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AUSTRALIAN FUTURES
ANNUAL REPORT 2021
YANCOAL
AUSTRALIA LTD
(INCORPORATED IN VICTORIA, AUSTRALIA WITH LIMITED LIABILITY)
ASX STOCK CODE: YAL HKEX STOCK CODE: 3668 ACN 111 859 119
A
Yancoal is a leading low-cost Australian
over $10 billion in Foreign Direct Investment
customers: in 2021 we sold our Australian
coal producer and exporter to the global
(FDI) for Australia and now owns, operates
coal to 19 countries, with our major
seaborne market, producing a mix of
or participates in nine producing coal mines
markets located across the Asian region.
premium thermal, semi-soft coking and PCI
across NSW, Queensland and Western
Every year, Yancoal’s thermal coal exports
coals. Since 2004, Yancoal has generated
Australia. Yancoal has a diverse range of
power millions of households in Asia, and
our metallurgical coal exports assist in
Asia. But while coal mining remains our core
listed on both the Australian Securities
the production of millions of tonnes of steel.
focus, we also have a strategy to sustain the
Exchange (ASX: YAL) and the Stock Exchange
We believe our coal will continue to play
business through diversifying into renewable
of Hong Kong (HKEx: 3668), and is majority
a key role in delivering economic growth
energy projects and into other minerals and
owned by Yankuang Energy Group Company
and improved quality of life, especially in
commodities. Yancoal is a public company,
Limited, which is itself listed on the HKEx.
1
CHAIRMAN’S
LETTER
s positive
"OneofthereasonsforYancoal
'
performance is the ongoing commitment
to our existing business plan and
strategy. T he future is full of exciting
andnewhorizonsforthecompany."”
In 2021, Yancoal has again overcome
We maintained a disciplined focus on
Yancoal’s 2021 performance indicated
significant challenges. Uniting as “one
operational optimisation and made further
the success that we had achieved in
Yancoal” across all our operations in
progress in implementing the “Four
these endeavours. Additional factors
Australia, we achieved outstanding
Initiatives” project that was launched in 2020.
that underpinned our success included
business results despite the impact on
our operations of the ongoing COVID-19
pandemic and significant rain events caused
by the prevailing La Nina weather system.
These results included maintaining a safety
performance that continues to trend in the
right direction and remains better than the
relevant industry average. Offsetting these
operational headwinds was the stronger
coal price, which drove Yancoal to post
record revenue and operating EBITDA
results, facilitated an early debt repayment
and the resumption of dividends.
These “Four Initiatives” were introduced to
support the continuous improvement of the
business through: optimising our marketing
plan; adjusting our product offering to better
meet our customers’ needs; tightening
expenditure controls across the whole
organisation to reduce costs; and actively
measuring and quantifying the effectiveness
of our actions. As an example, in 2021
promoting intelligent and innovative mining
methods and ensuring strong leadership
and effective management. Yancoal’s efforts
in 2021 demonstrated a spirit of courage
and resilience, as well as persistence and
hard work. Yancoal’s workforce should
be proud of the operational and financial
performance that was achieved in such
difficult circumstances.
Yancoal sold coal to 19 different countries
In 2022, Yancoal will continue to strive for
whilst also focusing on the premium markets
excellence: the future is full of exciting and
of Japan and South Korea. We continued our
new horizons for the company. While Yancoal
‘wash harder’ strategy to upgrade the quality
will remain committed to our core business
One of the reasons for this positive
of our coal product, capturing the price
and to ensure our coal mining operations are
performance in the face of adversity is
arbitrage for higher energy thermal coal that
world-class, there will also be opportunities
Yancoal’s ongoing commitment to our
persisted throughout the year.
to expand Yancoal’s asset portfolio beyond
existing business plan and strategy.
a pure focus on traditional energy.
2
CHAIRMAN’S
LETTER
As the world moves towards a lower
I thank my fellow Directors for their efforts
carbon economy, Yancoal has identified
and support in 2021, and I look forward
the development of renewable energy
with confidence to another record year
projects and the pursuit of diversification
for Yancoal in 2022 and with excitement
into minerals and commodities beyond
about what the future holds for Yancoal,
coal as important elements of a strategy to
as it continues to be an industry leading
underpin the ongoing sustainability of the
coal producer and as the busines grows
business into the future. The need to explore
and matures into a diversified global
opportunities in the new energy sector and
mining company.
other commodities is critical, especially given
that investors are increasingly focused on
decarbonisation and carbon-neutral themes.
This bold strategy aligns with the ambitions
of Yankuang Energy, Yancoal’s major
shareholder. Yankuang Energy is pursuing
a path of evolution from being a pure-play
coal mining business to diversification into
an international energy and commodities
group with a global presence. Having
commenced this journey and with
the support of its major shareholder,
the coming years will be a transitional
period for Yancoal.
Baocai Zhang
Chairman of the Board
3
MESSAGE
FROM CEO
"Ouroutstandingoperatingandfinancial
resultsdemonstratedtheunwavering
determinationandabilityofourworkforce"”
Yancoal delivered record revenue of
by the pandemic, there were some
half of the year to meet customer demand
over $5.4 billion and record Operating
unavoidable production losses due to
and to maximise the benefit of the higher
EBITDA of over $2.5 billion in 2021, which
logistics constraints and staff absences as
coal prices. Pleasingly, the proportion of
demonstrated the ability of our world class
a result of Government mandated isolation
metallurgical coal sales increased from 11%
assets to generate outstanding returns
requirements. Critically, we also delivered
to 15%. Achieving operating costs of $67/per
during periods of robust coal pricing.
pleasing operational performance whilst
production tonne was also a solid outcome
Although there were several issues
throughout the year that presented
considerable challenges, our outstanding
continuing to see an overall downward trend
in the context of a challenging 2021.
in the Total Recordable Injury Frequency
Increased diesel price and demurrage rates
Rate, which was 8.4 in 2021.
combined throughout the year to add over
operating and financial results demonstrated
Regular rain events generated by the
the unwavering determination and ability
prevailing La Niña weather pattern was
of our workforce to extract the maximum
the other recurring challenge in 2021.
value from our operations. Similar to 2020,
The effects included halting or restricting
achieving optimal performance throughout
mining activities due to excess water in the
2021 was not an easy achievement,
open-cut operations, particularly later in
$2.20/tonne to costs, and production losses
due to COVID-19, wet weather and disruptive
underground mining conditions at Moolarben
due to an unanticipated widening of a hard
rock intrusion in the coal seam, escalated
cash costs by around $3.50/tonne.
however there were many highlights for
the year when on-site water storage limits
While some factors beyond our control
Yancoal during 2021.
were reached. Protecting and repairing
worked against us in the operational
It took a concerted effort on behalf of all
our workforce to keep the production and
health impacts of COVID-19 to a minimum.
of the operations.
unsealed roads along with rail and port
space, others, such as a rallying coal
interruptions contributed to the disruption
price throughout 2021, provided Yancoal
The wellbeing of all our employees is
Nevertheless, Run of Mine (ROM)
of vital importance to Yancoal, and the
performance remained impressive at 47.5
whole workforce worked closely together
million tonnes (attributable), which was only
throughout the year on the continued
1% below 2020 despite the challenges.
implementation of an effective response
Sales of attributable production was 37.5
to the COVID-19 pandemic. Although
million and stockpiles accumulated in prior
we remained vigilant to the risks posed
periods were sold down in the second
4
with much welcome relief. On the back
of an average realised coal price of $141/
tonne (compared to $82/tonne in 2020),
Yancoal recorded its strongest ever revenue
of $5.4 billion and operating EBITDA of
$2.53 billion. In addition, certain “key task”
initiatives to improve productivity and
yield are estimated to have delivered over
$80 million in pretax profit.
Yancoal’s robust financial position
our core focus in the foreseeable future,
following our performance in 2021 has
but we also have a strategy to sustain
also facilitated our rapid deleveraging to a
the business into the future. We are actively
24% gearing level and the resumption of
assessing renewable energy projects in
dividend payments to our long-supportive
Australia, whether to supply electricity to
shareholders. As the current period of
our existing operations or as a beneficial
elevated coal prices continues into 2022,
land-use after mining has ended. We are
Yancoal could consider making further debt
also assessing opportunities to expand
repayments and paying further dividends
into other minerals and commodities,
to our shareholders.
whether in Australia or internationally.
Our community contributions during
The process to transition Yancoal into
2021 totalled $1.4 million, which was split
a diversified energy and mining company
between site-based community support
over the coming years will not detract
program initiatives and corporate level
us from our continued focus to operate
sponsorships of organisations such as
our existing assets efficiently, safely
the Clontarf Foundation and Westpac
and profitably, as well as to contribute
Helicopter Rescue Service. A detailed
to the well-being of our workforce and
overview of our Environmental, Social and
the prosperity of our communities.
Governance (ESG) performance will be
available in the 2021 ESG Report.
Finally, I would like to thank all Yancoal
employees for their hard work and
As we move on from two difficult years,
support over the last year.
47.5
MILLION TONNES
ATTRIBUTABLE ROM
$5.4B
RECORD REVENUE
$791M
NPAT
I am optimistic and excited about Yancoal’s
future. We have demonstrated we can
withstand significant headwinds and that
we have a workforce dedicated to making
Yancoal an industry leading coal producer.
Mining coal at our existing assets will remain
David Moult
CEO
5
5
EXECUTIVE
LEADERSHIP TEAM
CHAIR OF THE
EXECUTIVE COMMITTEE (CEC)
CHIEF EXECUTIVE
OFFICER (CEO)
CHIEF FINANCIAL
OFFICER (CFO)
MR NING ZHANG
MR DAVID MOULT
MR NING (KEVIN) SU
Mr Zhang was appointed
Mr Moult was appointed CEO
Mr Ning (Kevin) Su was
Executive Director, Co-Vice
in March 2020, having been
appointed CFO in May 2020,
Chairman and CEC of Yancoal
an Independent Non-Executive
having been Yancoal’s General
in March 2020. Mr Zhang has
Director of Yancoal since
Manager Treasury since June
served Yankuang Group for
January 2018. He has over
2014. He has over 20 years
nearly 30 years and has rich
40 years of global coal mining
of accounting, financial and
experience in accounting,
experience. At Centennial Coal,
treasury experience across
financial management, project
he was Managing Director
manufacturing and mining
management, auditing and
and CEO from 2011 to 2017,
industries in China and
risk control. Before taking
Non-Executive Director from
Australia. Mr Su was previously
positions at Yancoal, he served
May 2017 until January 2018,
the financial controller of Acer’s
as Vice-Director of the Finance
and COO from 1998 to 2011.
Oceanic Region, acting in
Department and Director of the
He is a Director of the Minerals
various accounting and finance
Audit and Risk Department at
Council of Australia (MCA),
positions in the Company
Yankuang Group. Mr Zhang
a Director and former
from 2003 to 2014. He holds
holds a Master’s degree
Chairman of the New South
a Master of Commerce Degree
from Tianjin University of
Wales Minerals Council
from the University of Sydney,
Finance and Economics,
(NSWMC), a Director of
a Bachelor of Commerce
and is a Professorate Senior
Coal Services Pty Ltd,
Degree from University of
Accountant and International
and a Director of Port Waratah
International Business and
Finance Manager.
Coal Services (PWCS).
Economics in China and is
a Fellow of CPA Australia.
6
EXECUTIVE GENERAL
MANAGER – OPERATIONS
CHIEF COMMERCIAL
OFFICER (CCO)
EXECUTIVE GENERAL
MANAGER – MARKETING
COMPANY SECRETARY, CHIEF
LEGAL, COMPLIANCE, AND
CORPORATE AFFAIRS OFFICER
MR BILL MCKINSTREY
MR MICHAEL NGO
MR MARK SALEM
MS LAURA LING ZHANG
Mr McKinstrey was appointed
Mr Ngo joined Yancoal in 2020
Mr Salem was appointed
Ms Zhang is one of the founding
EGM – Operations in March
and has responsibility for the
EGM – Marketing in March
executives of the Company
2021. Mr McKinstrey has
company’s various commercial
2018, following four years as
and has been the Company
over 43 years of experience
functions, including strategy,
General Manager of Marketing.
Secretary since September
in the mining industry, with
mergers and acquisitions,
Mark has over 30 years of
2005. She has over 20 years
25 years of these in senior
infrastructure and procurement.
experience in coal marketing,
of experience in the mining
management and executive
He has over 25 years of
logistic and commercial
industry and has been
roles. Since 2013 and before
experience most of which
functions. Mark worked
instrumental in the Company’s
his appointment as EGM –
has been in the resources
at Xstrata Coal for
growth. Ms Zhang has
Operations, he held several
and energy sector. Previous
14 years, where he held
BA, MA and EMBA
roles in Yancoal including
roles include Senior Vice
marketing and commercial
(Australia Graduate School
Acting COO, General Manager
President – Strategic Planning
positions in Australia, the
of Management) degrees,
– QLD/WA and Project Director
& Analysis for Banpu pcl,
Asia/Pacific and Switzerland.
is a Fellow of Institute
for the Moolarben Open-Cut
Executive General Manager
Mark has also worked in
of Chartered Secretaries
4 Expansion Project. Between
- Strategy & Development for
various roles at BP Coal
and Administrators (ICSA)
2003-2013 Mr McKinstrey
Centennial Coal and Principal
Development Australia, Rio
and the Hong Kong Institute of
held senior roles at Xstrata /
– Transaction Advisory
Tinto and Savage Resources.
Chartered Secretaries (HKICS),
Glencore, and prior to this was
Services for EY.
responsible for the operational
and financial performance of
a portfolio of eight coal assets
for Thiess Contractors.
is a member and graduate of
AICD, and a graduate of GIA.
7
REVIEW OF
OPERATIONS
MOOLARBEN
NSW
MOUNT THORLEY
WARKWORTH
NSW
HUNTER VALLEY
OPERATIONS
NSW
YARRABEE
QLD
MIDDLEMOUNT
QLD
ASHTON
NSW
STRATFORD-
DURALIE
NSW
95%
83%
51%
100%
~50%
100%
100%
Truck and excavator
open-cut and longwall
underground mining
complex producing
thermal coal; operated
by Yancoal.
Dragline, truck and shovel
/excavator open-cut mine
producing semi-soft
coking coal and thermal
coal; operated by Yancoal.
A multi-pit mine using
dragline, truck and shovel
/excavator operations to
produce semi-soft coking
coal and thermal coal;
operated by Hunter Valley
Joint Venture.
Truck and excavator
Truck and excavator
The Ashton longwall mine
Truck and excavator
open-cut mine producing
open-cut mine producing
produces a semi-soft
open-cut mine producing
ultra low volatile pulverised
low volatility pulverised
coking coal; operated
thermal coal and semi-
coal injection (PCI) coal;
coal injection (PCI) coal
by Yancoal.
soft coking coal; operated
operated by Yancoal.
and hard coking coal;
by Yancoal.
operated by Middlemount
Joint Venture.
~780
EMPLOYEES &
CONTRACTORS
~1,275
EMPLOYEES &
CONTRACTORS
~1,370
EMPLOYEES &
CONTRACTORS
~380
EMPLOYEES &
CONTRACTORS
~510
EMPLOYEES &
CONTRACTORS
~205
EMPLOYEES &
CONTRACTORS
~100
EMPLOYEES &
CONTRACTORS
18.4
MILLION TONNES
11.2
MILLION TONNES
10.6
MILLION TONNES
182
MILLION TONNES
178
MILLION TONNES
620
MILLION TONNES
10
YEARS
16
YEARS
58
YEARS
MILLION TONNES
MILLION TONNES
MILLION TONNES
MILLION TONNES
2.6
61
23
YEARS
3.7
69
19
YEARS
1.2
22
18
YEARS
0.8
1.4
2
YEARS
MILLION TONNES
MILLION TONNES
MILLION TONNES
MILLION TONNES
I
C
M
O
N
O
C
E
T
S
E
R
E
T
N
I
N
O
I
T
P
I
R
C
S
E
D
T
N
U
O
C
D
A
E
H
E
L
B
A
E
L
A
S
1
2
0
2
T
U
P
T
U
O
L
A
O
C
)
%
0
0
1
(
E
L
B
A
T
E
K
R
A
M
T
A
S
A
(
S
E
V
R
E
S
E
R
)
1
2
0
2
C
E
D
1
3
D
E
I
L
P
M
I
*
*
E
F
I
L
E
N
M
I
*Managed by Yancoal
**Implied mine life is the Marketable reserve at 31-Dec-2021 divided by the 2021 Output, rounded to the nearest whole number.
8
YANCOAL 2021YANCOAL 2021
ANNUAL REPORT
ANNUAL REPORT
YARRABEE
MIDDLEMOUNT
CAMEBY DOWNS*
MOUNT THORLEY WARKWORTH
STRATFORD DURALIE
ASHTON
HUNTER VALLEY OPERATIONS
MOOLARBEN
PREMIER*
MOOLARBEN
NSW
MOUNT THORLEY
WARKWORTH
NSW
HUNTER VALLEY
OPERATIONS
NSW
YARRABEE
QLD
MIDDLEMOUNT
QLD
ASHTON
NSW
STRATFORD-
DURALIE
NSW
95%
83%
51%
100%
~50%
100%
100%
Truck and excavator
open-cut and longwall
underground mining
complex producing
by Yancoal.
Dragline, truck and shovel
A multi-pit mine using
/excavator open-cut mine
dragline, truck and shovel
producing semi-soft
/excavator operations to
coking coal and thermal
produce semi-soft coking
operated by Hunter Valley
Joint Venture.
thermal coal; operated
coal; operated by Yancoal.
coal and thermal coal;
Truck and excavator
open-cut mine producing
ultra low volatile pulverised
coal injection (PCI) coal;
operated by Yancoal.
Truck and excavator
open-cut mine producing
low volatility pulverised
coal injection (PCI) coal
and hard coking coal;
operated by Middlemount
Joint Venture.
The Ashton longwall mine
produces a semi-soft
coking coal; operated
by Yancoal.
Truck and excavator
open-cut mine producing
thermal coal and semi-
soft coking coal; operated
by Yancoal.
~780
EMPLOYEES &
CONTRACTORS
~1,275
EMPLOYEES &
CONTRACTORS
~1,370
EMPLOYEES &
CONTRACTORS
~380
EMPLOYEES &
CONTRACTORS
~510
EMPLOYEES &
CONTRACTORS
~205
EMPLOYEES &
CONTRACTORS
~100
EMPLOYEES &
CONTRACTORS
18.4
MILLION TONNES
11.2
MILLION TONNES
10.6
MILLION TONNES
2.6
MILLION TONNES
3.7
MILLION TONNES
1.2
MILLION TONNES
0.8
MILLION TONNES
MILLION TONNES
MILLION TONNES
182
10
YEARS
178
16
YEARS
620
MILLION TONNES
58
YEARS
61
MILLION TONNES
69
MILLION TONNES
22
MILLION TONNES
1.4
MILLION TONNES
23
YEARS
19
YEARS
18
YEARS
2
YEARS
C
I
M
O
N
O
C
E
T
S
E
R
E
T
N
I
N
O
I
T
P
I
R
C
S
E
D
T
N
U
O
C
D
A
E
H
E
L
B
A
E
L
A
S
1
2
0
2
T
U
P
T
U
O
L
A
O
C
)
%
0
0
1
(
E
L
B
A
T
E
K
R
A
M
T
A
S
A
(
S
E
V
R
E
S
E
R
)
1
2
0
2
C
E
D
1
3
D
E
I
L
P
M
I
*
*
E
F
I
L
E
N
I
M
*Managed by Yancoal
**Implied mine life is the Marketable reserve at 31-Dec-2021 divided by the 2021 Output, rounded to the nearest whole number.
9
YANCOAL 2021
FINANCIAL
SUMMARY
4,416
3,932
3,051
2,204
COAL PRODUCTION
SALES REVENUE AND AVERAGE PRICE
Attributable saleable coal production, Million tonnes
A$ Millions / A$ per tonne
Three large-scale, low-cost mines are the
foundation of Yancoal’s business.
Realised price and revenue exceed the prior highs
of 2018.
PRODUCT MIX
CASH OPERATING COSTS
Attributable sales volume, Million tonnes
Operating costs, Royalties, and Selling price, A$/tonne
Metalurgical coal sales proportion returned prior level.
The realised price increase far outpaced operating
cost escalation.
10
010203040506020172018201920202021MoolarbenMTWHVOYarrabeeStratford DuralieAshtonNon-attributable52.135.632.950.031.518.551.838.348.536.715.528.430.133.731.63.85.15.54.25.9051015202530354020172018201920202021ThermalMetallurgical6465645967910961111413211182141-5010015005010015020172018201920202021Cash operating costsRoyaltyAverage selling price, A$/t5,29011413211182141-20406080100120140160-1,0002,0003,0004,0005,0006,0007,00020172018201920202021RevenueAverage realised coal price
ANNUAL REPORT
2,530
2,180
1,654
988
748
OPERATING EBITDA
A$ Millions / Margin %
NET PROFIT/(LOSS) AFTER TAX
A$ Millions
Record Operating EBITDA and EBITDA Margin.
Record profit after tax after excluding one-off items.
Interim Div.
Final Div.
Special Div.
Payout ratio
NET DEBT AND GEARING
A$ Millions / %
TOTAL DIVIDEND AND PAYOUT RATIO
A$ Millions / %
Net debt position returned to a manageable level.
Yancoal has returned $1.85 billion to its shareholders.
11
-5001,0001,5002,0002,5003,00020172018201920202021Operating EBITDAMargin %38%45%36%21%46%169869663(295)891229852719(1,040)791(1,500)(1,000)(500)-5001,00020172018201920202021One-off itemsProfit / (Loss) after tax excluding one-off itemsProfit / (Loss) after tax4,5163,0932,5363,5681,94047%35%29%41%24%-5001,0001,5002,0002,5003,0003,5004,0004,5005,00020172018201920202021Net debt, A$ mnGearing ratio, %13013721128066016626960%58%118%-1002003004005006007008009001,00020172018201920202021
YANCOAL 2021
ANNUAL
REPORT
DIRECTORS’ REPORT
REMUNERATION REPORT
AUDITOR’S INDEPENDENCE
DECLARATION
MANAGEMENT DISCUSSION
AND ANALYSIS
CONSOLIDATED STATEMENT
OF PROFIT OR LOSS AND OTHER
COMPREHENSIVE INCOME
CONSOLIDATED BALANCE SHEET
CONSOLIDATED STATEMENT
OF CHANGES IN EQUITY
CONSOLIDATED STATEMENT
OF CASH FLOWS
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
DIRECTORS’
DECLARATION
INDEPENDENT
AUDITOR’S REPORT
CORPORATE GOVERNANCE
STATEMENT
CONTINUING CONNECTED
TRANSACTIONS
COAL RESERVES
AND RESOURCES
SHAREHOLDING STATISTICS
GLOSSARY
CORPORATE DIRECTORY
14
27
39
40
56
57
58
59
60
121
122
128
151
158
162
164
167
12
12
ANNUAL REPORT
1313
DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTORS’ REPORT
The Directors present their report on the consolidated entity
(“Yancoal” or the “Group”) consisting of Yancoal Australia Ltd
(the “Company”) and the entities it controlled at the end of, or
during, the year ended 31 December 2021 (the “period”).
DIRECTORS
The following persons were Directors of Yancoal Australia Ltd
during the period and until the date of this report:
Chairman
• Baocai Zhang (became a director on 26 June 2012)
Co-Vice Chairmen
• Ning Zhang (became a director on 20 March 2020)
• Gregory James Fletcher (became a director on
26 June 2012)
Directors
• Xing Feng (became a director on 15 December 2017)
• Helen Jane Gillies (became a director on 30 January 2018)
• Cunliang Lai (became a director on 18 November 2004)
• Geoffrey William Raby (became a director on 26 June 2012)
• Xiangqian Wu (became a director on 28 April 2017)
• Qingchun Zhao (became a director on 28 April 2017)
Company Secretary
The Company Secretary in office during the period, and up to
the date of this report is Laura Ling Zhang.
REVIEW OF ACTIVITIES
Safety and Environment
Yancoal remains committed to operating safely and
transparently to achieve its objective of zero harm. Yancoal
operates its mines to meet legislative and safety standards and
be an industry leader in this aspect of its business.
Under the direction of the board of Directors (“Board”) and
the Health, Safety, Environment and Community Committee,
Yancoal utilises Core Hazard and Critical Controls across all
operations, identifying critical hazards within the workplace
and instituting adequate controls. These controls are regularly
verified to ensure that they are operating as intended for our
people’s safety.
12 month Rolling TRIFR
During the period, Yancoal reintroduced the COVID-19
response measures that had proved effective during 2020
and implemented additional measures including pre-screening,
periodical testing, differentiated check- in codes for work
areas and deliveries with minimal contact. The work practices
and measures implemented have proved successful on-site;
however, the spread of COVID-19 to areas in which it operates
led to increased instances of workers being unable to attend
site as they follow Government protocols.
Yancoal’s Total Recordable Injury Frequency Rate (“TRIFR”)
at the end of the period was 8.4; the TRIFR recorded at the
end of 2020 was 7.41. The increase in the Group’s TRIFR during
the year was due wholly to the reincorporation of Watagan
underground assets into the Group performance. The reported
TRIFR at the end of the period is below the comparable
industry weighted average TRIFR of 10.22.
Yancoal’s operations are subject to stringent environmental
approvals and licences. To honour these regulatory obligations
and to meet the requirements of Yancoal’s management
directives, Yancoal has developed and implemented
systems, processes and practices to manage compliance
with the conditions of these approvals and licences. These
systems, processes and practices are subject to continuous
improvement initiatives and are audited by a third party to
provide “third line” assurance.
The following environmental initiatives were undertaken in
2021 to improve environmental performance or comply with
environmental approvals and licences:
• Yancoal Corporate’s Environment & Community
Department implemented a new process to maintain
corporate oversight of potential mining activities that
could impact Aboriginal cultural heritage sites with
moderate to high archaeological significance, and
• Yancoal continued to roll out its third party Independent
Environmental Assurance Audit program, with audits
undertaken at Cameby Downs, Yarrabee and Stratford
and Duralie during the period.
1 Attributable TRIFR includes Moolarben, Mount Thorley Warkworth, Stratford Duralie, Yarrabee and Corporate; it excludes joint venture operated Middlemount
and Hunter Valley Operations as well as Watagan (up to 16 December 2020). From January 2021 onwards the Yancoal TRIFR and Industry weighted average were
revised to include the Watagan assets. Prior periods may be revised for reclassification of past events.
2 The Industry weighted average combines proportional components from the relevant New South Wales and Queensland industry averages.
14
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024681012Mar-20Jun-20Sep-20Dec-20Mar-21Jun-21Sep-21Dec-2112 Month Rolling TRIFRWeighted Industry Benchmark TRIFR12 Month Rolling LTIFRYANCOAL 2021YANCOAL 2021 DIRECTORS’ REPORT
DIRECTORS’ REPORT
In addition to these actions, Yancoal is planning for
Australia’s progressive transition to a lower carbon economy.
Investigation into opportunities such as replacing diesel-
powered mining fleet with electric-powered equipment or
introducing renewable power generation to the mine sites are
examples of potential future endeavours.
In 2021, Yancoal contributed $1.4 million via its Community
Support Program into local and regional health,
environmental, education, arts, culture and community
initiatives capable of making a positive difference in the
regions in which it operates.
Yancoal works with its community stakeholders, utilising
community consultative committees, local newsletters, local
media, community days and site-specific websites to help
ensure the communities are engaged and informed of relevant
matters related to nearby operations.
Greenhouse gas and energy data reporting requirements
As a thermal coal producer, we acknowledge we have a role
in mitigating the emissions generated by our operations
and supporting investment into low emission technology to
reduce downstream emissions from the consumption of coal
products.
We also understand the elevated interest from stakeholders
regarding the potential risks and opportunities posed to our
business and the broader sector due to the ongoing global
shift towards a lower-carbon economy. Yancoal’s 2021 ESG
Report is due to be published in May 2022; it will provide a
detailed review of the Company’s progress in these matters.
Governance
Oversight of climate-related matters, including risks and
opportunities, sits within Yancoal’s governance framework.
The Health, Safety, Environment and Community Committee
consider climate-related risks and relevant risk management
strategies.
The Board has ultimate responsibility for the oversight
and approval of risk management and financial investment
decisions, including those relating to climate change. The
Board regularly considers how climate change may affect
physical, regulatory, commercial, and operating environments.
These considerations inform the development of medium-to-
long-term goals and strategies.
Reporting on our emissions
Yancoal reports its operational direct (scope 1) and indirect
(scope 2) emissions annually in line with the National
Greenhouse and Energy Reporting Act 2007.
The Group has implemented systems and processes to collect
and calculate the data required and submitted its 2020/2021
Section 19 Energy and Emissions Report to the Federal Clean
Energy Regulator on 21 October 2021.
The majority of scope 1 emissions relate to fugitive emissions
associated with the underground and open-cut mines,
and diesel consumption. Scope 2 emissions stem from the
consumption of electricity purchased from the grid. Overall,
on an operational control basis, our total scope 1 and scope 2
emissions for the period ended 30 June 2021 were 2.08 million
tCO2-e, a 10% increase from the year prior3. Scope 1 emissions
increased by 12% due to a combination of increased
production at Ashton (9% increase in ROM coal production for
the 12 months ending 30-June), reduced flaring at Ashton and
an increased emissions factor for methane. Scope 2 emissions
decreased by 1% which is a positive year on year trend
continued from 2020.
Summary of Greenhouse Emissions
2019/2020
2020/2021
1,533,700
337,977
1,747,756
334,617
Scope 1 emissions (tCO2-e)
Scope 2 emissions (tCO2-e)
While we do not track our scope 3 emissions associated
with our product’s consumption, we support the development
of technologies to reduce the emissions intensity of these
downstream activities. These technologies include developing
and installing high-efficiency, low-emissions technologies in
coal-fired power stations and investment in carbon capture
and storage technology.
Operations
Yancoal owns, operates or has a joint-venture stake in coal
mines in New South Wales (“NSW”) and Queensland. The
thermal, semi-soft coking and pulverised coal injection (“PCI”)
coal products are exported through ports in Newcastle,
Gladstone and Dalrymple Bay to customers throughout the
Asia-Pacific region.
During March, a one-in-100-year-rain event occurred in
NSW, with parts of the state subject to severe flooding.
Throughout the period, above-average rainfall and high
winds further disrupted activity at mines, rail and ports.
These conditions resulted in decreased production from the
Group’s open-cut mines located in NSW and led to increased
vessel queues off the port at Newcastle. During the first half
of the year the longwall in the Moolarben underground mine
encountered a hard rock intrusion. The longwall successfully
traversed this area, but output was affected lowering the
production contribution from Yancoal’s lowest cost mine for
several months.
Heavy rainfall events occurred again in November and
December as conditions associated with the La Nina weather
pattern continued. The operational impacts in the fourth
quarter were exacerbated by reduced workforce availability
as mine site personnel followed mandatory COVID-19
protocols. The rain at the beginning, during and at the end of
the year resulted in excess site water at the NSW operations,
and management of the excess water is a priority that will
continue well into 2022.
3 Emissions data is reported on 100% basis, but Yancoal does not own 100% of all assets. The assets included are: Moolarben, Mount Thorley Warkworth, Yarrabee,
Stratford Duralie, and Ashton. Reporting on a 100% basis is consistent with the National Greenhouse and Energy Reporting (NGER) data submitted to the Clean
Energy Regulator (CER).
15
ANNUAL REPORT DIRECTORS’ REPORT
DIRECTORS’ REPORT
Despite the external challenges facing the operations in
2021, ROM coal production was only down 7% from 68.1
million tonnes to 63.2 million tonnes (100%), and saleable
coal production was only down 6% from 51.8 million tonnes
to 48.5 million tonnes (100%).
On an attributable basis, the impacts were slightly lower;
saleable coal volume was down 4% to 36.7 million tonnes
in 2021. The teams at each mine site worked proactively to
recover production and take advantage of the coal market
conditions in the latter half of the year. The attributable
annual saleable production of 36.7 million tonnes was only
2% below our 2021 adjusted production target of around 37.5
million tonnes from 19th October 2021.
The Group’s overall average cash operating costs, excluding
government royalties, increased from A$59 per tonne in 2020
to A$67 per tonne in 2021. Uncontrollable factors affecting
the unit costs included: higher diesel prices and demurrage
costs, reduced output due to wet weather, COVID-19 impacts
and a hard rock intrusion in the Moolarben Underground
mine. The cost increase also incorporated the “wash harder”
strategy, which incurred an additional cost to produce
higher-quality coal and delivered a net increase to the
operating margin. The unit cost of production increased from
A$66 per tonne in the first half of 2021 to A$68 per tonne
in the second half of 2021 primarily due to a lower relative
production contribution from the low-cost Moolarben mine.
The ‘Management Discussion and Analysis’ provides a
detailed review of the period’s operational performance.
Coal Markets
Yancoal typically sells the majority of its thermal coal on
contracts linked to the All Published Index 5 (“API5”) 5,500kCal
index, with the balance priced off the GlobalCOAL NEWC
6,000kCal NAR index (“GCNewc”). In 2021, the API5 price
averaged US$83/t and ended at around US$102/t, while the
GCNewc price averaged US$138/t and ended the period at
around US$166/t. The US$55/t price differential through the
year was more pronounced than the prior decade, of which
the average differential was US$18/t.
During 2021 supply constraints resulting from wet weather
in Australia and Indonesia combined with logistic disruptions
to coal exports from Russia and South Africa contributed
directly to thermal coal indices rising. Supply shortfalls in the
gas and oil markets also in part contributed to the elevated
prices for energy commodities; particularly in the third quarter
as demand in the international coal markets picked up ahead
of winter in the northern hemisphere.
Yancoal actively responds to prevailing market conditions
and customer requirements to the best of its ability while
also expanding its customer base.
The marketing team took advantage of international market
conditions and sold down coal inventories accumulated in
prior periods. During the year, the attributable sales volume
was 37.5 million tonnes, 1% less than the prior year, but the
ratio of metallurgical coal to thermal coal increased, and the
sales volumes were skewed to the second half of the year,
capturing the higher prices.
The Group’s overall average ex-mine selling price was A$141/
tonne, 72% higher than 2020 due to the coal price strength
and increased proportion of metallurgical coal. Compared
to 2020 a higher AUD:USD exchange rate offset some of the
benefit of the stronger USD denominated coal price indices.
Price realisation during 1H 2022 will continue to benefit from
the higher coal price indices due to the ‘lag effect’ from prior
sales contracts rolling over.
Financial Performance
Revenue increased by 56% from $3,473 million in 2020 to
$5,404 million in 2021, primarily due to the 72% increase
in the realised coal price.
Operating EBITDA increased by $1,783 million to $2,531 million
in 2021. The Operating EBITDA margin was 46% in 2021,
compared to 21% in 2020.
The depreciation and amortisation expenses were stable
at $831 million in 2021. After including the depreciation
and amortisation, the $286 million of net finance costs
and $311 million of non-operating items and an income tax
expense of $312 million, the profit after tax was $791 million
— a notable improvement from the $1,040 million loss after
tax recorded in 2020.
The net operating cash inflow was $1,900 million. Yancoal
spent $269 million on capital expenditure – mostly on items
required to sustain the operations. The net financing cash
outflow was $761 million as Yancoal made mandatory debt
repayments and early debt repayment of US$500 million in
October. The gearing ratio improved from 41% at 31 December
2020 to 24% at 31 December 2021.
As of 31 December 2021, the Group had $1,495 million in cash
and cash equivalents. It also had over $921 million of undrawn
debt across its various facilities.
The ‘Management Discussion and Analysis’ provides a detailed
review of the period’s financial performance.
Potential growth projects
At Moolarben, Yancoal has the required approvals to increase
annual ROM production from 14 million tonnes to 16 million
tonnes from the open-cut mine. Studies under review
incorporate work to assess the optimal production profile and
address the various licensing requirements. Yancoal’s ability to
increase open-cut production to 16 million tonnes per annum
depends on a decision by the Company to invest in increasing
the capacity at the Coal Handling and Preparation Plant.
Beyond the Company’s organic growth opportunities, it
is open to acquiring additional coal assets or diversifying
into other minerals, energy, or renewable energy projects.
Any new initiative would be subject to careful evaluation
and require Yancoal Board consideration and approval
before commencement.
16
YANCOAL 2021 DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIVIDENDS AND DIVIDEND POLICY
According to Yancoal policy and subject in each case to
applicable laws, the ongoing cash needs of the business,
the statutory and common law duties of the Directors and
shareholders’ approval, the Directors may pay interim or final
dividends, and per the Company’s Constitution must:
•
subject to the point below, pay as interim and/or final
dividends not less than (A) 50% of net profit after tax
(pre- abnormal items); or (B) 50% of the free cash flow
(pre-abnormal items), in each financial year; and
if the Directors determine that it is necessary in order
to prudently manage the Company’s financial position,
pay as interim and/or final dividends not less than 25%
of net profit after tax (pre-abnormal items) in any given
financial year.
•
The Yancoal Board has determined the payment of dividends
can resume given the improvement in the company’s fiscal
position and outlook for coal prices. The dividend allocation
for FY21 is $930 million, with A$0.5000/share unfranked as
a final dividend and A$0.2040/share unfranked as a special
dividend.
CORPORATE ACTIVITIES
On 29 October 2021, Yancoal made a US$500 million debt
prepayment from available cash. The prepayment consists
of payment toward Yancoal’s Syndicated Facility and its
unsecured related-party loans. The prepayments deliver an
approximate US$82 million reduction in total finance cost over
the loan periods.
During the year ended 31 December 2021, neither Yancoal nor
any of its subsidiaries purchased, sold or redeemed Yancoal’s
listed securities.
Matters subsequent to the end of the financial year are
detailed in the ‘Management Discussion and Analysis’ section
of this report.
MAJORITY SHAREHOLDER – CHANGE OF NAME
In 2021 Yanzhou Coal Mining Company Limited (“Yanzhou”)
completed a change of name to Yankuang Energy Group
Company Limited (“Yankuang Energy”). The change of name
did not affect the ownership stake in the Company.
In 2020, Yankuang Group Co. Ltd. merged with Shandong
Energy Group Co. Ltd. and Yankuang Group was renamed
as Shandong Energy Group Co. Ltd (“Shandong Energy”).
The merger did not result in any change in the controlling
shareholder or the actual controller of Yankuang Energy
(the immediate controlling shareholder of the Group), which
remained as Yankuang Group (now renamed as Shandong
Energy Group Co. Ltd.).
COMMUNICATION WITH SHAREHOLDERS
The Company believes in high standards of transparent
corporate disclosure and is committed to disclosing to its
shareholders information in a timely and fair manner via ASX
and HKExnews. Where there is inadvertent disclosure made to
a selected group, the Company will make the same disclosure
publicly to all others as soon as practicable. Communication is
mainly made through:
• Annual reports that are prepared and made available
to all shareholders. The Board ensures that the annual
report includes all relevant material information about the
Company and the Group, including future developments
and other disclosures required by the Corporations Act
2001 (Cth), the ASX listing rules, the Companies Ordinance
of the Laws of Hong Kong and the Hong Kong listing rules;
Interim reports containing a summary of the financial
information and affairs of the Group for that period;
•
• Quarterly production reports containing a summary of the
Group’s production output and coal sales for the reporting
period;
• Notices of explanatory memoranda for AGMs and
extraordinary general meetings (if any) that are sent to all
shareholders.
The Company does not practice selective disclosure. Price
sensitive information is first publicly released through ASX and
HKExnews. All Company shareholders are eligible to receive
the Annual Report and the notice of AGM by post.
Shareholders can access all of the Company’s announcements
published on the ASX and HKExnews on the Company’s
website at www.yancoal.com.au.
PRE-EMPTIVE RIGHTS ON NEW ISSUES OF SHARES
Under the Corporations Act 2001 (Cth) and the Company’s
Constitution, shareholders do not have the right to be offered
any shares that are newly issued for cash before those Shares
can be offered to non-Shareholders.
PUBLIC FLOAT
Based on the information available to the Company as at
31 December 2021, approximately 15.41% of the issued
ordinary shares of the Company are held by the public.
Accordingly, the Company has complied with the waiver
granted by The Stock Exchange of Hong Kong Limited under
Rule 8.08(1) of The Rules Governing the Listing of Securities
as part of the Company’s listing in Hong Kong. Rule 8.08(1)(a)
of the HK Listing Rules requires that at least 25% of an issuer’s
total issued share capital must at all times be held by the public.
Based on the publicly available information to the Company
and within the knowledge of the Directors as at the date of this
report, the Company has maintained the minimum public float
of approximately 15.37% under the HK Listing Rules.
FULFILMENT OF CONDITIONS AND UNDERTAKINGS
The Company confirms that it has complied with the
conditions and undertakings imposed by The Stock Exchange
of Hong Kong Limited during the period from 1 January 2021
to 31 December 2021.
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ANNUAL REPORT DIRECTORS’ REPORT
DIRECTORS’ REPORT
MANAGEMENT CONTRACTS
No contracts concerning the management and
administration of the whole or any substantial part
of the Company’s business were entered into or existed
during the year ended 31 December 2021.
TAX RELIEF
The Company is not aware of any taxation relief available
to the shareholders because they hold the fully paid shares.
If shareholders are unsure about the taxation implications of
purchasing, holding, disposing of, dealing in, or exercising any
rights concerning the fully paid shares, they are advised to
consult an expert.
MAJOR CUSTOMERS AND SUPPLIERS
Information regarding the Group’s sales to the major customers
and purchases from the major suppliers can be found in
Notes B2 and B5 to the consolidated financial statements. The
details of the customer and sales agreements are provided in
the ‘Continuing Connected Transactions’ section of this report.
None of the Directors, or their associates, had any beneficial
interest in the five largest customers or suppliers to the
knowledge of the Directors. To the Directors’ knowledge, no
substantial shareholders of Yancoal have a beneficial interest
in the five largest customers or suppliers.
DIRECTORS’ INTERESTS IN TRANSACTIONS, ARRANGEMENTS
OR CONTRACTS
No transactions, arrangements or contracts of significance in
relation to the Group’s business to which any of the Company’s
subsidiaries and fellow subsidiaries was a party, and in which a
Director or an entity connected with a Director had a material
interest, whether directly or indirectly, subsisted at any time
during the year or at the end of the year.
INSURANCE OF OFFICERS
Rule 10.2 of Yancoal’s Constitution requires Yancoal to
indemnify, to the full extent permitted by law, each Officer
of the Company against liability incurred by the Officer as a
Director or an Officer of the Company. The Directors named
in this report, along with the Company Secretary, Chief
Executive Officer and Chief Financial Officer, have the benefit
of this requirement, as do individuals who formerly held one
of those positions.
During the financial year, the Company paid a premium for
Directors’ and Officers’ Liability insurance and Defence Costs
cover. The policies cover the Directors and other officers of
the Group. The Directors have not included details of the
nature of the liabilities covered, and the amount of premium
paid in respect of the Directors’ and Officers’ Liability
insurance policy as such disclosure is prohibited under the
terms of insurance contracts.
PROCEEDINGS ON BEHALF OF THE COMPANY
No person has applied to the Court under section 237 of the
Corporations Act 2001 (Cth) for leave to bring proceedings on
behalf of the Company, or to intervene in any proceedings
to which the Company is a party, for the purpose of taking
responsibility on behalf of the Company for all or part of those
proceedings.
No proceedings have been brought or intervened in on behalf
of the Company with leave of the Court under section 237 of
the Corporations Act 2001 (Cth).
NON-AUDIT SERVICES
The Company may decide to employ the auditor on assignments
additional to its statutory audit duties where the auditor’s
expertise and experience with the Group are essential.
Details of the amounts paid or payable to the auditor for
audit and non-audit services provided during the year are
set out below.
The Board of Directors have considered the position and,
in accordance with advice received from the Audit and Risk
Management Committee, is satisfied that the provision of the
non-audit services is compatible with the general standard of
independence for auditors imposed by the Corporations Act
2001 (Cth). The Directors are satisfied that the provision of
non-audit services by the auditor, as set out below, did not
compromise the auditor independence requirements of the
Corporations Act 2001 (Cth) for the following reasons:
• all non-audit services have been reviewed by the Audit and
Risk Management Committee to ensure they do not impact
the impartiality and objectivity of the auditor, and
• none of the services undermines the general principles
relating to auditor independence as set out in APES110
Code of Ethics for Professional Accountants.
During the year the following fees were paid or payable for
services provided by the auditor of the Group:
SHINEWING AUSTRALIA
Audit and review of financial statements
Audit related services
Non-audit services
Other assurance services
Taxation compliance
Total services remuneration
of ShineWing Australia
2021
$
1,233
35
–
50
–
2020
$
1,585
27
–
45
–
1,318
1,657
For fees paid to related practices and non-related audit firms,
refer to Note F2.
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YANCOAL 2021 DIRECTORS’ REPORT
DIRECTORS’ REPORT
AUDITOR’S INDEPENDENCE DECLARATION
A copy of the auditor’s independence declaration as required
under section 307C of the Corporations Act 2001 (Cth) is set
out on page 39.
ROUNDING OF AMOUNTS
The Group is of a kind referred to in Legislative Instrument
2016/191, issued by the Australian Securities and Investments
Commission, relating to the ‘rounding off’ of amounts in this
Directors’ Report and financial statements. Amounts in the
Directors’ Report and financial statements have been rounded
off to the nearest million dollars in accordance with that
legislative instrument.
INFORMATION ON DIRECTORS
Baocai Zhang EMBA
Non- Executive Director (26 Jun 2012 – 19 Jan 2014, and
8 Jun 2018 – current),
Co-Vice Chairman (20 Dec 2013 – 8 Jun 2018)
Executive Director (20 Jan 2014 – 8 Jun 2018)
Chairman of the Board (8 Jun 2018 – current)
Mr Zhang, aged 54, joined Yankuang Energy Group Co Ltd’s
(“Yankuang Energy”) predecessor in 1989 and was appointed
as the Head of the Planning and Finance department of
Yankuang Energy in 2002. He was appointed as a Director
and Company Secretary of Yankuang Energy in 2006 and
Deputy General Manager in 2011. Mr Zhang was appointed
as Non-Executive Director of Yancoal on 26 June 2012, and
subsequently appointed a Co-Vice Chairman of Yancoal on
20 December 2013. He became the Chair of the Executive
Committee of Yancoal on 20 January 2014. In October
2015, he became a director of Yankuang Group Co. Ltd4
and a standing member of the CPC Yankuang Group Co.
Ltd4 Committee. In February 2018, he was appointed as the
General Counsel of Yankuang Group Co. Ltd4. Mr Zhang was
appointed as the Chair of the Board of Yancoal on 8 June 2018.
In July 2020, Mr Zhang was appointed as the Deputy General
Manager of Shandong Energy Group and a standing member
of the CPC Shandong Energy Group Committee. In June 2021,
Mr. Zhang was appointed as the General Manager, Deputy
Secretary of the CPC Shandong Energy Group Committee and
a Director of Shandong Energy Group.
Mr Zhang planned and played a key role in the acquisition of
Felix Resources Limited and the merger with Gloucester Coal
Ltd in Australia. He also led Yankuang Energy’s acquisition
of potash exploration permits in Canada in 2011. He has
considerable experience in capital management and business
development in the coal industry, in particular, in financial
control, corporate governance and compliance for listed
companies in Australia and overseas.
Mr Zhang graduated from Nankai University. He is a senior
accountant with an EMBA degree.
4 As the company was known in 2015.
Ning Zhang
Executive Director (20 Mar 2021 – current)
Chair of the Executive Committee (20 Mar 2021 – current)
Co-Vice Chairman (20 Mar 2021 – current)
Mr Zhang, aged 53, holds a master’s degree from Tianjin
University of Finance and Economics. He is professionally
accredited as Professorate Senior Accountant and
International Finance Manager.
During his near 30-year career with the Yankuang Group Co.
Ltd, Mr Zhang has held several senior roles, including Vice
Director of the Finance Department and the Director of the
Audit and Risk Department.
Gregory James Fletcher BCom, CA
Independent Non-Executive Director (26 Jun 2012 – Current)
Co-Vice Chairman (1 Mar 2018 – Current)
Mr Fletcher, aged 65, was a Director of Gloucester Coal Ltd
from June 2009. He was appointed a Director of Yancoal after
the merger of Yancoal and Gloucester Coal Ltd in June 2012.
Mr Fletcher was elected a Co-Vice Chairman of Yancoal in 2018.
Prior to 2009, Mr Fletcher was a senior partner of Deloitte
for 16 years during which he held many senior roles as well
as working with major Australian listed companies with
operations internationally including the Asia Pacific region.
He also worked closely with organisations in China, Indonesia
and Mongolia in enhancing governance practices.
Since 2009 Mr Fletcher has taken on Board and Audit
Committee roles. He has been a member of the NSW Auditor
General’s Audit and Risk Committee, on the Board of Railcorp,
TAFE NSW and WDS Limited and Chairman of the Roads and
Maritime Services Audit and Risk Committee and City of
Sydney Audit and Risk Committee.
Mr Fletcher holds a Bachelor of Commerce, and he is a
Chartered Accountant.
Cunliang Lai DE EMBA
Executive Director (18 Nov 2004 – 19 Jan 2014)
Co-Vice Chairman (26 Jun 2012 – 6 Jun 2018)
Non-Executive Director (20 January 2014 – Current)
Mr Lai, aged 61, joined Yankuang Energy’s predecessor in 1980.
He was appointed as the Head of Xinglongzhuang Coal Mine
of Yanzhou in 2000. In 2005, he was appointed as the Deputy
General Manager of Yankuang Energy. Before the merger with
Gloucester Coal Ltd, Mr Lai was an Executive Director of Yancoal
and was appointed the Co-Vice Chairman and Chair of the
Executive Committee in 2012. Mr Lai successfully completed
the acquisition of the Austar Coal Mine and the establishment
of an appropriate corporate governance structure for Yancoal.
Mr Lai has also successfully applied the Longwall Top Coal
Caving technology in Australia and has gained considerable
experience in Australian coal business management.
Mr Lai graduated from Nankai University and the Coal
Science Research Institute. He is a researcher in engineering
technology application with a Doctorate degree in Engineering
and an EMBA degree.
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ANNUAL REPORT DIRECTORS’ REPORT
DIRECTORS’ REPORT
Xiangqian Wu DE
Non-Executive Director (28 Apr 2017 – Current)
Mr Wu, aged 56, joined Yankuang Energy’s predecessor in
1988. In 2003, he was appointed as the Deputy Head and
Deputy Chief Engineer of Jining No.3 Coal Mine.
In 2004, he was appointed as the Deputy Head and Chief
Engineer of Jining No.3 Coal Mine. In 2006, he was appointed
as the Head of Jining No.3 Coal Mine. From April 2014 to
January 2016, he was the Chairman and General Manager of
Yanzhou Coal Ordos Neng Hua Co., Ltd. and Chairman of Inner
Mongolia Haosheng Coal Mining Co., Ltd.
In May 2014, he was appointed as a Director of Yankuang
Energy. In January 2016, he was appointed as the General
Manager and Deputy Chief Engineer of Yankuang Energy.
In April 2020, he was appointed as the Production Director of
Yankuang Group Co. Ltd. In August 2020, he was appointed
as the Chief Safety Officer of Shandong Energy Group Co. Ltd.
Mr Wu graduated from Shandong University of Science and
Technology and China University of Mining and Technology.
Mr Wu is a Research Fellow in Applied Engineering Technology
and a Doctor of Engineering.
Qingchun Zhao EMBA
Non-Executive Director (28 Apr 2017 – Current)
Mr Zhao, aged 53, is a senior accountant with an EMBA
degree and is a Director and the Chief Financial Officer of
Yankuang Energy.
Mr Zhao joined Yankuang Energy’s predecessor in 1989 and
was appointed as the Accountant in charge of the Finance
Department in 2002 and Director of the Planning and Finance
Department of Yankuang Energy in 2006. In March 2011, he
was appointed as the Vice Chief Financial Officer and the
Director of the Finance Department of Yankuang Energy.
In March 2014, Mr Zhao was appointed Assistant General
Manager and the Director of the Finance Management
Department of Yankuang Energy.
In January 2016, he was appointed as the Chief Financial
Officer of Yankuang Energy, and in June 2016, he was
appointed as a director of Yankuang Energy. Mr Zhao
graduated from Nankai University.
Xing Feng EMBA
Non-Executive Director (15 Dec 2017 – Current)
Mr Feng, aged 48, started his career with China Cinda Asset
Management Co., Limited (Cinda) in 1999, and has served in
various capacities in the Department of General Management,
Department of General Business and Department of
Investment and Financing. He has abundant experience in
corporate governance, investment and financing.
He was appointed Deputy General Manager of Cinda’s Fourth
Strategic Client Department in 2020, where he is responsible
for implementing the Department’s development strategy
plan, involvement in the business review and leading the
implementation of the investment plan. He has successfully
completed a number of overseas M&A investments and
mixed-ownership reform of SOE projects.
Mr Feng holds a Bachelor of Engineering (Electrical Engineering
and Automation) from Tsinghua University and an EMBA
degree from Peking University.
Dr Geoffrey William Raby BEc (Hons), MEc and PhD
(Economics)
Independent Non-Executive Director (26 Jun 2012 – Current)
Dr Geoffrey Raby, aged 68, was appointed a Director of
Yancoal in 2012.
Dr Raby was formerly Australia’s Ambassador to the People’s
Republic of China from 2007 to 2011. Prior to that, he was a
Deputy Secretary in the Department of Foreign Affairs and
Trade (DFAT). Dr Raby has extensive experience in international
affairs and trade, having been Australia’s Ambassador to the
World Trade Organisation (1998 to 2001), Australia’s APEC
Ambassador (2003 to 2005), Head of DFAT’s Office of Trade
Negotiations and Head of the Trade Policy Issues Division at
the OECD, Paris. Between 1986 and 1991 he was Head of the
Economic Section at the Australian Embassy, Beijing. He has
been the Chair of DFAT’s Audit Committee and served as an ex-
officio member of the Boards of Austrade and Export Finance
and Insurance Corporation.
Dr Geoffrey Raby holds a Bachelor of Economics, a Master of
Economics and a Doctor of Philosophy in Economics.
Helen Jane Gillies MBA, MConstrLaw, LLB(Hons), BCom,
FAICD
Independent Non-Executive Director (30 Jan 2018 – Current)
Helen Gillies is an experienced Director and legal, risk and
compliance professional.
Ms Gillies, aged 57, was appointed as a Non-Executive Director
of Bankstown and Camden Airports in September 2017 and a
Non-Executive Director of ASX-listed company Monadelphous
Group Limited and of ASX listed company Aurelia Metals
Limited. She is the Chair of the Audit Committee of the
Monadelphous Group Limited, and a member of the
Nomination Committee and a member of the Remuneration
Committee of the Monadelphous Group Limited. She is a
member of the Nomination and Remuneration Committee
of Aurelia Metals Limited and a member of the Sustainability
and Risk Committee of Aurelia Metals Limited. She, is a Non-
Executive Director with Lexon Insurance Pte Ltd. Previously,
she served as a director of Red Flag Group Limited from 2016
to 2020, a director of Sinclair Knight Merz Management Pty
Limited from October 2002 to September 2008 and Sinclair
Knight Merz Management Pty Limited from September 2010 to
December 2013 . She was also a non-executive director of Civil
Aviation Safety Authority from 2009 to 2014.
Ms Helen Gillies holds a Master of Business Administration
and a Master of Construction Law, as well as undergraduate
degrees in Commerce and Law. Ms Gillies is a Fellow of the
Australian Institute of Company Directors.
20
YANCOAL 2021 DIRECTORS’ REPORT
DIRECTORS’ REPORT
Ms Zhang graduated with a Bachelor of Arts degree and a
Master of Arts degree in language literature and cross- cultural
communication. Ms Zhang also holds a graduate diploma of
applied corporate governance from Governance Institute of
Australia (formerly known as Chartered Secretaries Australia)
in 2008 and foundations of directorship certificate of
Australian Institute of Company Directors in 2012. Ms Zhang
completed her EMBA degree at the Australian Graduate School
of Management at the University of New South Wales in 2019.
Ms Zhang was previously a Fellow of the Hong Kong Institute
of Chartered Secretaries between May 2016 and July 2021,
and is currently a Fellow member of the Governance Institute
of Australia. Ms Zhang has been a member of the Australian
Institute of Company Directors since 2011.
INFORMATION ON MANAGEMENT
David James Moult
C. Eng (Mining), MBA, FAusIMM, FIMMM, MAICD
Chief Executive Officer (9 Mar 2021 – Current)
Independent Non-Executive Director (30 Jan 2018
– 9 Mar 2021)
David Moult, aged 65, was an Independent Director of
Yancoal from January 2018 to March 2020 when he was then
appointed to the role of Chief Executive Officer (“CEO”). He
has over 40 years of global coal mining experience. He was
Managing Director and CEO of Centennial Coal Company
Limited from 2011 to 2017, then a non-executive director
of Centennial Coal from May 2017 until January 2018. He
previously held the position of Chief Operating Officer of
Centennial Coal from 1998 to 2011.
Mr Moult has worked with Joy Mining Machinery in the USA
and Australia, RJB Mining PLC and British Coal in the UK.
Mr Moult is Director of the Minerals Council of Australia
(“MCA”), a Director and former Chairman of the New South
Wales Minerals Council (“NSWMC”), a Director of Coal Service
Pty Lld, and a Director of Port Waratah Coal Services (“PWCS”).
Mr Moult is a Member of the University of NSW Education
Trust Advisory Committee.
Mr Moult holds a Master of Business Administration and a
Higher National Diploma in Mining. Mr Moult is a Chartered
Mining Engineer in the United Kingdom, a Fellow of the
Australasian Institute of Mining and Metallurgy, a Fellow of
the Institute of Materials, Minerals and Mining, a European
Engineer of European Federation of National Engineering
Associations and a member of the Australia Institute of
Company Directors.
Ning (Kevin) Su FCPA
Chief Financial Officer (1 June 2021 – Current)
Ning (Kevin) Su, aged 45, a Fellow of CPA Australia (FCPA),
joined Yancoal as General Manager Treasury in June 2014.
He has over 20 years of accounting, financial, and treasury
experience across manufacturing and mining industries in China
and Australia. Mr Su was previously the financial controller
of Acer’s Oceanic Region, acting in various accounting and
finance positions in the Company from 2003 to 2014. Mr Su
holds a Master of Commerce Degree from the University
of Sydney and a Bachelor of Commerce Degree from the
University of International Business and Economics in China.
Laura Ling Zhang BA, MA, EMBA, AGIA, FCIS, GAICD
Company Secretary, Chief Legal, Compliance, Corporate
Affairs Officer (6 Sep 2005 – Current)
Laura Ling Zhang, aged 44, was appointed as the Company
Secretary on 6 September 2005.
Ms Zhang is one of the founding executives of the Company
and has been the Company Secretary since September 2005.
She has over 20 years of experience in the mining industry and
has been instrumental in the Company’s growth. She currently
also holds the office of Chief Legal, Compliance and Corporate
Affairs Officer. She oversees the Company’s corporate
governance, group legal issues, corporate compliance,
projects/corporate initiatives, investor relations, corporate
affairs and media communications functions.
21
ANNUAL REPORT DIRECTORS’ REPORT
DIRECTORS’ REPORT
DIRECTOR/CEO
OTHER CURRENT KEY DIRECTORSHIPS
Baocai Zhang (Director)
Director of Shandong Energy Group Company Limited
Ning Zhang (Director)
Director of various subsidiaries of Yancoal Australia Ltd
Gregory James Fletcher (Director)
Chairman of SMEG Australia Pty Ltd
5Director of Saunders International Limited, Chairman Audit and Risk Committee and Member of the Remuneration and
Nomination Committee (ASX:SND) (1 Jul 2015 – current)
Member of the Audit and Risk Committee of TAFE NSW
Chairman of NSW Electoral Commission Audit and Risk Committee
Chairman of NSW HealthShare/eHealth Audit and Risk Committee
Member of Audit and Risk Committee NSW Health Infrastructure
Member of Audit and Risk Committee NSW State Transit Authority
Cunliang Lai (Director)
Independent Director of Shandong Gold Group Co., Ltd
Qingchun Zhao (Director)
5Director of Yankuang Energy Group Company Limited (1171 HK) (Jun 2016 – current)
Director of Duanxin Investment Holding (Shenzhen) Co., Ltd Chairman of Duanxin Investment Holding (Beijing) Co., Ltd Director of
Yancoal International (Holding) Co.Ltd
Director of Yancoal International Resources Co., Ltd
Director of Yancoal International Technology Development Co., Ltd Chairman of Shanghai Jujiang Asset Management Co., Ltd
Director of Yanzhou Coal Yulin Neng Hua Co., Ltd
Director of Inner Mongolia Haosheng Coal Mining Limited Director of Yankuang Group Finance Co., Ltd
Director of Qilu Bank Co., Ltd
Director of Shanghai Mid-Term Futures Co., Ltd
Xiangqian Wu (Director)
Xing Feng (Director)
Director of Yancoal International (Holding) Co. Ltd
Director of Yancoal International Trading Co. Ltd
Director of Yancoal International Resources Development Co., Ltd
Director of Yancoal International Technology Development Co., Ltd
Director of China Broadcasting and Telecommunications Corporation
Director of China Cinda (Hong Kong) Holdings Company Limited
Dr Geoffrey William (Director)
5Director of Netlinkz Limited (ASX:NET)
Helen Jane Gillies (Director)
David James Moult (CEO)
DIRECTOR/CEO
Baocai Zhang (Director)
5Director of Monadelphous Group Limited (ASX:MND) (5 Sept 2016 – current)
Director of BAC Holdings Pty Ltd
5Director of Aurelia Metals Limited (ASX:AMI) (21 Jan 2021 – current)
Director with Lexon Insurance Pte Ltd
Director of the Minerals Council of Australia
Director of Coal Services Pty Ltd
Director of Coal Mines Insurance Pty Ltd
Director of Mines Rescue Pty Ltd
Director of Middlemount Coal Pty Ltd
Director of Middlemount Mine Management Pty Ltd
Director of Ribfield Pty Ltd
Director of Port Waratah Coal Services Ltd
FORMER DIRECTORSHIPS IN LAST THREE YEARS
Chairman and Director of Yankuang Group Finance Co., Ltd
Director of Yanzhou Coal Yulin Neng Hua Co., Ltd
Director of Inner Mongolia Haosheng Coal Mining Limited
Director of Yancoal International (Holding) Co., Ltd
Chairman of Shandong Yunding Technology Co.Ltd
Ning Zhang (Director)
Director of Shanghai Yankuang Energy Sources Technology Research & Development Co., Ltd
Director of Yankuang Group (Hongkong) Co., Ltd
Gregory James Fletcher (Director)
6Director of Yancoal SCN Limited (ASX:YCN) (21 Nov 2014 – 30 Aug 2018)
Cunliang Lai (Director)
None
Qingchun Zhao (Director)
Director of Qingdao Zhongyin International Trade Co., Ltd
Director of Zhongyin Financial Leasing Co., Ltd
Xiangqian Wu (Director)
6Director of Yanzhou Coal Mining Company Limited (1171 HK) (14 May 2014 – 20 Aug 2021)
Xing Feng (Director)
None
Dr Geoffrey William Raby (Director)
6Director of iSentia Group Ltd (ASX:ISD) (9 May 2014 – 20 Jul 2018)
6Chairman of Wiseway Group (ASX:WWG) (18 Jul 2018 – 30 Apr 2019)
6Director of OceanaGold Corporation Limited (ASX:OGC) (5 Aug 2011 – 29 Jun 2021)
Helen Jane Gillies (Director)
Director of Red Flag Group (Holdings) Limited
David James Moult (CEO)
Independent Non-Executive Director of Yancoal Australia Ltd (30 Jan 2018 – 9 Mar 2020)
Non-Executive Director of Centennial Coal Company Limited
Chairman and Director of the Australian Coal Association Low Emissions Technology Ltd
Director of the New South Wales Minerals Council
5 Listed company.
6 Listed company.
22
YANCOAL 2021 DIRECTORS’ REPORT
DIRECTORS’ REPORT
Special responsibilities as at 31 December 2021:
DIRECTOR
Baocai Zhang
Ning Zhang
Cunliang Lai
Qingchun Zhao
Xiangqian Wu
Xing Feng
Gregory James Fletcher
Dr Geoffrey William Raby
Helen Jane Gillies
AUDIT AND RISK MANAGEMENT
COMMITTEE
NOMINATION AND
REMUNERATION COMMITTEE
HEALTH, SAFETY, ENVIRONMENT
AND COMMUNITY COMMITTEE
STRATEGY AND
DEVELOPMENT COMMITTEE
–
–
–
Member
–
–
Chair
–
Member
Member
–
–
–
Member
–
Member
Member
Chair
–
Member
–
–
Member
–
–
Chair
–
Chair
–
–
Member
–
Member
–
Member
–
Current Directorships and Company Secretary positions within the Group held by CEO and CFO:
COMPANY
1.
2.
3.
4.
5.
6.
7.
8.
9.
10.
11.
12.
13.
14.
15.
16.
17.
18.
19.
20.
21.
22.
23.
24.
25.
26.
27.
28.
29.
30.
31.
32.
33.
34.
35.
