March 2014

Annual Results Presentation

China Shanshui Cement Group Limited

Disclaimer

This presentation has been prepared by China Shanshui Cement Group Limited (“Shanshui” or “the Company”) and

the Company is solely responsible for its contents

The information presented or contained in these materials is subject to change without notice and its accuracy is not

guaranteed

Neither the presentation nor any of the information contained therein constitutes an offer to sell or issue or the

solicitation of an offer to buy or acquire or invitation to purchases or subscribe for any securities of the Company in

any jurisdiction or an inducement to enter into investment activity, nor may it or any part of it form the basis of or be

relied upon in connection with any contract, commitment or investment decision whatsoever.

2

Section

I

II

III

Review of 2013 Annual Results

Future Outlook

Q & A

Agenda

3

2013 Annual Results Review

4

2013 2012 YoY Growth

Sales Revenue (RMB MM) 16,535.2 16,161.0 2.3%

Cement 13,349.0 13,262.0 0.7%

Clinker 1,800.0 1,904.0 (5.5%)

Concrete 850.0 465.0 82.8%

Others 536.0 530.0 1.1%

Shandong Region 10,853.4 10,692.4 1.5%

Northeast Region 4,553.5 4,677.0 (2.6%)

Shanxi Region 838.5 706.7 18.7%

Xinjiang Region 289.8 85.0 241.2%

Gross Profit (RMB MM) 3,829.2 4,111.3 (6.9%)

EBITDA(1) (RMB MM) 3,798.7 4,264.6 (10.9%)

Net Profit (RMB MM) 1,074.7 1,603.8 (33.0%)

Net Profit Attributable to the Equity Shareholders of the Company

(RMB MM) 1,016.7 1,518.5 (33.0%)

Basic Earnings per Share (RMB) 0.36 0.54 (33.3%)

Gross Margin (%) 23.2% 25.4%

Net Margin (%) 6.5% 9.9%

Note: (1）EBITDA = Net income + finance costs + tax expenses + fixed assets depreciation + amortization

Key Financial Results

5

2013 2012 YoY Growth

Capacity (MM tonne)

Cement 94.2 89.6 5.1%

Clinker 45.4 39.0 16.4%

Concrete (MM m3) 16.2 14.6 11.0%

Sales Volume (MM tonne)

Cement and Clinker 62.6 56.9 10.2%

Cement 53.4 47.8 11.7%

Clinker 9.2 9.0 2.1%

Concrete (MM m3) 2.9 1.7 72.4%

Unit Selling Price (RMB / tonne or m3)

Cement 249.9 277.2 (9.8%)

Clinker 195.3 211.0 (7.4%)

Concrete 296.7 280.0 6.0%

Cement Regional Unit Selling Price (RMB/ tonne)

Shandong Region 243.9 268.3 (9.1%)

Northeast Region 270.3 303.8 (11.0%)

Shanxi Region 218.9 239.9 (8.8%)

Xinjiang Region 226.8 200.0 13.4%

Key Operating Results

6

5,0794,111 3,829

0

3,000

6,000

9,000

2011 2012 2013

Gross profit Gross margin

4,8014,265

3,799

0

3,000

6,000

9,000

2011 2012 2013

EBITDA EBITDA margin

30.1% 25.4% 23.2%

28.5% 26.4% 23.0%

13.7% 9.9% 6.5%

Financial Overview

7

Sales revenue

Gross profit

EBITDA (1)

Net profit (2)

Notes: (1）EBITDA = Net income + finance costs + tax expenses + fixed assets depreciation + amortization

(2）Net income before deduction of minority interest

(RMB MM) (RMB MM)

(RMB MM) (RMB MM)

16,862 16,161 16,535

0

5,000

10,000

15,000

20,000

2011 2012 2013

2,312

1,604

1,075

0

1,000

2,000

3,000

4,000

2011 2012 2013

Net profit Net margin

The Sales Contribution from Shanxi and Xinjiang Regions

to the Group is Increasing

8

Sales breakdown by area – 2012 Sales breakdown by area – 2013

The proportion of sales contributed by Shanxi and Xinjiang Regions to total sales increased by 2.0

percentage points YoY. This is mainly due to:

