Yankuang Energy Group Company Limited

Now may I invite Chairman Lee to start the presentation, please. Ladies and gentlemen, good morning. First of all, on behalf of Yang Kuang Energy, I would like to extend a warm welcome to all investors and friends attending this meeting and express my heartfelt thanks to everyone for your long-term care and support for the company. Now, I'm going to report to you the group's operating performance in 2023, market analysis of key products, operation goals for 2024, and measures. First part. Operating Review In 2023, the macroeconomy is very complex and severe. The energy market fluctuated sharply. In face of these difficulties and challenges, Yan Kuang Energy has always maintained our strategic focus, strengthened our confidence in development, vigorously implemented targeting work measures, accelerated the release of advantageous production capacity, deepened implementation of lean management, have deeply tapped internal potential to reduce cost and consumption and tackled key projects. We effectively overcame the adverse effects of downward fluctuations in coal price. The development of the five major industries has achieved remarkable results. Operating performance remained at historically high levels. So, results overview. Production volume of saleable coal 110 million tons, up 10.49 million tons, ranking first in the industry. Two. Production volume of coal chemicals 7.89 million tons up 1.08 million tons year-on-year. This is a historical high level. Sales revenue 118.4 billion RMB up 23.4% year-on-year. Equity attributable to shareholders or net profit 17.8 billion RMB down 41.6% year-on-year. Profitability level ranked among the top in the industry. Total assets 414.3 billion RMB, up 33.6% year-on-year. 6. Equity attributable to shareholders 86.9 billion RMB, ROA 20.5%. 7. Net operating cash flow 22.6 billion RMB, operating cash flow ratio 19.1%. 2. Industrial development has achieved remarkable results. In 2023, the group focused on stock optimization and incremental leapfrog based on overall improvement of the five businesses. We continue to optimize regional layout and resource allocation, promote the transformation and upgrading of traditional industries, make breakthroughs and upgrades in emerging industries, and build a solid industry cornerstone for high-quality development.

3.

