China National Building Material : (1) MAJOR TRANSACTION IN RELATION TO THE RESTRUCTURING; (2) DISCLOSEABLE TRANSACTION IN RELATION TO THE BUY-OUT TRANSACTION AND (3) NOTICE OF THE EGM

THIS CIRCULAR IS IMPORTANT AND REQUIRES IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed security dealer or other registered institution in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in China National Building Material Company Limited*, you should at once hand this circular, together with the enclosed form of proxy, to the purchaser or the transferee or to the licensed security dealer, registered institution in securities or other agent through whom the sale or transfer was effected for transmission to the purchaser or the transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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

• (1) MAJOR TRANSACTION IN RELATION TO THE RESTRUCTURING

• (2) DISCLOSEABLE TRANSACTION IN RELATION TO THE BUY-OUT

TRANSACTION

AND

(3) NOTICE OF THE EGM

Capitalized terms used on this cover page shall have the same meanings as those defined in the section headed "Definitions" in this circular.

A letter from the Board is set out on pages 1 to 23 of this circular.

The notice convening the EGM to be held at Tower 2, Guohai Plaza, No. 17 Fuxing Road, Haidian District, Beijing, the People's Republic of China at 9:30 a.m. on Tuesday, 23 March 2021, is contained in this circular. Shareholders are advised to read the notice and to complete and return the enclosed form of proxy for use at the EGM in accordance with the instructions printed thereon.

Whether or not you are able to attend the EGM, please complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event not less than 24 hours before the time appointed for the EGM (i.e. not later than 9:30 a.m. on Monday, 22 March 2021) or any adjournment thereof (as the case may be).

Completion and return of the form of proxy will not preclude you from attending and voting in person at the EGM or any adjournment thereof should you so wish and in such event, the form of proxy shall be deemed to be revoked.

4 March 2021

References to time and dates in this circular are to Hong Kong time and dates.

* For identification purpose only

CONTENTS
Page
DEFINITIONS ...............................................................	ii
LETTER FROM THE BOARD ..................................................	1

APPENDIX I	FINANCIAL INFORMATION ON THE GROUP .......................	I-1
APPENDIX II	GENERAL INFORMATION .......................................	II-1

NOTICE OF THE EGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . EGM-1

In this circular, the following expressions have the following meanings unless the context requires otherwise:

"Adjustment Reference Date"

the date of the trading day immediately following the day on which the triggering conditions for adjustment of the Issue Price are satisfied

"Alternative Tests"

the alternative tests adopted for the purpose of classifying a transaction under Chapter 14 of the Listing Rules

"Appraised Value"

the appraised value of the Target Companies

"Articles of Association"

the articles of association of the Company

"Board"

the board of Directors of the Company

"Buy-Out Transaction"

Tianshan Cement's acquisition of the Independent Sellers' (except for the Excluded Sellers') equity interests in South Cement or Southwest Cement (as the case may be) (the "Acquisition"), in consideration for the issuance of Consideration Shares by Tianshan Cement (except that part of the consideration payable to certain of such Independent Sellers is to be satisfied by cash), resulting in a reduction of the Company's equity interests in Tianshan Cement (the "Deemed Disposal")

"China United Cement"

ʕ਷ᑌΥ˥إණྠϞࠢʮ̡ (China United Cement Corporation*), a subsidiary of the Company

"CNBM Indicative Agreement"

the indicative asset purchase agreement dated 7 August 2020 entered into between the Company and Tianshan Cement in connection with the Restructuring

"CNBM Supplemental Agreement"

the supplemental agreement dated 2 March 2021 entered into between the Company and Tianshan Cement in connection with the Restructuring

"CNBM Target Equity Interests"

the Target Equity Interests disposed of by the Company to Tianshan Cement pursuant to the Restructuring

"Company"

ʕ਷ܔҿٰ΅Ϟࠢʮ̡ (China National Building Material Company Limited*), a joint stock limited company incorporated under the laws of the PRC, the H shares of which are listed on the Stock Exchange

"Compensation Period"

three accounting years commencing from the year when the Restructuring is completed, being (1) 2021, 2022 and 2023 if the Restructuring is completed in 2021, or (2) 2022, 2023 and 2024 if the Restructuring is completed in 2022

"Compensation Shares"

the Consideration Shares to be used for compensation, if there is an impairment and when necessary for the Company to make compensation pursuant to Impairment Compensation Agreement

"Completion"

the completion of the Restructuring and the Buy-Out Transaction

"Conditions to Effectiveness"

the conditions to the effectiveness of the Indicative Agreements and the Supplemental Agreements

"Consideration Shares"

common shares in Tianshan Cement denominated in RMB and listed on the Shenzhen Stock Exchange, with a par value of RMB1.00 each

"CSRC"

the China Securities Regulatory Commission

"Director(s)"

the director(s) of the Company

"Domestic Share(s)"

the ordinary shares with a nominal value of RMB1.00 each in the registered capital of the Company, which are subscribed for in RMB

"EGM"

the extraordinary general meeting of the Company to be held at Tower 2, Guohai Plaza, No. 17 Fuxing Road, Haidian District, Beijing, the People's Republic of China on Tuesday, 23 March 2021 at 9:30 a.m.

