China National Building Material : CONNECTED TRANSACTION - CAPITAL CONTRIBUTION TO CHINA NATIONAL BUILDING MATERIAL GROUP FINANCE CO., LTD.

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

CONNECTED TRANSACTION

CAPITAL CONTRIBUTION TO CHINA NATIONAL BUILDING

MATERIAL GROUP FINANCE CO., LTD.

On 26 March 2021, Sinoma Cement (a wholly-owned subsidiary of the Company) and Parent, being the shareholders of Finance Company (a subsidiary of Parent), entered into the Capital Contribution Agreement, pursuant to which Sinoma Cement agreed to make a capital contribution to Finance Company in cash on a basis of RMB1.31/registered capital. Sinoma Cement will contribute RMB262,000,000, among which RMB200,000,000 will be counted into the registered capital of Finance Company and the remaining amount will be counted into the capital reserve of Finance Company. After the capital contribution, the registered capital of Finance Company will increase from RMB1,000,000,000 to RMB1,200,000,000. Sinoma Cement and Parent will make a capital contribution of RMB500,000,000 and RMB700,000,000 respectively.

As Parent has a direct and indirect equity interest of 43.02% in aggregate in the Company, it is a controlling shareholder of the Company. Therefore, pursuant to the Listing Rules, Parent and Finance Company constitute connected persons of the Company, and thus the transaction contemplated under the Capital Contribution Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one or more applicable percentage ratios as defined under Rule 14.07 of the Listing Rules are higher than 0.1% but all applicable percentage ratios are less than 5%, according to Rule 14A.76 of the Listing Rules, the transaction contemplated under the Capital Contribution Agreement is exempt from the circular and shareholders' approval requirements and is only subject to the announcement and reporting requirements under the Listing Rules.

PRINCIPAL TERMS OF THE CAPITAL CONTRIBUTION AGREEMENT

Date

26 March 2021

Parties

• (1) Sinoma Cement, a wholly-owned subsidiary of the Company; and

• (2) Parent

Nature of the Transaction

It is proposed that Finance Company (a company held as to 30% by Sinoma Cement and 70% by Parent) will increase its registered capital. The shareholders of Finance Company, namely, Sinoma Cement and Parent, agreed that Sinoma Cement to make a capital contribution to Finance Company in cash on a basis of RMB1.31/registered capital. The equity interest of Sinoma Cement in Finance Company will increase from 30% to 41.67% and the equity interest of Parent in Finance Company will decrease from 70% to 58.33% after the said capital contribution.

Upon completion of the capital contribution, the registered capital of Finance Company will increase from RMB1,000,000,000 to RMB1,200,000,000 (representing an increase of RMB200,000,000 in the registered capital). Sinoma Cement will make a capital contribution of RMB262,000,000 in cash on a basis of RMB1.31/registered capital (the actual amount of capital contribution shall be determined according to the result of assets appraisal), among which RMB200,000,000 will be counted into the registered capital of Finance Company and the remaining amount will be counted into the capital reserve of Finance Company. The amount of capital contribution shall be fully paid by 30 April 2021 (in the event that the CBIRC (Beijing) has not approved the matters relating to the increase of capital by 30 April 2021, within five business days after the date of approval by the CBIRC (Beijing)).

The transactions contemplated under the Capital Contribution Agreement shall require the approval by the respective competent authority of each party and the approval by the CBIRC (Beijing).

Capital structure of Finance Company before the capital contribution:

ShareholdersAmount of contributionPercentage of registered capital

(RMB)

Sinoma Cement Parent

300,000,000 30%

700,000,000 70%Total

1,000,000,000 100%

Capital structure of Finance Company after the capital contribution:

ShareholdersAmount of contributionPercentage of registered capital

(RMB)

Sinoma Cement Parent

500,000,000 41.67%

700,000,000 58.33%Total

1,200,000,000 100%

INFORMATION ON FINANCE COMPANY

As at the date of this announcement, Finance Company is held as to 30% by the Group (through Sinoma Cement) and 70% by Parent, and is a subsidiary of Parent.

Finance Company is a limited liability company established under the laws of the PRC. It is licensed and regulated by the CBIRC and is engaged in the provision of financial services which principally include acceptance of deposits, loans, bills acceptance and discounting services and clearing and settlement services.

Based on the audited financial statements of Finance Company prepared in accordance with the generally accepted accounting principles in the PRC, for each of the two years ended 31 December 2019 and 2020, the audited net profit (before tax) of Finance Company was RMB113.0094 million and RMB37.2242 million, respectively, and the audited net profit (after tax) was RMB84.1687 million and RMB29.5438 million, respectively. The audited net assets of Finance Company as at 31 December 2019 and 2020 was RMB1,291.7341 million and RMB1,221.2780 million, respectively.

BASIS FOR DETERMINATION OF AMOUNT OF CONTRIBUTION

The amount of capital contribution was determined by the parties to the agreement with reference to the operation needs and actual circumstances with respect to Finance Company. As the capital contribution will be made by the shareholder of Finance Company, namely, Sinoma Cement, on a basis of RMB1.31/registered capital, Sinoma Cement will contribute RMB262,000,000, representing the total amount of capital increase. Sinoma Cement will finance its capital contribution by its internal funds.