ABAKK Pty Limited
Ashton Coal Mines Pty Ltd
Ashton Coal Operations Pty Limited
Athena Coal Operations Pty Ltd
Athena Coal Sales Pty Ltd
Austar Coal Mine Pty Limited
Australian Coal Resources Pty Ltd
Black Hill Land Pty Ltd
Catherine Hill Bay Land Pty Ltd
CIM Duralie Pty Ltd
CIM Mining Pty Ltd
CIM Services Pty Ltd
CIM Stratford Pty Ltd
CNA Bengalla Investments Pty Limited
CNA Resources Pty Ltd
CNA Warkworth Australasia Pty Limited
CNA Warkworth Pty Ltd
Coal & Allied (NSW) Pty Limited
Coal & Allied Industries Pty Ltd
Coal & Allied Mining Services Pty Limited
Coal & Allied Operations Pty Ltd
Donaldson Coal Finance Pty Limited
Donaldson Coal Holdings Limited
Donaldson Coal Pty Ltd
Duralie Coal Marketing Pty Ltd
Duralie Coal Pty Ltd
Eucla Mining Pty Ltd
Felix NSW Pty Ltd
Gloucester (SPV) Pty Ltd
Gloucester (Sub-Holdings 1) Pty Ltd
Gloucester (Sub-Holdings 2) Pty Ltd
Gloucester Coal Pty Ltd
Gwandalan Land Pty Ltd
Kalamah Pty Ltd
Lower Hunter Land Holdings Pty Ltd
CEO
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
CFO
C.S.
C.S.
C.S.
Dir.
Dir.
C.S.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
C.S.
C.S.
C.S.
Dir.
Dir.
Dir.
Dir.
Dir.
C.S.
Dir.
Dir.
Dir.
Dir.
Dir.
COMPANY
CEO
CFO
36.
37.
38.
39.
40.
41.
42.
43.
44.
45.
46.
47.
48.
49.
50.
51.
52.
53.
54.
55.
Miller Pohang Coal Co Pty Ltd
Minmi Land Pty Ltd
Monash Coal Holdings Pty Ltd
Monash Coal Pty Ltd
Moolarben Coal Mines Pty Ltd
Moolarben Coal Operations Pty Ltd
Moolarben Coal Sales Pty Ltd
Mount Thorley Coal Loading Ltd
Mount Thorley Operations Pty Limted
Namoi Valley Coal Pty Limited
Newcastle Coal Company Pty Ltd
Nords Wharf Land Pty Ltd
Northern (Rhondda) Collieries Pty Ltd
Novacoal Australia Pty Limited
Oaklands Coal Pty Limited
Primecoal International Pty Ltd
Proserpina Coal Pty Ltd
R.W.Miller (Holdings) Pty Ltd
Stratford Coal Marketing Pty Ltd
Stratford Coal Pty. Ltd.
56. Warkworth Coal Sales Limited
57. Warkworth Mining Limited
58. Warkworth Pastoral Coal Pty Ltd
59. Warkworth Tailings Treatment Pty Ltd
60. Watagan Mining Company Pty Ltd
61. Westralian Prospectors Pty Ltd
62. White Mining (NSW) Pty Limited
63. White Mining Pty Ltd
64. White Mining Services Pty Limited
65.
66.
67.
68.
69.
70.
Yancoal Australia Sales Pty Ltd
Yancoal CSR Pty Ltd
Yancoal Mining Services Pty Ltd
Yancoal Moolarben Pty Ltd
Yancoal Resources Pty Ltd
Yarrabee Coal Company Pty Ltd
–
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
–
–
–
–
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
C.S.
Dir.
Dir.
Dir.
Dir.
C.S.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
C.S.
Dir.
C.S.
C.S.
C.S.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
23
ANNUAL REPORT DIRECTORS’ REPORT
DIRECTORS’ REPORT
MEETINGS OF DIRECTORS
The numbers of meetings of the Company’s Board of Directors and of each Board Committee held during the year ended
31 December 2021, and the numbers of meetings attended by each Director were:
GENERAL MEETINGS
MEETINGS OF THE
BOARD OF
DIRECTORS
ANNUAL GENERAL
MEETING
FULL MEETINGS OF
DIRECTORS
AUDIT AND RISK
MANAGEMENT
A7
B8
1
1
0
0
0
1
1
1
0
1
1
1
1
1
1
1
1
1
A
9
11
11
10
8
11
10
11
11
B
11
11
11
11
11
11
11
11
11
A
–
–
–
–
2
4
–
4
–
B
–
–
–
–
4
4
–
4
–
MEETINGS OF COMMITTEES
HEALTH, SAFETY,
ENVIRONMENT AND
COMMUNITY
NOMINATION AND
REMUNERATION
STRATEGY AND
DEVELOPMENT
TRAINING
CONTINUOUS
PROFESSIONAL
DEVELOPMENT
A
–
4
–
4
–
–
4
–
–
B
–
4
–
4
–
–
4
–
–
A
5
–
–
6
–
6
5
6
–
B
6
–
–
6
–
6
6
6
–
A
1
–
–
–
0
–
1
–
1
B
1
–
–
–
1
–
1
–
1
Note
Note
Note
Note
Note
Note
Note
Note
Note
Baocai Zhang
Ning Zhang
Cunliang Lai
Xiangqian Wu
Qingchun Zhao
Gregory James Fletcher
Geoffrey William Raby
Helen Jane Gillies
Xing Feng
Note:
Each Director received continuous professional development training during the year ended 31 December 2021, which included training on Company’s Code of
Conduct, cybersecurity, chain of responsibility, cross cultural and sexual harassment laws and other relevant topics. The Directors are also continually updated on
developments in the statutory and regulatory regime and the business environment to facilitate the discharge of their responsibilities.
Xiangqian Wu. Director
CHANGES IN DIRECTORS’ INFORMATION PURSUANT TO RULE 13.51B(1) OF THE HK LISTING RULES
The changes in Directors’ information as required to be disclosed pursuant to Rule 13.51B(1) of the Rules governing the listing of
securities on The Stock Exchange of Hong Kong Limited (“HK Listing Rules”) are set out below:
•
Resigned as a director of Yanzhou Coal Mining Company Limited (1171 HK) (now known as Yankuang Energy) with effect from
20 August 2021.
• Dr Geoffrey William Raby. Independent Non-Executive Director
Resigned as a director of OceanaGold Corporation Limited (ASX:OGC) with effect from 29 Jun 2021.
DIRECTORS’ CONFIRMATIONS
Director’s Interest in Competing Business
Baocai Zhang, who is a non-executive Director, serves as a director of Shandong Energy. Qingchun Zhao, who is a non-executive
Director, serves as a director of Yankuang Energy. Shandong Energy and Yankuang Energy are the controlling shareholders of the
Company. As at 31 December 2021, Shandong Energy is, directly and indirectly, interested in approximately 55.76% of the shares
in Yankuang Energy and Yankuang Energy is interested in approximately 62.26% of the shares in the Company.
Shandong Energy is a capital investment company with exposure to coal, coal chemicals and aluminium, power generation,
machinery manufacturing and financial investments. Yankuang Energy is principally engaged in the production of coal and coal
chemicals, manufacturing of mechanical and electrical equipment and power and heat generation. The mining assets of Yankuang
Energy located in Australia, other than through its interest in the Group, are managed and operated by the Company. Shandong
Energy does not have any interests in mines in Australia other than through its interests in Yankuang Energy and the Group.
Except as disclosed above, none of the Directors are interested in any business apart from the Group’s business which competes
with or is likely to compete directly or indirectly, with the Group’s business during the year ended 31 December 2021.
Letters of appointment and service contracts
Each Director has entered into a letter of appointment in relation to his/her role as a director of the Company, which is subject to
termination by the Director or the Company in accordance with the terms of the letter of appointment, the requirements of the
Listing Rules and the provisions relating to the retirement and rotation of the Directors under the Constitution.
7 A = Number of meetings attended.
8 B = Number of meetings held during the time the Director held office or was a member of the Committee during the year.
24
YANCOAL 2021 DIRECTORS’ REPORT
DIRECTORS’ REPORT
Pursuant to the terms of the letter of appointment entered into between each Director (on the one part) and the Company
(on the other part), (a) the Executive Director and the Non-executive Directors are not entitled to receive any director’s fees;
(b) the annual director’s fees payable by the Company to each Independent Non-executive Director are $169,500 (save for
Gregory Fletcher who receives fees as set out in (e) below); (c) an Independent Non-executive Director (save for Gregory Fletcher)
will receive from the Company an additional fee of $41,200 for being the chairman of the Audit and Risk Management Committee,
the nomination and remuneration committee or the Health, Safety, Environment and Community Committee, (d) an Independent
Non- Executive Director (save for Gregory Fletcher) will receive from the Company an additional fee of $20,600 for being a
member of the Audit and Risk Management Committee, the Health, Safety, Environment and Community Committee, the
Nomination and Remuneration Committee or the Strategy and Development Committee, and certain additional fees on a per
day basis as approved by the Board for the role on an independent board committee for any major related party transactions,
and (e) Gregory Fletcher will receive $370,800 including superannuation in aggregate for his role as a Co-Vice Chair of the Board,
chairman of the Audit and Risk Management Committee, member of the Nomination and Remuneration Committee and chair of
the Independent Board Committee.
Each Director is entitled to be indemnified by the Company (to the extent permitted under the Constitution and applicable laws)
and to be reimbursed by the Company for all necessary and reasonable out-of-pocket expenses properly incurred in connection
with the performance and discharge of his/her duties under his/her letter of appointment.
Save as disclosed above, none of the Directors has entered into any service contracts as a director with any member of the Group
(excluding contracts expiring or determinable by the employer within one year without payment of compensation (other than
statutory compensation)).
INTERESTS AND POSITIONS IN SHARES
Interests of the Directors and Chief Executive of the Company
As at 31 December 2021 the interests or short positions (as applicable) of the Directors and the Chief Executive of the Company
in the Shares and debentures of the Company and any interests or short positions (as applicable) in shares or debentures of any
of the Company’s associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance (“SFO”)) which
(1) have to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO
(including interests or short positions (as applicable) which they are taken or deemed to have under such provisions of the SFO),
(2) are required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or (3) are required, pursuant
to the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the HK Listing Rules, to be
notified to the Company and the Hong Kong Stock Exchange, are as follows:
The Company
NAME OF EXECUTIVE OR DIRECTOR
Baocai Zhang
Gregory James Fletcher
Geoffrey William Raby
David James Moult
Associated corporations of the Company
NUMBER OF
SHARES
274,404
2,100
22,858
–
INTEREST IN
UNDERLYING
SHARES9
–
–
–
–
COMBINED
TOTAL
274,404
2,100
22,858
–
NATURE OF INTEREST
Beneficial owner
Beneficial owner
Beneficial owner
–
APPROXIMATE
PERCENTAGE
0.02078%
0.00016%
0.00173%
–
NAME OF DIRECTOR
NAME OF THE ASSOCIATED CORPORATION
Qingchun Zhao
Xiangqian Wu
Yankuang Energy Group Company Limited
Yankuang Energy Group Company Limited
NUMBER OF
SHARES
85,800
162,600
INTEREST IN
UNDERLYING
SHARES
174,200
214,400
COMBINED
TOTAL
260,000
377,000
NATURE OF INTEREST
Beneficial owner
Beneficial owner
APPROXIMATE
PERCENTAGE
0.00533%
0.00773%
Save as disclosed above, as at 31 December 2021, none of the Directors or the Chief Executive of the Company have an interest
and/or short position (as applicable) in the Shares or debentures of the Company or any interests and/or short positions
(as applicable) in the shares or debentures of the Company’s associated corporations (within the meaning of Part XV of the SFO)
which (i) have to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the
SFO (including interests and short positions which they are taken or deemed to have under such provisions of the SFO), (ii) are
required, pursuant to Section 352 of the SFO, to be entered in the register referred to therein or (iii) are required, pursuant to
the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 to the HK Listing Rules, to be
notified to the Company and the Hong Kong Stock Exchange.
9 These represent the number of shares underlying the performance share rights which were granted pursuant to the Company’s Equity Incentive Plan approved
by shareholders The terms of the Equity Incentive Plan governing the grant of performance share rights are not subject to the provisions of Chapter 17 of the
HK Listing Rules as it does not involve the grant of options by the Company to subscribe for new shares of the Company.
25
ANNUAL REPORT DIRECTORS’ REPORT
DIRECTORS’ REPORT
Interests of persons other than Directors and Chief Executive of the Company
As at 31 December 2021 the following persons (other than a Director or Chief Executive of the Company) had an interest or
short position (as applicable) in the Shares or underlying Shares which were recorded in the register required to be kept under
section 336 of the SFO:
NAME OF SHAREHOLDER
Yankuang Energy
Shandong Energy10
CAPACITY
Beneficial interest
Interest in controlled entity
Cinda International HGB Investment (UK) Limited
Beneficial interest
China Agriculture Investment Limited
International High Grade Fund B, L.P.
Cinda International GP Management Limited
China Cinda (HK) Asset Management Co., Ltd11
Cinda Strategic (BVI) Limited
Cinda International Holdings Limited
Cinda Securities Co., Ltd
China Cinda (HK) Holdings Company Limited
China Cinda Asset Management Co., Ltd
Glencore Coal Pty Ltd
Glencore Holdings Pty Limited
Glencore plc12
CSIL13
Interest in controlled entity
Interest in controlled entity
Interest in controlled entity
Interest in controlled entity
Interest in controlled entity
Interest in controlled entity
Interest in controlled entity
Interest in controlled entity
Interest in controlled entity
Beneficial interest
Interest in controlled entity
Interest in controlled entity
Beneficial interest
Shandong Lucion Investment Holdings Group Co., Ltd
Interest in controlled entity
NUMBER OF
SHARES HELD
OR INTERESTED
APPROXIMATE
PERCENTAGE
(%)
822,157,715
822,157,715
209,800,010
209,800,010
209,800,010
209,800,010
209,800,010
209,800,010
209,800,010
209,800,010
209,800,010
209,800,010
84,497,858
84,497,858
84,497,858
71,428,571
71,428,571
62.26
62.26
15.89
15.89
15.89
15.89
15.89
15.89
15.89
15.89
15.89
15.89
6.40
6.40
6.40
5.41
5.41
Save as disclosed above, as at 31 December 2021, none of the substantial shareholders or other persons, (other than the Directors
and Chief Executive of the Company) had any interest or short position in the shares and/or underlying shares of the Company as
recorded in the register required to be kept by the Company under section 336 of the SFO.
10 Shandong Energy is deemed to be interested in the 822,157,715 Shares which Yankuang Energy is interested in as beneficial owner as it is entitled to exercise or
control the exercise of more than one-third of the voting power at general meetings of Yankuang Energy.
11 Cinda International HGB Investment (UK) limited, an indirect wholly owned subsidiary of China Cinda Asset Management Co., Ltd, is interested in 209,800,010
Shares which are held by J P Morgan Nominees Australia Limited as nominee. China Cinda Asset Management Co., Ltd., China Cinda (HK) Holdings Company
Limited, Cinda International Holdings Limited, Cinda Securities Co., Ltd, Cinda Strategic (BVI) Limited, China Cinda (HK) Asset Management Co., Ltd, Cinda
International GP Management Limited, International High Grade Fund B, L.P. and China Agriculture Investment Limited are each deemed to be interested in the
209,800,010 Shares which Cinda International HGB Investment (UK) Limited is interested in as beneficial owner.
12 Glencore plc and Glencore Holdings Pty Ltd are deemed to be interested in the 84,497,858 Shares which Glencore Coal Pty Ltd is interested in as beneficial
owner. Glencore plc wholly owns Glencore Holdings Pty Ltd which in turn wholly owns Glencore Coal Pty Ltd.
13 CSIL, a wholly owned subsidiary of Shandong Lucion Investment Holdings Group Co., Ltd, is interested in 71,428,571 Shares which are held by HSBC Custody
Nominees (Australia) Limited – A/C 2 as nominee.
26
YANCOAL 2021 REMUNERATION REPORT
Dear Shareholder
I am pleased to introduce the Group’s 2021 Remuneration Report.
2021 REFLECTIONS AND PERFORMANCE
2021 continued to be a challenging year for Yancoal as COVID-19 spread into regional areas, the Moolarben longwall encountered
a hard rock intrusion, and significant inclement weather experienced in NSW and QLD during both early and late 2021 disrupted
operational activities. While the significant rainfall in Yancoal’s three largest open-cut mines have impacted our production, the
combined asset portfolio delivered a total of 36.7 million tonnes of attributable saleable coal. Whilst the output is below the 2020
production level, higher coal prices and a focus on improving the quality of our product has delivered a net positive outcome on
our operating margin despite an increase in operating cash costs.
Key operational highlights include:
Strong Safety Culture:
12-month rolling TRIFR of
8.4, below the comparable
industry average
Saleable Production:
Achieved attributable saleable
coal production of 36.7Mt
despite the operational
challenges
Realised Coal Price:
Average realised coal price
of A$141/t up from A$82/t
in 2020
The executive leadership team prioritised the health and wellbeing of all Yancoal employees, introducing additional protocols
in response to the increased number of positive COVID-19 cases in the community. This focus on safety has resulted in Yancoal
continuing to deliver safety performance below the comparable industry average.
An ongoing recovery of global economic conditions has supported energy demand, combined with global supply disruptions,
leading to a 72% increase in Yancoal’s average realised coal price in 2021 compared to 2020. Yancoal optimises its products to
maximise sales between the different markets and seeks diversification of its customer base.
2021 EXECUTIVE REMUNERATION OUTCOMES
The 2021 Executive Short-Term Incentive Plan (“STIP”) Outcomes section of this report summarises this year’s scorecard
performance.
Improvements have been realised across the various underlying quantitative measures, for instance a reduction in environmental
incidents and disciplined capital expenditure. Performance against production and cash costs was constrained as a result of
operational challenges and uncontrollable factors (diesel prices, demurrage, wet weather recovery and workforce availability)
experienced during the year. Our balanced scorecard approach reinforces the need for our Executive team to deliver across a
range of both financial and non-financial priorities.
2022 REMUNERATION FRAMEWORK
No changes are proposed to the Executive Remuneration Framework for 2022.
Following the last holistic review of the framework completed in 2018, the Nomination and Remuneration Committee will
review the Group’s remuneration framework in 2022 to ensure remuneration arrangements continue to align management with
shareholder interests.
2021 has seen our Executive team remain focussed on a “One Yancoal” approach across all our sites, reinforcing our core
beliefs and values to deliver excellence and innovation in an environment that supports individual experience and engagement.
An aligned Yancoal which takes advantage of cross-collaboration across the business and with the involvement from all our
employees, will position the Group to continue its performance into 2022.
This report sets out remuneration information for the Group’s Key Management Personnel (“KMP”) for the 12 months ended
31 December 2021.
Yours sincerely,
Helen Jane Gillies
Chair of the Nomination and Remuneration Committee
27
2727
ANNUAL REPORTANNUAL REPORT REMUNERATION REPORT
REMUNERATION REPORT
REMUNERATION REPORT
REMUNERATION REPORT
KEY MANAGEMENT PERSONNEL
The Board delegates responsibility for the day to day management of the Company’s affairs and implementation of the strategy
and policy initiatives set by the Board to the Chairman of the Executive Committee and the Chief Executive Officer. The Executive
Committee is a management committee comprising the Chairman of the Executive Committee, the Chief Executive Officer, the
Chief Financial Officer and any other officers that the Board resolves will be members of the Executive Committee.
Consistent with the Constitution, the Company’s majority shareholder Yankuang Energy can nominate a director to the position
of the Chairman of the Executive Committee and the Chairman of the Board can recommend a person to the position of Chief
Financial Officer.
No Board, Committee or Executive changes took place during 2021.
The KMP comprise the Directors of the Company and nominated members of the Executive Committee (“Executive KMPs”).
Together, the Executive Director and Executive KMPs are referred to as “Executives” in this report. Details of the KMP are set out
in the table below.
NAME
NON-EXECUTIVE DIRECTORS
Baocai Zhang
POSITION
Director
Chairman of the Board
Chair of the Strategy and Development Committee
Member of the Nomination and Remuneration Committee
Cunliang Lai
Qingchun Zhao
Director
Director
Xiangqian Wu
Director
Member of the Audit and Risk Management Committee
Member of the Strategy and Development Committee
Member of the Nomination and Remuneration Committee
Member of the Health, Safety, Environment and Community Committee
Xing Feng
Director
Gregory James Fletcher
Independent Director
Member of the Strategy and Development Committee
Co-Vice Chairman of the Board
Chair of the Audit and Risk Management Committee Member of the Nomination and
Remuneration Committee
Geoffrey William Raby
Independent Director
Member of the Strategy and Development Committee
Chair of the Health, Safety, Environment and Community Committee Member of the
Nomination and Remuneration Committee
Helen Jane Gillies
Independent Director
Chair of the Nomination and Remuneration Committee Member of the Audit and Risk
Management Committee
EXECUTIVE DIRECTORS
Ning Zhang
EXECUTIVE KMP
David James Moult
Ning (Kevin) Su
Director, Co-Vice Chairman of the Board
Chair of the Executive Committee
Member of the Health, Safety, Environment and Community Committee
Chief Executive Officer
Chief Financial Officer
TIME IN ROLE
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full year
Full Year
Full Year
28
28
YANCOAL 2021YANCOAL 2021
REMUNERATION REPORT
REMUNERATION REPORT
REMUNERATION FRAMEWORK OBJECTIVES
The executive remuneration framework is structured to be market competitive and to reflect the reward strategy of the Group.
Through this framework the Group seeks to align executive remuneration with:
• Shareholder interests by:
• Executive interests by:
͵ making economic performance a core component of
the overall remuneration plan design;
͵
focusing on the key value drivers of the business
including employee safety, operational performance
and cost control; and
͵
attracting and retaining high calibre executives
͵
͵
rewarding capability and experience;
reflecting competitive reward for contribution to
growth in Group performance; and
͵
providing a clear structure for earning rewards
Details of remuneration for all Executives are set out in the ‘Executive Statutory Remuneration’ section of this Remuneration Report.
REMUNERATION STRUCTURE
The executive remuneration framework is structured as a combination of fixed and variable remuneration, as follows:
VARIABLE REMUNERATION (AT RISK)
FIXED ANNUAL REMUNERATION (“FAR”)
SHORT-TERM INCENTIVE PLAN (“STIP”)
LONG-TERM INCENTIVE PLAN (“LTIP”)
The FAR package provides market competitive
remuneration to attract and retain high quality talent
while reflecting role scope and accountabilities.
The STIP rewards and Executives for the achievement
of Group and individual goals that are aligned to the
Group’s financial, operational and strategic priorities.
The LTIP rewards and supports retention of participants
who are in positions to influence the Group’s long-
term performance.
The FAR package incorporates cash salary,
superannuation benefits and may include a provision
for a car benefit, together with various other benefits.
•
•
50% is paid as cash
25% is deferred into rights (Deferred Share Rights)
for one year
Executive FAR is reviewed annually against equivalent
roles among companies of similar size in the mining/
resources industry. No Executives are guaranteed an
annual increase in FAR.
•
25% is deferred into rights for two years
Performance is assessed annually against profitability,
health & safety, strategic objectives and environment
key performance indicators (“KPIs”).
For further information see the ‘Short Term Incentive
Plan’ section in this Remuneration report.
Performance rights to shares with no dividend
equivalent payments vest after a three-year period
subject to performance assessed against a comparator
group:
•
•
60% Earnings Per Share Vesting Condition
(“EPS Awards”)
40% Costs Target Vesting Condition (“Costs Target
Awards”).
For further information see the ‘Long Term Incentive
Plan’ section in this Remuneration report.
The executive remuneration framework has been structured to align participants to the long-term interests of the Company and
its shareholders through the use of equity components in the annual remuneration package: deferred share rights in the STIP and
performance share rights in the LTIP. Restrictions are in place regarding to whom equity can be issued and/or transferred under
the HKEx Listing Rules, as the Company is required to maintain a minimum free float of shares. As a result, the Company’s ability
to issue and/or transfer shares to employees or personnel who are directors of the Company and/or its subsidiaries is restricted
by the HKEx Listing Rules. For more information, please see the ‘Public Float’ section of the Directors’ Report. In accordance with
the terms of the STIP and LTIP grant conditions, the Board has discretion to settle the STIP deferred share rights or qualifying LTIP
performance share rights in cash. If settled in cash, the cash equivalent value is determined with reference to the market value
of shares on vesting. Since the introduction of the current executive remuneration framework in 2018, deferred STIP has been
settled in cash.
Target Remuneration Mix
The chart below illustrates the relative proportion of 2021 remuneration for Executive KMPs which is fixed and that which is linked
to individual and/or Group performance (STIP and LTIP) in the event that target performance for at- risk components is met.
33%
33%
15%
CEO/CEC
21%
CFO
43%
17%
17%
21%
Fixed
At risk STI (cash)
At risk STI (deferred)
At risk LTI
As the graphics above illustrate, STIP and LTIP form a significant part of Executive remuneration, which have been structured to
award the majority of at-risk remuneration as share rights.
29
ANNUAL REPORT REMUNERATION REPORT
REMUNERATION REPORT
REMUNERATION TIMING
The chart below provides an indicative timing illustration of how the 2021 financial year remuneration will be delivered to
Executive KMPs.
FAR
At risk STI (cash) 50%
At risk STI (deferral) 25%
At risk STI (deferral) 25%
At risk LTI
2021
2022
2023
2024
Date granted
End of performance period
Date paid / eligible for vesting
Short Term Incentive Plan
The STIP aims to strengthen stakeholder alignment and encapsulates various Company and Group performance measures.
The Board maintains discretion to alter the formula outcomes outlined below if the results generate any unintended outcomes
from a reward perspective considering the perspectives of various stakeholders including but not limited to shareholders,
employees and communities.
In 2021, an individual performance weighting was introduced in the determination of STIP outcomes with the objective of driving
increased individual accountability. The STIP structure for 2021 is outlined in the table below.
FEATURE
Eligibility
Opportunity
Scorecard
Performance
Conditions
DESCRIPTION
Executives as well as other management and employees of the Group are eligible to participate in the STIP.
This is expressed as a percentage of each Executive’s FAR. The STIP opportunity is reviewed annually. The Chief Executive Officer, Chair of the
Executive Committee and Chief Financial Officer have a Target STIP Opportunity of 100% of FAR, with a maximum opportunity of 200% of FAR. The
Board believes this level of STIP opportunity is reasonable and competitive for the current environment.
The STIP Scorecard consists of several KPIs.
At the start of each year, the Board reviews and selects KPIs considered to be the most appropriate to the business to drive performance for the
financial year in question.
Assessment against these measures is determined following the end of each year.
For Executives, all KPIs are measured at Group level. The STIP scorecard measures the Group’s performance in respect of the following categories:
KPI
Measure
Profitability
Profit Before Tax (“PBT”)
Free On Board14 (“FOB”) Cash Costs (excluding royalties)
Run Of Mine tonnes (“ROM”)
Health & Safety
Total Recordable Injuries and Disease Injuries (“TRI & DI”)
Critical Controls Compliance
Strategic Objectives
Strategic measures may include special projects, capital management, growth and culture development.
Environment
Environmental incidents and complaints
Weighting
30%
20%
10%
10%
5%
15%
10%
Individual
Performance
Condition
Individual Performance will be assessed against objectives set at the beginning of the financial year as part of Yancoal’s Performance Review and
Development (“PRD”) framework, with further consideration of behaviours against Yancoal’s values and Leadership competencies. The Board will
oversee the objectives and assessment of the Chief Executive Officer and Chair of the Executive Committee, while objectives for other executives
including the Chief Financial Officer will be set and assessed in collaboration with the Chief Executive Officer and Chair of the Executive Committee.
Outcome
Formula
The STIP Scorecard outcome and individual PRD outcome are weighted (Chief Executive Officer and Chair of the Executive Committee 90% and 10%;
Chief Financial Officer 80% and 20% respectively) to determine the overall STIP Performance Outcome.
Performance against the STIP scorecard is converted to a payout multiplier, calculated referencing the relevant maximum level of opportunity and
minimum acceptable or threshold level of performance. Likewise, the PRD outcome is converted to a payout multiplier.
These payout multipliers (0% to 200%) are weighted as described above and applied to the Target STIP opportunity to determine the actual STIP
award. Accordingly, each Executive’s STIP award is heavily influenced by the achievement of Group KPIs.
The Board can exercise discretion should the formula outcome generate an unintended reward.
Timing
Executive STIP awards are paid as follows:
•
•
50% of the award is delivered as a cash payment around March each year.
50% of the award will be deferred in share rights and vest in equal parts over a two- year period (25% deferred for one year, 25% deferred for
two years) subject to continued employment at the respective vesting dates. The value of the deferred portion of STIP is converted to Deferred
Share Rights (to Yancoal shares) at the time of award using a volume average weighted price (“VWAP”).
Deferred share rights will be granted following audited 2021 financial statements being released.
Settlement
Vested rights will be equity settled unless the Board exercises discretion to settle in cash, with consideration to the Company being required to
maintain a minimum free float. The cash equivalent value is determined with reference to the number of rights and the market value of shares on
vesting, less applicable taxes and other amounts such as any applicable statutory superannuation contributions.
14 FOB cash costs are calculated on a management reporting basis.
30
YANCOAL 2021 REMUNERATION REPORT
REMUNERATION REPORT
Long Term Incentive Plan
LTIP grants are delivered in performance share rights with vesting subject to performance conditions measured over a 3-year
period. The Board maintains discretion to reduce or waive the conditions outlined below if the results generate any unintended
outcomes. No structural changes were proposed for 2021, however the EPS Awards comparator group was revised to include
comparable coal mining-focused companies. The LTIP structure for 2021 is outlined in the table below.
FEATURE
Eligibility
Frequency
DESCRIPTION
Executives and certain senior management are eligible to participate in the LTIP.
Each year, eligible Executives and certain senior management are considered for an annual LTIP grant.
LTIP opportunity
The Chair of the Executive Committee and the Chief Executive Officer have an annual LTIP opportunity of up to 200% of FAR.
The Chief Financial Officer has an annual LTIP opportunity of up to 50% of FAR.
Allocation Methodology
The number of performance rights granted is calculated by dividing the dollar value of the annual LTIP opportunity by the VWAP
of the Company’s ordinary shares traded on the ASX across a 20-day trading period spread 10 days prior to, and 10 days after, 31 December
2020.
LTIP instrument
The LTIP is issued via a grant of performance share rights for nil consideration.
LTIP performance conditions The LTIP will vest subject to both service and performance measures:
•
•
EPS Awards: 60% of the award will vest subject to EPS growth performance of the Group relative to performance of a comparator
group of international companies of a comparable size with a coal mining focus over the relevant performance period; and
Costs Target Awards: 40% of the award will vest subject to cost per tonne performance of the Group relative to performance of a
comparator group of Australian export mines at the end of the performance period.
An EPS vesting condition was chosen because it allows for an objective, well understood, external assessment of the shareholder value
created by the Group relative to a group of peers over a sustained period in view of the low liquidity and limited float of Yancoal shares.
The Costs Target condition was chosen because it provides a structural incentive to LTIP participants to ensure that the Group remains
positioned in the best cost quartile of Australian coal producers. The best quartile costs protect and preserve shareholder value in difficult
times and supports enhanced returns when the commodity cycle recovers.
For the EPS Awards, the EPS growth of the Group (based on the Group’s Annual Report, adjusted for any share consolidations or splits) is
measured as a percentile ranking compared to the EPS growth for the same period of the comparator group of companies.
Vesting is based on the ranking in accordance with the following schedule:
LTIP performance
conditions – why were
they chosen?
How will the performance
condition be calculated
for the EPS Awards?
Below the 50th
percentile:
no EPS Awards vest
At 50th percentile:
50% of the EPS
Awards vest
Between the 50th and
75th percentiles:
vesting will occur on a
pro rata straight line
basis
At the 75th percentile
or above:
100% of the EPS
Awards vest
How will the performance
condition be calculated for
the Costs Target Awards?
The 2021 comparator group consists of the following companies: Adaro Energy; Alliance Resources; Arch Resources; CONSOL Energy;
Coronado Global Resources; New Hope Corp; Peabody; PT Bum Resources TBK; South32; Teck Resources; and Whitehaven Coal.
For the Costs Target Awards, the Group’s weighted average FOB cost per tonne is measured as a percentile ranking compared to the coal
industry cost curve, as provided by an independent expert, for Australian export mines at the end of the performance period.
Vesting is based on the ranking in accordance with the following schedule. Yancoal must rank ahead of 70% of the comparator companies
before vesting commences.
Above the 30th
percentile:
no Costs Target
Awards vest
At the 30th percentile:
50% of the Costs
Target Awards vest
Between the 30th and
20th percentiles:
vesting will occur on a
pro rata straight line
basis
At the 20th percentile
or below:
100% of the Costs
Target Awards vest
Performance Period
Subject to achieving vesting conditions, EPS awards can become exercisable after a three-year performance period with the performance
period commencing on 1 January 2021.
Settlement
The Costs Target Awards is based on the FOB cost per saleable tonne achieved by the Group and the assets managed on behalf of Yancoal
International Holdings for the year ending 31 December 2023 with Costs Target Awards being tested at, or shortly after, the time of
publication of Wood Mackenzie’s independent expert report.
All awards that do not vest following testing will lapse immediately. There is no re-testing. All vested awards are automatically exercised.
Exercisable rights will be equity settled unless the Board exercises discretion to settle in cash, with consideration to the Company being
required to maintain a minimum free float. The cash equivalent value is determined with reference to the number of rights and the market
value of shares on vesting, less applicable taxes and other amounts such as any applicable statutory superannuation contributions.
31
ANNUAL REPORT REMUNERATION REPORT
REMUNERATION REPORT
LTIP awards granted to Executives in 2021
A summary of the LTIP awards granted in 2021 is set out in the table below.
NAME
Ning Zhang
David James Moult
Ning (Kevin) Su
Total
FAIR VALUE AT
DATE OF GRANT
$
NUMBER OF
PERFORMANCE
RIGHTS
GRANTED15
–
2,554,449
185,938
2,740,387
–
1,386,759
100,942
1,487,701
The maximum total value of the performance rights is the grant price multiplied by the maximum number of performance rights
which can be granted. The grant price is determined at grant date and will not change during the vesting period. The maximum
possible value, under the accounting standards, will not change from the determined value at the grant date. The minimum
possible value of performance rights is zero, if they do not meet the relevant performance conditions.
Chair of the Executive Committee Mr Ning Zhang is entitled to participate in the LTIP. On 26 February 2021, Mr Ning Zhang elected
to forfeit the rights granted associated with the 2020 LTIP and not to participate in the 2021 plan.
REMUNERATION GOVERNANCE FRAMEWORK
Board
Consistent with its Board Charter, the Board oversees the appointment, remuneration and performance of senior management;
including but not limited to:
• Approving the remuneration arrangements for all members of the Executive Committee (except for any Director) and senior
executive officers; and
• Ensuring that the Group’s remuneration policies are aligned with its purpose, values, strategic objectives and risk appetite.
On these and other issues as outlined in the Board Charter, the Board receives recommendations from the NRC.
Nomination and Renumeration Commitee
The Board has established an NRC to make recommendations to the Board on matters such as:
• Board composition and succession planning for the Board and the Chief Executive Officer and oversight of succession
planning for the Executive Committee;
• Director remuneration (subject to shareholder approval that is required in accordance with the ASX and HKEx Listing Rules,
and the Constitution) and remuneration arrangements for the Company’s Executive Committee and any other person
nominated as such by the Committee from time to time;
the public reporting of remuneration for Directors and key management personnel and other members of the Executive
Committee;
•
• oversight of the performance assessment of the Executive Committee;
• designing Group remuneration policy and regulations with regard to corporate governance; and
• oversight of the progress of the diversity and inclusion strategy, as well as diversity metrics at the organisation and
operation level.
External advice
From time to time, the NRC seeks and considers advice from external advisors who are engaged by and report directly to the
NRC. Such advice will typically cover remuneration levels, independent benchmarking data and information regarding best
practice, trends and regulatory developments. Following a substantial revamp of the remuneration framework in 2018, no
remuneration recommendations were obtained during 2021 as defined under the Corporations Act 2001 (Cth).
15 The performance share rights noted above have been allocated and were issued on 28 May 2021 for David James Moult and Ning (Kevin) Su. The number of
performance rights granted is calculated as the maximum LTIP award opportunity divided by the VWAP across a 20-day trading period spread 10 days prior to,
and 10 days after, 31 December 2020.
32
YANCOAL 2021 REMUNERATION REPORT
REMUNERATION REPORT
EXECUTIVE REMUNERATION
Principles and Framework
REMUNERATION PRINCIPLES
Equitable and aligned with
the long- term interests of the
Company and its shareholders
Compliant with relevant
Company policies, including the
Diversity Policy
Market competitive
remuneration to attract and
retain skilled and motivated
employees
Linked with achievement
of Company strategy and
challenging business objectives,
and the delivery of sustainable
returns over the long-term
Rewards the contribution of
outstanding performers and
recognises conduct aligned to
Yancoal’s values
LINKING EXECUTIVE REMUNERATION TO GROUP PERFORMANCE
The Group’s remuneration principles include rewarding based on performance and this is primarily achieved through the Group’s
STIP and LTIP. Cash and equity awards under these plans are impacted by the overall performance of the Group in order to
maintain a link between performance and shareholder value. The Group’s earnings and delivery of shareholder wealth for the
past five years is outlined in charts below. These charts also highlight the fact Yancoal’s Executive remuneration reflects the
outcomes across a number of financial and operational outcomes at Group and Company level.
Overview of Yancoal’s historical performance and Executive STIP Outcomes16
PBT
($’M)
311
Operating EBITDA
($’M)
Operating Cash
Costs
($/t)
1,172
767
1,103
(1,143)
988
2,180
1,654
2,531
748
66
65
64
67
59
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
Basic EPS
($)
Closing share price
($)
Dividend Paid per share
($)
0.52
0.68
0.54
0.60
(0.79)
4.38
3.92
2.90
2.42
2.60
—
0.10
0.39
0.21
—
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
Attributable ROM tonnes
(Mt)
TRIFR
(Number of recordable injuries
per million hours worked)
Executive STIP
Scorecard Outcome
(% of Target)
42.9
46.5
47.9
47.5
10.6
24.2
8.0
7.4
7.4
8.4
169%
169%
132%
118% 144%
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
FY17
FY18
FY19
FY20
FY21
16 Yancoal’s share capital was consolidated on a 35-1 basis on 28 September 2018. Restated figures are shown for Closing share price and Ordinary dividend per share.
33
ANNUAL REPORT REMUNERATION REPORT
REMUNERATION REPORT
2021 Executive STIP Outcomes
The table below outlines STIP scorecard achievement for Yancoal Australia Limited and Yancoal International Holdings Limited
in 2021.
MEASURE
ACTUAL KPI RESULT THRESHOLD
TARGET
STRETCH
COMMENTS
STIP OUTCOME
KPI
Profitability17
PBT
A$mn
Adjusted FOB Cash Costs18
(excluding royalties)
$ per tonne
Adjusted ROM Mt
Health & Safety
TRI & DI
Critical Controls Compliance
Strategic measures such as
diversification and optimisation
initiatives
Environmental
incidents and complaints
(excluding serial complainants)
Strategic
Objectives
Environment
OVERALL
1,157
61.83
57.97
68
100%
75%
Various
143.8%
Stretch PBT reflects higher than expected coal prices
combined with net margin management
Uncontrollable factors elevated cash costs including
diesel prices, demurrage costs, and wet weather
recovery works.
ROM tonnes were constrained as significant rainfall
and COVID safe work protocols impacted production
Target TFR & DI performance reflects achievement
similar to prior year.
Stretch Critical Controls
Compliance performance reflects an increase from
96% achieved in the prior year.
Target reflects the progress made across key strategic
objectives which position Yancoal to improve both
financial and operational outcomes in the future.
Reflects incidents and complaints remaining below
stretch-level occurrences
The table below outlines 2021 Individual Objectives achievement:
EXECUTIVE
OUTCOME
COMMENTS
CEC
CEO
CFO
The majority of goals have been achieved in full in FY21
The majority of goals have been achieved in full in FY21
The majority of goals have been achieved in full in FY21
•
•
•
•
•
•
•
•
Set up and held the leadership team accountable for completion of FY21
economic Key Tasks
Implemented Corporate and Mine Site Optimization projects
Enhanced Executive performance management process
Execution of a multi-faceted business development strategy
Assisted the CEC and CEO to implement strategic projects
Lead company’s capital management strategy
Effective stakeholder management cross Australia and China
Improved collaboration between functions to drive productivity
The STI outcomes are a reflection of the balanced scorecard approach that considers not only the business results but also
progress across a series of strategic priorities that are crucial to Yancoal’s long term shareholder returns and individual objectives
for each Executive KMP. The 2021 STI Outcome for the Executive KMP is equivalent to 75% (for the CEC and CEO) and 77% (for the
CFO) of the maximum STIP opportunity.
17 The NRC has approved the use of adjusted outcomes for FOB Cash Costs and ROM in the FY21 STIP scorecard to ensure STIP outcomes provide a fair reflection of
performance.
18 FOB cash costs are calculated on a management accounts basis.
34
YANCOAL 2021
REMUNERATION REPORT
REMUNERATION REPORT
Details of the resulting STIP outcomes for Executives are outlined in the table below. Executive STIP outcomes are subject to
discussion and approval by the Board.
NAME
Ning Zhang
David James Moult
Ning (Kevin) Su
Total
STIP CASH19
$
373,850
1,269,700
383,600
2,027,150
STIP
DEFERRED20
$
373,850
1,269,700
383,600
2,027,150
STIP TOTAL
$
747,700
2,539,400
767,200
4,054,300
% OF STIP
OPPORTUNITY
AWARDED
% OF STIP
OPPORTUNITY
NOT AWARDED
75%
75%
77%
75%
25%
25%
23%
25%
The STIP Deferred value shown in the table above is converted to Deferred Rights at the time of award, using the VWAP
established by the Board. The STIP Deferred Rights will vest in equal parts over a two-year period (25% of total STIP award
deferred for one year, 25% of total STIP award deferred for two years). Given the low float of the Company’s shares, it is
anticipated that, at the time of vesting, the Board may exercise discretion to settle the 2021 STIP Deferred Rights with a cash
equivalent payment. See section ‘Short Term Incentive Plan’ for Settlement details.
Details of the remuneration of Executives prepared in accordance with statutory obligations and accounting standards are
contained in the Executive Statutory Remuneration Section of this Remuneration Report. The deferred STIP expense has been
accounted for as being expected to be settled in cash in accordance with Australian Accounting Standards.
2021 Executive LTIP Outcomes
2018 LTIP and 2019 LTIP
None of the Executive KMP participated in either the 2018 LTIP or 2019 LTIP.
Looking forward to 2022
Following the last holistic review of the remuneration framework being completed in 2018, the Nomination and Remuneration
Committee will review the Group’s remuneration framework in 2022 to ensure remuneration arrangements continue to align
management with shareholder interests.
SERVICE AGREEMENTS
For Non-Executive Directors, the terms and conditions of their appointment are outlined in a letter of appointment. For
Executives, the terms and conditions of their employment are outlined in their Executive Service Agreement (“ESA”) with
the Company.
The following table outlines key ESA terms for each of the Executives.
EXECUTIVE
Ning Zhang
POSITION
TERM OF ESA
Executive Director,
Unlimited
Co-Vice Chairman,
Chair of the Executive
Committee
David James Moult Chief Executive
Unlimited
Officer
Ning (Kevin) Su
Chief Financial OfficerUnlimited
NOTICE PERIOD
6 months21
12 months22
6 months21
12 months22
3 months21
6 months22
TERMINATION BENEFIT
•
•
Nil for cause or resignation.
If ceasing employment for any other reason i.e. as a ‘Good Leaver’,
a pro- rata payment in accordance with STIP or LTIP rules is at the Board
discretion.
19 The 2021 STIP cash figures are to be paid around March 2022.
20 The “STIP Deferred” is the value of the deferred portion of the STIP awarded for the year.
21 Notice period applicable if the Executive resigns.
22 Notice period applicable if the Company terminates the Executive.
35
ANNUAL REPORT REMUNERATION REPORT
REMUNERATION REPORT
EXECUTIVE STATUTORY REMUNERATION
Executive Remuneration
The following table sets out the details of remuneration earned by Executives in 2021 and 2020, calculated in accordance with
Australian Accounting Standards.
SHORT-TERM BENEFITS
$
POST-EMPLOYMENT
BENEFITS
$
NAME
Ning Zhang23
David James
Moult
Ning
(Kevin) Su
Total
YEAR
2021
2020
2021
2020
2021
2020
2021
2020
CASH
SALARY
STI
476,676
373,850
371,485
221,100
1,677,355 1,269,700
1,367,008
834,400
472,340
383,600
333,371
239,178
2,626,371 2,027,150
2,071,864 1,294,678
NON-
MONETARY
BENEFITS
SUPERANNUATION
BENEFITS
14,220
16,459
17,504
20,594
7,592
9,753
39,316
46,806
22,631
16,098
22,631
17,450
22,631
16,740
67,893
50,288
LONG-TERM BENEFITS
$
LONG
SERVICE
LEAVE
1,127
147
STI
DEFERRED
373,850
221,100
SHARE-BASED
PAYMENTS
$
TOTAL
$
%
PERFORMANCE
RELATED
LTI
(111,081)
1,151,273
111,081
16,296
1,269,700
1,073,000
6,831
13,456
21,568
30,879
28,546
834,400
383,600
239,178
2,027,150
1,294,678
388,103
78,494
35,204
1,040,413
534,388
957,470
5,346,186
3,468,786
1,361,713
894,992
7,859,172
5,321,248
55%
58%
68%
59%
62%
57%
65%
59%
Particulars regarding the Directors’, senior management’s and Executive KMPs’ remuneration and the five highest paid employees
as required to be disclosed pursuant to Appendix 16 of the HK Listing Rules are set out in note B4 to the financial statements.
During the financial year ended 31 December 2021, no emoluments were paid by the Group to any of the Directors or the five
highest paid employees as an inducement to join or upon joining the Group, or as compensation for loss of office as a director of
any member of the Group or of any other office in connection with the management of the affairs of any member of the Group.
NON-EXECUTIVE DIRECTOR FEES
Objective
The Board seeks to set remuneration for Non-Executive Directors at a level which:
•
•
•
provides the Company with the ability to attract and retain directors of the highest calibre;
reflects the responsibilities and demands made on Non-Executive Directors; and
is reasonable and acceptable to the Company’s shareholders.
Structure
In line with sound corporate governance, the remuneration structure for the Non-Executive Directors is distinct from the
remuneration structure for Executives.
The Company set an aggregate remuneration cap of $3,500,000 per annum for all Non-Executive Directors, consistent with the
constitution. Remuneration payable to each Non-Executive Director has been approved by the Company’s majority shareholder,
Yankuang Energy. The total Board and Committee fees paid by the Company to Non-Executive Directors in 2021 was $854,901.
During 2021, Non-Executive Directors were remunerated by way of fixed fees in the form of cash and superannuation (to the
maximum superannuation guarantee cap). No element of the Non-Executive Director fees is linked to performance.
No Board or Board Committee fees were paid to:
• Executive Director Ning Zhang as the responsibilities of Board Committee membership are considered in determining the
remuneration provided as part of their normal employment conditions.
• Nominee Directors of Yankuang Energy and Cinda, as the responsibilities of Board or Board Committee membership were
considered part of their role and remuneration arrangements with Yankuang Energy and Cinda. The nominee Directors of
Yankuang Energy and Cinda were as follows:
͵
͵
Cunliang Lai
Xiangqian Wu
͵ Baocai Zhang
͵ Qingchun Zhao
͵
Xing Feng
23 As Chair of the Executive Committee Mr Ning Zhang is entitled to participate in the LTIP. On 26 February 2021, Mr Ning Zhang elected to forfeit the rights granted
associated with the 2020 LTIP and not to participate in the 2021 plan.
36
YANCOAL 2021 REMUNERATION REPORT
REMUNERATION REPORT
The table below outlines Board and Board Committee fees for 2021 and 2020.
BOARD FEES PER ANNUM
(INCLUDING ANY SUPERANNUATION)
Chairman of the Board
Independent Co-Vice Chairman of the Board (inclusive of Committee fees)
Director
COMMITTEE FEES PER ANNUM
(INCLUDING ANY SUPERANNUATION)
Audit and Risk Management Committee
Health, Safety, Environment and Community Committee
Nomination and Remuneration Committee
Strategy and Development Committee
2021
$
2020
$
Not applicable
Not applicable
370,800
169,950
370,800
169,950
CHAIR
MEMBER
Not applicable
41,200
41,200
Not applicable
20,600
20,600
20,600
20,600
The following table sets out the details of remuneration (in the form of Board and Committee fees and other benefits) earned by
eligible Non-Executive Directors in 2021 and 2020 calculated in accordance with Australian Accounting Standards.
NAME
Gregory James Fletcher
Helen Jane Gillies
David James Moult24
Geoffrey William Raby
Total
SHORT TERM BENEFITS
$
POST-EMPLOYMENT BENEFITS
$
FEES
STI OR BONUS
NON- MONETARY
BENEFITS
SUPERANNUATION
LONG SERVICE
LEAVE
348,169
349,452
211,163
211,644
–
42,939
230,033
223,853
789,365
827,888
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
22,631
21,348
20,587
20,106
–
3,898
22,318
20,969
65,356
66,321
–
–
–
–
–
–
–
–
–
–
TOTAL
$
370,800
370,800
231,750
231,750
–
46,837
252,351
244,822
854,901
894,209
YEAR
2021
2020
2021
2020
2021
2020
2021
2020
2021
2020
SHARE TRADING POLICY
The Company’s Share Trading Policy prohibits dealing in Company securities or Yankuang Energy securities by Directors of the
Group, all officers of the Company and other relevant employees and contractors of the Group, as well as their closely related
persons, during specified blackout periods each year and when they are in possession of ‘inside information’. Directors of the
Group, all officers of the Company, and their closely related persons are also prohibited from dealing in securities of the listed
Company where he or she is in possession of inside information in relation to those securities. Subject to compliance with the
Company’s Share Trading Policy, employees are permitted to deal in Company securities or Yankuang Energy securities outside
these blackout periods where they are not in possession of inside information, however additional approval requirements apply.
The Share Trading Policy precludes relevant employees from entering into any hedge or derivative transactions relating to
unvested options or share rights granted to them under incentive plans and securities that are subject to holding locks or
restrictions from dealing under such plans. There are also restrictions regarding margin lending arrangements, hedging and short-
term trading of the Company’s securities. Each Director of the Company is required to provide a declaration at the end of each
financial year certifying that they (and their closely related persons) have complied with the Share Trading Policy for the duration
of that financial year.
24 Fees for David James Moult reflect the period to 9 March 2020 when he ceased as a non-executive director and commenced as Chief Executive Officer.
37
ANNUAL REPORT REMUNERATION REPORT
REMUNERATION REPORT
REMUNERATION REPORT
REMUNERATION REPORT
EQUITY INSTRUMENT DISCLOSURES
The numbers of shares in the Company held during the financial year by each director of the Company and other Executive KMPs
of the Group, including their personally related parties, are set out in the table below. No other KMP held any shares in respect of
Yancoal or its related entities at or during the year ended 31 December 2021.
NAME
Gregory James Fletcher
Geoffrey William Raby
Baocai Zhang
Ning (Kevin) Su25
HELD AT
1 JANUARY 2021
GRANTED AS
COMPENSATION
PURCHASED /
(DISPOSED)
HELD AT
31 DECEMBER 2021
2,100
22,858
274,404
45,573
–
–
–
–
–
–
–
–
2,100
22,858
274,404
45,573
The number of performance rights held by Executives under long term incentive plans in 2021 is outlined in the table below.
NAME
Ning Zhang
David James Moult
Ning (Kevin) Su
HELD AT
1 JANUARY
2021
344,390
1,171,240
65,351
GRANTED AS
COMPENSATION26
–
1,386,759
100,942
VESTED
DURING
THE YEAR
EXERCISED
DURING YEAR
(LAPSED/
CANCELLED
DURING YEAR)27
HELD AT
31 DECEMBER
2021
OF WHICH
EXERCISABLE
–
–
–
–
–
–
(344,390)
–
–
–
2,557,999
166,293
–
–
–
OF WHICH NOT
VESTED & NOT
EXERCISABLE
–
2,557,999
166,293
As at 31 December 2021 there are 5,578,066 LTIP performance rights in aggregate over unissued Group shares. Refer to Note D3
for further details.
OTHER TRANSACTIONS WITH AND LOANS TO DIRECTORS AND EXECUTIVES
A number of Directors and executives hold positions in other entities that result in them having control or significant influence
over the financial or operating policies of those entities. Some of these entities transacted with the Company or its subsidiaries
in the reporting period. The terms and conditions of any transactions with management, Directors or parties related to Executives
or Directors were no more favourable than those available, or which might reasonably be expected to be available, on similar
transactions to non-management or Director related persons or entities on an arm’s length basis. There were no loans provided
to Directors and Executives during the year.
This report is made in accordance with a resolution of the Directors.
Gregory James Fletcher
Director
Sydney
28 February 2022
25 These shares were purchased on 31 August 2017 and 3 September 2018 and held by a related party of Ning (Kevin) Su. The shareholding was identified during the
current period and, if identified in the previous period, would have been disclosed in the 2020 Remuneration Report. Ning (Kevin) Su was considered an Executive
KMP from 20 March 2020. From 20 March 2020, Ning (Kevin) Su took on additional responsibilities within the finance function and was appointed Chief Financial
Officer from 1 June 2020.
26 2021 LTIP: The number of performance rights granted is calculated as the value of the maximum LTIP award divided by the VWAP across a 20-day trading period
spread 10 days prior to, and 10 days after, 31 December 2020.
27 As CEC Mr Ning Zhang is entitled to participate in the LTIP. On 26 February 2021, Mr Ning Zhang elected to forfeit the rights granted associated with the 2020 LTIP
and not to participate in the 2021 plan.
38
38
YANCOAL 2021YANCOAL 2021
AUDITOR’S INDEPENDENCE DECLARATION
AUDITOR’S INDEPENDENCE DECLARATION
Take the lead
AUDITOR’S INDEPENDENCE DECLARATION UNDER SECTION 307C OF THE
CORPORATIONS ACT 2001 TO THE DIRECTORS OF YANCOAL AUSTRALIA LIMITED
As lead auditor, I declare that, to the best of my knowledge and belief, during the year ended 31 December 2021
there have been:
i. no contraventions of the auditor independence requirements as set out in the Corporations Act 2001 in relation
to the audit, and
ii. no contraventions of any applicable code of professional conduct in relation to the audit.
ShineWing Australia
Chartered Accountants
R Blayney Morgan
Partner
Melbourne, 28 February 2022
Brisbane
Level 15
240 Queen Street
Brisbane QLD 4000
T + 61 7 3085 0888
Melbourne
Level 10
530 Collins Street
Melbourne VIC 3000
T + 61 3 8635 1800
Perth
Level 25
108 St Georges Terrace
Perth WA 6000
T + 61 8 6184 5980
Sydney
Level 7, Aurora Place
88 Phillip Street
Sydney NSW 2000
T + 61 2 8059 6800
ShineWing Australia ABN 39 533 589 331. Liability limited by a scheme approved under Professional
Standards Legislation. ShineWing Australia is an independent member of ShineWing International Limited.
sw-au.com
39
3939
ANNUAL REPORTANNUAL REPORT
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
BUSINESS OVERVIEW
Yancoal operates a diversified portfolio of world class assets
consisting of both large-scale open cut and underground mines
comprising six coal mine complexes in Australia.1
As a leading low-cost coal producer in the global seaborne
market, Yancoal’s coal mining operations produce a mix of
premium thermal, semi-soft coking, and pulverised coal
injection (“PCI”) coals, together with mid-to-high ash thermal
coals. The Group’s financial results are influenced by the
interaction between the demand and supply for thermal and
for metallurgical coal. This in turn depends on macroeconomic
trends, including regional and global economic activity, the
price and availability of alternative forms of energy production
as well as supply fluctuations from competitors.
Our customers are located throughout the Asia-Pacific region
with Japan, Taiwan, South Korea and Singapore accounting for
approximately 73% of our revenue from coal sales in the year
ended 31 December 2021.
Thermal coal is primarily used in electricity generation and
its end users are typically power and utilities companies.
Metallurgical coal is primarily used to produce coke for blast
furnace steel production and its end users are typically steel
plants. We also sell coal to customers in the commodities
trading business, who purchase the Group’s coal for trading
purposes or to on-sell to their end user customers. Commodity
traders are similarly exposed to regional and global demand
trends in the coal market.
The Group’s export thermal coal is generally priced on either
an index price, an annual fixed price or on a spot price basis.
Generally, lower ash products are priced relative to the
GlobalCOAL Newcastle index and higher ash products are
priced relative to the Argus/McCloskey API5 index. Annual
fixed price contracts are mostly priced against the Japanese
Power Utility Reference Price, which is the contract price
agreed between major Australian suppliers and Japanese
power utilities. The balance of our sales are spot sales
priced relative to the market at their transaction date and
mostly at fixed prices. At times during the period, delayed
contract deliveries contributed to a ‘lag effect’ in the realised
price achieved compared to benchmark spot prices. These
delayed deliveries primarily resulted from the production and
supply chain interruptions noted below, and led to extended
periods between when the contract was priced and when it
was performed.
The Group’s export metallurgical coal is either priced on a
benchmark or spot price basis. Most term contracts are priced
against a benchmark pricing mechanism which is negotiated
on a quarterly price basis between major Australian suppliers
and Japanese steel mills. Spot sales are priced relative to the
market at their transaction date and mostly at fixed prices.
The large majority of the Group’s semi-soft coking coal out of
Newcastle and low volatile PCI coal out of Queensland is priced
relative to the quarterly benchmark.
In January 2021, the Moolarben underground encountered an
unknown hard rock intrusion in the centre of a known dyke
which could not have been identified by normal investigative
methods that effectively suspended longwall operations
for eleven weeks, while drill and blasting activities were
undertaken to allow the longwall to mine through the dyke.
The impact of the dyke resulted in an estimated loss of 1.2Mt
of ROM (equity), with the underground coal being 100%
bypass.
In March 2021, New South Wales (“NSW”) experienced a one-
in-100-year-rain event with parts of the state subject to severe
flooding, disrupting mining, rail and port activity. Throughout
the Period, NSW experienced above average rainfall and
high winds associated with the La Niña weather cycle that
disrupted mining and port activity and hampered the recovery
from the March floods with most of the NSW open cut mines
nearing their water storage capacity. Then in November
2021, many parts of NSW and Queensland experienced the
wettest November on record, again leading to site, rail and
port disruptions. Most significantly, this resulted in decreased
production from the Group’s open cut mines located in NSW,
Moolarben, MTW, HVO and Stratford Duralie and led to
increased vessel queues off the port at Newcastle. The overall
impact of the extreme wet weather resulted in an estimated
loss of 1.6Mt of ROM coal (equity) during the period.
During the period, COVID-19 became more prevalent in
regional areas resulting in the introduction of additional
protocols in response to the increased number of positive
cases in the community. Adherence with Government
COVID-19 regulations resulted in an increased number of
workers unable to attend site as lockdowns and precautionary
isolations become more common. MTW and HVO reported
positive cases in the third quarter resulting in temporary
shutdowns whilst late in the year Moolarben’s longwall
ceased operating due to a lack of available operators.
The combination of these factors forced shutdowns and
COVID-19 protocols resulted in a significant decrease in
workforce availability which together resulted in an estimated
loss of 1.1Mt of ROM coal (equity) during the period.
During the period, coal price indices appreciated to record
levels on the back of pandemic driven government stimulus
packages increasing coal demand along with supply issues
caused by the wet weather in Australia and Indonesia. Logistic
disruptions to coal exports from Russia and South Africa also
impacted supply.
China ceasing to purchase Australian coals kept the high-ash
thermal index relatively flat during the first half of the period
with prices appreciating towards the end of the first half
of 2021. Demand from China for coal imported from other
countries remained and strengthened during the period on the
back of a hot summer and lower than expected hydro energy
production. This in turn increased demand for Australian coal
from other countries. There was some softening of imported
coal demand from China during the latter part of the period as
China moved to increase domestic supply. In the metallurgical
market, China ceased exporting steel, providing the opportunity
1 Includes Moolarben, MTW, HVO (jointly owned), Yarrabee, Stratford Duralie and from 17 December 2020, following the reconsolidation of Watagan, Ashton,
with Donaldson currently on care and maintenance and Austar transitioning to mine closure.
40
40
YANCOAL 2021YANCOAL 2021
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
for other countries to increase steel production resulting in
greater demand for Australian coking and PCI coals. With
ongoing economic stimulus packages instigated around the
world in 2020 continuing, demand for all coals remained robust.
Yancoal actively considers the effect that its supply level can
have on specific coal markets and responds appropriately
to prevailing market conditions. To counter the anticipated
short-term volatility in thermal coal price indices, we continue
to optimise the product quality and volume we place into the
market and actively seek to expand our customer base and
sales to new markets.
It is currently expected that Australia’s share of the world
seaborne thermal coal supply market, of 21% in 2021, will
increase to approximately 30% by 20502, and it will continue to
play a critical role as a primary source of premium grade coals.
Ongoing challenges associated with obtaining development
approvals for greenfield projects has the potential to support
premium coal prices. Accordingly, domestic exporters with
brownfield expansion opportunities, such as Yancoal, should
benefit from such conditions.
The Group’s coal sales revenue is typically recognised on a
Free on Board (“FOB”) basis when coal is loaded at the load
port in Australia.
The Group’s overall average ex-mine selling price of coal
increased by 72% from A$82 per tonne in 2020 to A$141 per
tonne in 2021 mainly as a result of (i) an increase in global USD
coal prices with the weekly average GlobalCOAL Newcastle
thermal coal index price increasing by US$79 per tonne (132%)
during the same period; the weekly Argus/McCloskey API5 coal
index price increasing by US$39 per tonne (88%) during the
same period; and the average semi-soft coking coal benchmark
price increasing by US$46 per tonne (50%) during the same
period; and (ii) a decrease in the proportion of thermal coal
sales to 81% in 2021 down from 85% in 2020; partially offset by
the Australian dollar strengthening against the US dollar by 9%
from an average of 0.6906 in 2020 to 0.7514 in 2021.
Internally, management actions were directed by the Group’s
“Key Tasks” initiative that focused on 48 workstreams across
the Group, overseen by the Board of Directors (“Board”).
Operationally, the work streams focused on productivity
improvement and cost reduction initiatives. Productivity and
yield improvements, resulting in additional product tonnes,
is estimated to have delivered more than $80 million in
profit before tax improvements during the period with these
structural improvements embedded in the site processes.
Further profit enhancements were achieved through the
Group’s “washing harder” strategy where at some mines,
where coal seams have the appropriate qualities, higher wash
costs and lower yields are intentionally incurred to increase
the overall sales margin. This has been particularly effective
during the period with large arbitrage opportunities existing
between low and higher-ash thermal coal.
The Group’s overall average cash operating costs per product
tonne, excluding government royalties, increased from A$59
per tonne in 2020 to A$67 per tonne in 2021 with the increase
primarily due to decreased production volumes resulting from
the wet weather in NSW, COVID-19 and the hard rock intrusion
encountered in the Moolarben underground together with
escalating diesel prices and demurrage costs.
The table below sets out the ROM and saleable production for
each Yancoal owned mine on a 100% basis during the Group’s
period of ownership.
YEAR ENDED 31 DECEMBER
ROM production
Moolarben
MTW
HVO
Yarrabee
Stratford Duralie
Middlemount
Ashton3
Total – 100% basis
Saleable production
Moolarben
MTW
HVO
Yarrabee
Stratford Duralie
Middlemount
Ashton3
Total – 100% basis
2021
MT
20.4
16.5
14.4
3.0
1.5
4.8
2.6
63.2
18.4
11.2
10.6
2.6
0.8
3.7
1.2
48.5
2020
MT
CHANGE
%
21.7
17.6
16.9
3.3
1.0
4.0
3.6
68.1
19.7
11.9
12.0
3.0
0.5
2.9
1.8
51.8
(6%)
(6%)
(15%)
(9%)
50%
20%
(28%)
(7%)
(7%)
(6%)
(12%)
(13%)
60%
28%
(33%)
(6%)
On a 100% basis, ROM coal production was down 7% from
68.1Mt in 2020 to 63.2Mt in 2021. This included a decrease in
the three tier-one assets (being Moolarben, MTW and HVO) of
9% from 56.2Mt in 2020 to 51.3Mt in 2021.
Saleable coal production was down 6% from 51.8Mt in 2020 to
48.5Mt in 2021. This included a decrease in the three tier- one
assets of 8% from 43.6Mt in 2020 to 40.2Mt in 2021.
Moolarben’s ROM production decreased by 1.3Mt (6%) and its
saleable production decreased by 1.3Mt (7%). The decrease
in ROM production was primarily due to a hard rock intrusion
encountered in the underground that interrupted production
and wet weather impacting the open cut. The decrease in
saleable production was primarily attributable to the decrease
in ROM with the underground being 100% bypass coal.
MTW’s ROM production decreased by 1.1Mt (6%) and its
saleable production decreased by 0.7Mt (6%). The decrease
in ROM production was primarily due to the mine scheduling
impacts of wet weather and lower bypass coal.
