Annual Results 2012 - TodayIR · Operation targets in 2013: Sales Target Unit: ‘000 tonnes Production volume of raw coal Sales volume of saleable coal 2013 target 2012 actual Change

Annual Results 2012

Disclaimer

u  The information contained in this presentation is intended solely for your personal reference. In

addition, such information contains projections and forward-looking statements that reflect the

Company’s current views with respect to future events and financial performance. These views are

based on assumptions subject to various risks. No assurance can be given that future events will

occur, that projections will be achieved, or that the Company’s assumptions are correct. Actual

results may differ materially from those projected. Past track record cannot be used as guidance for

future performances.

Saskatchewan

Shandong

Shanxi Inner Mongolia Autonomous Region Shaanxi

Western Australia

Queensland

New South Wales

Geographical Coverage

Page ♣ 1

Hong Kong

1 2012 Operation Review

2 Market Analysis of Major Products

3 2013 Operation Targets

4 Operation Strategies

Page ♣ 2

Agenda

Page ♣ 3

Part I 2012 Operation Review

Three Breakthroughs Five Achievements Four Enhancements

•  Operating scale hit record

high

•  Rapid growth of international

business

•  Three operating regions

came into shape

•  Effective marketing and sales strategies

•  Successful cost control

•  Efficient management of Yancoal Australia

•  Good progress of key projects

•  Healthy and steady financial position

•  Credit rating

•  Quality management

•  Investment value

•  Corporate governance

Production and trading volume exceeded 100 mn tonnes

Sales income reached RMB58.1 bn

Total assets exceeded RMB120 bn Net income recorded RMB6.2 bn

Page ♣ 4

Three Breakthroughs: Economies of scale hit record high

‘000 tonnes RMB bn

RMB bn

101 mn tonnes RMB58.1 bn

RMB122.7 bn

Mining sites in Shandong

Mining sites in other provinces

Overseas mining sites

Coal purchased from other companies

0

2,000

4,000

6,000

8,000

10,000

2011 2012

6,773 4,164

2,100

2,000

23

36

30.3% RMB mn

RMB6.2 bn

Overseas assets account for 39.8% Overseas coal production volume accounts for 33.3%

Overseas coal resources accounts for 36.1%

Page ♣ 5

Three Breakthroughs: Rapid growth of international business

Yanzhou Coal

Yancoal Australia Yancoal International

Austar Coal Mine Pty Ltd Gloucester Coal Limited

Austar coal mine

Yarrabee coal mine

Ashton coal mine

Moolarben coal mine

Gloucester basin

Middlemount coal mine

Donaldson coal mine

Premier coal mine

Cameby Downs coal mine

Yancoal Canada Resources

Holding Co., Ltd

40%

60%

Overseas Domestic

Page ♣ 6

Three Breakthroughs: Three operating regions came into shape

Sales volume of saleable coal ‘000 tonnes

Sales income of saleable coal RMB bn

1 �

2 �

0

20,000

40,000

60,000

80,000

100,000

Total Mining sites in Shandong




64,250

35,280

5,600 10,060 13,310

94,150

36,240

8,180 17,310

32,420

2011 2012

0 10 20 30 40 50 60

Total Mining sites in Shandong




45.5

24.7

1.8 9.4 9.6

56.4

22.4

2.1 10.3

21.6

2011 2012

Page ♣7

Four Enhancements on Management

Asian Recognition for Excellence in Quality Practice

The Most Valuable Listed Company

2012 Information Disclosure Award

The sole Chinese coal mining company won Asian highest quality management award

The Golden Bauhinia Award by China Securities Journal

Top award of Information disclosure among listed

companies

International investment rating

The first coal mining company being rated as “investment grade” in the

world

Significant rebound of selling price in 4Q 2 �

Decrease in selling price was lower than the market level 1 �

Company 2012 2011 Y-O-Y 2012

Change Change (%) 4Q 3Q 2Q 1Q

The Headquarters 612.49 686.01 -73.52 -10.72 591.18 536.48 631.81 691.56

Shanxi Neng Hua 349.59 467.67 -118.08 -25.25 314.26 287.29 376.24 468.21

Heze Neng Hua 725.37 912.86 -187.49 -20.54 671.04 538.40 774.89 844.93

Ordos Neng Hua 237.28 290.71 -53.43 -18.38 288.70 208.48 258.41 277.16

Yancoal Australia 647.81 929.80 -281.99 -30.33 588.19 718.53 642.97 653.60

Yancoal International 335.35 - 335.35 - 344.79 334.62 407.08 -

Average selling price (RMB/tonne)

