2018 Annual Results March 2019 Important Disclaimer and Notice to Recipients Institutional presentation materials By attending the meeting where this presentation is made, or by reading the presentation materials, you agree to be bound by the following limitations: The information in this presentation has been prepared by representatives of West China Cement Limited (the “Issuer”) for use in presentations by the Issuer at investor meetings and does not constitute a recommendation or offer regarding the securities of the Issuer. No representation or warranty, express or implied, is made as to, and no reliance should be placed on, the fairness, accuracy, completeness or correctness of the information, or opinions contained herein. 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By reviewing this presentation, you are deemed to have represented and agreed that you and any client you represent are outside of the United States. 2 Company Overview Company Overview Western China focus – Shaanxi, Xinjiang and Guizhou The largest Market leader in Southern cement producer in and Eastern Central Shaanxi Province by NSP Shaanxi production capacity Cement capacity: 29.2mt Shaanxi: 23.3mt Xinjiang: 4.1mt Guizhou: 1.8mt ◼ 100% NSP capacity. Matching Clinker/Cement volumes at each plant ◼ Southern Shaanxi core markets: Dominant market position ◼ Eastern Central Shaanxi core market: Access to Xi’an metropolitan market ◼ Xinjiang and Guizhou: Growth opportunities ◼ Well positioned to capitalize on West China development ◼ A key strategic cement asset in North West China 4 2018 Annual Results 2018 Annual Results Highlights ◼ Operational Regional operational metrics (2018) – Period-end installed capacity of 29.2mt (31 Dec 2017: 29.2mt) Central Shaanxi Southern Shaanxi Total – Cement sales volume of 18.1mt (31 Dec 2017: 18.7mt). Including clinker sales Market 18.2mt (31 Dec 2017: 19.1mt). ◼ Highly Competitive ◼ Limited Competition situation – Cement ASP’s of RMB314/t (31 Dec 2017: RMB248/t) 15.01 7.54 Cement 7.47 ◼ Financial Production – Gross Profit increase to RMB1,985.8m (31 Dec 2017: RMB1,185.9m) volume (mt) – EBITDA increase to RMB2,637.0m (31 Dec 2017: RMB1,875.3m) – Profit Attributable to Shareholders RMB1,159.4m (31 Dec 2017: RMB710.8m) High grade High grade High grade – Net Gearing 26.0% (31 Dec 2017: 34.5%) 63% 66% 70% – Cash & cash equivalents of RMB1,075.1m (31 Dec 2017: RMB1,452.4m) Product mix Low grade Low grade Low grade ◼ Further Developments 30% 37% 34% – The Group early redeemed USD80 million 5-year senior note in November and December 2018 Average: 297 Average: 327 Average: 312 302 287 334 317 – Four aggregates production lines with capacities of 7 million tons in total have 316 303 been fully commissioned during 2018 ASP (RMB) High grade Low grade High grade Low grade High grade Low grade 6 Financial Analysis and KPIs RMB Million Ended Ended Ended Ended (unless otherwise specified) 31 Dec 2018 31 Dec 2017 % 31 Dec 2018 31 Dec 2017 Cement Sales Volume 18.1 18.7 (3.2%) ASP/t (RMB) 314 248 Revenue 5,911.7 4,760.0 24.2% GP/t (RMB) 110 63 Gross Profit 1,985.8 1,185.9 67.5% EBITDA 2,637.0 1,875.3 40.6% Trade receivable (4) 10 14 Profit/(Loss) Attributable to Turnover Days 1,159.4 710.8 63.1% Shareholders Inventory (5) 42 48 Basic EPS (cents) 21.3 13.1 62.6% Turnover Days Trade payable Dividend (cents) 2.6 2.6 - 59 58 Turnover Days (6) Gross Profit Margin 33.6% 24.9% 8.7 p.pt EBITDA Margin 44.6% 39.4% 5.2 p.pt As at As at 31 Dec 2018 31 Dec 2017 Total Assets 12,392.1 11,671.9 6.2% Net Debt (1) 1,976.5 2,287.7 (13.6%) Net Gearing (2) 26.0% 34.5% (8.5 p.pt) Net Debt / EBITDA 0.8 1.2 (33.3%) EBITDA / Fixed Charge (3) 11.4 7.4 54.1% Net Assets Per Share(cents) 140 122 14.8% 1.Net debt equal to total borrowings, medium-term notes and senior notes, less bank balances and cash and restricted bank deposits 2.Net Gearing is measured as net debt to equity 3.Fixed charge means gross interest expenses. 4.365 day / (Turnover / Average trade receivable) 5.365 day / (Production cost / Average inventory) 7 6.365 day / (Production cost / Average trade payable) Production Cost Analysis Production Cost Average Coal Cost (RMB mm) (RMB per ton) 4,500.0 800 -21.1% 4.8% 50.6% 3.5% 3,926.0 600 491 508 4,000.0 395 400 311 326 9.7% 3,574.1 200 3,500.0 6.2% 3,285.3 4.9% 5.5% 0 4.4% 3,037.4 3,042.6 2014 2015 2016 2017 2018 5.0% 16.5% 3,000.0 3.6% 4.7% 18.1% Average Electricity Cost 6.0% 6.2% 15.5% (RMB per kwh) 2,500.0 18.4% 21.3% 15.6% -1.6% -4.5% -3.5% 16.5% 0.6 0.43 20.5% 0.5 0.423 0.404 0.39 0.40 2,000.0 0.4 19.6% 0.3 19.0% 0.2 1,500.0 27.5% 0.1 24.2% 29.0% 0.0 19.0% 2014 2015 2016 2017 2018 20.5% 1,000.0 Average Limestone Cost (RMB per ton) 500.0 30.4% 33.4% 24.5% +4.9% -8.1% 28.3% 26.0% -11.4% 23.6% 20.0 17.2 17.3 16.4 15.8 14.0 0.0 15.0 2014 2015 2016 2017 2018 10.0 Raw material Coal cost Electricity cost Depreciation Labor cost Others 5.0 0.0 2014 2015 2016 2017 2018 8 Operations & Markets WCC Position in Shaanxi* ◼ Southern Shaanxi – Shangluo, NSP production capacity: NSP production capacity: 19.2 million tons Ankang & Hanzhong 3.6 million tons WCC: 2.2m An area dominated by the Qingling Mountains NSP production capacity: Market shares of 60%-100% in each 13 million tons Yulin NSP production capacity: region 12.5 million tons WCC: 8.5m Limited limestone deposits have resulted in relatively little new cement NSP production capacity: capacity