2,150,856 6.7139 14,440,632 5,574,080 6.4716 36,073,216 14,772,500 6.6227 97,833,836
	48,016,813 112,274,468

28. Non-current liabilities due within one year

• (1) Non-current liabilities due within one year

Items	At June 30, At January 1, 2011 2011
Long-term borrowing due within one year Long-term payable due within one year (note) Provisions due within one year Deferred gain due within one year Total	22,000,000 236,844,800 2,340,000,000 86,026,208 6,029,499 3,218,442 3,458,650 3,178,435
	2,371,488,149 329,267,885

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28. Non-current liabilities due within one year – continued

• (2) Long-term borrowing due within one year

Loan category	At June 30, At January 1, 2011 2011
Guaranteed loan Mortgaged loan Total	22,000,000 22,000,000 – 214,844,800
	22,000,000 236,844,800

Note: As approved at the nineteenth meeting of the fourth session of the Board of the Company held on 28 January 2011, for a consideration of RMB 7.8 billion, Ordos Neng Hua, a subsidiary of the Company, successfully obtained the mining rights of Zhuan Longwan coal mine zone of Dongsheng Coal Field in Inner Mongolia. As at the end of this reporting period, the fi rst instalment of RMB 3.12 billion was paid by the Company. The second instalment of RMB 2.34 billion shall be paid by 30 November 2011. The third instalment of RMB 2.34 billion shall be paid by 30 November 2012.

29. Long-term loan

• (1) Long-term loan by category

Loan category	At June 30, At January 1, 2011 2011
Debt of honour Guaranteed loan Mortgaged loan Total	– 657,962,200 19,794,664,000 20,265,008,000 – 738,529,000
	19,794,664,000 21,661,499,200

• (2) Top fi ve long-term borrowings

				At June	30, 2011	At January	1, 2011
Lender	Beginning date	Expiration date	Interest rate (%)	USD	RMB	USD	RMB
Sydney branch of BOC (note 1)	2009-12-16	2014-12-16	Libor+0.75%	2,400,000,000	15,531,840,000	2,400,000,000	15,894,480,000
Hong Kong branch of CDB (note 1)	2009-12-16	2014-12-16	Libor+0.75%	300,000,000	1,941,480,000	300,000,000	1,986,810,000
Hongkong branch of CCB (note 1)	2009-12-16	2014-12-16	Libor+0.75%	200,000,000	1,294,320,000	200,000,000	1,324,540,000
Sydney branch of BOC (note 1)	2009-12-9	2014-12-16	Libor+0.8%	140,000,000	906,024,000	140,000,000	927,178,000
Taiyuan branch of CDB (note 2)	2006-3-15	2018-2-19	5..94%	–	121,000,000	–	132,000,000

Note 1: Yancoal Australia Pty Ltd borrowed USD3.04 billion from the syndication of banks taken the lead by Sydney branch of BOC, which was guaranteed by the Company, at the same time, the Company was counter guaranteed by Yankuang Group, the controlling shareholder of the Company.

Note 2: Yankuang Group, the controlling shareholder of the Company, provides guarantee to this long-term borrowing.

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30. Long-term payables

• (1) The breakdown of long-term payables

Lender	Amount Amount Expiration at 1 January Interest Accrued at June 30, Loan (Year) 2011 rate (%) Interest 2011 condition
Total Including: Commonwealth Bank of Australia Caterpillar Finance Corporation Komatsu Australia Finance Limited Deferred payment for acquisition of Minerva Department of Land and Resources of the Inner Mongolia Municipality (note)	– 752,325,971 – 2,352,263,972 – 2014 710,504,443 – – – Mortgage 2014 2,493,166 – – – Mortgage 2014 26,337,414 – – – Mortgage 2016 12,990,948 – – 12,263,972 Unsecured and interest-free 2012-11 – 6.06% 203,733,834 2,340,000,000 Paying interest

Note: See Note “VIII, 28”.

• (2) The details of fi nance lease payables among long-term payables

Items Commonwealth Bank of Australia Caterpillar Finance Corporation Komatsu Australia Finance Limited Provisions Items	Items	Amount At June 30, 2011 Amount at 1 January 2011 Foreign Foreign currency RMB currency RMB – – 105,825,890 710,504,443 – – 371,344 2,493,166 – – 3,922,819 26,337,414 At January 1, At June 30, 2011 Additions Carry forward 2011
Reclamation, restoration and environment expenses Total		152,594,177 33,926,805 – 186,520,982 152,594,177 33,926,805 – 186,520,982

31. Provisions

Note: Reclamation, restoration and environment expenses accrued for the restoring of coal mines are based on the accounting policy as stated in Note IV.19. The obligation of restoring will be exercised when mining areas become out of use or coal resource dry up.

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32. Other non-current liabilities

Items	At June 30, At January 1, 2011 2011
Deferred income – leaseback Deferred income – government grant Total	– 7,946,089 7,980,020 7,980,020
	7,980,020 15,926,109

• (1) The deferred income of leaseback incorporated by acquisition of Felix generates from the leaseback of Yarrabee CHPP. The fi nance lease asset of this period was sold and the deferred income was transferred into non-operating revenue.

• (2) Government grant is the coal production safety appropriation and infrastructure construction subsidies received at last period.

Government grant by category	Balance At June 30, 2011 Amount Amount included included Amount in other in other charged Amount of non-current current to current rebate for reason of liability liability prof t or loss the year rebate
Coal production safety appropriation Infrastructure construction subsidies Total	3,980,000 – – – – 4,000,020 – – – –
	7,980,020 – – – –

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33. Share capital

Shareholders names/class	At January 1, 2011 At June 30, 2011 Amount % Amount %
Listed shares with restricted trading conditions Shares held by state-owned legal person Shares held by management Subtotal shares with restricted trading conditions Shares without trading restriction A shares H shares Subtotal of shares without trading restriction Total share capital	2,600,000,000 53 2,600,000,000 53 21,800 – 21,800 – 2,600,021,800 53 2,600,021,800 53 359,978,200 7 359,978,200 7 1,958,400,000 40 1,958,400,000 40 2,318,378,200 47 2,318,378,200 47 4,918,400,000 100 4,918,400,000 100

Note: 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. In respect of the Yankuang Group has promised that the Company will participate in the investment and joint development in the liquefaction of coal project when performing the reform of share equity split, there has not been signifi cant progress. As at the reporting date, since the Yankuang Group has not fi nished the above commitments, its holding shares in the Company will not be traded in the market.

34. Capital reserves

Items	At January 1, At June 30, 2011 Addition Reversals 2011
Share premium Other capital reserves Total	2,563,038,423 – – 2,563,038,423 1,939,340,698 102,052,955 – 2,041,393,653 4,502,379,121 102,052,955 – 4,604,432,076

Note: The increase in other capital reserves for the period was caused by the change of fair value of available-for-sale fi nancial assets and cash fl ow hedging contract held by the Group

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35. Special reserves

Items	At January 1, At June 30, 2011 Addition Reversals 2011
Wei jian fei Safety production fee Specif c development fund Environmental improvement security fund Production reforming fund Total Surplus reserves Items	830,028,905 120,267,582 – 950,296,487 431,555,903 173,302,190 2,070,731 602,787,362 611,512,916 – – 611,512,916 31,452,820 5,765,950 – 37,218,770 15,856,410 2,882,975 – 18,739,385 1,920,406,954 302,218,697 2,070,731 2,220,554,920
	At January 1, At June 30, 2011 Addition Decrease 2011
Statutory surplus reserve Total	3,895,859,339 – – 3,895,859,339 3,895,859,339 – – 3,895,859,339

36. Surplus reserves

37. Retained earnings

Items	Proportion of accrue or Amount distribution (%)
Closing balance of last period Add: adjustment from opening balance of retained earnings Opening balance Add: net prof t attributable to shareholders of parent company Less: Appropriations to statutory surplus reserve Distribution of dividend of common shares Closing balance	21,292,197,345 – 21,292,197,345 5,033,731,101 – 10% 2,901,856,000 23,424,072,446

Note: On 20 May 2011, as approved at the 2010 annual general meeting of the Company, the Company made a cash dividend payment at RMB5.9 per ten share (tax included), i.e. the sum of RMB2,901.86 million, on the basis of total capital on December 31, 2010.

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38. Minority interest

Subsidiary Proportion of minority interest (%)	At June 30, At January 1, 2011 2011
Heze Neng Hua 1.67 Hua Ju Energy 4.86 Subsidiaries of Felix – Zhongyan Company 47.62 Yanmei Shipping 8.00 Shanxi Tianchi 18.69 Shanxi Tianhao 0.11 Total	45,405,498 44,900,658 39,392,638 35,990,893 – – 3,511,291 3,596,999 1,182,618 1,403,755 5,727,801 – – –
	95,219,846 85,892,305

Note: As at the end of this reporting period, the net asset of Shanxi Tianchi is RMB30.65 million (RMB-17.03 million of opening balance for this period) and RMB 5.73 million of minority interests is recognized accordingly.

39. Operating revenue and operating cost

Items	Jan. 1, 2011- Jan. 1, 2010- June 30, 2011 June 30, 2010
Principal operating revenue Other operating revenue Total Principal operating cost Other operating cost Total	20,224,011,947 15,218,689,237 533,114,298 382,654,719
	20,757,126,245 15,601,343,956
	10,631,863,990 7,910,255,835 531,967,249 413,482,998
	11,163,831,239 8,323,738,833

Note: For the reporting period, the operating revenue increased by 33% over the same period of last year, mainly due to the increase of coal sales volume and unit coal price by 14% and 15% respectively over the same period of last year.

