Anhui Conch Cement : CONTINUING CONNECTED TRANSACTIONS：SALE OF CEMENT PRODUCTS, PROCUREMENT OF FLYA...

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

安徽海螺水泥股份有限公司

ANHUI CONCH CEMENT COMPANY LIMITED

(a joint stock limited company incorporated in the People's Republic of China)

(Stock Code: 00914)

CONTINUING CONNECTED TRANSACTIONS:

SALE OF CEMENT PRODUCTS, PROCUREMENT OF FLY ASH AND

DESULPHURIZATION GYPSUM MATERIAL

Sale and Purchase of Cement Contract

On 3 January 2019, the Company and Jiangsu Conch Building Materials entered into the Sale and Purchase of Cement Contract under which certain subsidiaries of the Company located in East China will sell cement products to Jiangsu Conch Building Materials. The contract is valid from 3 January 2019 until 31 December 2019. The aggregate transaction amount is estimated to be approximately not more than RMB2,500,000,000.

Procurement of Materials Contract

On 3 January 2019, the Company and Jiangsu Conch Building Materials entered into the Procurement of Materials Contract under which three of the Company's subsidiaries located in Shanghai region will procure fly ash and desulphurization gypsum from Jiangsu Conch Building Materials. The contract is valid from 3 January 2019 until 31 December 2019. The aggregate transaction amount is estimated to be approximately not more than RMB21,200,000.

Listing Rules Implications

Jiangsu Conch Building Materials is a non-wholly-owned subsidiary of the Company, which is owned as to 51% by the Company and 49% by Conch Profiles and Science. Conch Profiles and Science is a subsidiary of Conch Holdings, a controlling shareholder of the Company. Accordingly, Conch Profiles and Science is an associate of Conch Holdings and hence a connected person of the Company. Therefore, Jiangsu Conch Building Materials is a connectedsubsidiary of the Company under 14A.16 of the Listing Rules and thereby a connected person of the Company. The transactions contemplated under the Sale and Purchase Contract of Cement and Procurement of Materials Contract thus constitute continuing connected transactions for the Company under Chapter 14A of the Listing Rules. Pursuant to Rule 14A.81 of the Listing Rules, the transactions contemplated under the Sale and Purchase of Cement Contract and Procurement of Materials Contract shall be aggregated as if they were one transaction as they were all entered into within a 12-month period between the same parties. As certain applicable percentage ratios (excluding profits ratio) calculated pursuant to Chapter 14 of the Listing Rules in connection with the relevant transaction amounts are more than 0.1% but each of the applicable percentage ratios is less than 5%, the transactions contemplated under the Sale and Purchase of Cement Contract and Procurement of Materials Contract are subject to the annual review and disclosure requirements, and are exempt from the independent shareholders' approval requirement under Rule 14A.76(2) of the Listing Rules.

On 3 January 2019, the Company entered into respective contracts with Jiangsu Conch Building Materials for the sale of cement products and the procurement of fly ash and desulphurization gypsum materials (collectively, the "Contracts"). The Contracts are valid from 3 January 2019 to 31 December 2019. Details of the Contracts are as follows.

1. SALE AND PURCHASE OF CEMENT CONTRACT

On 3 January 2019, the Company and Jiangsu Conch Building Materials entered into the Sale and Purchase of Cement Contract under which certain subsidiaries of the Company located in East China will sell cement products to Jiangsu Conch Building Materials.

Date of the Contract:

3 January 2019

Parties to the Contract:

(1) The Company (Seller)

The Group is principally engaged in the production and sale of cement and commodity clinker.

(2) Jiangsu Conch Building Materials (Buyer)

Jiangsu Conch Building Materials is an enterprise established in the PRC and is principally engaged in the production, processing and sales of cement products, steel structure construction and lightweight building materials; wholesale and retail of plastic profiles, building materials, metal materials, hardware products and coal.

Major Terms of the Contract:

Certain subsidiaries of the Company located in East China will sell a total of approximately 7.5 million tonnes of cement products to Jiangsu Conch Building Materials as stipulated in the Sale and Purchase of Cement Contract. The sales price of the cement products will be determined with reference to the prevailing market price and factors as detailed in the paragraph headed "Contract Price and Basis for its Determination" below. Jiangsu Conch Building Materials will be responsible for product transportation and will bear all expenses after collection of the products. Payment will be settled on a monthly basis.