580

680

780

880

980

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兖州煤业5500大卡混煤现货价格秦皇岛港-山西5500大卡优混煤平仓价

RMB/tonne

70 80 90

100 110 120

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兖煤澳洲动力煤销售平均价格澳大利亚BJ动力煤现货价格

USD/tonne

Page ♣8

Five Achievements: Effective marketing and sales strategies

BJ spot price of thermal coal in Australia

Average selling price of thermal coal in Yancoal Australia

Shanxi Quality Mixed Coal Price in Qinghuangdao

Quality Mixed Coal Spot Price in Yanzhou Coal

Cost of coal sold in the headquarters up 8.97% y-o-y, achieving the goal of controlling

cost increase within 10%

Company 2012 2011 Change (+/-)

Change (%) 2H2012 1H2012

The Headquarters 314.40 288.53 25.87 8.97 310.54 318.48

Shanxi Neng Hua 310.02 332.7 -22.68 -6.82 338.75 268.47

Heze Neng Hua 548.42 649.1 -100.68 -15.51 588.09 513.98

Ordos Neng Hua 168.34 158.59 9.75 6.15 177.13 158.51

Yancoal Australia 438.12 426.27 11.85 2.78 428.29 448.11

Yancoal International 217.59 — — — 212.85 271.33

Average cost of coal sold (RMB/tonne)

Cost Structure (Yancoal Australia)

Page ♣9

Five Achievements: Successful cost control

Cost Structure (The Headquarters)

14.45%

44.90% 9.44%

12.91%

18.30% Materials

Wages and employees’ benefits

Depreciation

Cost for land subsidence

Others

Page ♣10

Five Achievements: Efficient management of Yancoal Australia

1

2

3 Strengthened competitive advantages

Cost control through financial management

Resource integration management

Page ♣11

Middlemount (50% equity) Operation

PCI coal & semi-hard coking coal

Reserves 96mn tonnes Resources 123mn tonnes Sales Volume(2012) 930,000 tonnes

Austar (100% equity) Operation

Semi-hard coking coal & thermal coal

Reserves 49.7mn tonnes

Resources 221mn tonnes Sales Volume(2012) 1.62mn tonnes

Gloucester basin(100% equity)

Operation & Development

Semi-hard coking coal & thermal coal Reserves 69.4mn tonnes Resources 323mn tonnes

Sales Volume(2012) 1.13mn tonnes

Donaldson (100% equity) Operation

semi-soft coking coal & thermal coal Reserves 148mn tonnes

Resources 827mn tonnes


Middlemount coal mine

Yarrabee coal mine

Yarrabee (100% equity) Operation

LV PCI coal Reserves 61.4mn tonnes

Resources 180.6mn tonnes


Austar Coal Mine

Gloucester basin Donaldson coal mine

Ashton coal mine Moolarben coal mine

Moolarben (80% equity) Operation &

Development

Thermal coal Reserves 301mn tonnes

Resources 1,222mn tonnes


Ashton (90% equity) Operation & Development

semi-soft coking coal & thermal coal Reserves 74mn tonnes

Resources 323mn tonnes Sales Volume(2012) 1.1mn tonnes

Premier (100% equity) Operation & Development

Thermal coal Reserves 141mn tonnes

Resources 462mn tonnes


Cameby Downs (100 equity) Operation &

Development

Thermal coal Reserves 288mn tonnes Resources 362mn tonnes


Cameby Downs coal mine

Premier coal mine


Resource integration management

Page ♣12

2012 2011 Change (+/-)

Change (%)

Austar 725.75 538.73 187.01 34.71

Ashton 760.99 669.42 91.57 13.68

Yarrabee 636.26 552.25 84.01 15.21

Moolarben 242.40 227.94 14.46 6.34

Gloucester 645.85 675.18 -29.32 -4.34

Donaldson 572.71 737.24 -164.52 -22.32

Yancoal Australia Average 523.07 499.31 23.76 4.76

Premier 222.53 249.34 -26.81 -10.75

Cameby Downs 225.13 281.38 -56.25 -19.99

Yancoal International Average 223.19 253.65 -30.46 -12.01

Cost of sales for mining sites in Australia (RMB/tonne)


Cost control through financial management


Management competitive advantages

Page ♣13

Management competitive advantages

Global integration of marketing

Product mix of multi-type of coals

Output Enhancement

Complementary advantages among shareholders

Project Equity Interests

Resource Volume

(mn tonnes)

Planned capacity (mn tonnes) Progress

Zhuan Longwan Coal Mine 100% 547.7 5 Under construction, expect to commence operation in