− The commencement of operations for operating companies in Shanxi and Xinjiang contributed to

more production volume

− Regional unit selling price of Cement in Xinjiang Region increased by 13.4%

Shandong66.2%

Northeast28.9%

Shanxi4.4%

Xinjiang0.5%

Shandong65.6%

Northeast27.5%

Shanxi5.1%

Xinjiang1.8%

2013 2012

RMB MM % Revenue RMB MM % Revenue

Percentage point

change

Total cost of sales 12,706 76.8% 12,050 74.6% 2.2 Points

Raw materials 4,222 25.5% 3,792 23.5% 2.0 points

Coal 3,326 20.1% 3,516 21.8% (1.7) points

Power 1,863 11.3% 1,830 11.3% 0.0 points

Depreciation and amortisation 1,016 6.1% 958 5.9% 0.2 points

Others 2,278 13.8% 1,954 12.1% 1.7 points

Effective Cost Control and Strengthening Internal

Management

Benefited by 11.8% year-on-year drop in average purchasing price of coal to RMB573.9/ton, coal

cost is reduced to RMB3.33 billion in 2013, representing only 20.1 % of sale revenue

As for cost reduction, output of residual heat power generation reached 1.105 billion KWH in 2013,

successfully reducing clinker production cost by RMB453 million

9

2013 2012

RMB MM % Revenue RMB MM % Revenue

Percentage point

change

Sales and marketing expenses 478 2.9% 391 2.4% 0.5 points

Administrative expenses 1,092 6.6% 910 5.6% 1.0 points

Finance costs 968 5.9% 925 5.7% 0.2 points

Total 2,538 15.4% 2,226 13.8% 1.6 points

Steady Operating Efficiency

During the reporting period, the proportion of sales and marketing expenses to revenue slightly

increased by 0.5 percentage points

The proportion of administrative expenses to revenue increased 1.0 percentage points yoy

The proportion of finance costs to revenue increased 0.2 percentage points yoy

10

2.4x

3.2x

4.3x

1.8x

2.9x

4.0x

0.0

1.0

2.0

3.0

4.0

5.0

2011 2012 2013

Total debt to EBITDA Net debt to EBITDA

Capital Structure Matching with Business

Development

11

Leverage ratio Debt Structure

Notes: (1) Long term Borrowings = Long term bank loans + other bank loans (less current portion) + long term bonds (less current portion)

(2) Short term Borrowings = Short term bank loans + current portion of other borrowings + current portion of long term bonds

(3) Net gearing = Net Debt / (Net Debt + Equity attributable to Equity shareholders of the Company + minority interest), Net Debt = Total debt – cash and cash equivalent

(1) (2) (3)

(RMB MM)

71.5%

77.8%58.3%

28.5%

22.2%

41.7%11,465

13,466

16,490 50.9%

56.9%

60.4%

0

5,000

10,000

15,000

20,000

25,000

2011 2012 2013

Long term debt Short term debt Net gearing

Effective Working Capital Control

12

Working capital days (1) Operating cash flow

Note: (1) Inventory days = Average inventories / Cost of sales * 365;

Days of sales outstanding= Average trade receivables / Revenue * 365;

Days of purchase outstanding= Average trade and bill payables / Cost of sales * 365

(RMB MM) (Days)

47.4

56.3 54.0

9.3 11.7

16.6

65.7

73.9

82.9

0

20

40

60

80

100

2011 2012 2013

Inventory days Days of sales outstanding

days of purchase outstanding

1,549

1,930 1,925

0

500

1,000

1,500

2,000

2,500

2011 2012 2013

2013 Dividend Distribution

13

2009-2013 Total dividend

2009-2013 Dividend per share

We propose to distribute final dividend of HKD 0.092

per share totaling HKD 259.1 million for 2013

– Major considerations:

