China National Building Material : INSIDE INFORMATION - UPDATES ON PROPOSED RESTRUCTURING OF CEMENT ASSETS

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.

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

INSIDE INFORMATION

UPDATES ON PROPOSED RESTRUCTURING OF

CEMENT ASSETS

INDICATIVE AGREEMENTS IN RELATION TO THE PROPOSED RESTRUCTURING

On 7 August 2020, the Company entered into the CNBM Indicative Agreement with its A-share listed subsidiary, Tianshan Cement, in connection with the proposed disposal by the Company of its equity interests in the respective Target Companies, in consideration for shares to be issued to the Company by Tianshan Cement.

On the same date, Tianshan Cement entered into the Other Indicative Agreements with the Independent Sellers, in connection with Tianshan Cement's proposed acquisition from the Independent Sellers most of the equity interests in two Target Companies which are not held by the Company, in consideration for shares to be issued to the Independent Sellers by Tianshan Cement.

PROPOSED PLACING BY TIANSHAN CEMENT

Tianshan Cement proposes to conduct a placing of additional new shares if and after the Proposed Restructuring is completed.

This announcement is made by the Company pursuant to Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and Rule 13.09 of the Listing Rules.

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Reference is made to the announcement issued by China National Building Material Company Limited* (the "Company") dated 24 July 2020 in relation to the Proposed Restructuring (the "Announcement"). Unless otherwise defined, capitalised terms used in this announcement shall have the same meanings as those defined in the Announcement.

On 7 August 2020, the Company entered into an indicative asset purchase agreement (the "CNBM Indicative Agreement") with its A-share listed subsidiary, Tianshan Cement, in connection with the proposed disposal by the Company of its equity interests in China United Cement, South Cement, Southwest Cement and Sinoma Cement (collectively, the "Target Companies"), respectively, in consideration for shares to be issued to the Company by Tianshan Cement.

On the same date, Tianshan Cement entered into an indicative asset purchase agreement (each an "Other Indicative Agreement", together with the CNBM Indicative Agreement, the "Indicative Agreements") with each of the 27 minority shareholders (the "Independent Sellers") of South Cement or Southwest Cement (as the case may be), in connection with Tianshan Cement's proposed acquisition of such Independent Seller's equity interests in South Cement or Southwest Cement (as the case may be), in consideration for shares to be issued to such Independent Seller by Tianshan Cement.

Further, Tianshan Cement proposes to conduct a placing of additional new shares if and after the Proposed Restructuring is completed.

PRINCIPAL TERMS OF THE INDICATIVE AGREEMENTS

Date
7 August 2020
Parties
	The CNBM Indicative	Each of the Other Indicative
	Agreement	Agreements
Seller:	The Company	An Independent Seller
Purchaser:	Tianshan Cement

As far as the Company is aware, the Independent Sellers are not connected persons of the Company.

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Target Equity Interests

The Company intends to dispose of, and Tianshan Cement intends to acquire, the equity interests in the Target Companies (the "Target Equity Interests") as set out below:

		Percentage of
	Percentage of	the Independent	Total
	the Company's	Sellers' equity	percentage
	equity interests	interests to	of the equity
	to be disposed	be acquired	interests to be
	of to Tianshan	by Tianshan	disposed of or
Target Company	Cement	Cement	acquired
China United Cement	100%	N/A	100%
South Cement	84.82895%	15.09841%	99.92736%
Southwest Cement	79.84278%	15.87381%	95.71659%
Sinoma Cement	100%	N/A	100%
Consideration

The value of the Target Equity Interests (the "Value") is to be determined with reference to the valuation results as issued by an asset valuer and filed with the competent authorities with respect to state-owned assets, and to be confirmed in definitive supplemental agreements to be signed by the relevant parties. The consideration is to be paid in the form of new shares to be issued by Tianshan Cement (the "Consideration Shares") as follows:

(1) Nature and par value:	Common shares denominated in Renminbi ("RMB")
	and listed on the Shenzhen Stock Exchange, with a par
	value of RMB1.00 each

1. Issue price (the "Issue Price"):

RMB13.38, as determined in accordance with the principle that the Issue Price will not be lower than 90% of the average trading price of Tianshan Cement's shares in the 60 trading days prior to the date of this announcement (the "Valuation Reference Date")

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1. Adjustment mechanism of the Issue Price:

1. Number of Consideration Shares to be issued to each seller of the Target Equity Interests

1. The Issue Price may be adjusted once, whether upwards or downwards, by Tianshan Cement's

b o a r d d u r i n g t h e p e r i o d f r o m t h e d a t e o f announcement of the resolutions of Tianshan Cement's shareholders' meeting in respect of the Proposed Restructuring until the approval of the Proposed Restructuring by the China Securities Regulatory Commission (the "CSRC"), with reference to, among others, the price of Tianshan Cement's shares and the performance of market indices . The effectiveness of this proposed adjustment mechanism of the Issue Price is conditional upon obtaining approvals at Tianshan Cement's shareholders' meeting and of the State- owned Assets Supervision and Administration Commission of the State Council (the "SASAC")

1. If there is any ex-right or ex-dividend event, such as distribution of dividend, bonus issue, rights issue and transfer to share capital from capital reserve, by Tianshan Cement during the period commencing on the Valuation Reference Date and ending on the date of registration of the issued Consideration Shares in the stock accounts of the sellers of the Target Equity Interests at the China Securities Depository and Clearing Company Limited (the "Registration Date"), the Issue Price will be adjusted accordingly