2014

Shilawusu Coal Mine 74.82% 1,144 10 Under construction, expect to commence operation in

2015

Yingpanhao Coal Mine 100% 2,168.2 12 Under construction, expect to commence operation in 2015

Wanfu Coal Mine 98.33% 291.3 1.8 Under construction, expect to commence operation

during the beginning of “The 13th Five-year Plan”

600,000-Tonne Methanol Project in Ordos

100% – 0.6 Under construction, expect to commence trial operation in late 2013

CTL Project and Jin Jitan Coal Mine 25% 1,872 8 Under construction, expect to commence operation in

2014

Moolarben Coal Mine 80% 1,222 17

Annual production capacity in existing mining sites have been granted to increase from 7mn tonnes to 8mn tonnes; expansion plan of Phase II commences with plan to raise coal production capacity up to 17 mn tonnes

Ashton Coal Mine 90% 323 5.2

The development application of Southeast open cut mine has been approved by the Australian Planning Ministry, expect to receive final approval from environmental assessment hearing

Middlemount Coal Mine 50% 123 5.4 Production capacity expands from 1.8 mn tonnes to 5.4 mn tonnes

Page ♣14

Five Achievements: Good progress of key projects

Cash settlement accounts for 68%

Cash Settlement,

68%

Others, 32%

Notes receivables settlement accounts for 65%

Notes receivable settlement,

65%

Others, 35%

Optimize payment settlement

Optimize debt structure

RMB mn 2012-12-31 2011-12-31 Change Change(%)

Cash at bank and on hand� 15,904.3 17,688.5 -1,784.2 -10.09

Note receivables & accounts receivable� 7,459.6 7,312.1 147.5 2.02

Total assets� 122,702.3 97,151.6 25,550.7 26.30

Interest bearing debt� 40,996.4 34,457.8 6,538.6 18.98

• Debt due one year 7,712.6 19,588.5 -11,875.9 -60.63

Shareholders’ equity� 45,826.4 42,634.5 3,191.9 7.49

Net asset value per share (RMB)� 9.32 8.67 0.65 7.50

Interest bearing gearing ratio� 33.41% 35.47% Down 2.06ppt –

Page ♣15

Five Achievements: Healthy and steady financial position

Page ♣ 16

Part II: Market Analysis

Coal market analysis

•  Domestic market

•  Overseas market

Domestic methanol market analysis

Coal price dropped significantly in 2012

•  Emergence of production capacity

•  Lackluster growth in demand

•  Surge in imports

•  Growth in hydro-power

Coal price to fluctuate within a small range in 2013

•  Sufficient supply

•  Strong trend of import

•  Environmental constraints on

protection and energy saving

•  Slow rebound of demand

Page ♣ 17

Domestic Coal Market

Coal price dropped significantly in 2012 Coal price to fluctuate at a low level in 2013

•  Demand from Europe and the US

decreases

•  Demand from Asia increases

•  Stable international export

•  Restricted export from Vietnam and

Indonesia

70

80

90

100

110

120

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Unit: USD/tonne

Price trend of Australia BJ thermal coal in 2012

Page ♣ 18

Overseas Coal Market Analysis

Domestic price saw a continued correction

Domestic price to be adjusted at a low level in 2013

•  Excess capacity

•  Weakened demand

•  Pressure from seaborne exports

2500

2600

2700

2800

2900

3000

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Unit: RMB/tonne

Average domestic methanol price in 2012

Page ♣ 19

Domestic Methanol Market Analysis

Page ♣ 20

Part III: Operation Targets in 2013

Sales target

Costs of sales per tonne target

CAPEX plan

Sales target of coal: 89.85 million tonnes

Page ♣ 21

Operation targets in 2013: Sales Target

Unit: ‘000 tonnes

Production volume of raw coal Sales volume of saleable coal

2013 target 2012 actual Change Change (%) 2013 target 2012 actual Change Change (%)

The Headquarters 34,800 34,290 510 1.49 34,800 33,940 860 2.53

Shanxi Neng Hua �

1,200 1,360 -160 -11.76 1,200 1,340 -140 -10.45

Heze Neng Hua 3,000 2,700 300 11.11 2,600 2,290 310 13.54

Ordos Neng Hua 6,200 6,860 -660 -9.62 6,000 6,840 -840 -12.28

Yancoal Australia 23,520 19,320 4,200 21.74 14,960 14,350 610 4.25

Yancoal International 6,700 3,280 3,420 104.27 5,290 2,970 2,320 78.11

Subtotal of self-produced coal 75,420 67,810 7,610 11.22 64,850 61,730 3,120 5.05