Company’s dividend policy

Company’s future expansion plan

Cash return to shareholders

Company’s debt financing capacity, operating

cash flow and capital expenditure

In the recent years, we have maintained a stable,

consistent and good dividend policy which brings good

return to our shareholders

(HKD MM)

(HKD per share)

273.1

408.3

681.5 656.1

259.1

0

200

400

600

800

2009 2010 2011 2012 2013

0.097

0.145

0.242 0.233

0.092

0.00

0.05

0.10

0.15

0.20

0.25

0.30

2009 2010 2011 2012 2013

14

Future Outlook

22.527.8 31.1

36.543.7

51.3

0

20

40

60

80

100

2009A 2010A 2011A 2012A 2013A 2014E

15

China’s Fixed Asset Investment Targeted to Growth Steadily(2)

(RMB Tn)

China Leads the Global Economic Growth (1)

Total Cement Production in China (3)

(MM tonne)

(%)

Investment Plan - Shandong/Liaoning/Shanxi/Inner Mongolia/Xinjiang

China’s Continued Economy Growth Ensures Demand

for Cement

China GDP Growth Rate World GDP Growth Rate

Notes: (1) IMF

(2) NBS, Research Report

(3) NBS

Shandong 2014 Investment Plan

Transportation infrastructure investment: RMB56.5 Bn, including RMB39 Bn in highway construction.

Affordable housing: 316k and 190k units will commence and complete construction respectively; 500k

units of rural houses to be built and 100k units of dilapidated rural houses to be renovated

Liaoning 2014 Investment Plan

Transportation infrastructure investment: RMB44 Bn; the construction of 7 expressway projects will be

continued, with total expressway mileage exceeding 4,000 km, and 3,355 km of roads to be upgraded; 75

port projects including 49 continuing projects and 26 new projects will be constructed. Affordable housing:

310k units will be constructed

Shanxi 2014 Investment Plan

Highway construction investment: RMB21 Bn including RMB15.5 Bn in expressways, with 27 new and

continued projects totaling 1,665 km; RMB5.5 Bn will be invested in provincial and rural roads with total

mileage of 1,800 km. Affordable housing: 230k and 180k units will commence and complete construction,

with RMB45 Bn to be invested

Inner Mongolia 2014 Investment Plan

Highway construction investment: RMB65 Bn, with 14,000 km of highways to be constructed, including

1,900 km of expressway and 2,000 km of first-class highway. Affordable homes: an investment of

>RMB130 Bn is planned for 2013-2017; RMB22 Bn will be invested to build 170k units of affordable home

and RMB111 Bn will be invested to redevelop 59.9k of shanty house

Xinjiang 2014 Investment Plan

Transportation FAI: RMB30-35 Bn will be invested to build 7 national highways. Investment in water

