On behalf of the board of directors (the “Board”) of West China Cement Limited and its subsidiaries, I am pleased to present to our shareholders the annual report (including the audited consolidated financial statements) of the Group for the year ended 31 December 2024.

OVERVIEW

The Group’s cement production is geared towards the economic development of Western China, Uzbekistan, Mozambique, D.R. Congo and Ethiopia, Africa, driven by the Chinese Government’s “Western Development Policy” and the “Silk Road Economic Development Plan”. The Group aims to serve the development needs of Shaanxi, Xinjiang, Guizhou, Uzbekistan, Mozambique, D.R. Congo and Ethiopia, Africa supplying cement products to the infrastructure, urban and rural construction markets.

In 2024, the PRC’s economic recovery was relatively slow compared to 2023, primarily due to a weak global economic recovery, high inflation as well as a complex and challenging international environment. The slowdown in infrastructure investment coupled with a deterioration in property investment contributed to a decline in the demand of cement in PRC. On the other hand, in order to control the air pollution and preserve the blue sky, the environmental management of atmospheric pollution and the local environmental control remained stringent. As a result, the effect of various policies such as peak-shifting production halts and mine comprehensive regulations are more favorable to balance the supply and demand of the cement industry. Both FAI and RDI growth rates improved in Shaanxi Province in 2024. However, the improved growth rates of FAI and RDI were insufficient to boost the relatively weak demand for cement products in Shaanxi Province. Nevertheless, intense competition on the supply side remains a key factor affecting the ASPs in Shaanxi Province, which continued to be balanced through the occasional peak shifting production halts during low season periods under the stringent environmental policy. As a result of the greater margins contributed from the plants in Africa, the Group was able to maintain overall stable margins in 2024 even though under the abovementioned impact of low ASPs in PRC. Another important factor contributing to the Group’s stable margins was the maintenance of costs at a stable level, which resulted from the Group’s successful implementation of efficiency enhancement and cost-control measures during the year.

Energy conservation and emission controls are increasingly important factors in the cement industry and the Group continues to work towards the highest industry standards in these areas. All of the Group’s production facilities are NSP lines, mostly situated in close proximity to limestone quarries and the Group uses conveyor belts at many of its plants in order to minimise transportation related emissions. The Group has constructed heat-recycling plants at over 50% of its production capacity, reducing approximately 30% of electricity consumption and decreasing CO2 emissions by approximately 22,000 tons per year per million tons of production. All of the Group’s plants in China have been installed with denitration (De-NOx) equipment, reducing nitrous oxide emissions by approximately 60% per ton of clinker produced, as well as PM reduction equipment. The Group is also involved in hazardous and municipal waste incineration.

FINANCIAL RESULTS

In 2024, the Group saw a tough operating environment in China. The Group’s cement and clinker sales volumes have decreased slightly from 20.5 million tons in 2023 to 20.0 million tons in 2024 and the Group has recorded a 19.8% decrease in gross profit as compared to 2023. However, the Group has still maintained strong cash flows, with stable EBITDA maintaining at approximately RMB2.9 billion and 2.6 billion in 2023 and 2024, respectively. The Group’s net gearing ratio has in turn increased from 60.4% in 2023 to 65.3% in 2024, as a result of the increase in borrowings for capacity development during the year. The ratio is still maintained at a low industry level to provide a healthy statement of financial positions in the Group.

DIVIDEND

Having considered the Group’s stable net profit for the year ended 31 December 2024, the Board has recommended payment of a final dividend of RMB3.4 cents per ordinary share for this financial year.

OPERATIONS

The Group focuses on strengthening its position in its core markets of Eastern and Southern Shaanxi Province, where it has constructed or acquired well-positioned plants. This has resulted in the Group enjoying a leading market position in Shaanxi Province and benefiting from barriers to entry caused by high transportation costs. The Group has maintained a strong market position in its Southern Shaanxi core markets, where high levels of market share coupled with good infrastructure demand have resulted in continued average selling price (“ASPs”) premiums and more stable margins. ASPs in Central Shaanxi have been increasing in recent years even under the continuing low demand scenario through the continuation of occasional peak-shifting production halts during low season periods under the stringent environmental policy. In 2024. Shaanxi Province as a whole has seen improved FAI and RDI growth rates. However, the improved growth rates of FAI and RDI were insufficient to boost the relatively weak demand for cement products in Shaanxi Province. Nevertheless, intense competition on the supply side remains a key factor affecting the ASPs in Shaanxi Province, which continued to be balanced through the occasional peak shifting production halts during low season periods under the stringent environmental policy.

Operations at the Group’s plant in Xinjiang have been stable in 2024. During the year, sales volume in Xinjiang has decreased moderately. In Guizhou, the Group has recorded a decreased sales volume but a stable cement ASPs. The imbalance between demand and supply in Guizhou was even exacerbated by the continuation of decreasing demand scenario. The sales volumes at the Huaxi Plant have already been better than other locations in Guizhou due to its location being in close proximity to Guiyang City and the Guiyang — Anshun (“Gui-An”) New Area.