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39. Operating revenue and operating cost – continued

• (1) Principal operations – Classifi cation by sector

Items	Jan. 1, 2011-June 30, 2011 Jan. 1, 2010-June 30, 2010 Operating revenue Operating cost Operating revenue Operating cost
Coal mining Electricity power Heating supply Coal chemical Other Total	19,326,667,503 9,868,256,846 14,450,757,568 7,257,947,971 161,726,711 161,921,015 85,838,718 77,428,889 15,406,668 8,374,675 15,274,435 5,483,942 477,334,280 442,359,871 408,568,021 427,811,268 242,876,785 150,951,583 258,250,495 141,583,765
	20,224,011,947 10,631,863,990 15,218,689,237 7,910,255,835

• (2) Principal operations – Classifi cation by product

Items	Jan. 1, 2011-June 30, 2011 Jan. 1, 2010-June 30, 2010 Operating revenue Operating cost Operating revenue Operating cost
Revenue from domestic sales of coal products Revenue from export sales of coal products Sales of coal purchased from other companies Revenue from railway transportation services Sales of methanol Sales of electricity power Sales of heating power Total	12,572,696,718 5,523,143,211 10,940,112,884 4,461,124,321 4,320,280,395 1,949,983,913 2,000,806,087 1,302,921,760 2,433,690,390 2,395,129,722 1,509,838,597 1,493,901,890 242,876,785 150,951,583 258,250,495 141,583,765 477,334,280 442,359,871 408,568,021 427,811,268 161,726,711 161,921,015 85,838,718 77,428,889 15,406,668 8,374,675 15,274,435 5,483,942
	20,224,011,947 10,631,863,990 15,218,689,237 7,910,255,835

• (3) Principal operations – Classifi cation by area

Area	Jan. 1, 2011-June 30, 2011 Jan. 1, 2010-June 30, 2010 Operating revenue Operating cost Operating revenue Operating cost
Domestic International Total	15,903,731,552 8,681,880,077 13,217,883,150 6,607,334,075 4,320,280,395 1,949,983,913 2,000,806,087 1,302,921,760
	20,224,011,947 10,631,863,990 15,218,689,237 7,910,255,835

(4) Total sales amount of the 5 largest customers till June 30, 2011 is RMB5,285.91 million, which accounts for 25% in total revenue.

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40. Operating taxes and surcharges

Items Proportion	Jan. 1, 2011- Jan. 1, 2010- June 30, 2011 June 30, 2010
Business tax 3%, 5% City construction tax 7% Education fee 3% Local education fee 1% Resource tax Total Selling expenses Items	12,076,054 10,515,935 118,867,315 107,990,537 90,520,144 48,853,209 661,559 15,207,218 70,681,166 65,255,939
	292,806,238 247,822,838
	Jan. 1, 2011- Jan. 1, 2010- June 30, 2011 June 30, 2010
Freight charge Mining right royalty Coal port dues, loading and transportation cost Benef ts, social insurance and welfare of employees Self-owned car cost Business entertainment expenses Others Total	601,150,590 266,705,298 355,972,920 200,633,991 121,344,901 132,051,793 27,554,009 19,496,948 5,541,875 7,744,459 1,192,167 2,091,937 63,507,904 23,501,215
	1,176,264,366 652,225,641

41. Selling expenses

Note: For the reporting period, selling expenses increased by 80% over the same period of last year. It is mainly due to signifi cant increase of coal production and coal sales volume of Yancoal Australia over the same period of last year, which led to the signifi cant increase of freight fees and coal royalties.

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42. Administrative expenses

Item	Jan. 1, 2011- Jan. 1, 2010- June 30, 2011 June 30, 2010
Benef ts, social insurance and welfare of employees Materials and repairs expenses Taxes Mineral resources compensation fees Depreciation expense Property management fees Research and Development Costs Business travel, off ce, conference and hospitality fees Commission, consulting and service charges Amortization, leasing fees, etc Others Total	774,654,440 699,581,244 309,321,727 280,517,643 196,065,358 48,902,429 117,841,433 109,287,838 111,111,749 166,424,610 70,001,397 68,999,998 68,207,686 38,557,547 39,382,729 32,179,242 34,416,915 34,093,188 31,986,711 10,227,316 165,082,490 202,203,990
	1,918,072,635 1,690,975,045

43. Finance costs

Items	Jan. 1, 2011- Jan. 1, 2010- June 30, 2011 June 30, 2010
Interest expenses Less: interest income Add: exchange gains or losses Add: other expenses Total	407,716,161 154,982,256 171,175,327 81,713,060 -1,242,793,428 1,059,914,225 179,641,321 103,434,651
	-826,611,273 1,236,618,072

Note: During this reporting period, fi nance costs decreased by 167% over the same period of last year, mainly due to great changes in unrealized foreign exchange gains generated by its Australian subsidiary, arising from signifi cant fl uctuation of exchange rates, with AUD as the functional currency but the borrowings are denominated in USD.

44. Impairment loss

Items	Jan. 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010
Bad debt provision Total	988,609 -133,439
	988,609 -133,439

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45. Investment income

• (1) Sources of investment income

Items	Jan. 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010
Long-term equity investment income under equity method Investment income from AFS f nancial assets Total	14,137,463 -7,663,616 2,433,305 4,504,096
	16,570,768 -3,159,520

(2) Long-term equity investment income under equity method

	Jan 1, 2011-	Jan 1, 2010-
Items	June 30, 2011	June 30, 2010	Reason of change
Total	14,137,463	-7,663,616
Including:
China HD Zouxian Co., Ltd.	7,078,491	-7,962,542	HD Zouxian’s prof t
			increased during
			current period
Yankuang Group Finance Co.,Ltd	7,058,972	–	Newly increased
Ashton Coal Mines Limited	–	298,926

46. Non-operating income

• (1) Non-operating income

Items	Jan 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010
Gains on disposal of non-current assets Including: gains on disposal of f xed assets Government grants Resource compensation fee Deferred income (note) Others Total	2,073,711 3,606,521 2,073,711 3,606,521 5,600,675 5,145,270 7,600,000 – 7,946,089 – 5,512,077 4,240,278
	28,732,552 12,992,069

Note: Detailed information on deferred income, please refer to Note VIII.32

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46. Non-operating income – continued

(2) Government grants

Items	Jan 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010 Basis and sources
Value added tax reduction on product from comprehensive use of resources Other Total	5,241,806 5,145,270 Jiguoshui Liupizi (2010) NO.1 358,869 – 5,600,675 5,145,270

47. Non-operating expenses

Items	Jan 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010
Losses on disposal of non-current assets Including: losses on disposal of f xed assets Penalty, supplementary payment and overdue f nes Donation expenditure Other Total	9,849,858 10,593,608 9,849,858 10,593,608 11,225,384 – 11,664,605 8,991,293 1,416,494 6,827,684
	34,156,341 26,412,585

48. Income taxes

(1) Income taxes

Items	Jan 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010
Current tax expense Deferred tax expense Total	1,400,709,664 1,319,192,780 599,200,919 -525,507,202
	1,999,910,583 793,685,578

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48. Income taxes – continued

• (2) Current tax expense (the Company and its domestic subsidiaries)

Items	Amount
Total prof t of the period	4,503,933,232
Add: increase of tax adjustment	1,196,075,230
Less: decrease of tax adjustment	54,087,246
Add: unrecognized tax loss	–
Taxable income of the period	5,645,921,216
Statutory income tax rate	25%
Income tax payable of the period	1,411,480,304
Add: other adjustments	4,820,870
Current tax expense	1,416,301,174

• (3) Current tax expense (Overseas subsidiaries)

Items	Amount
Total prof t of the period	2,439,541,990
Add: increase of tax adjustment	2,022,275,528
Less: decrease of tax adjustment	3,462,076,726
Less: recovering of past losses	999,740,786
Taxable income of the period	6
Statutory income tax rate	30%
Income tax payable of the period	2
Add: other adjustments	-15,591,512
Current tax expense	-15,591,510

(4) Income tax increased by 152%, mainly due to the increase of taxable temporary difference caused by rising exchange rate of AUD.

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49. Computation process of basic and diluted earnings per share

Items No.