25,000 32,420 -7,420 -22.89 25,000 32,420 -7,420 -22.89

Total 100,420 100,230 190 0.19 89,850 94,150 -4,300 -4.57

Page ♣ 22

Cost of sales per tonne in Shandong Province to remain at 2012 level

Operation targets in 2013: Cost of sales per tonne target �

Yancoal Australia to decrease by 15% on the same basis

CAPEX Plan of the Group for 2013

RMB mn 2013 plan 2012 actual Change Change (%)

The Headquarters 2,086.9 1,355.4 731.5 53.97

Heze Neng Hua 1,540.3 560.8 979.5 174.67

Hua Ju Energy 44.8 35.1 9.7 27.64

Shanxi Neng Hua 41.6 16.5 25.1 152.12

Yulin Neng Hua 27.9 23.9 4.0 16.74

Ordos Neng Hua 3,418.2 2,026.1 1,392.1 68.71

Haosheng Company 672.8 - 672.8 -

Yancoal Australia 3,233.9 2,161.4 1,072.4 49.62

Yancoal International 938.2 444.4 493.8 111.12

In which: Canada Company (CAD) 27.2 27.4 -0.3 -0.95

Excluded assets in Australia (AUD) 118.8 42.0 76.8 182.81

Total 12,004.6 6,623.6 5,381.0 81.24

Page ♣ 23

Operation targets in 2013: CAPEX Plan

Page ♣ 24

Part IV: Operation Strategies and Initiatives

Operation strategies

Initiatives

Page ♣ 25

Operation Strategies

Development model

High efficiently

High quality and

efficiency

Marketing layout

Regional marketing

Global marketing

Operation management

Cost and expenses reduction

Value management

Resources allocation

Economies of scale

Efficiency advantage

To prudently expand To improve internally

Optimize development

strategies

Initiatives

Page ♣ 26

To improve internally +

Prudently expand

1 Place management as top priority and create value to unleash potential

2 Managed adjustment on CAPEX

3 Optimize its resources distribution to transform and upgrade its development model

5 Support overseas operation management to achieve synergies

6 Prudently develop capital management for a stable growth of the Group

4 Optimize its global marketing system to improve the profitability of products

Improving and enhancing efficiency

Comprehensive budgeting

Cost and expense control

Capital control Debt management

Initiative I: Place management as top priority and

create value to unleash potential

Page ♣ 27

Initiative II: Managed adjustment on CAPEX

Page ♣ 28

Advance or retreat Keep or suppress Fast or slow Step by step

Speed up investment of projects with quick investment return

Manage investment in projects that are unlikely to

make profit in short term

Ordos Coal Mine under construction

Moolarben Coal Mine under construction

Ashton Southeast open cut mine

Exploration projects

……

Page ♣ 29

Increasing inventory: increase production

volume of new mines

Reducing inventory: close down or cease production to mitigate loss

Reserving inventory: unleash potential in existing regions

Initiative III: Optimize its resources distribution plan

to transform its development model

Page ♣ 30

1

Set up global marketing network to enhance integrated efficiency

3 2 Utilize competitive

edge of location and coal types whilst improving the

profitability of products

Improve market expansion capability by leveraging the Group’s marketing resources

Initiative IV: Optimize its global marketing system to

improve the profitability of products

Page ♣ 31

Realise synergies with the development of assets in Australia

Cost control initiatives

Synergy effect

Adopt “LEAN”

methodology

Improve financial control

Nurture competitive advantage

Initiative V: Support overseas operation

management to achieve synergies

Page ♣ 32

1

2

3

4

Prudently reduce equity interest to maximize returns

Optimize debt structure to guarantee capital needs

Formulate hedging strategies to prevent foreign exchange risks

Develop strategic collaboration for mutually beneficial development

Initiative VI: Prudently develop capital management

for a stable growth of the Group

Page ♣ 35

Looking ahead in 2013 when both challenges and opportunities emerge,

Yanzhou Coal will proactively capitalize on the new trend, adapting to the

new features and seize the new opportunities of the development of

international coal industry. We will taking the synergy of both domestic and

overseas markets as well as both resources to full strength. We will also

maximize investment efficiency by reviewing development with global vision,

initiating development with thorough consideration and pushing forward

development with management innovation, so as to enhance profitability and

increase shareholder’s returns.

Documents

Annual Results 2012 - TodayIR · Operation targets in 2013: Sales Target Unit: ‘000 tonnes Production volume of raw coal Sales volume of saleable coal 2013 target 2012 actual Change