The Group built a cement plant in Mozambique, a “window” country in South Africa, in close compliance with the “Belt and Road” development policy of the PRC and to seize the opportunity brought by the “Go Global” policy to maximize the cement production capacity. The Mozambique plant was commissioned in December 2020. During the year, both sales volume and ASPs in Mozambique have increased.

The Great Lakes plant is a production line with a capacity of 3500-ton clinker and cement per day and approximately 1.50 million tons of cement per year, equipped with limestone mines, coal mines, power stations and wharfs. The Great Lakes plant is located in the city of Kalemie in the eastern region of D.R. Congo. Our cement sales cover Kalemie and neighboring countries and regions such as Rwanda, Burundi and western Tanzania. These market areas are relatively undeveloped and there is no large-scaled cement production line. With Lake Tanganyika as the center, the area where the plant is situated has a large population density and high population growth, which can ensure a certain market demand for cement. In addition to the potential of the civilian market, there are a large amount of unexploited mineral resources in the underneath and surrounding areas of Lake Tanganyika, which, once developed in the future, will directly drive related infrastructure and economic development, generating significant demand for cement. All markets covered can be reached mainly by water transportation from the lake, supported by truck transportation on land. The Great Lakes plant was commissioned in December 2022. During the year, the Group has recorded an increased sales volume and a decreased cement ASPs as a result of the policy of seizing market share in the new market in Rwanda.

Given the strategic layout in the African market, the Group is optimistic about the long-term development of the Ethiopian market. In 2022, the Group acquired National Cement plant with a capacity of 1.3 million tons of cement per year, the plant was then upgraded and commissioned in November 2022. With the strong support of the local governments at all levels, the Group has built a new production line with a daily production capacity of 10,000 tons of clinker in Lemi, Amhara State, Ethiopia, following the acquisition of the National Cement plant. The production line was built by the new dry-process pre-decomposition production technology with an annual production capacity of 5 million tons of cement. The market for the Lemi project extends to the regions of Addis Ababa, Amhara and Oromia. The major markets in such regions focus on key projects such as new capital city construction and airport construction, as well as infrastructure such as state-level highway and railway construction. The Lemi project has gained strong support from the government in terms of preferential income tax, priority provision of land and mine resources. The Lemi plant was commissioned in September 2024. During the year, the Group has recorded cement ASPs at approximately USD90 per ton and sales volume of 1.35 million tons.

With a relatively stable political situation and a fast-growing economy, Uzbekistan has the largest population in Central Asia, ranking second in terms of total GDP. The government has improved its economic reform and considered economic development as the main objective. A series of policies to improve key areas such as road traffic, communications and social infrastructure have resulted in long-term favorable national demand for cement. Uzbekistan has both oil and gas resources, with 100 million tons of proved reserves of petroleum, 190 million tons of proved reserves of condensate and 3.4 trillion cubic meters of proved reserves of natural gas. The development of oil and gas resources has fostered a great market potential for the special cements required for oil and gas cementing. Based on the aforementioned belief of the long-term growth of the Uzbekistan market, the Group has built a new production line with a daily production capacity of 6,000 tons of clinker in Andijan region, which produce 2.5 million tons of cement per annum, using the internationally advanced New Generation II dry process cement production line technology. The Andijan plant was commissioned in May 2024. During the year, the Group has recorded cement ASPs at approximately RMB203 per ton and sales volume of cement and clinkers of 440,000 tons.

In 2024, the PRC’s economic recovery was relatively slow compared to 2023, primarily due to a weak global economic recovery, high inflation as well as a complex and challenging international environment. During the year, the overall cement ASPs and margins in PRC were declining. As a result of the greater margins contributed from the plants in Africa, the Group was able to maintain overall stable margins in 2024 even though under the abovementioned impact of low ASPs in PRC. Another important factor contributing to the Group’s stable margins was the maintenance of costs at a stable level, which resulted from the Group’s successful implementation of efficiency enhancement and cost-control measures during the year.

ENVIRONMENTAL PROTECTION SOLUTIONS & SAFETY

The Group’s work in energy conservation, emission controls and environmental protection solutions have continued to be a major focus in 2024. The Group has already completed the installation of de-nitration (“De-NOx”) equipment at all of the Group’s plants in China. This equipment reduces nitrogen oxide (“NOx”) emissions by approximately 60% per ton of clinker produced, bringing NOx emissions to within the new standards stipulated by the Cement Industrial Air Pollution Emissions Standards. Modifications of production lines to meet PM emission standards have been completed, resulting in all of the Group’s plants in China having been upgraded to meet new PM emission standards as well. Moreover, the Group has effectively reduced the emission of dust through the technical renovation of the kiln- head and kiln-end dust collectors and also further reduced the emission of NOx and the consumption of ammonia water through the implementation of de-nitration spray guns and automated technological innovation.