Jan 1, 2011-June 30, 2011 Jan 1, 2010-June 30, 2010

Net prof t attributable to shareholders of the parent company 1 Extraordinary gains/(losses) attributable to parent company 2 Net prof t attributable to shareholders of the parent company, excluding extraordinary gains/(losses) 3=1-2 Total shares at the beginning of the period 4 Shares added through reserves fund addition and shares dividend distribution addition (I) 5 Shares added by issuing new shares or converting debt to equity (II) 6 Number of months from next month of share added (II) to the end of the reporting period 7 Shares decreased by share buy-back or shares shrink 8 Number of months from the next month of share decreased to the end of the reporting period 9 Number of months for the reporting period 10 Weighted average of common shares issued 11=4+5+6×7÷10-8×9÷10 Basic earnings per share (I) 12=1÷11 Basic earnings per share (II) 13=3÷11 Common shares interest with diluted potential which is recognized as expenses 14 Converting fee 15 Income tax rate 16 Shares added through stock warrants and exercise of options 17 Diluted earnings per share (I) 18=[1+(14-15)×(1-16)]÷(11+17) Diluted earnings per share (II) 19=[3+(14-15)×(1-16)]÷(11+17)

5,033,731,101 2,632,967,798 -2,381,251 -5,664,799 5,036,112,352 2,638,632,597 4,918,400,000 4,918,400,000 – – – – – – – – – – 6.00 6.00 4,918,400,000 4,918,400,000 1.0234 0.5353 1.0239 0.5365 – – – – 25% 25% – – 1.0234 0.5353 1.0239 0.5365

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50. Other comprehensive income

Items	Jan 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010
1. Gains (losses) generated by available-for-sale f nancial assets Less: income tax effects generated by available-for-sale f nancial assets Net amount presented in other comprehensive income in past periods and transferred in prof ts and losses at current period Subtotal 2. Gains (losses) generated by cash f ow hedging instruments Less: income tax effects generated by cash f ow hedging instruments Net amount presented in other comprehensive income in past periods and transferred in prof ts and losses at current period Subtotal 3. Difference resulting from translation of foreign f nancial statements Less: amount transferred into prof t and loss of the current period from disposal of foreign operations Subtotal Total	4,594,276 -85,243,204 1,148,569 -21,310,804 – –
	3,445,707 -63,932,400
	138,403,776 -55,349,507 43,521,334 -16,604,852 3,724,806 -3,805,113
	98,607,248 -42,549,768
	129,948,557 -6,314,851 – –
	129,948,557 -6,314,851
	232,001,512 -112,797,019

Note: Other comprehensive income increased by 306%, mainly due to the substantial increase of cash fl ow hedging, fair value of AFS fi nancial assets and Australian dollar exchange rate.

51. Cash fl ow

• (1) Cash received/paid relating to operating activities/investment/fi nance activities

• 1) Other cash received relating to operating activities

Items Jan 1-June 30, 2011	Items Jan 1-June 30, 2011
Interest income Received cash from funds paid on other’s behalf Sundry revenue Total	171,175,327 160,588,587 90,790,249 422,554,163

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51. Cash fl ow – continued

• (1) Cash received/paid relating to operating activities/investment/fi nance activities – continued

• 2) Other cash paid relating to operating activities

Items Jan 1-June 30, 2011	Items Jan 1-June 30, 2011
Payments for selling and administrative expenses Sundry cash payment Donation expenditure Penalty and overdue f nes Total	1,428,562,677 1,208,496,863 11,664,605 11,225,384 2,659,949,529

• 3) Other cash received relating to investment activities

4) 5)	Items Jan 1-June 30, 2011	Items Jan 1-June 30, 2011
	Decrease of restricted deposits 1,347,076,105 Total 1,347,076,105 Other cash paid relating to investment activities Items Jan 1-June 30, 2011	1,347,076,105 1,347,076,105
	Increase of restricted deposit 7,547,072,115 Borrowings for NCIG (Newcastle Coal Infrastructure Group) 114,791,178 Payment of bank guarantees 14,480,028 Others 1,703,900 Total 7,678,047,221 Other cash paid relating to f nancing activities Items Jan 1-June 30, 2011	7,547,072,115 114,791,178 14,480,028 1,703,900 7,678,047,221
	Payment for f nance lease Total	837,898,189 837,898,189

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51. Cash fl ow – continued

• (2) Supplemental information of consolidated cash fl ow statement

Items	Jan 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010
1. Reconciliation of net prof t to cash f ow from operating activities Net prof t Add: Provision of impairment of assets Depreciation of f xed assets Amortization of intangible assets Amortization of long-term deferred expenses Accrued special reserves Losses on disposal of f xed assets, intangible and other long-term assets (“-” represents gain) Finance costs (“-” represents gain) Loss arising from investments (“-” represents gain) Inf uence of deferred taxes assets (“-“ represents increase) Decrease in inventories (“-“ represents increase) Decrease in receivables under operating activities (“-“ represents increase) Increase in payables under operating activities (“-“ represents decrease) Net cash f ow from operating activities 2. Changes in cash and cash equivalents Cash, closing Less: Cash, opening Net addition in cash and cash equivalents	5,043,010,827 2,639,831,352 988,609 -133,439 1,020,125,736 1,039,163,940 277,601,544 121,267,297 2,572,506 2,336,721 302,706,512 238,276,388 7,776,147 6,987,087 -835,077,267 904,931,969 -16,570,768 3,159,520 599,200,919 -525,507,202 352,498,507 -314,229,703 7,627,808,845 -2,529,330,076 -896,308,150 697,969,530
	13,486,333,967 2,284,723,384
	12,194,213,525 8,449,548,600 6,771,312,424 8,522,398,899 5,422,901,101 -72,850,299

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51. Cash fl ow – continued

• (3) Acquisition or disposal of subsidiaries and other operating entities during the current period

Items Jan 1-June 30, 2011

Items Jan 1-June 30, 2011

Acquiring subsidiaries and other operating entities 1. Price of acquiring subsidiaries and other operating entities 2. Cash or cash equivalent paid for acquiring subsidiaries and other operating entities Less: Cash or cash equivalent owned by subsidiaries and other operating entities 3. Net cash amount paid for acquiring subsidiaries and other operating entities 4. Net assets from acquisition of subsidiaries Current assets Non-current assets Current liabilities Non-current liabilities

1,594,667,811 1,594,667,811 67,416,718 1,527,251,093 1,544,785,855 186,987,397 1,471,473,116 47,531,225 66,143,433

(4) Cash and cash equivalents

Items	Jan 1, 2011- Jan 1, 2010- June 30, 2011 June 30, 2010
Cash Including: Cash on hand Deposits that can be readily drawn on demand Other monetary assets that can be readily drawn on demand Cash equivalents Cash and cash equivalents balance Including: Cash and cash equivalents with limited use right by parent company or subsidiaries of the Group	12,194,213,525 8,449,548,600 1,005,843 1,054,441 12,187,798,953 8,199,635,998 5,408,729 248,858,161 – – 12,194,213,525 8,449,548,600 –

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IX. RELATIONSHIP OF RELATED PARTIES AND THEIR TRANSACTIONS

i. RELATIONSHIP OF RELATED PARTIES

1. Parent company and ultimate controlling party

• (1) Parent company and ultimate controlling party

Parent company and	Type of	Registration	Business	Legal	Organization
ultimate controlling party	enterprise	location	nature	representative	code
Yankuang Group	State-owned	Zoucheng,	Industry	Wang Xin	166122374
Co. Ltd	Enterprise	Shandong	processing

• (2) The registered capital of the Parent Company and its changes

Parent Company At January 1, 2010 Addition Reversals At June 30, 2010	Parent Company At January 1, 2010 Addition Reversals At June 30, 2010
Yankuang Group Co. Ltd	3,353,388,000 – – 3,353,388,000

• (3) The proportion and changes of equity interest of the parent company

Parent Company	Shareholding amount Sharholding proportion (%) At June 30, At January 1, At June 30, At January 1, 2011 2011 2011 2011 2,600,000,000 2,600,000,000 52.86% 52.86%
Yankuang Group Co. Ltd

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i. RELATIONSHIP OF RELATED PARTIES – continued

2. Subsidiaries

• (1) Subsidiaries

	Type of	Registration		Legal
Subsidiaries	enterprise	location	Business nature	representative	Organization code
Qingdao Free Trade Zone Zhongyan Trade Co., Ltd	limited liability	Shandong	Trade and storage	Fan Qingqi	16362500-5
Yanzhou Coal Mining Yulin Neng Hua Co., Ltd	limited liability	Shaanxi	Production and sales of	Wang Xin	75881603-8
			methanol and acetic acid
Yancoal Australia Pty Limited	limited liability	Australia	Investment and shareholding
Austar Coal Mine Pty Limited	limited liability	Australia	Coal mining and sales
Felix Resources Limited	limited liability	Australia	Coal mining and sales
Yanmei Heze Neng Hua Co., Ltd	limited liability	Shandong	Coal mining and sales	Wang Yongjie	75445658-1
Yankuang Shanxi Neng Hua Co., Ltd	limited liability	Shanxi	Thermoelectricity investment,	Qu Tianzhi	74601732-7
			coal technology service
Shanxi Heshun Tianchi Energy Co., Ltd	limited liability	Shanxi	Intensive coal	Ren Yi	11285097-4
			products processing
Shanxi Tianhao Chemicals Co., Ltd	limited liability	Shanxi	Production and sales	Yin Mingde	73403278-1
			of methanol and coals
Shandong Yanmei Shipping Co., Ltd	limited liability	Shandong	Freight transportation	Wang Xinkun	16612592X
			and coal sales
Shandong Hua Ju Energy Co., Ltd.	limited liability	Shandong	Sales and production of	Hao Jingwu	73927723-5
			electricity power with coal
			slurry and gangue, and
			comprehensive use
			of waste heat
Yanzhou Coal Mining Ordos Nenghua Co., Ltd.	limited liability	Inner Mongolia	600,000tons methanol	Wang Xin	69594585-1
			production, coal mining
			and sales
Inner Mongolia Yize Mining Investment Co, Ltd	limited liability	Inner Mongolia	Investment	Wang Xin	76786334-6
Inner Mongolia Rongxin Chemicals Co. Ltd	limited liability	Inner Mongolia	Methanol production	Wang Xin	67067850-7
Inner Mongolia Daxin Industrial Gas Co. Ltd	limited liability	Inner Mongolia	Industrial gas production	Wang Xin	67691995-7

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i. RELATIONSHIP OF RELATED PARTIES – continued