REASONS FOR AND BENEFITS OF THE TRANSACTIONS

It is expected that contributing capital into Finance Company will decrease its asset-to-liability ratio, as well as support the expansion of the business scale of Finance Company. While the members of the Group can obtain more financing services from Finance Company, which will in turn be beneficial to lowering the finance costs of the members of the Group, it can also promote the deep cooperation between Sinoma Cement and Finance Company in capital business and obtain investment return.

The Directors (including the independent non-executive Directors) are of the view that the terms of the Capital Contribution Agreement are fair and reasonable, and the transaction contemplated under the Capital Contribution Agreement is on normal commercial terms or better and is in the ordinary and usual course of business of the Group, and is in the interests of the Company and its shareholders as a whole.

As Mr. Cao Jianglin and Mr. Pengshou, being the executive Directors, and Mr. Chang Zhangli, being an non-executive Director, hold positions in Parent, and Ms. Zhan Yanjing, being an non-executive Director, held position in Parent and was also the chairman of Finance Company when the relevant resolution was proposed to the Board for approval, they are deemed to have material interests in the Capital Contribution Agreement. They have abstained from voting on the relevant Board resolution(s) in respect of the Capital Contribution Agreement. Save as the Directors mentioned above, none of the Directors had material interests in the transaction contemplated under the Capital Contribution Agreement or was required to abstain from voting on the relevant Board resolution(s).

LISTING RULES IMPLICATIONS

As Parent has a direct and indirect equity interest of 43.02% in aggregate in the Company, it is a controlling shareholder of the Company. Therefore, pursuant to the Listing Rules, Parent and Finance Company constitute connected persons of the Company, and thus the transaction contemplated under the Capital Contribution Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As one or more applicable percentage ratios as defined under Rule 14.07 of the Listing Rules are higher than 0.1% but all applicable percentage ratios are less than 5%, according to Rule 14A.76 of the Listing Rules, the transaction contemplated under the Capital Contribution Agreement is exempt from the circular and shareholders' approval requirements and is only subject to the announcement and reporting requirements under the Listing Rules.

INFORMATION ON THE PARTIES

The Group is a leading building materials company in the PRC with significant operations in the cement, new materials and engineering services businesses. Sinoma Cement is principally engaged in the manufacturing of cement, clinker, cement accessories and cement products.

Parent is a state-owned limited liability company engaged in the business of building materials in the PRC.

DEFINITIONS

"Board"	the board of Directors
"Capital Contribution	the capital contribution agreement dated 26 March 2021 entered
Agreement"	into between Sinoma Cement and Parent in relation to the
capital contribution by Sinoma Cement to Finance Company
"CBIRC"	China Banking and Insurance Regulatory Commission ( ʕ਷ვ
Бڭᎈ္ຖ၍ଣ։ࡰึ)
"CBIRC (Beijing)"	China Banking and Insurance Regulatory Commission Beijing
Bureau ( ʕ਷ვБڭᎈ္ຖ၍ଣ։ࡰึ̏ԯ္၍҅)
"Company"	ʕ਷ܔҿٰ΅Ϟࠢʮ̡ (China National Building Material
Company Limited*), a joint stock limited company established
under the laws of the PRC, the H shares of which are listed on
The Stock Exchange of Hong Kong Limited
"Director(s)"	the director(s) of the Company

"Finance Company" China National Building Material Group Finance Co., Ltd. (ʕ ਷ܔҿණྠৌਕϞࠢʮ̡ ), a limited liability company established under the laws of the PRC

"Group"

the Company and its subsidiaries from time to time

"Listing Rules"

"Parent"

The Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited ʕ਷ܔҿණྠϞࠢʮ̡ (China National Building Material Group Co., Ltd.*), a state-owned limited liability company established under the laws of the PRC and a controlling shareholder of the Company

"PRC"

the People's Republic of China, excluding, for the purpose of this announcement, Hong Kong Special Administrative Region of the PRC, Macau Special Administrative Region of the PRC and Taiwan

"RMB"

"Sinoma Cement"

Renminbi, the lawful currency of the PRC ʕҿ˥إϞࠢப΂ʮ̡ (Sinoma Cement Co., Ltd*), a limited liability company incorporated under the laws of the PRC

%

per cent

By order of the Board

China National Building Material Company Limited*

Yu Kaijun

Secretary of the Board

Beijing, the PRC 26 March 2021

As at the date of this announcement, the board of directors of the Company comprises Mr. Cao Jianglin, Mr. Peng Shou, Mr. Cui Xingtai and Mr. Fu Jinguang as executive directors, Ms. Zhan Yanjing, Mr. Chang Zhangli, Mr. Tao Zheng, Mr. Chen Yongxin, Mr. Shen Yungang and Ms. Fan Xiaoyan as non-executive directors and Mr. Sun Yanjun, Mr. Liu Jianwen, Mr. Zhou Fangsheng, Mr. Li Jun and Ms. Xia Xue as independent non-executive directors.

* For identification purposes only