During the year, the Group has increased the investment in environmental protection, carried out ultra-low emission remodeling at its environmental treatment facilities, established an early warning platform for pollutants exceeding standards, and strictly controlled the concentration of pollutant emissions, so as to achieve the management goal of limiting its pollutant emissions concentration well below the national emission standard. In addition, the Group also regularly invites external online monitoring experts to conduct system checks on the Company’s online monitoring equipment, and conduct comprehensive analyses of the equipment operation principle, monitoring principle and production system operation, so as to switch from equipment troubleshooting to fault prevention, thus reduce the equipment failure rate, improve the accuracy of online monitoring equipment measurements, and ensure that the real-time monitoring and control of pollutants meets the national emission standards. Moreover, all plants in China were already refurbished as garden like plants in the preliminary stage and the Group will further develop the garden like plants to meet the environmental policy requirements. Green limestone mine projects, including soil reclamation and mine re-greening, have been already commenced construction to comply with the environmental policy. The Group will continue to implement the green mine projects to reduce the pollution to the soil and mines during mining in order to comply with the government policy of “managing while mining” in the future.

The Group’s safety and environmental protection department continuously monitors and reviews safety procedures in accordance with evolving environmental and safety regulations in the PRC. In 2024, the Group has focused its EHS (Environmental, Health & Safety) efforts on revising and improving the safety emergency response plan by employing independent safety experts to strengthen the handling capacity of all employees in emergency accidents. Moreover, several handbooks and guidelines were revised significantly to improve the work safety measures as well as numerous safety related training courses were initiated to strengthen the staff’s safety awareness. In addition, the Group will continue to implement a “Sustainable Safety Development Project”, which involved continuous training for both management and on- site employees, on-site inspections and audits, stringent safety reports and on-going suggestions for safety improvements at all of the Group’s plants.

OUTLOOK

In 2025, the central government will adhere to the general principle of “pursuing progress while maintaining stability”, strengthen counter-cyclical adjustment, and implement proactive fiscal policies alongside prudent monetary policies. With the accelerated placement of funds such as ultra-long-term special government bonds and special bonds, the demand for cement in ongoing projects under construction is expected to increase. Infrastructure development will continue to be the main driving force for cement demands. With continuous optimization and implementation of supporting policies of “stabilizing the market” and “destocking”, and the acceleration of the construction of “three major projects” such as affordable housing, the real estate market will be recovered to a certain extent. However, the situation of the real estate market is difficult to reverse in the short term, and will be in a stage of further adjustment. The State Council issued the 2024–2025 Energy Conservation and Carbon Reduction Action Plan and Opinions on Accelerating the Comprehensive Green Transformation of Economic and Social Development, which require strengthening the adjustment and control on the production capacity and volume of building materials industry, and promoting the normalization of staggered production. They also strictly restrict access to new projects, push forward green and low-carbon transformation and upgrading of traditional industries, and establish a comprehensive exit mechanism for production capacity. In addition, the central government proposed to strengthen industry self discipline, prevent “involution” vicious competition, strengthen the survival of the fittest mechanism of the market, and facilitate the exit channels for backward and inefficient production capacity, all of which can help to alleviate the contradiction between supply and demand in the cement market, maintain the industry ecology and promote the healthy development of the industry.

In terms of operation and management, the Group will pay close attention to domestic and international macroeconomic situation and continue to improve the quality and efficiency of its operations under the guidance of national policies. Firstly, the Group will conduct in-depth study and judgement on market supply and demand conditions, implement differentiated marketing strategies, give full play to the Group’s advantages in branding, supply guarantee and quality, consolidate and deepen the partnerships with major customers, and continue to step up efforts in market development. Secondly, the Group will adhere to the core principle of “cost reduction in procurement”, consolidate and deepen the strategic cooperation with suppliers, increase the proportion of direct supply of raw fuel materials, sum up the experience and promote the use of alternative fuels, so as to further reduce procurement costs. Thirdly, the Group will implement refined management throughout the process, and optimize various economic and technological indicators, continuously enhancing production efficiency and resource utilization rate. Fourthly, the Group will remain steadfast in implementing the strategy of strengthening the Group through talents, improve the incentive and appraisal mechanism, and strengthen the construction of innovative talent teams, generating continuous power for the sustainable development of the Group.

In terms of investment development, the Group will insist on effective investment and continue to consolidate the competitive advantages in the cement and upstream and downstream industries. Firstly, the Group will seize the opportunity to deeply reshape the market structure of the domestic cement industry, and continuously optimize the market layout. Secondly, the Group will strive for steady progress to expand the layout of overseas businesses, explore diversified development models, make great efforts to seek development opportunities, and focus on improving the operation quality of overseas projects. Thirdly, the Group will consolidate and extend the upstream and downstream industrial chains, improve the operation quality and efficiency of aggregate and commodity concrete segments, and create a new engine for efficiency enhancement. Fourthly, the Group will vigorously promote the application of intelligent mining system, cement quality control system, loading and shipping system and logistics platform and other systems. The Group will explore the application of cutting-edge technologies for energy conservation and carbon reduction, so as to empower the Group to carry out energy conservation, emission reduction and consumption reduction transformation.

On behalf of the Board, I would like to take this opportunity to thank our management, employees, bankers and advisors for their efforts in 2024. I would also like to thank our shareholders for their continuing support of our Group in the past and into the future.

Zhang Jimin
Chairman
24 March 2025