conservancy construction: RMB16 Bn

7.7% 7.5%

3.0%3.7%

0%

2%

4%

6%

8%

10%

2013A 2014E

1,6481,870

2,085 2,1842,414

0

500

1,000

1,500

2,000

2,500

3,000

2009 2010 2011 2012 2013

16

Cement Industry Benefits from the Macro-economic

and Industry Policies

I II

III IV

Robust Demand Driven by Investment in Fixed Assets

Consolidation and Obsolete Capacity Phase-out Encouraged by Industry Policy

Cement Demand Supported by China’s Urbanization Process

Vertical Integration and Higher Environmental Standard Proposed by Government

In July 2013, China Cement Association published “Measures for Promoting

Mergers and Reorganizations in Cement Industry,” advocating for the active

policy and financial support for the energy-saving and environment friendly

projects, and encouraging large companies to expand across the value chain

In September 2013, the State Council issued the “Air Pollution Prevention

and Control Action Plan” to promote clean production. It promulgates a clean

production review in the cement industry, and incentivizes and provides

subsidies to companies implementing energy saving and emission reduction

In December 2013, the MEP (2) issued a revised version of “Emission

Standard of Air Pollutants for Cement Industry”, which will be implemented in

2014 and is considered as the most strict environmental protection measure

in China cement industry. This will further help accelerate the phase-out of

obsolete capacity and encourage the industry upgrade

In July 2013, China Cement Association published the “Measures for

Promoting Mergers and Reorganizations in Cement Industry,” supporting the

restructuring of large cement companies, with the targets of raising

production concentration ratio of the top ten cement enterprises to over 35%

In July 2013, the State Council issued guidance mandating the differential

treatment in financing policies for cement and other industries with severe

overcapacity issues, including providing credit support for the acquisition

activities of larger companies and putting stringent limit on loans to

companies with obsolete capacity

In October 2013, the State Council issued “Guidelines on Addressing Severe

Overcapacity”, proposed to strictly prohibit the construction of new cement

capacity and decisively eliminate obsolete capacity, and aimed to phase-out

another 100 million tonnes of cement (including clinker and grinding) capacity

by the end of 2015, and to abolish PC32.5 grade cement as soon as possible

In June 2013, the State Council approved the “National Highway Network

Planning (2013-2030),” targeting to increase total mileage of national

highway network to 400,000 km by 2030

In March 2014, the Government Work Report stated that 7 million units

affordable homes will commence construction, with over 4.7 million units in

shanty areas

The investment requirement in rail transport will reach RMB320 Bn and the

total construction will amount to 2,800 km in 2014; the total investment in

railway construction is expected to be RMB650-670 Bn and 29,100km of

railway will be built in the same period

The plan for Bohai Channel passageway with an investment totaling c.

RMB260 Bn is expected to be submitted to the State Council for approval

soon

In the Third Plenary Session of the 18th CPC Central Committee held in

November 2013, the government proposed to put forward urbanization and

the construction of new rural areas, to promote the coordinated

development of megacities, mid-sized cities, small cities and small towns,

and to allow local governments to finance the construction of municipal

infrastructure through bond issuance

During the Central Conference on Rural Work in December 2013, it was

emphasized the goal of “Three 100 millions” (1) would be achieved by 2020

In December 2013, the Central Urbanization Work Conference highlighted

the orderly migration of rural population into cities, deepening the renovation

of urban shanty areas, and strengthening the construction of major

infrastructure projects in Central and West China and guiding industrial

transfer; a number of city clusters shall be developed in Central, West and

Northeast China where favorable conditions are available

Have updated based on the

latest numbers / newsrun

国家工信部关于加快推进重点行业企业兼并重组的指导意见

http://www.gov.cn/zwgk/2013-01/22/content_2317600.htm

Note: (1) The goal of 3 100 millions include the change of Hukou registration of 100 million rural population to urban ones, the transformation of shanty towns and villages in cities with a population of 100 million, and the urbanization of Central and

West China with a population of 100 million

(2)Ministry of Environmental Protection

Upper Left Railroad

spending udpated

Source: Digital Cement, Broker Research, Newsrun

1. Increasing Government Investment into Infrastructure – In 2014, China fixed assets investments are targeted to

increase 17.5 % Y-o-Y, indicating FAI will likely reach RMB51.3 trillion for the year of 2014

2. Key relevant themes of China’s “12th Five-Year Plan”

− Affordable housing for RMB1.4 trillion

− To strengthen rural infrastructure construction

− Water-conservation projects for RMB4 trillion

3. Urbanization-related Constructions Will Pick Up

Significantly – China Development Bank forecasts the fund required for

urbanization in China to reach RMB25 Tn in the next 3 years

– The goal of “3 100 millions” will be actively pursued and achieved by 2020

17

Source: Digital Cement

China Cement Investment Declined Continuously since 2011

Source: NDRC, China Cement Association Report, Digital Cement, Newsrun

Robust Demand Disciplined Supply

Cement Price Recovery Realized By Improved Supply/Demand Dynamics

Well Positioned to Benefit from Favorable Market

Dynamics

(%) Y-o-Y comparison of cement fixed asset investment

Source: Digital Cement

(RMB / tonne)

