West China Cement Limited provided unaudited earnings guidance for the year ended December 31, 2023. The company expects that the Group's net profit will decrease by approximately 50% to 60% for the year ended 31 December 2023 as compared to the year ended 31 December 2022 due to the following reasons: The Group recorded provision for an administrative penalty order made by Shaanxi Administration for Market Regulation for violation of relevant anti-trust law provisions in the Central Shaanxi market in the PRC for the year ended 31 December 2023 in the amount of approximately RMB 119.6 million, compared with the provision for such administrative penalty order of approximately RMB 29.8 million for the year ended 31 December 2022; and The Group recorded impairment losses in respect of goodwill and inter-group receivables for the year ended 31 December 2023 in the amount of approximately RMB 319.3 million mainly composed of (a) impairment loss in respect of inter-group receivables in the amount of approximately RMB 265.9 million due from Kangding Paomashan Cement Co. Ltd. Paomashan is in bankruptcy liquidation proceedings, it is estimated that the Group will not be able to recover all receivables due from Paomashan.

Accordingly, the Group recorded impairment loss of inter-group receivables of approximately RMB 265.9 million due from Paomashan; and (b) impairment loss in respect of goodwill in the amount of approximately RMB 53.4 million as the operating result of the two subsidiaries of the Group did not meet expectations. The Group did not record impairment loss in respect of goodwill for the year ended 31 December 2022. During the year ended 31 December 2021, owing to the need of better urban reservation, a subsidiary of the Group had been approached by the government to close its existing manufacturing plant.

The subsidiary received approximately RMB 502.0 million from the local government in return for the demolition work as well as the compensation for its loss incurred. During the year ended 31 December 2022, the demolition work was completed and the Group recorded government grants in relation to demolition work in an amount of RMB 308.5 million accordingly. The Group did not record such government grants for the year ended 31 December 2023.