"Excluded Sellers"

the two Independent Sellers who signed termination agreements dated 26 October 2020 and 1 March 2021, respectively, with Tianshan Cement to terminate their respective Other Indicative

Agreements

DEFINITIONS
"Group"	the Company and its subsidiaries from time to time
"H Share(s)"	the overseas listed foreign shares with a nominal value of
RMB1.00 each in the share capital of the Company, which are
listed on the Stock Exchange and subscribed for and traded in
Hong Kong dollars
"Hong Kong"	the Hong Kong Special Administrative Region of the PRC
"IFRS"	the International Financial Reporting Standards promulgated by
the International Accounting Standards Board
"Impairment Compensation	the impairment compensation agreement dated 2 March 2021
Agreement"	entered into between the Company and Tianshan Cement in
connection with the Restructuring
"Independent Sellers"	27 minority shareholders of South Cement or Southwest Cement
(as the case may be)
"Indicative Agreements"	the CNBM Indicative Agreement and the Other Indicative
Agreements
"Issue Price"	as defined in the section headed "Basis of the consideration" in
the Letter from the Board in this circular
"Latest Practicable Date"	26 February 2021, being the latest practicable date prior to the
printing of this circular for ascertaining certain information
contained herein
"Listing Rules"	the Rules Governing the Listing of Securities on The Stock
Exchange of Hong Kong Limited
"Other Indicative Agreements"	the indicative asset purchase agreements dated 7 August
2020 entered into between Tianshan Cement and each of the
Independent Sellers in connection with the Buy-Out Transaction
"Other Supplemental Agreements"	the supplemental agreements dated 2 March 2021 entered into
between Tianshan Cement and each of the Independent Sellers
(except for the Excluded Sellers) in connection with the Buy-Out
Transaction
- iv -

"PRC"

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

"Registration Date"

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

"Relevant Departments"

the relevant administrative departments for market regulation in the PRC

"Restructuring"

the disposal by the Company of its equity interests in China United Cement, South Cement, Southwest Cement and Sinoma Cement, respectively, in consideration for the issuance of Consideration Shares by Tianshan Cement

"RMB"

Renminbi, the lawful currency of the PRC

"SASAC"

the State-owned Assets Supervision and Administration Commission of the State Council

"SFO"

the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong) (as revised, supplemented or otherwise modified from time to time)

"Shareholders"

the holders of the Shares

"Shares"

the ordinary shares of the Company with a nominal value of RMB1.00 each, comprising the Domestic Shares, Unlisted Foreign Shares and H Shares

"Sinoma Cement"

ʕҿ˥إϞࠢப΂ʮ̡ (Sinoma Cement Co., Ltd.*), a subsidiary of the Company

"South Cement"

ی˙˥إϞࠢʮ̡ (South Cement Company Limited*), a subsidiary of the Company

"Southwest Cement"

Гی˥إϞࠢʮ̡ (Southwest Cement Company Limited*), a subsidiary of the Company

"Stock Exchange"

The Stock Exchange of Hong Kong Limited

"Supervisor(s)"

the supervisor(s) of the Company

"Supplemental Agreements"

the CNBM Supplemental Agreement and the Other Supplemental Agreements

"Target Companies"

China United Cement, South Cement, Southwest Cement and Sinoma Cement, each a "Target Company"

"Target Equity Interests"

the Company's equity interests in the Target Companies which are agreed to be disposed of by the Company and acquired by Tianshan Cement in respect of the Restructuring, and the Independent Sellers' (except for the Excluded Sellers') equity interests in South Cement and Southwest Cement which are agreed to be acquired by Tianshan Cement in respect of the Buy-Out Transaction

"Tianshan Cement"

อᖛ˂ʆ˥إٰ΅Ϟࠢʮ̡ (Xinjiang Tianshan Cement Co., Ltd.*), a company whose A-shares are listed and traded on the Shenzhen Stock Exchange (stock code: 000877)

"Transfer Completion Date"

the earlier of (1) the last day of the calendar month in which all Conditions to Effectiveness under the relevant Indicative Agreement and Supplemental Agreement are fulfilled; and (2) the actual Transfer Registration Date