2 Wood Mackenzie Coal Market Service Global Thermal Coal December 2021 outlook to 2050.
3 Ashton volumes in Q1 2020 include the final tonnes produced at Austar before it transferred to ‘care and maintenance’.
41
41
ANNUAL REPORTANNUAL REPORT
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
HVO’s ROM production decreased by 2.5Mt (15%) and its
saleable production decreased by 1.4Mt (12%). The decrease
in ROM and saleable production was primarily due to the
planned reduction in production and sales as a response to the
coal market in 2020 further impacted by the wet weather.
The below table sets out the Group’s ongoing equity interest
in the saleable production for each Yancoal owned mine that
contributes to the financial results of the Group.
YEAR ENDED 31 DECEMBER
OWNERSHIP
%4
95
82.9
51
100
100
100
~50
Saleable production5
Moolarben
MTW
HVO
Yarrabee
Stratford Duralie
Ashton3
Middlemount (equity-
accounted)
Total – equity basis
Thermal
Metallurgical
2021
MT
17.4
9.3
5.4
2.6
0.8
1.2
36.7
1.9
38.6
31.1
7.5
38.6
2020
MT
18.2
9.9
6.1
3.0
0.5
0.1
37.86
1.5
39.3
33.6
5.7
39.3
CHANGE
%
(4%)
(6%)
(13%)
7%
60%
1,100%
(3%)
28%
(2%)
(7%)
32%
(2%)
The Group’s saleable coal production, excluding Middlemount,
was down 3% from 37.8Mt in 2020 to 36.7Mt in 2021 and
including Middlemount was down 2% from 39.3Mt in 2020 to
38.6Mt in 2021. This included a decrease in the three tier-one
assets of Moolarben, MTW and HVO of 6% from 34.2Mt in
2020 to 32.1Mt in 2021.
The saleable production contribution of the Group’s tier-one
assets decreased from 87% in 2020 to 83% in 2021.
Thermal coal saleable production decreased by 7% from
33.6Mt in 2020 to 31.6Mt in 2021 and metallurgical coal
saleable production increased by 32% from 5.7Mt in 2020 to
7.5Mt in 2021. Thermal coal represented 81% of total saleable
coal production in 2021 a decrease from 85% in 2020.
Equity Saleable Production (Mt)
45
40
35
30
25
20
15
10
5
0
2017
2018
2019
2020
2021
Moolarben
MTW
HVO
Yarrabee
Stratford Duralie
Ashton
Middlemount
The Group’s equity saleable production increased from 20.4Mt
in 2017 to 39.3Mt in 2020, before decreasing to 38.6Mt
in 2021. 2017 represented a transformative year with the
acquisition of Coal & Allied on 1 September 2017, including
interests in MTW and HVO from that date. Further growth
in equity saleable production tonnes had been driven by
the continued expansion of Moolarben, including increasing
the Group’s interest from 81% on 1 January 2017 to 85%
on 30 November 2018 and to 95% on 31 March 2020. The
decrease in saleable production in 2021 was primarily due
to the hard rock intrusion encountered in the Moolarben
underground, severe and persistent wet weather and the
impact of COVID-19 on site shutdowns and labour availability.
The key risks affecting the Group’s operations, and where
applicable, the strategies and measures taken to manage these
risks are detailed in the Corporate Governance Statement
included in this report.
3 Ashton volumes in Q1 2020 include the final tonnes produced at Austar before it transferred to ‘care and maintenance’.
4 Ownership percentage stated as at 31 December 2021.
5 Includes saleable production of (i) 85% of the Moolarben unincorporated joint venture up to and including 31 March 2020 and 95% thereafter and (ii) 0% of
Watagan’s mines up to and including 16 December 2020 and 100% thereafter.
6 The Group’s quarterly report issued on 19 January 2021 included Attributable Saleable Coal Production of 38.3Mt with this amount including an additional
0.5Mt attributable to the additional 10% interest acquired in Moolarben in the first quarter of 2020. The difference arises as the economic effective date of the
acquisition was 1 January 2020 but for accounting purposes the transaction completion date was 31 March 2020.
42
42
YANCOAL 2021YANCOAL 202120.434.836.939.338.6
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
SAFETY
Yancoal remains committed to operating safely and
transparently to achieve its objective of zero harm and
operates its mines to meet legislative and safety standards and
be an industry leader in this aspect of its business.
Under the direction of the Board and the Health, Safety,
Environment and Community (“HSEC”) Committee,
management utilises Core Hazard and Critical Controls across
all operations, identifying critical hazards within the workplace
and instituting adequate controls. These controls are regularly
verified to ensure that they are operating as intended for our
people’s safety.
The Group’s 12-month rolling TRIFR7 at 31 December 2021
was 8.4, an increase from 7.4 at 31 December 2020 but below
the comparable weighted average industry TRIFR8 of 10.2 at
31 December 2021. The increase in TRIFR during the period
was attributable to the inclusion of the Watagan underground
mines in the 2021 calculation, with the TRIFR, excluding
Watagan, at 31 December 2021 of 6.9 showing a decrease
from the 7.4 at 31 December 2020.
ENVIRONMENT, SOCIAL AND GOVERNANCE (“ESG”)
Yancoal’s HSEC Committee has oversight of Yancoal’s ESG
performance. The Group compiles an annual “Environment,
Social & Governance” report, published on the ASX and HKEx
platforms and available on the Company’s website. Yancoal’s
ESG disclosures have been guided by the Taskforce for Climate-
Related Financial Disclosures, the Global Reporting Initiative
and the United Nations Sustainable Development Goals.
Environment: Yancoal’s operations are subject to stringent
environmental approvals and licences. To honour these
regulatory obligations, and to meet the requirements of
Yancoal’s management directives, Yancoal has developed
and implemented comprehensive and robust environmental
compliance systems, processes and practices. These
systems, processes and practices are subject to continuous
improvement initiatives and are periodically audited by third
parties to provide “third line” assurance to the Board and the
HSEC Committee regarding both systems and performance.
Social: Yancoal is committed to making a genuine positive
difference in the communities in which it operates. Yancoal
operates a Community Support Program which proactively
engages with stakeholders at each site to support local and
regional initiatives, both financially and physically. Yancoal’s
Code of Conduct sets out the company’s requirements and
expectations for all employees and suppliers, including the
requirement to act ethically at all times. Yancoal has also
developed procedures to ensure its suppliers are not engaging
in modern slavery.
Governance: Yancoal has developed rigorous governance
processes to drive its ESG performance across the business.
The Enterprise Risk Management framework is a key platform,
and includes the assessment and mitigation of business risks,
including environmental risks and the risks associated with the
progressive transition to a lower carbon economy.
Climate Change Risk: The transition to a lower carbon
economy gathered pace in 2021, with the 2021 United Nations
Climate Change Conference of Parties (“COP26”) in Glasgow.
COP26 resulted in announcements of renewed efforts by
151 countries to reduce emissions, Yancoal acknowledges
that it has a role to play in mitigating the emissions generated
by its operations and supporting research into low-emission
technology to assist the reduction of downstream emissions
from the consumption of coal products. In terms of its
operations, there is a particular focus on targeting the
reduction of Scope 1 emissions (from diesel consumption)
and Scope 2 emissions (from electricity consumption).
Investigation into opportunities such as replacing diesel-
powered mining fleets or introducing renewable power
generation to the mine sites are examples of potential future
endeavours.
COVID-19 IMPACT
The health and wellbeing of all Yancoal employees remains
a key focus in response to the ongoing COVID-19 pandemic.
Sites continue to rigorously adopt and enhance the Group’s
strict COVID-19 protocols aimed at minimising the transmission
and disruption at site, including:
• Corporate Crisis Management teams
• Site Incident Management teams
• Access ban for those with symptoms
• Use of Pre-Screening apps / forms
• RAT testing (Moolarben, MTW, HVO and Ashton)
• Mandatory mask wearing
• Staggered crew starting times – at some sites
• Differentiated check-in codes for work areas
• Social distancing
• Use of thermal cameras
• Working from home where possible
• Travel restrictions
• Carpooling for fully vaccinated only
• Deliveries with no / minimal contact
• COVID-19 awareness signage
7 TRIFR includes Moolarben, Mount Thorley Warkworth, Stratford Duralie, Yarrabee and Corporate; it excludes joint venture operated Middlemount and Hunter
Valley Operations as well as Watagan (up to 16 December 2020). From 1 January 2021 onwards the Yancoal TRIFR and Industry weighted averages were revised to
include the Watagan assets. Prior periods may be revised for reclassification of past events.
8 The Industry weighted average combines proportional components from the relevant New South Wales and Queensland Industry references.
43
43
ANNUAL REPORTANNUAL REPORT
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
In the first half of the period, the Delta variant became
more prevalent in regional areas resulting in an increased
number of positive cases in our communities. Adherence with
Government COVID-19 regulations resulted in an increased
number of workers unable to attend site as lockdowns and
precautionary isolations became more common.
Late in the third quarter, mining was suspended for 36 hours
at MTW as the mine followed government protocols following
the notification of a positive COVID-19 case and a temporary
shutdown of the HVO wash plant was unavoidable late in
the quarter following two confirmed COVID-19 cases for
contractors who had visited site as government protocols
were again followed.
In December 2021, a combination of the NSW government
eliminating essential COVID-19 controls such as social
distancing and mask wearing, the temporary discontinuation
of QR codes, reduced government led contact tracing and
less stringent PCR testing requirements, together with the
spread of the more transmissive Omicron variant led to the
number of positive COVID-19 cases in NSW rapidly escalating.
Whilst sites continued to rigorously adopt Yancoal’s strict
COVID-19 protocols, our employees, as part of the broader
community, were not immune and we again saw an escalation
in the number of workers unable to attend site including
at Moolarben where, late in the month, the longwall was
temporarily shut down due to the lack of suitably qualified
workers.
The escalation in positive COVID-19 cases appears to have
peaked in mid-January 2022 in both NSW and Queensland,
with the number of daily positive cases on the decline, but still
at relatively high levels.
In 2020, the most significant impact of COVID-19 on the Group
was the decline in both the thermal and metallurgical seaborne
USD coal price from April 2020 before reaching a low in Q3
2020 due to reduced global economic activity. Coal prices then
recovered from Q4 2020 onwards as workforce disruptions
contributed to constrain supply in international coal markets.
In 2021, the most significant COVID-19 impacts have been
(i) the increased number of positive cases in regional Australia,
particularly NSW, impacting our workforce where the
combination of forced shutdowns and COVID-19 protocols
adopted decreased workforce availability resulting in an
estimated loss of 1.1Mt of ROM coal (equity); and (ii) coal price
indices appreciated to record levels on the back of COVID-19
driven government stimulus packages increasing coal demand.
A further impact of COVID-19 together with the wet weather
during Q4 2021, was that the Group’s NSW mines ended the
period with low, in-pit and ROM stockpiles that will require a
period of pit re-establishment.
So far in 2022, ongoing COVID-19 and wet weather impacts
have hampered this recovery and could potentially continue
to impact the Group’s operating performance throughout
the year.
Overall, other than the aforementioned impacts there
were no other material adverse impacts or changes to the
Group’s funding or business plan as a result of COVID-19 during
the period.
WATER MANAGEMENT
Diligent management of wet weather impacts and site wide
water controls are an essential element in the performance
of open cut coal mines. While large quantities of clean water
is required for the processing of ROM coal in the wash plant,
too much water, through sudden rainfall events, can result in
flooding, suspension of operations and unlicensed discharges
into local rivers, potentially causing environmental harm.
Sites construct water management infrastructure including
sedimentation and storage dams for holding and segregating
clean and dirty water.
As noted above, NSW has experienced heavy and persistent
rainfall throughout the period that has disrupted mining,
rail and port activity with most of the NSW open cut mines
nearing their water storage capacity limits. With recent shifts
in weather patterns management had proactively prioritised
site wet weather planning and as a result the impacts of the
aforementioned wet weather, whilst still significant, were well
managed. Planning activities included:
• Ongoing review of water management strategies and
investment in infrastructure
• Planning and building more storage dam capacity
• Ensuring pumping infrastructure is prioritised and in place
• Hiring additional pumps as a contingency
• Pit drainage works completed in advance
• Daily wet weather planning meetings
• Using environmental windows to discharge excess water
•
Crushing gravel and building stockpiles to use to improve
road conditions during wet weather
• Building emergency ROM stockpiles
• Building blasted inventory volumes
• Contingent wet weather waste dumps
• Mine schedules revised to optimise equipment use and
coal recovery
• Utilising down time to conduct training
FINANCIAL RESULTS REVIEW
RESULTS FOR THE YEAR ENDED 31 DECEMBER 2021
For the management discussion and analysis, the Group’s
operating results for the year ended 31 December 2021 are
compared with the operating results for the year ended
31 December 2020.
All financial numbers included below, and in the commentary
to follow, are stated in Australian dollars (A$ or $) unless
otherwise stated.
44
44
YANCOAL 2021YANCOAL 2021
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
Revenue
Other income
Changes in inventories of finished
goods and work in progress
Raw materials and consumables
Employee benefits
Transportation
Contractual services and plant hire
Government royalties
Coal purchases
Impairment charge
Loss on reconsolidation
Other operating expenses
Share of profit/(loss) of equity-
accounted investees, net of tax
EBITDA
EBITDA %
Depreciation and amortisation
EBIT
EBIT %
Net finance costs
Non-operating items
Profit / (loss) before income tax
Profit / (loss) before income tax %
Income tax (expense) / benefit
Profit / (loss) after income tax
Profit / (loss) after income tax %
Attributable to:
- Owners of Yancoal
- Non-controlling interests
IFRS
REPORTED
$M
5,404
64
(60)
(757)
(578)
(642)
(410)
(421)
(162)
(100)
–
(202)
57
2,193
41%
(831)
1,362
25%
(259)
–
1,103
20%
(312)
791
15%
791
–
Profit / (loss) per share attributable to the ordinary
equity holders of the Company
Basic profit / (loss) per share (cents)
Diluted profit / (loss) per share (cents)
59.9
59.7
2021
NON-
OPERATING
$M
132
(4)
–
–
–
–
–
–
–
100
–
110
–
337
–
337
–
(27)9
(310)
–
–
–
–
–
–
–
–
–
YEAR ENDED 31 DECEMBER
OPERATING
$M
IFRS
REPORTED
$M
5,535
60
(60)
(757)
(578)
(642)
(410)
(421)
(162)
–
–
(92)
57
2,530
46%
(831)
1,699
31%
(286)
(310)
1,103
20%
(312)
791
14%
791
–
59.9
59.7
3,473
680
12
(666)
(568)
(556)
(364)
(232)
(302)
–
(1,383)
(183)
(59)
(148)
(104%)
(804)
(952)
(127%)
(191)
–
(1,143)
(132%)
103
(1,040)
(132%)
(1,040)
–
(78.8)
(78.8)
2020
NON-
OPERATING
$M
110
(676)
–
–
–
–
–
–
–
–
1,383
79
–
896
–
896
–
29
(925)
–
–
–
–
–
–
–
–
–
OPERATING
$M
3,583
4
12
(666)
(568)
(556)
(364)
(232)
(302)
–
–
(104)
(59)
748
21%
(804)
(56)
(102%)
(162)
(925)
(1,143)
(132%)
103
(1,040)
(132%)
(1,040)
–
(78.8)
(78.8)
CHANGE
%
54%
1,400%
(600%)
14%
2%
15%
13%
81%
(46%)
–
–
(12%)
197%
238%
3%
3,134%
77%
–
197%
403%
176%
176%
–
176%
174%
To supplement the Group’s consolidated financial statements, which are presented in accordance with International Financial
Reporting Standards (“IFRSs”) the Group also uses adjusted Operating EBITDA and Operating EBIT as additional financial
measures, as set out in the table above, which are unaudited and not required by or presented in accordance with, IFRSs.
These financial measures are presented because they are used by management to evaluate the Group’s financial performance.
These non-IFRSs measures provide additional information to investors and others in understanding and evaluating the
consolidated results of operations in the same manner as they help management compare the financial results across accounting
periods with those of our peer companies, by removing one-off or non-operating items.
As presented by the management, Operating EBITDA represents profit or loss before income tax for the year as adjusted for net
finance costs, depreciation and amortisation and any significant non-operating items, while Operating EBIT represents profit or
loss before income tax as adjusted for net finance costs and any significant non-operating items.
9 Includes the reclassification of interest income of $21 million (2020: $84 million) from other income to net finance costs and bank fees and other charges of
$48 million (2020: $55 million) from other operating expenses to net finance costs as these amounts are excluded from operating EBITDA.
45
45
ANNUAL REPORTANNUAL REPORT
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
PROFIT ATTRIBUTABLE TO EQUITY HOLDERS OF THE COMPANY
Profit after income tax increased by 197% from a loss after
income tax of $1,040 million in 2020 to a profit after income
tax of $791 million in 2021 and was fully attributable to the
owners of Yancoal with no non-controlling interests.
Profit attributable to the owners of Yancoal of $791 million was
impacted by a number of non-operating items during 2021.
These totalled a net loss before tax impact of $310 million
comprising a $153 million fair value loss recycled from the
hedge reserve, a $100 million exploration asset impairment,
$28 million contingent royalty expense, a $33 million
contingent royalty revaluation expense and a $4 million royalty
revaluation gain. These are discussed in more detail separately
below, refer “Overview of non-operating items”, and have
been excluded from the operating commentary.
OVERVIEW OF OPERATING RESULTS
The below comparison of the financial results for the years
ended 31 December 2021 and 2020 is impacted by changes
in the Group’s portfolio of assets, most significantly the
reconsolidation of Watagan from 16 December 2020.
The analysis in this section includes ex-mine sales tonnes,
saleable production and ex-mine revenue comprising (i) 85%
of the Moolarben unincorporated joint venture up to and
including 31 March 2020 and 95% thereafter (ii) 51% of the
unincorporated HVO joint venture (HVO) (iii) 82.9% of the
combined unincorporated Mount Thorley and Warkworth joint
ventures (MTW) (iv) 100% of Yarrabee and Stratford Duralie
and (v) 100% of the Watagan group from 16 December 2020.
The results of Middlemount and Watagan (prior to
17 December 2020) are excluded from the line by line
commentary below as their results, as incorporated equity-
accounted investments, are included in share of profits of
equity-accounted investees, net of tax in the statement of
profit and loss and is discussed separately below.
REVENUE
Ex-mine coal sales10
Sale of purchased coal
Other
Sale of coal
Mining service fees
Sea freight
Royalty revenue
Other
Revenue
YEAR ENDED 31 DECEMBER
2021
$M
5,290
98
21
5,409
–
79
28
19
2020
$M
3,051
366
12
3,429
45
64
15
30
5,535
3,583
CHANGE
%
73%
(72%)
75%
58%
(100%)
23%
87%
(37%)
54%
Total revenue increased by 54% from $3,583 million in 2020 to
$5,535 million in 2021, primarily due to a 58% increase in coal
sales revenue from $3,429 million in 2020 to $5,409 million in
2021 and a 100% decrease in mining service fees due to the
consolidation of Watagan on 16 December 2020 resulting in
their elimination on consolidation from that date. With respect
to coal sales revenue, the key factors were:
YEAR ENDED 31 DECEMBER
2020
CHANGE %
Thermal coal
Average selling price (A$
per tonne)
Sales volume (Mt)
% of total ex-mine sales
volume
Total ex-mine thermal coal
revenue (A$ million)
Metallurgical coal
Average selling price (A$
per tonne)
Sales volume (Mt)
% of total ex-mine sales
volume
Total ex-mine metallurgical
coal revenue (A$ million)
Total coal
Average selling price (A$
per tonne)
Total ex-mine sales
volume (Mt)
Total ex-mine coal
revenue (A$ million)
2021
134
31.7
85
76
33.211
89
4,246
2,535
180
5.8
15
1,044
141
37.5
124
4.2
11
516
82
37.4
5,290
3,051
76%
(5%)
(4%)
67%
45%
38%
36%
102%
72%
-%
73%
• The Group’s overall average ex-mine selling price of
coal increased by 72% from A$82 per tonne in 2020
to A$141 per tonne in 2021 mainly as a result of (i) an
increase in global USD coal prices with the weekly average
GlobalCOAL Newcastle thermal coal index price increasing
by US$79 per tonne (132%) during the same period; the
weekly Argus/McCloskey API5 coal index price increasing
by US$39 per tonne (88%) during the same period; and the
average semi-soft coking coal benchmark price increasing
by US$46 per tonne (50%) during the same period; and
(ii) a decrease in the proportion of thermal coal sales to
81% in 2021 down from 85% in 2020; partially offset by the
Australian dollar strengthening against the US dollar by
9% from an average of 0.6906 in 2020 to 0.7514 in 2021.
• The Group’s average selling price of thermal coal increased
from A$76 per tonne to A$134 per tonne. The Group’s
average selling price of metallurgical coal increased from
A$124 per tonne to A$180 per tonne.
10 Ex-mine coal sales include only coal that has been produced at one of the Group’s mines. They exclude the sale of coal that has been purchased from third parties.
11 The Group’s quarterly report issued on 19 January 2021 included Attributable Thermal Sales of 33.7Mt with this amount including an additional 0.5 Mt
attributable to the additional 10% interest acquired in Moolarben in the first quarter of 2020. The difference arises as the economic effective date of the
acquisition was 1 January 2020 but for accounting purposes the transaction completion date was 31 March 2020.
46
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YANCOAL 2021YANCOAL 2021
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
Sales by customer location, not final destination, as a
percentage of total coal sales revenue changed significantly
between 2020 and 2021 primarily due to the import control
policies placed on Australian coal, with the 13% of sales made
to China in 2020 being sold into existing and alternate markets.
Most noticeably this resulted in a 17% increase in sales to the
primary Asian seaborne markets of Japan and Taiwan with
increases of 7% and 10%, respectively, to those markets.
The decrease in sales to Singapore was primarily due to
Yancoal’s continued move away from sales to traders, who are
primarily domiciled in Singapore, in favour of developing direct
end user sales, many of which are included in the 4% increase
in sales to other countries.
Other income
Net gain on foreign exchange
Sundry income
Other income
YEAR ENDED 31 DECEMBER
2021
$M
52
8
60
2020
$M
–
4
4
CHANGE
%
–
100%
1,400%
Other income increased from $4 million in 2020 to $60 million
in 2021. This included a net gain on foreign exchange of
$52 million primarily recognised on holding USD cash balances
as the Australian dollar weakened during 2021.
Changes in inventories of finished goods and work in
progress
Changes in inventories of finished goods and work in progress
decreased from an increase of $12 million in 2020 to a
decrease of $60 million in 2021 primarily due to selling down
coal inventories with ex-mine sales of 37.5Mt compared to
production of 36.7Mt for the period.
PRODUCTION COSTS
All-in total production costs include cash and non-cash
operating costs, representing costs directly attributable to the
production, transportation and selling of coal but excludes
care and maintenance costs. It also includes indirect corporate
costs, in particular, corporate employee costs, but excluding
transaction costs. Cash operating costs comprise the cost
of raw materials and consumables used, employee benefits,
contractual services and plant hire, transportation and
other operating expenses. Non-cash operating costs include
depreciation and amortisation.
Average A$ Selling Price
114
132
111
141
82
200
100
0
2017
2018
2019
2020
2021
Thermal
Metallurgical
Group
• The Group’s ex-mine sales volume increased by 0.3% from
37.4Mt in 2020 to 37.5Mt in 2021, primarily due to the 2%
decrease in saleable production offset by a decrease in
product coal stockpiles.
• A 73% decrease in the sale of purchased coal from
$366 million in 2020 to $98 million in 2021, resulting from
a 46% decrease in purchases of coal from third parties
primarily due to the weather impacted reduction in supply
across many other Australian producers creating limited
opportunities to make coal purchases.
2021
Malaysia
$120m, 2%
Others
$312m, 6%
Vietnam
$214m, 4%
Thailand
$278m, 5%
Australia
$605m, 11%
Japan
$1,455m, 27%
South Korea
$653m, 12%
Taiwan
$1,094m, 20%
Singapore
$678m, 13%
2020
Others
$60m, 2%
China
$455m, 13%
Japan
$683m, 20%
Malaysia
$101m, 3%
Vietnam
$101m, 3%
Thailand
$283m, 8%
Australia
$338m, 10%
Taiwan
$385m, 11%
South Korea
$413m, 12%
Singapore
$610m, 18%
Others includes Switzerland, India, Chile, China, Hong Kong, Columbia, Pakistan
and UAE (2020 also included USA and Germany)
47
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ANNUAL REPORTANNUAL REPORT10212310076134165182167124180
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
PER EX-MINE SALES TONNE12
Cash operating costs
Raw materials and consumables used
Employee benefits
Transportation13
Contractual services and plant hire
Other operating expenses
Cash operating costs (excluding royalties)
Royalties
Cash operating costs
Non-cash operating costs
Depreciation and amortisation
Total production costs
Total production costs (excluding royalties)
YEAR ENDED 31 DECEMBER
2021
$/T
2020
$/T
20
15
17
11
2
66
11
77
22
99
88
18
15
15
10
2
60
6
66
22
88
82
The table above is prepared on a cost per sales tonne basis.
Over a financial year ex-mine sales tonnes and saleable
production are not necessarily aligned due to changes in
coal inventories. The table below has been restated on a
per saleable production tonne basis to remove the impact
of inventory movements and more accurately represent the
cost of production. Royalties have been removed as these are
based on sales revenue and are driven by ex-mine sale tonnes.
PER SALEABLE PRODUCTION TONNE
Cash operating costs
Raw materials and consumables used
Employee benefits
Transportation13
Contractual services and plant hire
Other operating expenses
Cash operating costs (excluding royalties)
Cash operating costs
(excluding royalty and sea freight)
Non-cash operating costs
Depreciation and amortisation
Total production costs (excluding royalties)
YEAR ENDED 31 DECEMBER
2021
$/T
2020
$/T
21
16
17
11
2
67
65
23
90
17
15
15
10
2
59
58
21
81
The Group’s cash operating costs, after capitalised
development, per saleable tonne increased by $8/t from
$59/t in 2020 to $67/t in 2021 primarily due to (i) a 2.1Mt
(6%) decrease in production from the Group’s lowest cost
tier-1 mines impacted by the severe wet weather, COVID-19
and the hard rock intrusion encountered in the Moolarben
underground that as well as reducing production also incurred
additional prevention and remediation costs; (ii) a 1.0Mt
(28%) increase in production from the Group’s other, higher
cost mines, including the full year consolidation of Ashton;
(iii) increases in diesel costs due to the strengthening oil price;
(iv) increases in demurrage costs due to multiple adverse
weather and Newcastle Port facility interruptions; and (v) cost
deferral activities undertaken to preserve cash in 2020 as a
response to the depressed coal price resulting from the initial
wave of COVID-19. These largely uncontrollable impacts have
been compounded by the additional costs incurred by the
Group’s “washing harder” strategy to improve coal quality
to capture more of the current low-ash thermal coal price
arbitrage opportunity for a net positive outcome on the
Group’s operating margin.
The increases in operating costs due to the aforementioned
uncontrollable factors and the Group’s “washing harder”
strategy have been partially offset by management’s non-
negotiable focus on operational productivity and cost
reductions. In 2021 this was led by the Group’s “Key Tasks”
initiative that focused on 48 key workstreams across the
Group, overseen directly by the Board, where the operational
focus was on site optimisation projects delivering productivity
improvement and cost reduction initiatives.
Cash operating costs per product tonne (A$)
2017
2018
2019
2020
2021
Raw materials and consumables used
Employee benefits
Transportation
Contractual services and plant hire
Other operating expenses
The Group’s cash operating costs, after capitalised
development, increased to $65/t in 2018 primarily due
to the first full year inclusion of MTW and HVO and then
decreased to $59/t in 2020, before increasing to $67/t in 2021.
Despite inflationary pressures, particularly on labour costs,
management was able to deliver year-on-year cost reductions
through a strong focus on operational productivities, assisted
by increased tonnes from the low-cost Moolarben mine from
2018 to 2020. The Group’s cash operating costs increased to
$67/t in 2021 for the reasons noted above.
Raw materials and consumables used
Raw materials and consumables used increased by 14% from
$666 million in 2020 to $757 million in 2021, primarily due
to (i) higher diesel prices; (ii) the consolidation of Ashton
from 16 December 2020; and (iii) an expected increase
in maintenance costs after the deferral of non-essential
maintenance in 2020 as part of the response to COVID-19
and lower coal prices as well as unrelated unscheduled
maintenance resulting from equipment breakdowns.
12 Ex-mine sales tonnes includes (i) 85% of the Moolarben unincorporated joint venture up to and including 31 March 2020 and 95% thereafter (ii) 51.0% of the
unincorporated HVO joint venture (iii) 82.9% of the unincorporated MTW joint venture (iv) 100% of Yarrabee and Stratford Duralie and (v) 100% of Watagan from
16 December 2020.
13 Transportation costs in 2021 included $79 million, $2.14 per product tonne (2020: $64 million, $1.68 per product tonne) of sea freight incurred on a single Cost
and Freight (“CFR”) contract the Group acquired as part of the Coal & Allied acquisition. The sea freight incurred is largely recovered from the customer through
an increased coal price. The Group’s FOB contracts do not incur sea freight.
48
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YANCOAL 2021YANCOAL 2021010203040506070806465645967
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
This contributed to an increase in per saleable production
tonne raw materials and consumables used from $17 to $21
over the same period.
Employee benefits
Employee benefits expenses increased by 2% from
$568 million in 2020 to $578 million in 2021, primarily due
to wage and salary inflation and the consolidation of Ashton
from 16 December 2020 partially offset by the impacts of wet
weather and COVID-19. This contributed to an increase in per
saleable production tonne employee benefits expense from
$15 to $16 over the same period.
Transportation
Transportation costs increased by 15% from $556 million
in 2020 to $642 million in 2021, primarily due to
(i) the consolidation of Ashton from 16 December 2020;
(ii) a $38 million increase in demurrage costs due to wet
weather impacting vessel queues; (iii) a $15 million increase
in sea freight costs on a Cost and Freight contract due
to escalating global freight rates and; (iv) a $12 million
(2020: $3 million income) Australian Rail Track Corporation
(“ARTC”) below rail charge relating to 2018 - 2020 costs
as assessed by the Australian Competition & Consumer
Commission (“ACCC”). This contributed to an increase in per
saleable production tonne transportation costs from $15 to
$17 over the same period.
Contractual services and plant hire
Contractual services and plant hire expenses increased
by 13% from $364 million in 2020 to $410 million in 2021
primarily due to (i) $28 million from the consolidation
of Ashton from 16 December 2020; (ii) $5 million from
additional equipment hire costs at MTW due to equipment
commissioning delays; and (iii) a $6 million increase in
legal costs. This contributed to an increase in per saleable
production tonne contractual services and plant hire costs
from $10 to $11 over the same period.
Government royalties
Government royalty expenses increased by 81% from
$232 million in 2020 to $421 million in 2021, primarily due
to a 73% increase in ex-mine coal sales revenue. Royalties
are determined on an ad valorem basis by reference to the
value of coal sold, the type of mine and the State the mine
is in and are payable to the appropriate State government.
This contributed to an increase in per ex-mines sales tonne
government royalties from $6 to $11 over the same period.
Coal purchases
Coal purchases decreased by 46% from $302 million in 2020
to $162 million in 2021, primarily due to the wet weather
impacted reduction in supply across many other Australian
producers creating limited opportunities to make coal
purchases.
Other operating expenses
Other operating expenses decreased by 12% from $104 million
in 2020 to $92 million in 2021 including (i) a $9 million decrease
in net losses on the disposal of property, plant and equipment
from a loss of $9 million in 2020 to a gain of $1 million in 2021
(recognised in other income); (ii) a decrease in net loss on
foreign exchange of $8 million from a loss of $8 million in 2020
to a gain of $52 million in 2021(recognised in other income),
partially offset by a $6 million increase in software license
costs. The per saleable tonne amount remained flat at $2
over the same period and excludes the net loss on disposal of
property, plant and equipment of nil (2020: $9 million) and net
loss on foreign exchange of nil (2020: $8 million) as these are
considered non-operating.
Share of profit / (loss) of equity-accounted investees,
net of tax
Share of profit of equity-accounted investees, net of tax
increased from a loss of $59 million in 2020 to a profit of
$57 million in 2021 primarily due to the increasing profit
after tax performance of the incorporated Middlemount joint
venture positively impacted by a 48% increase in realised
A$ coal price and a 30% increase in sales tonnes.
Operating EBITDA and operating EBITDA margin
Operating EBITDA increased by 238% from $748 million in
2020 to $2,531 million in 2021. The $1,783 million increase
was due to (i) a $2,009 million (56%) increase in revenue
and other income primarily due to higher coal prices;
(ii) a $342 million 12% increase in costs, including government
royalties; and (iii) a $116 million increase in equity-accounted
losses. Operating EBITDA margin as a percentage of operating
revenue increased from 21% in 2020 to 46% in 2021.
Operating EBITDA
3,000
2,500
2,000
1,500
1,000
500
0
2017
2018
2019
2020
2021
Operating EBITDA
Margin %
Depreciation and amortisation
Depreciation and amortisation expenses increased by 3% from
$804 million in 2020 to $831 million in 2021 primarily due to
(i) the consolidation of Ashton from 16 December 2020; and
(ii) the impact of some accelerated depreciation recognised at
Stratford Duralie partially offset by lower production tonnes.
Per saleable production tonne depreciation and amortisation
costs increased from $21 to $23 over the same period.
Operating EBIT and operating EBIT margin
Operating EBIT increased by 3,134% from a loss of $56 million
in 2020 to a profit of $1,699 million in 2021 primarily due to
a 238% increase in Operating EBITDA and a 3% increase in
depreciation and amortisation as noted above. Operating EBIT
margin as a percentage of operating revenue increased from
(102%) in 2020 to 31% in 2021.
49
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ANNUAL REPORTANNUAL REPORT9882,1801,654748253138%45%36%21%46%
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
Net finance costs
Net finance costs increased by 77% from $162 million in 2020
to $286 million in 2021 due to a $60 million (24%) increase in
interest expense and bank fees and charges and a $63 million
(75%) decrease in interest income.
The $60 million increase in interest expense and bank fees and
charges was primarily due to the consolidation of Watagan
on 16 December 2020 that resulted in (i) the consolidation
of Watagan debt of US$775 million; and (ii) the recognition
of a mine closure provision for the Austar mine resulting
in a $12 million unwind of the discount during the period;
partially offset by (i) a decrease in the Group’s LIBOR based
debt facilities from an average of 4.99% in 2020 to an
average of 4.51% in 2021; (ii) mandatory debt repayments
of US$25 million in both January 2021 and July 2021 and
US$531 million of voluntary debt repayments; and (iii) an
increase in the AUD:USD exchange rate during the period from
an average of 0.6906 in 2020 to an average of 0.7514 in 2021
resulting in a decrease in the Australian dollar value finance
charge, where the Group’s loans are denominated in US dollars.
The $63 million decrease in interest income was primarily
due to the consolidation of Watagan from 16 December
2020 resulting in the elimination on consolidation of interest
income on the loan provided to Watagan from that date
(2020: $65 million).
Operating profit before income tax and profit before income
tax margin
As a result of the aforementioned reasons, operating
profit before income tax increased by 746% from a loss of
$218 million in 2020 to a profit of $1,413 million in 2021.
Operating profit before income tax margin as a percentage
of operating revenue increased from (106%) to 26% over the
same period.
Profit before income tax and profit before income tax margin
As a result of the aforementioned reasons, and the non-
operating items discussed below, profit before income tax
increased by 197% from a loss of $1,143 million in 2020 to
a profit of $1,103 million in 2021. Profit before income tax
margin as a percentage of operating revenue increased from
(132%) to 20% over the same period.
Income tax (expense) / benefit
Income tax expense increased from a net benefit of
$103 million in 2020 to a net expense of $312 million in
2021. The effective tax rate was 9.0% and 28.3% in the same
periods, respectively, compared to the Australian corporate
income tax rate of 30%. In 2021 the lower effective rate
primarily resulted from the non-assessable equity-accounted
profit of $57 million. In 2020 the lower effective tax rate
primarily resulted from the non-taxable gain on bargain
purchase of $653 million, the non-taxable loss on the Watagan
reconsolidation of $1,383 million and on the non-deductible
equity-accounted loss of $59 million.
Profit after income tax and profit after income tax margin
As a result of the aforementioned reasons profit after income
tax increased by 176% from a loss of $1,040 million in 2020 to
a profit of $791 million in 2021. Profit after income tax margin
as a percentage of operating revenue increased from (132%) to
14% over the same period.
Profit per share attributable to the ordinary equity holders of
the Company
Basic earnings per share increased by 176% from (78.8) cents
per share in 2020 to 59.9 cents per share in 2021 and diluted
earnings per share increased by 174% from (78.8) cents per
share in 2020 to 59.8 cents per share in 2021 primarily due to
the aforementioned profit after income tax with no change
in the number of ordinary shares on issue. In 2021 the diluted
earnings per share was impacted by 3.7 million rights on issue
to senior management, whilst in 2020 the 1.9 million rights on
issue were considered non-dilutive given the loss per share.
OVERVIEW OF NON-OPERATING ITEMS
Non-operating items in the year ended 31 December 2021 and
2020 included the following:
YEAR ENDED 31 DECEMBER
Non-operating items
Fair value losses recycled from hedge
reserve
Impairment of exploration asset
Contingent royalty expense
Re-measurement of contingent royalty
Re-measurement of royalty receivable
Loss on reconsolidation of Watagan
Gain on bargain purchase
Stamp duty expensed
Loss before tax impact
2021
$M
(153)
(100)
(28)
(33)
4
–
–
–
(310)
2020
$M
(194)
–
–
23
(9)
(1,383)
653
(15)
(925)
Fair value losses recycled from the hedge reserve of $153
million (2020: $194 million) represent retranslation losses
on the Group’s US dollar-denominated loans which are
attributable to changes in USD:AUD foreign exchange rates.
Under the Group’s natural hedge policy, such losses are
recycled to the statement of profit and loss based on the
scheduled loan maturity dates. The amount of any fair value
loss or gain recycled from the hedge reserve in a period is a
function of the amount of the hedged US dollar loan scheduled
to mature in that period and the respective USD:AUD exchange
rates at the time the hedge was put in place and at the time
the loan matured.
Impairment of exploration asset of $100 million (2020: nil)
relates to the impairment, to nil book value, of the Group’s
Donaldson exploration asset. Management is undertaking
a strategic review of its underperforming assets and with
Donaldson currently on care and maintenance it was
considered unlikely that the any value attributable to the
prospective thermal coal exploration asset, that would only
be recovered at the end of any potential mine plan, would be
realised, particularly given uncertainty in demand or pricing
that far in the future.
Contingent royalty expense of $28 million (2020: nil) relates
to the contingent coal price-linked royalty payable to Rio
Tinto for the year ended 31 December 2021, as part of the
contingent consideration on the Coal & Allied acquisition, due
50
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YANCOAL 2021YANCOAL 2021
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
to the GlobalCOAL quarterly index price being above the 2021
threshold price for all four quarters.
Similarly, the re-measurement of contingent royalty up by
$33 million (2020: down by $23 million) represents an increase
in the provision recognised on the Coal & Allied acquisition
with respect to the contingent coal price-linked royalty
potentially payable to Rio Tinto for the remaining period from
1 January 2022 to 31 August 2030 due to a strengthening of
the thermal coal price forecasts.
Re-measurement of the royalty receivable up by $4 million
(2020: down by $9 million) relates to the change in the
estimated fair value of the Group’s Middlemount royalty
receivable recognised on its right to receive a royalty of 4%
of Free on Board Trimmed Sales on 100% of the Middlemount
mine coal sales.
In 2020 non-operating items also included (i) a one-off, non-
cash loss on the reconsolidation of Watagan of $1,383 million
resulting from the shortfall in value between the fair value of
the deemed consideration compared against the fair value of
the net liabilities being reconsolidated; (ii) a gain on bargain
purchase of $653 million representing the accounting gain
recognised on the acquisition of the additional 10% interest in
the unincorporated Moolarben joint venture; and (iii) stamp
duty expensed of $15 million representing the stamp duty
incurred on the acquisition of the additional 10% interest in
Moolarben on 31 March 2020.
CASH FLOW ANALYSIS
YEAR ENDED 31 DECEMBER
2021
$M
1,900
(306)
(761)
833
2020
$M
605
(591)
(314)
(300)
CHANGE
$M
1,295
285
(447)
1,133
Net operating cash flows
Net investing cash flows
Net financing cash flows
Net increase / (decrease)
in cash
Net operating cash flows
Net operating cash inflows increased by $1,295 million (214%)
to $1,900 million reflecting an increase in net receipts from
customers over payments to suppliers primarily due to a 54%
increase in revenue over the same period.
Net investing cash flows
Net investing cash outflows decreased by $285 million
(48%) to $306 million. In 2021 investing cash outflows
included (i) $269 million of capital expenditure; and (ii) the
final $100 million installment payment for a further 10%
interest in the Moolarben joint venture partially offset by the
$60 million repayment, in full, of the revolver loans provided
to Middlemount. In 2020 investing cash outflows included
(i) $204 million of instalment payments for a further 10%
interest in the Moolarben joint venture; (ii) $279 million of
capital expenditure, including exploration; (iii) a net $120
million provided to Watagan under the Watagan loan facility;
and (iv) $35 million of revolver loans provided to Middlemount.
Net financing cash flows
Net financing cash outflows increased by $447 million (142%)
to an outflow of $761 million. In 2021 the net financing
cash outflow included (i) A$66 million (US$50 million) of
mandatory debt repayments under the syndicated facility;
(ii) A$705 million (US$531 million) of voluntary debt
repayments on both the syndicated and related party facilities;
and (iii) a A$419 million (US$300 million) debt repayment
on maturity of the US$300 million syndicated term loan
facility refinanced by A$464 million (US$333 million) drawn
under the replacement syndicated term loan facility. In 2020
the net financing cash outflow included (i) $432 million
(US$300 million) of mandatory debt repayments offset
by $433 million (US$300 million) drawn under the
US$1,275 million facility refinance; and (ii) $280 million
of dividends.
FINANCIAL RESOURCES AND LIQUIDITY
YEAR ENDED 31 DECEMBER
2021
$M
2,531
(826)
1,705
11,800
(5,654)
6,146
2020
$M
1,343
(1,199)
144
11,055
(5,862)
5,193
CHANGE
$M
1,188
373
1,561
745
208
953
Current assets
Current liabilities
Net current assets
Total assets
Total liabilities
Total equity
Current assets increased by $1,188 million to $2,531 million
at 31 December 2021 mainly reflecting an increase in cash
on hand of $858 million and trade and other receivables of
$363 million.
Current liabilities decreased by $373 million to $826 million
at 31 December 2021 mainly reflecting the current debt
repayments of US$350 million, partially offset by an increase
in trade and other payables of $78 million.
Total assets increased by $745 million to $11,800 million at
31 December 2021 mainly reflecting (i) a $275 million decrease
in mining tenements primarily resulting from $344 million of
amortisation partially offset by a $69 million transfer in from
exploration assets; (ii) a $168 million decrease in exploration
and evaluation assets primarily resulting from the $100 million
Donaldson impairment and the $69 million transfer to
mining tenements; and (iii) the increase in current assets
of $1,188 million noted above.
Total liabilities decreased by $208 million to $5,654 million
at 31 December 2021 mainly reflecting a $770 million decrease
in interest-bearing liabilities including (i) a $683 million
net decrease in loans due to the repayments made during
the period; (ii) a $222 million foreign exchange loss on the
Group’s US dollar denominated loans due to an decrease
in the AUD:USD exchange rate from an opening rate of
0.7702 at 31 December 2020 to a closing rate of 0.7256 at
31 December 2021; and (iii) a $309 million initial recognition
fair value gain on the below market interest rate received
51
51
ANNUAL REPORTANNUAL REPORT
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
on the US$775 million loan provided by Shandong Energy
(formerly Yankuang) recognised in equity partially offset by
(i) a $381 million increase in deferred tax liabilities primarily
due to the $312 million tax expense; (ii) a $114 million
increase in provisions including the $33 million increase in
the contingent royalty provision and a $96 million increase
in rehabilitation provisions; and (iii) a $78 million increase in
trade and other payables.
Total equity increased by $953 million to $6,146 million at
31 December 2021 reflecting the $791million profit after
tax and an increase in contributed equity of $216 million,
representing the after-tax amount of the $309 million loan
fair value, noted above partially offset by the $54 million
reserve movement (including the $55 million net, after-tax,
hedge reserve loss).
The Group’s primary source of liquidity was operating
cash flows that contributed $1,900 million in the year
ended 31 December 2021. Together with the opening cash
position this enabled the payment for investing activities of
$306 million and financing activities of $761 million.
For the year ending 31 December 2022, the primary source of
liquidity is expected to continue to be operating cash flows for
ongoing business and potentially additional interest-bearing
liabilities for any possible transactions. Historically, the Group’s
primary sources of liquidity have consisted of operating cash
flows, interest-bearing liabilities, including shareholder loans,
and new equity.
YEAR ENDED 31 DECEMBER
2021
$M
3,435
(1,495)
1,940
6,146
8,086
0.24
Interest-bearing liabilities
Less: cash and cash
equivalents
Net debt
Total equity
Net debt + total equity
Gearing ratio14
Net debt and Gearing
CHANGE
$M
(770)
(858)
(1,628)
936
(692)
2020
$M
4,205
(637)
3,568
5,193
8,761
0.41
41%
47%
4,516
5,000
4,000
3,000
2,000
1,000
0
35%
3,093
29%
2,536
3,568
24%
1,940
2017
2018
2019
2020
2021
Net debt
Gearing %
The gearing ratio decreased from 41% to 24% during the
period mainly due to (i) a decrease in net debt due to the
high operating cash inflows that enabled the voluntary early
repayment of debt and a significant increase in cash and
cash equivalents on hand; and (ii) an increase in total equity
primarily due to the $791million profit after tax and the
increase in contributed equity of $216 million noted above.
The Group’s interest-bearing liabilities include (i) secured bank
loans of A$1,632 million (31 December 2020: A$2,019 million);
(ii) unsecured loans from related parties of A$1,672 million
(31 December 2020: A$1,059 million); and Watagan bonds
of nil (2020: A$1,006 million); all denominated in US dollars
and lease liabilities of A$131 million (31 December 2020:
A$121 million) denominated in Australian dollars.
Secured bank loans carry a floating interest rate calculated
with reference to the 3-month LIBOR rate for which the
average all-in rate (including guarantee fees) for the
year ended 31 December 2021 was 4.51% (2020: 4.99%).
Unsecured loans from related parties comprise two facilities
(i) US$641 million at a fixed interest rate for which the rate for
the year ended 31 December 2021 was 7.00% (2020: 7.00%);
and (ii) US$775 million at a fixed cash rate of 4.65% until
31 March 2024 and at the Loan Prime Rate15 for the three years
to 31 March 202716.
The Group’s cash and cash equivalents includes A$970 million
(31 December 2020: A$192 million) and US$381 million
(31 December 2020: US$343 million).
While the Group operates entirely in Australia and its costs
are primarily denominated in its functional currency, the
A$, foreign currency exposure arises particularly in relation
to coal supply contracts, which generally are priced and
payable in USD, procurement of diesel and imported plant
and equipment, which can be priced in USD or other foreign
currencies, and debt denominated in USD.
The impact of exchange rate movements will vary depending
on factors such as the nature, magnitude and duration of the
movements, the extent to which currency risk is hedged under
forward exchange contracts or other hedging instruments and
the terms of these contracts.
The hedging policy of the Company aims to protect against
the volatility of cash expenditures or reduced collection in the
abovementioned transactions as well as to reduce the volatility
of profit or loss for retranslation of US dollar denominated
loans at each period end.
Operating foreign exchange risk that arises from firm
commitments or highly probable transactions is managed
through the use of bank issued forward foreign currency
contracts. The Company hedges a portion of contracted USD
sales and asset purchases settled in foreign currencies in each
currency to mitigate the adverse impact on cash flow due to
the future rise or fall in the A$ against the relevant currencies.
14 The Group’s gearing ratio is defined as net debt (being interest-bearing liabilities less cash and cash equivalents) divided by net debt + total equity.
15 The Loan Prime Rate (“LPR”) is the reference rate for lending in China as announced by the People’s Bank of China in August 2020. The LPR is the interest rate
banks charge their most creditworthy customers.
16 The arms’ length interest rate of the US$775 million loan was independently determined to be 12% resulting in a fair value discount of $309 million being
recognised as noted above. The unwind of this discount through the profit and loss over the life of the loan effectively increases the interest expense to 12%.
52
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YANCOAL 2021YANCOAL 2021
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
More details on interest-bearing liabilities, cash and cash
equivalents and equity including types of instrument used,
security provided, maturity profile of interest-bearing
liabilities, interest rates and hedging strategies are included
in Notes D1, D2 and D7 of the Group’s financial statements.
Available debt facilities
As at 31 December 2021 the Group had the following available
debt facilities.
A$852 million of undrawn debt under its A$1,400 million
unsecured facility from related parties with a maturity date
of 31 December 2024.
A$69 million of undrawn debt under its US$50 million
unsecured working capital facility from an external party
with a maturity date of 29 June 2022.
A$100 million of undrawn bank guarantees under its A$975
million Syndicated Bank Guarantee Facility that are provided
for operational purposes in favour of port, rail, government
departments and other operational functions in the normal
course of business with a maturity date of 2 June 2023.
No undrawn debt under its US$869 million Syndicated
Facility with maturity dates of US$25 million on 8 July 2022;
US$25 million on 10 July 2023; US$231.5 million on 8 July 2024;
and US$587.5 million on 8 July 2025.
No undrawn debt under its US$333 million Syndicated Term
Loan with maturity dates of US$301 million on 23 August 2024
and US$32 million on 21 August 2026.
The Directors of Yanzhou (now Yankuang Energy) have
provided a letter of support whereby unless revoked by giving
not less than 24 months’ notice, for so long as Yanzhou owns
at least 51% of the shares of the Company, Yanzhou will ensure
that the Group continues to operate so that it remains solvent.
CAPITAL EXPENDITURE AND COMMITMENTS
During the year ended 31 December 2021 capital
expenditure cash flows of the Group amounted to
$269 million (2020: $279 million) comprising $269 million
(2020: $278 million) of property, plant and equipment and nil
(2020: $1 million) of exploration.
Included in the capital expenditure of $269 million is
capitalised operating expenses, net of any applicable revenue,
incurred on open-cut and underground development
activities of $38 million (2020: $32 million). Amortisation
of such capitalised costs commences on either (i) the start
of commercial production from the new mine or pit for
open-cuts; and (ii) over the life of mine if development
roads service the entire mine or over the life of the longwall
panels accessible from the development roads, if shorter,
for undergrounds.
As at 31 December 2021 commitments of the Group comprised
capital commitments of $194 million.
SIGNIFICANT INVESTMENTS
The Company continues to look for high quality acquisition
opportunities.
The Company will inform the market as required, if and when
any material transaction occurs. The Group also focuses on
organic growth opportunities and business as usual capital
expenditure.
The Group continues to pursue its long-term strategy for
organic growth, with a commitment to progressing its
brownfield expansion and extension projects.
In the year ahead, the Group will continue to focus on
exploration and potential expansion works across the tier-
one assets of Moolarben, MTW and HVO, to be funded from
operating cash flows.
At Moolarben, Yancoal has the required approvals to
increase annual open-cut mine ROM production from 14Mt
to 16Mt. Studies under review incorporate work to assess
the optimal production profile and address the various
licensing requirements. Yancoal’s ability to increase open-cut
production depends on increasing the capacity at the Coal
Handling and Preparation Plant (“CHPP”). This CHPP project
has commenced, and the expansion to 16Mtpa from the open
cut will occur over the next 18 months.
At MTW, Yancoal has identified a coal resource that could
support an underground operation with the concept subject to
study and assessment.
Yancoal continually examines opportunities to grow the
business. The Company is open to expanding or extending the
operational profile of its existing assets with organic projects,
like those identified at Moolarben. It would also consider
acquiring additional coal assets or diversifying into other
minerals, energy or renewable energy projects should suitable
opportunities arise. Any new initiative would be subject to
careful evaluation and require Yancoal Board consideration
and approval before commencement.
Organic growth opportunities are expected to be funded
through operating cashflows as part of the group’s overall
capital expenditure program.
Funding of any inorganic opportunities will be assessed on a
case-by-case basis and could include funding from operating
cashflows and potentially interest-bearing liabilities depending
on the debt market availability at the time.
On 16 December 2020, the Company received a letter from
Shandong Energy (formerly Yankuang Group) confirming its
commitment, having regard to the overall situation of the
coal industry; the operations and financial circumstances of
the Company and Shandong Energy; the Company’s existing
financings; the global funding market; and the profitability of
any proposed project, to explore with the Company whether,
and the basis on which, financial support may be provided
to the Company by Shandong Energy in the next few years
for the purpose of (i) potential acquisitions or finance lease
arrangements; or (ii) additional financial support required
by Watagan. In addition, Shandong Energy confirmed it is
willing to assist and support the Company in discussions
with Yankuang Energy (formerly Yanzhou) to explore the
possibility of (i) obtaining a licence on paid terms for the
use of technology recently acquired by Yankuang Energy;
and (ii) commencing technology cooperation in accordance
with standard and reasonable commercial practices.
53
53
ANNUAL REPORTANNUAL REPORT
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MATERIAL ACQUISITIONS AND DISPOSALS
No material acquisitions or disposals were undertaken during
the period.
EMPLOYEES
As at 31 December 2021, the Group had approximately
3,196 employees (including contract labour who are full time
equivalents), all located in Australia, in addition to other
contractors and service providers who support the Group’s
operations by delivering fixed scopes of work. For the period,
the total employee costs (including director’s emoluments,
HVO and Middlemount employees who are not included in
the employee number above and excluding contract labour,
contractors and service providers whose costs are included in
Contractual services and plant hire) amounted to $578 million
(2020: $568 million).
Remuneration packages and benefits are determined in
accordance with market terms, industry practice as well
as the nature of duties, performance, qualifications and
experience of employees and are reviewed an on annual
basis. Remuneration packages include base wages or salaries,
short-term site production bonuses, short and long-term staff
incentives, non-monetary benefits, superannuation and long
service leave contributions and insurance.
The Group’s remuneration policies ensure remuneration is
equitable, aligns with the long-term interests of the Group and
Shareholders, comply with the diversity policy, provide market
competitive remuneration to attract and retain skilled and
motivated employees and structure incentives to link rewards
with performance.
Details of the Group’s incentive plans are included in the
Remuneration Report in the Groups’ Financial Report for the
year ended 31 December 2021.
The Company believes that capable and competent employees
contribute to the success of the Group. The Group invests
in competence development and assurance programs to
ensure statutory compliance and zero harm to its employees.
The Group also contributes to the ongoing professional
development of its employees for example, the roll out of an
“Inclusive Leadership” program to all site leadership teams in
2021. This investment contributes to a pipeline of employees
who are ready to transition into new roles as well as creating
a value proposition for new employees looking to join
the Group.
EVENTS OCCURRING AFTER THE REPORTING DATE
Other than as disclosed below, no matters or circumstances
have occurred subsequent to the end of the period which
has significantly affected, or may significantly affect, the
operations of the Group, the results of those operations or the
state-of- affairs of the Group.
On 28 February 2022, the Directors declared an unfranked
dividend of $930 million, comprising a $0.5000 per share final
dividend and a $0.2040 per share special dividend, both with a
record date of 16 March and payment date of 29 April 2022.
FINANCIAL AND OTHER RISK MANAGEMENT
The Group is exposed to financial risks arising from its
operations and the use of financial instruments. The key
financial risks include currency risk, price risk, interest rate
risk, credit risk and liquidity risk and are detailed in Note D7
to the financial statements in this report. The Board reviews
and agrees policies and procedures for management of
these risks.
Coal sales are predominately provisionally priced initially.
Provisionally priced sales are those for which price finalisation,
referenced to the relevant index, is outstanding at the
reporting date. Provisional pricing mechanisms embedded
within these sales arrangements have the character of a
commodity derivative and are carried at fair value through
profit and loss as part of trade receivables. The final sales
price is determined normally 7 to 90 days after delivery to
the customer. At 31 December 2021, there are $143 million of
provisionally priced sales still to be finalised. If prices were to
increase by 10%, provisionally priced sales would increase by
$14 million.
CONTINGENT LIABILITIES
The contingent liabilities of the Group as at 31 December 2021
comprise (i) $875 million (31 December 2020: $809 million) of
bank guarantees comprising $370 million (31 December 2020:
$377 million) of performance guarantees provided to third
parties and $505 million (31 December 2020: $432 million)
of guarantees provided in respect of the cost of restoration
of certain mining leases given to government departments
as required by statute with respect to the Group’s owned
and managed mines (ii) a letter of support provided to the
Middlemount Coal Pty Limited joint venture and (iii) a number
of claims that have been made against the Group, including in
respect of personal injuries, and in relation to contracts which
Group members are party to as part of the Group’s day to day
operations.
See Note D6 to the financial statements in this report for
further details on the Group’s contingent liabilities.
CHARGES ON ASSETS
The Group has a Syndicated Bank Guarantee Facility provided
by a syndicate of nine Australian and international banks
totalling A$975 million. As at 31 December 2021 the facility
was drawn to A$875 million.
The Group has a Syndicated Term Loan facility provided by a
syndicate of six international banks totalling US$333 million.
As at 31 December 2021 the facility was fully drawn.
The Syndicated Bank Guarantee and Term Loan facilities
are both secured by the assets of the consolidated group of
Yancoal Resources Ltd and Coal & Allied Industries Ltd (both
wholly owned subsidiaries of Yancoal) with a carrying value of
$7,392 million as at 31 December 2021.
54
54
YANCOAL 2021YANCOAL 2021
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
MANAGEMENT DISCUSSION AND ANALYSIS
FUTURE PROSPECTS
International coal indices are again at record levels in early
2022 as supply-side constraints persist, and commodity
shortages occur in other international energy markets.
Yancoal’s rolling contract structures means it will continue
to capture the benefit of the recent and current prices in the
coming months.
Wet weather and the regional escalation of COVID-19 during
Q4 2021 resulted in low, in-pit and ROM stockpiles at the
Group’s NSW mines, requiring a period of pit re-establishment.
In 2022, ongoing wet weather and COVID-19 impacts have
hampered this recovery to date and could potentially continue
to impact the Group’s operating performance throughout the
year. Open-cut mines in NSW still have excess water on-site
with most near their water storage capacity making them
susceptible to further rain events if La Niña persists. Despite
the number of positive COVID-19 cases dropping their remains
a risk of further interruptions.
Taking into account the risks noted, Yancoal has set the
following targets for 2022:
• Saleable coal production of 35 to 38 million tonnes
attributable).
• Cash operating costs (excluding government royalties) of
$71 to $76/tonne17.
• Capital expenditure is expected to be $600 to $650 million
(attributable).
The bottom end of the production guidance and top end of
the cost guidance is where the existing challenges persist, or
other unforeseen issues arise. The top end of the production
guidance and bottom end of the cost guidance is where
operations rapidly return to optimal operating performances
and external cost pressures decline. Capital expenditure
increases in 2022, after two years of modest expenditure, as
the Group replaces some mining fleet and to keep our large-
scale, low-cost mines performing at optimal levels, together
with the completion of the Moolarben CHPP upgrade.
Yancoal continually examines opportunities to grow
the business and is open to expanding or extending the
operational profile of its existing assets with organic projects,
acquiring additional assets, or diversifying into other minerals,
energy or renewable energy projects. Any new initiative would
be subject to careful evaluation and require consideration and
approval of the Board before commencement.
17 Operating cash costs are exclusive of government royalties and sea-freight. The comparable figure for the year ended 31 December 2021 is $65/tonne.
55
55
ANNUAL REPORTANNUAL REPORT
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
CONSOLIDATED STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME
FOR THE YEAR ENDED 31 DECEMBER 2021
Revenue
Other income
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits
Depreciation and amortisation
Transportation
Contractual services and plant hire
Government royalties
Coal purchases
Impairment of exploration and evaluation assets
Other operating expenses
Finance costs
Share of profit / (loss) of equity-accounted investees, net of tax
Loss on reconsolidation of Watagan
Profit / (loss) before income tax
Income tax (expense) / benefit
Profit / (loss) after income tax
Profit / (loss) is attributable to:
Owners of Yancoal Australia
Non-controlling interests
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Cash flow hedges:
Fair value (losses) / gains
Fair value losses transferred to profit and loss
Deferred income tax benefit / (expense)
Other comprehensive income, net of tax
Total comprehensive income / (expense)
Total comprehensive income / (expense) for the year is attributable to:
Owners of Yancoal Australia Ltd
Non-controlling interests
Earnings / (loss) per share attributable to the ordinary equity holders of the Company:
Basic earnings / (loss) per share (cents per share)
Diluted earnings / (loss) per share (cents per share)
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
5,404
3,473
64
(60)
(757)
(578)
(831)
(642)
(410)
(421)
(162)
(100)
(202)
(259)
57
–
1,103
(312)
791
791
–
791
(232)
153
24
(55)
736
736
–
736
59.9
59.7
680
12
(666)
(568)
(804)
(556)
(364)
(232)
(302)
–
(183)
(191)
(59)
(1,383)
(1,143)
103
(1,040)
(1,040)
–
(1,040)
309
194
(151)
352
(688)
(688)
–
(688)
(78.8)
(78.8)
NOTES
B2
B3
B4
C4
B5
B5
E2
E1
B6
D5
D5
D5
B7
B7
These financial statements should be read in conjunction with the accompanying notes.
56
YANCOAL 2021YANCOAL 2021
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
AS AT 31 DECEMBER 2021
ASSETS
Current assets
Cash and cash equivalents
Trade and other receivables
Inventories
Royalty receivable
Other current assets
Total current assets
Non-current assets
Trade and other receivables
Property, plant and equipment (reclassified)
Mining tenements (reclassified)
Exploration and evaluation assets
Intangible assets
Royalty receivable
Interests in other entities
Other non-current assets
Total non-current assets
Total assets
LIABILITIES
Current liabilities
Trade and other payables
Interest-bearing liabilities
Provisions
Total current liabilities
Non-current liabilities
Trade and other payables
Interest-bearing liabilities
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
EQUITY
Contributed equity
Reserves
Accumulated losses
Capital and reserves attributable to owners of Yancoal Australia Ltd
Non-controlling interests
Total equity
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
NOTES
C7
C8
C9
C10
C8
C1
C2
C4
C5
C10
E2
C11
D1
C12
D1
B6
C12
D2
D5
1,495
707
264
23
42
637
348
312
16
30
2,531
1,343
239
3,232
4,608
541
138
198
303
10
9,269
11,800
743
66
17
826
8
3,369
516
935
4,828
5,654
6,146
6,698
(188)
(366)
6,144
2
6,146
221
3,291
4,883
709
135
201
257
15
9,712
11,055
678
496
25
1,199
6
3,709
135
813
4,663
5,862
5,193
6,482
(134)
(1,157)
5,191
2
5,193
These financial statements should be read in conjunction with the accompanying notes.
57
ANNUAL REPORTANNUAL REPORT CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
ATTRIBUTABLE TO OWNERS OF YANCOAL AUSTRALIA LTD
Balance at 1 January 2020
Loss after income tax
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity
as owners:
Dividends paid
Movements in other reserves
Balance at 31 December 2020
Balance at 1 January 2021
Profit after income tax
Other comprehensive income
Total comprehensive income
Transactions with owners in their capacity
as owners:
Movements in other contributed equity
Movements in other reserves
Balance at 31 December 2021
NOTES
CONTRIBUTED
EQUITY
$M
6,482
–
–
–
–
–
–
6,482
6,482
–
–
–
216
–
216
6,698
D4
D5
D2
D5
RETAINED
EARNINGS/
(ACCUMULATED
LOSSES)
$M
RESERVES
$M
(484)
–
352
352
–
(2)
(2)
163
(1,040)
–
(1,040)
(280)
–
(280)
(134)
(1,157)
TOTAL
$M
6,161
(1,040)
352
(688)
(280)
(2)
(282)
5,191
(1,157)
5,191
(134)
–
(55)
(55)
–
1
1
791
–
791
–
–
–
791
(55)
736
216
1
217
6,144
(188)
(366)
NON-
CONTROLLING
INTERESTS
$M
TOTAL EQUITY
$M
2
–
–
–
–
–
–
2
2
–
–
–
–
–
–
2
6,163
(1,040)
352
(688)
(280)
(2)
(282)
5,193
5,193
791
(55)
736
216
1
217
6,146
These financial statements should be read in conjunction with the accompanying notes.
