China Conch Venture : SHARE TRANSACTION

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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

China Conch Venture Holdings Limited

中 國 海 螺 創 業 控 股 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock code: 586)

SHARE TRANSACTION:

ACQUISITION OF THE ENTIRE ISSUED SHARE CAPITAL OF

THE TARGET COMPANIES,

INVOLVING THE ISSUE OF CONSIDERATION SHARES

UNDER GENERAL MANDATE

THE ACQUISITIONS

The Board would announce that on 7 June 2021 (after trading hours), the Vendors and the Purchaser (a direct wholly-owned subsidiary of the Company) entered into the SP Agreement. Pursuant to the SP Agreement, the Purchaser conditionally agreed to acquire:

1. from the First Vendor, the entire issued share capital in AGL, at the AGL Consideration of HK$616,151,831; and
2. from the Second Vendor, the entire issued share capital in WETH, at the WETH Consideration of HK$190,847,580.

Pursuant to the SP Agreement, (a) the AGL Consideration shall be settled by the allotment and issue of Tranche A Consideration Shares (i.e. a total of 16,808,710 new Shares) to the First Vendor, and (b) the WETH Consideration shall be settled by the allotment and issue of Tranche B Consideration Shares (i.e. a total of 5,206,349 new Shares) to the Second Vendor. The Consideration Shares will be issued under the General Mandate at the issue price of HK$36.6567 per Consideration Share. Such issue price represents:

1. a premium of approximately 10.41% over the closing price of HK$33.2 per Share as quoted on the Stock Exchange on the date of the SP Agreement;

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1. a premium of approximately 6.04% over the average closing price of HK$34.57 per Share as quoted on the Stock Exchange on the five consecutive trading days ended on the trading day immediately preceding the date of the SP Agreement; and
2. a premium of approximately 0.59% over the average closing price of HK$36.44 per Share as quoted on the Stock Exchange on the 30 consecutive trading days ended on the trading day immediately preceding the date of the SP Agreement.

The Consideration Shares represent (i) about 1.22% of the entire issued share capital in the Company as at the date of this announcement, and (ii) (assuming that the Company's issued share capital is not changed from the date of this announcement and up to the Completion Date (immediately before Completion)) about 1.21% of the Company's issued share capital as enlarged by the issue of the Consideration Shares.

As of the date of this announcement and immediately prior to completion of the Acquisitions, (a) Yaobai JV is an indirect 60%-owned subsidiary of the Company, and the remaining equity interest in Yaobai JV is indirectly held:

1. as to 20% by AGL (through Able Bless which is AGL's direct wholly-owned subsidiary); and
2. as to 20% by WETH (through Faithful Environmental which is WETH's direct wholly-owned subsidiary),

and (b) Chongqing JV is an indirect 65%-owned subsidiary of the Company, and the remaining 35% equity interest in Chongqing JV is indirectly held by AGL (through Able Bless). Subject to and immediately after completion of the Acquisitions, each of Yaobai JV (together with each of the Yaobai Subsidiaries) and Chongqing JV will become an indirect wholly-owned subsidiary of the Company.

LISTING RULES IMPLICATIONS

All applicable percentage ratios in respect of the Acquisitions (i.e. collectively, the acquisition of the AGL Sale Shares and the acquisition of the WETH Sale Shares) are less than 5%. As the Consideration for the Acquisitions will be satisfied by the issue of the Consideration Shares, the Acquisitions constitute a share transaction for the Company and is therefore subject to the reporting and announcement requirements under Chapter 14 of the Listing Rules.

As of the date of this announcement and immediately prior to completion of the Acquisitions, the First Vendor indirectly holds 20% of the equity interest in Yaobai JV and 35% of the equity interest in Chongqing JV, and the Second Vendor indirectly holds 20% of the equity interest in Yaobai JV. Accordingly, the First Vendor is a substantial shareholder of each of Yaobai JV and Chongqing JV, and the Second Vendor is a substantial shareholder of Yaobai JV. Both of Yaobai JV (taking into account Yaobai JV and the Yaobai Subsidiaries) and Chongqing JV (whether upon aggregation or singly) are insignificant subsidiaries of the Company. For such reasons, notwithstanding the Vendors being substantial shareholders of Yaobai JV and/or Chongqing JV, the Vendors and their associates are not regarded as connected persons of the Company by virtue of Rule 14A.09 of the Listing Rules.

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As the Acquisitions are subject to the fulfillment of certain conditions precedent set out in the SP Agreement, the transactions contemplated thereunder may or may not proceed to Completion. Shareholders and potential investors of the Company should exercise caution when dealing in the securities in the Company.

THE ACQUISITIONS

The Board would announce that on 7 June 2021 (after trading hours), the Vendors and the Purchaser (a direct wholly-owned subsidiary of the Company) entered into the SP Agreement.