2. Subsidiaries

• (2) Changes in registered capital

Subsidiaries At January 1,2011 Addition Reversal At June 30, 2011

Subsidiaries At January 1,2011 Addition Reversal At June 30, 2011

Qingdao Free Trade Zone Zhongyan Trade Co., Ltd Yanzhou Coal Mining Yulin Neng Hua Co., Ltd Yancoal Australia Pty Limited Austar Coal Mine Pty Limited Felix Resources Limited Yanmei Heze Neng Hua Co., Ltd Yankuang Shanxi Neng Hua Co., Ltd Shanxi Heshun Tianchi Energy Co., Ltd Shanxi Tianhao Chemicals Co., Ltd Shandong Yanmei Shipping Co., Ltd Shandong Hua Ju Energy Co., Ltd Yanzhou Coal Mining Ordos Nenghua Co., Ltd Inner Mongolia Yize Mining Investment Co, Ltd Inner Mongolia Rongxin Chemicals Co. Ltd Inner Mongolia Daxin Industrial Gas Co. Ltd

2,100,000 – – 2,100,000 1,400,000,000 – 1,400,000,000 AUD64,000,000 – – AUD64,000,000 AUD64,000,000 – – AUD64,000,000 AUD 445,370,000 – – AUD 445,370,000 3,000,000,000 – – 3,000,000,000 600,000,000 – – 600,000,000 90,000,000 – – 90,000,000 150,000,000 – – 150,000,000 5,500,000 – – 5,500,000 288,590,000 – – 288,590,000 500,000,000 2,600,000,000 – 3,100,000,000 136,260,000 – 136,260,000 3,000,000 – 3,000,000 4,110,000 – 4,110,000

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i. RELATIONSHIP OF RELATED PARTIES – continued

2. Subsidiaries

• (3) Changes in shareholding proportion or equity interest of subsidiaries

Subsidiaries

Shareholding amount Shareholding proportion (%) At June 30, 2011 At January 1, 2011 At June 30, 2011 At January 1, 2011

Qingdao Free Trade Zone Zhongyan Trade Co., Ltd Yanzhou Coal Mining Yulin Neng Hua Co., Ltd Yancoal Australia Pty Limited Austar Coal Mine Pty Limited Felix Resources Limited Yanmei Heze Neng Hua Co., Ltd Yankuang Shanxi Neng Hua Co., Ltd Shanxi Heshun Tianchi Energy Co., Ltd Shanxi Tianhao Chemicals Co., Ltd Shandong Yanmei Shipping Co., Ltd Shandong Hua Ju Energy Co., Ltd. Yanzhou Coal Mining Ordos Nenghua Co., Ltd. Inner Mongolia Yize Mining Investment Co, Ltd Inner Mongolia Rongxin Chemicals Co. Ltd Inner Mongolia Daxin Industrial Gas Co. Ltd

1,100,000 1,100,000 52.38 52.38 1,400,000,000 1,400,000,000 100.00 100.00 AUD64,000,000 AUD64,000,000 100.00 100.00 AUD64,000,000 AUD64,000,000 100.00 100.00 AUD 445,370,000 AUD 445,370,000 100.00 100.00 2,950,000,000 2,950,000,000 98.33 98.33 600,000,000 600,000,000 100.00 100.00 73,180,000 73,180,000 81.31 81.31 149,790,000 149,790,000 99.89 99.89 5,060,000 5,060,000 92.00 92.00 274,590,000 274,590,000 95.14 95.14 3,100,000,000 500,000,000 100.00 100.00 179,690,000 179,690,000 100.00 100.00 4,400,000 4,400,000 100.00 100.00 6,000,000 6,000,000 100.00 100.00

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i. RELATIONSHIP OF RELATED PARTIES – continued

3. Joint ventures and associates

• (1) Joint ventures and associates

	Type of	Registration	Business	Legal	Registered Shareholding	Registered Shareholding	Organization
Investee name	enterprise	location	nature	representative	capital proportion (%)		Code
Associates
China HD Zouxian Co., Ltd.	limited liability	Shandong	Electricity	Zhong	RMB3 billion	30	66930776-8
			power	Tonglin
Yankuang Group Finance Co.,Ltd	limited liability	Shandong	Finance	Zhang	RMB500	25	56250962-6
				Shengdong	million
Shaanxi Future Energy	limited liability	Shaanxi	Coal mining	Li Weimin	RMB5.4 billion	25	56714796-X
Chemical Corp. Ltd		province	and
			liquefaction
			of coal
Joint ventures
Ashton Coal Mines Limited	limited liability	Australia	Holding and		AUD100	90
			sales of
			real-estate
Australian Coal Processing	limited liability	Australia	Holding			90
Holding Pty Ltd			company, no
			operations

• Note: The Company holds 90% shares and 50% voting rights of Australian Coal Processing Holding Pty Ltd and Ashton Coal Mines Limited, detailed in Note VII.i.12.(2).

• (2) Financial information is stated in Note VIII.10.(3).

188

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i. RELATIONSHIP OF RELATED PARTIES – continued

4. Other related parties (limited to transaction with the Group)

Type	of
relationship Related parties		Transactions
(1)	Other enterprises under control of the same	controlling shareholder and ultimate controlling party
	Yankuang Group Tangcun Shiye Co., Ltd	Sales of goods and materials, purchase
		of materials, acceptance of labours
	Yankuang Group Dalu Machinery Co., Ltd	Sales of goods and materials, purchase
		of materials, acceptance of labours
	Yankuang Group Zoucheng	Sales of goods and materials, purchase of materials
	Jinming Gongmao Co., Ltd
	Shandong Yankuang
	International Coking Co., Ltd	Sales of goods and materials
	Yankuang Group Logistics Co., Ltd	Sales of goods, acceptance of labours
	Yankuang Group Donghua	Sales of goods, purchase of materials,
	Construction Co., Ltd	acceptance of labours service
	Yankuang Group Zoucheng	Sales of goods, purchase of materials
	Jintong Rubber Co., Ltd
	Yankuang Meihua Gongxiao Co., Ltd	Sales of goods
	Shandong Yankuang	Sales of goods
	Jisan Electricity Co., Ltd
	Yankuang Group Coal Chemical Co., Ltd	Sales of goods
	Yanri Coal Slurry Co., Ltd	Sales of goods
	Yankuang Group Xinshiji Co., Ltd	Sales and purchase of materials,
		acceptance of labours service
	Yankuang Donghua Zoucheng	Sales of goods
	Haitian Trading Co., Ltd
	Yankuang Group Electrical and	Sales and purchase of materials,
	Machinery Equipment Co., Ltd	acceptance of labours service
	Yankuang Guotai Chemicals Co., Ltd	Sales of materials
	Yankuang Group Hailu	Sales of materials
	Construction Co., Ltd
	Yankuang Donghua 37 Chu	Acceptance of labours service
	Yankuang Donghua Geological Co., Ltd	Acceptance of labours service
	Yankuang Donghua Jianan Co., Ltd	Purchase of materials, Acceptance of labours service

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IX. RELATIONSHIP OF RELATED PARTIES AND THEIR TRANSACTIONS – CONTINUED

i. RELATIONSHIP OF RELATED PARTIES – continued

4. Other related parties (limited to transaction with the Group) – continued

Type of relationship Related parties Transactions Yankuang Group Zoucheng Huajiang Purchase of materials, Acceptance of labours service Design and Research Co., Ltd Yankuang Boyang Foreign Economic Purchase of materials, Acceptance of labours service and Trading Co., Ltd Yankuang Group Changlong Purchase of materials Cable Co., Ltd Yankuang Group Fuxing Shiye Co.,Ltd Purchase of materials, Acceptance of labours service Yankuang Group Labour Service Co., Ltd Purchase of materials, Acceptance of labours service Yankuang Group Zoucheng Purchase of materials Dehailan Rubber Co., Ltd Yankuang Xinshiji Kenuode Dianqishebei Co., Ltd Purchase of materials, Acceptance of labours service Yanzhou Dongfang Jidian Co., Ltd Purchase of materials, Acceptance of labours service Yankuang Group Beisu Coal Mine Sales of materials, Acceptance of labours service Yankuang Group Finance Co., Ltd Other enterprises under control of Sales and purchase of materials, the same controlling shareholder acceptance of labours service

• (2) Joint ventures Ashton Mining Co., Ltd

Dealing payments, sales of goods

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ii. RELATED PARTY TRANSACTIONS

1. Goods purchasing

Type and name of related parties	Jan 1-June 30, 2011 Jan 1-June 30, 2010 Amount Proportion Amount Proportion
Controlling shareholder and entities it controls Total	343,589,217 9 198,954,672 7
	343,589,217 9 198,954,672 7

Note: Based on market price or negotiated price.

2. Goods sales

Type and Name of related parties	Jan 1-June 30, 2011 Jan 1-June 30, 2010 Amount Proportion Amount Proportion
Controlling shareholder and entities it controls (Coal sales) Joint Ventures (Coal sales) Controlling shareholder and entities it controls (Materials sales) Controlling shareholder and entities it controls (Electricity power supply and heat supply) Total	826,566,897 4 1,069,801,548 7 726,957,049 4 500,069,518 3 236,119,985 44 188,943,408 50 96,035,134 38 122,988,000 22
	1,885,679,065 1,881,802,474

Note: Based on market price or negotiated price.