58
YANCOAL 2021YANCOAL 2021CONSOLIDATED STATEMENT OF CHANGES IN EQUITYCONSOLIDATED STATEMENT OF CHANGES IN EQUITYFOR THE YEAR ENDED 31 DECEMBER 2021
CONSOLIDATED BALANCE SHEET
CONSOLIDATED BALANCE SHEET
Cash flows from operating activities
Receipts from customers
Payments to suppliers and employees
Interest paid
Interest received
Stamp duty paid
5,109
(3,036)
(180)
7
–
Net cash inflow from operating activities
F3
1,900
3,729
(2,994)
(179)
64
(15)
605
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
NOTES
Cash flows from investing activities
Payments for property, plant and equipment
Payments for capitalised exploration and evaluation activities
Proceeds from sale of property, plant and equipment
Receipts of non-contingent royalties
Payment of non-contingent royalties
Payments for acquisition of interest in joint operation (net of cash acquired)
Cash at bank acquired on reconsolidation of Watagan
Repayment of borrowing from joint venture
Advances of borrowing to joint venture
Repayment of borrowings from associates
Advance of borrowings to associates
Dividends received
Net cash outflow from investing activities
Cash flows from financing activities
Repayment of interest-bearing liabilities
Proceeds from interest-bearing liabilities
Repayment of interest bearing liabilities - related entities
Payment of lease liabilities
Dividends paid
Net cash outflow from financing activities
Net increase / (decrease) in cash and cash equivalents
Cash and cash equivalents at the beginning of the financial year
Effects of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year
(269)
(278)
–
1
4
(13)
(100)
–
60
–
–
–
11
(306)
(958)
464
(232)
(35)
–
(761)
833
637
25
1,495
(1)
40
4
(15)
(204)
7
–
(35)
247
(367)
11
(591)
(432)
433
–
(35)
(280)
(314)
(300)
962
(25)
637
E1
D1
D1
C7
These financial statements should be read in conjunction with the accompanying notes.
59
ANNUAL REPORTANNUAL REPORTCONSOLIDATED STATEMENT OF CASH FLOWS CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE YEAR ENDED 31 DECEMBER 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
FOR THE YEAR ENDED 31 DECEMBER 2021
A
B
B1
B2
B3
B4
B5
B6
B7
C
C1
C2
C3
C4
C5
C6
C7
C8
C9
C10
C11
C12
D
D1
D2
D3
D4
D5
D6
D7
D8
E
E1
E2
E3
E4
E5
E6
F
F1
F2
F3
F4
F5
F6
F7
F8
Basis of Preparation
Performance
Segment information
Revenue
Other income
Employee benefits
Expenses
Taxation
Earnings per share
Operating Assets and Liabilities
Property, plant and equipment
Mining tenements
Impairment of assets
Exploration and evaluation assets
Intangibles
Leases
Cash and cash equivalents
Trade and other receivables
Inventories
Royalty receivable
Trade and other payables
Provisions
Capital Structure and Financing
Interest-bearing liabilities
Contributed equity
Share–based payments
Dividends
Reserves
Contingencies
Financial risk management
Fair value measurements
Group Structure
Business combinations and disposals
Interests in other entities
Related party transactions
Parent entity financial information
Controlling interests
Deed of cross guarantee
Other Information
Commitments
Remuneration of auditors
Reconciliation of profit / (loss) after income tax to net cash inflow from operating activities
Historical information
Events occurring after the reporting period
Other significant accounting policies
New and amended standards adopted by the Group
New accounting standards and interpretations
60
PAGE
61
62
62
64
66
67
68
68
71
72
72
73
74
77
77
78
79
79
81
81
82
82
84
84
87
88
89
90
91
92
96
98
98
99
104
108
109
111
113
113
113
114
114
115
115
118
118
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
A BASIS OF PREPARATION
These consolidated financial statements and notes are
for the consolidated entity consisting of Yancoal Australia
Ltd (“Company” or “parent entity”) and its subsidiaries
(“the Group”).
These general purpose financial statements have been
prepared in accordance with the Australian Accounting
Standards and interpretations issued by the Australian
Accounting Standards Board and the Corporations Act 2001.
Yancoal Australia Ltd is a for-profit entity for the purpose of
preparing the financial statements.
The financial statements were authorised for issue
in accordance with a resolution of the Directors on
28 February 2022.
The outbreak of the Novel Coronavirus (“COVID-19”)
was declared as a ‘Global Pandemic’ by the World Health
Organisation on 11 March 2020.
In 2021, the most significant COVID-19 impacts on the Group
have been (i) the increased number of positive cases in
regional Australia, particularly NSW, impacting the workforce
where the combination of forced shutdowns and COVID-19
protocols adopted decreased workforce availability resulting
in an estimated loss of 1.1Mt of ROM coal (equity); and
(ii) coal price indices appreciated to record levels on the back
of COVID-19 driven government stimulus packages increasing
coal demand.
COVID-19 continues to cause great uncertainty for the coal
industry and the global economy more broadly and the Group
continues to rigorously adopt and enhance its strict COVID-19
protocols aimed at minimising the transmission and disruption
at site.
These uncertainties continue to be assessed and have been
considered in the preparation of the financial statements.
(i) Compliance with IFRS
The consolidated financial statements of the Group also
comply with International Financial Reporting Standards
(“IFRS”) as issued by the International Accounting Standards
Board (“IASB”).
(ii) Subsidiaries
The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the
entity and has the ability to affect those returns through its
power over the entity.
Subsidiaries are fully consolidated from the date on which
control is transferred to the Group. They are de-consolidated
from the date that control ceases.
The acquisition method of accounting is used to account
for business combinations by the Group. Intercompany
transactions, balances and unrealised gains on transactions
between the Group companies are eliminated.
Unrealised losses are also eliminated unless the transaction
provides evidence of the impairment of the asset transferred.
Accounting policies of subsidiaries are aligned to ensure
consistency with the policies adopted by the Group.
(iii) Significant accounting policies
Significant accounting policies have been included in the
relevant notes to which the policies relate, and other
significant accounting policies are discussed in Note F6.
These policies have been consistently applied to all the years
presented, unless otherwise stated.
(iv) Historical cost convention
These financial statements have been prepared on an accrual
basis and under the historical cost convention, as modified
by the revaluation of certain financial assets and liabilities
(including derivative instruments) at fair value through profit
or loss.
(v) Auditor sign-off – unqualified and unmodified
The independent auditor’s report of these consolidated
financial statements is unqualified and unmodified.
(vi) Rounding of amounts
The Company is of a kind referred to in ASIC Legislative
Instrument 2016/191. Amounts in the financial statements
have been rounded off in accordance with that legislative
instrument to the nearest million dollars, or in certain cases,
the nearest dollar.
(vii) New and amended standards adopted by the Group
Effective from 1 January 2021 the Group adopted new
standards, refer to Note F7 for details.
(viii) Impact of standards issued but not yet applied by
the Group
Australian Accounting Standards and Interpretations issued
but not yet applicable for the year ended 31 December 2021
that have not been applied by the Group are disclosed in
Note F8.
(ix) Early adoption of standards
Certain new accounting standards and interpretations have
been published that are not mandatory for 31 December 2021
reporting periods and have not been early adopted by the
Group. The Group’s assessment of the impact of these new
standards and interpretations is set out in Note F8.
(x) Critical accounting estimates and judgements
The preparation of financial statements requires the use of
certain critical accounting estimates and judgements that
involve a higher degree of judgement or complexity. It also
requires management to exercise its judgement in the process
of applying the Group’s accounting policies.
The Directors evaluate estimates and judgements incorporated
into these financial statements based on historical knowledge
and best available current information. Estimates assume a
reasonable expectation of future events and are based on
current trends and economic data, obtained both externally
and within the Company. The resulting accounting estimates
will, by definition, seldom equal the related actual results.
61
61
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Details of critical accounting estimates and judgements can be found in the notes to which they relate and include:
Taxation
Mining tenements
Impairment of assets
Exploration and evaluation assets
Royalty receivable
Provisions
Related party loan contributions
Business combinations and disposals
Interests in other entities
Note B6
Note C2
Note C3
Note C4
Note C10
Note C12
Note D2
Note E1
Note E2
(xi) Adjustments due to provisional accounting (reclassified)
Refer to note E1 for details on the adjustments associated with finalising provisional accounting.
B PERFORMANCE
This section of the financial statements focuses on disclosure that enhances a user’s understanding of profit or loss after tax.
Segment reporting provides a breakdown of profit, revenue and assets by geographic segment. The key line items of the profit or
loss along with their components provide details behind the reported balances.
B1 Segment information
Accounting policy
Management has determined the operating segments based on the strategic direction and organisational structure of the Group together with reports reviewed
by the Chief Operating Decision Makers (“CODM”), defined as the Executive Committee, that are used to make strategic decisions including resource allocation and
assessment of segment performance.
The reportable segments are considered at a regional level being New South Wales (“NSW”) and Queensland (“QLD”).
Non-operating items of the Group are presented under the segment “Corporate” which includes administrative expenses, foreign exchange gains and losses recycled
from hedge reserve, and the elimination of intersegment transactions and other consolidation adjustments.
(a) Segment information
The segment information for the reportable segments for the year ended 31 December 2021 is as follows:
31 DECEMBER 2021
Total segment revenue*
Add: Fair value losses recycled from hedge reserve
Revenue from external customers
Operating EBIT
Operating EBITDA
Material income or expense items
Non-cash items
Depreciation and amortisation
Remeasurement of contingent royalty
Remeasurement of royalty receivable
Impairment of exploration and evaluation assets
Total capital expenditure
Segment assets
Investments in associates and joint ventures
Total assets
COAL MINING
NSW
$M
4,899
–
4,899
1,597
2,379
(782)
–
–
(100)
(882)
417
9,133
171
9,304
QLD
$M
510
–
510
70
111
(41)
–
–
–
(41)
21
662
–
662
CORPORATE
$M
(153)
153
–
33
41
(8)
(33)
4
–
(37)
1
1,701
133
1,834
TOTAL
$M
5,256
153
5,409
1,700
2,531
(831)
(33)
4
(100)
(960)
439
11,496
304
11,800
* Total segment revenue consists of revenue from the sale of coal whereas revenue disclosed in the profit and loss also includes other revenue such as
management fees, sea freight, rents and sub-lease rentals, interest income, dividend income and royalty income. Refer to Note B1(b) below.
62
62
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Interest revenue by segment for 31 December 2021 is as follows: NSW $1 million (2020: $nil), QLD $nil (2020: $nil) and Corporate
$20 million (2020: $84 million).
Finance costs by segment for 31 December 2021 is as follows: NSW $26 million (2020: $18 million), QLD $3 million
(2020: $1 million) and Corporate $230 million (2020: $172 million).
The segment information for the reportable segments for the year ended 31 December 2020 is as follows:
31 DECEMBER 2020
Total segment revenue*
Add: Fair value losses recycled from hedge reserve
Revenue from external customers
Operating EBIT
Operating EBITDA
Material income or expense items
Non-cash items
Depreciation and amortisation
Remeasurement of contingent royalty
Remeasurement of royalty receivable
Gain on acquisition of interest in joint operation
Loss on reconsolidation of Watagan
Cash items
Stamp duty expense
Total capital expenditure
Segment assets
Investment in associate and joint ventures
Total assets
COAL MINING
NSW
$M
3,092
–
3,092
51
801
(750)
–
–
653
–
(97)
(15)
(15)
331
9,272
177
9,449
QLD
$M
337
–
337
(65)
(20)
(46)
–
–
–
–
(46)
–
–
12
645
–
645
CORPORATE
$M
(194)
194
–
(42)
(33)
(8)
23
(9)
–
(1,383)
(1,377)
–
–
2
881
80
961
TOTAL
$M
3,235
194
3,429
(56)
748
(804)
23
(9)
653
(1,383)
(1,520)
(15)
(15)
345
10,798
257
11,055
There was no impairment charge or other significant non-cash items recognised during the year ended 31 December 2021 and
31 December 2020 other than those disclosed above.
(b) Other segment information
(i) Segment revenue
Sales between segments are carried out at arm’s length and are eliminated on consolidation. The revenue from external parties
for the reportable segments are measured in a manner consistent with that in the profit and loss.
Revenue from external customers are derived from the sale of coal from operating mines and coal purchases. Segment revenues
are allocated based on the country in which the customer is located. Refer to Note B2 for revenue from external customers split
by geographical region.
Revenues from the top five external customers were $1,691 million (2020: $1,094 million) which in aggregate represent
approximately 31% (2020: 32%) of the Group’s revenues from the sale of coal. These revenues were attributable to the NSW
and Queensland coal mining segments.
Segment revenue reconciles to total revenue as follows:
Total segment revenue
Interest income
Sea freight
Royalty revenue
Other revenue
Mining services fees
Total revenue (refer to Note B2)
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
5,256
3,235
21
79
28
20
–
84
64
15
30
45
5,404
3,473
63
63
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ii) Operating EBITDA
The Executive Committee assesses the performance of the operating segments based on a measure of Operating EBITDA.
This measure excludes the effects of non-recurring expenditure from the operating segments such as restructuring costs,
business combination related expenses and significant impairments of cash-generating units. Furthermore, the measure excludes
the effects of fair value re-measurements and foreign exchange gains / (losses) on interest-bearing liabilities.
Interest income and expense are not allocated to the NSW and QLD segments, as this type of activity is driven by the corporate
function, which manages the cash position of the Group.
A reconciliation of Operating EBITDA to profit before income tax from continuing operations is provided as follows:
Operating EBITDA
Depreciation and amortisation
Operating EBIT
Interest income
Finance costs
Bank fees and other charges
Fair value losses recycled from hedge reserve – USD loans
Impairment of exploration and evaluation assets
Remeasurement of contingent royalty
Loss on reconsolidation of Watagan
Contingent royalty payments
Gain on acquisition of interest in joint operation
Remeasurement of royalty receivable
Stamp duty
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
2,531
(831)
1,700
21
(259)
(49)
(153)
(100)
(33)
–
(28)
–
4
–
748
(804)
(56)
84
(191)
(55)
(194)
–
23
(1,383)
–
653
(9)
(15)
Profit / (loss) before income tax from continuing operations
1,103
(1,143)
(iii) Segment capitalised expenditure
Amounts with respect to capital expenditure are measured in a manner consistent with that of the financial statements.
Reportable segment’s capital expenditure is set out in Note B1(a).
All segment assets are located in Australia.
(iv) Segment liabilities
A measure of total liabilities for reportable segments are not provided to the Executive Committee. The Executive Committee
reviews the liabilities of the Group at a consolidated level.
B2 Revenue
Accounting policies
(a) Sales revenue
(i) Sale of coal
The Group produces and sells a range of thermal and metallurgical coal products. Revenue from the sale of coal is recognised when control of the product has
transferred to the customer usually when loaded onto the vessel, or Free On Board (“FOB”). Some contracts include sea freight services which is accounted for as a
separate performance obligation. On occasion revenue is recognised as the vessel pulls into harbour on a Free Alongside Ship (“FAS”) basis. A receivable is recognised
when the products are delivered as this is the point in time that the consideration is unconditional and only the passage of time is required before the payment is
due. Payment is usually due within 21 days of the date when control of the product is transferred to the customer.
Some of the Group’s coal sales contracts are long-term supply agreements which stipulate the annual quantity and contain a price negotiation mechanism. The initial
transaction price is the market price prevailing at the time of the future shipment. As the future market price for coal is highly susceptible to factors outside the
Group’s influence, the transaction price for a shipment is not readily determinable until the time of the shipment.
As a result, the Group has concluded that a contract with the customer does not exist for those contracts until the time of shipment.
The transaction price for a shipment is often linked to a market index for the respective delivery period, for example, by reference to the average GlobalCOAL
Newcastle Index for the delivery period. At the end of each reporting period, the final average index price may not be available for certain shipments. In those
situations, the Group uses “the expected value” method to estimate the amount of variable consideration with reference to index prices at the end of the reporting
period for those shipments.
64
64
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(b) Other revenue
(i) Interest
Interest income from a financial asset is accrued over time, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate
that exactly discounts the estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount. Interest income from
leases is recognised over the term of the lease based on a pattern reflecting a constant periodic rate of return on the net investment in the lease.
(ii) Mining services fees
The Group provided mining, corporate support and IT services which relate to the management of Watagan mines. The management and mining service agreements
stipulate a fixed monthly service fee and payment of the service fees is usually due within 21 days after the end of each calendar month in which the service is
rendered. Revenue from providing management and mining services is recognised when the services are rendered.
(iii) Sea freight services
When contracts for sale of coal include sea freight services the performance obligation associated with providing the shipping is separately measured and recognised
as the service is provided.
(iv) Other
Other primarily consists of dividends, rent, and other management fees. Dividends are recognised as revenue when the right to receive payment is established, it is
probable that the economic benefits associated with the dividend will flow to the Group and can be measured reliably. Rental income arising on land surrounding a
mine site is accounted for on a straight-line basis over the lease term.
From continuing operations
Sales revenue
Sale of coal
Fair value losses recycled from hedge reserve
Other revenue
Interest income
Mining services fees
Sea freight
Royalty revenue
Other items
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
5,409
(153)
5,256
21
–
79
28
20
148
5,404
3,429
(194)
3,235
84
45
64
15
30
238
3,473
At 31 December 2021 there are $143 million (2020: $50 million) of provisionally priced sales, still to be finalised, of which
$94 million is yet to be collected (2020: $50 million). These amounts are included in the revenue recognised above.
Disaggregation of revenue
In the following table, revenue from sale of coal is disaggregated by primary geographical market and major products/service
lines. The table also includes a reconciliation of the disaggregated revenue with the Group’s three reportable segments
(see Note B1) however Corporate is not presented in this table as this segment have no coal sales:
31 DECEMBER 2021
Primary geographical markets
Japan
Taiwan
Singapore
South Korea
Australia (Yancoal's country of domicile)
Thailand
Vietnam
Malaysia
All other foreign countries
Total
Product mix
Thermal coal
Metallurgical coal
Total
NSW
$M
1,331
1,090
608
546
604
278
12
120
303
4,892
4,382
510
4,892
QLD
$M
124
4
70
107
1
–
202
–
9
517
25
492
517
TOTAL
$M
1,455
1,094
678
653
605
278
214
120
312
5,409
4,407
1,002
5,409
65
65
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
31 DECEMBER 2020
Primary geographical markets
Japan
Singapore
China
South Korea
Taiwan
Australia (Yancoal's country of domicile)
Thailand
Vietnam
Malaysia
All other foreign countries
Total
Product mix
Thermal coal
Metallurgical coal
Total
NSW
$M
QLD
$M
TOTAL
$M
622
562
434
340
361
338
283
11
101
40
61
48
21
73
24
–
–
90
–
20
683
610
455
413
385
338
283
101
101
60
3,092
337
3,429
2,771
321
3,092
52
285
337
2,823
606
3,429
In 2021 8.2% of coal sales were attributable to the largest customer and 31.2% to the top five customers (2020: 8.3% and
31.9% respectively).
Contract balances
The Group has recognised the following revenue-related receivables, contract assets and liabilities:
Receivables from contracts with customers
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
619
223
There are no contract assets, liabilities or costs as at 31 December 2021 or 31 December 2020.
Transaction price allocated to the remaining performance obligation
For long term contracts the Group has concluded that contracts with customers do not exist for those shipments for which the
actual delivery quantity and transaction price have not yet been negotiated or determined. For the remaining shipments where
the delivery quantity and transaction price have been negotiated or determined but are subject to market price movements, the
contract durations are within one year or less. As a result, the Group elects to apply the practical expedient in paragraph 121(a)
of AASB 15 and does not disclose information about the remaining performance obligations in relation to the coal sales contracts.
The Group also elects to apply the practical expedient in paragraph 121(b) of AASB 15 and does not disclose information about
the remaining performance obligations in relation to the management and mining service contracts.
B3 Other income
Gain on remeasurement of royalty receivable
Net gain on foreign exchange
Sundry income
Gain on acquisition of interest in joint operation
Gain on remeasurement of contingent royalty
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
4
52
8
–
–
64
–
–
4
653
23
680
There is no impact on the conversion of US dollar denominated interest-bearing liabilities (2020: nil).
66
66
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B4 Employee benefits
Accounting policies
(i) Employee benefits
Employee benefits are expensed as the service by the employee is provided and includes both equity and cash based payment transactions. Employee benefits
recognised in the profit or loss are net of recoveries from third parties.
(ii) Superannuation
Contributions made by the Group under Australian legislation to contribute 10% (previously 9.5%) from 1 July 2021 of employees salaries and wages to the
employee’s defined contribution superannuation funds are recognised as an expense in the period in which they are incurred.
(iii) Equity-settled share-based payments
The grant date fair value of equity-settled share-based payment awards granted to employees is recognised as an expense, with a corresponding increase in equity,
over the vesting period of the awards. The amount recognised as an expense is adjusted to reflect the number of awards for which related service and non-market
performance conditions are expected to be met, such that the amount ultimately recognised is based on the number of awards that meet the related service and
non-market based performance conditions at the vesting date.
(a) Employee benefits
Employee benefits
Superannuation contributions
Total employee benefits
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
532
46
578
525
43
568
During 2021 $16 million of employee benefits were capitalised (2020: $9 million).
(b) Key management personnel compensation
Refer to the remuneration report contained in the directors’ report for details of the remuneration paid or payable to each
member of the Group’s key management personnel (“KMP”) for the year ended 31 December 2021. The total remuneration paid
to KMP of the Company and Group during the year is as follows:
Short-term employee benefits
Post-employment benefits
Share-based payments
Other long-term benefits
31 DECEMBER
2021
$
31 DECEMBER
2020
$
5,482,202
133,429
2,058,029
1,040,413
8,714,073
7,876,960
163,603
(2,537,960)
1,329,898
6,832,501
(c) Top five employees
The five highest paid individuals in the Group include the Chief Executive for each of the years, details of whose remuneration are
set out in the remuneration report. Details of remuneration of the remaining four (2020: four) highest paid individuals who are
neither a Director or Chief Executive of the Company are as follows:
Salaries, allowance and other benefits in kind
Retirement benefit scheme contributions
Discretionary bonuses
Their emoluments were within the following bands:
HK$6,500,000 to HK$7,000,000
HK$8,000,000 to HK$8,500,000
HK$8,500,000 to HK$9,000,000
HK$9,000,000 to HK$9,500,000
HK$9,500,000 to HK$10,000,000
HK$10,500,000 to HK$11,000,000
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
2
–
4
6
2
–
3
5
31 DECEMBER
2021
NUMBER
31 DECEMBER
2020
NUMBER
–
–
1
1
–
2
1
1
1
–
1
–
67
67
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B5 Expenses
(a) Finance costs
Lease charges
Unwinding of discount on provisions and deferred payables
Other interest expenses
Total finance costs
(b) Other operating expenses
Bank fees and other charges
Remeasurement of financial assets
Contingent royalty payments
Rates and other levies
Information technology
Insurance
Other operating expenses
Travel and accommodation
Rental expense
Stamp duty
Loss on remeasurement of royalty receivable
Net loss on disposal of property, plant and equipment
Net loss on foreign exchange
Total other operating expenses
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
8
22
229
259
48
33
28
28
20
19
15
7
4
–
–
–
–
5
16
170
191
55
–
–
27
15
19
14
9
3
15
9
9
8
202
183
(c) Largest suppliers
In 2021 7.4% of total operating expenses related to one supplier and 21.6% to the top five suppliers (2020: 6.3% and 19.7%
respectively).
B6 Taxation
Accounting policy
The income tax expense or benefit for the period is the tax payable on the current period’s taxable income based on the applicable income tax rate and laws enacted
or substantially enacted at the end of the reporting period for each jurisdiction, adjusted by changes in deferred tax assets and liabilities attributable to temporary
differences and to unused tax losses. Current and deferred tax is recognised in profit or loss, except to the extent that it relates to items recognised in other
comprehensive income or directly in equity. In this case, the tax expense or benefit associated with these items is recognised in other comprehensive income or
directly in equity, respectively.
Deferred income tax is provided in full, using the liability method, on temporary differences arising between the tax bases of assets and liabilities and their carrying
amounts in the financial statements. However, the deferred income tax is not accounted for if it arises from initial recognition of an asset or liability in a transaction
other than a business combination that at the time of the transaction affects neither accounting nor taxable profit or loss.
Deferred tax assets are recognised for deductible temporary differences and unused tax losses only if it is probable that future taxable amounts will be available to
utilise those temporary differences and losses. The carrying value of deferred tax assets are reviewed at each reporting period and reduced to the extent that it is no
longer probable that future taxable profit will be available to allow all or part of the asset to be recovered.
Current tax assets and liabilities are offset where the Group has a legally enforceable right to offset and intends either to settle on a net basis, or to realise the asset
and settle the liability simultaneously. Deferred tax assets and liabilities are offset when there is a legally enforceable right to offset current tax assets and liabilities
and when the deferred tax balances relate to the same taxation authority.
Tax consolidation legislation
Yancoal Australia Ltd and its wholly-owned Australian controlled entities have implemented the tax consolidation legislation. The head entity, Yancoal Australia Ltd,
and the entities in the tax consolidated group account for their own current and deferred tax amounts. These tax amounts are measured as if each entity in the
tax consolidated group continues to be a stand alone taxpayer in its own right. In addition to its own current and deferred tax amounts, Yancoal Australia Ltd also
recognises the current tax liabilities (or assets) and the deferred tax assets arising from unused tax losses and unused tax credits assumed from the entities in the tax
consolidated group.
The entities in the tax consolidated group have entered into a tax funding agreement under which the wholly-owned entities fully compensate Yancoal Australia Ltd
for any current tax payable assumed and are compensated by Yancoal Australia Ltd for any current tax receivable and deferred tax assets relating to unused tax losses
or unused tax credits that are transferred to Yancoal Australia Ltd under the tax consolidation legislation as loans between entities. The amounts receivable/payable
under the tax funding agreement are due upon receipt of funding advice from the head entity. The head entity may also require payment of interim funding amounts
to assist with its obligations to pay tax instalments.
68
68
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Critical accounting estimates and judgements
Deferred tax
Judgement is required to determine the amount of deferred tax assets that are recognised based on the likely timing and the level of future taxable profits. The Group
assesses the recoverability of recognised and unrecognised deferred taxes, including historical losses incurred in Australia, using estimates and assumptions relating
to projected taxable income as applied in the impairment process, refer to note C3.
Uncertain tax matters
Judgements are applied in how income tax legislation interacts with income tax accounting principles. These judgements are subject to risk and uncertainty, and there
is the possibility that changes in circumstances will alter expectations, which may impact deferred tax assets and liabilities recognised. Where the final tax outcome is
different from the amounts that are initially recognised these differences will impact the current and deferred tax in the period in which the determination is made.
(a) Income tax (expense) / benefit
(i) Income tax (expense) / benefit
Deferred tax (expense) / benefit
Deferred tax (expense) / benefit included in income tax benefit comprises:
Net over provision in respect of prior years
(Decrease) / increase in deferred tax assets (refer to Note B6(b)(ii))
Increase in deferred tax liabilities (refer to Note B6(b)(iii))
(ii) Reconciliation of income tax (expense) / benefit to prima facie tax payable
Profit / (loss) from continuing operations before tax
Tax at the Australian tax rate of 30% (2020 – 30%)
Tax effect of amounts which are not deductible / taxable in calculating taxable income:
Over provision in prior years
Share of profit / (loss) of equity-accounted investees not deductible
Other
Stamp duty expensed
Gain on acquisition of interest in joint operation
Loss on reconsolidation of Watagan
Income tax (expense) / benefit
(iii) Amounts recognised directly in equity
Aggregate current and deferred tax arising in the reporting period and not recognised in net profit or loss or other comprehensive
income but directly debited or credited to equity:
Tax effect of the discount on interest bearing liability
Cash flow hedges
(b) Deferred tax assets and liabilities
(i) Deferred tax balances
Deferred tax assets
Deferred tax liabilities
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
(312)
5
(422)
105
(312)
1,103
(331)
5
17
(3)
–
–
–
(312)
103
3
73
27
103
(1,143)
343
3
(18)
(2)
(4)
196
(415)
103
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
93
(24)
69
–
151
151
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
539
(1,055)
(516)
890
(1,025)
(135)
69
69
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(ii) Deferred tax assets
MOVEMENTS
At 1 January 2020
(Under)/over provision in prior year
(Charged)/credited
– to profit or loss
– directly to equity
– others
– tax loss recorded on behalf of
Watagan Group
Acquisition of subsidiaries
At 31 December 2020
1 January 2021
(Under)/over provision in prior year
(Charged)/credited
– to profit or loss
– directly to equity
At 31 December 2021
TAX LOSSES
AND OFFSETS
$M
PROVISIONS
$M
TRADE AND
OTHER
PAYABLES
$M
LEASE
LIABILITIES
$M
CASH FLOW
HEDGES
$M
330
10
66
–
–
74
–
480
480
45
(462)
–
63
154
–
16
–
–
–
62
232
232
–
32
–
264
29
–
8
–
–
–
–
37
37
2
(1)
–
38
29
–
(4)
–
–
–
12
37
37
–
2
–
39
210
–
–
(151)
–
–
–
59
59
–
–
24
83
OTHER
$M
40
(10)
(13)
–
24
–
4
45
45
–
7
–
52
TOTAL
$M
792
–
73
(151)
24
74
78
890
890
47
(422)
24
539
The Group’s tax consolidated group includes Watagan Mining Company Pty Ltd (“Watagan”) and its controlled subsidiaries,
including the period from 31 March 2016 to 16 December 2020 whilst Watagan was deconsolidated, refer to E1(b) for further
details. Deferred tax assets are recognised for the carry forward of unused tax losses and unused tax credits to the extent that
it is probable that taxable profits will be available against which the unused tax losses / credits can be utilised. The Group has
unrecognised capital tax losses (tax effected) of $12 million (2020: capital tax losses $11 million). There is no expiry date on
these tax losses.
(iii) Deferred tax liabilities
PROPERTY,
PLANT AND
EQUIPMENT
$M
INTANGIBLE
ASSETS
$M
INVENTORIES
$M
MINING TENEMENTS
AND
EXPLORATION
AND EVALUATION
ASSETS
$M
UNREALISED
FOREIGN
EXCHANGE
GAINS
$M
160
(25)
(8)
(88)
39
39
28
14
–
81
6
–
3
8
17
17
–
(1)
–
16
28
–
–
7
35
35
–
2
–
37
548
22
(52)
313
831
831
12
(80)
–
763
9
7
46
–
62
62
–
(40)
–
22
MOVEMENTS
At 1 January 2020
(Under)/over provision in prior year
Charged/(credited)
– to profit or loss
Acquisition of subsidiaries
At 31 December 2020
At 1 January 2021
Over provision in prior year
Charged/(credited)
– to profit or loss
– directly to equity
At 31 December 2021
OTHER
$M
52
(7)
(16)
12
41
41
2
–
93
136
TOTAL
$M
803
(3)
(27)
252
1,025
1,025
42
(105)
93
1,055
70
70
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
B7 Earnings per share
Accounting policies
(a) Basic earnings per share
Calculated as net earnings/(loss) attributable to members of the parent, adjusted to exclude any costs of servicing equity (other than dividends) and preference
shares dividends, divided by the weighted average number of ordinary shares, adjusted for any bonus element, excluding any treasury shares held.
(b) Diluted earnings per share
Calculated as net earnings/(loss) attributable to members of the parent, adjusted for costs of servicing equity (other than dividends); the after-tax effect of dividends
and interest associated with dilutive potential ordinary shares that have been recognised as expenses; and other non-discretionary changes in revenues or expenses
during the period that would result from the dilution of potential ordinary shares, divided by the weighted average number of ordinary shares and dilutive potential
ordinary shares, adjusted for any bonus element.
(a) Basic and diluted earnings per share
Total basic earnings / (loss) per share (cents)
Total diluted earnings / (loss) per share (cents)
(b) Reconciliation of earnings / (loss) used in calculating earnings/ (loss) per share
Basic and diluted earnings / (loss) per share
Earnings used in calculating the basic and diluted earnings / (loss) per share:
From continuing operations
(c) Weighted average number of shares used in calculating earnings / (loss) per share
Ordinary shares on issue at start on the period
Less: weighted average of treasury shares held
Weighted average number of ordinary shares used in basic earnings / (loss) per share
Adjusted for rights and options on issue
Anti-dilutive options
Weighted average shares used in diluted earnings / (loss) per share
31 DECEMBER
2021
31 DECEMBER
2020
59.9
59.7
(78.8)
(78.8)
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
791
791
(1,040)
(1,040)
31 DECEMBER
2021
NUMBER
31 DECEMBER
2020
NUMBER
1,320,439,437
1,320,439,437
(31,225)
(31,225)
1,320,408,212
1,320,408,212
3,677,102
1,900,859
–
(1,900,859)
1,324,085,314
1,320,408,212
71
71
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C OPERATING ASSETS AND LIABILITIES
Investment in assets drives the current and future performance of the Group. This section includes disclosures for property
plant and equipment, mining tenements, exploration and evaluation assets, intangible assets, royalty receivable, cash and cash
equivalents, trade and other receivables, trade and other payables, inventories and provisions contained within the Balance Sheet.
C1 Property, plant and equipment
Accounting policies
Items of property, plant and equipment are stated at cost less accumulated depreciation and impairment losses. The cost includes expenditure directly attributable to
the acquisition of the items and the estimated restoration costs associated with the asset. Subsequent costs are included in the asset’s carrying amount or recognised
as a separate asset, as appropriate, only when it is probable that future economic benefits associated with the item will flow to the Group and the cost of the item
can be measured reliably. The carrying amount of any component accounted for as a separate asset is derecognised when replaced.
Mine development assets include all mining related development expenditure that is not included under land, buildings, and plant and equipment. The open pit
operations capitalise mine development costs including both direct and indirect costs incurred to remove overburden and other waste materials to enable access
to the coal seams during the development of a new open pit mining area before commercial production commences. Amortisation of capitalised costs over the life
of the operation commences at the time that commercial production begins for an open pit mining area. The open pit mining area costs are capitalised net of the
coal sales revenue earned from coal extracted as part of the mains development process. Underground mine development costs include both direct and indirect
mining costs relating to underground longwall panel development and mains development (primary access / egress roads for the mine). Mains development costs are
capitalised net of the coal sales revenue earned from coal extracted as part of the mains development process. These capitalised costs are amortised over the life of
the mine if the roads service the entire mine or over the life of the panels accessible from those mains if shorter than the mine life.
A regular review is undertaken of each area of interest to determine the appropriateness of continuing to carry forward mine development costs in relation to that
area of interest. Accumulated costs in relation to an abandoned area are written off in full in the period in which the decision to abandon the area is made.
Borrowing costs
Borrowing costs directly attributable to the acquisition, construction or production of assets that necessarily take a substantial period of time to prepare for their
intended use or sale, are added to the cost of those assets, until such time as the assets are substantially ready for their intended use or sale.
Depreciation and amortisation
Fixed assets, excluding freehold land, is depreciated on a straight-line or Units of Production (“UOP”) basis over the asset’s useful life to the Group. UOP is based on
either machine hours utilised, or production tonnes from life of mine plans and estimated reserves, commencing from the time the asset is ready for use. Right of
use assets are depreciated over the asset’s useful life or over the shorter of the asset’s useful life and the lease term if there is no reasonable certainty that the Group
will obtain ownership at the end of the lease term. Leasehold improvements are depreciated over the period of the lease or estimated useful life, whichever is the
shorter, using the straight-line method.
The estimated useful lives, residual values and depreciation method are reviewed at the end of each annual reporting period. The estimated useful lives are
as follows:
•
Buildings 10 - 40 years
• Mine development 10 - 40 years
•
•
Plant and equipment 2.5 - 30 years
Leased property, plant and equipment 2 - 10 years
An asset’s carrying value is written down immediately to its recoverable amount if the asset’s carrying value is greater than its estimated recoverable value. Any gain
or loss arising on the disposal of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying value of the
asset and is recognised in profit or loss.
See Note C3 for further details on impairment of assets and Note C2 for further details on the estimation of coal reserves used for UOP.
72
72
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 31 December 2020
Opening net book amount
Additions
Transfers from assets under construction
Acquisition through business combinations
Other disposals
Depreciation charge
Closing net book amount
At 31 December 2020
Cost
Accumulated depreciation
Net book amount
Year ended 31 December 2021
Opening net book amount
Additions
Transfers from assets under construction
Other disposals
Depreciation charge
Closing net book amount
At 31 December 2021
Cost
Accumulated depreciation
Net book amount
ASSETS UNDER
CONSTRUCTION
$M
FREEHOLD LAND
AND
BUILDINGS
$M
MINE
DEVELOPMENT
$M
PLANT AND
EQUIPMENT
$M
RIGHT OF USE
ASSETS
$M
224
273
(334)
39
–
–
202
202
–
202
202
249
(194)
–
–
257
257
–
257
310
1
18
81
–
(10)
400
484
(84)
400
400
–
–
–
(11)
389
484
(95)
389
1,188
60
105
181
–
(145)
1,389
2,025
(636)
1,389
1,389
104
86
–
(177)
1,402
2,237
(835)
1,402
1,140
9
196
161
(8)
(299)
1,199
3,368
(2,169)
1,199
1,199
25
102
(1)
(263)
1,062
3,463
(2,401)
1,062
78
20
–
42
(2)
(37)
101
178
(77)
101
101
59
–
–
(38)
122
211
(89)
122
TOTAL
$M
2,940
363
(15)
504
(10)
(491)
3,291
6,257
(2,966)
3,291
3,291
437
(6)
(1)
(489)
3,232
6,652
(3,420)
3,232
During the year ended 31 December 2021 $7 million of depreciation and amortisation was capitalised (2020: $7 million).
(a) Non-current assets pledged as security
Refer to Note D1(b) for information on non-current assets pledged as security by the Group.
C2 Mining tenements
Accounting policy
Mining tenements have a finite useful life and are carried at cost less any accumulated amortisation and impairment losses. Mining tenements are amortised from
the date when commercial production commences, or the date of acquisition. Amortisation is calculated over the life of the mine on a ‘units of production’ method
based on the Joint Ore Reserves Committee (“JORC”) estimated reserves.
Changes in the annual amortisation rate resulting from changes in the remaining estimated reserves, are applied on a prospective basis from the commencement
of the next financial year. Every year the mining tenement’s carrying amount is compared to its recoverable amount and assessed for impairment, or for possible
reversals of prior year impairment.
See Note C3 for further details on the impairment of assets.
Opening net book amount
Acquisition through business combination
Transfers from exploration and evaluation
Amortisation
Closing net book amount
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
4,883
–
69
(344)
4,608
4,047
1,121
31
(316)
4,883
Critical accounting estimates and judgements
Coal reserves are based on geological information and technical data relating to the size, depth, quality of coal, suitable production techniques and recovery rates.
Such an analysis requires complex geological judgements to interpret the data. The estimation of recoverable reserves is based on factors such as estimates of
foreign exchange rates, coal price, future capital requirements, rehabilitation obligations and production costs, along with geological assumptions and judgements
made in estimating the size and quality of the reserves. Management forms a view of forecast sales prices based on long term forecast coal price data from multiple
external sources.
73
73
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C3 Impairment of assets
Accounting policy
Mining tenements and goodwill are tested annually for impairment, or more frequently if events or changes in circumstances indicate that they might be impaired.
An impairment loss is recognised immediately in profit or loss for the amount by which the asset’s carrying amount exceeds its recoverable amount. The recoverable
amount is the higher of an asset’s fair value less costs of disposal and value in use. Mining tenements and other non-financial assets (excluding goodwill) that have
previously suffered an impairment are reviewed for possible reversal of the impairment at the end of each reporting period.
For the purposes of assessing impairment, assets are grouped into Cash-Generating Units (“CGU”), being the lowest levels for which there are separately identifiable
cash inflows which are largely independent of the cash inflows from other assets or groups of assets. For the purposes of goodwill impairment testing, CGUs to
which goodwill has been allocated are aggregated so that the level at which impairment is tested reflects the lowest level at which goodwill is monitored for internal
reporting purposes. The goodwill acquired in a business combination, for the purpose of impairment testing, is allocated to CGUs that are expected to benefit from
the synergies of the combination. The Group assesses impairment by evaluation of conditions and events specific to the CGU that may be indicative of impairment
triggers.
Critical accounting estimates and judgements
The determination of fair value and value in use requires management to make estimates and assumptions about expected production and sales volumes, coal prices
(considering current and historical prices, price trends and related factors), foreign exchange rates, coal resources and reserves (refer to C2), operating costs, closure
and rehabilitation costs and future capital expenditure. These estimates and assumptions are subject to risk and uncertainty; hence there is a possibility that changes
in circumstances will alter these projections, which may impact the recoverable amount of the assets with the impact recorded in profit or loss. Management must
use judgement in determining the CGUs that should be used for impairment testing and allocating goodwill that arises from business combinations to these CGUs.
The Group estimates its coal resources and reserves based on information compiled by Competent Persons defined in accordance with the 2012 JORC code.
(a) CGU assessment
The Group operates on a regional basis within NSW and as such the NSW mines of Moolarben, Mount Thorley Warkworth,
Hunter Valley Operations, Ashton and Startford Duarlie are considered to be one Cash Generating Unit (“CGU”). Yarrabee and
Middlemount are considered separate CGU’s due to their location and ownership structure.
Donaldson is currently on care and maintenance and has been included in the Group of NSW CGU’s. The Austar mine is
progressing toward closure and is therefore not included in the Group of NSW CGU’s. Life of Mine (“LOM”) models are reassessed
on a regular basis and any change in the LOM model may result in a change in the recoverable amount and possibly result in an
impairment charge.
On 16 December 2020 the Watagan Group mines of Ashton, Austar and Donaldson were reconsolidated into the Group as
disclosed in Note E1(b) with the assets and liabilities recorded at fair value in line with AASB 3 Business Combinations.
(b) Assessment of fair value
Each CGU’s fair value less costs of disposal has been determined using a discounted cash flow model over the expected life of
mine (17 – 54 years). The fair value model adopted has been categorised as level 3 in the fair value hierarchy.
The key assumptions in the model include:
KEY ASSUMPTIONS
Coal price
DESCRIPTION
The Group’s cash flow forecasts are based on estimates of future coal prices, which assume benchmark
prices will revert to the group’s assessment of the long term real coal prices of US$57 – US$105 per
tonne (2020: US$57 – US$103 per tonne) for thermal and US$103 – US$180 per tonne (2020: US$103 –
US$177 per tonne) for metallurgical coal.
The Group receives long term forecast coal price data from multiple external sources when determining
its benchmark coal price forecasts and then makes adjustments for specific coal qualities.
The external sources have determined their benchmark coal price forecasts having regard to countries
various National Energy Policies including Nationally Determined Contributions submitted in accordance
with the 2015 Paris Agreement, and other measures announced in the lead-up to COP26, including phasing
down of coal fired power generation. This contemplates the global seaborne demand for thermal coal will
remain relatively consistent to 2025 and then range between remaining relatively consistent or declining
to 25% below 2021 levels by 2040, whilst the global seaborne demand for metallurgical coal will increase
up to 2040. Key risks to the outlooks are increasing decarbonisation trends, trade disputes, protectionism,
import control policies in end markets, shareholder activism to divest from coal, the pace of renewable
technology advancement and investor behaviour to coal project financing.
74
74
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
KEY ASSUMPTIONS
Coal price
continued
Foreign
exchange rates
Production and
capital costs
Coal reserves
and resources
Discount rate
DESCRIPTION
The Group has considered the impacts of a more rigorous international response to climate change under
the Paris Agreement incorporating updated pledges for COP26 and notes that the average mine life
required for the recoverable amount to continue to exceed the book value, holding all inputs constant,
including coal prices, is 7, 9 and 6 years for the NSW, Yarrabee and Middlemount CGUs, respectively.
The NSW CGU has a 91% exposure to thermal coal and 9% exposure to metallurgical coal whilst Yarrabee
and Middlemount are both metallurgical coal mines.
The Group concludes that whilst a more rigorous international response to climate change could reduce
the future demand for coal the likely impact of any such actions are not expected to materially impact
during the time periods noted above and hence would not result in the recoverable amount falling below
book value.
For both thermal and metallurgical coal the Group’s forecast coal price is within the range of external
price forecasts. These forecasts include the assumption that the world economy will return to the growth
trajectory that was occurring before the COVID-19 pandemic, China will increase its imports of seaborne
coal and that limited supply will be brought online due to low investment in new coal production capacity
over the last five to ten years. There is a risk that these assumptions are incorrect and that future coal
prices are different from those forecast.
The long term AUD/USD forecast exchange rate of $0.75 (2020: $0.75) is based on external sources.
The year-end AUD/USD exchange rate was $0.7256 per the Reserve Bank of Australia.
Production and capital costs are based on the Group’s estimate of forecast geological conditions, stage of
existing plant and equipment and future production levels.
This information is obtained from internally maintained budgets, the five year business plan, life of mine
models, life of mine plans, JORC reports, and project evaluations performed by the Group in its ordinary
course of business.
The Group estimates its coal reserves and resources based on information compiled in accordance with the
JORC 2012 Code and ASX Listing Rules 2014. See discussion at Note C2 Mining tenements for how the coal
reserves and resources are determined.
The Group has applied a post-tax discount rate of 10.5% (2020: 10.5%) to discount the forecast future
attributable post-tax cash flows.
The post-tax discount rate applied to the future cash flow forecasts represents an estimate of the rate the
market would apply having regard to the time value of money and the risks specific to the asset for which
the future cash flow estimates have not been adjusted.
External consultants were engaged to consider the Group’s discount rate, in particular the effect of ESG
concerns on coal asset risk premiums, with 10.5% assessed as the middle of the range.
This rate is also consistent with the Group’s five-year business plan, life of mine models and project
evaluations performed in ordinary course of business.
Based on the above assumptions at 31 December 2021 the recoverable amount is determined to be above book value for all
CGU’s resulting in no impairment.
Impairment provisions recorded in previous years as at 31 December 2021 is $40 million at Stratford and Duralie. Stratford and
Duralie is included in the NSW CGU. Management may consider reversals of the impairment provision previously recognised if
there is either an increase in the average long term real revenue over the life of the mine due to either an increase in USD coal
prices, or a weakening of the AUD/USD foreign exchange rate or a combination of both, or reductions in the current and life of
mine operating costs, capital expenditure requirements, or an increase in the reserves.
In determining the value assigned to each key assumption, management has used: external sources of information; the expertise
of external consultants; as well as the experience of experts within the Group to validate entity specific assumptions such as coal
reserves and resources. Additionally various sensitivities have been determined and considered with respect to each of the key
assumptions, further supporting the above fair value conclusions.
75
75
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Key sensitivity
The most sensitive input in the fair value model is forecast revenue, which is primarily dependent on estimated future coal prices
and the AUD/USD forecast exchange rate. The sensitivity for the NSW, Yarrabee and Middlemount CGUs are shown below:
Book Value
Recoverable Amount
Head Room
USD Coal Price (i)
+10%
-10%
Exchange Rate (ii)
+5 cents
-5 cents
Discount Rate (iii)
+50 bps
-50 bps
NSW
$M
6,077
10,392
4,315
2,298
(2,299)
(1,548)
1,771
(379)
409
2021
YARRABEE
$M
MIDDLEMOUNT
$M
344
777
433
277
(278)
(196)
224
(24)
25
299
413
114
175
(234)
(164)
143
(9)
10
(i) This represents the change in recoverable amount due to a +/- 10% change to our coal price assumption.
(ii) This represents the change in recoverable amount due to a +/- 5 cents change to the long-term US$:A$ foreign exchange rate adopted.
(iii) This represents the change in recoverable amount due to a +/- 50bps change in discount rate adopted.
If coal prices were -10% Life of mine (“LOM”) the NSW and Yarrabee recoverable amounts would exceed book value however
for Middlemount the book value would exceed the recoverable amounts by $117 million. If the AUD/USD over the life of mine
long term forecast exchange rate was $0.80, the recoverable amount would exceed book value for NSW and Yarrabee however
for Middlemount the book value would exceed recoverable amount by $17 million. If the WACC was 11.0%, or 0.5% higher, the
recoverable amount would exceed book value for all CGU’s.
Donaldson remains on care and maintenance and technical work remains ongoing to assess potential future mining operations.
Based on the latest available technical information, with development commencing in 2025, and adopting a 14% discount rate,
the recoverable amount exceeds the book value.
The key sensitivity for Donaldson is whether the operation is developed. If, as a result of the ongoing technical work, or due to
other strategic priorities, the development is delayed or cancelled there may be an impairment.
(c) Goodwill
The Yarrabee goodwill was not subject to an impairment charge as the recoverable amount is greater than the carrying value for
this CGU.
(d) Exploration and evaluation
Details of the impairment of exploration and evaluation assets is included in note C4.
76
76
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C4 Exploration and evaluation assets
Accounting policy
Exploration and evaluation expenditure incurred is accumulated in respect of each separately identifiable area of interest which is at the individual exploration
permit or licence level. These costs are only carried forward where the right of tenure for the area of interest is current and to the extent that they are expected to
be recouped through successful development and commercial exploitation, or alternatively, sale of the area, or where activities in the area have not yet reached a
stage which permits reasonable assessment of the existence of economically recoverable reserves and active and significant operations in, or in relation to, the area
of interest are continuing.
Exploration and evaluation assets acquired in a business combination are recognised at their fair value at the acquisition date. The carrying amount of exploration and
evaluation assets are assessed for impairment when facts or circumstances suggest the carrying amount of the assets may exceed their recoverable amount. A regular
review is undertaken for each area of interest to determine the appropriateness of continuing to carry forward costs in relation to each area of interest. Accumulated
costs in relation to an abandoned area are written off in full in the period in which the decision to abandon the area is made.
Once the technical feasibility and commercial viability of the extraction of mineral resources in an area of interest are demonstrable, the exploration and evaluation
assets attributable to that area of interest are first tested for impairment and then reclassified to mining tenements or mine development assets
Critical accounting estimates and judgements
The application of the Group’s accounting policy for exploration and evaluation expenditure requires judgement in determining whether it is likely that future
economic benefits are likely, which may be based on assumptions about future events or circumstances. Estimates and assumptions may change if new information
becomes available. If after expenditure is capitalised information becomes available suggesting that the recovery of expenditure is unlikely, the amount capitalised is
recognised in the profit and loss in the period when the new information becomes available.
Opening net book amount
Acquisition through business combination
Other additions
Transfers to mining tenements
Impairment
Closing net book amount
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
709
–
1
(69)
(100)
541
555
184
1
(31)
–
709
An impairment of $100 million has been recognised against the Donaldson exploration and evaluation assets. Based on the latest
available technical information, if the Donaldson mine commences development in 2025 the mine plan could extend out beyond
2050. It has been assessed that the development of a thermal coal resource in this location is unlikely beyond 2050 and as a result
the book value of the exploration and evaluation assets are unlikely to be recoverable.
C5 Intangibles
Accounting policies
(i) Goodwill
Goodwill acquired in a business combination is recognised at cost and subsequently measured at cost less any impairment losses. The cost represents the excess of
the cost of a business combination over the fair value of the identifiable assets, liabilities and contingent liabilities acquired.
Goodwill is tested annually for impairment or more frequently if events or changes in circumstances indicate that it might be impaired.
See Note C3 for further details on impairment of assets.
(ii) Computer software
Computer software is carried at cost less accumulated amortisation and any accumulated impairment losses. Amortisation is calculated on a straight-line basis over
the period of expected benefit, which ranges from 2.5 to 10 years.
(iii) Water rights
Water rights have been recognised at cost and are assessed annually for impairment or more frequently if events or changes in circumstances indicate that it might
be impaired. The water rights have been determined to have an indefinite useful life as there is no expiry date on the licences.
(iv) Other
Other intangibles include access rights, other mining licenses and management rights associated with the Group’s right to manage Port Waratah Coal Services.
These intangibles have a finite useful life and are carried at cost less any accumulated amortisation and impairment losses. Amortisation of these other intangibles
is calculated as the shorter of the life of the mine or agreement and using a units of production basis in tonnes, or on a straight-line basis. The estimated useful lives
vary from 10 to 25 years.
77
77
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Year ended 31 December 2020
Opening net book amount
Acquisition through business combination
Transfers – assets under construction
Amortisation charge
Closing net book amount
At 31 December 2020
Cost
Accumulated amortisation
Net book amount
Year ended 31 December 2021
Opening net book amount
Transfers – assets under construction
Amortisation charge
Closing net book amount
At 31 December 2021
Cost
Accumulated amortisation
Net book amount
GOODWILL
$M
COMPUTER
SOFTWARE
$M
WATER RIGHTS
$M
OTHER
$M
TOTAL
$M
60
–
–
–
60
60
–
60
60
–
–
60
60
–
60
6
–
4
(3)
7
35
(28)
7
7
1
(3)
5
36
(31)
5
18
28
11
–
57
57
–
57
57
5
–
62
62
–
62
13
–
–
(2)
11
15
(4)
11
11
–
–
11
16
(5)
11
97
28
15
(5)
135
167
(32)
135
135
6
(3)
138
174
(36)
138
The goodwill at 31 December 2021 relates to the acquisition of Yancoal Resources Limited (formally known as Felix Resources
Limited) in a public offer to shareholders of the ASX listed company and was allocated to the Yarrabee mine. Refer to Note C3 for
the details regarding the fair value less cost to sell calculation performed at 31 December 2021. The CGU for which goodwill was
allocated was not subject to an impairment charge as the recoverable amount is greater than the carrying value for this CGU.
C6 Leases
(a) Amount recognised in profit or loss
Depreciation on right of use assets (refer Note C1)
Expenses relating to short-term and variable leases
Interest on lease liabilities
Other income from equipment leasing
(b) As a lessee
Right-of-use assets
Opening balance at 31 December 2020
Additions
Depreciation
Closing balance at 31 December 2021
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
(38)
(45)
(8)
–
BUILDINGS
$M
PLANT AND
EQUIPMENT
$M
12
–
(2)
10
89
59
(36)
112
(37)
(34)
(5)
4
TOTAL
$M
101
59
(38)
122
An undiscounted maturity analysis of lease liabilities is disclosed in Note D7(c).
The cash outflow for capitalised leases was $35 million for the year ended 31 December 2021 (2020: $35 million).
78
78
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C7 Cash and cash equivalents
Accounting policy
For the purpose of the Consolidated Statement of Cash Flows, cash and cash equivalents includes:
(i) cash on hand and at call deposits with banks or financial institutions, net of bank overdrafts; and
(ii) other short term, highly liquid investments, that are readily convertible to known amounts of cash and which are subject to an insignificant risk of changes
in value.
Cash at bank and in hand
Deposits at call
Share of cash held in Joint Operations
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
621
769
105
1,495
470
65
102
637
As disclosed in Note D1(a)(i) the minimum average balance of US$25 million per day and at month end US$50 million is required to
be held in the Lender Accounts of the Syndicated Facility which is not available for use on those days.
(a) Risk exposure
The Group’s exposure to interest rate risk and credit risk is discussed in Note D7. The maximum exposure to credit risk on the cash
and cash equivalents balance at the end of the reporting period is the carrying amount of each class of cash and cash equivalents
mentioned above.
C8 Trade and other receivables
Accounting policy
Trade and other receivables are non-derivative financial assets with fixed or determinable payments that are not quoted in an active market. They are included in
current assets, except for those with maturities greater than 12 months after the reporting period which are classified as non-current assets. After initial recognition,
trade and other receivables are carried at amortised cost using the effective interest method apart from Wiggins Island Preference Shares (“WIPS”) which are
classified as fair value through profit and loss. Refer to Note F6(b) for detailed policies in relation to recognition, measurement, impairment and derecognition of
trade and other receivables.
Current
Trade receivables from contracts with customers
Receivables from joint venture (i)
Other trade receivables
Non-current
Receivables from joint venture (ii)
Receivables from other entities (iii)
Long service leave receivables
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
619
–
88
707
149
14
76
239
223
60
65
348
135
14
72
221
(i) Current receivables from joint venture includes revolver loans provided to Middlemount Coal Pty Ltd (“Middlemount”) with a maturity date of 31 December
2023 (facility amended and extended from previous one which expired on 31 December 2021) and interest rate of 10%. The drawn balance of the revolver loan
is nil million at 31 December 2021, facility balance is $50 million.
(ii) Receivables from joint venture includes a loan provided to Middlemount with a face value of $212 million. From 15 October 2020 the shareholders of
Middlemount agreed to renew the loan interest free until 31 December 2025. At 31 December 2021 this loan has been revalued using the effective interest
rate method to $149 million with the initial difference being recognised against the investment in joint venture (refer Note E2), and is subsequently unwound
through profit and loss over the term.
(iii) Receivables from other entities includes the Group’s investment in securities issued by Wiggins Island Coal Export Terminal Pty Ltd (‘WICET”). These include
E Class WIPS and Gladstone Island Long Term Securities (“GiLTS”). During 2018 the WIPS were revalued to nil from $29 million, the GiLTS were impaired by
$17 million to a carrying value of $14 million.
79
79
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group does not have a standardised and universal credit period granted to its customers, and the credit period of individual
customer is considered on a case-by-case basis, as appropriate. The following is an aged analysis of trade receivables based on the
invoice dates at the reporting dates:
0-90 days
91-180 days
181-365 days
Over 1 year
Total
(a) Past due but not impaired
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
591
5
10
13
619
199
3
9
12
223
The ageing analysis of the Group’s trade receivables, that were past due but not yet impaired as at 31 December 2021 and 2020,
is as follows:
0-90 days
91-180 days
181-365 days
Over 1 year
Total
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
3
5
10
13
31
2
3
9
12
26
Included above is $27 million (2020: $26 million) of royalty revenue receivable from Middlemount which under the terms of the
revolver loans provided defer the payment obligation from Middlemount whilst there is a current balance in the revolver loans.
As at 31 December 2021 there is no outstanding balance in the Middlemount revolver loan. Subsequent to year end this royalty
receivable has been settled.
The Group does not hold any collateral over these balances. Management closely monitors the credit quality of trade receivables
and considers the balance that are neither past due or impaired to be of good quality.
(b) Foreign exchange and interest rate risk
Information about the Group’s exposure to foreign currency risk and interest rate risk in relation to trade and other receivables is
provided in Note D7.
(c) Fair value and credit risk
Due to the nature of these receivables, their carrying amount is assumed to approximate their fair value.
The maximum exposure to credit risk at the end of the reporting period is the carrying amount of each class of receivables
mentioned above. Refer to Note D7 for more information on the risk management policy of the Group and the credit quality
of the Group’s trade receivables.
80
80
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C9 Inventories
Accounting policy
Coal stocks are stated at the lower of cost and net realisable value. Costs are assigned on a weighted average basis and include direct materials, direct labour and
an appropriate proportion of variable and fixed overheads on the basis of normal mining capacity. Net realisable value is the estimated selling price in the ordinary
course of business less the estimated costs of completion and the estimated costs necessary to make the sale.
Inventories of auxiliary materials, spare parts, small tools, and fuel expected to be used in production are stated at weighted average cost after deducting rebates,
discounts, less an allowance, if necessary, for obsolescence.
Coal – at lower of cost or net realisable value
Tyres and spares – at cost
Fuel – at cost
(a) Inventory expense
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
142
118
4
264
197
111
4
312
Write downs of inventories to net realisable value recognised as a provision at 31 December 2021 amounted to $8 million (2020:
$14 million). The movement in the provision has been included in “Changes in inventories of finished goods and work in progress”
in the profit or loss.
C10 Royalty receivable
Accounting policy
The royalty receivable is revalued at each reporting period based on expected future cash flows that are dependent on sales volumes, price changes and fluctuations
in foreign exchange rates. Gains or losses arising from changes in the re-measurement of the fair value of the royalty receivable are recognised in profit or loss. The
cash and accrued receipts are recorded directly in other revenue in profit or loss.
Critical accounting estimates and judgements
The fair value of the royalty receivable is estimated based on expected future cash flows that are dependent on sales volumes, price changes and fluctuations in
foreign exchange rates.
Opening balance
Re-measurement of royalty receivable
Split between:
Current
Non-current
Total
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
217
4
221
23
198
221
226
(9)
217
16
201
217
A right to receive a royalty of 4% of Free on Board Trimmed sales from the Middlemount mine was acquired as part of the merger
with Gloucester Coal Ltd in 2012. This asset has been determined to have a finite life being the life of the Middlemount Mine and
is measured on a fair value basis.
(a) Risk exposure and fair value measurements
Information about the Group’s exposure to price risk, foreign exchange risk and methods and assumptions used in determining
fair value of the royalty receivable is provided in Note D7.
81
81
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
C11 Trade and other payables
Accounting policy
Refer to Note F6(b) for detailed policies in relation to recognition, classification, measurement and derecognition of trade and other payables.
Liabilities for payroll costs payable include employee benefits for wages, salaries, annual leave and accumulating sick leave that are expected to be wholly settled
within 12 months of the reporting date and based on the undiscounted present obligations resulting from employees’ services provided to the reporting date
including related on costs, such as superannuation, workers compensation, insurance and payroll tax. Employee benefits payable later than 12 months have been
measured at the present value of the estimated future cash outflows to be made for those benefits using corporate bond rates with terms that match the expected
timing of cash out flows. In determining the liability, consideration is given to employee salary and wage increases and the probability that the employee may satisfy
any vesting requirements.
Trade payables
Payroll costs payable
Interest payable
Other payables
The following is an aging analysis of trade payables based on the invoice dates at the reporting date:
0-90 days
91-180 days
181-365 days
Over 1 year
Total
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
458
136
127
22
743
414
127
99
38
678
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
453
5
–
–
458
412
1
1
–
414
The average credit period for trade payable is 90 days. The Group has financial risk management policies in place to ensure that
all payables are within the credit timeframe.
C12 Provisions
Accounting policy
Provisions are:
•
recognised when the Group has a legal or constructive obligation as a result of a past event, it is probable that cash will be required to settle the obligation, and
the amount can be reliably estimated.
• measured at the present value of management’s best estimate at reporting date of the cash outflow required to settle the obligation.
Provisions are determined by discounting the expected future cash flows at a pre-tax discount rate that reflects current market assessments of the time value of
money and the risks specific to the liability where the time value is material. Any increase in the provision due to the passage of the time is recognised as an interest
expense.
2021
Opening net book amount
Charged / (credited) to profit or loss
– unwinding of discount
– release of the provision
– utilisation of provisions
Increase of provisions
Re–measurement of provisions
Closing net book amount
Split between
Current
Non-current
Total
82
82
EMPLOYEE
BENEFITS
$M
REHABILITATION
$M
TAKE OR PAY
$M
SALES
CONTRACT
PROVISION
$M
OTHER
PROVISIONS
$M
95
–
(2)
–
–
–
93
5
88
93
631
18
–
(27)
105
–
727
–
727
727
22
1
(9)
–
–
–
14
4
10
14
47
2
(6)
–
–
–
43
8
35
43
43
–
(1)
–
–
33
75
–
75
75
TOTAL
$M
838
21
(18)
(27)
105
33
952
17
935
952
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
PROVISION
Employee benefits
DESCRIPTION
The provision for employee benefits represents long service leave entitlements and other incentives
accrued by employees.
Long service leave payments are made monthly to the Coal Mining Industry (Long Service Leave Funding)
Corporation based on the eligible monthly payroll of employees involved in the mining of black coal.
Reimbursement is sought from the fund when long service leave is paid to employees involved in the
mining of black coal. An asset for the amount recoverable from the Coal Mining Industry (Long Service
Leave Funding) Corporation is recognised in trade and other receivables.
Rehabilitation costs Mining lease agreements and exploration permits impose obligations on the Group to rehabilitate areas
where mining activity has taken place. Rehabilitation of these areas is ongoing and in some cases will
continue past the life of a mine. The provision for rehabilitation costs has been calculated based on the
present value of the future costs expected to be incurred in restoring affected mining areas, assuming
current technologies.
Key estimate and judgement:
The rehabilitation provision has been created based on managements’ internal estimates and assumptions
relating to the current economic environment, which management believes is a reasonable basis upon
which to estimate the future liability.
These estimates are reviewed regularly to take into account any material changes to the assumptions,
however actual rehabilitation costs will ultimately depend upon the future market prices for the necessary
decommissioning works (including technology changes which are inherently uncertain) and the timing of
when the rehabilitation costs are incurred. Timing is dependent upon when the mines cease to produce
at economically viable rates, which in turn, will depend upon future coal prices, which are inherently
uncertain.
In acquiring part of a business or operation, an assessment is made on the fair value of the assets and
liabilities under AASB 3 Business Combinations. Take or pay is the assessment of forecast excess capacity
for port and rail contracts. A provision is recognised for the discounted estimated excess capacity.
The provision has a finite life and will be released to profit or loss over the period in which excess capacity
is realised.
Key estimate and judgement:
The provision is recognised and estimated based on management’s assessment of contracted port capacity
versus forecast usage. This involves making assumptions about the probability, amount and timing of an
outflow of resources embodying economic benefits.
In acquiring part of a business or operation, an assessment is made on the fair value of the assets and
liabilities under AASB 3 Business Combinations. The sales contract provision is the assessment of a coal
supply and transportation agreement to supply coal to BLCP Power Limited in Thailand at below market
prices. A provision was recognised in 2017 for the discounted estimated variance between contract and
market prices. The provision has a finite life and will be released to profit or loss over the contract term.
Key estimate and judgement:
The provision is recognised and estimated based on management’s assessment of future market prices.
The provision includes marketing services fee payable to Noble Group Limited deemed above market
norms in 2012 and contingent royalties payable to Rio Tinto assessed as part of the Coal & Allied Industries
Ltd (“Coal & Allied”) acquisition in 2017 which will be amortised over the contract terms, and make good
provisions to cover the cost to ‘make good’ any hired equipment, in case any major overhaul costs are incurred
at the end of the lease period.
Key estimate and judgement:
The provision is recognised and estimated based on management’s assessment of future market prices
of coal.
Take or pay
Sales contract
Other provisions
83
83
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D CAPITAL STRUCTURE AND FINANCING
The ability of the Group to fund the investment in its ongoing activities, invest in new opportunities and meet current
commitments is dependent on available cash and access to third party capital. This section contains disclosure on interest-bearing
liabilities, contingencies, financial risk management, reserves, share-based payments and contributed equity that are required to
finance the Group’s activities.
