WEST CHINA CEMENT LIMITED

UNAUDITED INTERIM RESULTS FOR THE

SIX MONTHS ENDED 30 JUNE 2008 

Financial Highlights

• Profit before tax increased 57% to RMB 87.7 million (June 2007: RMB 55.9 million).

• Group turnover for the first half of the year rose 68% to RMB 338 million (June 2007: RMB 201 million); Sales from Pucheng were RMB 131 million (June 2007: RMB 152 million) and Lantian RMB207 million (June 2007: RMB 49 million).

• The increase in turnover is due to the two new Lantian production lines which came into production in April and July 2007.

• Group turnover and production were affected by the exceptional snow in January and February. Pucheng sales for January and February were 43% below the previous year's level for the same period.

• Group turnover was ahead of budget in March to June and the sales lost in January and February are expected to be recovered by the third quarter.

• Other operating income of RMB 16 million (June 2007: RMB 12 million) includes RMB 14 million VAT rebates (June 2007: RMB 11 million). 

• The Group secured a US$60 million debt facility with warrants attached to finance its third production base - the Ankang plant, which will contribute a further 1.8 million tonnes of production capacity per annum following its expected completion in Q1 2009. 

  
  

Operational Highlights

• Both Pucheng and Lantian are now fully operational.

• The Lantian waste heat project was completed in August at a cost of RMB 60 million. This project is expected to result in cost savings of RMB 14 million per annum.

• Further cost savings are anticipated through the use of demolition waste from Xi'an as a substitute for fly-ash at the Lantian Plant. 

• The Ankang plant is expected to be completed early in 2009. 

• The disastrous earthquake in Sichuan, south of Shaanxi province has intensified the demand for cement in the region. This has widened the demand-supply gap in southern Shaanxi. 

• The Group has been able to pass on the major effects of cost pressures, mainly rising fuel and coal costs, to its customers, with gross margin declining by only 1% to 33%. Demand is buoyant in the region and significant price increases have been made since 30 June.

Enquiries:

Robert Robertson, West China Cement Limited

Tel: + 44 118 974 4636

Christopher Caldwell / Emma Brewer, NCB Stockbrokers Limited

Tel: + 44 20 7071 5200

Chairman's Statement

WCC again delivered a substantial increase in profit for the first half of 2008, in line with expectations. Profit amounted to RMB 87.7 million (£6.4 million), an increase of 57% over the same period in 2007, which is highly satisfactory given the severe disruption to production and demand brought about by the exceptional snowstorms at the time of the Chinese New Year. From March operations have been running at above normal levels, and the shortfall in sales in the first two months of the year should be recouped during the second half year. 

It is pleasing that the Lantian plants, commissioned in April and July of last year, have been running consistently at capacity since March. Lantian production amounted to 0.91 million tonnes out of the total of 1.56 million in the half year.

WCC was able to substantially pass on the effects of significant cost increases to its customers. Coal prices averaged 43.7% higher than in the first half of last year. Gross Margin suffered a marginal 1% decline to 33%. However significant price increases have been made since the end of June, and the company is aiming to increase margins in buoyant trading conditions.

The Ankang project remains on schedule to begin production early in 2009. Its annual production will be approximately 1.8 million tonnes, increasing WCC's capacity to about 5.3m tonnes. Situated in the South of the province, demand for Ankang's product has been underpinned by the reconstruction requirements following the tragic earthquake in Sichuan. The project has not been immune to cost pressures however, and we now expect the capital cost to increase by RMB 30 million (£2.2 million) to RMB 725 million (£53.0 million), or RMB 685 million (£50.1 million) net of tax credits. It was important that WCC complete the project on schedule and the credit crisis made financing of this more difficult than anticipated. It is to the company's credit that it was able to raise $60 million through Credit Suisse, as announced on 30 May 2008.

WCC remains committed to taking advantage of the unusual growth opportunities in Shaanxi province to the fullest extent possible in current financial markets. It has further projects in mind and will be actively seeking to finance further expansion. 

While there is some evidence of a slow-down in the rate of growth in China, demand continues to grow at a pace which can still be considered exceptional. This is particularly true of demand for cement in Shaanxi province, and the company looks forward to building further on the substantial growth in production and profitability achieved so far.

Robert Robertson

Non-Executive Chairman

  Unaudited Consolidated Income Statement 

for the six months ended 30 June 2008

Unaudited Consolidated Balance Sheet 

as at 30 June 2008

Unaudited Consolidated Balance Sheet 

as at 30 June 2008 (continued)

Unaudited Consolidated Statement of Changes in Equity 

for the six months ended 30 June 2008

Unaudited Consolidated Statement of Changes in Equity 

for the six months ended 30 June 2008