61.7%

3.1%

-8.3% -7.0% -6.5%-20%

0%

20%

40%

60%

80%

2009 2010 2011 2012 2013

250

300

350

400

450

500

550

1/2012 3/2012 6/2012 9/2012 12/2012 3/2013 6/2013 9/2013 12/2013

North Northeast Northwest East Cental South Southwest National Average

8.714.2 16.316.3

12.612.8

2.0 2.2 1.6 1.6

37.6

43.6

2.98.0

24.323.1

5.2 5.22.9 2.2

6.8

6.8

1.5

3.3

2.5 3.5

4.6 4.6

2.2 2.2

53.1

64.6

20.7

27.6

39.439.4

11.711.9

6.7 6.3

0

20

40

60

80

2011 Actual Closure2011 Target Closure

2012 Target Closure 2012 Actual Closure

2013 Target Closure 2013 Actual Closure

18 18

Capacity Closures Will Constrain Supply

Capacity Closures Well on Track Cement Production Under Effective Control

Shandong Liaoning Shanxi Inner

Mongolia

Xinjiang

Have updated based on the

Dcement monthly

publication 201307

(1)

Copal: No update

Please refer to backup for 2013 targets, which

were release May 2013

Sources checked: 数字水泥网

各省经济和信息化委员会

各省发改委

Research Report

Goole, Baidu, Factiva

Xiao: In 2012 Interim NDR, no half year update

either

(MM tonne) (MM tonne)

Source: China Building Materials Industry Association, Digital Cement, NBS

Note: (1) 2013 target capacity closure is used as the proxy for 2012 actual closure since the actual closure data is not available

139 140147 150

154162

4147 48

57 57 60

2125

3339

47 50

3443

54

6459

64

17 2024

30

30

50

0

50

100

150

200

2008 2009 2010 2011 2012 2013

Shandong Liaoning Shanxi Inner Mongolia Xinjiang

(1)

Source : Provincial Governments, Digital Cement

19

Capex Plan

Update

2012 Capacity p11 of AR draft

1H2013 Capacity: P12 of 2013 Interim:截至2013年6月30日，本集团

水泥产能【9,264】万吨

P20 of 2013 Interim: 报告期内，本集团资本性支出约人民币【15.06】亿元，主要用于水泥、

熟料生产线的建设和收购支出

Notes: (1) Capex mainly used as the investments in the construction and acquisition of cement and clinker production lines

(2) Capacity as of 2012 year end and 2013 year end

(RMB MM)

Capital Expenditure (1) Cement Capacity (2)

(MM tonne)

89.694.2

0

40

80

120

2012 2013

3,409

4,3804,155

2,100

0

1,500

3,000

4,500

6,000

2011 2012 2013 2014E

20

2013 Strategy Outlook

In core markets of Shandong and Northeast China, fully leverage

the Company’s comprehensive competitiveness, and adopt a lean

marketing mode to increase volume and stabilize price; In new

markets of Shanxi and Xinjiang, focus on expanding new

customer base and enhance brand influence

Theme 2014 as the “Year of Management Deepening”. Further

formulate and modify procedures and systems, and highlight the

headquarters' role in overall work planning. Assign working

groups to accomplish management enhancement in Northeast

operations, and subsequently in operations in Shanxi and Xinjiang

Further optimize its strategic layout in existing markets. In

Shandong, accelerate the development of product chain including

aggregate and commercial concrete to strengthen its

comprehensive edge. In Shanxi, focus on the establishment of

auxiliary cement grinding stations. Also accelerate the

technological upgrade for part of its existing production lines

Devote to establishing a full set of systematic mechanism with the

focus on trainings of professional skills and ethics. Extend the

communications and cooperation's with well-known domestic and

international universities and institutions, achieve technological

breakthroughs and reserve a pool of talents, to enhance

competitive edge for future market competitions

Further consolidate in core markets to stabilize price and increase sales volume

Reinforce basic management, consider the overall situation and make

breakthroughs in key areas

Optimize industrial layout through scientific development, transformation

and upgrade

Implement human resources strategies, optimize structure and enhance skills

P23 of Draft of Interim report

21

Thank You

Q&A