D1 Interest-bearing liabilities
Accounting policy
(i) Interest-bearing liabilities
Interest-bearing liabilities (excluding financial guarantees) are initially recognised at fair value, net of transaction costs. They are subsequently measured at amortised
cost using the effective interest rate method. US dollar interest-bearing loans are designated as a hedge instrument in a cash flow hedge (refer to note D7). Refer to
Note F6(b) for detailed policies in relation to recognition, classification, measurement and derecognition of interest-bearing liabilities.
(ii) Leases
For capitalised leases the corresponding minimum lease payments are included in lease liabilities. Each lease payment is allocated between finance cost and a
reduction in the outstanding lease liability. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on
the remaining balance of the liability for each period.
Current
Lease liabilities
Bank loans
Non-current
Lease liabilities
Bank loans
Bonds from related parties
Unsecured loans from related parties (i)
Total interest-bearing liabilities
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
32
34
66
99
1,598
–
1,672
3,369
3,435
41
455
496
80
1,564
1,006
1,059
3,709
4,205
(i) Included are unsecured interest bearing loans of $883 million (2020: $1,059 million) from majority shareholder Yankuang Energy and $789 million (2020: nil) from
ultimate parent Shandong Energy. Terms and conditions is detailed in Note D1(c) below.
Reconciliation of liabilities arising from financing activities
Opening balance at 1 January 2021
Additions
Repayments
Transaction costs capitalised
Initial revaluation of loan from Shandong Energy
Unwind of interest expenses and costs
Foreign exchange movements
Closing balance at 31 December 2021
LEASE
LIABILITIES
$M
LOANS FROM
RELATED
PARTIES
$M
BANK LOANS
$M
121
44
(42)
–
–
8
–
131
1,059
1,019
(232)
–
(309)
30
105
1,672
2,019
464
(958)
(4)
–
6
105
1,632
BONDS
$M
1,006
–
(1,019)
–
–
–
13
–
84
84
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(a) Bank loans
The bank loans are made up of the following facilities:
Secured bank loans
Syndicated Facility (i)*
Syndicated Term Loan (ii)
Unsecured bank loan
Working capital facility (iii)
31 DECEMBER 2021
31 DECEMBER 2020
FACILITY US
$M
FACILITY
$M
UTILISED
$M
FACILITY
$M
UTILISED
$M
869
333
50
1,252
1,198
459
69
1,726
1,198
459
–
1,657
1,655
390
65
2,110
1,655
390
–
2,045
*
Facility balance excludes transaction costs of AU$24 million (31 December 2020: AU$26 million).
i. Syndicated Facility
On 8 July 2020 the Syndicated Facility was refinanced with a new agreement and syndication of banks. Repayments are US$25
million each due after six months, the first, second and third anniversary with the balance split over the fourth and fifth
anniversary. During 2021 US$406 million was repaid reducing the facility to US$869 million (31 December 2020 facility amounted
to US$1,275 million). Once the facility has been repaid it can not be redrawn.
Security is held over these loans in the form of a corporate guarantee issued by the Company’s majority shareholder, Yankuang
Energy Group Company Limited (“Yankuang Energy”), formerly known as Yanzhou Coal Mining Co Limited, for the full amount of
the facility in return for a 1.5% guarantee fee.
The new Syndicated Facility includes the following financial covenants that remain the same as compared to 31 December 2020 to
be tested half-yearly:
a. The interest cover ratio is greater than 1.40;
b. The gearing ratio of the Group will not exceed 0.75; and
c. The consolidated net worth of the Group must be greater than AU$3,000 million.
The calculation of the above covenants include certain exclusions with regard to unrealised gains and losses including foreign
exchange gains and losses.
The Syndicated Facility include the following minimum balance requirements to be satisfied daily and at each end of month:
a. The Company is to maintain in the Lender Accounts an aggregate daily average balance of not less than US$25 million, this is
tested at the end of each month, and;
The Company is to maintain in the Lender Accounts an aggregate end of month balance of not less than US$50 million.
b.
There was no breach of covenants at 31 December 2021.
ii. Syndicated Term Loan
On 23 August 2021, the Syndicated Term Loan has been refinanced with a new agreement, provided from a syndicate of six
international banks, with US$333 million in total of which US$301 million will mature in August 2024 and US$32 million will
mature in August 2026.
The Syndicated Term Loan is secured by the assets of the aggregated group of Yancoal Resources Ltd and Coal & Allied Industries
Ltd with an assets carrying value of $7,392 million.
The Syndicated Term Loan includes the following financial covenants based on the aggregated results of Yancoal Resources Ltd
Group and Coal & Allied Group to be tested half-yearly:
a. The interest cover ratio is greater than 5.0 times;
b. The finance debt to EBITDA ratio is less than 3.0 times; and
The net tangible assets is greater than AU$1,500 million.
c.
iii Working capital facility
On 1 June 2020 the Company entered into a general purpose working capital facility with an international bank on an unsecured
basis with an annual review. No amounts were drawn on the facility as at 31 December 2021 (The drawn balance at 31 December
2020 was less than $1 million).
The financial covenants match the Syndicated Facility. There was no breach of covenants at 31 December 2021.
85
85
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(b) Bank guarantee facilities
Yancoal are party to the following bank guarantee facilities which have been issued for operational purposes in favour of port,
rail, government departments and other operational functions:
PROVIDER
Syndicate of nine Australian and
international banks*
Total
AU
$M
975
975
UTILISED AU
$M SECURITY
Secured by the assets of the consolidated groups of Yancoal Resources Ltd and Coal &
Allied Industries Ltd with carrying value of $7,392 million. Facility expires on 3 June 2023.
875
875
* The Syndicated Bank Guarantee Facility was extended on 3 June 2020 for a three year term with a new syndicate group of banks.
The Syndicated Bank Guarantee Facility includes the same financial covenants as the Syndicated Term Loan.
(c) Unsecured loans from related parties
In December 2014, the Company successfully arranged two long term loan facilities from its majority shareholder, Yankuang
Energy repayable on 31 December 2024.
•
Facility 1: AU$1,400 million – the purpose of the facility is to fund working capital and capital expenditure. The facility can be
drawn in both AUD and USD. During the period, US$175 million has been repaid (31 December 2020: NIL). At 31 December
2021 US$398 million (AU$548 million) was drawn (31 December 2020: US$573 million (AU$744 million)).
Facility 2: US$243 million – initially the facility totalled US$807 million with the purpose of the facility being to fund the
coupon payable on subordinated capital notes. On 31 January 2018 all remaining SCN’s were redeemed limiting the facility
to the current drawn amount US$243 million. During the period no amount has been drawn down or repaid. In total US$243
million (AU$335 million) was drawn as at 31 December 2021 (31 December 2020 US$243 million (AU$315 million)).
•
Both the facilities have a term of ten years (with the principal repayable at maturity, 31 December 2024) and are provided on an
unsecured and subordinated basis with no covenants.
The terms of the US$775 million loan from Shandong Energy are as follows:
On 31 March 2021 the Group successfully refinanced the Watagan Bonds where the ultimate parent, Shandong Energy, provided
the Group a US$775 million unsecured and subordinated loan. The loan matures on 16 December 2026. During the period, no
principal repayments have been made on this loan.
A revaluation to fair value of the loan was performed at inception. This loan has an interest rate of 4.65% which is significantly
below normal commercial terms. The implicit discount, between the agreed interest rate and determined arms length commercial
interest rate of the loan, (if the loan was made by a financier that was not a related party) 12%, was recognised as an increase
to other contributed equity. The revaluation of the loan is released through interest expense in the profit and loss using the
effective interest method over the life of the loan. As at 31 December 2021 the total outstanding loan (net of discounted equity
contribution) amounts to $789 million (US$563 million).
(d) Bonds
On 16 December 2020 the Group reconsolidated Watagan Mining Company Pty Ltd and its subsidiaries and as disclosed in
Note E2, the Group acquired US$775 million of bonds payable to external financiers. The financiers were Industrial Bank Co.
Ltd US$550 million, Yankuang Group (Hong Kong) Ltd US$200 million and United NSW Energy US$25 million. A commercial
arrangement was entered into between Shandong Energy (the Group’s ultimate parent company, formerly known as Yankuang)
and the financiers whereby Shandong Energy provided a new loan facility of US$775 million to the Group which was used to
refinance all the bonds on 31 March 2021.
86
86
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D2 Contributed equity
Accounting policy
An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Costs directly attributable to the
issue of new shares, options or other equity instrument are shown as a deduction from the equity proceeds, net of any income tax benefit. Costs directly attributable
to the issue of new shares or options associated with the acquisition of a business are included as part of the purchase consideration. Refer to Note F6(b)(ii) for
detailed policies in relation to recognition, classification and measurement of contributed equity.
(a) Contributed equity
(i) Share capital
Ordinary shares
(ii) Other equity securities
Contingent value right shares
Related party loan contribution (i)
Total contributed equity
31 DECEMBER
2021
NUMBER
31 DECEMBER
2020
NUMBER
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
1,320,439,437
1,320,439,437
6,219
6,219
263
216
479
6,698
263
–
263
6,482
i. Related party loan contribution
On 31 March 2021 Shandong Energy the Group’s ultimate parent, (formerly known as Yankuang) provided a US$775 million loan
to the Group in order for the Group to redeem an equal amount of external bonds on issue. Using the effective interest method
a revaluation to fair value the loan from Shandong Energy was performed at inception. The revaluation took into account the
implicit discount between the determined arms length commercial interest rate of the loan if the loan was made by a financier
that was not a related party, of 12%, and the actual interest rate. The difference is recognised as an increase to other contributed
equity reflecting the contribution made to the Group through the implicit support provided by Shandong Energy. The revaluation
of the loan is released through interest expense in the profit and loss using the effective interest method over the life of the loan.
Key accounting estimate and judgement:
In determining the expected commercial borrowing rate that is expected to be payable if the loan was made by a financier that was not a related party requires
significant judgement in formulating the estimate as there are limited observable comparable transactions.
(b) Ordinary shares
Ordinary shares entitle the holder to participate in dividends and the proceeds on winding up of the Company in proportion to
the number of and amounts paid on the shares held.
On a show of hands, every holder of ordinary shares present at a meeting in person or by proxy, is entitled to one vote, and upon
a poll each share is entitled to one vote.
Ordinary shares have no par value and the Company does not have a limited amount of authorised capital. There were no changes
in ordinary shares in the reporting periods.
(c) Contingent value right shares
The contingent value right (“CVR”) shares were repurchased on 4 March 2014 for cash of $263 million representing the market
value of $3.00 cash per CVR share.
(d) Capital risk management
Total capital comprises total equity as shown on the balance sheet plus total interest bearing liabilities less cash and cash
equivalents. The Group’s primary objectives when managing capital are to ensure the continued ability to provide a consistent
return for equity stakeholders through a combination of capital growth and distributions and to maintain an optimal capital
structure to reduce the cost of capital. In order to achieve these objectives, the Group seeks to maintain a debt to debt plus
equity ratio (gearing ratio) that balances risks and returns at an acceptable level and also to maintain a sufficient funding base to
enable the Group to meet its working capital and strategic investment needs. In order to maintain or adjust the capital structure,
the Group may adjust the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or other
equity instruments, repay debt or draw down additional debt.
87
87
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The gearing ratios at the reporting dates were as follows:
Total interest-bearing liabilities
Less: cash and cash equivalents
Net debt
Total equity
Total capital
Gearing ratio
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
3,435
(1,495)
1,940
6,146
8,086
4,205
(637)
3,568
5,193
8,761
24.0%
40.7%
Refer to Note D1 for the Group’s compliance with the financial covenants of its borrowing facilities.
D3 Share-based payments
Accounting policy
Refer to Note B4(iii) for the accounting policy on share-based payments.
Participation in the share-based payment program (Long Term Incentive Program, “LTIP”) by the issuing of rights is limited
to Senior Executives of the Group. All rights are redeemable on a one-for-one basis for the Group’s shares, subject to the
achievement of certain performance hurdles. Dividends are not payable on rights. For more information on the operation of the
LTIP refer to the remuneration report.
Outlined below are the rights that are on issue as at 31 December 2020 and 31 December 2021.
DETAILS
Management performance rights
2018 LTIP
2019 LTIP (i)
2020 LTIP
Balance at 31 December 2020
2019 LTIP
2020 LTIP
2021 LTIP
Balance at 31 December 2021
Balance at beginning of the year
Granted
2018 LTIP paid in cash
LTIP rights lapsed
Forfeited during the year (ii)
Balance at the end of year
DATE OF
MEASUREMENT/GRANT
NUMBER OF
RIGHTS*
DATE OF
EXPIRY
CONVERSION
PRICE
($)
30 May 2018
1 January 2019
1 January 2020
1 January 2019
1 January 2020
1 January 2021
383,135
591,960
2,459,845
3,434,940
1 January 2021
1 January 2022
1 January 2023
591,960
1 January 2022
2,115,455
2,870,651
5,578,066
1 January 2023
1 January 2024
Nil
Nil
Nil
Nil
Nil
Nil
2021 NO. OF
RIGHTS
2020 NO. OF
RIGHTS
3,434,940
2,870,651
(153,254)
(229,881)
(344,390)
5,578,066
3,599,839
2,591,655
–
–
(2,756,554)
3,434,940
(i) 2019 LTIP is still on issue and expected to be completed in first half 2022.
(ii)
In 2021 the Chairman of the Executive Committee forfeited his 2020 LTIP right 2018 allocation. In 2020 certain executives including Chief Executive Officer,
Chief Financial Officer and Chairman of Executive Committee resigned and previously allocated LTIP performance rights were forfeited upon their departure.
88
88
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Fair value of performance rights granted
The fair value of the LTIP performance rights has been determined using the following assumptions:
Number of performance rights issued
Number of performance right on issue
Grant date (b)
Average share price at grant date ($)
Expected dividend yield
Vesting conditions
Value per performance right ($)
2021
LTIP
2,870,651
2,870,651
2020
LTIP
2,591,655
2,115,455
2019
LTIP
2,161,669
591,960
1 January 2021
1 January 2020
1 January 2019
2.45
8%
(a)
1.94
2.86
8%
(a)
2.23
3.35
8%
(a)
2.66
There are a maximum of 5,578,066 shares available for issue, which, if issued as new shares, would represent 0.4% of share capital
in issue at 31 December 2021 (31 December 2020: 3,434,940 shares representing 0.3% of share capital).
The LTIP has been valued using the volume weighted average price of Yancoal’s ordinary shares across a 20 day trading period
around the grant date.
a. The LTIP performance rights will vest dependent upon the outcome of cost and earnings per share targets. The rights are split
40% and 60% respectively to these conditions.
b. The current Chief Executive Officer and Chair of the Executive Committee’s performance rights were granted on 28 May 2021
after approval by shareholders at the AGM with a commencement date of 31 December 2020. All other senior executives
were granted on 1 January 2021.
D4 Dividends
(a) Dividends
Final dividend for 2019 paid on 30 April 2020
2021
2020
CENTS PER
SHARE
–
TOTAL
AU$’M
–
CENTS PER
SHARE
21.21
TOTAL
AU$’M
280
There were no final dividend paid for 2020 or an interim dividend paid for 2021.
On 28 February 2022, the Directors declared an unfranked dividend of $930 million, comprising a $0.5000 per share final dividend
and a $0.2040 per share special dividend, both with a record date of 16 March and payment date of 29 April 2022.
(b) Franking credits
Franking credits available for subsequent reporting periods based on an income tax rate of 30% (2020 – 30%)
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
25
20
The above amounts are calculated from the balance of the franking account as at the end of the reporting year, adjusted for
franking credits and debits that will arise from the settlement of liabilities or receivables for income tax and dividends after the
end of the year.
a.
franking credits that will arise from the payment of the amount of the provision for income tax and franking debits that will
arise as a result of refunds of tax that are reflected in the current tax receivable balance at the reporting date;
b. franking debits that will arise from the payment of dividends recognised as a liability at the reporting date, and
franking credits that will arise from the receipt of dividends recognised as receivables at the reporting date.
c.
89
89
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D5 Reserves
Accounting policies
(i) Hedging reserve
When a financial instrument is designated as a cash flow hedging instrument, the effective portion of changes in the fair value of the hedging instrument are
recognised in other comprehensive income and accumulated in the hedging reserve until the anticipated underlying transaction occurs. Any ineffective portion of
changes in the fair value of the hedging instrument is recognised immediately in profit or loss.
If the hedging instrument no longer meets the criteria for hedge accounting, or is sold, terminated or expires, any accumulated gain or loss remains in equity until
the forecast transaction is ultimately recognised in profit or loss. If the forecast transaction is no longer expected to occur, then the amount accumulated in equity is
immediately recognised in profit or loss.
(ii) Employee compensation reserve
Shares held by the Group sponsored Employee Share Plan Trust are recognised as treasury shares and deducted from equity.
The fair value of equity plans granted is recognised in the employee compensation reserve over the vesting period. This reserve will be reversed against treasury
shares when the underlying shares vest and transfer to the employee at the fair value. The difference between the fair value at grant date and the amount received
against treasury shares is recognised in retained earnings (net of tax).
(a) Reserve balances
Hedging reserve
Employee compensation reserve
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
(192)
4
(188)
(137)
3
(134)
(b) Hedging reserve
The hedging reserve is used to record gains or losses on cash flow hedges that are recognised directly in equity through other
comprehensive income.
The closing balance relates to the effective portion of the cumulative net change in the fair value of the natural cash flow hedge
using the US dollar denominated interest-bearing liabilities to hedge against future coal sales.
MOVEMENTS
Hedging reserve – cash flow hedges
Opening balance
Fair value (losses) / gains recognised on USD interest bearing liabilities
Fair value losses recycled to profit or loss
Deferred income tax benefit / (expense)
Closing balance
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
(137)
(232)
153
24
(192)
(489)
309
194
(151)
(137)
If interest-bearing liabilities that are a natural hedge to future coal sales are repaid prior to the original designated date the
hedge gain/loss incurred prior to repayment will be released to the profit or loss in line with the original sales to which they were
designated. This has resulted in the following pre-tax release profile as at 31 December 2021:
Hedge loss to be recycled in future periods
Of which:
Hedges related to loans repaid prior to designated
repayment date
Hedges related to loans yet to be repaid
Deferred income tax benefit
Closing balance
2022
$M
237
238
(1)
2023
$M
(2)
–
(2)
2024
$M
6
40
(34)
2025
$M
(38)
–
(38)
2026
$M
71
–
71
TOTAL
$M
274
278
(4)
274
(82)
192
(c) Employee compensation reserve
During the period the movements related to any 2021 additional performance rights issued or forfeited as disclosed in Note D3
and new awards of performance rights were made during the period.
90
90
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D6 Contingencies
Contingent liabilities
The Group had contingent liabilities at 31 December 2021 in respect of:
(i) Bank guarantees
Parent entity and Group
Performance guarantees provided to external parties
Guarantees provided to government departments as required by statute
Joint ventures (equity share)
Performance guarantees provided to external parties
Guarantees provided to government departments as required by statute
Guarantees held on behalf of related parties (refer to Note E3(f) for details of beneficiaries)
Performance guarantees provided to external parties
Guarantees provided to government departments as required by statute
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
133
108
241
151
393
544
86
4
90
875
134
107
241
153
321
474
90
4
94
809
Refer to note E2(c)(iii) for commitments and contingent liabilities of the Group’s associates and joint ventures.
(ii) Letter of Support provided to Middlemount Coal Pty Ltd
The Company has issued a letter of support dated 4 March 2015 to Middlemount Coal Pty Ltd (“Middlemount”), a joint venture of
the Group confirming:
•
it will not demand the repayment of any loan due from Middlemount, except to the extent that Middlemount agrees
otherwise or as otherwise provided in the loan agreement; and
it will provide financial support to Middlemount to enable it to meet its debts as and when they become due and payable,
by way of new shareholder loans in proportion to its share of the net assets of Middlemount.
•
This letter of support will remain in force whilst the Group is a shareholder of Middlemount or until notice of not less than
12 months is provided or such shorter period as agreed by Middlemount.
(iii) Other contingencies
A number of claims have been made against the Group, including in respect of personal injuries, and in relation to contracts which
Group members are party to as part of the Group’s day to day operations. The personal injury claims which have been made
against the Group have largely been assumed by the insurers of the Group under the Group’s insurance policies. The Directors do
not believe that the outcome of these claims will have a material impact on the Group’s financial position.
91
91
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
D7 Financial risk management
The Group’s activities expose it to a variety of financial risks: market risk (including foreign exchange risk, price risk and interest
rate risk), credit risk and liquidity risk. The Group’s overall risk management program focuses on the unpredictability of financial
markets and seeks to minimise potential adverse effects on the financial performance of the Group. The Group uses derivative
financial instruments such as foreign exchange contracts to hedge certain risk exposures. Derivatives are exclusively used for
hedging purposes and not as speculative instruments. The Group uses different methods to measure different types of risk to
which it is exposed. These methods include sensitivity analysis in the case of foreign exchange, interest rate risk and other price
risks, and aging analysis for credit risk.
The Group holds the following financial instruments:
i. Cash and cash equivalents;
ii. Trade and other receivables (including WIPS);
iii. Trade and other payables;
iv. Interest-bearing liabilities, including bank loans and leases;
v. Available-for-sale investments;
vi. Royalty receivable; and
vii. Derivative financial instruments.
Financial assets
Cash, loans and receivables – amortised cost
Cash and cash equivalents
Trade and other receivables
Assets at fair value through profit and loss
Royalty receivable
Financial liabilities
Amortised cost
Trade and other payables
Interest-bearing liabilities
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
1,495
946
221
2,662
751
3,435
4,186
637
569
217
1,423
684
4,205
4,889
The Board of Directors has overall responsibility for determining risk management objectives and policies and risk management is
carried out by the Group Audit and Risk Management department along with the Group Treasury department. The Board provides
written principles for overall risk management, as well as policies covering specific areas such as the use of derivative financial
instruments to mitigate foreign exchange risk. These derivative instruments create an obligation or right that effectively transfers
one or more of the risks associated with an underlying financial instrument, asset or obligation.
The overall objective of the Board is to set policies that seek to reduce risk and volatility in financial performance without unduly
affecting competitiveness and flexibility. Further details regarding these policies are set out below.
(a) Market risk
Market risk is the risk that changes in market prices, such as foreign exchange rates, interest rates, securities prices, and coal
prices, will affect the Group’s income or the value of its holdings of financial instruments.
(i) Foreign exchange risk
The Group operates entirely in Australia and its costs are primarily denominated in its functional currency, the Australian dollar.
Export coal sales are denominated in US dollars and a strengthening of the Australian dollar against the US dollar has an adverse
impact on earnings and cash flow settlement. Liabilities for some plant and equipment purchases and loans are denominated
in currencies other than the Australian dollar and a weakening of the Australian dollar against other currencies has an adverse
impact on earnings and cash flow settlement.
The hedging policy of the Group aims to protect against the volatility of cash expenditures or reduced collection in the above
mentioned transactions as well as to reduce the volatility of profit or loss for retranslation of US dollar denominated loans at each
period end.
92
92
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Hedging through bank issued instruments
Operating foreign exchange risk that arises from firm commitments or highly probable transactions are managed through the use
of bank issued forward foreign currency contracts. The Group hedges a portion of contracted US dollar sales receivables and asset
purchases settled in foreign currencies in each currency to mitigate the adverse impact on cash flow due to the future rise or fall
in Australian dollars against the relevant currencies.
The effective portion of changes in the fair value of derivatives that are designated and qualify as cash flow hedges is recognised
in Other Comprehensive Income in the hedging reserve until the anticipated underlying transaction occurs. Once the anticipated
underlying transaction occurs, amounts accumulated in equity are recycled through the profit or loss or recognised as part of
the cost of the asset to which it relates. The ineffective portion of changes in the fair value of derivatives that are designated and
qualify as cash flow hedges is recognised immediately in the profit or loss. In the current period, the loss relating to the ineffective
portion was $nil (2020: $nil).
Natural cash flow hedge
The Group currently does not use bank issued instruments to hedge foreign exchange risks in respect of US dollar denominated
loans, however, the scheduled repayment of the principal on US dollar loans is designated to hedge the cash flow risks on the
portion of forecast US dollar sales that are not hedged through bank issued instruments (“natural cash flow hedge”). US dollar
loan repayments up to a six-month period are designated to hedge the forecast US dollar sales during the same period after the
designation of the hedge relationship based on a dollar for dollar basis until the hedge ratio reaches one.
Hedging effectiveness is determined by comparing the changes in the hedging instruments and hedged sales. Hedge
ineffectiveness will occur when cash flows generated by sales transactions are lower than the forecast sales transaction. In cases
of hedge ineffectiveness, gains or losses in relation to the excess portion in the foreign exchange movement of the designated
US dollar loan repayment will be recycled to profit or loss. The effective portion of changes in the hedging instruments will
be recognised in the cash flow hedge reserve in Other Comprehensive Income. When the sales transactions occur, amounts
accumulated in equity are recycled through the profit or loss as an increase or decrease to sales revenue.
Royalty receivable
The royalty receivable from the Middlemount Joint Venture is estimated based on expected future cash flows that are dependent
on sales volumes, US dollar denominated coal prices and the US dollar foreign exchange rate (refer to Note C10).
The Group’s exposure to foreign currency risk at the end of the reporting period, expressed in Australian dollars, was as follows:
Cash and cash equivalents
Trade and other receivables
Other assets
Royalty receivable
Trade and other payables
Interest-bearing liabilities
Net Exposure
31 DECEMBER
2021
US $M
31 DECEMBER
2020
US $M
525
565
–
221
(237)
(3,608)
(2,534)
446
200
5
217
(154)
(4,111)
(3,397)
Sensitivity
The following table summarises the sensitivity of the Group’s financial assets and liabilities to a reasonable possible change in
the US dollar exchange rate. The Group’s exposure to other foreign exchange movements is not material. The Group has used the
observed range of actual historical rates for the preceding five year period, with a heavier weighting placed on recently observed
market data, in determining reasonably possible exchange movements to be used for the current year’s sensitivity analysis. Past
movements are not necessarily indicative of future movements. A 10% depreciation/appreciation of the Australian dollar against
the US dollar would have increased/(decreased) equity and profit or loss after tax by the amounts shown below. This analysis
assumes that all other variables remain constant.
93
93
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
2021
Cash and cash equivalents
Trade and other receivables
Royalty receivable
Total increase / (decrease) in financial assets
Trade and other payables
Interest-bearing liabilities
Total (increase) / decrease in financial liabilities
Total increase / (decrease) in profit after tax and equity
2020
Cash and cash equivalents
Trade and other receivables
Royalty receivable
Total increase / (decrease) in financial assets
Trade and other payables
Interest-bearing liabilities
Total (increase) / decrease in financial liabilities
Total (decrease) / increase in profit after tax and equity
10% DEPRECIATION OF AUD/USD
10% APPRECIATION OF AUD/USD
PROFIT AFTER
INCOME TAX
$M
EQUITY
$M
PROFIT AFTER
INCOME TAX
$M
EQUITY
$M
41
44
19
104
(18)
–
(18)
86
35
15
19
69
(12)
(78)
(90)
(21)
–
–
–
–
–
(281)
(281)
(281)
–
–
–
–
–
(241)
(241)
(241)
(33)
(36)
(16)
(85)
15
–
15
(70)
(28)
(12)
(19)
(59)
10
64
74
15
–
–
–
–
–
230
230
230
–
–
–
–
–
198
198
198
Equity movements above reflect movements in the hedge reserve due to foreign exchange movements on designated USD
interest bearing loans.
(ii) Price risk
The price risk of the Group include coal price risk.
The Group does not enter into commodity contracts other than to meet the Group’s expected usage and sales requirements,
such contracts are not settled net. The royalty receivables from Middlemount is exposed to fluctuations in coal price. The Group
currently does not have any derivative hedges in place against the movement in the spot coal price. Refer to Note D8(d)(iii) for the
royalty receivable coal price sensitivity analysis.
Coal sales are predominately provisionally priced initially. Provisionally priced sales are those for which price finalisation,
referenced to the relevant index, is outstanding at the reporting date. Provisional pricing mechanisms embedded within these
sales arrangements have the character of a commodity derivative and are carried at fair value through profit and loss as part of
trade receivables. The final sales price is determined normally 7 to 90 days after delivery to the customer. At 31 December 2021
there are $143 million of provisionally priced sales (31 December 2020: $50 million). If coal prices were to increase by 10.0%
provisionally priced sales would increase by $14 million (31 December 2020: $5 million).
(iii) Interest rate risk
The Group is subject to interest rate risk that arises from borrowings, cash and cash equivalents and interest-bearing loan to
associate. Generally, no variable interest is receivable or payable on the Group’s trade and other receivables or payables where
applicable as they are fixed in nature and therefore they are not exposed to the interest rate risk.
The Group’s cash flow interest rate risk for assets primarily arises from cash at bank and deposits subject to market bank rates.
As at 31 December 2021, two US$ bank facilities (the Syndicated Facility and the Syndicated Term Loan) are subject to USD LIBOR-
linked interest rates. All other facilities have fixed interest rates. In response to the interest rate benchmark reform, the Group has
adopted screen rate replacement provisions with reference to the Asia Pacific Loan Market Association (APLMA) loan agreement
template. Transition trigger event will happen in accordance with the loan agreements on or before 30 June 2023.
The Group is also committed not to sign any new contracts with LIBOR component on and from 31 December 2021. Extensive
discussions with internal and external stakeholders are ongoing to manage the risks with the market evolvement.
94
94
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
The Group’s exposure to interest rate risk and the weighted average interest rate is set out as below:
Cash and cash equivalents
Bank loans and other borrowings
31 DECEMBER 2021
31 DECEMBER 2020
WEIGHTED
AVERAGE
INTEREST RATE
%
0.4
3.3
WEIGHTED
AVERAGE
INTEREST RATE
%
0.4
6.0
BALANCE
$M
1,495
1,657
BALANCE
$M
637
2,045
Sensitivity
A reasonable possible movement in interest rates would not cause a material impact on profit or loss.
(b) Credit risk
Credit risk refers to the risk that a counterparty will default on its contractual obligations resulting in financial loss to the Group.
As at 31 December 2021 the Group’s maximum exposure to credit risk which will cause a financial loss to the Group due to failure
to discharge an obligation by the counterparties and financial guarantees provided by the Group is arising from the carrying
amount of the respective recognised financial assets as stated in the Consolidated Balance Sheet and the amount of contingent
liabilities in relation to financial guarantees issued by the Group as disclosed in Note D6.
In order to minimise credit risk, the management of the Group has delegated a team responsible for determination of credit
limits, credit approvals and other monitoring procedures to ensure that follow-up action is taken to recover overdue debts. In
addition, the Group reviews the recoverable amount of each individual trade debt at the end of the reporting period to ensure
that adequate impairment losses are made for irrecoverable amounts. In this regard, the Directors consider that the Group’s
credit risk is significantly reduced. The Group maintains its cash and cash equivalents with reputable banks. Therefore, the
Directors consider that the credit risk for such amounts are minimal.
In assessing the Expected Credit Losses (“ECL”) of trade receivables management assesses historical write offs of trade
receivables, ageing of debtors and whether sufficient credit enhancement is provided by customers (letters of credit and bank
guarantees). If the ageing of trade receivables significantly increased then the recognition of ECL would need to be reassessed.
Receivables will only be written off if there is demonstrable evidence that there is no reasonable expectation of recovery. There
was no provision recognised for trade receivables as at 31 December 2021 as there are minimal aged debts.
The credit risk on cash and cash equivalents is limited as the counterparties are banks with credit-ratings assigned by international
credit-rating agencies that are at least investment grade.
Credit risk in trade receivables is managed in the following ways:
i.
ii. a risk assessment process is used for all customers; and
iii. letters of credit are required for those customers assessed as posing a higher risk.
payment terms and credit limits are set for individual customers;
As disclosed in Note D1(a)(i) the minimum average balance of US$25 million per day and at month end US$50 million is required to
be held in the Lender Accounts of the Syndicated Facility which is not available for use on those days.
The maximum exposure to credit risk on financial assets which have been recognised in the balance sheet is their carrying amount
less impairment provision, if any as set out below.
Cash and cash equivalents
Trade and other receivables
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
1,495
946
2,441
637
565
1,202
Included in trade and other receivables are significant customers located in Japan, Australia and Taiwan that account for 26%, 19%
and 18% of trade receivables respectively (2020: Australia 20%, South Korea 10% and Singapore 6%).
The top five customers included in trade receivables with the largest gross receivable balance as at 31 December 2021 account for
34% of trade receivables (2020: 43%).
95
95
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(c) Liquidity risk
Liquidity risk includes the risk that the Group will not be able to meet its financial obligations as they fall due. The Group will be
impacted in the following ways:
i. will not have sufficient funds to settle transactions on the due date;
ii. will be forced to sell financial assets at a value which is less than what they are worth; or
iii. may be unable to settle or recover a financial asset at all.
Liquidity risk is managed by maintaining sufficient cash and liquid deposit balances and having readily accessible standby facilities
in place in accordance with the Board’s risk management policy. Details regarding finance facilities are set out in Note D1.
Maturities of financial liabilities
The tables below analyse the Group’s financial liabilities into relevant maturity groupings based on their contractual maturities
and interest payments for all liabilities.
The amounts disclosed in the table are the contractual undiscounted cash flows including interest payments. Balances due within
12 months equal their carrying balances as the impact of discounting is not significant.
Contractual maturities of financial liabilities
AT 31 DECEMBER 2021
Non-derivatives
Trade and other payables
Lease liabilities
Other interest-bearing liabilities
Total non-derivatives
AT 31 DECEMBER 2020
Non-derivatives
Trade and other payables
Non-contingent royalty
Lease liabilities
Other interest-bearing liabilities
Total non-derivatives
D8 Fair value measurements
LESS THAN
1 YEAR
$M
BETWEEN 1
AND 2 YEARS
$M
BETWEEN 2
AND 5 YEARS
$M
GREATER THAN
5 YEARS
$M
TOTAL CASH
FLOWS
$M
CARRYING
AMOUNT
$M
742
39
213
994
–
33
212
245
–
60
3,833
3,893
–
21
194
215
742
153
4,452
5,347
742
130
3,305
4,177
LESS THAN
1 YEAR
$M
BETWEEN 1
AND 2 YEARS
$M
BETWEEN 2
AND 5 YEARS
$M
GREATER THAN
5 YEARS
$M
TOTAL CASH
FLOWS
$M
CARRYING
AMOUNT
$M
671
13
48
706
1,438
–
–
29
253
282
–
–
44
3,175
3,219
–
–
31
1,022
1,053
671
13
152
5,156
5,992
671
13
121
4,084
4,889
(i) Fair value hierarchy
The Group uses various methods in estimating the fair value of financial instruments. AASB 13 Fair Value Measurement requires
disclosure of fair value measurements by level in accordance with the following fair value measurement hierarchy:
a. quoted prices (unadjusted) in active markets for identical assets or liabilities (level 1);
b.
inputs other than quoted prices included within level 1 that are observable for the asset or liability, either directly (as prices)
or indirectly (derived from prices) (level 2); and
inputs for the asset or liability that are not based on observable market data (unobservable inputs) (level 3).
c.
The royalty receivable was classified as a level 3 financial instrument in 2021 and 2020. No other financial instruments were
subject to recurring measurement.
(ii) Valuation techniques
The fair value of financial instruments that are not traded in an active market is determined using valuation techniques.
These valuation techniques maximise the use of observable market data where it is available. If all significant inputs required
to fair value an instrument are observable, the instrument is included in level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in level 3. This is the
case for the royalty receivable.
96
96
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(iii) Value measurements using significant unobservable inputs (level 3)
The following table presents the changes in level 3 instruments for the year ended 31 December 2021:
Opening balance
Remeasurement of the royalty receivable recognised in profit and loss
Closing balance
31 DECEMBER
2021
ROYALTY
RECEIVABLE
$M
31 DECEMBER
2020
ROYALTY
RECEIVABLE
$M
217
4
221
226
(9)
217
Royalty receivable
The fair value of the royalty receivable is the fair value of the right to receive a royalty of 4% of Free on Board Trimmed Sales from
the Middlemount Mine. The financial asset has a finite life being the life of the Middlemount Mine and will be measured on a fair
value basis.
The fair value is determined using the discounted future cash flows that are dependent on the following unobservable inputs:
forecast sales volumes, coal prices and fluctuations in foreign exchange rates. The forecast sales volumes are based on the
internally maintained budgets, five year business plan and life of mine models. The forecast coal prices and long term exchange
rates are based on external data consistent with the data used for impairment assessments (refer to Note C3). The risk-adjusted
post-tax discount rate used to determine the future cash flows is 9.0%.
The estimated fair value could increase significantly if the following unobservable inputs of sales volumes and coal prices were
higher and if the Australian dollar weakens against the US dollar. The estimated fair value would also increase if the risk-adjusted
discount rate was lower.
Sensitivity
The following tables summarise the sensitivity analysis of royalty receivable. This analysis assumes that all other variables
remain constant.
Coal price
+10%
-10%
Exchange rates
+5 cents
-5 cents
Discount rates
+50 bps
-50 bps
31 DECEMBER
2021
FAIR VALUE
INCREASE/
(DECREASE)
$M
31 DECEMBER
2020
FAIR VALUE
INCREASE/
(DECREASE)
$M
19
(18)
(13)
15
(7)
8
19
(19)
(11)
14
(7)
8
WIPS
On the 28 July 2020 the WIPS were restructured and are no longer entitled to any accrual or future dividend payments.
Rights to claim repayment of the face value of $31 million only on wind-up, cessation or sale of the business or breach of
senior debt covenants. The fair value is determined using the discount future cash flows that are dependent on the following
unobservable inputs: internally maintained budgets and business plans of Wiggin Island Coal Export Terminal (“WICET”).
The risk adjusted post tax discount rate used to determine the future cashflows is 11.0%. In 2018 the WIPS book value was
reduced to nil.
(iv) Fair values of other financial instruments
The carrying amount is approximate to the fair value for the following:
i. Trade and other receivables
ii. Other financial assets
iii. Trade and other payables
iv. Interest-bearing liabilities
97
97
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E GROUP STRUCTURE
This section explains significant aspects of the Group’s structure including business combinations and disposals, interests in other
entities, related party transactions, parent entity information, controlled entities, and the deed of cross guarantee.
E1 Business combinations and disposals
Accounting policies
The acquisition method of accounting is used to account for all business combinations regardless of whether equity instruments or other assets are acquired. The
consideration transferred for the acquisition of a subsidiary comprises the fair values of the assets transferred, the liabilities incurred and the equity interests issued
by the Group. The consideration transferred also includes the fair value of any contingent consideration arrangement and the fair value of any pre-existing equity
interest in the subsidiary. Acquisition related costs are expensed as incurred including stamp duty. Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair values at the acquisition date.
The excess of the consideration transferred and the amount of any non-controlling interest in the acquiree and the acquisition date fair value of any previous equity
interest in the acquiree over the fair value of the Group’s share of the net identifiable assets acquired is recorded as goodwill. If those amounts are less than the fair
value of the net identifiable assets of the subsidiary acquired and the measurement of all amounts has been reviewed, the difference is recognised directly in profit or
loss as a gain on acquisition of subsidiaries.
Critical accounting estimates and judgements
Accounting for the acquisitions of businesses requires judgment and estimates in determining the fair value of the consideration, acquired assets and liabilities.
Techniques used to determine the fair value of acquired assets and liabilities include an income and cost approach for mining tenements and depreciated
replacement cost for the valuation of property, plant and equipment.
The relevant accounting standard allows the fair value of assets acquired to be refined for a window of one year after the acquisition date only if the information has
not been obtained as a matter of course. Judgement is required to ensure the adjustments made reflect new information obtained about facts and circumstances
that existed as of the acquisition date. The adjustments made on fair value of assets are retrospective in nature and have an impact on goodwill or gain recognised on
acquisition.
(a) Update on acquisition of 10% interest in Moolarben Coal Joint Venture
On 31 March 2020, Yancoal Moolarben Pty Ltd a 100% owned subsidiary of Yancoal Australia Ltd acquired a 10% interest in
Moolarben Coal Joint Venture (“Moolarben JV”) previously owned by Sojitz Corporation (“Sojitz”). The Moolarben JV is accounted
for as a joint operation. With the 10% acquisition the Group now holds an 95% interest in the Moolarben JV.
On acquiring the 10% interest from Sojitz the Group is deemed to now control the relevant activities of the Moolarben JV by
holding all voting rights on the Joint Venture Policy Committee.
During 2021 the final instalment of $100 million was paid. There was no change to the provisional accounting at 31 December
2020 and the accounting for the acquisition was final at 30 June 2021.
(b) Update on reconsolidation of Watagan
On 18 February 2016, the Group executed a Bond Subscription Agreement, together with other agreements that, on completion,
transferred the Group’s interest in three of its 100% owned NSW coal mining operations, being the Austar, Ashton and
Donaldson coal mines, to Watagan for a purchase price of $1,363 million funded by way of a $1,363 million loan from Yancoal.
The completion date of the transaction was 31 March 2016 when it was determined that the Group lost accounting control of
Watagan on the basis that the bondholders obtained power over the key operating and strategic decisions of Watagan through
the ability to appoint the majority of the Watagan Board. This resulted in the Group de-consolidating the results of Watagan as a
subsidiary from that date.
On 16 December 2020, the Company announced that a commercial arrangement had been entered into between Shandong Energy,
its wholly owned subsidiary Yankuang Group (Hong Kong) Ltd (“Yankuang HK”) and two other bondholders. On 16 December 2020
as part of the commercial arrangement the bondholder nominated directors stepped down from the Watagan Board resulting in
the determination that the Group regained accounting control of Watagan and the reconsolidation of Watagan as a subsidiary on
that date. The Company subsequently included the Watagan Group entities in its ASIC Deed of Cross Guarantee.
The reconsolidation of the Watagan Group was accounted for as a business combination under AASB 3, and resulted in
recognition of $593 million of net assets and a $1,383 million loss on reconsolidation. At 30 June 2021 a prior period adjustment
was made to the provisional accounting of the Watagan net assets on reconsolidation. This resulted in a decrease to property,
plant and equipment of $11 million, and an increase to mining tenements of $11 million. There was no change to prior period
profit or loss due to the acquisition being so close to the period end.
The accounting for the reconsolidation of Watagan has been finalised as at 31 December 2021.
98
98
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E2 Interests in other entities
Accounting policies
(i) Control
The Group defines “control of an investee” in accordance with AASB 10 Consolidated Financial Statements, paragraph 6 and 7 when the investor has:
•
•
•
power over the investee, and
exposure or rights to variable returns from its involvement with the investee and
the ability to affect those returns through its power over the investee.
Consideration is given to the substance of the agreements and not only to how the arrangements are directed in practice when determining the level of control over
the arrangement. In the case of an incorporated entity, this would result in Yancoal consolidating that entity as a subsidiary. In the case of another legal ownership
structure, the Group has considered the most appropriate accounting policy based on the facts and circumstances for each legal ownership structure. This is
discussed further in section (iii) below. If the conclusion is that the Group does not control the entity or other legal ownership structure, then an assessment is made
whether the arrangement meets the definition of joint control.
(ii) Joint control and joint arrangements
A joint arrangement is a contractual arrangement whereby two or more parties undertake economic activities under joint control. Joint control exists only when
the strategic, financial and operational policy decisions relating to the relevant activities of the joint arrangement require the unanimous consent of the parties
sharing control. The classification of a joint arrangement as either a joint operation or joint venture is dependent on the rights and obligations of the parties to
the arrangement. Where the Group concludes that joint control exists, the Group then considers whether the arrangement is a joint operation or joint venture in
accordance with AASB 11 Joint Arrangements.
Joint operations: A joint operation is an arrangement where the Group shares joint control, primarily through contractual arrangements with other parties. In these
arrangements, the Group has rights to the assets and obligations for the liabilities relating to the arrangement. This includes situations where the parties benefit
from the joint activity through a share of the output, rather than by receiving a share of the results of trading. The Group recognises its proportional interest in the
assets, liabilities, revenues and expenses of joint operations and its share of any jointly held or incurred assets, liabilities, revenues and expenses. These have been
incorporated in the financial statements under the appropriate line items.
Joint ventures: A joint venture is a joint arrangement in which the parties that share joint control of the arrangement have rights to the net assets of the arrangement.
A separate vehicle, not the parties, has rights to the assets and liabilities of the arrangement. Joint ventures are accounted for using the equity method accounting (as
outlined in AASB 128 Investment in Associates and Joint Ventures).
(iii) Controlling interest in unincorporated arrangements
A controlling interest in an unincorporated arrangement occurs when the Group has the sole ability to direct the relevant activities in the arrangement, such as,
approving budgets and investment plans and appointing representatives to the Board or relevant Committees. As the Group controls these contractual arrangements,
they do not meet the definition of joint operations. The Group recognises its interest in these types of arrangements in accordance with the contractual arrangements
by consolidating its share of any jointly held or incurred assets, liabilities, revenues, and expenses of joint operations. These have been incorporated in the financial
statements under the appropriate line items.
If neither control nor joint control is identified, consideration is given whether the Group has significant influence over the entity or other legal ownership structure
through AASB 128 Investments in Associates and Joint Ventures.
(iv) Associates
Associates are entities over which the Group has significant influence but not control or joint control. Significant influence is presumed to exist where the Group:
•
•
has over 20% but less than 50% of the voting rights of an entity, unless it can be clearly demonstrated that this is not the case; or
holds less than 20% of the voting rights of an entity; however, has the power to participate in the financial and operating policy decisions of the entity.
If the conclusion is that significant influence exists, then the investment is accounted for using the equity method as outlined in AASB 128 Investments in Associates
and Joint Ventures.
After initial recognition at cost, associates are accounted for using the equity method.
(v) Equity method
The Group’s share of its associates’ and joint ventures’ post-acquisition profits or losses is aggregated as one line item and recognised in profit or loss. Its share of
post-acquisition other comprehensive income is recognised in other comprehensive income. The cumulative post-acquisition movements are adjusted against the
carrying amount of the investment. Dividends receivable from associates and joint ventures are recognised as a reduction in the carrying amount of the investment.
When the Group’s share of losses in a joint venture or associate equals or exceeds its interest, which includes any long-term interests that, in substance, form part
of the Group’s net investment in the joint venture, the Group does not recognise any further losses, unless it has incurred a contractual or constructive obligation to
contribute further funds. Unrealised gains on transactions between the Group and its joint ventures or associates are eliminated to the extent of the Group’s interest
in these entities. Accounting policies of the joint ventures and associates have been changed where necessary, to ensure consistency with the policies adopted by the
Group.
(vi) Reassessment of interests in other entities
The determination of control, joint control or significant influence requires significant judgement as discussed below. The Group has reassessed these determinations
for its interests in other entities. This assessment led to the following changes:
The Group’s interests in the unincorporated Mount Thorley and Warkworth joint ventures, collectively Mount Thorley Warkworth, have been assessed as being
controlled, rather than jointly controlled, and are now accounted for as unincorporated arrangements.
The Group’s interest in Newcastle Coal Infrastructure Group Pty Ltd (“NCIG”) has been assessed as being subject to joint control, rather than significant influence, and
will continue to be equity accounted.
The reassessments have not resulted in any changes in recognition and measurement, as the accounting principles are the same.
In addition, the Group’s interest in WICET Holdings Pty Ltd (“WICET”) was reassessed at 30 June 2021 as being an associate and equity accounted. This resulted in
no change to the balance sheet or net profit after tax as the Group’s share of WICET’s losses after tax exceeded its investment in WICET for the period ended 31
December 2021.
99
99
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Critical accounting judgements and estimates
The Group has interests in several unincorporated arrangements of which the determination of control or joint control requires significant judgement based on
the assessment of the contractual rights and obligations. Differing conclusions around these judgements could materially impact how the Group recognises these
investments on initial acquisition and how any subsequent changes in ownership interest are accounted for. See (a) and (b) below for a summary of the Group’s
interest in unincorporated arrangements and joint arrangements and key judgements made in determining the applicable accounting treatment for each.
Prior to 16 December 2020 there was significant judgement in assessing whether the Group controlled Watagan. An assessment was made that in accordance with
the accounting standards the Group did not control Watagan as it was not able to direct the relevant activities of Watagan and accounted for its interest in Watagan
as an associate. On 16 December 2020, due to a change in circumstances, it was determined the Group had regained control of Watagan resulting in it accounting for
its interest in Watagan as a subsidiary, refer to E1 for more details.
(a) Controlling interest in unincorporated arrangement
In some unincorporated arrangements the Group’s contractual rights and obligations give it control of the arrangements and
the Group accounts for these arrangements by consolidating its share of the assets, liabilities, revenues, and expenses of the
arrangement. In applying this accounting policy there can be significant judgement in determining whether the Group has control
or joint control of an unincorporated arrangement. The Group has made the following judgements in the application of its
accounting policy for a controlling interest in unincorporated arrangements.
•
Moolarben Coal Mines Pty Ltd and Yancoal Moolarben Pty Ltd, have a combined 95% (85% up to 31 March 2020) interest in
the Moolarben Joint Venture (an unincorporated arrangement) whose principal activity is the development and operation
of open-cut and underground coal mines. The Group controls Moolarben as the decisions over relevant activities require
approval from the JV Policy Committee, where the Group has the sole ability to appoint representatives.
• Mount Thorley Operations Pty Ltd has an 80% (2020: 80%) interest in Mount Thorley Co-Venture (an unincorporated
arrangement) whose principal activity is the development and operation of open-cut coal mines. The Group controls Mount
Thorley as the decisions require a majority approval based on working interest and the Group’s working interest is 80%.
• CNA Warkworth Australasia Pty Ltd and CNA Resources Ltd, have a combined 84.5% (2020: 84.5%) interest in Warkworth
Associates (an unincorporated arrangement) whose principal activity is the development and operation of open-cut mines.
The Group controls Warkworth as the decisions over relevant activities require a majority approval of the Operating
Committee and 76% of the Participants shares. The Group can appoint 9 out of 11 Operating Committee members and holds
84.5% of the Participants shares.
The principal place of business for the above joint operations is in Australia.
(b) Joint operations with joint control
The Group accounts for joint operations in accordance with AASB 11 Joint Arrangements, by recognising the Group’s share of joint
assets, liabilities, revenue and expenses. The Group has made the following judgements in the application of its accounting policy
for its interests in joint operations where the Group has joint control.
• Coal & Allied Operations Pty Ltd has a 51% (2020: 51%) interest in the Hunter Valley Operations (“HVO”) Joint Venture (an
unincorporated joint operation) whose principal activity is the development and operation of open-cut coal mines. The Group
and the other joint venture partner have joint control over HVO as they must act together to direct the relevant activities
which significantly affect the returns of the arrangement.
• Yarrabee Coal Company Pty Ltd, has a 50% (2020: 50%) interest in the Boonal Joint Venture (an unincorporated joint
operation), whose principal activity is the provision of a coal haul road and train load out facility. The Group and the other
joint venture partner have joint control over Boonal as they must act together to direct the relevant activities which
significantly affect the returns of the arrangement.
The principal place of business for the above joint operations is in Australia.
(c) Interests in associates and joint ventures
Set out below are the associates and joint ventures of the Group as at 31 December 2021. The entities listed below have share
capital consisting solely of ordinary shares, which are held directly by the Group. The country of incorporation or registration is
also their principal place of business.
100
100
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NAME OF ENTITY
PLACE OF
BUSINESS /
COUNTRY OF
INCORPORATION
Port Waratah Coal Services Ltd
Australia
WICET Holdings Pty Ltd
Middlemount Coal Pty Ltd
HVO Coal Sales Pty Ltd
HV Operations Pty Ltd
HVO Services Pty Ltd
Newcastle Coal Infrastructure
Group Pty Ltd
Total
Australia
Australia
Australia
Australia
Australia
Australia
% OF OWNERSHIP
INTEREST
CARRYING AMOUNT
OF INVESTMENT
2021
%
30
25
2020
%
30
25
NATURE OF
RELATIONSHIP
Associate
Associate
MEASUREMENT
METHOD
Equity method
Equity method
49.9997
49.9997
Joint Venture
Equity method
51
51
51
27
51
51
51
27
Joint Venture
Equity method
Joint Venture
Equity method
Joint Venture
Equity method
Joint Venture
Equity method
2021
$M
171
–
132
–
–
–
–
2020
$M
177
–
80
–
–
–
–
* Watagan Mining Company Pty Ltd ceased being an associate in 2020.
Amount recognised in profit or (loss):
Middlemount Coal Pty Ltd
Port Waratah Coal Services Ltd
HVO Entities
(i) Investment in associates
303
257
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
52
5
–
57
(61)
4
(2)
(59)
Port Waratah Coal Services Ltd
The Group holds a direct shareholding in Port Waratah Coal Services Ltd (“PWCS”) of 30% (2020: 30%). Under the shareholder
agreement between the Group and the other shareholders of PWCS, the Group has 30% of the voting power of PWCS. The Group
has the right to appoint a director who is on the Board to partake in policy-making processes and is the appointed manager. The
principal activities of PWCS were the provision of coal receivable, blending, stockpiling and ship loading services in the Port of
Newcastle.
WICET Holdings Pty Ltd (“WICET”)
The Group holds 25% (2020: 25%) of the ordinary shares of WICET Holdings Pty Ltd (“WICET”). Under the shareholder agreement
between the Group and other shareholders of WICET, the Group has 9.7% of the voting power equal to its capacity entitlement
at WICET. The Group has the right to appoint a director and is currently represented on the Board to partake in policy-making
processes. The principal activities of WICET were the provision of coal receiving, stockpiling and ship loading services in the Port
of Gladstone.
Summarised financial information of associates
The information below reflects the Group’s share of the results of its principal associates and the aggregated assets and liabilities.
They have been amended to reflect adjustments made by the Group when using the equity method, including fair value
adjustments and modifications for differences in accounting policy.
101
101
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Cash and cash equivalent
Other current assets
Current assets
Property, plant and equipment
Other non-current assets
Non-current assets
Total assets
Current liabilities
Deferred tax liability
Other non-current liabilities
Non-current liabilities
Total liabilities
Net assets
Group's ownership interest in the Net assets / (liabilities)
Revenue
Other income
Other interest expenses
Depreciation and amortisation expenses
Other expenses
Income tax expense
Profit / (loss) from continuing operations after tax
Other comprehensive income / (expense)
Total comprehensive income / (expense)
Group's ownership interest in profit / (loss) after tax
PWCS
WICET
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
8
95
103
1,184
94
1,278
1,381
129
50
632
682
811
570
171
337
–
(17)
(121)
(173)
(10)
16
–
16
5
62
43
105
1,310
23
1,333
1,438
226
61
560
621
847
591
177
308
–
(18)
(110)
(157)
(10)
13
–
13
4
21
142
163
2,842
122
2,964
3,127
365
–
3,108
3,108
3,473
(346)
(87)
443
–
(170)
(110)
(213)
–
(50)
–
(50)
(13)
27
124
151
2,947
117
3,064
3,215
301
–
3,230
3,230
3,531
(316)
(79)
1,371
278
(291)
(112)
(44)
–
1,202
–
1,202
301
The Group’s share of WICET’s loss after tax has not been recognised for the reporting periods since the Group’s share of WICET’s
accumulated losses exceeds its interest in WICET at the reporting dates. As the Group does not have contractual agreements or
an obligation to contribute to this associate no additional liabilities have been recognised.
Movements in carrying amounts
MOVEMENTS IN PWCS CARRYING AMOUNTS
Opening balance
Share of profit of equity-accounted investees, net of tax
Dividends received
Closing net book amount
(ii) Interest in joint ventures
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
177
5
(11)
171
184
4
(11)
177
Middlemount Coal Pty Ltd
Gloucester (SPV) Pty Ltd, has a 49.9997% interest in the net assets of Middlemount Coal Pty Ltd (“Middlemount”), an incorporated
joint venture, whose principal activity is the development and operation of open-cut coal mines in the Bowen Basin. Structured
through a separate vehicle and as a Pty Ltd entity, the legal form provides separation of the assets and liabilities of Middlemount
and its owners. The Group and the other shareholder have joint control over Middlemount as they must act together to direct
the relevant activities which significantly affect the returns of the arrangement. The key decisions require approval of 80% of the
voting interest (which follows ownership interest). Given the legal structure of Middlemount, it has been concluded that it should
be classified as a Joint Venture. In accordance with AASB 11 Joint Arrangements, the Group’s investment in Middlemount should
be accounted for using the equity method.
HVO entities
The Group holds a 51% interest in HVO Coal Sales Pty Ltd, HV Operations Pty Ltd and HVO Services Pty Ltd (together the “HVO
Entities”). These entities are the sales, marketing and employee vehicles of the HVO Joint Operation. The Group and the other
joint venture partner have joint control over HVO Entities as they must act together to direct the relevant activities which
significantly affect the returns of the arrangement.
102
102
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Newcastle Coal Infrastructure Group Pty Ltd
The Group holds 27% (2020: 27%) of the ordinary shares of Newcastle Coal Infrastructure Group Pty Ltd (“NCIG”). Under the
shareholder agreement between the Group and other shareholders, the Group has 27% of the voting power of NCIG. The Group
has the right to appoint a director and is currently represented on the Board to partake in policy-making processes. The principal
activities of NCIG were the provision of coal receiving, stockpiling and ship loading services in the Port of Newcastle. All decisions
over relevant activities are made by the Group and two other investors as the decisions over the relevant activities requires
approval of 75% of voting interest. In accordance with AASB 11 Joint Arrangements, the Group’s investment in NCIG is deemed a
joint venture and is accounted for using the equity method.
Summarised financial information of joint ventures
The following table provides summarised financial information for the HVO Entities, Middlemount and NCIG. They have been
amended to reflect adjustments made by the Group when using the equity method, including fair value adjustments and
modifications for differences in accounting policy.
Cash and cash equivalents
Other current assets
Total current assets
Total non-current assets
Total current liabilities
Non-current financial liabilities
Other non-current liabilities
Total non-current liabilities
Net assets
Group’s ownership interest in net (liabilities)/assets
Revenue
Depreciation and amortisation
(Loss) / gain on foreign exchange
Other expenses
Interest expenses
Income tax (expense) / benefit
(Loss) / profit from continuing operations after tax
Movements in reserves, net of tax
Total changes in equity
Group's ownership interest in (loss)/profit after tax
Group's ownership interest in reserve movements
HVO ENTITIES
MIDDLEMOUNT
NCIG
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
5
159
164
33
169
–
38
38
(10)
(5)
6
76
82
25
72
–
38
38
(3)
(1)
9
220
229
1,045
405
244
360
604
265
132
12
69
81
1,103
441
270
313
583
160
80
67
44
111
2,441
58
–
3,754
3,754
(1,260)
(340)
63
36
99
2,515
50
–
3,718
3,718
(1,154)
(312)
HVO ENTITIES
MIDDLEMOUNT
NCIG
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
–
–
–
(7)
–
–
(7)
–
(7)
(3)
–
–
–
–
(5)
–
(2)
(7)
–
(7)
(3)
–
715
(80)
–
(422)
(52)
(56)
105
–
105
52
–
355
(66)
–
(413)
(40)
42
(122)
108
(14)
(7)
–
473
(113)
(133)
(125)
(231)
23
(106)
–
(106)
(29)
–
440
(115)
259
(70)
(251)
(95)
168
–
168
45
–
The Group’s share of the HVO Entities loss after tax has not been fully recognised for the year ended 31 December 2021 since the
Group’s share of the joint ventures accumulated loss exceeds its interest during the period.
The liabilities of Middlemount include non-interest-bearing liability of $149 million (face value of $212 million) due to the Group
at 31 December 2021 (2020: $135 million, face value $212 million) with maturity of 31 December 2025 and an interest-bearing
revolver of $nil (2020: $20 million). The liabilities of Middlemount also include a royalty payable of $46 million due to the Group at
31 December 2021 (2020: $32 million).
103
103
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Movements in carrying amounts
The Group’s share of NCIG’s loss after tax has not been recognised for the reporting periods since the Group’s share of NCIG’s
accumulated losses exceeds its interest in NCIG at the reporting dates.
As the Group does not have contractual agreements or an obligation to contribute to this associate no additional liabilities have
been recognised.
Opening net book amount
Share of profit / (loss) of equity-accounted investees, net of tax
Movements in reserves, net of tax
Closing net book amount
MIDDLEMOUNT
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
80
53
-
133
87
(61)
54
80
(iii) Commitments and contingent liabilities in respect of associates and joint ventures
There were no commitments and no contingent liabilities in respect of the Group’s associates and joint ventures, other than
Middlemount, as at 31 December 2021.
There were no commitments in respect of the Group’s interest in Middlemount at 31 December 2021. Other contingent liabilities
in respect of the Group’s interest in Middlemount are set out in Note D6(ii).
As a shipper in NCIG and WICET, the Group may be required to pay its share of any outstanding senior debt, amortised over the
remaining years of that particular contract, if the Group’s source mines are unable to maintain a minimum level of Marketable Coal
Reserves. Furthermore, the Group may be required to pay its share of any outstanding senior debt in full, if NCIG or WICET are
unable to refinance a tranche of its maturing debt and defaults on its remaining debt. If an NCIG or WICET shipper was to default
on its contractual obligations and was unable to pay its share of the NCIG or WICET debt, the outstanding senior debt would be
socialised amongst the remaining shippers. In this scenario’s the Group’s share of the outstanding senior debt would increase.
The Group currently expects to remain in compliance with the minimum level of Marketable Coal Reserves and is unaware of any
issues with NCIG or WICET refinancing their future debt maturities.
E3 Related party transactions
(a) Parent entities
The parent entity within the Group is Yancoal Australia Ltd. The Group’s majority shareholder is Yankuang Energy Group Company
Limited (“Yankuang Energy”), incorporated in the People’s Republic of China, formerly known as Yanzhou Coal Mining Company
Limited. The ultimate parent entity and ultimate controlling party is Shandong Energy Group Company Limited (“Shandong
Energy”), incorporated in the People’s Republic of China, formerly known as Yankuang Group Corporation Limited.
Yancoal International Resources Development Co., Ltd, Yancoal International Trading Co., Ltd (up to 30 April 2020) and Yankuang
(Hainan) Intelligent Logistics Technology Co., Ltd (“Yankuang Hainan”) are owned by Yankuang Energy and incorporated in
Hong Kong. Yankuang Resources Pty Ltd and Yankuang Group (Hong Kong) Ltd are owned by Yankuang Group, incorporated
in Australia and the Company manages this entity on behalf of Yankuang Group. Yancoal International Trading Co., Ltd from
30 April 2020 is owned by Yankuang Energy.
(b) Yancoal International Holding Co. Ltd
Yancoal International (Holding) Co., Ltd is a wholly owned subsidiary of Yankuang Energy and controls the following subsidiaries:
Yancoal Technology Development Holdings Pty Ltd, Athena Holdings Pty Ltd, Tonford Holdings Pty Ltd, Wilpeena Holdings
Pty Ltd, Premier Coal Holdings Pty Ltd, Premier Coal Ltd, Yankuang Ozstar Ningbo Trading Co Ltd (“Yankuang Ozstar”), Yancoal
Energy Pty Ltd and Syntech Resources Pty Ltd (“Yancoal International Group”). The Company manages these entities on behalf
of Yankuang Energy.
(c) Associates and joint ventures
Refer to Note E2 for details on the associates and joint ventures.
104
104
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(d) Transactions with other related parties
The following transactions occurred with related parties:
Sales of goods and services
Sales of coal to Yankuang Hainan (i)
Sales of coal to Yancoal International Trading Co. Ltd (i)
Sales of coal to Shandong Energy (Qingdao) Intelligent Industry Technology Co. Ltd (i)
Provision of marketing and administrative services to Yancoal International Group (ii)
Provision of marketing and administrative services to Watagan Group
Purchases of goods and services
Purchases of coal from Syntech Resources Pty Ltd (i)
Purchase of coal from Watagan Group
Advances and loans
Revolver loan repayment from Middlemount
Advances of loan to Watagan (ii)
Repayments of loan from Watagan (ii)
Advances of loan receivable to Middlemount
Revaluation of interest-free loan to Middlemount
Equity subscription, debt repayment and debt provision
Repayments of loan from Yankuang Energy (ii)
Finance costs
Interest expenses on loans from Yancoal International Resources Development Co., Ltd (ii)
Interest expenses on loans from Yankuang Energy (ii)
Interest expenses on loans from Yancoal International (Holding) Co., Ltd (ii)
Interest on bond from Yankuang Group (Hong Kong) Ltd
Interest on loan from Shandong Energy
Unwinding of discount on loan from Shandong Energy
Other costs
Corporate guarantee fee to Yankuang Energy (ii)
Port charges to NCIG
Port charges to PWCS
Port charges to WICET
Finance income
Interest income received from loan receivable with Middlemount
Interest income released from loan receivable with Middlemount
Interest income on loan to Watagan Mining Company Pty Ltd
Other income
Royalty income charged to Middlemount
Bank guarantee fee charged to Yancoal International Group (ii)
Dividend income received from PWCS
Mining services fees charged to Watagan Group
Bank guarantee fee charged to Watagan Group
Longwall hire fee charged to Austar Coal Mine Pty Ltd
31 DECEMBER
2021
$’000
31 DECEMBER
2020
$’000
27,019
21,446
18,647
8,556
–
75,668
(9,862)
–
(9,862)
60,000
–
–
–
–
60,000
(233,023)
(233,023)
(9,220)
(59,781)
(3,693)
(2,718)
(34,936)
(29,706)
21,513
73,110
–
10,135
5,745
110,503
(4,939)
(132,190)
(137,129)
–
(367,027)
246,161
(35,000)
(77,024)
(232,890)
–
–
(11,612)
(50,234)
(4,817)
–
–
–
(140,054)
(66,663)
(23,962)
(121,375)
(21,389)
(47,845)
(214,571)
(28,388)
(116,423)
(29,682)
(55,782)
(230,275)
14,114
5,096
–
19,210
28,270
2,216
13,058
–
–
–
43,544
9,132
5,549
62,311
76,992
14,724
2,534
13,510
44,668
1,830
1,185
78,451
105
105
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(e) Outstanding balances arising from transactions with related parties
Balances outstanding at the reporting date to / from related parties are unsecured, non-interest bearing (except for loans
receivable and loans payable) and are repayable on demand.