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ii. RELATED PARTY TRANSACTIONS – continued

3. Guarantee

				Guarantee	Guarantee
Assurance Provider		Secured party	Amount guaranteed	starting date	maturity date	Completion
Yankuang Group		Shanxi Neng Hua	RMB121 million	2006-02-13	2018-02-19	No
The Company (note 1)		Yancoal Australia	USD2.9 billion	2009-12-16	2014-12-16	No
The Company (note 1)		Yancoal Australia	USD140 million	2009-12-09	2014-12-16	No
Yancoal Australia		Austar	AUD5.59 million	2010-08-25	2011-08-24	No
Felix (note 2)		7 Subsidiaries of Felix	AUD20.20 million	2005-08-09		No
Felix (note 2)	2	Entities and joint ventures	AUD2.01 million	2006-09-19		No
		under joint control of Felix

• Note1: The Company’s controlling shareholder Yankuang Group provides counter-guarantee for this guarantee event.

• Note 2: The borrowing of port construction provided by Commonwealth Bank of Australia was cross-guaranteed by Felix and its subsidiaries. Meanwhile, Felix pledged its key assets as collateral. As at 30 June 2011, the collateral included AUD129.5 million of accounts receivable, AUD723.75 million of fi xed assets, AUD52.29 million of construction in progress and AUD 2,802.62 million of intangible assets.

4. Transaction with key management Total amount of remuneration paid to key management (including salaries, welfare and subsidies paid in the form of cash, goods and others), for the period from January 1 to June 30, 2011 is RMB 4.44 million.

5. Free use of trademark The trademark of the Company registered and owned by controlling shareholder, can be freely used by the Company.

6. Deposits in Yankuang Group Finance Company Limited As at the end of this reporting period, the balance of deposits of the Company in Yankuang Group Finance Co. Ltd was RMB1.4 billion. The interest income during this reporting period was RMB3.07 million, and the service fee payment was RMB 3.58 million.

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ii. RELATED PARTY TRANSACTIONS – continued

7. Establishment of Shaanxi Future Energy Chemical Corp. Ltd as a Joint Stock Company

As approved at the seventeenth meeting of the fourth session of the Board held on 30 December 2010, Shaanxi Future Energy Chemical Corp. Ltd (“Future Energy”) was jointly funded and established by the Company, Yankuang Group and Shaanxi Yanchang Petroleum (Group) Corp. Ltd on 25 February 2011. The registered capital of Future Energy is RMB5.4 billion, in which Yankuang Group will contribute RMB 2.70 billion in cash, representing 50% of total registered capital, the Company and Shaanxi Yanchang Petroleum (Group) Corp. Ltd will both contribute RMB1.35 billion in cash, representing an equity interest of 25% respectively. The registered capital will be paid in full in 3 instalments before August 2012. By the end of this reporting period, the Company had injected RMB540 million. Future Energy will mainly engage in investment and participation in the coal liquefaction project in Shaanxi Province as well as the preparation for development of compatible coal mines.

8. Other transactions

Pursuant to an agreement signed between the Company and Yankuang Group, Yankuang Group manages employees’ social insurance for the Company. Amount charged to expenses of the Company for the period from January 1-June 30, 2011 and the period from January 1-June 30, 2010 are RMB564.88 million and RMB481.97 million respectively.

Pursuant to an agreement signed between the Company and Yankuang Group, Yankuang Group manages the retired personnel for the Company. Amount charged to expenses of the Company for the period from January 1-June 30 2011 and period from January 1-June 30, 2010 are RMB255.06 million and RMB218.38 million respectively.

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 period, transaction price shall be determined by market price, government pricing or negotiated price.

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ii. RELATED PARTY TRANSACTIONS – continued

8. Other transactions – continued

Items	Jan 1-June 30 Jan 1-June 30, 2011 2010 (million) (million)
Laboring received from the Group Construction service Road transportation fee Gas and heating expenses Buildings management fee Technicians training fee Repairs service Employees’ benef ts Environmental protection and greening Communication services Others Subtotal	48.81 43.01 27.10 30.44 – 20.40 70.00 70.00 13.00 13.00 131.55 90.25 12.01 15.64 20.85 20.85 14.26 14.66 23.05 23.03
	360.63 341.28

iii. Amount due to or from related party 1. Notes receivables Related parties (Items) Parent company Other enterprises under the control of the same parent company Total 2. Accounts receivables Related parties (Items) Other enterprises under the control of the same parent company Joint ventures Total	iii. Amount due to or from related party 1. Notes receivables Related parties (Items) Parent company Other enterprises under the control of the same parent company Total 2. Accounts receivables Related parties (Items) Other enterprises under the control of the same parent company Joint ventures Total	At June 30, At January 1, 2011 2011
	Parent company Other enterprises under the control of the same parent company Total Accounts receivables Related parties (Items)	– 300,000 316,722,148 879,032,580
		316,722,148 879,332,580
		At June 30, At January 1, 2011 2011
	Other enterprises under the control of the same parent company Joint ventures Total	763,099 79,721 61,885,043 53,450,049
		62,648,142 53,529,770

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iii. Amount due to or from related party – continued

3. Other receivables

4. 5. 6.	Related parties (Items)	At June 30, At January 1, 2011 2011
	Parent company Other enterprises under the control of the same parent company Joint ventures Total Prepayment Related parties (Items)	17,134,070 16,894,070 26,512,143 28,316,469 199,633,652 115,479,966
		243,279,865 160,690,505
		At June 30, At January 1, 2011 2011
	Other enterprises under the control of the same parent company Total Notes payable Related parties (Items)	125,792,063 –
		125,792,063 –
		At June 30, At January 1, 2011 2011
	Other enterprises under the control of the same parent company Total Accounts payables Related parties (Items)	1,997,708 500,000
		1,997,708 500,000
		At June 30, At January 1, 2011 2011
	Parent company Other enterprises under the control of the same parent company Total	338,284 338,284 32,669,723 88,596,988
		33,008,007 96,878,266

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IX. RELATIONSHIP OF RELATED PARTIES AND THEIR TRANSACTIONS – CONTINUED

iii. Amount due to or from related party – continued

7. Other payables

Related parties (Items)	At June 30, At January 1, 2011 2011
Parent company Other enterprises under the control of the same parent company Total Advance from the related parties Related parties (Items)	1,927,904,501 855,013,956 199,963,465 323,880,880
	2,127,867,966 1,178,894,836
	At June 30, At January 1, 2011 2011
Other enterprises under the control of the same parent company Total	149,593,660 95,075,975
	149,593,660 95,075,975

8. Advance from the related parties

X. CONTINGENCY

1. Guarantees

As at June 30, 2011, detailed information about the guarantees provided by the Company, Yancoal Australia and Felix to other subsidiaries of the Group is stated in Note IX.(2)3.

1. As at June 30, 2011, the Group does not have any other signifi cant contingencies.

XI. COMMITMENTS

1. Ongoing investment agreement and related fi nancial expenditure

• (1) The Company entered into an agreement with two independent third parties to establish a company to operate Yulin Yushuwan Coal Mine in Shaanxi in August 2006. Pursuant to agreement, the Company shall pay RMB196.80 million, and the Company has paid RMB117.93 million. By June 30, 2011, RMB78.87 million is still not paid by the Company. As at this reporting date, the Company’s application legal fi les for establishment and registration have been submitted to National Development and Reform Committee (Shaan Development and Reform Coal and Electricity (2009) No. 1652) and related government departments, and are still waiting to be approved.

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XI. COMMITMENTS – CONTINUED

1. Ongoing investment agreement and related fi nancial expenditure – continued

• (2) The Company entered into equity transfer agreements and supplemental agreements with three independent third parties on 16 September 2010 and 19 October 2010 to acquire 51% equity interests of Inner Mongolia Haosheng Coal Mining Company Limited and increased registered capital as per share proportion. The Company also entered into equity transfer agreements with two independent third parties on 31 March 2011 to acquire 10% equity interest of Haosheng Company. It is agreed that the total consideration for acquisition and capital contribution was RMB 8,013.94 million. As at the end of the reporting period, RMB 2,439.88 million has been paid by the Company and RMB 5,574.06 million was still unpaid.

• (3) As described in IX.ii.7, the Company, Yankuang Group and Shaanxi Yanchang Petroleum (Group) Corp. Ltd entered into a co-operative agreement to establish Shaanxi Future Energy Chemical Corp. Ltd as a joint stock company. It is agreed that capital contribution of the Company was RMB 1.35 billion. As at the end of the reporting period, RMB 540 million of initial investment has been paid and RMB 810 million was still unpaid.

• Ongoing lease agreements and related fi nancial infl uence As at June 30, 2011 (T), the amount shall be carried by the Group for irrevocable operating lease and fi nance lease of machinery and equipments, buildings, etc stated as the follows.

Terms	Operating lease Finance lease
T+1years T+2years T+3years T+3years later Total	7,686,040 – 1,899,462 – 1,081,997 – 217,895 –
	10,885,394 –

1. By June 30, 2011, the Group’s other commitments which have not been recognized in the fi nancial statements are as follows:

Commitments	June 30, 2011 January 1, 2011
Capital expenditure-purchase and construction of assets Total	1,321,460,000 1,021,910,000
	1,321,460,000 1,021,910,000

1. Except for the above stated commitments, the Company has no other signifi cant commitments by June 30, 2011.

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XII. EVENTS AFTER BALANCE SHEET DATE

• (1) As approved at the meeting of general managers of the Company held on 6 April 2011, Austar Coal Mine Pty Ltd, a subsidiary of Yancoal Australia, entered into an acquisition agreement with an independent third party to acquire 100% equity interests in Syntech Holdings Pty Ltd and Syntech Holdings II Pty Ltd for a consideration of AUD202.5 million. Syntech Holding Pty Ltd and Syntech Holdings II Pty Ltd are mainly engaged in exploration, production, washing and selecting, and processing of coals. The transaction has been approved by domestic and overseas governments and supervisory departments. The equity transfer was completed on 1 August 2011.