The relevant subsidiaries of the Company will respectively enter into individual sub-contracts with Jiangsu Conch Building Materials regarding the sales of cement products. The major terms of these individual sub-contracts shall be in line with those of the Sale and Purchase of Cement Contract.

Validity of the Contract:

The Sale and Purchase of Cement Contract was entered into between the Company and Jiangsu Conch Building Materials on 3 January 2019, and was approved by the Board of the Company to become effective on the same date. It is valid from 3 January 2019 until 31 December 2019.

Contract Price and Basis for its Determination:

Based on the current prevailing market conditions and the expected transaction volume, the aggregate transaction amount within the validity period of the Sale and Purchase of Cement Contract is estimated to be approximately not more than RMB2,500,000,000. Payment to Jiangsu Conch Building Materials will be settled by the relevant subsidiaries of the Company on a monthly basis.

As the price of cement is affected by multiple factors in the market and is subject to frequent fluctuations, the selling price of the cement products to be sold by the Company to Jiangsu Conch Building Materials will be determined with reference to the factory / freight on board prices, the prevailing market price and historical prices. The basis for determination of the selling prices ofcement products are as follows:

• 1. Seasonal factors: seasonal factors have relatively significant effects on the demand for cement, resulting in frequent fluctuations in the market prices. Peak seasons usually fall within the second and the fourth quarters of the year, while low seasons usually fall within the first and the third quarters of the year. When entering into the Sale and Purchase of Cement Contract with Jiangsu Conch Building Materials, the Company has considered the effect of seasonal factors on cement prices where demand for cement will be higher in peak season leading to a higher market price of cement;

• 2. Factory / freight on board prices: these mean the prices set by the Group and offered to its customers after completion of production at the Group's factory or when the products are loaded on board, and having taken into consideration factors including the then supply-demand relationship of the products in the region and costs of production;

• 3. Historical prices: the historical selling prices set by the Group and by other cement sellers for the same or similar products in the East China region with reference to the Price List as mentioned below and the actual historical sale amount of cement products of approximately RMB768 million during the period from 28 September 2018 to 31 December 2018 under the previous sale and purchase of cement contract as disclosed in the Company's announcement dated 28 September 2018;

• 4. Market conditions: the then market conditions and factors, which include the demand for cement products in the East China region and the prevailing market prices for the same or similar products in the East China region offered by other cement manufacturers/sellers; and

• 5. Arm's length negotiation: the selling prices to be offered under individual sub-contracts with Jiangsu Conch Building Materials will be approved by the sales department of the Group and to be negotiated and agreed with Jiangsu Conch Building Materials on arm's length basis.

The Group's pricing policies on the selling of cement products are applicable to all of its transactions, whether with independent customers or connected persons.

The Company has formulated internal control measures which regulate the terms (including pricing) and implementation of connected transactions and continuing connected transactions. Under such internal control measures, the Group maintains a historical price list ("Price List") for its products; the Price List is prepared by the sales department of the Company with reference to the internalhistorical selling prices set by the Group and the prevailing market prices offered by other industry players in separate sales regions from time to time. The Price List will be updated by the sales department of the Company on a monthly basis. The internal control department of the Company will review the compliance of the internal control measures from time to time and will report any irregularities to the senior management, including the review of the Price List and the review and monitoring of the compliance and implementation of sales management policies (including pricing policies) for the Group's transactions by the sales department and sales teams of the Group.

2. PROCUREMENT OF MATERIALS CONTRACT

On 3 January 2019, the Company and Jiangsu Conch Building Materials entered into the Procurement of Materials Contract under which three of the Company's subsidiaries located in Shanghai region will procure fly ash and desulphurization gypsum from Jiangsu Conch Building Materials.

Date of the Contract:

3 January 2019

Parties to the Contract:

• (1) The Company (Buyer)

• (2) Jiangsu Conch Building Materials (Seller)

For an overview of the principal business activities of the Company and Jiangsu Conch Building Materials, please refer to the section headed "1. Sale and Purchase of Cement Contract - Parties to the Contract" in this announcement above.

Major Terms of the Contract:

Three subsidiaries of the Company located in Shanghai region will procure fly ash and desulphurization gypsum material from Jiangsu Conch Building Material. A total of approximately 130,000 tonnes of fly ash and 70,000 tonnes of desulphurization gypsum materials will be procured from Jiangsu Conch Building Materials at fixed unit price (calculated per tonne) applicable to different quarters of the year as stipulated in the contract. The three subsidiaries of the Company will be responsible for product transportation and will bear all expenses after collection of the