The following balances are outstanding at the end of the reporting period in relation to transactions with related parties:
Current assets
Trade and other receivables
Receivable from Yancoal International Group in relation to cost reimbursement
Royalty receivable from Middlemount
Loans receivable
Interest income receivable from Middlemount
Other receivable from Shandong Energy
Loan receivable advanced to Middlemount
Non-current assets
Advances to joint venture and associate
Receivable from Middlemount being an unsecured, non-interest bearing advance
Total assets
Current liabilities
Other payables
Payables to Yankuang Energy
Payables to Shandong Energy
Payables to Yancoal International Resources Development Co., Ltd
Payables to Yancoal International (Holding) Co., Ltd
Payables to Yankuang Group (Hong Kong) Ltd
Non-current liabilities
Other payables
Payable to Yancoal International Resources Development Co., Ltd being an unsecured, interest-bearing loan (ii)
Payable to Yankuang Energy being an unsecured, interest-bearing loan (ii)
Payable to Shandong Energy, interest-bearing loan (ii)
Payable to Yankuang Group (Hong Kong) Ltd being an interest-bearing bond (ii)
Payable to Yancoal International (Holding) Co., Ltd being an unsecured, interest-bearing loan (ii)
Total liabilities
The terms and conditions of the related party non current liabilities is detailed in Note D1(c) above.
i. Continuing connected transaction under Chapter 14A of H K Listing Rules.
ii. Fully exempt continuing connected transaction under Chapter 14A of H K Listing Rules.
31 DECEMBER
2021
$’000
31 DECEMBER
2020
$’000
4,001
46,390
155
1
–
50,547
148,892
148,892
199,439
110,714
12,518
647
–
–
123,879
1,293
31,636
510
–
60,000
93,439
134,778
134,778
228,217
84,799
–
5,143
2,133
785
92,860
22,046
860,913
788,946
–
–
1,671,905
1,795,784
175,279
811,060
–
259,673
72,704
1,318,716
1,411,576
106
106
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(f) Guarantees
The financiers of the Group have issued undertakings and guarantees to government departments, and various external parties
on behalf of the following related entities:
Yancoal International Group
Syntech Resources Pty Ltd
AMH (Chinchilla Coal) Pty Ltd
Premier Coal Ltd
Tonford Holdings Pty Ltd
Athena Joint Venture
Other Yankaung entity
Yankuang Resources Pty Ltd
31 DECEMBER
2021
$’000
31 DECEMBER
2020
$’000
60,899
29
29,062
10
3
45
64,879
49
29,000
10
3
45
90,048
93,986
(g) Terms and conditions
Transactions between related parties are on normal commercial terms and conditions no more favourable than those available to
other parties unless otherwise stated.
The terms of the loan facilities from Yankuang Energy are as follows:
On 31 December 2014 an AU$1,400 million facility was provided by Yankuang Energy at a fixed interest rate of 7% on any amounts
drawn. During the period, US$175 million was repaid. As at 31 December 2021 US$398 million (AU$548 million) was drawn
(31 December 2020: US$573 million (AU$744 million)).
On 31 December 2014 an AU$807 million facility was provided by Yankuang Energy at a fixed interest rate of 7% on any amounts
drawn. During 2021 no amounts were repaid or drawn (31 December 2020: no amount was repaid or drawn) (Note D1(c)). As at
31 December 2021 a total of US$243 million has been drawn.
Yankuang Energy has provided corporate guarantees as security for the following facilities:
• Syndicated facility and syndicated bank guarantee facility at a fixed rate of 1.5% is charged on the outstanding loan principal
and bank guarantee facility limit.
The terms of the US$775 million loan from Shandong Energy are as follows:
On 31 March 2021 the Group successfully refinanced the Watagan Bonds where the ultimate parent, Shandong Energy, provided
the Group a US$775 million unsecured and subordinated loan. The loan matures on 16 December 2026. During the period, no
principal repayments have been made on this loan.
A revaluation to fair value of the loan was performed at inception. This loan has an interest rate of 4.65% which is significantly
below normal commercial terms. The implicit discount, between the agreed interest rate and determined arms length commercial
interest rate of the loan, (if the loan was made by a financier that was not a related party) 12%, was recognised as an increase
to other contributed equity. The revaluation of the loan is released through interest expense in the profit and loss using the
effective interest method over the life of the loan. As at 31 December 2021 the total outstanding loan (net of discounted equity
contribution) amounts to $789 million (US$563 million).
(h) Letter of support provided by parent
The Directors of Yankuang Energy have provided a letter of support whereby unless revoked by giving not less than 24 months
notice, for so long as Yankuang Energy owns at least 51% of the shares of the Company, Yankuang Energy will ensure that the
Group continues to operate so that it remains solvent.
107
107
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E4 Parent entity financial information
(a) Summary financial information
The individual financial statements for the parent entity, Yancoal Australia Ltd show the following aggregate amounts:
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
Shareholders’ equity
Contributed equity
Reserves
Other reserves
Accumulated losses
Capital and reserves attributable to the owners of Yancoal Australia Ltd
Loss for the year
Other comprehensive (expense) / income
Total comprehensive expense
31 DECEMBER
2021
$M
31 DECEMBER
2020
(RESTATED)
$M
3,661
9,201
12,862
3,786
4,240
8,026
4,836
6,698
(188)
(1,674)
4,836
(54)
(55)
(109)
1,266
8,620
9,886
1,698
4,002
5,700
4,186
6,482
(134)
(2,162)
4,186
(1,566)
352
(1,214)
Restatement
The parent entity has assessed the carrying value of its net investment in a controlled subsidiary and has determined that the
recoverable amount is less than the book value and has further determined that an impairment loss of $543 million should have
been recorded in the prior year, resulting in a prior year error. The error is corrected above as a $543 million increase in the loss
for the year ended 31 December 2020 and a corresponding decrease in non-current assets. This restatement is only associated
with the parent entity and there is no impact on the Group.
Dividends
Subsequent to year end, controlled subsidiaries have declared dividends sufficient to enable the parent to declare a final and
special dividend from accounting profits.
(b) Guarantees entered into by the parent entity
As at 31 December 2021, the parent entity had contingent liabilities in the form of bank guarantees amounting to $875 million
(2020: $809 million) in support of the operations of the parent entity, its subsidiaries and related parties (refer to Note E3).
(c) Contingent liabilities of the parent entity
There are cross guarantees given by Yancoal Australia Ltd and certain subsidiaries as described in Note E5.
The parent entity did not have any contingent liabilities as at 31 December 2021, except for those described in Note D8.
108
108
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E5 Controlling interests
(a) Significant investments in subsidiaries
The consolidated financial statements incorporate the assets, liabilities and results of the following principal subsidiaries that are
controlled:
PRINCIPAL ACTIVITIES
ISSUED AND FULLY
PAID SHARE CAPITAL
$
EQUITY HOLDING
2021
%
2020
%
NAME OF ENTITY
The Company
Yancoal Australia Ltd (i)
Controlled entities
Yancoal SCN Ltd (iv)
Holding company of subordinated capital notes
Yancoal Australia Sales Pty Ltd (i) (iii)
Coal sales
Yancoal Resources Pty Ltd (formerly Yancoal
Resources Limited) (iii)
Coal investment holding company
Yancoal Mining Services Pty Ltd (i)
Provide management services to underground mines
Yancoal Moolarben Pty Ltd (i) (iii)
Coal business development
Moolarben Coal Mines Pty Ltd (iii)
Coal business development
Moolarben Coal Operations Pty Ltd
Management of coal operations
Moolarben Coal Sales Pty Ltd
Coal sales
Felix NSW Pty Ltd
SASE Pty Ltd (iv)
Investment holding
Dormant
Yarrabee Coal Company Pty. Ltd. (iii)
Coal mining and sales
Proserpina Coal Pty Ltd
Holding company
Athena Coal Operations Pty Ltd
Athena Coal Sales Pty Ltd
Dormant
Dormant
Gloucester Coal Pty Ltd (formerly Gloucester
Coal Ltd) (i) (iii)
Westralian Prospectors Pty Ltd (formerly
Westralian Prospectors NL) (i)
Eucla Mining Pty Ltd (formerly Eucla
Mining NL) (i)
CIM Duralie Pty Ltd (ii)
Duralie Coal Marketing Pty Ltd (ii)
Duralie Coal Pty Ltd (i) (iii)
Gloucester (SPV) Pty Ltd (iii)
Gloucester (Sub Holdings 2) Pty Ltd (ii)
CIM Mining Pty Ltd (i)
Monash Coal Holdings Pty Ltd (ii)
CIM Stratford Pty Ltd (i)
CIM Services Pty Ltd (ii)
Monash Coal Pty Ltd (ii) (iii)
Stratford Coal Pty Ltd (ii) (iii)
Stratford Coal Marketing Pty Ltd (ii)
Paway Ltd (iv)
Coal & Allied Industries Pty Ltd (formerly Coal
& Allied Industries Ltd) (iii)
Coal resource exploration development
Holding company
Coal mining
Holding company
Holding company
Coal mining
Holding company
Holding company
Holding company
Holding company
Holding company
Holding company
Coal exploration
Coal mining
Coal sales
Dormant
1
100
446,409,065
100
100
1
2
2
2
9,650,564
92,080
1
1
1
719,720,808
93,001
2
665
2
2
2
2
30,180,720
100
21,558,606
8,400,002
100
10
10
1
Coal investment Holding company
86,584,735
Kalamah Pty Ltd
Holding company
Coal & Allied (NSW) Pty Ltd
Employment company for Mount Thorley and Warkworth mines
Australian Coal Resources Pty Ltd
(formerly Australian Coal Resources Ltd)
Coal investment holding company
1
1
5
Coal & Allied Operations Pty Ltd (iii)
Coal mining and related coal preparation and marketing
17,147,500
Lower Hunter Land Holdings Pty Ltd
Management company of Lower Hunter Land entities
Oaklands Coal Pty Ltd
Novacoal Australia Pty Ltd
CNA Resources Pty Ltd (formerly CNA
Resources Ltd) (iii)
Coal exploration
Holding company
Holding company
CNA Warkworth Pty Ltd
Coal mining
Coal & Allied Mining Services Pty Ltd
Employment company for Mount Thorley Co Venture
6
5,005
530,000
14,258,694
1
10,000
100
–
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
90
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
109
109
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NAME OF ENTITY
RW Miller (Holdings) Pty Ltd
(formerly RW Miller (Holdings) Ltd)
PRINCIPAL ACTIVITIES
Holding company
Mount Thorley Coal Loading Ltd
Operation of coal loading facility
Gwandalan Land Pty Ltd
Nords Wharf Land Pty Ltd
Catherine Hill Bay Land Pty Ltd
Black Hill Land Pty Ltd
Minmi Land Pty Ltd
Dormant
Dormant
Dormant
Dormant
Dormant
Namoi Valley Coal Pty Ltd
Holding company
CNA Warkworth Australasia Pty Ltd (iii)
Coal mining
CNA Bengalla Investments Pty Ltd
Holding company
Mount Thorley Operations Pty Ltd (iii)
Coal mining
Northern (Rhondda) Collieries Pty Ltd
Holding company
Miller Pohang Coal Company Pty Ltd
Sales company for Mount Thorley JV
Warkworth Mining Ltd
Mine management
Warkworth Pastoral Company Pty Ltd
Pastoral company for the Warkworth JV
Warkworth Tailings Treatment Pty Ltd
Tailings company for the Warkworth JV
Warkworth Coal Sales Ltd
Parallax Holdings Pty Ltd
White Mining Pty Ltd
(formerly White Mining Limited)
Sales company for Warkworth JV
Holding company
Holding company and mine management
Watagan Mining Company Pty Ltd
Holding company
Austar Coal Mine Pty Limited
Coal mining and sales
White Mining Services Pty Limited
Holding company
White Mining (NSW) Pty Limited
Coal mining and sales
Ashton Coal Operations Pty Limited
Mine management
Ashton Coal Mines Pty Ltd
(formerly Ashton Coal Mines Ltd)
Donaldson Coal Holdings Pty Ltd
(formerly Donaldson Coal Holdings Ltd)
Coal sales
Holding company
Gloucester (Sub Holdings 1) Pty Ltd
Holding company
Donaldson Coal Pty Ltd
Coal mining and sales
Donaldson Coal Finance Pty Ltd
Abakk Pty Ltd
Newcastle Coal Company Pty Ltd
Primecoal International Pty Ltd
Finance company
Holding company
Coal mining
Holding company
ISSUED AND FULLY
PAID SHARE CAPITAL
$
42,907,017
3,990,000
1
1
1
1
1
51,210,000
2
12
24,214
62,082
100
100
100
100
100
100
3,300,200
100
64,000,000
2
10
5
100
204,945,942
2
6,688,782
10
6
2,300,999
1
EQUITY HOLDING
2021
%
100
2020
%
100
70
100
100
100
100
100
100
100
100
100
100
80
80
85
85
85
–
100
100
100
100
100
100
100
100
100
100
100
100
100
100
70
100
100
100
100
100
100
100
100
100
100
80
80
85
85
85
100
100
100
100
100
100
100
100
100
100
100
100
100
100
100
(i) These subsidiaries have been granted relief from the requirement to prepare financial reports in accordance with ASIC Legislative Instrument 2016/785.
These subsidiaries represent the closed group for the purposes of the class order. For further information refer to Note E6. During 2020 the Watagan Group and
Yancoal Moolarben Pty Ltd were added to the closed group.
(ii) These subsidiaries are members of the extended closed group for the purposes of ASIC Legislative Instrument 2016/785. For further information refer to
Note E6.
(iii) These entities are considered to be the material controlled entities of the Group. Their principal activities are the exploration, development, production and
marketing of metallurgical and thermal coal.
(iv) These subsidiaries have been deregistered / dissolved during 2021.
(v) All subsidiaries included in the table above are incorporated and operate in Australia, except for Paway Ltd which is incorporated in the British Virgin Islands.
The subsidiaries as listed have share capital consisting solely of ordinary shares and subordinated capital notes, which are held
directly by the Group. The country of incorporation or registration is also their principal place of business.
110
110
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
E6 Deed of cross guarantee
Yancoal Australia Ltd and certain subsidiaries (refer to Note E5), are parties to a deed of cross guarantee under which each
company guarantees the debts of the others. By entering into the deed, the wholly owned entities have been relieved from the
requirement to prepare a financial report and Directors’ Report under Legislative Instrument 2016/785 issued by the Australian
Securities and Investments Commission.
(a) Consolidated statement of profit or loss and other comprehensive income
Set out below is a Consolidated Statement of Profit or Loss and Other Comprehensive Income and a summary of movements in
consolidated accumulated losses for the year ended 31 December 2021 of the entities included in the deed of cross guarantee
consisting of Yancoal Australia Ltd and certain subsidiaries. For details regarding the closed group and the extended closed group
refer to Note E5.
Revenue
Other income
Changes in inventories of finished goods and work in progress
Raw materials and consumables used
Employee benefits
Depreciation and amortisation
Coal purchase
Impairment of exploration and evaluation assets
Transportation
Contractual services and plant hire
Loss on reconsolidation of Watagan
Government royalties
Other operating expenses
Finance costs
Loss before income tax
Income tax benefit
Loss after income tax
Other comprehensive income
Items that may be reclassified subsequently to profit or loss
Cash flow hedges:
Fair value (losses) / gains taken to equity
Fair value losses transferred to profit or loss
Deferred income tax benefit / (expense)
Other comprehensive (expense) / income, net of tax
Total comprehensive expense
Summary of movements in consolidated accumulated losses
Accumulated losses at the beginning of the financial year
Dividends provided for or paid
Loss after income tax
Accumulated losses at the end of the financial year
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
852
105
(3)
(81)
(147)
(276)
(162)
(100)
(140)
(91)
–
(41)
(79)
(228)
(391)
201
(190)
1,000
776
(9)
(34)
(145)
(189)
(298)
–
(103)
(51)
(1,383)
(11)
(80)
(159)
(686)
154
(532)
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
(232)
153
24
(55)
(245)
(1,184)
–
(190)
(1,374)
309
194
(151)
352
(180)
(372)
(280)
(532)
(1,184)
111
111
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(b) Consolidated balance sheet
Set out below is a Consolidated Balance Sheet as at 31 December 2021 of the entities included in the deed of cross guarantee
consisting of Yancoal Australia Ltd and certain subsidiaries. For details regarding the closed group and the extended closed group
refer to Note E5.
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
959
1,679
34
49
–
501
937
30
44
4
2,721
1,516
14
6,791
746
70
1,364
29
–
21
9,035
19
6,808
792
397
1,279
30
189
20
9,534
11,756
11,050
3,319
1,770
47
4
–
93
9
13
3,370
1,885
2,891
7
87
266
3,251
6,621
5,135
6,698
(189)
(1,374)
5,135
3,724
5
–
273
4,002
5,887
5,163
6,482
(135)
(1,184)
5,163
Current assets
Cash and cash equivalents
Trade receivables
Inventories
Other current assets
Non contingent royalty receivable
Total current assets
Non-current assets
Trade and other receivables
Other financial assets
Property, plant and equipment
Exploration and evaluation assets
Mining tenements
Intangible assets
Deferred tax assets
Other non-current assets
Total non-current assets
Total assets
Current liabilities
Trade and other payables
Interest-bearing liabilities
Provisions
Non-contingent royalty payable
Total current liabilities
Non-current liabilities
Interest-bearing liabilities
Trade and other payable
Deferred tax liabilities
Provisions
Total non-current liabilities
Total liabilities
Net assets
Equity
Contributed equity
Reserves
Accumulated losses
Total equity
112
112
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F OTHER INFORMATION
This section provides details on other required disclosures relating to the Group to comply with the accounting standards and
other pronouncements. Information is provided on commitments, remuneration of auditors, events occurring after balance date,
reconciliation of profit after income tax to net cash inflow, other accounting policies and new and amended accounting policies.
F1 Commitments
(a) Capital commitments
Capital expenditure contracted for at the reporting date but not recognised as liabilities is as follows:
Property, plant and equipment
Not later than one year
Share of joint operations
Other
Later than one year but not later than five years
Exploration and evaluation
Not later than one year
Share of joint operations
F2 Remuneration of auditors
(a) ShineWing Australia
Audit and review of financial statements
Audit-related services
Other assurance services
Total remuneration of ShineWing Australia
(b) ShineWing China CPA / ShineWing (HK) CPA Ltd
Audit and review of financial statements
Other assurance services
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
187
1
5
1
194
42
–
–
3
45
31 DECEMBER
2021
$000
31 DECEMBER
2020
$000
1,233
35
50
1,318
10
–
10
1,585
27
45
1,657
15
59
74
(c) Other audit providers
During the year ended 31 December 2021 the Company incurred services provided by other audit providers for the audit and
review of financial statements and financial information for:
PROVIDER
Deloitte
Ernst & Young
PwC
Deloitte
ENTITY
Hunter Valley Operations
Middlemount
PWCS
PWCS
31 DECEMBER
2021
$000
31 DECEMBER
2020
$000
65
36
8
–
68
35
–
13
113
113
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F3 Reconciliation of profit / (loss) after income tax to net cash inflow from operating activities
Profit / (loss) after income tax
Non-cash flows in profit or loss:
Depreciation and amortisation of non-current assets
Release of provisions
Interest income release from joint venture loan
Unwinding of discount on provisions and deferred payables
Net loss on disposal of property, plant and equipment
Impairment of exploration and evaluation assets
Fair value losses recycled from hedge reserve
Foreign exchange gains
Unwind of non-substantial loan refinance
Loss / (gain) on remeasurement of contingent royalty
(Gain) / loss on remeasurement of royalty receivables
Accrual of royalty receivable
Gain on acquisition of interest in joint operations
Loss on reconsolidation of Watagan
Unwind of discount on non-contingent royalty
Share of (profit) / loss of equity-accounted investees, net of tax
Changes in assets and liabilities:
Decrease / (increase) in deferred tax
Decrease / (increase) in inventories
(Increase) / decrease in operating receivables
Increase / (decrease) in operating payables
Increase in prepayments
Net cash inflow from operating activities
F4 Historical information
The revenue, profit / (loss) after tax, assets and liabilities for the last five years at 31 December are:
2021
$M
5,404
1,103
(312)
791
791
–
2,531
9,269
11,800
825
4,828
5,653
6,147
2020
$M
3,473
(1,143)
103
(1,040)
(1,040)
–
1,343
9,712
11,055
1,199
4,663
5,862
5,193
2019
$M
4,459
767
(48)
719
719
–
1,773
9,320
11,093
2,112
2,818
4,930
6,163
Revenue
Profit / (loss) before income tax
Income tax (expense) / benefit
Profit / (loss) after tax
Profit / (loss) is attributable to:
Owners of Yancoal Australia Ltd
Non-controlling interests
Assets and Liabilities
Current assets
Non-current assets
Total assets
Current liabilities
Non-current liabilities
Total liabilities
Net assets
114
114
31 DECEMBER
2021
$M
31 DECEMBER
2020
$M
791
(1,040)
831
(44)
(14)
22
1
100
153
(61)
30
33
(4)
–
–
–
–
(57)
312
48
(423)
194
(12)
1,900
2018
$M
4,850
1,172
(320)
852
852
–
1,922
10,486
12,408
913
5,657
6,570
5,838
804
(27)
(9)
15
9
–
194
(24)
8
(23)
9
(15)
(653)
1,383
1
59
(111)
(26)
192
(113)
(28)
605
2017
$M
2,601
311
(82)
229
229
–
1,689
10,624
12,313
1,013
6,274
7,287
5,026
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
F5 Events occurring after the reporting period
No matter or circumstances have occurred subsequent to
the end of the financial year that has significantly affected,
or may significantly affect, the operations of the Group, the
result of those operations or the state of affairs of the Group
or Company in subsequent financial periods except for the
following:
• On 28 February 2022, the Directors declared an unfranked
dividend of $930 million, comprising a $0.5000 per share
final dividend and a $0.2040 per share special dividend,
both with a record date of 16 March and payment date of
29 April 2022.
F6 Other significant accounting policies
(a) Foreign currency transactions
(i) Functional and presentation currency
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity operates
(‘the functional currency’). The consolidated financial
statements are presented in Australian dollars, which is the
Group’s functional and presentation currency.
(ii) Transactions and balances
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the dates of the transactions. Foreign exchange gains and
losses resulting from the settlement of such transactions and
from the translation at year end exchange rates of monetary
assets and liabilities denominated in foreign currencies are
recognised in profit or loss, except when they are deferred in
equity as qualifying cash flow hedges.
Non-monetary items that are measured at fair value in a
foreign currency are translated using the exchange rates at
the date when the fair value was determined. Translation
differences on assets and liabilities carried at fair value are
reported as part of the fair value gain or loss. Non-monetary
items that are measured in terms of historical cost in a foreign
currency are translated using the exchange rate at the date of
the transaction.
(b) Financial instruments
Financial assets and financial liabilities are recognised when a
Group entity becomes a party to the contractual provisions of
the instrument.
Financial assets and financial liabilities are initially measured
at fair value. Transaction costs that are directly attributable
to the acquisition or issue of financial assets and financial
liabilities are added to or deducted from the fair value of the
financial assets or financial liabilities, as appropriate, on initial
recognition.
(i) Financial assets
All regular way purchases or sales of financial assets are
recognised and derecognised on a trade date basis. Regular
way purchases or sales are purchases or sales of financial
assets that require delivery of assets within the time frame
established by regulation or convention in the marketplace.
All recognised financial assets are subsequently measured in
their entirety at either amortised cost or fair value, depending
on the classification of the financial assets.
Classification of financial assets
Debt instruments that meet the following conditions are
subsequently measured at amortised cost:
•
the financial asset is held within a business model whose
objective is to hold financial assets in order to collect
contractual cash flows; and
the contractual terms of the financial asset give rise on
specified dates to cash flows that are solely payments of
principal and interest on the principal amount outstanding.
•
Amortised cost and effective interest method
The effective interest method is a method of calculating the
amortised cost of a debt instrument and of allocating interest
income over the relevant period.
For financial instruments the effective interest rate is the
rate that exactly discounts estimated future cash receipts
(including all fees and points paid or received that form an
integral part of the effective interest rate, transaction costs
and other premiums or discounts) excluding ECL, through the
expected life of the debt instrument, or, where appropriate,
a shorter period, to the gross carrying amount of the debt
instrument on initial recognition.
The amortised cost of a financial asset is the amount at which
the financial asset is measured at initial recognition minus the
principal repayments, plus the cumulative amortisation using
the effective interest method of any difference between that
initial amount and the maturity amount, adjusted for any loss
allowance. On the other hand, the gross carrying amount of a
financial asset is the amortised cost of a financial asset before
adjusting for any loss allowance.
Financial assets at Fair Value Through Profit or Loss
(“FVTPL”)
Financial assets that do not meet the criteria for being
measured at amortised cost or fair value through other
comprehensive income (”FVTOCI”) are measured at FVTPL.
Specifically:
•
Investments in equity instruments are classified as
at FVTPL, unless the Group designates an equity
investment that is neither held for trading nor contingent
consideration arising from a business combination as at
FVTOCI on initial recognition, and
• Debt instruments that do not meet the amortised cost
criteria or the FVTOCI criteria are classified as at FVTPL. In
addition, debt instruments that meet either the amortised
cost criteria or the FVTOCI criteria may be designated
as at FVTPL upon initial recognition if such designation
eliminates or significantly reduces a measurement or
recognition inconsistency that would arise from measuring
assets or liabilities or recognizing the gains and losses on
them on different bases. The Group has not designated any
debt instruments as at FVTPL.
Financial assets at FVTPL are measured at fair value, with
changes in fair value arising from remeasurement recognised
in profit or loss. The net gain or loss recognised in profit or
115
115
ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
loss excludes any dividend or interest earned on the financial
assets and is included in the ‘other revenue’ line item.
Significant increase in credit risk
In assessing whether the credit risk on a financial instrument
has increased significantly since initial recognition, the Group
compares the risk of a default occurring on the financial
instrument as at the reporting date with the risk of a default
occurring on the financial instrument as at the date of
initial recognition. In making this assessment, the Group
considers both quantitative and qualitative information
that is reasonable and supportable, including historical
experience and forward-looking information that is available
without undue cost or effort. Forward-looking information
considered includes the future prospects of the industries in
which the Group’s debtors operate, obtained from economic
expert reports, financial analysts, governmental bodies,
relevant think-tanks and other similar organisations, as well
as consideration of various external sources of actual and
forecast economic information that relate to the Group’s core
operations.
In particular, the following information is taken into account
when assessing whether credit risk has increased significantly
since initial recognition:
• an actual or expected significant deterioration in the
•
financial instrument’s external (if available) or internal
credit rating;
significant deterioration in external market indicators
of credit risk for a particular financial instrument, e.g. a
significant increase in the credit spread, the credit default
swap prices for the debtor, or the length of time or the
extent to which the fair value of a financial asset has been
less than its amortised cost;
• existing or forecast adverse changes in business, financial
or economic conditions that are expected to cause a
significant decrease in the debtor’s ability to meet its debt
obligations;
• an actual or expected significant deterioration in the
•
operating results of the debtor;
significant increases in credit risk on other financial
instruments of the same debtor; and
• an actual or expected significant adverse change in the
regulatory, economic, or technological environment of the
debtor that results in a significant decrease in the debtor’s
ability to meet its debt obligations.
Irrespective of the outcome of the above assessment, the
Group presumes that the credit risk on a financial asset
has increased significantly since initial recognition when
contractual payments are more than 30 days past due, unless
the Group has reasonable and supportable information that
demonstrates otherwise.
Despite the foregoing, the Group assumes that the credit
risk on a financial instrument has not increased significantly
since initial recognition if the financial instrument is
determined to have low credit risk at the reporting date. A
financial instrument is determined to have low credit risk
if i) the financial instrument has a low risk of default, ii) the
borrower has a strong capacity to meet its contractual cash
flow obligations in the near term and iii) adverse changes in
economic and business conditions in the longer term may, but
will not necessarily, reduce the ability of the borrower to fulfill
its contractual cash flow obligations. The Group considers a
financial asset to have low credit risk when it has an internal
or external credit rating of ‘investment grade’ as per globally
understood definition.
The Group regularly monitors the effectiveness of the criteria
used to identify whether there has been a significant increase
in credit risk and revises them as appropriate to ensure that
the criteria are capable of identifying significant increase in
credit risk before the amount becomes past due.
Definition of default
The Group considers the following as constituting an event
of default for internal credit risk management purposes as
historical experience indicates that receivables that meet
either of the following criteria are generally not recoverable.
• when there is a breach of financial covenants by the
•
counterparty; or
information developed internally or obtained from
external sources indicates that the debtor is unlikely to
pay its creditors, including the Group, in full.
Irrespective of the above analysis, the Group considers
that default has occurred when a financial asset is more
than 90 days past due unless the Group has reasonable and
supportable information to demonstrate that a more lagging
default criterion is more appropriate.
Credit-impaired financial assets
A financial asset is credit-impaired when one or more events
that have a detrimental impact on the estimated future cash
flows of that financial asset have occurred. Evidence that a
financial asset is credit-impaired includes observable data
about the following events:
a) significant financial difficulty of the issuer or the borrower;
b) a breach of contract, such as a default or past due event;
c) the lender(s) of the borrower, for economic or contractual
reasons relating to the borrower’s financial difficulty,
having granted to the borrower a concession(s) that the
lender(s) would not otherwise consider; or
it is becoming probable that the borrower will enter into
bankruptcy or other financial reorganisation.
d)
Measurement and recognition of ECL
The measurement of ECL is a function of the probability of
default, loss given default (i.e. the magnitude of the loss if
there is a default) and the exposure at default (including
consideration of enforceability and recoverability under any
guarantees). The assessment of the probability of default
and loss given default is based on historical data adjusted by
forward-looking information as described above. As for the
exposure at default, for financial assets, this is represented
by the assets’ gross carrying amount at the reporting date
and any undrawn, but committed loans associated with the
financial asset.
For financial assets, the ECL is estimated as the difference
between all contractual cash flows that are due to the Group in
accordance with the contract and all the cash flows that the
116
116
YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Group expects to receive, discounted at the original effective
interest rate.
to the net carrying amount on initial recognition. Interest
expense is recognised on an effective interest basis.
Where lifetime ECL is measured on a collective basis to cater
for cases where evidence of significant increases in credit risk
at the individual instrument level may not yet be available, the
financial instruments are grouped on the following basis:
• Nature of financial instruments;
• Past-due status;
• Nature, size and industry of debtors; and
• External credit ratings where available.
The grouping is regularly reviewed by management to ensure
the constituents of each group continue to share similar credit
risk characteristics.
If the Group has measured the loss allowance for a financial
instrument at an amount equal to lifetime ECL in the previous
reporting period, but determines at the current reporting
date that the conditions for lifetime ECL are no longer met,
the Group measures the loss allowance at an amount equal to
12 month ECL at the current reporting date.
The Group recognises an impairment gain or loss in profit
or loss for all financial instruments with a corresponding
adjustment to their carrying amount through a loss allowance
account.
Impairment of trade receivables
The Group has applied the simplified approach to measuring
ECL to trade and other receivables using a life-time
expected loss allowance. The Group has also used the
practical expedient of a provisions matrix using fixed rates
to approximate the ECL. These provisions are considered
representative across all business and geographic segments
of the Group based on historical credit loss experience and
considered future information.
(ii) Financial liabilities and equity instruments
Debt and equity instruments issued by the Group are classified
as either financial liabilities or as equity in accordance with the
substance of the contractual arrangements and the definitions
of a financial liability and an equity instrument.
An equity instrument is any contract that evidences a residual
interest in the assets of the Group after deducting all of its
liabilities.
Financial liabilities
The Group’s financial liabilities including trade and other
payables, non-contingent royalty payable, interest-bearing
liabilities which are initially recognised at fair value and
subsequently measured at amortised cost, using the effective
interest method.
Effective interest method
The effective interest method is a method of calculating the
amortised cost of a financial liability and of allocating interest
expense over the relevant period. The effective interest rate is
the rate that exactly discounts estimated future cash payments
(including all fees paid or points paid or received that form an
integral part of the effective interest rate, transaction costs
and other premiums or discounts) through the expected life of
the financial liability, or, where appropriate, a shorter period,
Equity instruments
An equity instrument is any contract that evidences a residual
interest in the assets of an entity after deducting all of its
liabilities. Equity instruments issued by the Company are
recognised at the proceeds received, net of direct issue costs.
(iii) Accounting for derivative financial instruments and
hedging activities
Derivatives are initially recognised at fair value at the
date when a derivative contract is entered into and are
subsequently remeasured at their fair value at the end of the
reporting period. The resulting gain or loss is recognised in
profit or loss immediately unless the derivative is designated
and effective as a hedging instrument, in which event the
timing of the recognition in profit or loss depends on the
nature of the hedge relationship. The Group designates certain
derivatives as either: (i) hedges of the fair value of recognised
assets or liabilities (fair value hedge); and (ii) hedges of highly
probable forecast transactions (cash flow hedge).
The fair values of various derivative instruments used for
hedging purposes are disclosed in Note D7. The full fair value
of a hedging derivative is classified as a non-current asset or
liability when the remaining maturity of the hedged item is
more than 12 months and as a current asset or liability when the
remaining maturity of the hedged item is less than 12 months.
At the inception of the hedging relationship the Group
documents the relationship between the hedging instrument
and the hedged item, along with its risk management objectives
and its strategy for undertaking various hedge transactions.
Furthermore, at the inception of the hedge and on an ongoing
basis, the Group documents whether the hedging instrument
that is used in a hedging relationship is highly effective
in offsetting changes in fair values or cash flows of the
hedged item.
Cash flow hedges
The effective portion of changes in the fair value of derivatives
or other financial instruments that are designated and qualify
as cash flow hedges are recognised in other comprehensive
income and accumulated in cash flow hedge reserve. The
gain or loss relating to the ineffective portion is recognised
immediately in profit or loss.
Amounts previously recognised in other comprehensive
income and accumulated in the cash flow hedge reserve in
equity are reclassified to profit or loss in the periods when the
hedged item is recognised in profit or loss.
Hedge accounting is discontinued when the Group revokes
the hedging relationship, the hedging instrument expires or is
sold, terminated, or exercised, or when it no longer qualifies
for hedge accounting. Any gain or loss recognised in other
comprehensive income and accumulated in equity at that
time remains in equity and is recognised when the forecast
transaction is ultimately recognised in profit or loss. When a
forecast transaction is no longer expected to occur, the gain
or loss accumulated in equity is recognised immediately in the
profit or loss.
117
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ANNUAL REPORTANNUAL REPORT
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
Derivatives that do not qualify for hedge accounting
and those not designated as hedging instruments
Changes in the fair value of any derivative instruments that do
not qualify for hedge accounting and those not designated as
hedges are recognised immediately in the profit or loss.
(iv) Derecognition
A financial asset is derecognised only when the contractual
rights to the cash flows from the asset expire, or when it
transfers the financial asset and substantially all the risks
and rewards of ownership of the asset to another entity.
On derecognition of a financial asset in its entirety, the
difference between the asset’s carrying amount and the
sum of the consideration received and receivable and the
cumulative gain or loss that had been recognised in other
comprehensive income and accumulated in investment
revaluation reserve is recognised in profit or loss.
A financial liability is derecognised when, and only when,
the Group’s obligations are discharged, cancelled or expire.
The difference between the carrying amount of the financial
liability derecognised and the consideration paid and payable
is recognised in profit or loss.
F7 New and amended standards adopted by the Group
Other amending accounting standards and interpretations
The relevant accounting amendments and interpretations
effective for the current reporting period are:
• AASB 2020-8 Amendments to Australian Accounting
Standards – Interest Rate Benchmark Reform – Phase 2.
The adoption of the amendments and interpretations have not resulted in any changes to the Group’s accounting policies and has
no effect on the amounts reported for the current or prior periods.
F8 New accounting standards and interpretations
Certain new accounting standards and interpretations have been published that are not mandatory for 31 December 2021
reporting periods and have not been early adopted by the Group. The Group’s assessment of the impact of these new standards
and interpretations is set out below.
REFERENCE
AASB 2020-1,
AASB 2020-6
DETAILS OF NEW STANDARD/AMENDMENT/INTERPRETATION
Amendments to Australian Accounting Standards – Classification of Liabilities as Current or
Non-current
APPLICATION DATE
FOR THE GROUP
1 January 2023
AASB 2020-3
• The amendments specify that the conditions which exist at the end of the reporting period
are those which will be used to determine if a right to defer settlement of a liability exists.
• Management expectations about events after the balance sheet date, for example on
whether a covenant will be breached, or whether early settlement will take place, are not
relevant.
• The amendments clarify the situations that are considered settlement of a liability.
Impact:
There is no material impact expected on the Group’s financial report.
Amendments to Australian Accounting Standards - Annual Improvements 2018 – 2020 and
Other Amendments
The AASB has made:
• AASB 116 Property, Plant and Equipment, in relation to proceeds before intended use.
AASB 116 was amended to prohibit an entity from deducting from the cost of an item of
property, plant and equipment, the proceeds from selling items produced before that
asset is available for use. An entity is also required to measure production costs of the sold
items by applying AASB 102 Inventories. Proceeds from selling any such items, and the cost
of those items, are recognised in profit or loss in accordance with applicable standards.
• AASB 137 Provisions, Contingent Liabilities and Contingent Assets, in relation to onerous
contracts and the cost of fulfilling a contract
• AASB 9 Financial Instruments, to clarify the fees an entity includes when assessing whether
the terms of a new or modified financial liability are substantially different from the terms
of the original financial liability; and
• AASB 3 Business Combinations, in relation to references to the Conceptual Framework.
Impact:
The Group does not anticipate any material impact resulting from adhering to this standard on
the Group’s financial report.
1 January 2022
118
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YANCOAL 2021YANCOAL 2021
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
APPLICATION DATE
FOR THE GROUP
1 January 2022
1 January 2022
REFERENCE
AASB 2014-10,
AASB 2017-5
AASB 2021-2
DETAILS OF NEW STANDARD/AMENDMENT/INTERPRETATION
Amendments to Australian Accounting Standards – Sale or Contribution of Assets between an
Investor and its Associate or Joint Venture
The amendments clarify that a full gain or loss is recognised when a transfer to an associate or
joint venture involves a business as defined by AASB 3 Business Combinations. Any gain or loss
resulting from the sale or contribution of assets that does not constitute a business, however, is
recognised only to the extent of unrelated investors’ interests in the associate or joint venture.
AASB 2015-10 deferred the mandatory effective date (application date) of AASB 2014-10 so that
the amendments were required to be applied for annual reporting periods beginning on or after
1 January 2018 instead of 1 January 2016. AASB 2017-5 further defers the effective date of the
amendments made in AASB 2014-10 to periods beginning on or after 1 January 2022.
Impact:
The Directors anticipate that the adoption of this amendment will only have an impact on the
financial statements if the Group was to transfer to an associate or joint venture involving a
business. At present, there is no material impact expected on the Group’s financial report.
Amendments to Australian Accounting Standards – Disclosure of Accounting Policies and
Definition of Accounting Estimates
The changes to AASB 108 focus on accounting estimates and clarify the following:
• Under the new definition of accounting estimates, they are “monetary amounts in financial
statements that are subject to measurement uncertainty”.
• Entities develop accounting estimates if accounting policies require items in financial
statements to be measured in a way that involves measurement uncertainty.
• Clarifies that a change in accounting estimate that results from new information or new
developments is not the correction of an error. In addition, the effects of a change in an
input or a measurement technique used to develop an accounting estimate are changes in
accounting estimates if they do not result from the correction of prior period errors.
• A change in an accounting estimate may affect only the current period’s profit or loss, or the
profit or loss of both the current period and future periods. The effect of the change relating
to the current period is recognised as income or expense in the current period. The effect, if
any, on future periods is recognised as income or expense in those future periods.
Disclosure of Accounting Policies amends AASB 101 in the following ways:
• An entity will be required to disclose its material accounting policy information instead of its
significant accounting policies.
• Explanations have been provided as to how an entity can identify material accounting
policy information and to give examples of when accounting policy information is likely to
be material.
• The amendments clarify that accounting policy information may be material because of its
nature, even if the related amounts are immaterial.
• The amendments clarify that accounting policy information is material if users of an entity’s
financial statements would need it to understand other material information in the financial
statements.
• The amendments clarify that if an entity discloses immaterial accounting policy information,
such information shall not obscure material accounting policy information.
Impact:
The Group is still in the process of assessing the impact of this amendment.
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NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
APPLICATION DATE
FOR THE GROUP
1 January 2023
REFERENCE
AASB 2021-5
DETAILS OF NEW STANDARD/AMENDMENT/INTERPRETATION
Amendments to Australian Accounting Standards – Deferred Tax related to Assets and Liabilities
arising from a Single Transaction
The amendments to AASB 112 clarify that the exception would not normally apply. That is,
the scope of this exception has been narrowed such that it no longer applies to transactions
that, on initial recognition, give rise to equal amounts of taxable and deductible temporary
differences.
The amendments to AASB 112:
• Apply to transactions that occur on or after the beginning of the earliest comparative period
presented; and
• Require entities to also recognise deferred tax for all temporary differences related to
leases, decommissioning, restoration and similar liabilities at the beginning of the earliest
comparative period presented.
Impact:
The Group is currently adhering to this standard and there is no material impact expected on
the Group’s financial report.
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DIRECTORS’ DECLARATION
DIRECTORS’ DECLARATION
FOR THE YEAR ENDED 31 DECEMBER 2021
In the Directors’ opinion:
a. the financial statements and notes set out on pages 56 to 120 are in accordance with the Corporations Act 2001, including:
complying with Accounting Standards, the Corporations Regulations 2001 and other mandatory professional reporting
requirements, and
i.
ii. giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its performance for the year
ended on that date, and
b. there are reasonable grounds to believe that the Company will be able to pay its debts as and when they become due and
payable, and
c. at the date of this declaration, there are reasonable grounds to believe that the members of the extended closed group
identified in Note E6 will be able to meet any obligations or liabilities to which they are, or may become, subject by virtue of
the deed of cross guarantee described in Note E6.
Note A(i) confirms that the financial statements also comply with International Financial Reporting Standards as issued by the
International Accounting Standards Board.
The Directors have been given the declarations by individuals performing the function of the Chief Executive Officer and Chief
Financial Officer required by section 295A of the Corporations Act 2001.
This declaration is made in accordance with a resolution of the Directors.
Gregory James Fletcher
Director
Sydney
28 February 2022
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INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF YANCOAL AUSTRALIA LTD
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INDEPENDENT AUDITOR’S REPORT
TO THE MEMBERS OF YANCOAL AUSTRALIA LTD
Report on the Audit of the Financial Statements
Opinion
We have audited the financial statements of Yancoal Australia Ltd (“the Company”) and its subsidiaries (“the
Group”) which comprises the consolidated balance sheet as at 31 December 2021, the consolidated statement of
profit or loss and other comprehensive income, the consolidated statement of changes in equity and the
consolidated statement of cash flows for the year then ended, and notes to the financial statements, including a
summary of significant accounting policies, and the directors’ declaration.
In our opinion, the accompanying financial statements of the Group is in accordance with the Corporations Act
2001, including:
a. giving a true and fair view of the Group’s financial position as at 31 December 2021 and of its financial
performance for the year then ended
b. complying with Australian Accounting Standards and the Corporations Regulations 2001, and
c. complying with International Financial Reporting Standards (“IFRS”) as disclosed in Note A(i).
Basis for Opinion
We conducted our audit in accordance with Australian Auditing Standards. Our responsibilities under those
standards are further described in the Auditor’s Responsibilities for the Audit of the Financial Statements section of
our report. We are independent of the Group in accordance with the auditor independence requirements of the
Corporations Act 2001 and the ethical requirements of the Accounting Professional & Ethical Standards Board’s
APES 110 Code of Ethics for Professional Accountants (including Independence Standards) (“the Code”) that are
relevant to our audit of the financial statements in Australia. We have also fulfilled our other ethical responsibilities
in accordance with the Code.
We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinion.
Key Audit Matters
Key audit matters are those matters that, in our professional judgement, were of most significance in our audit of
the financial statements of the current period. These matters were addressed in the context of our audit of the
financial statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on
these matters.
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INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
1. Recoverability of long-life assets (Note C3)
Area of focus
How our audit addressed the area of focus
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A substantial portion of the value of the Group’s non-
current assets are tangible and intangible assets which
are subject to an impairment assessment in
accordance with AASB 136 Impairment of Assets.
These assets represent 86% of the Group’s non-
current assets which includes property, plant and
equipment (note C1), mining tenements (note C2) and
intangible assets (note C5).
Significant judgement is required to assess the fair
value of these assets. We have determined this to be
a key audit matter
Our audit procedures included:
Considering the assessment of the existence of
impairment indicators
Assessing the basis for determining the Cash-
Generating Units (CGUs)
Obtaining an understanding and assessing key
controls over the preparation of the fair value
models
Obtaining an understanding of the methods,
assumptions and data used in the fair value
models
Testing the accuracy of the fair value models
Assessing whether the methods, assumptions and
data were appropriate
Obtaining the assistance of valuation experts in
assessing whether certain key assumptions are
appropriate, and
Assessing the adequacy of the Group’s
impairment disclosures relating to the
recoverability of long-life assets.
2. Recoverability of interests in the Middlemount Joint Venture (Middlemount) (Note C3 and C10)
Area of focus
How our audit addressed the area of focus
The Group has $299 million of investments and
receivables in Middlemount and a royalty receivable of
$221 million. The equity investment and receivables
are subject to impairment testing under AASB 9
Financial Instruments and AASB 136 Impairment of
Assets and the royalty receivable must be fair valued
in accordance with AASB 13 Fair Value Measurement.
Our audit procedures included:
Considering the assessment of the existence of
impairment indicators
Obtaining an understanding and assessing key
controls over the preparation of the fair value
model
Significant judgement is required to assess the fair
value of the Middlemount investment, loan
receivables and royalty receivable. We have
determined this to be a key audit matter.
Obtaining an understanding of the methods,
assumptions and data used in the fair value model
Testing the accuracy of the fair value model
Assessing whether the methods, assumptions and
data were appropriate
Obtaining the assistance of valuation experts in
assessing whether certain key assumptions are
appropriate
Obtaining the group reporting opinion and other
deliverables from Middlemount’s auditor, and
Assessing the adequacy of the Group’s impairment
disclosures relating to Middlemount.
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3. Exploration and evaluation asset impairment (Note C4)
Area of focus
How our audit addressed the area of focus
Take the lead
The Group has $541 million of exploration and
evaluation assets. During the year $100 million of
these assets associated with Donaldson were
impaired.
Significant judgement is required to assess
impairment of exploration and evaluation assets. We
have determined this to be a key audit matter.
4. Taxation (Note B6)
Area of focus
The Group is subject to income taxes in Australia.
Significant judgement is required in determining the
provision for income tax and associated deferred
taxation balances. The Group estimates its tax
liabilities based on the Group’s interpretation of tax
laws and regulations. Where the final outcome of
these matters is different from the amounts that were
initially recorded, such differences will impact the
current and deferred tax assets and liabilities in the
period in which such a determination is made.
The Group is involved in a significant number and
value of related party transactions that are subject to
analysis under the transfer pricing provisions of the
international taxation laws and regulations.
Significant judgement is required to calculate taxation
balances. Due to the size of the deferred tax balances
on a gross basis we consider this a key audit matter.
Our audit procedures included:
Assessing management’s determination of the
areas of interest
Assessing the Group’s rights to tenure for a
sample of tenements
Considering the assessment of the future
exploration plans for each area of interest
Obtaining an understanding and assessing key
controls over the assessment of the likelihood of
future economic benefits
Obtaining an understanding of the methods,
assumptions and data used in the assessment of
the likelihood of future economic benefits
Assessing whether the methods, assumptions and
data were appropriate
Testing the accuracy of the impairment
recognised, and
Assessing the adequacy of the Group’s
exploration and evaluation assets disclosures.
How our audit addressed the area of focus
Our audit procedures included:
Check the accuracy of the taxation work papers
provided by the Group
Engaging the use of our tax experts to assist the
audit team with:
o Assessing the tax calculations
o Assessing transfer pricing documentation
o Considering the prior period tax returns, and
o Evaluating any uncertain tax positions.
Assessing the adequacy of the Group’s taxation
disclosures.
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INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
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Information Other than the Financial Statements and Auditor’s Report Thereon
The directors are responsible for the other information. The other information comprises the information included in
the Group’s annual report for the year ended 31 December 2021 but does not include the financial statements and
our auditor’s report thereon.
Our opinion on the financial statements does not cover the other information and accordingly we do not express
any form of assurance conclusion thereon.
In connection with our audit of the financial statements, our responsibility is to read the other information and, in
doing so, consider whether the other information is materially inconsistent with the financial statements or our
knowledge obtained in the audit or otherwise appears to be materially misstated.
If, based on the work we have performed, we conclude that there is a material misstatement of this other
information, we are required to report that fact. We have nothing to report in this regard.
Responsibilities of the Directors for the Financial Statements
The directors of the Company are responsible for the preparation of the financial statements that gives a true and
fair view in accordance with Australian Accounting Standards and the Corporations Act 2001 and for such internal
control as the directors determine is necessary to enable the preparation of the financial statements that gives a
true and fair view and is free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the directors are responsible for assessing the ability of the Group to continue
as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis
of accounting unless the directors either intend to liquidate the Group or to cease operations, or has no realistic
alternative but to do so.
The directors are responsible for overseeing the Group’s financial reporting process. In Note A(i), the directors also
state, in accordance with Accounting Standard AASB 101 Presentation of Financial Statements, that the financial
statements comply with IFRS.
Auditor’s Responsibilities for the Audit of the Financial Statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from
material misstatement, whether due to fraud or error, and to issue an auditor’s report that includes our opinion.
Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance
with Australian Auditing Standards will always detect a material misstatement when it exists. Misstatements can
arise from fraud or error and are considered material if, individually or in the aggregate, they could reasonably be
expected to influence the economic decisions of users taken on the basis of these financial statements.
As part of an audit in accordance with the Australian Auditing Standards, we exercise professional judgement and
maintain professional scepticism throughout the audit. We also:
Identify and assess the risks of material misstatement of the financial statements, whether due to fraud or error,
design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and
appropriate to provide a basis for our opinion. The risk of not detecting a material misstatement resulting from
fraud is higher than for one resulting from error, as fraud may involve collusion, forgery, intentional omissions,
misrepresentations, or the override of internal control.
Obtain an understanding of internal control relevant to the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the
Group’s internal control.
Evaluate the appropriateness of accounting policies used and the reasonableness of accounting estimates and
related disclosures made by the directors.
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INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
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Conclude on the appropriateness of the directors’ use of the going concern basis of accounting and, based on
the audit evidence obtained, whether a material uncertainty exists related to events or conditions that may cast
significant doubt on the Group’s ability to continue as a going concern. If we conclude that a material uncertainty
exists, we are required to draw attention in our auditor’s report to the related disclosures in the financial
statements or, if such disclosures are inadequate, to modify our opinion. Our conclusions are based on the audit
evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the
Group to cease to continue as a going concern.
Evaluate the overall presentation, structure and content of the financial statements, including the disclosures,
and whether the financial statements represents the underlying transactions and events in a manner that
achieves fair presentation.
Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business
activities within the Group to express an opinion on the financial statements. We are responsible for the
direction, supervision and performance of the Group audit. We remain solely responsible for our audit opinion.
We communicate with the directors regarding, among other matters, the planned scope and timing of the audit and
significant audit findings, including any significant deficiencies in internal control that we identify during our audit.
We also provide the directors with a statement that we have complied with relevant ethical requirements regarding
independence, and to communicate with them, all relationships and other matters that may reasonably be thought
to bear on our independence, and where applicable, actions taken to eliminate threats or safeguards applied.
From the matters communicated with the directors, we determine those matters that were of most significance in
the audit of the financial statements of the current period and are therefore the key audit matters. We describe
these matters in our auditor’s report unless law or regulation precludes public disclosure about the matter or when,
in extremely rare circumstances, we determine that a matter should not be communicated in our report because
the adverse consequences of doing so would reasonably be expected to outweigh the public interest benefits of
such communication.
Report on the Remuneration Report
Opinion on the Remuneration Report
We have audited the Remuneration Report included in pages 27 to 38 of the directors’ report for the year ended 31
December 2021.
In our opinion, the Remuneration Report of Yancoal Australia Ltd for the year ended 31 December 2021 complies
with section 300A of the Corporations Act 2001.
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INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
INDEPENDENT AUDITOR’S REPORT
Responsibilities
The directors of the Company are responsible for the preparation and presentation of the Remuneration Report in
accordance with section 300A of the Corporations Act 2001. Our responsibility is to express an opinion on the
Remuneration Report, based on our audit conducted in accordance with Australian Auditing Standards.
Take the lead
ShineWing Australia
Chartered Accountants
R Blayney Morgan
Partner
Yang (Bessie) Yang
Partner
Melbourne, 28 February 2022
Sydney, 28 February 2022
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CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
Introduction
The Board and management of the Company are committed
to corporate governance. The Company adopts an approach to
corporate governance based on international good practice as
well as Australian and Hong Kong law requirements.
ASX Corporate Governance Statement
To the extent appropriate to the scale and nature of
the Company’s business, the Company has adopted the
4th edition of the ASX Corporate Governance Council’s
Principles and Recommendations (“ASX Recommendations”).
This statement sets out the Company’s compliance with the
ASX Recommendations and the main corporate governance
policies and practices adopted by the Company.
HK Listing and Compliance with the Hong Kong Corporate
Governance Code
The Company has also adopted the provisions of the Corporate
Governance Code in Appendix 14 (the “HK Code”) to the Rules
Governing the Listing of Securities on HKEx (the “HK Listing
Rules”) as part of its corporate governance policy.
The Company has implemented and applied the principles
contained within the HK Code in conducting the Company’s
business, including reflecting those principles in the Company’s
Board Charter and relevant policies. In the opinion of the
Board, the Company has complied with the code provisions
of the HK Code (in addition to the relevant principles of the
ASX Recommendations, unless otherwise disclosed) for the
financial year ended 31 December 2021. The conduct of the
Company’s compliance with the principles is discussed further
in this statement.
1. OUR BOARD
Role of the Board
The Board is responsible for the overall corporate governance,
leadership and control of the Company including directing the
affairs of the Company, setting and monitoring the Company’s
risk management strategy and overseeing the appointment,
remuneration and performance of senior Executives. The
Board is committed to maximising performance, generating
appropriate levels of shareholder value and financial return,
and sustaining the growth and success of the Company over
the longer-term. Directors are expected to exercise their
decision making in the best interests of the Company.
The Board’s role and responsibilities and its delegation of
authority to standing committees and senior Executives have
been formalised in a Board Charter. The Board Charter can
be found within the Corporate Governance section of the
Company’s website.
To assist the Board in making independent judgements,
the Board Charter sets out the procedure by which the
Board collectively, and each individual Director, can seek
independent professional advice, at the Company’s expense.
Delegation to management
The Board delegates responsibility for the day to day
management of the Company’s affairs and implementation
of the strategy and policy initiatives set by the Board to the
Chair of the Executive Committee (“CEC”), the CEO and other
senior Executives. The Executive Committee is a management
committee comprising the CEC, CEO, the CFO and any other
senior Executives that the Board resolves from time to time
will be members of the Executive Committee.
The Executive Committee Charter sets out the functions of
the Executive Committee and the duties of the CEC, CEO and
CFO and provides for a clear division of responsibility between
management and the Board. The Executive Committee Charter
is supplemented with the financial decision authorities matrix
and appropriate approval thresholds at different management
/ executive levels, which have been approved by the Board.
Given the delegation of the day-to-day management of the
Company, it is the responsibility of management, with the
assistance of the Company Secretary, to provide the Directors
with timely, adequate and appropriate information to assist
the Directors in making informed decisions and to be able to
effectively perform their duties and responsibilities.
Structure of the Board
During the financial year ended 31 December 2021, the Board
composition was:
EXECUTIVE DIRECTORS
Ning Zhang
NON-EXECUTIVE DIRECTORS
Baocai Zhang (Chairman)
Cunliang Lai
Qingchun Zhao
Xiangqian Wu
Xing Feng
INDEPENDENT NON-EXECUTIVE DIRECTORS
Gregory James Fletcher
Geoffrey William Raby
Helen Jane Gillies
The skills, experience and expertise of each Director and the
period that each Director has held office is disclosed in the
Information on Directors in the Directors’ Report, on page 14.
The Constitution provides that there will be a minimum of 4
and a maximum of 11 Directors of the Company, unless the
Company resolves otherwise at a general meeting.
The number of meetings held by the Board during 2021 and
each director’s attendance at these meetings is set out in the
Directors’ Report on page 24.
Chairman of the Board
The current Chairman, Baocai Zhang, was nominated by the
Company’s majority shareholder, Yankuang Energy Group
Company Limited (“Yankuang Energy”). The Chairman leads
the Board and is responsible for the efficient organisation
and conduct of the Board’s functions. The Chairman ensures
that Directors have the opportunity to contribute to Board
deliberations. The Chairman regularly communicates with the
CEC and CEO to review key issues and performance trends.
The current CEO is David James Moult. The CEO is responsible
for conduct and supervision of the management function of
the Company, including implementing strategic objectives,
plans and budgets approved by the Board. The CEO has overall
responsibility for the Company’s operations (other than as
delegated to the CEC) and undertakes such responsibilities as
may be delegated to him by the Board from time to time.
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The CEO is accountable to the Board and reports to the
Chairman of the Board and the CEC.
The roles of the Chairman, CEC and the CEO are separate
and assumed by different individuals to ensure a balance of
power and authority, so that power is not concentrated in
any one individual of the Board. There is a clear division of
responsibilities between the Chairman, CEC and the CEO.
Board skills matrix
The Board represents a balance of skills, experience and
diversity of perspectives appropriate to the requirements of
the Company’s business.
The table below sets out the skills and experience that are
currently represented on the Board.
BOARD COLLECTIVE KEY SKILLS AND EXPERIENCE
Mining / exploration
and production/
Engineering
Capital projects
Trading / marketing
Strategy
Leadership
Board experience
•
•
•
•
•
•
•
•
Corporate governance
•
Accounting / audit /
risk management
Government / policy
Legal / regulatory
Health, safety and
environment
Human resources
International business
expertise
•
•
•
•
•
•
•
•
Executive experience in mining, engineering or
resources companies
Experience in engineering, exploration and
production projects both domestically and
internationally
Experience in assessing commercial viability of
major capital projects
Experience in the delivery of large-scale capital
projects
Relevant experience in marketing and trading of
coal
Experience in developing and implementing
successful business strategy, including
appropriately overseeing management on the
delivery of agreed strategic planning objectives
Experience at a senior executive level working in a
large organisation
Experience in serving on Boards of varying size and
composition, in varying industries and for a range
of organisations
Experience in governance within large
organisations and multi- jurisdictional compliance
environments
Publicly listed company experience
Experience in financial accounting, reporting
and corporate finance, including recognising and
evaluating financial risks and maintaining effective
risk management and internal controls
Experience in government affairs, and public and
regulatory policy
Experience in compliance and knowledge of legal
and regulatory requirements
Experience in health, safety and environment,
including controlling risks and implementing
and monitoring health, safety and environment
strategies and procedures
Experience in remuneration, workplace culture,
people management and succession planning
Experience in and exposure to political, cultural,
regulatory and business environments in a range
of global locations
Experience with doing business in China, including
with government agencies, regulators and
customers
Nomination and appointment of Directors
The Board considers that Board succession planning, and
the progressive and orderly renewal of the Company’s Board
membership, are an important part of the governance process.
The Board’s policy for the selection, appointment and re-
appointment of Directors is to ensure that the Board possesses
an appropriate range of skills, experience and expertise
to enable the Board to carry out its responsibilities most
effectively. As part of this appointment and re-appointment
process, the Directors consider Board renewal and succession
plans and whether the Board‘s size and composition is
conducive to making appropriate decisions.
At the time of appointment of a new Non-Executive
Director, the key terms and conditions relevant to that
person’s appointment, the Board’s responsibilities and the
Company’s expectations of a Director are set out in a letter
of appointment. Each Director has entered into a written
letter of appointment with the Company. The Company
has implemented an induction program, facilitated by the
Company Secretary, through which new Non-Executive
Directors are introduced to the Company’s operations and
are familiarised with the Company’s strategy, culture and
core values.
The Board has established a Nomination and Remuneration
Committee to make recommendations to the Board on
matters such as:
• Board composition and succession planning for the Board
and the CEO;
• Director remuneration (subject to any shareholder
approval that is required in accordance with the
Company’s Constitution, ASX Listing Rules and HK Listing
Rules) and remuneration arrangements for the Company’s
Executive Committee and any other person nominated
as such by the Nomination and Remuneration Committee
from time to time;
the public reporting of remuneration for Directors and
key management personnel and other members of the
Executive Committee;
•
the performance assessment of the Executive Committee;
• designing Company remuneration policy and regulations
•
with regard to corporate governance; and
• oversight of the progress of the diversity and inclusion
strategy, as well as diversity metrics at the organisation
and operation level.
In carrying out its duties, the Nomination and Remuneration
Committee has regard to the ASX Recommendations and the
principles in the HK Code, in particular, principles B.1 and
B.2 (formerly principles A.3 and A.4). Further information
regarding the Nomination and Remuneration Committee is
outlined under the Board committees section below.
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CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
CORPORATE GOVERNANCE STATEMENT
The Board recognises that people are its most important
asset and is committed to the maintenance and promotion of
workplace diversity. Whilst traditionally, experience as a senior
Executive or Director of a large organisation with international
operations is a prerequisite for candidature, in accordance
with the Diversity Policy, the Board also seeks skills and
experience in the following areas:
• marketing and sales;
• policy and regulatory development and reform;
• health, safety and environment and social responsibility;
and
• human resources.
In identifying candidates, the Nomination and Remuneration
Committee considers and recommends to the Board nominees
by reference to a number of selection criteria including
the skills, expertise, background and gender that add to
and complement the range of skills, expertise, background
and gender of the existing Directors, the capability of the
candidate to devote the necessary time and commitment to
the role, potential conflicts of interest and independence, and
the extent to which the candidate would fill a present need on
the Board. The selection criteria for candidates for the Board
are set out in the Nomination and Remuneration Committee
Charter which can be found within the Corporate Governance
section of the Company’s website. Where appropriate, the
appropriate checks are undertaken prior to a Director being
appointed. The mix of skills currently held by the Board is set
out under the paragraph titled “Board skills matrix”.
Shareholder approval is required for the appointment of
Directors. However, Directors may appoint other Directors to
fill a casual vacancy where the number of Directors falls below
the Company Constitution’s prescribed minimum number of
Directors and in order to comply with any applicable laws,
regulations, ASX Listing Rules or HK Listing Rules. If a Director
is appointed to fill a casual vacancy in these circumstances,
the approval of members must be sought at the next general
meeting.
No Director may hold office without re-election beyond the
third annual general meeting (“AGM”) following the meeting
at which the Director was last elected or re-elected. The
Company provides all material information in its possession,
including the details of expertise and qualifications, details
of any other material directorships, and any other materials
that the Board considers to be material to such a decision, in
relation to Directors standing for election or re-election in the
Notice of Meeting provided to shareholders prior to the AGM.
Each Non-Executive Director (whether independent or not)
has been appointed for an initial term of not more than 3 years
and will be subject to retirement by rotation at least once
every 3 years under rule 8.1 of the Company’s Constitution,
pending re-election by the shareholders at an AGM.
To the extent that the ASX Listing Rules require an election
of Directors to be held and no Director would otherwise be
required under the Company’s Constitution to submit for
election or re-election at an AGM, the Director who has been
the longest in office since their last election or appointment
must retire at the AGM. As between Directors who were last
elected or appointed on the same day, where it is not agreed
between the relevant Directors, the Director to retire must be
decided by lot.
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The process for appointment, retirement and re-election of
Directors is set out in the Company’s Constitution which can
be found within the Corporate Governance section of the
Company’s website.
Independence standard
In assessing the independence of its Directors, the
Board has regard to the factors relevant to assessing the
independence of a Director that are set out in Box 2.3 of the
ASX Recommendations and Rule 3.13 of the HK Listing Rules.
The criteria considered in assessing the independence of
Non-Executive Directors are also set out in the Board Charter.
The Board will consider the materiality of the Directors’
interests, position, association or relationship for the purposes
of determining ‘independence’ on a case by case basis,
having regard to both quantitative and qualitative principles.