Mining, strengthening outstanding business. The coal industry is increasing and improving quality. Production of the Australian base recovered strongly with year-on-year increase of 4.5 million tons. We acquired Lucy Mining, Xinjiang Energy Chemical, added 25.6 billion tons of coal resources and then approved production capacity of 39.89 million tons. We successfully bid for the number one well in the Hualienhe mining area in Inner Mongolia. And we acquired... 1.04 billion tons of coal resources. We accelerated construction of intelligent mines, invested 2.8 billion RMB in those 59 intelligent mining working phases, accounting for 94% of coal output. Selling price fluctuated at middle to high levels. We scientifically studied and judged market trends, dynamically optimized product structure, focused on increasing the proportion of clean coal products and flexibly implemented The withholding and slowing down sales strategy. So ASP remains at a medium to high level. ASP of self-produced coal was 835 RMB per ton. Domestic, ASP 710 RMB per ton. Overseas, 1031 RMB per ton. High-end chemicals and new materials, breakthroughs in various aspects. Chemical production. reached record high. Coal-to-liquid production for the first time reached 1 million tonnes. Coal-to-gas production exceeded 2 billion cubic metres. For high-end coal chemical projects, we accelerated construction. We conducted a trial run of the Caprolactam integration project, where a 3,000-tonne OMB pulverised coal gasification device The President of the Energy Group Company Limited, Chunlei Gao A high-end equipment manufacturing park will be built and put into operation. Lucy Intelligent Manufacturing Industrial Park put into operation. Six JV enterprises settled in the industrial park. Set up an international equipment manufacturing platform in Europe through acquisition. So we strategically acquired Germany's SMT shaft AG and we have the first... Smart Green Zero Carbon Industrial Park As said just now, we set up international equipment manufacturing platform in Europe through acquisition We strategically acquired Germany's SMT Scharf AG and established an advanced R&D platform and a talent recruitment base 4. Smart Logistics, integrating operations to add value Five-in-one development manifests competitive advantage. The integration of six railway assets including the Yicai-Huzhen Railway and Yinpanhao Container Station in the Shaanxi and Inner Mongolia regions was completed. Total mileage of railway operations exceeded 1,300 km. Taiwan Port Road Railwater Intermodal Transport Logistics Park was completed and put into operation with handling capacity of 32 million tonnes. The 5-in-1 development pattern of railways, highways, ports and shipping parks and platforms has initially taken shape. Logistics and freight capacity had reached 300 million tonnes per year. Logistics system of production, sales, storage, distribution and transportation takes shape. There is synergy between various businesses through combination of various means of transportation and coordination between logistics and sales operations and integration of logistics and trade. We form strategic partnerships with leading companies in the industry. 5. New energy progressing steadily, adhering to synchronous advancement of Quota approval and project construction. A number of distributed PV projects have been started and three PV power stations have been connected to the grid. Projects such as integration of source grid loads and storage in Shanxi, Mongolia, Xinjiang have been advanced in an orderly manner. Number three, good results in value creation. Lean management releases room for profit growth. We continue to expand financing channels, replacing high interest rates with low interest rates, Long and replacing short-term bonds with long-term bonds. Average financing interest rate dropped to below 3.6%. Financial expenses decreased by 36% year-on-year. Yankou Australia paid off all interest-bearing debts to achieve zero debt operation. Asset liability ratio dropped to 25%, a record low. Deepened management efficiency improvement and asset quality improvement and implemented budget control and asset inventory. We continue to strengthen cost reduction and consumption reduction through management and control measures such as activities, material management and staff efficiency improvement, achieving annual cost sales. of 381 RMB per tonne. Among them, price in the second half of the year dropped by 16 RMB per tonne compared with first half. Yen Co. Australia's cash costs remain the lowest in the Australian industry. Unit cost of methanol, 1,715 RMB per tonne, year-on-year decrease of 11.4%. Unit sales cost of acidic acid, 2,380 RMB per tonne, down 10.6% year-on-year, showing significant cost reduction results. Thank you very much. ESG Construction At the forefront of the industry, adhering to ESG's strategic policy of green, low-carbon, compliance and transparent and sustainable development, we have fully integrated ESG concepts into all areas of corporate governance, covering entire production and operation process. We have disclosed ESG reports for 16 consecutive years, becoming the first company in China to pass ESG management system certification and ranking first in the domestic industry in the CDP International Carbon Disclosure Act Enhanced brand image. With excellent performance, standardized governance, and stable operation, we have won high praise and recognition from the industry and capital markets. We won honors such as the Golden Bull Award, Top 100 Companies with the Highest Investment Value, Disclosure Rating by Shanghai Stock Exchange A. We won National Quality Award by China Association of Quality for three times. We are ranked 68th among Fortune China's top 500 listed companies. Part 2. Market Analysis of Key Products Analysis of Co-Markets The total coal production capacity will continue to be released in 2023, but growth rate of production volume declined significantly. International supply situation has improved, imported coal has increased significantly. Overall supply and demand has shown a loose pattern, and prices remained at historical high levels. Looking into 2024, the Chinese government will further implement economic policies and The role of coal as a bottom line guarantee is more significant. The coal industry continues to have a strong supervision on production safety and imports are expected to decrease. Domestic coal supply has limited room for growth. Internationally, The President The President Analysis of Co-Chemical Markets In the first quarter of 2024, domestic economy steadily improved. As economic development continues to rebound, it will drive growth of chemical market demand, improve the loose supply pattern and promote bottoming out of chemical prices. Among that, market supply and demand relationship of basic chemicals such as methanol and acetic acid will improve. Competition and price advantages of fine chemicals such as caprolactam and POM will improve. Part 3. Operation Goals for 2024 After comprehensively studying and judging changes in the macro situation and coordinating speed and quality, efficiency and effectiveness, development and safety, economy and environment, our group have formulated business goals for 2024. Production Plan Saleable coal production target is about 140 million tonnes, a year-on-year increase of 30 million tonnes. Output target of cochemicals, 8 million tons or more, and variety structure is further optimized. CapEx plan. Capital will be invested mainly in incremental profit-creating projects such as mine construction and high-end chemical raw new materials in the Shanxi, Mongolia, Xinjiang region. With CapEx plan of 19.7 billion RMB, among that 10.2 billion is for maintaining simple reproduction, 4.8 billion for mine construction projects, 1.8 billion for high-end chemical new material projects. Unit cost of sales. Strive to reduce sales cost per ton of coal by 3 to 5 percent. Sales cost per ton of methanol and acetic acid will be reduced by more than 90 and 120 RMB per ton. Debt-to-asset ratio while meeting cash flow expenditure for production, operations, investments, M&A will actively promote leverage reduction and debt reduction. We strive to control debt-to-asset ratio to below 60%. Part 4. Operational measures in 2024 Currently, the global energy landscape is accelerating changes and competition in the energy industry is becoming increasingly fierce. China has successfully implemented policies to boost domestic demand such as large-scale equipment updates and trade-in and upgrade of consumer goods. At the same time, it is accelerating construction of new energy systems and promoting green, low-carbon, high-quality. For our group, opportunities outweigh challenges and hopes outweigh difficulties. The two-way empowerment advantages of traditional energy guarantee and new energy cultivation and accumulation are more prominent. We'll take the new green and low-carbon development concept as the guide to optimize and upgrade traditional industries. and cultivate and expand emerging industries, further promote new industrialization and create new quality production, productive forces. 2024 is the critical period for the group to consolidate its transformation advantages and accelerate green, low-carbon and high-quality development. We'll focus on development of new production, productive forces and green and low-carbon transformation to achieve development goals of the 1385 key projects in about five years. 1. We will build a first-class enterprise. In accordance with the 16-character standard of excellent products, outstanding brands, leading innovation and modern governance, we will accelerate construction of a world-class, sustainable, clean energy-leading demonstration enterprise. 3. Starting three main tasks. We will carry out the three main tasks of achieving production efficiency, increasing revenue and reducing expenditure, and building key projects. 8. Undertaking eight key projects. will accelerate the advancement of eight iconic and leading major engineering projects to lay a solid foundation for transformation and development to reinforce our position. Five, realizing five leads. First, the scale equivalent and comprehensive strength have achieved new leads. We will promote strong growth in economies of scale and ensure that operating indicators remain at the forefront of listed companies in the same industry. The second point is green and low carbon transformational breakthroughs and leap forwards. We will focus on the dual carbon goal, build green mines, green factories, green parks and increase proportion of green energy. Third, governance with standards and efficiency. So we will enhance transparent governance. We will forge a Yan Kuang characteristic corporate governance system that organically integrates day-to-day asset supervision and listing regulations and coordinates domestic governance and overseas management and control. 4. Technological Development and Innovation Cultivate scientific research and development innovation platforms, breakthrough key technologies that restrict industrial development and promote transformation and application of scientific and technological achievements. 5. Open-minded, inclusive and tolerant. We'll practice the concept of shared development and unswervingly create value for shareholders, customers, employees and other stakeholders. So focusing on the above goals, we will concentrate on Our superior resources to accelerate construction of the Shanxi and Mongolia regions as a breakthrough focus on regional optimization and industrial upgrading, coordinate allocation of various resource elements, accelerate release of incremental potential, and comprehensively drive rapid improvement of the group scale efficiency and competitive strength steadily.