To be determined by dividing the amount of the Value attributable to the relevant Target Equity Interests held by the Company or each Independent Seller (as the case may be) by the Issue Price, and to be approved by the

CSRC

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(5) Lock-up period	(A)	The Company will be prohibited from transferring
		the Consideration Shares within 36 months of
		the Registration Date, and will be subject to the
		relevant provisions prescribed by the CSRC and
		the Shenzhen Stock Exchange thereafter. Where
		(i) the closing price of Tianshan Cement's shares
		is lower than the Issue Price for 20 trading days
		consecutively during the 6 months after completion
		of the Proposed Restructuring; or (ii) the closing
		price of Tianshan Cement's shares at the end of
		the 6 months after completion of the Proposed
		Restructuring is lower than the Issue Price,
		the above lock-up period will be automatically
		extended by 6 months
	(B)	The Company will be prohibited from transferring
		the shares in Tianshan Cement as held by the
		Company prior to the Proposed Restructuring for
		the period of 18 months from the Registration
		Date, except as otherwise permitted by applicable
		law
	(C)	Each of the Independent Sellers is prohibited from
		transferring the Consideration Shares (i) within
		12 months of the Registration Date (if it had held
		the Target Equity Interests in the relevant Target
		Companies for at least 12 months); or (ii) within
		36 months of the Registration Date (if it had held
		the Target Equity Interests in the relevant Target
		Companies for less than 12 months), except as
		otherwise permitted by applicable law, regulations
		and regulatory documents

Profit or loss realised during the transitional period

The realised profits or losses of the respective Target Companies during the transitional period of the Proposed Restructuring, which is from 1 July 2020 to the applicable audit reference date (to be determined based on the actual completion date of the Proposed Restructuring), will be attributed to or borne by the existing shareholders of such Target Companies.

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Effectiveness of the Indicative Agreements

Each of the Indicative Agreements will take effect upon fulfilment of all of the following conditions (the "Conditions to Effectiveness"):

1. signing and/or stamping by the relevant parties to such Indicative Agreement;
2. approval of the Proposed Restructuring at Tianshan Cement's board and shareholders' meetings;
3. waiver in respect of the Company's obligation to make an offer to acquire Tianshan Cement's shares held by other shareholders of Tianshan Cement as a result of the Proposed Restructuring being approved at Tianshan Cement's shareholders' meeting;
4. approval of the Proposed Restructuring by the Company's competent decision-making bodies;
5. filing of the valuation results in respect of the Target Equity Interests with the competent authorities with respect to state-owned assets;
6. approval of the Proposed Restructuring by the SASAC;
7. approval of the Proposed Restructuring by the CSRC; and
8. passing of the undertaking concentration assessment conducted by the State Administration for Market Regulation with respect to the Proposed Restructuring.

Completion

Completion will take place within 10 business days of the fulfilment of all Conditions to Effectiveness, when relevant transfer and other documents relating to the Target Equity Interests will be signed. Registration of the relevant documents with the relevant administrative departments for market regulation (the "Relevant Departments") and the related procedures will be completed within 10 business days of the application to the Relevant Departments.

The parties will complete the relevant procedures with respect to the issuance of the Consideration Shares within 30 business days of the transfer of the Target Equity Interests to Tianshan Cement.

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Others

With respect to the Other Indicative Agreements, any seller of the Target Equity Interests which does not enter into a definitive supplemental agreement with Tianshan Cement prior to Tianshan Cement's further board meeting for approval of the formal proposal of the Proposed Restructuring will be deemed to have ceased to participate in the Proposed Restructuring, agreed with the transfers of the Target Equity Interests held by other sellers to Tianshan Cement pursuant to the Proposed Restructuring, and unconditionally waived its right of first refusal with respect to such Target Equity Interests.

The provisions of the Indicative Agreements are subject to the relevant parties' compliance with the laws, regulations and regulatory requirements of the People's Republic of China and Hong Kong, including but not limited to the Listing Rules and the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong).

PROPOSED PLACING BY TIANSHAN CEMENT

Tianshan Cement proposes to conduct a placing of additional new shares if and after the Proposed Restructuring is completed. If, however, the Proposed Restructuring is not completed, such proposed placing will not be conducted. The proceeds raised from such proposed placing will be mainly used for Tianshan Cement's working capital, payment of indebtedness, and payment of expenses incurred for the Proposed Restructuring.

This announcement is made by the Company pursuant to Part XIVA of the Securities and Futures Ordinance (Cap. 571 of the Laws of Hong Kong) and Rule 13.09 of the Listing Rules. Further announcement(s) will be made by the Company as and when appropriate.

WARNING

Shareholders of the Company should be aware that the Proposed Restructuring (including the structure of the transaction and the Target Assets) is still under discussion and consideration and has not yet been confirmed. There are still uncertainties on whether or not the Proposed Restructuring will proceed to signing of definitive agreements or implementation. The implementation of the Proposed Restructuring will be subject to, among other things, approval by the competent regulatory authorities and fulfilment of applicable requirements under the Listing Rules.

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Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

By order of the Board

China National Building Material Company Limited*

Cao Jianglin

Chairman

Beijing, the PRC

7 August 2020

As at the date of this announcement, the board of directors of the Company comprises Mr. Cao Jianglin, Mr. Peng Shou and Mr. Cui Xingtai 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

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