Specifically, the Board will consider whether there are any
factors or considerations which may mean that the Director’s
interest, business or relationship could, or could be reasonably
perceived to, materially interfere with the Director’s ability to
act in the best interests of the Company.
A Director is generally considered to be independent if the
Director:
•
is not, and has not within the last three years been,
employed in an executive capacity by the Company or any
of its child entities;
is not, nor has within the last three years been, a partner,
principal, director or senior employee of a provider of
material professional services to the Company or any of its
child entities;
is not, nor has within the last three years been, in
a material business relationship (e.g. as a supplier,
professional adviser, consultant or customer) with the
Company or any of its child entities, or an officer of,
or otherwise associated with, someone with such a
relationship;
•
•
• does not receive performance-based remuneration
(including options or performance rights) from, or
participate in an employee incentive scheme of, the
Company;
• does not hold more than 1% of the number of issued
•
shares of the Company; is not a substantial shareholder of
the Company or an officer of, or otherwise associated with,
a substantial shareholder of the Company;
is not, nor has been within the last three years an officer or
employee of, or a partner, principal, director or employee
of a professional adviser to, a substantial shareholder of
the Company;
• does not have a material contractual relationship with
the Company or any of its child entities other than as a
Director;
• does not have, nor within one year prior to the
appointment, had any material interest in any principal
activity of or is not or was not involved in any material
business dealings with the Company, its holding company
or their respective child entities;
• does not have close personal ties (for example based on
family, friendship or other social or business connections)
with any person who falls within any of the categories
described above;
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• has not been a Director of the Company, of its holding
•
company or any of their respective subsidiaries or of any
core connected persons of the Company for such a period
that his or her independence from management and
substantial holders may have been compromised;
is free from any other interest, position, association or
relationship that might interfere, or might reasonably be
seen to interfere, with the Director’s capacity to bring an
independent judgement to bear on issues before the Board
and to act in the best interests of the Company and its
shareholders generally.
Director independence
In determining the composition of the Board, the Company
has regard to the balance of Executive and Non- Executive
Directors to ensure that there is a strong independent
presence on the Board to exercise independent judgement.
The Board has assessed the independence of each of the Non-
Executive Directors (including the Chairman of the Board) in
light of their interests and relationships, and has determined
that of the 9 Directors currently on the Board, three hold their
positions in an independent Non-Executive capacity (based on
the independence standard disclosed above). The Company’s
current independent Directors are Gregory James Fletcher,
Geoffrey William Raby and Helen Jane Gillies. Mr Fletcher
and Dr Raby have been independent non-executive Directors
since their appointment on 26 June 2012 and have always
emphasised the importance of high standards of corporate
governance and contributed in objectively advising as well as
constructively monitoring and mentoring the management
team in their capacity as independent non-executive Directors.
Being familiar with the corporate values of the Company, Mr
Fletcher and Dr Raby have enhanced these values through
their strong professional relationship with management. After
a review of all the skill sets, experience and qualifications of
Mr Fletcher and Dr Raby respectively, the Board is satisfied
that Mr Fletcher and Dr Raby have the required character,
integrity, experience and knowledge to continue fulfilling the
role of independent non-executive Director effectively, and
their continued tenure will continue to bring valuable insights,
expertise and fresh perspectives to the Board.
A majority of the Board are not considered independent
Directors due to their affiliations with the Company’s
majority shareholder, Yankuang Energy, and accordingly the
Company does not comply with Recommendation 2.4 of
the ASX Recommendations. However, the Board considers
that its composition appropriately represents the interests
of its shareholders including its majority shareholder,
Yankuang Energy, and that the Board has put in place
appropriate policies and procedures to guide the Board
and senior Executives in circumstances where conflicts of
interest may arise and in its dealings with Yankuang Energy,
including establishing Independent Board Committees where
appropriate.
Each independent Director must regularly provide the Board
with all information relevant to their continued compliance
with the independence standard. The independence of
Directors will be reviewed by the Board on a regular basis
with assistance from the Nomination and Remuneration
Committee.
The independent Non-Executive Directors have confirmed
their independence in accordance with Rule 3.13 of the HK
Listing Rules, and the Company has received from each of the
independent Non-Executive Directors an annual confirmation
on his/her independence as required under Rule 3.13 of the
HK Listing Rules. Accordingly, the Company considers that
the independent Non-Executive Directors continue to be
independent.
Nomination and non-independence of Chair
The Company’s Constitution provides that the Company’s
shareholders holding a majority of the issued shares of the
Company (which confer the right to vote) may nominate a
Director to the office of Chairman and may elect one or more
Directors to the office of Vice Chair.
As a nominee of Yankuang Energy, Baocai Zhang, the Chairman
is not considered independent by the independence standard
(as above) and accordingly the Company does not comply with
Recommendation 2.5 of the ASX Recommendation. However,
the Board considers that this is an appropriate reflection of
Yankuang Energy’s majority shareholding in the Company.
While a majority of the Directors are associated with Yankuang
Energy this is considered appropriate in light of Yankuang
Energy’s majority shareholding in the Company. The Board
has put in place appropriate policies and procedures such as
the Conflicts and Related Transactions Policy and the Majority
Shareholder Protocol to manage any potential conflicts, while
the Company’s Constitution allows for the establishment of
an Independent Board Committee consisting of independent
Non-Executive Directors if required.
Conflicts of interest
To help ensure that any conflicts of interests are identified,
the Company has put in place a standing agenda item at all
meetings of the Board and its committees to provide the
Directors with the opportunity of declaring any conflicts of
interests in the subject matter of the proposed resolutions
made within the meeting.
Induction and professional development
Upon appointment, Directors are provided with induction
training. This includes briefing sessions with management
regarding the Company’s structure, business operations,
history, and culture, and provision of an information pack
containing a letter of appointment setting out the Company’s
expectations, Directors’ duties and the terms and conditions of
their appointment, and other materials containing information
about the Company including the Company’s Constitution,
charters and policies to support the induction of Directors to
the Board.
Yancoal has an ongoing Director training program, which
Directors participate in to ensure that they maintain the
skills and knowledge required to effectively discharge
their responsibilities. Examples of continuing education or
development programs include training on the Company’s
Code of Conduct, cybersecurity, chain of responsibility, cross
cultural, ESG and sexual harassment laws. Periodic review is
undertaken to consider whether professional development
for Directors is required to enable the Board to deal with new
and emerging business and governance issues, and Directors
are expected to undertake any necessary continuing education
and training.
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The Company Secretary supports Directors by providing access
to information in appropriate form where requested.
Keeping non-English speaking directors informed
There are currently a number of non-English speaking directors
on the Board. To ensure that these directors understand, and
are able to participate in, Board meeting discussions and can
properly discharge their directors’ duties and obligations, the
Company will ensure that:
• all Board and Board Committee papers or any other key
corporate documents are distributed to a Director in a
language the Director speaks and understands where that
Director does not speak and understand English; and
• an interpreter is available at all Board and Board
Committee meetings (whether in person, by telephone,
video conference or otherwise) to assist in translating the
content of all discussions at those meetings to ensure all
Directors can understand and contribute to the discussions
at those meetings.
In addition to the above, to ensure that all Directors are kept
informed and can properly discharge their directors’ duties
and obligations, where required Board in-camera sessions
are held prior to Board meetings, with a translator present,
to provide all Directors the opportunity to participate and
discuss important Company matters, and all Board Committee
meetings, where possible and appropriate, invite all Directors
to attend regardless of whether such Directors are members
of such Board Committees.
Company Secretary
The Company Secretary supports and is accountable to the
Board, through the Chairman, on all matters to do with the
proper functioning of the Board. The Company Secretary
facilitates the timely flow of information within the Board and
between the Board and management. Each Director is able
to communicate directly with the Company Secretary and
vice versa. The Board Charter sets out the other duties of the
Company Secretary, which include being responsible for:
• ensuring compliance by the Company with the Company’s
Constitution, the provisions of the Corporations Act 2001
(Cth) and other applicable laws and Listing Rules as they
relate to the Company;
• providing corporate governance advice to the Board
and facilitating induction processes and the ongoing
professional development of Directors;
• ensuring that the Board Charter and relevant policies and
procedures are followed;
• ensuring that the Company’s books and registers required
by the Corporations Act 2001 (Cth), the Securities and
Future Ordinance and other applicable laws are established
and properly maintained;
• ensuring that all notices and responses are lodged with
ASIC, ASX and HKEx on time; and
• organising and attending shareholders’ meetings and
Directors’ meetings, including sending out notices,
preparing agendas, marshalling proxies and compiling
minutes.
The Company Secretary is Laura Ling Zhang. Ms Zhang has
completed no less than 15 hours of professional training to
update her skills and knowledge as required by the HKEx.
Performance of the Board, its Committees and individual
Directors
The Nomination and Remuneration Committee oversees an
annual evaluation process for the Board, its committees and
each Director based on the Board Performance Evaluation
Protocol (Protocol) adopted and approved by the Board
in 2012. The Protocol was recently reviewed as part of the
Company’s annual review process. As a result of that review,
taking into account the ongoing COVID-19 pandemic and
inability for Directors to meet in person, the Protocol was
amended to provide a practical evaluation process for the
Board. Such revised Protocol was approved by the Board in
February 2022.
The Board
Periodically, a review of the structure and operation of the
Board, the skills and characteristics required by the Board
to maximise its effectiveness and whether the mix of skills,
experience and expertise and the Board’s practices and
procedures are appropriate for the present and future needs
of the Company is conducted. This evaluation of performance
of the Board may be conducted with the assistance of an
external facilitator. As set out in the Board Charter, the review
of the Board involves Directors providing written feedback on
the Board’s performance to the Chairman or to an external
facilitator, which in turn is discussed by the Board, with
consideration of whether any steps for improvement are
required.
Where practicable, it is expected that externally facilitated
reviews will occur approximately every three years. The
independent external facilitator will seek input from each of
the Directors and certain members of senior management
in relation to the performance of the Board against a set of
agreed criteria.
Once an externally facilitated review occurs, the progress
against any recommendations from the most recent externally
facilitated review, together with any new issues, will be
considered internally. Feedback from each Director against a
set of agreed criteria will be collected by the Chairman or the
external facilitator. The CEC and CEO will also provide feedback
from senior Executives in connection with any issues that may
be relevant in the context of the Board performance review.
Feedback will be collected by the Chairman, or an external
facilitator, and discussed by the Board, with consideration
being given as to whether any steps should be taken to
improve performance of the Board or its committees.
Where practicable, as part of the annual performance
evaluation process, the Nomination and Remuneration
Committee considers assessments by independent bodies
regarding Boards of Australian companies and their
performance. The Chair of the Nomination and Remuneration
Committee reports any material issues or findings from these
evaluations to the Board.
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Board committees
Each of the four standing committees of the Board conducts
an annual committee performance self-assessment, using
guidelines approved by the Nomination and Remuneration
Committee. The guidelines include reviewing the committee’s
performance having regard to its role and responsibilities
as set out in its Charter; consideration as to whether the
committee’s Charter is fit for purpose; and identification of
future topics for training/education of the committee or its
individual members. On a periodic basis, each committee
also reviews and makes an assessment against the respective
committee’s Charter requirements.
The outcomes of the performance self-assessments are
reported to the Nomination and Remuneration Committee
(or to the Board, if there are any material issues relating to
the Nomination and Remuneration Committee) for discussion
and noting.
Each committee provides feedback to the Board on its own
performance, which is collected by the Chairman or an
external facilitator, and the feedback is discussed by the Board,
with consideration of whether any steps for improvement are
required.
Individual Directors
Directors are evaluated on, amongst other things, their
alignment with the values of the Company, their commitment
to their duties and their level of financial, technical and
specialist knowledge. Directors are also expected to be fully
aware of their duties of care and skill, as well as fiduciary
duties, as a Director.
A performance review of Non-Executive Directors is conducted
by the Chairman for each Non-Executive Director, specifically
addressing the performance criteria within the Protocol.
A review of the performance of the Chairman is facilitated
by the Co-Vice Chairs who seek input from each Director
individually on the performance of the Chairman against the
competencies for the Chairman’s role approved by the Board.
Performance reviews
Since the adoption of the Protocol in 2012, the Company
has carried out five annual board performance reviews
internally, and has conducted one externally facilitated board
performance review. An externally facilitated review of the
Board was carried out in 2016 (in respect of 2015) and a review
of the Board was conducted internally in 2018 (in respect of
2017), in accordance with the process disclosed above.
The Company has undertaken a review of the performance
of the Board and its committees for the financial year ending
31 December 2021. The format of the review was conducted
in accordance with the new process set out in the revised
Protocol. The new process adopted for the 2021 review took
into account the requirements of the principles set out in the
HK Code.
Performance of senior Executives
The CEC and the CEO review the performance of senior
Executives annually against appropriate measures as part
of the Company’s performance management system for all
managers and staff.
On an annual basis, the Nomination and Remuneration
Committee and subsequently the Board formally reviews the
performance of the CEO and the CEC. The CEO’s performance
is assessed against qualitative and quantitative criteria,
including profit performance, other financial measures,
safety performance and strategic actions. The Nomination
and Remuneration Committee also undertakes an annual
formal review of the performance of other members of the
Executive Committee, based on similar criteria. The Board
reviews and approves the annual review of all the members of
the Executive Committee undertaken by the Nomination and
Remuneration Committee.
The performance evaluation for the CEC, CEO and senior
Executives to take place in 2022 (in respect of 2021), will be in
accordance with the process disclosed above.
Remuneration of Non-Executive Directors and senior
Executives
The Nomination and Remuneration Committee makes
recommendations to the Board to achieve Company
remuneration structures that are equitable and aligned with
the long-term interests of the Company and its shareholders,
to attract and retain skilled employees, to structure short and
long term incentives that are challenging and linked to creation
of sustainable returns and to ensure any termination benefits
are justifiable and appropriate.
In 2018, the committee engaged consulting firm Aon Hewitt
(“Aon”) to provide independent market benchmarking and
recommendations with respect to the remuneration of senior
Executives and Non-Executive Directors. The Board adopted
the recommendations in May 2018. Given this review in
2018 and the subsequent implementation of remuneration
recommendations, no further changes to the remuneration
framework for Executives or Non- executive Directors was
made in 2021.
Non-Executive Directors
The Constitution provides that the Non-Executive Directors are
entitled to such remuneration as approved by the Company’s
shareholders in accordance with the Constitution, which must
not exceed the aggregate annual amount as determined by the
Company in general meeting or by its majority shareholder,
Yankuang Energy.
Remuneration for Non-Executive Directors is capped at an
aggregate amount for each financial year of $3.5 million.
Non-Executive Directors may also be paid such additional or
special remuneration as the Directors decide is appropriate
where a Non-Executive Director performs extra services or
makes special exertions for the benefit of the Company. Such
additional remuneration will not form part of the calculation of
the aggregate cap on Non- Executive Directors’ remuneration
for a financial year and do not require shareholder approval.
No Director is involved in determining his or her own
remuneration.
Senior Executives
The Company’s senior Executives are employed under
written employment contracts that set out the terms of their
employment. In 2018, the Nomination and Remuneration
Committee engaged external remuneration consultants to
provide independent market benchmarking with respect to
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the remuneration of Yancoal Executives and Non-Executive Directors. In 2021, no changes were made to the structure of senior
Executive contracts other than Mr Moult’s Executive contract for position as CEO, which was initially for a period of two years
from 9 March 2020, and varied to an Executive contract with no fixed term on 17 December 2021. Aside from this variation, the
material terms of Mr Moult’s Executive Contract remain unchanged. Where appropriate, the appropriate checks are undertaken
prior to a new senior Executive being appointed.
Further details of the remuneration of the Non-Executive Directors, Executive Directors and senior Executives can be found in the
Remuneration Report on pages 27 to 38.
2. BOARD COMMITTEES
The Board may from time to time establish appropriate committees to assist in the discharge of its responsibilities.
The Board has established the following standing Board committees:
Audit and Risk
Management Committee
Health, Safety, Environment
and Community Committee
Nomination and
Remuneration Committee
Strategy and Development
Committee
These Board committees review matters on behalf of the Board and as set out in the relevant Charter:
•
• determine matters (where the committee acts with delegated authority), which the committee then reports to the Board.
refer matters to the Board for a decision, with a recommendation from the committee; or
Other committees may be established by the Board as and when required. Membership of the Board committees is based on the
needs of the Company, relevant regulatory requirements, and the skills and experience of individual Directors.
The purpose and primary role of each of the Board committees and membership of the committees are outlined below. The Charters
of each of these standing Board committees are available within the Corporate Governance section of the Company’s website.
AUDIT AND RISK MANAGEMENT COMMITTEE
CURRENT MEMBERSHIP
Independent Non-
Executive Directors:
Gregory James Fletcher
– Chair
Helen Jane Gillies
Non-Executive Directors:
Qingchun Zhao
The committee consists
only of Non-Executive
Directors with a majority
being independent and the
Chair of the committee is
an independent Non-
Executive Director and is
not the Chairman of the
Board. The Committee
meets the minimum
composition requirement
for audit committee of
three Non- Executive
Directors, at least one of
whom is an independent
Non-Executive Director
with appropriate
professional qualifications
or accounting or related
financial management
expertise, as required by
the HK Code.
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PURPOSE
The committee’s objectives are to:
• help the Board in relation to the reporting of financial information;
• advise on the appropriate application and amendment of accounting policies;
• make evaluations and recommendations to the shareholders of the Company regarding the
•
external auditor;
recommend to the Board the remuneration of the external auditor for shareholder approval as
required in accordance with the Constitution;
• provide a link between the Board and the external auditor and management;
• ensure that the Board, Directors and management are aware of material risks facing the
business;
• ensure the systems in place to identify, monitor and assess risk are appropriate and operating
effectively; and
• assess the independence of the external auditor.
review and endorsement of the Company’s Interim and Annual Financial Results;
consideration of external audit reports and approval of external auditor’s audit plan;
During the financial year ended 31 December 2021, work performed by the committee included,
but was not limited to:
•
•
• engagement of non-audit services;
•
•
•
• annual review of Enterprise Risk Management Framework;
•
consideration of the Company’s asset impairment assessments;
review of the Company’s related party and connected transactions;
review and endorsement of the Company’s 2020 Environmental, Social and Governance Report;
review of the effectiveness of risk management, internal control systems, internal audit function
and whether the Company is operating with due regard to the risk appetite set by the Board; and
• evaluation of the Company’s debt facilities.
The qualifications, skills and experience of each member and the number of times the committee
met throughout the period and the individual attendances of the committee members at those
meetings is disclosed in the Information on Directors in the Directors’ Report, on page 14.
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HEALTH, SAFETY, ENVIRONMENT AND COMMUNITY COMMITTEE
CURRENT MEMBERSHIP
Independent Non-Executive
Directors:
Geoffrey William Raby
– Chair
Non-Executive Directors:
Xiangqian Wu
Executive Directors:
Ning Zhang
The committee consists
of majority Non-Executive
Directors and meets the
minimum composition
requirement of three
Directors, as required by
the Company’s Health,
Safety, Environment and
Community Committee
Charter.
PURPOSE
The committee assists the Board to:
•
•
fulfil its responsibilities in relation to the health, safety, environment, and community
(collectively “HSEC”) matters arising out of the activities of the Company;
consider, assess and monitor whether or not the Company has in place the appropriate
policies, standards, systems and resources required to meet the Company’s HSEC
commitments; and
• provide necessary focus and guidance on HSEC matters across the Company.
During the financial year ended 31 December 2021, work performed by the committee included,
but was not limited to:
• monitoring the Company’s ongoing health and safety and environmental performance,
including significant incidents and regulatory investigations;
• overseeing major initiatives;
• monitoring the COVID-19 pandemic response;
•
•
considering independent environmental assurance audits for various Company mine sites;
reviewing and endorsing the Company’s 2020 Environmental, Social and Governance Report;
and
• overseeing community initiatives and health, safety and environmental legal and compliance
matters.
The qualifications, skills and experience of each member and the number of times the committee
met throughout the period and the individual attendances of the committee members at those
meetings is disclosed in the Information on Directors in the Directors’ Report, on page 14.
NOMINATION AND REMUNERATION COMMITTEE
Independent Non-Executive
Directors:
Helen Jane Gillies – Chair
Gregory James Fletcher
Geoffrey William Raby
Non-Executive Directors:
Baocai Zhang
Xiangqian Wu
The committee consists
only of Non-Executive
Directors with a majority
being independent,
including the Chair of the
committee, and meets
the minimum composition
requirement of three
Non-Executive Directors,
as required by the
Company’s Nomination
and Remuneration
Committee Charter.
The committee assists the Board of the Company by making recommendations in relation to:
• Board composition and succession planning for the Board and the CEO and oversight of
succession planning for the Executive Committee;
• Director remuneration (subject to any shareholder approval that is required in accordance
with the Company’s Constitution, ASX Listing Rules and HK Listing Rules) and remuneration
arrangements for the Company’s Executive Committee and any other person nominated as
such by the Committee from time to time;
the public reporting of remuneration for Directors and key management personnel and other
members of the Executive Committee;
•
• oversight of the performance assessment of the Executive Committee;
• designing Company remuneration policy and regulations with regard to corporate governance;
and
• oversight of the progress of the diversity and inclusion strategy, as well as diversity metrics at
the organisation and operation level.
During the financial year ended 31 December 2021, work performed by the committee included,
but was not limited to:
•
• undertaking a review of the Company’s organisational structure and composition of the
consideration of re-election of Directors;
Executive Committee;
• undertaking cross cultural training;
•
review of the 2020 Corporate Governance Statement, including diversity and measurable
objectives; and
finalisation and endorsement of Company short-term and long-term incentive plans and
Company salary indexation and performance assessment implementation.
•
The qualifications, skills and experience of each member and the number of times the committee
met throughout the period and the individual attendances of the committee members at those
meetings is disclosed in the Information on Directors in the Directors’ Report, on page 14.
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STRATEGY AND DEVELOPMENT COMMITTEE
CURRENT MEMBERSHIP
Independent Non-Executive
Directors:
Geoffrey William Raby
Non-Executive Directors:
Baocai Zhang – Chair
Qingchun Zhao
Xing Feng
The committee consists
only of Non-Executive
Directors and meets the
minimum composition
requirement of three
Directors, as required by
the Company’s Strategy
and Development
Committee Charter.
INDEPENDENT BOARD COMMITTEE
An Independent Board
Committee is composed
of independent Non-
Executive Directors who
do not have a material
interest in the relevant
transactions.
PURPOSE
The committee assists the Board in its oversight and review of the Company’s strategic initiatives,
including:
• merger and acquisition proposals;
• major capital markets transactions;
•
• proposals to dispose of significant Company assets.
significant investment opportunities; and
During the financial year ended 31 December 2021, work performed by the committee included,
but was not limited to:
•
• evaluation of various acquisition opportunities and organic growth opportunities.
consideration of capital management issues; and
The qualifications, skills and experience of each member and the number of times the committee
met throughout the period and the individual attendances of the committee members at those
meetings is disclosed in the Information on Directors in the Directors’ Report, on page 14.
An Independent Board Committee is established by the Board as and when required to manage
any related party transactions.
During the financial year ended 31 December 2021, the Independent Board Committee met
three times for the purposes of considering transactions between or involving the Company and
its majority shareholder, Yankuang Energy. In addition, a previously constituted Independent
Board Committee passed certain written resolutions for the purposes of considering transactions
between or involving the Company and its major shareholder, Yankuang Energy.
Meetings and attendance
The number of meetings held by the Board and each committee during 2021 and each member’s attendance at these meetings is
set out in the Directors’ Report on page 24.
3. ACTING LAWFULLY, ETHICALLY AND RESPONSIBLY
Our values and beliefs
The Company is focused on maintaining and upholding a company culture and a set of company values to underpin its ongoing
success and sustainability as a business. Who we are and how we work as Yancoal employees is informed by the ‘Yancoal Way’,
which encapsulates our beliefs, values and expected behaviours.
Our three core beliefs drive our values to deliver. They are:
TRANSPARENCY
We are open and honest with one
another and have a “no surprises”
mentality for all the stakeholders we
work with.
COMPLIANCE
We always follow our internal rules and
the rules of law where we operate.
EFFICIENCY
We strive to be efficient, productive and
effective at what we do all day, every
day.
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Our beliefs are underpinned by our core values which drive our daily behaviour. Our five core values are:
PEOPLE
– PATH WAY
We value
involvement from
everyone. Full
engagement is
encouraged. 99%
of what we need
to know is already
within the Yancoal
workforce.
SAFETY
– SAFE WAY
Safety is not
optional. It is
considered in
everything we do to
eliminate harm to
our people.
EXCELLENCE –
HIGH WAY
We identify and
implement best
practice and operate
above the line in the
‘can do’ zone with
courage, trust and
pride.
INNOVATION
– BETTER WAY
We seek to
continuously
improve all aspects
of our business.
INTEGRITY –
RIGHT WAY
We do what we
say with honesty,
integrity and
reliability. If it feels
like the wrong
thing to do it quite
possibly is. If you are
uncomfortable with
doing something,
check the Code or
seek advice.
Our values and beliefs are supported by our Code of Conduct
and other key governance polices, which are approved by
the Board. The Code of Conduct and other key governance
polices are internally promoted on a regular basis and training
programs have been developed to instil and reinforce our
values, beliefs and expected behaviours under the Code of
Conduct and other key governance polices.
Code of Conduct
The Board policy is that Directors, employees and contractors
must observe both the letter and spirit of the law, and adhere
to the highest standards of business conduct. The Company
has adopted a formal Code of Conduct and other key
governance guidelines and policies which are approved by
the Board that set out legal and ethical standards for the
Company’s Directors and employees, including (but not limited
to) an Anti-Corruption Policy, Conflicts and Related Party
Transactions Policy, Competition / Anti-Trust Policy, Health and
Safety Policy, Gifts and Benefits Policy, Modern Slavery Policy,
Share Trading Policy, Whistleblower Policy and Workplace
Behaviour Policy.
The Code of Conduct and these other key governance
guidelines and policies guide the Directors, the CEO, senior
Executives, and employees generally as to the practices
necessary to maintain confidence in the Company’s integrity
and as to the responsibility and accountability of individuals
for reporting, and investigating reports of, misconduct or
an improper state of affairs or circumstances within the
Group. The Code of Conduct and these other key governance
guidelines and policies also guide compliance with legal and
other obligations to stakeholders.
Specifically, the objective of the Code of Conduct is to:
• provide a benchmark for professional behaviour;
support the Company’s business reputation and
•
corporate image within the community; and
• make Directors and employees aware of the
consequences if they breach the policy.
The key values underpinning the Code of Conduct are:
• our actions must be governed by the highest standards of
integrity and fairness;
• our decisions must be made in accordance with the letter
and spirit of applicable law;
• our business must be conducted honestly and ethically,
with our best skills and judgement, and for the benefit
of customers, employees, shareholder and the Company
alike; and
the Company does not tolerate inappropriate workplace
conduct, including sexual harassment, bullying and racism
of any form.
•
The Code of Conduct is promoted across to all business
activities in Australia and overseas and reinforced by training
and appropriate disciplinary action if breached. Any material
breaches of the Code of Conduct are reported to the Board
or the Audit and Risk Management Committee. The Code of
Conduct is available in the Corporate Governance section
of the Company’s website and training for all levels of
the business regarding the Code of Conduct is conducted
periodically.
Reporting concerns and whistleblower protection
The Company’s Whistleblower Policy encourages any current
or former employees or officers, contractors or suppliers (and
their employees), associates or certain family members of
an individual mentioned above to raise serious concerns of
misconduct or an improper state of affairs or circumstances
in relation to the Company and report any issues if they have
reasonable grounds for suspecting so. The disclosure cannot
solely be about a personal work-related grievance.
Individuals can report their concerns confidentially in writing
or by phone to a confidential Speak Up facility, which is
operated by an independent external party. Alternatively,
disclosure may be made with our Whistleblower Officer, the
Executive General Manager (“EGM”) of Risk and Audit, an
officer or senior manager within the Company, the Company’s
auditor or if the disclosure concerns the Company’s tax affairs
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or its associates, its registered tax agent or Business Activity
Statement agent, or an employee or officer at the Company
who has functions or duties relating to its tax affairs.
All disclosures made under the policy will be treated seriously
and may be the subject of an investigation with the objective
of locating evidence that either substantiates or refutes the
misconduct disclosed by a person. Such investigations will be
facilitated in accordance with the steps and process detailed
in the policy, subject to certain exceptions within the policy.
The Audit and Risk Management Committee and the Board
are informed at each meeting with a report on all active
whistleblower matters and incidents, including information on
the number and nature of disclosures made in the last quarter,
the status of any investigations underway and the outcomes of
any investigations completed and actions taken as a result of
those investigations.
The Yancoal Whistleblower Policy is available in the Corporate
Governance section of the Company’s website.
Anti-Corruption Policy
The Company is committed to the highest level of integrity
and ethical standards in all business practices and has formally
adopted an Anti-Corruption Policy, which outlines how the
Company expects all of its Directors, officers and employees
to behave when conducting business both in Australia and
internationally. Corruption and bribery in all forms are strictly
prohibited by the Company. Directors, officers and employees
must conduct themselves, at all times, in a manner consistent
with Company policy, community expectations and in
compliance with state, federal and international legislation.
Breaches of the Anti-Corruption Policy are regarded as serious
and will be subject to appropriate sanctions. Preliminary
investigations of reported breaches are administered by
Human Resources. If a breach of the policy is found to have
occurred, a formal investigation process is administered by
the Company Secretary in consultation with the supervisor
or manager of the offending person. Any material breaches
of the policy are reported to the Audit and Risk Management
Committee. The Anti-Corruption Policy is available in the
Corporate Governance section of the Company’s website
and is supplemented by the Company’s Code of Conduct
and Gifts & Benefits Policy. Individuals can report concerns
confidentially and anonymously via Yancoal’s Speak Up facility,
which is operated by an independent external party.
Dealings in Company securities
By law, and under the Company’s Share Trading Policy, dealing
in Company securities is subject to the overriding prohibition
on trading while in possession of inside information.
In addition, the Company’s Share Trading Policy prohibits
dealing in Company securities or Yankuang Energy securities by
Directors of the Group, all officers of the Company and other
relevant employees and contractors of the Group, as well as
their closely related parties, during specified blackout periods
each year. Subject to compliance with the Company’s Share
Trading Policy, employees are permitted to deal in Company
securities or Yankuang Energy securities outside these blackout
periods where they are not in possession of inside information,
however additional approval requirements apply. The Share
Trading Policy precludes relevant employees from entering
into any hedge or derivative transactions relating to unvested
options or share rights granted to them under incentive plans
and securities that are subject to holding locks or restrictions
on dealing under such plans. There are also restrictions that
apply to relevant employees from entering into margin lending
arrangements and short-term trading of the Company’s
securities. Breaches of the policy are treated seriously and may
lead to disciplinary action, including dismissal.
The Company’s Share Trading Policy was last revised in
February 2021, which includes the requirements set out in the
Model Code for Securities Transactions by Directors of Listed
Issuers (the “Model Code”) as set out in Appendix 10 of the HK
Listing Rules to regulate the Directors’ securities transactions,
which is also applicable to its employees who are likely to be
in possession of unpublished inside information. A copy of the
Share Trading Policy is available on the Corporate Governance
section of the Company’s website.
Specific enquiry has been made of all the Directors and
they have each confirmed that they have complied with the
Company’s Share Trading Policy for the period 1 January 2021
to 31 December 2021.
Make timely and balanced disclosure
The Company recognises the importance of timely and
adequate disclosure to the market and is committed to
making timely and balanced disclosure of all material matters
and to effective communication with its shareholders and
investors so as to give them ready access to balanced and
understandable information. The Company also works
together with its majority shareholder, Yankuang Energy, to
ensure that Yankuang Energy can comply with its disclosure
obligations in relation to Company information, and vice
versa, Yankuang Energy seeks to ensure that the Company can
comply with its disclosure obligations in relation to Yankuang
Energy’s information.
The Board has put in place a Disclosure Policy to encapsulate
the disclosure obligations under the Corporations Act
2001 (Cth) and the ASX Listing Rules and to set out
procedures for managing compliance with those obligations.
These procedures provide a framework for managing the
disclosure of material matters to the market to ensure
accountability at Board and senior Executive level. As part of
this framework, a standing agenda item at all the Company’s
Board and Executive Committee meetings requires the
Directors and senior Executives to consider whether any
matters at the meeting should be disclosed to the market.
A Disclosure Committee has been established to assist the
Company to meet its disclosure obligations. The committee
plays a key role in reviewing and determining whether
information is likely to have a material effect on the price
or value of the Company’s securities such that it requires
disclosure to the market. The Disclosure Committee members
comprise the CEC, CEO, CFO, Company Secretary, Investor
Relations General Manager and General Counsel.
In accordance with the Disclosure Policy, Board approval and
input will only be required in respect of matters that are clearly
within the reserved powers of the Board (and responsibility for
which has not been delegated to management) or matters that
are otherwise of fundamental significance to Yancoal. Copies
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of all material market announcements are also circulated to
the Board promptly after they have been made, to ensure
the Board has timely oversight of the nature and quality of
information being disclosed to the market and the frequency
of such disclosures. In addition, the Disclosure Committee
receives copies of all market announcements prior to release
regardless of materiality and the Chair of Audit and Risk
Management Committee receives copies of all immaterial
market announcements once released, otherwise material
announcements are provided prior to release.
The Disclosure Policy can be found within the Corporate
Governance section of the Company’s website. Any
information disclosed to the market through an announcement
to the ASX and HKEx is also published on the Investor section
of the Company’s website.
4. RISK MANAGEMENT AND FINANCIAL REPORTING
Risk identification and management
The Board, through the Audit and Risk Management
Committee, is responsible for satisfying itself that a sound
system of risk oversight and management exists, that internal
controls are effective and for setting the risk appetite within
which the Board expects management to operate.
In particular, the Board ensures that:
•
•
the material strategic, operational, financial reporting and
compliance risks are identified and evaluated; and
risk management, control and reporting systems are in
place to identify, assess, manage, monitor and report on
these risks.
The role and membership of the Audit and Risk Management
Committee are described under paragraph titled “Audit
and Risk Management Committee” and under the Board
committees section.
The Company’s Audit and Risk Management Committee
Charter can be found within the Corporate Governance section
of the Company’s website. The number of times the committee
met throughout the period and the individual attendances of
the committee members at those meetings is disclosed in the
Directors’ Report, on page 24.
The Board has requested the Company’s senior Executives
and management to report to the Audit and Risk Management
Committee and, where appropriate the Board, regarding the
effective management of its material business risks.
In 2021, the Audit and Risk Management Committee had in
place a framework to identify, assess, manage risks that are
material to the business. This framework includes:
•
implementation of a corporate risk management standard
approved by the Audit and Risk Management Committee
and Board;
identification of material business risk by reference to a
corporate risk register, approved by the Audit and Risk
Management Committee and Board;
formal risk identification activities being undertaken at
both a functional level and at each of the Company’s
mine sites;
•
•
• designated individuals across the business that have
accountability for the implementation of risk management
within their areas of responsibility; and
•
the EGM of Risk and Audit as a central resource available
to assist with all risk management responsibilities, and
to assist with any training/awareness or other related
requirements.
The Audit and Risk Management Committee receives periodic
reports on the performance of the Company’s enterprise risk
management framework, as well as on the Company’s key
risk exposures to satisfy itself that it continues to be sound
and that the Company is operating with due regard to the
risk appetite set by the Board. An annual review of the risk
management framework was conducted in 2021 by the Audit
and Risk Management Committee, on behalf of the Board.
The Audit and Risk Management Committee confirmed that
the risk management framework continued to be effective
and adequate and considered social, environmental and
contemporary risks including climate change (transition and
physical), conduct, cyber and pandemic related risks. The
Audit and Risk Management Committee confirmed that the
Company is operating with due regard to the risk appetite set
by the Board.
The EGM of Risk and Audit is responsible for establishing and
managing the enterprise risk management framework, risk
management system and practices. The Company’s formal
risk identification activities are guided by ISO 31000 - Risk
Management and undertaken on a periodic basis; with risk
identification and analysis activities performed at a functional
level, as well as at each of the Company’s mine sites.
The responsibility for managing risks, risk controls or risk
management action plans is embedded within the business
and undertaken as part of everyday activities. Together with
the CEC, the Board and the Audit and Risk Management
Committee, the EGM of Risk and Audit is responsible for
developing a risk matrix and framework and for implementing
related risk-based assurance processes for the Company
and its subsidiaries. The EGM of Risk and Audit annually
reviews and confirms the continued effectiveness of the risk
framework to the Audit and Risk Management Committee.
The Board recognises and acknowledges that, while risk
management controls and systems can be effective in
managing risks, they cannot eliminate all risks relevant to the
Company achieving its objectives and cannot provide absolute
assurance against material misstatement or loss.
Internal audit function
The internal audit function is managed by the EGM of Risk
and Audit. That person has direct access to the Chair of the
Audit and Risk Management Committee, as well as to the
CEC, to whom he directly reports. The CEC and the Audit and
Risk Management Committee recommends to the Board the
appointment of the EGM of Risk and Audit.
The EGM of Risk and Audit has unfettered access to the
Audit and Risk Management Committee and its Chair to seek
information and explanations. The Chair of the Audit and Risk
Management Committee meets independently with the EGM
of Risk and Audit.
The role of the EGM of Risk and Audit is responsible for the
achievement of the risk management, internal audit, insurance
objectives and includes the responsibilities of Yancoal’s
Whistleblower Officer.
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An annual program for internal audit and risk assurance is
provided to the Audit and Risk Management Committee for
approval. The annual Internal Audit program is focused on key
operating risks and processes and evaluates the design and
operating effectiveness of associated key controls.
The program includes a review of compliance with the
obligations imposed by the General Rules on Internal
Control for Enterprises and the Supporting Guidelines
of Internal Control for Enterprises, jointly issued by five
Chinese ministries.
Periodical status reports on the execution of the plan,
including current findings and actions are provided to the
Audit and Risk Management Committee. This includes key
issues and subsequently corrective actions are monitored,
reviewed and reported. Any material findings are reported
to the Board.
Risks associated with the Company
The future operating performance of the Group may be
affected by risks relating to the Company’s business. Some of
these risks are specific to the Company while others relate to
economic conditions and the general industry and markets in
which the Company operates.
The Company’s risk management policies and procedures
have been designed and implemented to identify, assess
and manage any material exposure to risks relating to the
Company’s business, including environmental and social risks.
The Company undertakes regular monitoring and assessment
of existing and emerging risks. Group material risks are
assigned specific risk owners which are recorded alongside
applicable key controls and control effectiveness ratings to
manage the Company’s exposure to such risks. Further details
of how the Company manages certain environmental and
social risks are set out in the Company’s 2020 Environmental,
Social and Governance Report published on the ASX and
HKEx platforms and available on the Company’s website.
The 2021 Environmental, Social and Governance Report will
be published later in 2022.
However, there can be no assurance that such risk mitigation
strategies will protect the Company from these risks.
Other risks are beyond the Company’s control and cannot be
mitigated. The occurrence of any such risks could adversely
affect the Company’s financial condition and performance.
The risks listed below are not purported to be exhaustive and
there is no assurance that the importance of different risks will
not change or other risks will not emerge.
Environmental and social risks
The table below identifies risks which are considered to be
environmental and/or social risks.
Operations
Health and safety
Regulatory approvals
Mine closure
Native Title / Aboriginal Cultural
Heritage
ENVIRONMENTAL
RISKS
SOCIAL RISKS
ENVIRONMENTAL
RISKS
Overlapping tenement
Transition to a lower carbon
economy
Technological change
Fraud or misconduct
Changes in government policy,
legislation or regulation
Geopolitical Environment
Environment
Litigation
SOCIAL RISKS
Operations
The Company’s operations are subject to operating risks.
These risks include (but are not limited to) industrial action,
inappropriate mine design / plans, mine collapses, cave-ins or
other failures relating to mine infrastructure, including tailings
dams, interruptions due to hazardous weather conditions,
power interruption, insufficient water supply, inability to
dispose of tailings and rejects, critical equipment unavailability
/ failure (in particular any protracted breakdown or issues with
any of the Company’s Coal Handling and Preparation Plants
(“CHPPs”) or a major excavator), supply chain interruptions,
damage to third party infrastructure, fires and explosions from
methane gas or coal dust, accidental mine water discharges,
flooding and variations in or unusual or unexpected geological
or geotechnical mining conditions (particularly in the
Company’s underground operations).
Such risks could result in damage to applicable mines, personal
injury, environmental damage, delays in coal production,
delays in deliveries, decreased coal production, increased
cost / monetary losses, reduced revenue, and possible legal
liability. Although the Company’s insurance policies provide
coverage for some of these risks, the amount and scope of
insurance cover is limited by market and economic factors
and these risks would not be fully covered by insurances
maintained by the Company.
Mining operations can also be impacted by regular rain events.
Throughout the year regular wet weather events generated by
the prevailing La Niña weather pattern often had a threefold
impact: mining activities were halted to protect and repair the
unsealed roads; logistics services were usually severed; and
excess water in open-cut operations restricted mining access,
particularly when onsite water storage limits were reached.
The Company reviews the risks at each site on a regular
basis, and reviews and revises the risk controls as required to
minimise or mitigate both the likelihood of a risk occurring,
and the consequence of that risk in the event it does occur.
Health and safety
Accidents could occur at a mine site or corporate office
that result in personal injuries. These could relate to
factors such as (but not limited to) vehicle interaction /
motor vehicle accidents, exposures to energised plant or
equipment, exposures to airborne contaminants, ground
or strata instability, fires and explosions, explosives, inrush
and inundation, stockpile and reclaim tunnels, integrity of
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structures and fixed plant, handling of tyres, coal or gas bursts,
lifting and working with suspended loads, working at heights
or in confined spaces. These could also have adverse financial
implications including legal claims for personal injury, wrongful
death, amendments to approvals, potential production delays
or stoppages, any of which may have a material adverse effect
on the financial performance and/or financial position of
the Company.
There is a risk that past, present or future operations have not
met, or will not meet, health and safety requirements and/or
that the approvals or modifications the Company is currently
seeking, or may need to seek in the future, will not be granted
at all or on terms that are unduly onerous. If the Company
is unsuccessful in these efforts or otherwise breaches these
health and safety requirements, it may incur fines or penalties,
be required to curtail or cease operations and/or be subject
to increased compliance costs or costs for rehabilitation or
rectification works, which have not been previously planned
at one or more of its sites.
The Company‘s operations may cause exposure to hazardous
materials. There is also a risk that actions could be brought
against the Company, alleging adverse effects of such
substances on personal health.
The Company regularly reviews the health and safety risks
at each of its sites and has identified a number of core
hazards that are consistent across each site. The Company
has developed methods to control these core hazards.
The management of these health and safety controls is
audited at each site to mitigate the core hazard and associated
health and safety risks.
Regulatory approvals
The ability of the Company to meet its long term production
target profile depends on (amongst other things) the Company
being able to obtain on a timely basis, and maintain, all
necessary regulatory approvals (including any approvals
arising under applicable mining laws, environmental legislation
and other laws) for its current operations and expansion and
growth projects, including obtaining planning approvals,
land access, land owner consents and addressing any native
title issues, impacts on the environment and objections from
local communities.
The requirement to obtain approvals and to address potential
and actual issues for existing and future mining projects is
common to all companies in the coal mining sector. There is
no assurance or guarantee that the Company will be successful
in securing any or all of the required consents, approvals and
rights necessary to maintain its forecast production profile
from its existing operations or to develop its growth projects
in a manner which will result in profitable mining operations
and the achievement of its long term production targets. If
these approvals (or other approvals required for the planned
production increases) are not obtained or are delayed, or if
conditional or limited approvals are obtained, the economic
viability of the relevant projects may be adversely affected,
which may in turn result in the value of the relevant assets
being impaired.
With regard to environmental approvals, NSW and QLD have
recently introduced state government policies in the interests
of aimed at protecting agricultural and urban land from the
effects of mining. These include the QLD Government’s Central
Queensland Plan (2013) and Regional Planning Interests Act
2014 (QLD) and the NSW Government’s Strategic Regional
Land Use Policy (2012), Aquifer Interference Policy (2012),
and amendments to the State Environmental Planning Policy
(Mining, Petroleum Production and Extractive Industries)
2007 (NSW). Each of these policies is relevant to the areas in
which the Company has mining operations. Regulation and
policy are constantly evolving and adapting to market trends,
community concerns and new technologies. Accordingly,
there is no assurance that the future development and
exploration activities of the Company will result in profitable
or commercially viable mining operations in these areas.
In 2013, amendments to the Mining Act 1992 (NSW)
introduced a ‘fit and proper person’ test which allows a
decision maker to make decisions in relation to the grant,
renewal, cancellation or transfer of an authority based
on its view of whether the current or proposed authority
holder is a ‘fit and proper person’. The decision maker may
take into consideration whether the proposed authority
holder has previous compliance issues, a company’s financial
capacity to comply with mining obligations, whether the
proposed authority holder has been the subject of insolvency
action, and technical expertise. In recent years, the NSW
Government also significantly increased the maximum
penalties for breaches of mining and environmental legislation.
In particular, the NSW Resources Regulator considers the
following circumstances to be priority for investigations and
escalating enforcement actions:
•
•
•
•
mining/prospecting without authorisation;
failure to rehabilitate the land;
providing false and misleading information;
non-compliance with statutory notices or directions and
title or statutory conditions; and
failure to pay rehabilitation security deposits.
•
The legislative changes have resulted in the updating of
compliance programs and increased the risk of prosecution
for breaches of relevant legislation.
In 2018, the QLD Government revised the process by which
mining companies are required to calculate and provide
security for their rehabilitation liability. Companies are
progressively being transitioned to this process and are
now assessed under a risk-based security mechanism.
Mining operations that have been assessed as higher risk will
be required to provide a greater amount of security. Mines in
both NSW and Queensland are being held to more rigorous
progressive rehabilitation and mine closure regimes.
Yancoal’s experts in these areas continuously monitor changing
regulations and ensure the Company is in a position to respond
promptly to the rapidly changing regulatory environment.
The “life of mine” planning process is utilised to identify future
approvals requirements. Early identification of an approval
requirement provides sufficient time to finesse the scope
of a project to limit or avoid environmental impacts, and to
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collect appropriate baseline data to support new approvals.
Early consultation with stakeholders provides data to inform
an application and to respond to stakeholder concerns.
This approach results in constructive engagement and the
mitigation of approvals risk.
Mine closure
Closure of any of the mines or other operations of the
Company before the end of their mine life (e.g. due to
environmental, geological, geotechnical, commercial and/or
health and safety issues), could trigger significant closure and
rehabilitation expenses and other costs or loss of revenues.
Many of these costs will also be incurred where mines are
closed at the end of their planned mine life or placed on care
and maintenance.
If one or more of the relevant sites are closed earlier than
anticipated, the Company will be required to fund the closure
costs on an expedited basis and lose revenues, which could
have an adverse financial effect. In addition, there is a risk that
closure and rehabilitation planning is inadequate, costs have
been underestimated and/or that claims may be made arising
from environmental remediation upon closure of one or more
of the sites.
The annual “life of mine” planning process assesses closure
options and is instrumental in identifying closure costs,
liabilities and risks. Further, the Company is developing a mine
closure standard to facilitate a consistent approach to closure
planning at each of its operations.
In February 2020, the Austar mine completed mining of the
Bellbird South area and with no immediate economically
viable mine plan, was placed under care and maintenance by
Watagan. The Yancoal Board has approved commencing mine
closure activities at Austar, with such activities expected to
take between five and ten years to complete.
Native Title / Aboriginal Cultural Heritage
It is possible that, in relation to tenements which we have an
interest in or will in the future acquire, there may be areas over
which legitimate native title rights of Aboriginal Australians
may exist. Where the grant or renewal of a tenement is in
respect of land in relation to which native title may exist, the
Company will need to comply with the Native Title Act 1993
(Cth) in order for the tenement to be validly granted.
Compliance with the Native Title Act 1993 (Cth) (and the
relevant native title process to be followed for the grant of the
tenement e.g. the right to negotiate process) may be prolonged
or delayed, and substantial compensation may be payable as
part of any agreement reached, including for the temporary
suspension of the relevant native title rights and interests.
The existence or determination of native title may, therefore,
affect the existing or future activities of the Company and
impact on its ability to develop projects which may in turn
impact its operational and financial performance.
Under the Aboriginal Land Rights Act 1983 (NSW), Aboriginal
Land Councils can claim crown land if certain requirements
are met. If a claim is successful, freehold title over the
relevant land is transferred to the claimant Local Aboriginal
Land Council. Further, Aboriginal Land Councils are afforded
certain statutory rights which can include a requirement to
enter into a compensation agreement prior to the grant of
a Mining Lease. This may delay the grant of future mining
tenements over any area of such land. Some of our tenements
are located in areas that are subject to outstanding Aboriginal
land claims, and additional Aboriginal land claims may be made
in the future over other areas in which our tenements are
located. Any such claims may result in our ability to explore
or mine for coal in these areas being subject to the decisions
of the relevant Aboriginal Land Councils, which may adversely
affect our ability to develop projects and, consequently, our
operational and financial performance.
There may be matters of Aboriginal cultural heritage
significance in the vicinity of existing or future mining
operations. A planning approval to disturb areas of Aboriginal
cultural heritage does not, as of right, permit the destruction
of such areas. It is also possible that both state and federal
legislation will be amended to afford greater protection for
areas previously proposed to be disturbed. In addition, claims
to protect areas of Aboriginal cultural heritage significance
may be brought by Aboriginal parties. In any of these
circumstances, mine plans may need to be altered, or projects
may become unviable, with a direct impact on forecast
production profiles and forecast profitability and asset value.
Yancoal has implemented an additional layer of governance in
the oversight of Aboriginal Cultural Heritage matters with the
development of a corporate register of matters. This initiative
is designed to identify material matters which warrant
corporate oversight and approval.
Overlapping tenement
Some of the Company’s mines and associated tenements
adjoin or are overlapped by petroleum tenements and adjoin
other exploration interests held by third parties. Overlapping
tenements could potentially prevent, delay or increase the
cost of the future development of the Company’s projects
because the Company and the relevant petroleum exploration
or production licence or other exploration licence holders
could potentially seek to undertake their respective activities
on the overlapping area or the same resource seams and in
some cases the overlapping petroleum tenure holder’s consent
may be required.
There is no guarantee that agreement will be reached with the
overlapping petroleum tenement holder or that agreement
will not be delayed or will be reached on terms satisfactory to
the Company. There is also a risk that if agreement cannot be
reached with overlapping tenement holders the matter may be
referred to the relevant minister or a court who may make a
decision which adversely impacts upon or prevents the project
proposed by the Company.
The Company has established a dedicated and skilled
team to manage all tenement matters, including where
overlapping tenements exist. This team is charged with
oversight of overlapping tenement risks and opportunities,
and for constructive engagement with the holders of those
overlapping tenements to harmonise operations.
Transition to a lower carbon economy
Yancoal acknowledges that it has a role to play in mitigating
the emissions generated by its operations and supporting
research into low-emission technology to assist the reduction
of downstream emissions from the consumption of coal
products.
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The transition to a lower carbon economy gathered pace
in 2021, with the 2021 United Nations Climate Change
Conference of Parties (COP26) in Glasgow. COP26 resulted
in announcements of renewed efforts by 151 countries to
reduce emissions, meaning that 70% of the global economy
(including Yancoal customer countries) is now covered by a
net zero target. Participating countries also agreed to revisit
and strengthen their 2030 targets by the end of 2022 to
align them with the Paris Agreement, which aims to hold
back the increase in global temperatures, increase the ability
of countries to adapt to the adverse impacts of climate
change and provide channels to finance projects that lead to
greenhouse gas reductions.
The Company tracks and measures its carbon emissions
at each site and reports emissions under the National
Greenhouse and Energy Reporting scheme (NGER). There
is a particular focus on targeting the reduction of Scope 2
emissions (from diesel and electricity consumption). This
includes optimising diesel consumption in the existing fleet,
assessing the potential to progressively electrify the fleet, the
use of rooftop solar to reduce grid energy consumption and
the opportunity to enter into “power purchase agreements”
with renewable energy generators.
ESG is also incorporated into our procurement processes,
with supplier ESG performance progressively incorporated
in our assessment of tenders. This includes an evaluation of
modern slavery performance, health and safety systems and
performance, and an explicit requirement for suppliers to
conduct themselves ethically in compliance with the Yancoal
Code of Conduct.
The Company is also subject to a spectrum of climate-related
risks, including both physical and transition risks with the
potential to affect the Company’s future development,
operations, markets and asset carrying values. Physical risk
factors include (but are not limited to) extreme weather
events, fires, access to water, power supply, damage to
assets and indirect impacts from supply chain disruption.
Transition risk factors include (but are not limited to) timing
of technology development and deployment, customer or
community perception and the regulatory response to the risk
of climate change. Unilateral and collective action by Australia
and other countries, may affect the demand for coal, coal
prices, the future supply of coal and the competitiveness of
the Company’s products in the world energy market. Extensive
government regulations relating to the transition to a lower
carbon world economy may give rise to risks of delay and
uncertainty associated with approvals for future development
and impose costs on the mining operations of the Company.
Future regulations could increase those costs, limit the
Company’s ability to produce and sell coal, or reduce demand
for the Company’s coal products. In recent years, China has
also taken steps to address severe air pollution in many
Chinese cities by adopting a range of policies to lower carbon
emissions and reduce coal usage. The Company is also exposed
to risks related to external actors, including the capital and
insurance markets.
The Company recognises the growing interest by stakeholders
in how Yancoal is positioning itself in this shift to a lower-
carbon economy, through managing potential risks and
identifying and developing opportunities for our business and
the broader sector as a result of an anticipated global shift
towards a lower-carbon economy.
Increased community concern and adverse actions taken by
community and environmental groups may delay or prevent
the Company from progressing new mine developments or
development or expansion of existing mines, or may mean that
those mines are subject to conditions that adversely affect
their profitability and consequently the financial performance
of the Company. Environmental lobby groups in both QLD
and NSW have previously made submissions opposing both
operation and expansion of coal mines in an attempt to
prevent new mine developments or expansion of existing
mines on the basis of environmental concerns. The Company
engages constructively with all stakeholders to ensure they
have access to objective information to inform their views.
In terms of physical risks, sites are consistently managing
these at an operational level, including water conservation
initiatives and flood mitigation measures. The Company’s
marketing team is constantly developing a more diversified
customer base to improve revenue resilience. The Company’s
Environment & Community team is accountable for the
organisation’s ESG report and is engaged with evolving trends
and developments to meet stakeholder needs for more useful
reporting.
Additional details relating to the transition to a lower carbon
economy is provided in the Company’s 2020 Environmental,
Social and Governance Report published on the ASX and
HKEx platforms and available on the Company’s website.
The 2021 Environmental, Social and Governance Report will
be published later in the year.
Technological change
Thermal coal as a source of energy competes with other
forms of electricity generation (such as hydro, solar and wind).
In recent years, the global shift from conventional fuels to
renewable sources of energy has created greater competition
for thermal coal in the market which could lead to a structural
decline in thermal coal demand.
As renewable technologies become more efficient and
cost effective, they may gain an economic advantage over
coal-fired and other fossil fuel-based electricity generation.
These economic factors, combined with increasing costs to
comply with emission limits for other air pollutants, may
result in the continued retirement of existing coal- powered
generation capacity, and the cancellation of planned additional
coal-fired power capacity, which may reduce demand for
thermal coal in the market.
There is also a risk of the Company not keeping up with
technology advancements which could affect its future
competitiveness.
Our diversified and evolving customer base assist in improving
business resilience to changing demands. Our focus on high
quality, low cost Tier 1 assets is an important limb of our
strategy to mitigate the impact of technological change.
Fraud and misconduct
Any fraud, misrepresentation, money laundering or other
misconduct by the Company’s employees, customers, service
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providers, business partners or other third parties could result
in violations of relevant laws and regulations by the Company
and subject the Company to corresponding regulatory
sanctions. These unlawful activities and other misconduct may
have occurred in the past and may occur in the future, and may
result in civil and criminal liability under increasingly stringent
laws or cause serious reputational or financial harm to the
Company. The Company may not be able to timely detect or
prevent such activities, which could subject the Company to
regulatory investigations and criminal and civil liability, harm
our reputation and have a material adverse effect on the
Company’s business, financial condition, results of operations
and prospects.
Yancoal wants everyone to work in an environment that is
conducive to productivity, safety and teamwork. It has in place
a Code of Conduct, which sets out expected standards of
behaviour that are non-negotiable and key to the Company’s
culture, including the clear prohibition of bullying, (sexual)
harassment, retaliation and unlawful discrimination. The Code
of Conduct is supplemented by a Speak Up facility that allows
for any concerns to be raised confidentially and anonymously.
Material disclosures received via this facility are subject to
investigations overseen by Yancoal’s Whistleblower Officer,
with outcomes reported to the Board.
Changes in government policy, legislation or
regulation
The Company is subject to extensive legislation, regulations
and supervision by a number of federal and state regulatory
bodies. Any future legislation or regulatory change may
affect the resources industry and may adversely affect the
Company’s financial performance and position, such as future
laws that may limit the emission of greenhouse gases or the
use of coal in power generation.
Yancoal is a member of the state industry body in each
jurisdiction, as well as of the federal Minerals Council of
Australia. Each of these industry associations is actively
involved in advising respective governments in respect of
changes in policy, legislation and regulation, and is primarily
accountable for the industry’s lobbying efforts in that
regard, and in keeping association members informed of
developments.
Geopolitical Environment
The Company is subject to geopolitical exposures that have
the potential to impact the Company’s operations and growth.
Import protocols of China continue to influence regional coal
markets and have resulted in an increased diversification of
the Company’s customer base. Yancoal intends to continue this
diversification of its customer base and sales mix in the most
optimal market available.
Environment
Due to the nature of coal mining processes, and the associated
by-products, residues and tailings generated from these
processes, all operations of the Company are subject to
stringent environmental laws and regulations.
There is a risk that past, present or future operations have
not met or will not meet environmental or related regulatory
requirements and/or that the approvals or modifications the
Company is currently seeking, or may need to seek in the
future, will not be granted. If the Company is unsuccessful
in these efforts or otherwise breaches any environmental
requirements, it may incur fines or penalties, be required to
cease operations and/or be subject to increased compliance
costs or costs for rehabilitation or rectification works, which
have not been previously planned at one or more of its sites.
Extensive environmental regulations in Australia, and in other
countries that could affect the Company’s business, may
impose costs on its mining operations, and future regulations
could increase those costs, limit its ability to produce and
sell coal, or reduce demand for the Company’s coal products.
In particular, the regulatory response to the risk of climate
change, including unilateral and collective action by Australia
and other countries, may affect demand for coal, coal prices
and the competitiveness of the Company’s products in the
world energy market in the medium to long term.
Changes to environmental regulations may increase the
standard and cost of compliance, and may adversely affect
the Company’s ability to generate the expected economic
returns from its mining assets over their operational life.
The Company may not always be able to comply with future
laws and regulations in relation to environmental protection
economically or at all. There can be no assurance that the
Company will be able to fully and economically utilise the
entire coal resources of the mines it operates currently or in
the future or that some of its mining assets will not become
“stranded assets” that are not able to generate the expected
economic returns over their useful lives.
Environmental legislation may change in a manner that
may require compliance with additional standards, and a
heightened degree of responsibility for companies and their
Directors and employees. There may also be unforeseen
environmental liabilities resulting from coal related activities,
which may be costly to remedy. In particular, the acceptable
level of pollution and the potential abandonment costs and
obligations for which the Company may become liable as a
result of its activities may be impossible to assess under the
current legal framework.
The Company uses hazardous materials and will generate
hazardous waste, and may be subject to common law claims,
damages due to natural disasters, and other damages, as
well as the investigation and clean-up of soil, surface water,
groundwater, and other media. Such claims may arise, for
example, out of current or former activities at sites that it
owns or operates.
The Company employs skilled experts at each site to manage
its environmental compliance obligations. Further, it has
implemented an independent external environmental
assurance program which audits each site on a periodical basis
for both risks and compliance.
Litigation
Like all companies in the resources sector, the Company is
exposed to the risks of litigation (either as the complainant or
as the defendant), which may have a material adverse effect
on the financial position of the relevant entity. The Company
could become exposed to claims or litigation by persons
alleging they are owed fees or other contractual entitlements,
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employees, regulators, competitors or other third parties.
Such claims or proceedings could divert our management’s
time and attention and consume financial resources in their
defence or prosecution.
Yancoal undertakes legal review and ongoing conflict
management of key material contracts to minimise risk
of disputes and subsequent litigation. The Company also
manages its obligations under relevant legislation to manage
risk of prosecution, such as set out under the risks “Health
and safety” and “Regulatory approvals” above.
Economic and contemporary risks
In addition to the above environmental and social risks, the
Company is subject to a range of economic and contemporary
risks. These include (but are not limited to) the Company’s
exposure to COVID-19, coal prices and demand, coal
production, foreign exchange rates, insurance, transport and
infrastructure, technology and cyber vulnerabilities, estimates
of resources and reserves, business development risks,
funding, accounting standards, impairments, WICET and NCIG
debt, Key Personnel and Joint Ventures and reliance on third
parties. These are further outlined below.
COVID-19
As with most businesses, COVID-19 has introduced a range of
new risks to the Company. These range from health, supply
chain, logistics & infrastructure, production and sales risk
through to other risks to the continuity of business operations,
including absenteeism.
The Company’s formed a Crisis Management Team that
has been managing the company’s response to COVID-19
since early 2020. The team comprises members of senior
management and is supported by site- based Incident
Management Teams. Yancoal also strongly encourages
vaccinations amongst its workforce. It supports on-site
vaccinations across a number of its mines and implemented
a company-wide ‘Thank You’ program for fully vaccinated
employees and managed contractors.
The company maintains a variety of COVID-19 controls
including thermal cameras, pre-screening checks, physical
distancing, face-masks, hygiene practices, travel approvals and
wellbeing support.
Coal prices and coal demand
The Company generates revenue from the sale of coal. In
developing its business plan and operating budget, the
Company makes certain assumptions regarding coal prices
and demand for coal. The prices which the Company will
receive for its coal depend on numerous market factors
beyond its control and, accordingly, some underlying coal price
assumptions relied on by the Company may materially change
and actual coal prices and demand may differ materially from
those expected.
The prices for coal are determined predominantly by world
markets, which are affected by numerous factors, including
the outcome of future sale contract negotiations, general
economic activity, industrial production levels, changes in
foreign exchange rates, changes in energy demand and demand
for steel, changes in the supply of seaborne coal, technological
changes, changes in production levels and events interfering
with supply, changes in international freight rates or other
transportation infrastructure and costs, the costs of other
commodities and substitutes for coal, market changes in coal
quality requirements, government regulations which restrict
use of coal, and tax impositions on the resources industry, all of
which are outside the control of the Company and may have a
material adverse impact on coal prices and demand.
In addition, the coal price is highly dependent on the outlook
for coal consumption in large Asian economies, such as China,
Japan and India, as well as any changes in government policy
regarding coal or energy policy in those countries.
Absent offsetting factors, significant and sustained adverse
movements in demand for coal and, consequently, coal
prices (both generally and in relation to particular types and
classes of coal) may have a material adverse impact on the
ongoing financial performance and financial position of the
Company or may result in the Company not proceeding with
the development of new mines and projects due to such
development not being economically viable.
Any weakening in coal prices or any deterioration prompted
by reduction in demand or addition of new tonnes to the
seaborne market would have a material adverse impact on
the financial performance of the Company and its capacity to
undertake development projects.
Coal production
The Company’s financial performance is dependent on the
Company being able to sustain or increase coal production and
decrease operating costs on a per tonne basis. The Company’s
success or failure in improving productivity will become
particularly important to the Company’s financial performance
at times of low coal prices.
The Company’s coal production can be impacted by a number
of factors, including for example unforeseen geological
or geotechnical issues (particularly in the Company’s
underground operations), changes or variations in coal quality
or geological, hydrologic or other conditions, adverse weather
including abnormal wet weather conditions, bushfire events,
unforeseen delays or complexities in installing and operating
mining longwall systems, protracted breakdown of coal
handling infrastructure and other mining equipment and rail
and port breakdowns and outages. Regulatory factors and the
occurrence of other operating risks can also limit production.
Adverse foreign exchange rate movements
Foreign exchange risk is the risk of the Company sustaining loss
through adverse movements in exchange rates. Such losses
can impact the Company’s financial position and performance
and the level of additional funding required to support the
Company’s businesses.
The liabilities, earnings and cash flows of the Company are
influenced by movements in exchange rates, especially
movements in the A$:US$ exchange rate.
While the Company operates entirely in Australia and its costs
are primarily denominated in its functional currency, the A$,
foreign currency exposure arises particularly in relation to coal
supply contracts, which generally are priced and payable in
US$, procurement of imported plant and equipment, which
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can be priced in US$ or other foreign currencies, and debt
denominated in US$.
The impact of exchange rate movements will vary depending
on factors such as the nature, magnitude and duration of the
movements, the extent to which currency risk is hedged under
forward exchange contracts or other hedging instruments and
the terms of these contracts.
Insurance
The Company has external insurance coverage for certain
operating risks. However, it may become subject to liability
(including in relation to pollution, occupational illnesses or other
hazards), or suffer loss resulting from business interruption,
for which it is not externally insured (or has not sufficiently
insured) or cannot insure, including liabilities in respect of past
activities. The growing anti-coal sentiment in the insurance
market may further reduce insurance capacity available to the
Company and/or lead to insurance terms for certain insurance
types or layers no longer being economically viable.