• (2) As approved at the meeting of general managers of the Company held on 9 July 2011, Ordos Neng Hua, the subsidiary of the Company, entered into an equity transfer agreement with an independent third party and its controlling entity to acquire 80% equity interest of Inner Mongolia Xintai Coal Mining Company Limited with a consideration of RMB 2,801.6 million. Inner Mongolia Xintai Coal Mining Co. Ltd owns and manages Wenyu Coal Mine located in Inner Mongolia. RMB 2.47 billion of initial investment payment of the consideration was paid on 18 July 2011.

• (3) As at the date of this report, except for the above stated events, the Group has no other signifi cant events after balance sheet day to claim.

XIII. SEGMENT REPORT

1. Segment report during January 1 to June 30, 2011

Items

Railway Electricity Coal mining transportation power and Undistributed Inter-segment business business methanol items elimination Total

Operating revenue – External – Inter-segment Operating cost and expenses – External – Inter-segment – Overheads Total operating prof t (loss) Total assets Total liabilities Complementary information Depreciation and amortization Non-cash expenses excluding depreciation and amortization Capital expenditure

20,109,004,046 268,571,404 1,148,040,036 21,250,155 789,739,396 20,757,126,245 19,765,746,037 242,876,785 745,343,621 3,159,802 – 20,757,126,245 343,258,009 25,694,619 402,696,415 18,090,353 789,739,396 – 13,004,953,581 239,058,907 1,133,822,198 17,909,820 686,963,460 13,708,781,046 10,316,997,768 150,951,584 693,065,905 2,815,982 – 11,163,831,239 338,207,263 15,990,121 322,157,132 10,608,944 686,963,460 – 2,349,748,550 72,117,202 118,599,161 4,484,894 – 2,544,949,807 7,104,050,465 29,512,497 14,217,838 3,340,335 102,775,936 7,048,345,199 106,380,339,679 618,159,619 4,466,356,707 39,649,165 22,119,263,845 89,385,241,325 59,809,023,128 90,639,327 3,068,212,257 17,492,881 13,081,089,941 49,904,277,652 1,018,970,261 36,779,948 243,127,254 1,422,323 – 1,300,299,786 – – 988,609 – – 988,609 4,809,315,871 18,737,935 35,832,510 170,156 – 4,864,056,472

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XIII. SEGMENT REPORT

2. Segment report during January 1-June 30, 2010

Items	Railway Electricity Coal mining transportation power and Undistributed Inter-segment business business methanol items elimination Total
Operating revenue – External – Inter-segment Operating cost and expenses – External – Inter-segment – Overheads Total operating prof t Total assets Total liabilities Complementary information Depreciation and amortization Non-cash expenses excluding depreciation and amortization Capital expenditure	14,571,189,081 282,803,027 1,191,505,468 24,975,357 –469,128,977 15,601,343,956
	14,470,757,568 258,250,495 862,142,417 10,193,476 – 15,601,343,956 100,431,513 24,552,532 329,363,051 14,781,881 –469,128,977 –
	11,150,455,054 225,582,062 1,205,878,920 23,294,467 –450,803,993 12,154,406,510
	7,376,734,150 141,583,765 797,376,849 8,044,069 – 8,323,738,833 169,804,550 13,791,703 255,862,200 11,345,540 –450,803,993 – 3,603,916,354 70,206,594 152,639,871 3,904,858 – 3,830,667,677
	3,420,734,027 57,220,965 –14,373,452 1,680,890 –18,324,984 3,446,937,446
	69,383,391,994 658,950,867 4,923,137,026 51,053,575 –11,032,158,740 63,984,374,722 34,855,809,081 43,060,379 3,442,336,079 28,387,281 –4,378,979,894 33,990,612,926 872,494,248 41,910,473 246,913,592 1,449,645 – 1,162,767,958 –395,162 – 42,357 219,366 – –133,439 1,633,606,522 668,000 211,003,644 – – 1,845,278,166

XIV. OTHER IMPORTANT EVENTS

1. Mining rights

According to the Mining Rights Agreement signed between the Company and the Group in October, 1997 and supplementary agreement signed in February, 1998, an annual fee as compensation for mining rights of fi ve coal mines owned by the Yankuang Group is RMB12.98 million which is subject to new regulations after a ten-year period if they come out.

Pursuant to Implement Scheme about Experimental Units of Coal Mining Rights Paid which was approved by the State Council and jointly issued by the Ministry of Finance, State Resources Department and Development and Reformation Committee in September, 2006, despite free mining rights developed and invested by the country, enterprises should pay mining price on the base of reevaluation on remaining resource reserves. Shandong Province is one of the experimental provinces carrying paid mining rights. By the reporting day, the Company has been making assessment on remaining reserves. Pursuant to decision made in the sixth meeting of the Forth Board, compensation fee of RMB5 is accrued at per ton raw coal minded for the fi ve coal mines owned by the Company, which is subject to detailed scheme when it comes out. RMB140.71 million has been accrued according to this criterion for the year of 2010. RMB70.67 million has been accrued according to this criterion during the period from January1, 2011 to June 30, 2011.

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XIV. OTHER IMPORTANT EVENTS – CONTINUED

2. Assets and liabilities measured at fair value

Items At	Provision Gain or loss Accumulative for the from change of change of fair impairment fair value for the value charged for the At June 30, January 1, 2011 current period in equity current period 2011
Financial assets Tradable f nancial assets – hedging instrument Available-for-sale f nancial assets Subtotal Financial liabilities Tradable f nancial liabilities – hedging instrument Subtotal	239,475,434 – 122,105,786 – 418,369,600 194,259,526 – 3,445,707 – 198,853,830 433,734,960 – 125,551,493 – 617,223,430 166,177,927 – 23,498,538 – 191,696,949 166,177,927 – 23,498,538 – 191,696,949

3. Financial assets and liabilities denominated in foreign currency

Items At	Provision Gain or loss Accumulative for the from change of change of fair impairment fair value for the value charged for the At June 30, January 1, 2011 current period in equity current period 2011
Financial assets Bank balance and cash Tradable f nancial assets – hedging instrument Loans and accounts receivables Available for sales Financial assets Subtotal Financial liabilities Tradable f nancial liabilities – hedging instrument Others f nancial liabilities Subtotal	3,086,208,903 – – – 5,737,738,928 239,475,434 – 122,105,786 – 418,369,600 819,265,506 – – – 1,215,062,662 947 – – – 975 4,144,950,790 – 122,105,786 – 7,371,172,165 15,528,284 – –6,504,477 – 6,567,956 23,431,131,489 – – –20,508,748,174 23,446,659,773 – –6,504,477 –20,515,316,130

200

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4. Additional conditions for the acquisition of Felix

On October 23, 2009, the Treasury of the Australian government announced that the Assistant Treasurer of Australia has conditionally approved the Transaction.

• (1) Operate its Australian mines through Yancoal Australia, which is managed in Australia using a predominately Australian management and sales team;

• (2) Ensure Yancoal Australia, and any of its operating subsidiaries, have at least two directors whose principal place of residence is in Australia, one of whom will be independent of the Company;

• (3) Ensure that the Chief Executive Offi cer and Chief Financial Offi cer of Yancoal Australia have their principal place of residence in Australia;

• (4) Hold the majority of Yancoal Australia’s board meetings in Australia in any calendar year;

• (5) List Yancoal Australia on ASX prior to the end of 2012 and, by that time, reduce the Company’s shareholding of Yancoal Australia to no more that 70%, and following the listing the Company’s economic ownership of the underlying mining assets shall be reduced to no more than 50%. In the event of potential non-performance by the Company as a result of economic conditions or other factors, the Company is required to seek the approval of the Assistant Treasurer of Australia for amending the aforesaid undertakings; and

• (6) Market all coal produced at its Australian mines in arm’s length with reference to international benchmarks and in line with market practices.

• Pursuant to “Temporary Management Measurements for Deposit of Shandong Province Mine Geological Environment Restoration” Lu Caizheng [2005] No.81 and respective regulations issued by the Shandong Province Finance Bureau and Shandong Province Land resource Bureau, the mining rights owners shall implement obligation of mine environment restoration and hand in geological environment restoration deposit. The interests and principal of the deposit shall be returned to the mining rights owners after the acceptance of such restorations. In accordance with the provisions of such regulation, the Company and the subsidiary Heze Nenghua shall hand in the deposit of RMB 1,076.36 million and RMB903.19 million before the expiration of mining rights. By the end of the period, the Company and the subsidiary Heze Nenghua have handed in RMB200 million and RMB22 million.

• Pursuant to the decision in the eleventh meeting of the Fourth Session of the Board on December 30, 2010, the Company made a resolution to use its own capital for investing AUD909 million to the subsidiary of Yancoal Australia Pty Ltd, the registered capital of which was increased to AUD973 million from AUD64 million. As at the reporting date, related capital contribution process has not been completed.

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XIV. OTHER IMPORTANT EVENTS – CONTINUED

1. Ordos Neng Hua, a subsidiary of the Company, entered into the assets transfer agreement and supplemental agreement with independent third party and its controlling entity on 20 November 2010 and 20 January 2011 for the acquisition of all assets and equities of Anyuan coal mine owned by the independent third party in Nalintaohe Town of Inner Mongolia Ejin Horo Banner City, for a consideration of RMB 1.435 billion. These assets and equities include: mining rights of the coal mine; intangible assets such as land use rights; real estate ownership; machinery equipments and other fi xed assets related to businesses with Anyuan coal mine and related rights. By the end of this reporting period, the Company has paid all of the asset transfer payment. As at the date of this reporting period, the registration of business license, mining license, coal production license, safety production license, coal business license and state-owned land use rights license of Anyuan coal mine are still under modifi cation.