The material terms of the SP Agreement are summarised below:

Date	:	7 June 2021
Parties	:	(1) China Conch Environment Protection Holdings Limited, a direct
		wholly-owned subsidiary of the Company (as purchaser of the entire
		issued share capital in each of the Target Companies);

1. Mr. Ma Zhaoyang (being the First Vendor who agrees to sell to the Purchaser the AGL Sale Shares); and
2. West China Cement Limited (as the Second Vendor which agrees to sell to the Purchaser the WETH Sale Shares)

As mentioned in the section headed ''Listing Rules Implications'' below, the First Vendor is a substantial shareholder of each of Yaobai JV and Chongqing JV, and the Second Vendor is a substantial shareholder of Yaobai JV. Both Yaobai JV and Chongqing JV (whether upon aggregation or singly) are insignificant subsidiaries of the Company. To the best of the Directors' knowledge, information and belief after having made all reasonable enquiries, apart from their interests in Yaobai JV and Chongqing JV, the Vendors and their respective ultimate beneficial owners are Independent Third Parties.

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Subject Matter

Pursuant to the SP Agreement, the Purchaser conditionally agreed to acquire:

1. from the First Vendor, the entire issued share capital in AGL, at the AGL Consideration of HK$616,151,831; and
2. from the Second Vendor, the entire issued share capital in WETH, at the WETH Consideration of HK$190,847,580.

As of the date of this announcement and immediately prior to completion of the Acquisitions, (a) Yaobai JV is an indirect 60%-owned subsidiary of the Company, and the remaining equity interest in Yaobai JV is indirectly held:

1. as to 20% by AGL (through Able Bless which is AGL's direct wholly-owned subsidiary); and
2. as to 20% by WETH (through Faithful Environmental which is WETH's direct wholly- owned subsidiary),

and (b) Chongqing JV is an indirect 65%-owned subsidiary of the Company, and the remaining 35% equity interest in Chongqing JV is indirectly held by AGL (through Able Bless). Subject to and immediately after completion of the Acquisitions, each of Yaobai JV (together with each of the Yaobai Subsidiaries) and Chongqing JV will become an indirect wholly-owned subsidiary of the Company.

Considerations

The AGL Consideration for AGL Sale Shares is HK$616,151,831 and the WETH Consideration for WETH Sale Shares is HK$190,847,580, all of which were determined after arm's length negotiations between the Purchaser and the Vendors with reference to (among other matters) (i) the historical performance of Yaobai Group and Chongqing JV for the three years ended 31 December 2020; (ii) the business development and prospects of Yaobai Group and Chongqing JV; (iii) the historical performance of the price of the Shares; and (iv) the prevailing market conditions.

Pursuant to the SP Agreement, (a) the AGL Consideration shall be settled by the allotment and issue of Tranche A Consideration Shares (i.e. a total of 16,808,710 new Shares) to the First Vendor, and (b) the WETH Consideration shall be settled by the allotment and issue of Tranche B Consideration Shares (i.e. a total of 5,206,349 new Shares) to the Second Vendor. The Consideration Shares will be issued under the General Mandate at the issue price of HK$36.6567 per Consideration Share.

Consideration Shares

Pursuant to the SP Agreement, it is contemplated that a total of 22,015,059 Consideration Shares (comprising 16,808,710 Tranche A Consideration Shares and 5,206,349 Tranche B Consideration Shares) will be issued at Completion. The Consideration Shares represent (i) about 1.22% of the entire issued share capital in the Company as at the date of this announcement, and (ii) (assuming that the Company's issued share capital is not changed

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from the date of this announcement and up to the Completion Date (immediately before Completion)) about 1.21% of the Company's issued share capital as enlarged by the issue of the Consideration Shares.

The issue price of HK$36.6567 per Consideration Share represents:

1. a premium of approximately 10.41% over the closing price of HK$33.2 per Share as quoted on the Stock Exchange on the date of this announcement (which is also the SPA Date); and
2. a premium of approximately 6.04% over the average closing price of HK$34.57 per Share as quoted on the Stock Exchange on the five consecutive trading days ended on the trading day immediately preceding the date of this announcement; and
3. a premium of approximately 0.59% over the average closing price of HK$36.44 per Share as quoted on the Stock Exchange on the 30 consecutive trading days ended on the trading day immediately preceding the date of this announcement.

The issue price of HK$36.6567 per Consideration Share was determined after arm's length negotiations between the Purchaser and the Vendors with reference to the factors as mentioned in the paragraph headed ''Considerations'' above. Having regard to such factors, the Board considers that the issue price is fair and reasonable and the issue of the Consideration Shares at such issue price is in the interests of the Company and the Shareholders taken as a whole.

The Consideration Shares will be issued under the General Mandate. The Directors are allowed, under the General Mandate, to issue up to 360,950,000 Shares, representing 20% of the issued share capital of the Company as at 29 June 2020 (i.e. the date of the 2020 annual general meeting of the Company, at which the grant of the General Mandate was approved). Accordingly, the issue of the Consideration Shares is not subject to Shareholders' approval at a separate general meeting.

The Company will make application to the Listing Committee of the Stock Exchange for the listing of, and permission to deal, in the Consideration Shares. The Consideration Shares, when issued to be credited as fully paid, will rank pari passu in all respects with each other and with the Shares in issue at the time of issue of the Consideration Shares.

Changes in shareholding structure of the Company

To the best knowledge of the Directors after having made all reasonable enquiries, the Company does not have any controlling Shareholders nor any substantial Shareholders (as defined under the Listing Rules). The following table sets out the number of Shares held by the Directors, the Vendors and their respective associates and the Shareholders and their percentage shareholdings as at the date of the SP Agreement and immediately after

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