As a result, the risk transfer to a third party as achieved
through external insurance coverage may not cover the scope
and extent of claims against the Company or losses it may
incur, including, but not limited to, claims for environmental
or industrial accidents, occupational illnesses, pollution and
product liability, war, terrorism, major equipment and business
interruption. In the absence of external insurance coverage,
major losses could adversely affect the future financial
performance of the Company.
In addition, insurance may not be available or continue to be
available at economically acceptable premiums and therefore
require a form of self-insurance.
Transport and infrastructure
Coal produced from the Company’s mining operations is
transported to customers by a combination of road, rail and
sea. Fluctuations in transportation costs and disruptions to
our railway and port linkages could disrupt the Company’s coal
deliveries and adversely affect its business, financial condition
and results of operations.
A number of factors could disrupt or restrict access to
essential coal transportation and handling services, including
(but not limited to) weather related problems, key equipment
and infrastructure failures, rail or port capacity constraints,
congestions and inter-system losses, industrial action, failure
to obtain consents from third parties for access to rail or land,
failure or delay in the construction of new rail or port capacity,
failure to meet contractual requirements, terrorist attacks,
breach of regulatory framework, mismatch of rail and port
capacity or the possible sale of infrastructure. Each of these
factors could impair the Company’s ability to supply coal to
customers and/or increase costs, and consequently may have
a material adverse effect on the Company’s financial position.
Significant increases in transport costs (such as emissions
control requirements and fluctuations in the price of diesel
fuel and demurrage) could make the Company’s coal less
competitive when compared to other fuels or coal produced
from other regions.
Technology / cyber
The Company’s business relies on the performance, reliability
and availability of its technology systems including (custom)
software. Information and operating technology may be
subject to international cyber security threats. Breaches could
result in (but are not limited to) safety exposures, the loss of
sensitive data / information, unplanned outage of business-
critical system, environmental damage and misappropriation
of company funds. The Company’s information technology
infrastructure in general may also be adversely affected by
factors such as server damage, equipment faults, power
failure, computer viruses, misuse by employees or contractors,
telecommunications failures, external malicious intervention
such as hacking, terrorism, fire, natural disasters, or weather
interventions. Such events are largely beyond the Company’s
control, and may affect its ability to carry on our operations
efficiently.
Estimates of Resources and Reserves and geology
The volume and quality of the coal that the Company recovers
may be less than the Resource and Reserve estimates reported
to date. Resource and Reserve estimates are expressions
of judgment based on knowledge, experience and industry
practice. There are risks associated with such estimates,
including that coal mined may be of a different quality or grade,
tonnage or strip ratio from those in the estimates and the ability
to economically extract and process the coal may not eventuate.
Resource and Reserve estimates are necessarily imprecise
and depend to some extent on interpretations and geological
assumptions, coal prices, cost assumptions, and statistical
inferences which may ultimately prove to have been unreliable.
Coal Resource and Coal Reserve estimates are regularly revised
based on actual production experience or new information and
could therefore be expected to change. Furthermore, should
the Company encounter mineralisation or formations different
from those predicted by past drilling, sampling and similar
examinations, Coal Resource and Coal Reserve estimates may
have to be adjusted and mining plans, coal processing and
infrastructure may have to be altered in a way that might
adversely affect their operations. If it is determined that mining
of certain Coal Reserves are uneconomic, this may lead to a
reduction in the Company’s aggregate Coal Reserve estimates.
Material changes in Coal Reserve estimates, grades, strip
ratios, washing yields or recovery rates may affect the
economic viability of projects. Coal Reserve estimates
should not be interpreted as assurances of mine life or of the
profitability of current or future operations.
If the Company’s actual Coal Resource and Coal Reserve
estimates are less than current estimates, the Company’s
prospects, value, business, results of operations and financial
condition may be materially adversely affected.
Business development
An ineffective evaluation of investment opportunities and/or
allocation of capital could result in a loss of company value,
reduce shareholder returns, impairments and/or regulatory
exposures. There is a risk that capital is not available to
support the company’s growth or strategy.
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Funding
The amount of future funding required by the Company will
depend on a number of factors, including (but not limited
to) the business activities, commitments and the overall
performance of the Company’s business at that time. The
Company’s business operations and cash flow are highly
sensitive to any fluctuation in the US$ coal price, coal
production from its operations, demand for its coal product
and US$ movement in foreign exchange rates, particularly
movements in the A$:US$ exchange rate. The growing anti-
coal sentiment in capital markets is reducing external funding
capacity available to the Company and/or lead to terms that
are no longer economically viable.
In developing its business plan and operating budget, the
Company has made certain assumptions regarding coal prices,
the A$:US$ exchange rate, future production levels, business
development activities, dividends and other factors which
determine the Company’s financial performance.
Accounting Standards
Australian Accounting Standards (“AAS”) and International
Financial Reporting Standards (“IFRS”) are issued by the
Australian Accounting Standards Board and International
Accounting Standards Board respectively and are beyond the
control of the Company and the Directors. Any changes to
AAS, IFRS or to the interpretation of those standards may have
an adverse effect on the reported financial performance or
financial position of the Company.
Impairment
The Company’s balance sheet includes a number of assets
that are subject to impairment risk. The value of these assets
is derived from the fundamental valuation of the underlying
mining operations and as such is subject to many of the
risks including, but not limited to, coal price and demand,
foreign exchange, coal production, estimates of reserves and
resources, uncertainty in costs forecasts, operating risks,
injury and mine closure.
Adverse changes in these risk factors could lead to a reduction
in the valuation of the Company’s assets and result in an
impairment charge being recognised.
NCIG and WICET debt
As a shipper in NCIG and WICET, the Company may be required
to pay its share of any outstanding senior debt, amortised
over the remaining years of that particular contract, if the
Company’s source mines are unable to maintain a minimum
level of Marketable Coal Reserves. Furthermore, the Company
may be required to pay its share of any outstanding senior debt
in full, if NCIG and WICET are unable to refinance a tranche
of its maturing debt and defaults on its remaining debt. If a
NCIG Shipper was to default on its contractual obligations
and was unable to pay its share of the NCIG or WICET, the
outstanding senior debt would be socialised amongst the
remaining shippers. In this scenario the Company’s share of
the outstanding senior debt would increase.
Joint ventures and reliance on third parties
The Company holds a number of joint venture interests,
including interests in the Middlemount, Moolarben, HVO,
Mount Thorley and Warkworth joint ventures, PWCS, NCIG
and WICET, with other parties. Decision making, management,
marketing and other key aspects of each joint venture are
regulated by agreements between the relevant joint venture
participants. Under these agreements, certain decisions
require the endorsement of third party joint venture
participants and the Company relies on the co-operation of
these third parties for the success of its current operations
and/or the development of its growth projects and the
transportation of increased production.
The Company cannot control the actions of third party joint
venture participants, and therefore cannot guarantee that
joint ventures will be operated or managed in accordance with
the preferred direction or strategy of the Company. There is
a risk that the veto rights of, or consents required from, the
joint venture partners will prevent the business and assets of a
joint venture from being developed, operated and managed in
accordance with that preferred direction or strategy.
The Company also use contractors and other third parties for
exploration, mining and other services generally, and is reliant
on a number of third parties for the success of its current
operations and for the development of its growth projects.
While this is normal for the mining and exploration industry,
problems caused by third parties may arise which may have an
impact on the performance and operations of the Company.
Any failure by counterparties to perform their obligations may
have a material adverse effect on the Company and there
can be no assurance that the Company will be successful in
attempting to enforce its contractual rights through legal action.
People and talent management
As the world economy has emerged from the global pandemic
the ability to attract and retain talent has taken on increased
urgency. This is particularly relevant for qualified professional
staff where a shortage in the industry is already at play (e.g.
statutory ticket holders are in short supply). In addition,
Yancoal faces the challenge of attracting and retaining
employees into the coal industry. These increasing skills
shortages, labour market challenges and industry perception
have the potential to impact company performance.
Yancoal’s approach to attraction and retention is to pay market
competitive salaries and benefits, nurture a values driven
culture that creates connection with the business, develop
talent for the future and create career pathways.
Maintaining and upholding our company culture which is
underpinned by our values is key to our ongoing success
and sustainability as a business. A key factor in enabling this
is the reinforcement of the message that Yancoal does not
tolerate inappropriate workplace conduct and is committed
to eliminating incidents of sexual harassment, bullying and
racism. In 2022, Yancoal will continue to raise awareness
and strengthen our reporting and response systems in
this area. Most notably, we will implement the actions
from the 2021 psycho-social risk assessment including the
roll out of the Company’s Behavioural, Mental Health and
Wellbeing program and the inclusion of a module in a Front
Line Leader development program aimed at strengthening
people management skills and improving workplace culture.
In addition, The Company will carry out a review of the
accommodation camps used with a focus on the privacy,
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lighting and security that is in place to prevent harmful
behaviours from occurring.
Health, Safety Environment and Community Compliance
The Company has adopted policies to comply with
occupational health, safety, environment and other laws. The
Board has a Health and Safety Policy and an Environment and
Community Relations Policy which apply across all areas of
the business. In addition, each mine site has its own health,
safety and environmental policies and procedures to deal
with their particular health, safety and environmental issues.
The Board has established a Health, Safety, Environment
and Community Committee to assist it in overseeing the
Company’s health, safety, environmental and community
responsibilities. The committee meetings are generally held
at one of the Company’s mine sites, to provide the Committee
with the opportunity of viewing the implementation of the
policies in practice, to receive feedback from site operational
representatives and to address any mine specific health, safety
and environment issues.
Further information regarding the Health, Safety, Environment
and Community Committee is outlined under the Board
committees section above.
Audit and Risk Management Committee
The Board is responsible for preparing the financial
statements and accounts of the Company. The Audit and Risk
Management Committee plays a key role in helping the Board
to oversee financial reporting, internal control structure,
risk management systems and internal and external audit
functions. The committee also enables the Board to maintain
a transparent relationship with the Company’s internal and
external auditors.
Further information regarding the Audit and Risk Management
Committee is outlined under the Board committees section
above.
CEO and CFO certifications on financial reports
The persons who performed a chief executive function and
chief financial officer function for the Company have declared
in writing to the Board that in respect of the half year ended
30 June 2021 and the full year ended 31 December 2021, in
their opinion, the financial records of the Company have been
properly maintained and the financial statements comply
with the appropriate accounting standards and give a true
and fair view of the financial position and performance of the
Company, and that their opinion has been formed on the basis
of a sound system of risk management and internal control
which is operating effectively.
External Auditor
The Company’s external auditor is ShineWing Australia.
Consistent with the requirements of the Corporations Act 2001
(Cth), ShineWing Australia has a policy of partner rotation
every five years. The appointment, removal and remuneration
(not including amounts paid for special or additional
services provided by the auditor) of the auditor require
shareholder approval.
The external auditor receives all papers and minutes of the
Audit and Risk Management Committee. The external auditor
also attends the Company’s AGM to answer questions from
shareholders relevant to the Company’s audit.
The statement of the external auditor, ShineWing Australia,
about reporting responsibilities on the financial statements
of the Group is set out under the heading “Independent
Auditor’s Report To the Members of Yancoal Australia Ltd”
in this annual report.
The Directors confirm that, to the best of their knowledge,
information and belief, having made all reasonable enquiries,
they are not aware of any material uncertainties relating to
events or conditions that may cast significant doubt upon the
Company’s ability to continue as a going concern.
An analysis of remuneration (including details of the amounts
paid or payable) to the auditor for audit and non-audit services
provided during the financial year ended 31 December 2021
are set out in the Directors’ Report on page 18.
Verification of periodic corporate reports
Where a periodic corporate report is not required to be
audited or reviewed by an external auditor, the Company
conducts an internal verification process to confirm the
integrity of the report to ensure that the content of the
report is materially accurate, balanced and provide investors
with appropriate information to make informed investment
decisions. The verification process involves the reports being
prepared and reviewed by relevant subject matter experts, an
internal verification and sign off process, material statements
reviewed for accuracy, and an internal approval process.
Further details regarding the Company’s disclosure and
communications processes are set out below under paragraph
titled “Make timely and balanced disclosure”, and section
titled “Communications with shareholders”.
5. DIVERSITY
The Company recognises that people are its most important
asset and is committed to the maintenance and promotion of
workplace diversity. The Company’s Diversity Policy, approved
by the Board, seeks to actively facilitate a more diverse and
representative management and leadership structure. The
Diversity Policy is available in the Corporate Governance
section of the Company’s website.
Annually, the Board establishes measurable objectives with the
assistance of the Nomination and Remuneration Committee
with a view to progressing towards a balanced representation
of women at a Board and senior management level.
The measurable objectives and performance against them
are reviewed annually by the Nomination and Remuneration
Committee as part of its annual review of the effectiveness of
the Diversity Policy.
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The measurable objectives adopted for 2021 and the Company’s performance against the measurable objectives are outlined in
the table below:
OBJECTIVE
PERFORMANCE
1. Approval of and establishment of the Yancoal
Diversity Strategy.
The Yancoal Diversity, Equity and Inclusion strategy (“DE&I Strategy”) was established and adopted in
August 2021.
The DE&I Strategy will shape the measurable objectives for 2022, 2023 and 2024.
2. Creation and implementation of growth opportunities
for women through internal and external mentoring
programs, aimed at supporting the development of
career pathways into leadership positions for female
and other employees.
In 2021, Yancoal was a Silver Sponsor for the NSW WIMNET mentoring program for the 3rd consecutive year.
In the 2021 program, 7 female employees were mentees and Yancoal contributed 5 mentors to the program.
For the first year, Yancoal also participated in the QLD Women in Mining Mentor Program with two mentees.
This provided great brand exposure and awareness for Yancoal in the QLD market, and created meaningful
learning opportunities for our identified high potentials in QLD.
3. Continue to develop our leaders by delivering
inclusive leadership training to Company site
leadership teams.
During 2021, inclusive leadership training was delivered to all site leadership teams as well as leaders in
the corporate team. A total of 75 leaders participated in the program in 2021. Overall feedback from the
program was positive, with 68% of participants rating the session as very good or excellent and 79% saying
they feel that the course has made them think differently about inclusive leadership.
4. Continuing to develop and monitor meaningful
metrics to track key diversity metrics including:
a. diversity of new hires;
b. female employee turnover rate; and
c. return of female employees after parental leave.
Metrics for the diversity of new hires and the female employee turnover rate are tracked on a monthly basis.
This data provides insight into company trends to enhance retention and attraction strategies to increase
gender balance.
The Board has set the following measurable objectives in
relation to gender diversity for 2022:
1. Distribution and awareness of the DE&I Strategy to all
2.
3.
4.
5.
leadership teams, to articulate the business case for
greater diversity and create buy in and ownership for the
year 1 objectives of the plan.
The Company will promote appropriate gender balance in
interview selection panels.
The Company will actively promote the achievement
of women at Yancoal through nominations in external
awards, including NSW, QLD & WA Women in Mining,
WIM100 and other industry awards.
The Company will provide development support and
mentoring for women to progress into leadership
positions, particularly in areas affected by gender
imbalance.
The coal mining industry has a female representation
of 15.5% compared to 50.5% across all industries.
Attracting women into the industry is particularly
difficult. The Company will evaluate its gender balance
and set a target to increase the proportion of female
employees from 12% to 13%.
6. We will encourage career planning conversations and
achievable and structured development plans to be put
in place as part of the annual Performance Review &
Development cycle.
Proportion of Women in the Company
Gender has been identified as a key area of focus for
the Company. On an annual basis, the Nomination and
Remuneration Committee reviews the proportion of women
employed by the Company and submits a report to the Board
outlining its findings. Details regarding the proportion of men
and women throughout the organisation are set out below.
As at 31 December 2021, the proportion of women who were
directly engaged as employees and contractors was 13%: 379
Full-time, 17 Part-time, 4 Casual and 89 Managed Contractors.
The proportion of women in Executive Committee roles
within the Company during 2021 was 7%: Women held 1 of 14
Executive Committee roles within the Company.
On and from 30 January 2018, one female Non-Executive
Director sits on the Board.
6. COMMUNICATIONS WITH SHAREHOLDERS
The Company has an investor relations program that is aimed
at facilitating two-way communications with investors.
The Company’s policy is to promote effective two-way
communication with shareholders and other investors so that
they understand how to assess relevant information about the
Company and its corporate direction. The Company aims to
keep shareholders, potential investors and other stakeholders
informed of all major developments affecting the state of
affairs of the Company. The Company facilitates the investor
relations program by communicating information regularly to
shareholders, potential investors and other stakeholders by:
• posting announcements on the ASX and HKEx platforms
in accordance with its continuous disclosure obligations
and also making these announcements available on the
Company’s website under the sections marked ‘Corporate
Governance’, ‘Media’ and ‘Boards and Committees’;
• keeping its website up to date on important information
about the Company, including its Constitution, Board and
Board Committee Charters, core corporate governance
policies and financial information about the Company; and
• publishing investor presentations made to analysts on
the ASX and HKEx platforms and making media briefings
available within the Investor section of the Company’s
website.
The Board considers one of its key responsibilities to be
communication with shareholders. The Company generally
encourages shareholders to attend and participate in all
general meetings including AGMs and will use a variety
of technological solutions where appropriate to facilitate
such participation of shareholders to allow shareholders
to attend and vote in person, by proxy or online, this may
include, for example, making meetings available to view by
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live telecommunications. To ensure that the views of as many
shareholders as possible are represented, it is the Company’s
standard practice at an AGM (and any other general meeting)
for all resolutions to be decided by a poll rather than by a show
of hands.
Shareholders are entitled to ask questions about the
management of the Company and of the auditor as to its
conduct of the audit and the preparation of its reports.
Any shareholders who cannot attend any general meetings
can also participate via lodgement of their proxies. In addition,
shareholders have the option of receiving communications
from and sending communications to the Company and the
Company’s principal and branch share registries, Computershare
Investor Services Pty Limited and Computershare Hong Kong
Investor Services Limited, electronically.
The Company’s 2021 AGM was held at 11.00am (AEST)
(being 9.00am (HKT)) on Friday, 28 May 2021 at Darling Park,
The Pavilion, 201 Sussex Street, Sydney NSW 2000, Australia.
The major items discussed were the re-election of Directors,
issue of rights under the equity incentive plan and re-insertion
of proportional takeover provisions. All resolutions were duly
passed by the shareholders by way of poll.
The Company’s Shareholder Communication Policy can
be found within the Corporate Governance section of the
Company’s website.
Paragraph 44 of the Hong Kong Joint Policy Statement
Regarding the Listing of Overseas Companies, jointly issued
by the Securities and Futures Commission of Hong Kong and
HKEx in March 2007 and updated in April 2018, requires that
members holding a minority stake in an overseas company
must be allowed to convene an extraordinary general meeting
and add resolutions to a meeting agenda. The minimum level
of members’ support required to convene a meeting must be
no higher than 10%.
Under section 249D of the Corporations Act 2001 (Cth),
shareholders with at least 5% of the votes that may be cast at
a general meeting may request the Directors to call a general
meeting or may convene a general meeting themselves at
their own expense under section 249F of the Corporations Act
2001 (Cth). Any such request must be in writing, must state
any resolution to be proposed at the meeting, must be signed
by the shareholder making the request and must be given to
the Company.
Under section 249N of the Corporations Act 2001 (Cth),
shareholders representing at least 5% of the total votes that
may be cast on the resolution or at least 100 shareholders
who are entitled to vote at a general meeting may give the
Company notice requiring resolutions to be put before a
general meeting. The notice must be in writing, must set out
the wording of the proposed resolution and must be signed
by the shareholders proposing to move the resolution.
Apart from the general meetings, the Company’s website
is an effective means of communication with shareholders.
The Company is committed to facilitating the two-way
communication with shareholders, in particular, dealing
with shareholder enquiries (whether an institutional
investor or a retail investor) and any shareholders who have
questions or comments on what the Company is doing are
most welcome to contact the Company at any time through
the website. Shareholders may raise enquiries to the Board
by contacting the Company’s General Manager, Corporate
Affairs, at shareholder@yancoal.com.au. Upon receipt of the
enquiries, the General Manager, Corporate Affairs will forward
shareholders enquiries and concerns to the Board, Board
committees or management as appropriate.
This Corporate Governance Statement has been approved
by the Board and is current as at 28 February 2022.
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CONTINUING CONNECTED TRANSACTIONS
The Company has entered into certain transactions with
connected persons of the Company which constitute
continuing connected transactions of the Company under the
HK Listing Rules. These non-exempt continuing connected
transactions, in respect of which the Company has complied
with the relevant requirements under Chapter 14A of the HK
Listing Rules, are set out below.
SALE OF COAL BY THE GROUP TO YANKUANG ENERGY
From time to time, Yankuang Energy (the controlling
shareholder of the Company who is interested in
approximately 62.26% of the Shares in the Company) and/
or its subsidiaries (excluding the Group) may purchase coal
from the Group primarily for their own trading purposes. On
19 November 2020, the Company entered into a framework
agreement for coal sales with Yankuang Energy (the “Yankuang
Energy Framework Agreement For Coal Sales”) in relation to
the sale of coal by the Group to Yankuang Energy and/or its
subsidiaries (excluding the Group) commencing from 1 January
2021 and expiring on 31 December 2023.
The Yankuang Energy Framework Coal Sales Agreement
provides that all transactions in relation to the sale of coal
by the Group to Yankuang Energy and/or its subsidiaries
(excluding the Group) must be (i) in the ordinary and usual
course of business of the Group, (ii) on an arm’s length
basis, (iii) on normal commercial terms or better, and (iv) in
compliance with, among other things, the HK Listing Rules and
applicable laws.
The maximum annual transaction amount to be received
by the Group from Yankuang Energy and/or its subsidiaries
(excluding the Group) for the three years ending 31 December
2021, 2022 and 2023 was not to exceed US$20 million, US$20
million and US$20 million, respectively. During the year ended
31 December 2021, the transaction amount received by the
Group was nil.
SALE OF COAL BY THE GROUP TO YIT
On 19 November 2020, the Company entered into a
framework agreement for coal sales with Yancoal International
Trading Co., Ltd. (“YIT”) (the “2021 Framework Agreement
For Coal Sales”) in relation to the sale of coal by the Group
to YIT and/or its associates (excluding the Yankuang Energy
Group), commencing from 1 January 2021 and expiring on 31
December 2023.
YIT is a wholly-owned subsidiary of Shandong Energy, the
controlling shareholder of Yankuang Energy. Accordingly, YIT
is a connected person of the Company by virtue of being an
associate of Yankuang Energy.
The YIT Framework Coal Sales Agreement provides that all
transactions in relation to the sale of coal by the Group to YIT
and/or its associates (excluding the Yankuang Energy Group)
must be (i) in the ordinary and usual course of business of the
Group, (ii) on an arm’s length basis, (iii) on normal commercial
terms or better, and (iv) in compliance with, among other
things, the HK Listing Rules and applicable laws.
The maximum annual transaction amount to be received
by the Group from YIT and/or its associates (excluding the
Group) for the three years ending 31 December 2021, 2022
and 2023 was not to exceed US$87.5 million, US$87.5 million
and US$87.5 million, respectively. During the year ended 31
December 2021, the transaction amount received by the
Group was approximately US$49.3 million, which was below
the annual cap.
PURCHASE OF COAL BY THE GROUP
The Group has purchased and may, from time to time,
purchase coal from Yankuang Energy and/or its subsidiaries,
in particular Australian based subsidiaries of Yankuang Energy
holding mines which are managed by the Group, for back-
to-back on sale to end customers in order to fulfil customer
requirements and maintain customer relationships.
The Company entered into a framework coal purchase
agreement with Yankuang Energy (the “Framework Coal
Purchase Agreement”) on 8 October 2018 to govern all
existing and future purchases of coal by the Group from
Yankuang Energy and/or its subsidiaries (excluding the
Group). The Framework Coal Purchase Agreement provides
that all transactions in relation to the purchase of coal by
the Group from Yankuang Energy and/or its subsidiaries
(excluding the Group) must be (i) in the ordinary and usual
course of business of the Group, (ii) on an arm’s length basis,
(iii) on normal commercial terms with the sale price being
determined with reference to industry index prices and coal
quality characteristics under the respective contracts and (iv)
in compliance with, amongst other things, the HK Listing Rules
and applicable laws.
The Framework Coal Purchase Agreement expired on 31
December 2020 and on 16 December 2020, the Board resolved
to renew the Framework Coal Purchase Agreement for a
further three years commencing from 1 January 2021 and to
set the annual caps for the three years ending 31 December
2021, 2022 and 2023 at US$40 million, US$40 million and
US$40 million, respectively. During the year ended 31
December 2021, the transaction amount paid by the Group
was approximately US$7.6 million, which was below the annual
cap.
PROVISION OF MANAGEMENT SERVICES BY THE COMPANY
As one of the conditions imposed by the Foreign Investment
Review Board of the Australian Government in relation
to the merger of the Company with Gloucester in 2012,
a management and transitional services agreement (the
“Management and Transitional Services Agreement”) was
entered into between the Company and the following entities
(the “Existing Recipients”), comprising (i) Yankuang Energy,
(ii) Yancoal Technology Development Holdings Pty Ltd, (iii)
Premier Coal Holdings Pty Ltd, (iv) Athena Holdings Pty Ltd,
(v) Tonford Holdings Pty Ltd, (vi) Wilpeena Holdings Pty Ltd
and (vii) Yancoal Energy Pty Limited, in 2012, pursuant to
which the Company has agreed to provide to the Existing
Recipients each Services (as described below) in respect of
certain assets owned by the Existing Recipients. Each of the
Existing Recipients is a wholly owned subsidiary of Yankuang
Energy (other than Yankuang Energy itself). Yankuang Energy is
a Controlling Shareholder of the Company and is interested in
approximately 62.26% of the Shares in the Company.
On 7 December 2016, a deed of variation, accession and
termination agreement of the Management and Transitional
Services Agreement was entered into among the Existing
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CONTINUING CONNECTED TRANSACTIONS
Recipients, Yankuang Resources Pty Ltd (“Yankuang
Resources”), Yankuang (Australia) Metal Mining Pty Ltd.
(“Yankuang (Australia) Metal Mining”), together with Yankuang
Resources and the Existing Recipients, the (“Recipients”)
and the Company, pursuant to which Yankuang Resources
and Yankuang (Australia) Metal Mining became parties to
the Management and Transitional Services Agreement and
are entitled to all rights and benefits of an Existing Recipient
under the Management and Transitional Services Agreement.
Yankuang Resources and Yankuang (Australia) Metal Mining
are both wholly owned subsidiaries of Shandong Energy.
Shandong Energy is, directly and indirectly, interested in
approximately 55.76% of the shares in Yankuang Energy and is
a controlling shareholder of the Company.
Details of the terms of the Management and Transitional
Services Agreement are set out below.
Services
The services provided to each Recipient and each of their
respective subsidiaries (excluding the Group and Yankuang
Energy) include:
• General Corporate services, which comprise human
resource services, treasury services, financial accounting/
reporting services, compliance services, marketing and
logistic services, corporate communications services,
government and industry relations services, business
development services and other general corporate
services,
rate for such work and (iii) in respect of disbursement, full
recovery of any hard disbursements incurred by the Company.
At the end of each financial year (or such other times as the
parties may agree), the parties will undertake a reconciliation
of the fees charged during that financial year against the actual
cost and services provided. The Company will refund the
excess charges, or the Recipients will pay the shortfall charges
to the Company, in each case, within 14 days of determination
of the fee adjustment required.
Payment of the Services Fees
The Company will invoice the Recipients quarterly in arrears
for services provided and the Recipients must pay to the
Company within 30 days after the receipt of the invoice.
Notwithstanding that the term of the Management and
Transitional Services Agreement may exceed three years, the
Company has set the annual caps for the transactions under
the Management and Transitional Services Agreement for a
term of three years and will re-comply with the applicable
requirements of the HK Listing Rules after the expiry of the
initial three years.
On 16 December 2020, the Board resolved to set the annual
caps for the three years ending 31 December 2021, 2022 and
2023 at $12 million, $12 million and $12 million, respectively.
During the year ended 31 December 2021, the transaction
amount charged by the Group was approximately $8.6 million,
which was below the annual cap.
• Operations services, which comprise carrying out
LOAN FACILITY PROVIDED BY THE COMPANY
exploration programs, preparing business plans,
monitoring and reporting on environmental issues, using
all reasonable endeavours to meet business KPIs, preparing
plans of operations as may be required by laws and other
operational services and
IT services, which comprise the granting of the permission
to use the Company’s hardware or software and the
provision of IT support services.
(collectively, the “Services”)
•
During the term, each party may request that the Company
provide an additional service, or the Company may change
or modify the provision of an existing service by notifying
the parties in writing. Following receipt of the notice,
representatives of each party must promptly meet to discuss
in good faith the proposed new services or modified services.
Services Fees
The services fees for provision of the Services are charged on
the basis of cost plus a 5% margin, except for any third-party
charges attributable to the provision of the relevant services
which are charged at cost. The cost base upon which 5%
margin is applied is determined on the basis of management’s
reasonable estimate of such costs at the commencement
of each calendar year having regard to certain principles,
including (i) in respect of coal-mining operations, the total
budgeted corporate administration costs of the Company
and the budgeted proportion of overall product tonnes of the
relevant mining operation, (ii) in respect of non-coal mining
businesses, the estimated management hours and the hourly
Premier Coal Holdings Pty Ltd, an indirect wholly-owned
subsidiary of Yankuang Energy (“Premier Coal”) (as the
borrower), entered into a loan agreement with the Company
(as lender) on 15 June 2016 in relation to an $50 million
uncommitted revolving loan with a fixed interest rate of 7%
per annum (the “Premier Coal Loan Agreement”). Pursuant
to the Premier Coal Loan Agreement, the Company may
terminate or cancel the facility at any time and amounts
already advanced to Premier Coal prior to the termination
or cancellation are required to be repaid immediately. The
termination date will be the date 12 months after the date
of the Premier Coal Loan Agreement, subject to automatic
extension on a rolling 12 months basis, or any earlier date on
which the facility is terminated or cancelled in full or on which
all the money owing becomes due and payable.
On 16 December 2020, the Board resolved to set the annual
caps for the three years ending 31 December 2021, 2022
and 2023 at $53.5 million, $53.5 million and $53.5 million,
respectively. As at 31 December 2021, no amount remained
drawn down under the Premier Coal Loan Agreement.
BANK GUARANTEES PROVIDED IN FAVOUR OF YANKUANG
ENERGY’S SUBSIDIARIES
Framework Bank Guarantee Agreement
The Company entered into a framework bank guarantee
agreement with Athena Holdings Pty Ltd, Tonford Holdings Pty
Ltd, Wilpeena Holdings Pty Ltd, Premier Coal Holdings Pty Ltd
and Yancoal Energy Pty Ltd (together, the “Yankuang Energy
Entities”) (the “Framework Bank Guarantee Agreement”)
on 19 December 2019, pursuant to which the Yankuang
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CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
Energy Entities and/or their subsidiaries may use overall bank
guarantee facilities under the financing facilities entered or
to be entered into by the Group, and pay the Company bank
guarantee fees, which are equal to the bank guarantee fees
to be paid by the Group to the relevant financiers plus a 5%
margin within 20 business days after the payment by the
Company. The initial term of the Framework Bank Guarantee
Agreement is for a period of three years commencing 1 January
2020 and expiring on 31 December 2022 and is automatically
renewed for a successive period of three years thereafter,
subject to the compliance with the HK Listing Rules.
The Company manages certain mines, which are located in
Australia on behalf of Yankuang Energy Entities and/or their
subsidiaries. In the ordinary and usual course of business,
the Yankuang Energy Entities and/or their subsidiaries of
holding the managed mines may require credit support
documents issued by commercial banks for their respective
business operations. Given the relevant commercial banks can
issue credit support documents pursuant to existing facility
agreements generally within five business days after receiving
a request, which is a much shorter period of time and simpler
process as compared to those required by other commercial
banks to issue credit support documents without an existing
facility agreement and the relationship between the Company
and the managed mines, as an integral part of the management
services rendered by the Company in support of the operation
of the managed mines, the Yankuang Energy Entities and/
or their subsidiaries holding the managed mines will use the
overall bank guarantee facilities entered or to be entered into
by the Group and pay the Company bank guarantee fees.
The aggregate maximum daily outstanding principal and the
bank guarantee fees to be received under the credit support
documents issued by the financiers in favour of the Yankuang
Energy Entities and/or their subsidiaries (excluding the Group)
for the three years ending 31 December 2020, 2021 and 2022
was not to exceed $170 million, $170 million and $170 million,
respectively. During the year ended 31 December 2021, the
aggregate maximum daily outstanding principal and the bank
guarantee fees was approximately $90.0 million, which was
below the annual cap.
PURCHASE OF COAL BY GLENCORE
From time to time, Glencore Coal Pty Ltd (“Glencore”) and/or
its associates may purchase coal from the Group for on sale
to end customers, in order to maintain customer relationships
or to meet specific customer requirements. The Company
entered into a framework coal sales agreement with Glencore
(the “Glencore Framework Coal Sales Agreement”) on 29
June 2018 to govern all existing and future sales of coal by
the Group to Glencore and/or its subsidiaries and/or related
entities. The Glencore Framework Coal Sales Agreement
provides that all transactions in relation to the sale of coal by
the Group to Glencore and/or its subsidiaries and/or related
entities must be (i) in the ordinary and usual course of business
of the Group, (ii) on an arm’s length basis, (iii) on normal
commercial terms with the sale price being determined with
reference to the prevailing market price for the relevant type
of coal and (iv) in compliance with, amongst other things, the
HK Listing Rules and applicable laws. The Company will take
into account relevant industry benchmarks and indices when
determining the market price. Glencore wholly owns Anotero
Pty Ltd (“Anotero”). Anotero is a substantial shareholder
of subsidiaries of the Company under the HK Listing Rules.
Glencore is a connected person of the Company by virtue of
being a substantial shareholder of the Company’s subsidiary
(through Anotero).
On 16 December 2020, the Board resolved to renew the
Glencore Framework Coal Sales Agreement for a further three
years commencing from 1 January 2021 and to set the annual
caps for the three years ending 31 December 2021, 2022 and
2023 at US$350 million, US$350 million and US$350 million,
respectively. During the year ended 31 December 2021, the
transaction amount received by the Group was approximately
$155.2 million, which was below the annual cap.
SALES OF COAL BY THE GROUP TO POSCO AND/OR ITS
ASSOCIATES
From time to time, POSCO Australia Pty Ltd (previously
known as Pohang Steel Australia Pty Ltd) (“POSCO”) and/
or its associates may purchase coal from the Group for their
own utilisation in the manufacturing of steel or generation of
electricity. As POSCO is interested in 20% of the Mount Thorley
JV, a subsidiary of the Company under the HK Listing Rules,
POSCO is a connected person of the Company by virtue of
being a substantial shareholder of the Company’s subsidiary.
On 18 December 2020, each of Ashton Coal Mines Limited,
Miller Pohang Coal Company Pty Limited and Yarrabee Coal
Company Pty Ltd (each a subsidiary of the Company) formally
agreed to enter into a coal sales agreement with POSCO
pursuant to which POSCO and/or its associates have agreed to
purchase coal from the Group during the financial year ending
31 December 2021 and the three months ending 31 March
2022 (collectively, the “2021 POSCO Coal Sales Agreements”).
The maximum annual transaction amounts to be received by
the Group from POSCO and/or its associates for the sale of
coal pursuant to the 2021 POSCO Sales Agreements for the
year ending 31 December 2021 and for the period from 1
January 2022 to 31 March 2022 will not exceed US$500 million
and US$125 million, respectively. During the year ended 31
December 2021, the transaction amount received by the Group
was approximately US$171.5 million, which was below the
annual cap.
On 22 December 2021, each of Ashton Coal Mines Limited,
Miller Pohang Coal Company Pty Limited, Yarrabee Coal
Company Pty Ltd and Stratford Coal Pty Ltd (each a subsidiary
of the Company) formally agreed to enter into a coal sales
agreement with POSCO (collectively, the “POSCO Coal Sales
Agreements”) pursuant to which POSCO and/or its associates
have agreed to purchase coal from the Group during the three
years ending 31 December 2024. Upon the POSCO Coal Sales
Agreements becoming effective, the 2021 POSCO Coal Sales
Agreements will cease to have any effect in accordance with
their terms. The maximum annual transaction amounts to be
received by the Group from POSCO and/or its associates for
the sale of coal pursuant to the POSCO Sales Agreements for
the three years ending 31 December 2022, 2023 and 2024
will not exceed US$300 million, US$300 million and US$300
million, respectively.
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CONTINUING CONNECTED TRANSACTIONS
PURCHASE OF COAL FROM GLENCORE
From time to time, the Group may purchase coal from
Glencore and/or its associates for on sale to end customers,
in order to maintain customer relationships or to meet
specific customer requirements. The Company entered into
a framework coal purchase agreement with Glencore (the
“Glencore Framework Coal Purchase Agreement”) on 6 August
2018 to govern all existing and future purchase of coal by the
Group from Glencore and/or its subsidiaries.
The Glencore Framework Coal Purchase Agreement provides
that all transactions in relation to the purchase of coal by
the Group from Glencore and/or its associates must be in
the ordinary and usual course of business of the Group,
on an arm’s length basis, (iii) on normal commercial terms
with the sale price being determined with reference to the
prevailing market price for the relevant type of coal and (iv) in
compliance with, amongst other things, the HK Listing Rules
and applicable laws. The Company will take into account
relevant industry benchmarks and indices when determining
the market price. Glencore wholly owns Anotero which is a
substantial shareholder of subsidiaries of the Company under
the HK Listing Rules. Glencore is a connected person of the
Company by virtue of being a substantial shareholder of the
Company’s subsidiary.
On 16 December 2020, the Board resolved to renew the
Glencore Framework Coal Purchase Agreement for a further
three years commencing from 1 January 2021 and to set the
annual caps for the three years ending 31 December 2021,
2022 and 2023 at US$250 million, US$250 million and US$250
million, respectively. During the year ended 31 December
2021, the transaction amount paid by the Group was
approximately US$75.6 million, which was below the annual
cap.
PURCHASE OF COAL FROM ANOTERO
As part of the Glencore Transaction, Coal & Allied Operations
Pty Ltd (“CNAO”), a wholly-owned subsidiary of the Company,
HVO Coal Sales Pty Ltd (the “SalesCo”) and Anotero entered
into a sales contract – Hunter Valley Operations Joint Venture
on 4 May 2018 (the “HVO Sales Agreement”). The relevant
mining and exploration licences of HVO are held directly by
CNAO and Anotero as tenants in common in proportion to
their respective participating interest in the Hunter Valley
Operations Joint Venture (“HVO JV”). Pursuant to the HVO
Sales Agreement, (i) each of CNAO and Anotero agrees to sell
all of its entitled portion of finished coal product in saleable
form that is produced by the tenements held by the HVO JV
to the SalesCo only and the SalesCo agrees to purchase each
of CNAO’s and Anotero’s entitled portion of coal product
(other than coal product to be sold to Glencore and/or its
subsidiaries); (ii) the amount payable to each of CNAO and
Anotero by the SalesCo shall be the total amount received
by the SalesCo for that portion of product under each sales
contract entered into between the SalesCo and its customers;
and (iii) payment by the SalesCo to CNAO and Anotero shall
be no later than 3 business days after receipt by the SalesCo
of payment from its customers. In respect of any sales to
Glencore and/or its subsidiaries that fall within the Glencore
Framework Coal Sales Agreement, each of CNAO and Anotero
agrees that SalesCo will be treated as if it has entered into
the sale as agent for and on behalf CNAO and Anotero in
proportion to their respective participating interests in the
HVO JV.
Anotero is a substantial shareholder of subsidiaries of the
Company under the HK Listing Rules. Anotero is a connected
person of the Company by virtue of being a substantial
shareholder of the Company’s subsidiary.
The HVO Sales Agreement shall commence on the date of the
HVO Sales Agreement and terminate upon the termination
of the joint venture agreement in relation to the HVO JV in
accordance with its terms.
Notwithstanding that the term of the HVO Sales Agreement
may exceed three years, the Company has set the estimated
maximum annual transaction amounts for the transactions
under the HVO Sales Agreement for a term of three years and
will re-comply with the applicable requirements of the HK
Listing Rules after the expiry of the initial three years.
On 16 December 2020, the Board resolved to set the annual
caps for the three years ending 31 December 2021, 2022 and
2023 at US$750 million, US$750 million and US$750 million,
respectively. During the year ended 31 December 2021,
the transaction distributed by the SalesCo to Anotero was
approximately US$740.9 million, which was below the annual
cap.
PURCHASE OF COAL FROM POSCO
The participants of the unincorporated joint venture in relation
to Mt Thorley (the “MT JV”) namely POSCO and Mount Thorley
Operations Pty Ltd (previously known as R. W. Miller & Co.
Pty Limited) (“MT Operations”), a wholly-owned subsidiary
of the Company holding the relevant mining and exploration
licences of Mount Thorley on behalf of the MT JV, entered
into a sales contract with Miller Pohang Coal Co. Pty Limited
(the “MT SalesCo”) on 10 November 1981 (the “MT Sales
Agreement”), respectively. MT SalesCo is a company jointly
controlled by MT Operations and POSCO with MT Operations
and POSCO holding 80% and 20% of its interest, respectively.
Both the MT SalesCo and the MT JV are subsidiaries of the
Company under the HK Listing Rules. As POSCO holds more
than 10% of the interest in the MT SalesCo and has more than
10% participating interest in the MT JV, POSCO is a connected
person of the Company by being a substantial shareholder of
the subsidiaries of the Company. Accordingly, the transaction
between the MT SalesCo and POSCO constitutes a continuing
connected transaction of the Company under the HK Listing
Rules.
Pursuant to the MT Sales Agreement: (i) each of POSCO and
MT Operations agrees to sell all of its entitled portion of
finished coal product in saleable form that is produced by
the tenements held by the MT JV to the MT SalesCo only and
the MT SalesCo agrees to purchase each of POSCO’s and MT
Operations’ entitled portion of coal product; (ii) the amount
payable to each of POSCO and MT Operations shall be the
total amount received by the MT SalesCo for that portion of
product under each sales contract entered into between the
MT SalesCo and its customers; and (iii) payment by the MT
SalesCo to POSCO and MT Operations shall be no later than
seven days after receipt by the MT SalesCo of payment from
its customers.
154
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YANCOAL 2021YANCOAL 2021
CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
The MT Sales Agreement was entered into on 10 November
1981 and will last during the economic life of the Mount
Thorley coal mine.
Notwithstanding that the term of the MT Sales Agreement
may exceed three years, the Company has set the estimated
maximum annual transaction amounts for the transactions
under the MT Sales Agreement for a term of three years and
will re-comply with the applicable requirements of the HK
Listing Rules after the expiry of the initial three years.
On 16 December 2020, the Board resolved to set the annual
caps for the three years ending 31 December 2021, 2022
and 2023 at US$90 million, US$90 million and US$90 million,
respectively. During the year ended 31 December 2021, the
transaction amount distributed by the MT SalesCo to POSCO
was approximately US$84.1 million, which was below the
annual cap.
PURCHASE OF DIESEL FUEL FROM GLENCORE
On 25 October 2019, HV Operations Pty Ltd (“HV Operations”),
a subsidiary of the Company, entered into a diesel fuel supply
agreement with Glencore Australia Oil Pty Ltd (“GAO”),
pursuant to which HV Operations has agreed to purchase
diesel fuel from GAO during the period from 1 November
2019 to 31 October 2022 (the “2019 Diesel Fuel Supply
Agreement”).
As GAO is a subsidiary of Glencore plc, which is the holding
company of Anotero Pty Ltd, a substantial shareholder of HV
Operations, GAO is a connected person of the Company by
virtue of being an associate of a substantial shareholder of the
Company’s subsidiary.
The 2019 Diesel Fuel Supply Agreement became effective on 1
November 2019 and will expire on 31 October 2022. Pursuant
to the 2019 Diesel Fuel Supply Agreement, HV Operations
agrees to purchase, and GAO agrees to sell at a price agreed
and applicable to the monthly quantity delivered as measured
in accordance with the agreement. HV Operations will
generate a purchase order prior to the month of delivery. GAO
will deliver the volume of fuel in the purchase order by the
date specified in that purchase order and HV Operations will
make the payments after the delivery of the fuel. The basis for
calculating the payments to be made is based on the volume
delivered and the price determined following the tender
process.
To ensure a fair and open tender process, an Independent
Third Party has been engaged with extensive involvement in
the commercial business-to-business diesel supply market
to assist in the tender document preparation, submission
evaluations and subsequent engagement with suppliers in
negotiating the optimal outcome. A tender has been issued to
several prospective suppliers. The negotiation process cycled
three or four times with each supplier, including reviewing
and verifying the accuracy and consistency of each submission
made by the suppliers and ensuring that pricing is evaluated
on consistent basis. Potential suppliers were determined and
approved based on a variety of criteria, including reputation,
reliability and the pricing submitted.
The maximum annual transaction amount to be paid by HV
Operations to GAO for the purchase of diesel fuel for the
period from 1 November 2019 to 31 December 2019, the two
years ending 31 December 2020 and 2021, and the period from
1 January 2022 to 31 October 2022 will not exceed $30 million,
$180 million, $180 million and $150 million, respectively.
During the year ended 31 December 2021, the transaction
amount paid by the Group was approximately $105.3 million,
which was below the annual cap.
MASTER LEASE AGREEMENTS WITH ZHONGYIN
On 22 December 2021, each of Warkworth Mining Limited
and Mount Thorley Operations Pty Limited (each a “Lessee”),
both being subsidiaries of the Company, and Zhongyin (Hong
Kong) Co., Limited (“Zhongyin”) entered into master lease
agreements (the “Master Lease Agreements”, and each, a
“Master Lease Agreement”) pursuant to which Zhongyin
agreed to lease certain items of up to a total of 15 ultra-class
trucks across both Lessees (the “Equipment”) to each Lessee
for a term of five years from the relevant commencement date
in accordance with the terms of the relevant Master Lease
Agreement.
Yankuang Energy is a controlling shareholder of the Company,
holding approximately 62.26% of the total issued shares of the
Company, and Zhongyin is an indirect wholly-owned subsidiary
of Yankuang Energy. Accordingly, Zhongyin is a connected
person of the Company by virtue of being an associate of
Yankuang Energy, a connected person of the Company.
In accordance with the Australian Accounting Standards
applicable to the Group, the Group will recognise each lease
(the “Lease”) under the Master Lease Agreements as a
right-of-use asset representing its right to use the relevant
Equipment and a lease liability representing its obligation to
make lease payments. A right-of-use asset will be recognised
at the commencement date of the individual Lease. Leases
will be recognised by the Company pursuant to the Master
Lease Agreements in the year ending on 31 December 2022.
The transactions under the Master Lease Agreements will be
treated as continuing connected transactions under Chapter
14A of the HK Listing Rules and the Company is required to
set annual cap on the total value of right-of-use assets to
be recognised by the Company for the year ending on 31
December 2022 under the Master Lease Agreements.
Each Lessee will execute a lease schedule in respect of each
unit of Equipment leased by it, setting out the details of the
lease, including the lease commencement date, rent payment
date and rent in respect of the lease of such Equipment. During
the term of the lease of each unit of Equipment, which will
be five years from the date of commencement of such lease,
the relevant Lessee will pay to Zhongyin the rent on each rent
payment date as specified in the relevant lease schedule. The
amount of the rent in respect of a lease will be determined by
reference to the acquisition cost of the relevant Equipment
(being the applicable purchase price, interest payable on the
amount of that price that has been paid by the Lessor, from
the date it pays that component of the price and the term of
the lease).
The Company has not leased any Equipment from Zhongyin
previously. The annual cap for the Leases to be entered into
by the Group under the Master Lease Agreements, which are
based on the total value of the right-of-use assets relating
155
155
ANNUAL REPORTANNUAL REPORT
CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
CONTINUING CONNECTED TRANSACTIONS
to such Leases, for the year ending 31 December 2022 is not
expected to exceed US$70 million.
Review on continuing connected transactions
Pursuant to Rule 14A.55 of the HK Listing Rules, the Directors
(including independent non-executive Directors) have
reviewed the above continuing connected transactions
in the year ended 31 December 2021. The independent
non-executive Directors hereby confirmed that the above
continuing transactions have been entered into:
1.
2. on normal commercial terms or better; and
3.
in the ordinary and usual course of business of the Group;
in accordance with the relevant agreements governing
them on terms that are fair and reasonable and in the
interest of Shareholders as a whole.
In accordance with the requirement of Rule 14A.56 and
14A.71(6)(b) of the HK Listing Rules, the Company has engaged
the independent auditor of the Company to report on the
continuing connected transactions of the Group.
Based on the results of procedures performed and in
accordance with the aforesaid HK Listing Rules, the
independent auditor has provided a letter to the Board
confirming that nothing has come to their attention that cause
them to believe that the continuing connected transactions:
i.
have not been approved by the Board;
ii. were not, in all material respects, in accordance with the
pricing policies of the Group;
iii. were not entered into, in all material respects, in
accordance with the relevant agreements governing such
transactions; and
iv. have exceeded their respective annual caps for the
financial year ended 31 December 2021 set out in the
prospectus and announcement of the Company.
In accordance with paragraph 14A.57 of the Listing Rules, a
copy of the independent auditor’s letter has been provided to
the HK Stock Exchange.
The Company confirms that it has complied with the
requirements of Chapter 14A of the HK Listing Rules in relation
to all connected transactions and continuing connected
transactions to which any Group member was a party during
the year ended 31 December 2021. Please refer to Note E3 to
the financial statements for a summary of the related party
transactions entered into by the members of the Group for the
year ended 31 December 2021. Other than those transactions
disclosed in the section headed “Continuing Connected
Transactions” above, none of these transactions constitutes
a disclosable connected transaction as defined under the HK
Listing Rules.
156
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YANCOAL 2021YANCOAL 2021
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
The Coal Resources and Coal Reserves presented in this report
are extracted from an announcement made on 28 February
2022. The original report was produced in accordance with the
Australasian Code for reporting of Mineral Resources and Ore
Reserves 2012 Edition (the JORC Code).
Yancoal is not aware of any new information or data that
materially affects the information included in this report
and at the time of this report all material assumptions and
technical parameters underpinning the estimates continue
to apply and have not materially changed.1
Coal Resources and Coal Reserves are reported in 100 per cent
terms (unless otherwise stated). Coal Resources are reported
inclusive of the Coal Resources that have been converted
to Coal Reserves (i.e. Coal Resources are not additional
to Coal Reserves). The attributable share total is the total
coal resources or coal reserves when Yancoal’s ownership
percentage (as at 31 December 2021) is applied. Coal resources
and coal reserves have been rounded in line with the JORC
Code and the Yancoal reporting standards to reflect the
relative uncertainty of the estimates.
On an attributable basis the Yancoal group total year-end
31 December 2021 position is as follows:
COAL RESOURCES FOR YEAR ENDING 31 DECEMBER 2021
Measured, Indicated and
Inferred Coal Resources3
Recoverable Proved and
Probable Coal Reserves2,3
Marketable Proved and
Probable Coal Reserves
31 DEC 2021
31 DEC 2020
% CHANGE
6,013Mt
6,884Mt
-12.7%
1,137Mt
1,154Mt
819Mt
833Mt
-1.5%
-1.7%
The following abbreviations are used throughout this section
of the report.
AusIMM
Australasian Institute of Mining and Metallurgy
JORC
Met
Semi
PCI
Mt
OC
UG
Joint Ore Reserves Committee
Metallurgical Coal
Semi-soft coking coal
Pulverised Coal Injection
Million tonnes
Open Cut
Underground
PROJECT
Moolarben (OC & UG)
Mt Thorley (OC & UG)
Warkworth (OC & UG)4
HVO (OC)
Yarrabee (OC)
Gloucester (OC)5
Middlemount (OC)
Austar (UG)6, 7
Ashton (OC & UG)7
Donaldson (OC & UG)7
Monash (UG)
YANCOAL
OWNERSHIP
%
95%
80%
COAL TYPE
Thermal
Semi/Thermal
84.47%
Semi/Thermal
51%
100%
100%
50%
100%
100%
100%
100%
Semi/Thermal
PCI/Thermal
Met/Thermal
Coking/PCI
Met
Semi/Thermal
Semi /Thermal
Met/Thermal
Total Coal Resources (100% Basis)
Yancoal Attributable Share
MOISTURE
BASIS
%
MEASURED
COAL RESOURCES
(MT)
INDICATED
COAL RESOURCES
(MT)
INFERRED
COAL RESOURCES
(MT)
TOTAL
COAL RESOURCES
(MT)
2021
6.0%
6 to 8%
6 to 8%
6 to 8%
5.5%
6.0%
5.0%
5.0%
6.5%
4.0%
6.0%
2021
2020
700
203
497
780
60
8
83
0
85
190
0
710
280
590
800
75
8
57
110
85
190
0
2021
170
150
260
2020
180
160
420
2021
200
75
175
2020
200
160
440
1,300
1,300
2,400
2,400
60
195
56
0
95
400
17
85
195
53
40
85
400
17
13
110
19
0
90
100
80
50
110
8
70
90
100
80
2,606
2,905
2,703
2,935
3,262
3,708
2021
1,070
428
932
4,480
133
313
158
0
270
690
97
8,571
6,013
1 The Austar mine suspended production on 31 March 2020 and transitioned to care and maintenance operations. On 1 March 2021, an announcement was made
to transition Austar to closure activities. Coal Resources and Reserves are therefore no longer being reported for Austar
2 Where required the component Coal Reserve numbers for each site making up this total have been depleted by production from the annual report date to
31 December 2021.
3 2021 Coal Resources and Coal Reserves have been rounded (significant figure) by the Competent Persons in line with the JORC Code and the Yancoal Coal
Resource and Reserve reporting standards to reflect the relative uncertainty of the estimates.
MTW operations primary changes are due to Bulga Exclusion Zone, Southern Biodiversity Area, Resource Re-classifications and Sterilisation of Resources.
4
5 Gloucester comprises the Stratford, Duralie and Grant & Chainey deposits.
6 The Austar mine suspended production and transitioned to care and maintenance operations after 31 March 2020. On the 1st of March 2021, an announcement
was made to transition Austar to closure activities. Coal Resources are therefore no longer being reported for Austar.
7 On 16 December 2020, Yancoal announced that a commercial arrangement had been entered into between Yankuang Group Co. Ltd, its wholly owned subsidiary
Yankuang Group (Hong Kong) Limited and the other two holders of the bonds issued by Watagan which resulted in Yancoal regaining accounting control of
Watagan on that date.
157
157
ANNUAL REPORTANNUAL REPORT
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES FOR YEAR ENDING 31 DECEMBER 2021
PROJECT
Moolarben (OC)
Moolarben (UG)
Mount Thorley (OC)
Warkworth (OC)
HVO (OC)
Yarrabee (OC)
Gloucester (OC)8
Middlemount (OC)
Ashton (AWOC)9
Ashton (UG)9
Donaldson (UG)9
YANCOAL
OWNERSHIP %
95%
95%
80.0%
84.47%
51%
100%
100%
50%
100%
100%
100%
COAL TYPE
Thermal
Thermal
Semi/Thermal
Semi/Thermal
Semi/Thermal
PCI/Thermal
Met/Thermal
Coking/PCI
Semi/Thermal
Semi/Thermal
Semi/Thermal
Total Coal Reserves (100% Basis) – Rounded
Yancoal Attributable Share
RECOVERABLE COAL RESERVE
PROVED COAL RESERVES (MT)
PROBABLE COAL RESERVES (MT)
TOTAL COAL
RESERVES (MT)
2021
162
32
2
151
400
39
0
74
0
14
0
874
2020
178
38
4.6
180
420
31
0
41
0
15
0
909
2021
5
13
16
92
460
42
2.4
19
17
8
110
783
2020
6
13
14
76
460
15
17
37
17
7
110
771
2021
167
44
18
242
860
81
2.4
93
17
22
110
1,657
1,137
PROJECT
Moolarben (OC)
Moolarben (UG)
Mount Thorley (OC)
Warkworth (OC)
HVO (OC)
Yarrabee (OC)
Gloucester (OC)8
Middlemount (OC)
Ashton (AWOC)9
Ashton (UG)9
Donaldson (UG)9
YANCOAL
OWNERSHIP
%
95%
95%
80.0%
84.47%
51%
100%
100%
50%
100%
100%
100%
COAL TYPE
Thermal
Thermal
Semi/Thermal
Semi/Thermal
Semi/Thermal
PCI/Thermal
Met/Thermal
Coking/PCI
Semi/Thermal
Semi/Thermal
Semi/Thermal
MOISTURE
BASIS %
2021
9%
9%
10%
10%
10%
10%
8%
ASH %
2021
21%
16%
10-14%
10-14%
13%
10%
19%
10% Coking
10.5% PCI
10% Coking
10.5% PCI
9.5%
8.5%
8%
9.5%
9.5%
17%
Total Coal Reserves (100% Basis) – Rounded
Yancoal Attributable Share
MARKETABLE COAL RESERVE
PROVED
COAL RESERVES (MT)
PROBABLE
COAL RESERVES (MT)
TOTAL COAL
RESERVES (MT)
2021
133
32
1.3
104
290
29
0
53
0
8
0
651
2020
144
39
3.1
123
310
25
0
33
0
7.2
0
684
2021
2020
4
13
11
61
330
32
1.4
16
9
5
62
544
5
13
10
52
330
12
10
27
9
3.4
62
532
2021
137
45
13
165
620
61
1.4
69
9
13
62
1,195
819
8 Gloucester comprises the Stratford, Duralie and Grant & Chainey deposits.
9 On 16 December 2020, Yancoal announced that a commercial arrangement had been entered into between Yankuang Group Co. Ltd, its wholly owned subsidiary
Yankuang Group (Hong Kong) Limited and the other two holders of the bonds issued by Watagan which resulted in Yancoal regaining accounting control of
Watagan on that date.
158
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YANCOAL 2021YANCOAL 2021
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
YANCOAL 2021 EXPLORATION DRILLING
Total payments for capitalised exploration and evaluation activities in 2021 was $6.1 million. There were no development
activities related to mining structures or infrastructure undertaken in 2021. The reporting period is from 1 January to
31 December 2021. The drilling totals provided exclude pre-production drilling.
Non-Core Holes
Core Holes
MOOLARBEN
MOUNT THORLEY WARKWORTH
HUNTER VALLEY OPERATIONS
NO. OF HOLES
TOTAL DRILLED
M
NO. OF HOLES
TOTAL DRILLED
M
NO. OF HOLES
TOTAL DRILLED
M
91
16
5269
537
0
5
0
1594
13
6
1354
1602
YANCOAL AUSTRALIA TENEMENTS AS AT 31 DECEMBER 2021
Only tenements containing Coal Resources and/or Reserves reported in accordance with the 2012 JORC Code are detailed in the
following table.
PROJECT
Moolarben
Mount Thorley/
Warkworth (MTW)
HVO
TITLE TENEMENT
TENEMENT TYPE
EL 6288
EL 7073
EL 7074
ML 1605
ML 1606
ML 1628
ML 1691
ML 1715
CCL 753
CL 219
EL 7712
EL 8824
ML 1412
Part ML 1547
(sublease)
ML 1590
ML 1751
ML 1752
MLA 548
AL 32
AL 33
AL 34
Exploration License
Exploration License
Exploration License
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Consolidated Coal Lease
Coal Lease
Exploration License
Exploration License
Mining Lease
Sublease
Mining Lease
Mining Lease
Mining Lease
Mining Lease Application
Assessment Lease
Assessment Lease
Assessment Lease
Auth 72
Authorisation
Part CCL 708
(sublease)
Sublease
CCL 714
CCL 755
CL 327
CL 359
CL 360
CL 398
CL 584
CML 4
EL 5291
EL 5292
EL 5417
EL 5418
EL 5606
EL 8175
EL 8821
ML 1324
ML 1337
Consolidated Coal Lease
Consolidated Coal Lease
Coal Lease
Coal Lease
Coal Lease
Coal Lease
Coal Lease
Consolidated Mining Lease
Exploration License
Exploration License
Exploration License
Exploration License
Exploration License
Exploration License
Exploration License
Mining Lease
Mining Lease
PROJECT
HVO (cont.)
TITLE TENEMENT
TENEMENT TYPE
ML 1359
ML 1406
ML 1428
ML 1465
ML 1474
ML 1482
ML 1500
ML 1526
ML 1560
ML 1589
ML 1622
ML 1634
ML 1682
ML 1704
ML 1705
ML 1706
ML 1707
ML 1710
ML 1732
ML 1734
ML 1748
ML 1753
ML 1810
ML 1811
MLA 495
MLA 496
MLA 520
MLA 535
MLA 542
MLA 543
MLA 562
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease Application
Mining Lease Application
Mining Lease Application
Mining Lease Application
Mining Lease Application
Mining Lease Application
Mining Lease Application
Yarrabee/Wilpeena
EPC 1684
Exploration Permit for Coal
EPC 717
EPC 1177
EPC 1429
EPC 1668
EPC 621
MDL 160
ML 1770
ML 80049
ML 80050
ML 80096
Exploration Permit for Coal
Exploration Permit for Coal
Exploration Permit for Coal
Exploration Permit for Coal
Exploration Permit for Coal
Mineral Development License
Mining Lease
Mining Lease
Mining Lease
Mining Lease
159
159
ANNUAL REPORTANNUAL REPORT
TITLE TENEMENT
TENEMENT TYPE
EL 4918
EL 5860
ML 1529
ML 1533
ML 1623
ML 1696
MLA 351
MLA 394
MLA 500
ALA 70
ALA 71
ALA 72
EL 5337
EL 5497
EL 5498
EL 6964
ML 1461
ML 1555
ML 1618
ML 1653
ML 1703
ML 1756
ALA 73
EL 6123
EL 7579
CCL 774
Exploration License
Exploration License
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease Application
Mining Lease Application
Mining Lease Application
Assessment Lease Application
Assessment Lease Application
Assessment Lease Application
Exploration License
Exploration License
Exploration License
Exploration License
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Assessment Lease Application
Exploration License
Exploration License
Consolidated Coal Lease
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
COAL RESERVES AND RESOURCES
PROJECT
TITLE TENEMENT
TENEMENT TYPE
PROJECT
Ashton
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Assessment Lease Application
Authorisation
Authorisation
Exploration License
Donaldson
Exploration License Application
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mineral Development License
Monash
Rhondda
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Consolidated Coal Lease
Consolidated Coal Lease
Coal Mining Lease
Dam Site Lease
Exploration License
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease
Mining Lease Application
Mining Purposes Lease
Mining Purposes Lease
Mining Purposes Lease
Mining Purposes Lease
Mining Purposes Lease
Mining Purposes Lease
Gloucester Basin
(Stratford/Duralie)
Middlemount
Austar
ML 80104
ML 80172
ML 80195
ML 80196
ML 80197
ML 80198
ALA 74
Auth 311
Auth 315
EL 6904
ELA 5910
ML 1427
ML 1646
ML 1360
ML 1409
ML 1447
ML 1521
ML 1528
ML 1538
ML 1577
ML 1733
ML 1787
MDL 282
ML 700014
ML 700027
ML 70379
ML 70417
CCL 728
CCL 752
CML 2
DSL 89
EL 6598
ML 1157
ML 1283
ML 1345
ML 1388
ML 1550
ML 1661
ML 1666
ML 1677
MLA 521
MPL 1364
MPL 204
MPL 217
MPL 23
MPL 233
MPL 269
160
160
YANCOAL 2021YANCOAL 2021
SHAREHOLDER STATISTICS
SHAREHOLDER STATISTICS
DIRECTORSHIPS
Current Directorships and Company Secretary positions of subsidiaries of Shandong Energy and Yankuang outside the Group held
by CEO and CFO:
1
2
3
4
5
6
7
8
9
10
11
12
13
14
COMPANY
AMH (Chinchilla Coal) Pty Ltd
Athena Coal Mines Pty Ltd
Mountfield Properties Pty Ltd
Ozstar Australia Pty Ltd
Premier Coal Limited
Syntech Holdings II Pty Ltd
Syntech Holdings Pty Ltd
Syntech Resources Pty Ltd
Tonford Pty. Ltd.
UCC Energy Pty Limited
Yancoal CSR Pty Ltd
Yancoal Technology Development Pty Ltd
Yankuang Bauxite Resources Pty Ltd
Yankuang OzStar Pty Ltd
CEO
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
–
Dir.
–
–
Dir.
CFO
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
Dir.
SHAREHOLDER STATISTICS
Yancoal Australia Limited – Ordinary Fully Paid as of 7 March 2022
Combined ASX and HKEx Top 20 Shareholders
RANK
NAME
UNITS*
% UNITS
1
2
3
4
5
6
7
8
9
10
11
12
13
14
15
16
17
18
19
20
YANZHOU COAL MINING COMPANY LIMITED
BNP PARIBAS NOMINEES PTY LTD ACF CLEARSTREAM
GLENCORE COAL PTY LTD
HKG REGISTER CONTROL A/C\C
HSBC CUSTODY NOMINEES (AUSTRALIA) LIMITED - A/C 2
CITICORP NOMINEES PTY LIMITED
EVERCHARM INTERNATIONAL INVESTMENT LIMITED
BNP PARIBAS NOMINEES PTY LTD
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