XV. NOTES TO STATEMENTS OF FINANCIAL STATEMENTS OF THE PARENT COMPANY

1. Accounts receivable

• (1) Accounts receivable by category

	At June 30, 2011 At January 1, 2011 Book value Bad debt Provision Book value Bad debt Provision Amount RMB % Amount RMB %Amount RMB % Amount RMB %
Accounts receivables accrued debt provision as per portfolio Accounting aging portfolio Risk-free portfolio The subtotal of portfolio Total	– – – – – – – – 44,269,144 24 5,357,473 100 42,247,450 51 5,227,650 100 142,346,314 76 – – 40,000,000 49 – – 186,615,458 100 5,357,473 100 82,247,450 100 5,227,650 100
	186,615,458 100 5,357,473 100 82,247,450 100 5,227,650 100

1) There was no the individual signifi cant amounts of account receivables accrued the bad debt provision separately for the reporting period.

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1. Accounts receivable – continued

• (1) Accounts receivable by category – continued

• 2) Accounts receivables in the portfolio accrued the bad debt provision as per accounting aging analysis method

Items	At June 30, 2011 At January 1, 2011 Amount Bad debt Amount Bad debt RMB % provision RMB % provision
Within 1 year 1-2 years 2-3year Over 3 years Total	39,442,984 4 1,577,719 37,609,578 4 1,504,383 1,494,867 30 448,461 1,306,579 30 391,974 – 50 – – 50 – 3,331,293 100 3,331,293 3,331,293 100 3,331,293
	44,269,144 – 5,357,473 42,247,450 – 5,227,650

• 3) Accounts receivables in the portfolio accrued bad debt provision under other method

Item	Carrying Bad debt amount amount
Risk-free portfolio Total	142,346,313 –
	142,346,313 –

Note: As of the end of the period, all risk-free portfolios are letters of credit issued by banks.

• (2) Accounts receivable due from shareholders of the Group holding more than 5% (including 5%) of the total shares are not included for the period.

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1. Accounts receivable – continued

(3) The fi ve largest debtors

Relationship with Company name the Company	Proportion of total accounts Amount Aging receivables (%)	Proportion of total accounts Amount Aging receivables (%)
Letter of credit of Third party Shandong Jinneng Coal Gasif cation Co.,Ltd Baoshan Iron & Steel Third party Co.,Ltd. Shandong Hua Ju Holding subsidiary Energy Co.,Ltd Guangzhou Suitong Third party Material company Yanzhou Anqiufu Depot Third party Total	130,000,000 Within 1year 38,825,983 Within 1year 8,468,384 Within 1year 1,439,726 Within 1year 1,306,579 1-2 years 180,040,672	70 21 5 1 1
		98

2. Other receivables

(1) Other receivables by category

	At June 30, 2011 At January 1, 2011 Book value Bad debt Provision Book value Bad debt Provision Amount Amount Amount Amount RMB % RMB % RMB % RMB %
Accounts receivables accrued debt provision as per portfolio Accounting aging portfolio Risk-free portfolio The subtotal of portfolio Total	– – – – – – – – 21,497,482 1 13,720,786 100 17,495,686 1 13,850,609 100 8,907,076,640 99 – – 3,415,539,981 99 – – 8,928,574,122 100 – – 3,433,035,667 100 13,850,609 100
	8,928,574,122 100 13,720,786 100 3,433,035,667 100 13,850,609 100

• 1) There was no the individual signifi cant amounts of other receivables accrued the bad debt provision separately for the reporting period.

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2. Other receivables – continued

• (1) Other receivables by category – continued

• 2) Other receivables in the portfolio accrued the bad debt provision as per accounting aging analysis method

Items	At June 30, 2011 At January 1, 2011 Amount Bad debt Amount Bad debt RMB % provision RMB % provision
Within 1 year 1-2 years 2-3year Over 3 years Total	4,386,857 4 175,474 82,892 4 3,316 5,010,000 30 1,503,000 5,010,931 30 1,503,279 116,627 50 58,314 115,698 50 57,849 11,983,998 100 11,983,998 12,286,165 100 12,286,165
	21,497,482 – 13,720,786 17,495,686 – 13,850,609

• 3) Other receivables in the portfolio accrued bad debt provision under other method

Item	Carrying Bad debt amount amount
Risk-free portfolio Total	8,907,076,640 –
	8,907,076,640 –

Note: As of the end of the year, risk-free portfolio included RMB8699.88 million of prepayment for investment.

• (2) As at June 30, 2011, the account receivables due from parent company of the Company were RMB16.89 million (RMB16.89 million at December 31, 2010).

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2. Other receivables – continued

• (3) The fi ve largest other debtors

Relationship with Company name the Company	Proportion of other receivables Nature or Amount Age (%) contents	Proportion of other receivables Nature or Amount Age (%) contents
Yancoal Australia Pty Limited Holding subsidiary Prepayment of investment Third party Shanxi Heshun Tianchi Holding subsidiary Energy Co., Ltd. Yanmei Heze Neng Hua Co., Ltd. Holding subsidiary Yankuang Guohong. Under control of the same Chemicals Co., Ltd controlling shareholder Total	6,297,333,591 Within 1year 2,439,880,800 Within 1year 52,151,172 Within 1year 23,004,096 Within 1year 10,170,900 Within 1year 8,822,540,559	71 Investment fund payment and funds paid on others’ behalf 27 Investment fund payment 1 Materials – Materials – Materials 99

• (4) Other receivables due from related parties were RMB6428.28 million by the end of the period, accounting for 72% of total other receivables.

• (5) Other receivables denominated in foreign currency

Item	At June 30, 2011 At January 1, 2011 Original Exchange RMB Original Exchange RMB currency rate equivalent currency rate equivalent
USD Total	– – – 15,215,675 6.6227 100,768,851
	– – – 100,768,851

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3. Long-term equity investment

• (1) Long-term equity investment

Items	Items	At June 30, At January 1, 2011 2011
Long-term equity investments under cost method 8,948,640,546 6,348,640,546 Long-term equity investments under equity method 1,629,095,832 1,074,958,369 Long-term equity investments – Total 10,577,736,378 7,423,598,915 Less: provision for impairment – – Long-term equity investments – net 10,577,736,378 7,423,598,915 Under cost method and equity method Name of Shareholding Voting rights Original Opening Closing Cash investees proportion proportion amount balance Additions Reversals Balance dividends (%) (%)		8,948,640,546 6,348,640,546 1,629,095,832 1,074,958,369 10,577,736,378 7,423,598,915 – –
		10,577,736,378 7,423,598,915
Under cost method Qingdao Zhongyan 52.38 52.38 Yanmei Shipping 92.00 92.00 Heze Neng Hua 98.33 98.33 Yancoal Australia 100.00 100.00 Yulin Neng Hua 100.00 100.00 Shanxi Neng Hua 100.00 100.00 Ordos NengHua 100.00 100.00 Hua Ju Energy 95.14 95.14 Subtotal Under equity method China HD Zouxian Co., Ltd. 30.00 30.00 Yankuang Group Finance Co., Ltd. 25.00 25.00 Shaanxi Future Energy Chemicals Co., Ltd. 25.00 25.00 Subtotal Total	1,100,000 2,709,904 – – 2,709,904 – 3,430,000 10,575,733 – – 10,575,733 5,060,000 1,450,000,000 2,924,343,542 – – 2,924,343,542 – 403,281,954 403,281,954 – – 403,281,954 – 776,000,000 1,400,000,000 – – 1,400,000,000 – 600,000,000 508,205,965 – – 508,205,965 – 500,000,000 500,000,000 2,600,000,000 – 3,100,000,000 – 599,523,447 599,523,448 – – 599,523,448 –
	4,333,335,401 6,348,640,546 2,600,000,000 – 8,948,640,546 5,060,000
	900,000,000 947,855,961 7,078,491 – 954,934,452 – 125,000,000 127,102,408 7,058,972 – 134,161,380 – 540,000,000 – 540,000,000 – 540,000,000 –
	1,565,000,000 1,074,958,369 554,137,463 – 1,629,095,832 –
	5,898,335,401 7,423,598,915 3,154,137,463 – 10,577,736,378 5,060,000

• (2) Under cost method and equity method

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3. Long-term equity investment – continued

• (3) Investment in associates

Type of Registered Business Registered Shareholding Voting rights Name of investees enterprise location nature capital proportion proportion (%) (%)	Total assets Total liabilities Net assets Operating Net prof t by the end of by the end of by the end of income for the for the the period the period the period current period current period
China HD Zouxian Co., Ltd. Limited Tangcun, Electricity power RMB3 billion 30 30 liability Zoucheng resources and Shandong related development, production, investment, sales and construction Yankuang Group Finance Limited Shandong Finance RMB500million 25 25 Co., Ltd. liability province Shaanxi Future Energy Chemicals Limited Shaanxi Liquefaction RMB5.4 billion 25 25 Co., Ltd. liability province of coaland coal mining Total	6,826,559,128 3,643,444,290 3,183,114,838 1,975,236,880 23,594,970 6,428,623,083 5,891,978,079 536,645,004 63,112,553 28,235,888 2,227,742,831 67,742,831 2,160,000,000 – –
	15,482,925,042 9,603,165,200 5,879,759,842 2,038,349,433 51,830,858

(4) No impairment occurred in long-term equity investment of the Company, so there is no provision accrued.

4. Operating revenue and operating cost

Items	Jan 1-June 30, Jan 1-June 30, 2011 2010
Principal operating revenue Other operating revenue Total Principal operating cost Other operating cost Total	13,652,153,510 12,121,654,675 652,767,667 449,245,825
	14,304,921,177 12,570,900,500 7,201,818,809 5,875,894,275 708,343,489 508,480,549
	7,910,162,298 6,384,374,824

208

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4. Operating revenue and operating cost – continued

• (1) Principal operations – Classifi cation by business

Items	Jan 1-June 30, 2011 Jan 1-June 30, 2010 Operating revenue Operating costOperating revenue Operating cost
Coal mining Other Total	13,409,276,725 7,050,867,226 11,863,404,180 5,734,310,510 242,876,785 150,951,583 258,250,495 141,583,765
	13,652,153,510 7,201,818,809 12,121,654,675 5,875,894,275

• (2) Principal operations – Classifi cation by product

Items	Jan 1-June 30, 2011 Jan 1-June 30, 2010 Operating revenue Operating cost Operating revenue Operating cost
Revenue from domestic sales of coal products Revenue from export sales of coal products Sales of coal purchased from other companies Revenue from railway transportation services Total	10,968,854,600 4,651,532,862 10,350,630,403 4,239,150,602 6,731,736 4,204,642 2,935,179 1,258,018 2,433,690,389 2,395,129,722 1,509,838,598 1,493,901,890 242,876,785 150,951,583 258,250,495 141,583,765
	13,652,153,510 7,201,818,809 12,121,654,675 5,875,894,275

• (3) Principal operations – Classifi cation by area

Area	Jan 1-June 30, 2011 Jan 1-June 30, 2010 Operating revenue Operating cost Operating revenue Operating cost
Domestic International Total	13,645,421,774 7,197,614,167 12,118,719,496 5,874,636,257 6,731,736 4,204,642 2,935,179 1,258,018
	13,652,153,510 7,201,818,809 12,121,654,675 5,875,894,275

(4) Total sales amount of the 5 largest customers in the reporting period is RMB4,145.22 million, which accounts for 30% in total revenue.

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XV. NOTES TO STATEMENTS OF FINANCIAL STATEMENTS OF THE PARENT COMPANY – CONTINUED

5. Investment income

• (1) Sources of investment income

Items	Jan 1-June 30, Jan1-June 30, 2011 2010
Long-term equity investment income under cost method Long-term equity investment income under equity method Investment income of entrust loan Investment income of AFS f nancial assets Total Long-term equity investment income under equity method Jan 1-June 30, Jan Item 2011	5,060,000 – 14,137,463 –7,962,542 62,923,499 110,336,866 2,433,305 4,504,096
	84,554,267 106,878,420
	1-June 30, Reason 2010 of change
Total 14,137,463 –7,962,542 Including: China HD Zouxian Co., Ltd. 7,078,491 –7,962,542 HD Zouxian’sprof t increased during current period Yankuang Group Finance Co., Ltd. 7,058,972 – Newly increased

• (2) Long-term equity investment income under equity method

• (3) There is no major limit on recovery of investment income to the Group.

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6. Supplementary information of cash fl ow statement of the parent company

Items	Jan 1-June 30, Jan 1-June 30, 2011 2010
1. Reconciliation of net prof t to net cash f ow from operating activities Net prof t Add: Provision of impairment of assets Depreciation of f xed assets Amortization of intangible assets Amortization of long-term deferred expenses Special reserves accrued Gains or losses on disposal of f xed assets, intangible and other long-term assets (“-” represents gain) Gains or losses on fair value changes (“-” represents gain) Finance costs (“-” represents gain) Gains or losses arising from investments (“-” represents gain) Effect of deferred taxes assets(“-” represents increase) Decrease in inventories (“-” represents increase) Decrease in receivables under operating activities (“-” represents increase) Increase in payables under operating activities (“-” represents decrease) Net cash f ow from operating activities 2. Changes in cash and cash equivalents: Cash, closing Less: Cash, opening Net addition in cash and cash equivalents	3,226,205,508 3,429,474,620 – – 473,150,696 477,531,893 8,432,343 8,403,438 3,750 – 236,275,892 238,276,388 –2,073,711 –3,573,954 34,479,350 – 37,095,602 4,139,190 –84,554,267 –106,878,420 –146,899,788 –146,607,450 196,713,011 –211,966,601 6,628,628,935 –2,150,717,777 –285,386,774 33,725,679
	10,322,070,547 1,571,807,006
	6,483,975,340 7,742,369,197 5,336,180,576 6,724,043,764
	1,147,794,764 1,018,325,433

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CHAPTER 7 CONSOLIDATED FINANCIAL STATEMENTS – CONTINUED

XVI. SUPPLEMENT

1. Reconciliation for differences of net profi ts and net assets

Items	Equity attributable to parent Net prof t attributable to parent company shareholders company shareholders Jan 1-June 30, Jan 1-June 30, At June 30, 2011 At Jan 1, 2011 2011 2010
As per the f nancial statements prepared under IFRS 1) Business combination adjustment under common control(note 1) 2) Special reserves (note 2) 3) Deferred tax effect (note 3) 4) Others As per PRC ASBEs	39,845,364,847 37,331,886,252 5,183,335,432 2,715,438,944 –639,639,890 –642,100,925 3,026,732 3,748,563 –506,161,751 –610,766,370 –196,031,163 –136,526,307 688,535,849 648,135,011 41,042,686 38,773,289 –2,355,228 –5,434,720 2,357,414 11,533,309 39,385,743,827 36,721,719,248 5,033,731,101 2,632,967,798

• (1) Pursuant to CASs, when relevant assets and subsidiaries purchased from Yankuang Group come into combination with enterprises under the common control, assets and liabilities of acquiree should be measured based on book value on the date of acquisition. The difference of book value of net assets acquired by the Company and consolidation price paid was adjusted as capital reserves. While pursuant to IFRS, acquirees recognize identifi able assets, liabilities and contingent liabilities according to the fair value on the date of acquisition. When the cost of a business combination exceeds the acquirer’s interest in the fair value of the acquiree’s identifi able asset, liabilities and contingent liabilities, the difference shall be recognized as goodwill.

• (2) As stated in Note IV.20, in accordance with relevant regulations of the Chinese authorities, the company has to accrue for special reserve like Weijianfei, Work Safety expenses etc, which are presented in cost of expenses of the period and the amount that has been accrued but not used are presented in special reserve of owner’s equity. Fixed assets purchased with special reserve, are presented in related assets and full amount carryover accumulated depreciation. On the basis of IFRS, expenses are confi rmed when it occurs in the period, and relevant capital expenditures are confi rmed as fi xed assets when occurs and depreciated following corresponding depreciating method.

• (3) The differences between the above mentioned standards bring differences in tax and infl uence of minority equity.

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XVI. SUPPLEMENT – CONTINUED

2. Extraordinary gains or losses

Pursuant to Explanation to Information Disclosure and Presentation Rules for Companies Making Public Offering No.1 Extraordinary Gains or Losses (2008) , extraordinary gains or losses of the Company are as follows:

Items	Jan 1-June 30, Jan 1-June 30, 2011 2010
Gains or losses from disposal of non-current assets Government subsidies included in the prof t and loss in current period Investment income from available-for-sale f nancial assets Gains and losses from entrusted loans Other non-operating revenues and expenses expect for the above items Others Subtotal Income tax effect Extraordinary gains or losses excluding income tax effect Including: attributable to shareholders of the parent company Minority interest effect(after tax)	–7,776,147 –6,987,087 5,600,675 5,145,270 2,433,305 4,504,096 – – –3,248,317 –11,578,699 – –
	–2,990,484 –8,916,420 858,546 3,426,468 –2,131,938 –5,489,952 –2,381,252 –5,664,799 249,314 174,847

3. Return on net assets and earnings per share

Pursuant to Information Disclosure and Presentation Rules for Companies Making Public Offering No.9 computation and disclosure of Return on net assets and earnings per share Issued by China Securities Regulatory Commission, the weighted average return on net assets and earnings per share of the Company are as follows:

		Earnings per	share
	Weighted average	Basic Earnings	Diluted earnings
Prof t during the report period	return on net assets (%)	per share	per share
Net prof t attributable to shareholders of the parent company	12.74	1.0234	1.0234
Net prof t attributable to shareholders of the parent
company, excluding extraordinary gains or losses	12.75	1.0239	1.0239

XVII. APPROVAL OF FINANCIAL STATEMENTS

The fi nancial statements have been approved by board of directors on August 19, 2011.

Yanzhou Coal Miming Company Limited Interim Report 2011 213

CHAPTER 8 DOCUMENTS AVAILABLE FOR INSPECTION

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

1. The full text of the Interim Report signed by the chairman of the Board;

2. Financial statements of the Company with the corporate seal affi xed and signed by the legal representative, person responsible for accounting work and responsible person of the accounting department;

3. All documents published during the reporting period in newspapers designated by the CSRC;

4. The full text of the interim report released in other securities markets.

5. The Articles

On behalf of the Board

Li Weimin Chairman

Yanzhou Coal Mining Company Limited 19 August, 2011

214 Yanzhou Coal Minning Company Limited Interim Report 2011