"Transfer Registration Date"

the date of registration of the relevant documents with the Relevant Departments and completion of the related procedures in respect of the transfer of the relevant Target Equity Interests

"Transitional Period"

the period commencing on 1 July 2020 and ending on the applicable audit reference date (to be determined based on the actual Transfer Completion Date)

DEFINITIONS
"Unlisted Foreign Shares"	the unlisted foreign shares with a nominal value of RMB1.00 each
in the registered capital of the Company
"Valuation Date"	30 June 2020, being the reference date for valuating the Target
Companies
"Valuation Reference Date"	8 August 2020, being the reference date for determining the Issue
Price
"Valuer"	Ӝдಌ€̏ԯ਷ყ༟ପ൙ПϞࠢʮ̡ (Vocation (Beijing)
International Asset Valuation Co., Ltd.*)
"%"	per cent

*For identification purpose only

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

Executive Directors:

Mr. Cao Jianglin (Chairman) Mr. Peng Shou (President) Mr. Cui Xingtai

Mr. Fu Jinguang

Non-executive Directors: Ms. Zhan Yanjing

Mr. Chang Zhangli Mr. Tao Zheng Mr. Chen Yongxin Mr. Shen Yungang Ms. Fan Xiaoyan

Independent non-executive Directors: Mr. Sun Yanjun

Mr. Liu Jianwen Mr. Zhou Fangsheng Mr. Li Jun

Ms. Xia Xue

Joint company secretaries: Mr. Yu Kaijun

Ms. Lee Mei Yi

To the Shareholders of the Company

Dear Sir or Madam,

Registered Office: Tower 2 (Building B) Guohai Plaza

No. 17 Fuxing Road Haidian District Beijing

The PRC

Place of Business in Hong Kong: Level 54, Hopewell Centre

183 Queen's Road East Hong Kong

4 March 2021

• (1) MAJOR TRANSACTION IN RELATION TO THE RESTRUCTURING

• (2) DISCLOSEABLE TRANSACTION IN RELATION TO THE BUY-OUT

TRANSACTION

AND

(3) NOTICE OF THE EGM

• 1. INTRODUCTION

  Reference is made to the Company's announcement dated 2 March 2021 in relation to the Restructuring and the Buy-Out Transaction.

  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 each of the Target Companies, in consideration for shares to be issued to the Company by Tianshan Cement.

  On the same date, Tianshan Cement entered into an Other Indicative Agreement with each of the Independent Sellers, 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 each of such Independent Sellers by Tianshan Cement.

  On 2 March 2021, the Company entered into the CNBM Supplemental Agreement with Tianshan Cement to agree on the consideration of the Restructuring.

  On the same date, Tianshan Cement entered into an Other Supplemental Agreement with each of the Independent Sellers (except for the Excluded Sellers) to agree on the consideration of the Buy-Out Transaction.

  The purpose of this circular is to provide you with details of the resolution(s) proposed to be considered and approved by you at the EGM and provide relevant information to enable you to make an informed decision on voting in respect of such resolution(s).

• 2. PRINCIPAL TERMS OF THE INDICATIVE AGREEMENTS AND THE SUPPLEMENTAL AGREEMENTS

  Date

  • (I) The Indicative Agreements: 7 August 2020

  • (II) The Supplemental Agreements: 2 March 2021

Parties

The CNBM Indicative Agreement and the CNBM

Supplemental AgreementEach of the Other Indicative Agreements and Other Supplemental AgreementsSeller:Purchaser:Target Equity Interests

The Company

An Independent Seller (except for the Excluded Sellers in the case of the Other Supplemental

Agreements)

Tianshan Cement

The Target Equity Interests in respect of the Restructuring and the Buy-Out Transaction are set out below:

Percentage of
the Independent
Sellers' (except
Percentage of	for the Excluded	Total percentage
the Company's	Sellers') equity	of the equity
equity interests to	interests to be	interests to be
be disposed of to	acquired by	disposed of or
Target Company	Tianshan Cement	Tianshan Cement	acquired
China United Cement	100%	N/A	100%
South Cement	85.10134%	14.82602%	99.92736%
Southwest Cement	79.92845%	15.78814%	95.71659%
Sinoma Cement	100%	N/A	100%

Consideration

The parties agreed in the Supplemental Agreements that the consideration is to be satisfied by Tianshan Cement's issue of Consideration Shares (the numbers of which are subject to approval by the CSRC) (except that part of the consideration payable to certain of such Independent Sellers is to be satisfied by cash) as follows:

Number of
Consideration
Shares to be issued
Number of	Amount of	to the Independent	Amount of cash
Amount of	Consideration	consideration for	Sellers (except for	consideration to
consideration for	Shares to be issued	the Buy-Out	the Excluded	be paid to certain
Target Company	the Restructuring	to the Company	Transaction	Sellers)	Independent Sellers
(RMB million)	(RMB million)	(RMB million)
China United Cement	21,964.5138	1,641,592,959	N/A	N/A	N/A
South Cement	41,533.6985	3,104,162,818	7,235.8364	289,015,868	3,368.8039
Southwest Cement	13,434.8201	1,004,097,168	2,653.7588	153,327,158	602.2414
Sinoma Cement	11,319.4882	846,000,612	N/A	N/A	N/A
Total	88,252.5206	6,595,853,557	9,889.5952	442,343,026	3,971.0454

Basis of the consideration

The amount of consideration was determined based on and was equal to the Appraised Value (which has been determined with reference to the valuation reports issued by the Valuer (being an asset valuer) and filed with the SASAC). The methodology of the valuation is as follows:

(I)	Valuation method:	Market approach (i.e. by reference to the value of comparable
entities in the market)
(II)	Methodology:

(1) Select listed entities in the relevant industry for comparison:

Criteria for the first round of screening:

(a) having been listed for more than two years as at the

Valuation Date;

• (b) no trading suspension, material asset restructuring or

  abnormal fluctuations in the share price in the recent

  two years;

• (c) having similar income and profit structures as the appraised entity;

• (d) the principal place of business being in the proximity of that of the appraised entity; and

• (e) having similar scale of operation as that of the appraised entity.

Criteria for the second round of screening:

• (a) having similar mode of operation as that of the appraised entity;

• (b) being in a similar growth phase as the appraised entity; and

• (c) being subject to similar risk factors as the appraised entity.

(2) Determine the value of the appraised entity by reference to the weighted-average price-to-earnings ratio of the selected entities. The respective price-to-earnings ratio of the selected entities will be adjusted by a coefficient which is determined by reference to the proportion of the appraised entity's score and such selected entity' score in respect of the following parameters:

• (a) profitability (in terms of gross profit margin and return on equity etc.);

• (b) turnover (in terms of inventory turnover ratio and receivables turnover ratio etc.);

• (c) liquidity and solvency (in terms of current ratio and debt asset ratio etc.);

• (d) operation (in terms of net profits growth ratio and capital maintenance and appreciation ratio); and

• (e) scale (in terms of revenues and capacity utilisation ratio).

The price-to-earnings ratios for China United Cement, South Cement, Southwest Cement and Sinoma Cement were determined to be 7.35x, 6.03x, 7.54x and 7.84x, respectively.

(3)Adjust the value of the appraised entity by:

• (a) a discount reflecting the lack of marketability (given that the shares of the appraised entity are not publicly traded), which is determined on the basis of the respective average price-to-earnings ratio of private companies and listed companies in the relevant industry. The discount reflecting the lack of marketability of the Target Companies was determined to be 25.06%;

• (b) net value of the assets and liabilities which are not in the ordinary course of business of the appraised entity; and

• (c) any necessary net working capital adjustment as at the Valuation Date.

The issuance of Consideration Shares is subject to the following:

(I)	Number of	Determined by dividing the amount of the Appraised Value
Consideration Shares to	attributable to the relevant Target Equity Interests held by the
be issued to each seller	Company or each Independent Seller (except for the Excluded
of the Target Equity	Sellers) (as the case may be) by the Issue Price
Interests:
(II)	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 Valuation Reference Date
(III)	Adjustment mechanism
of the Issue Price:

(1)

The Issue Price may be adjusted once, whether upwards or downwards, by Tianshan Cement's board during the period from the date of announcement of the resolutions of Tianshan Cement's shareholders' meeting in respect of the Restructuring and the Buy-Out Transaction until the approval of the Restructuring and the Buy-Out Transaction by the CSRC, if the following triggering conditions are satisfied during such period:

• (a) the level of the Shenzhen Stock Exchange Component

  Index (ଉέᗇՎʹ׸הϓ΅ٰᄆܸᅰ) (stock code:

  399001.SZ) or the Building Materials Index (ܔҿ

  ܸᅰ) (reference code: 886008.WI) has increased

  (in the case of upward adjustment) or decreased (in

  the case of downward adjustment) by more than

  20% when compared to its level on the trading day

  immediately prior to the Valuation Reference Date,

  for at least 20 trading days out of the 30 consecutive

  trading days immediately prior to any particular

  trading day; and

• (b) the closing price of Tianshan Cement's shares has increased (in the case of upward adjustment) or decreased (in the case of downward adjustment) by more than 20% when compared to the closing price on the trading day immediately prior to the Valuation Reference Date, for at least 20 trading days out of the 30 consecutive trading days immediately prior to any particular trading day.

The adjusted Issue Price shall be a price equivalent to 90% of the average trading price of Tianshan Cement's shares in the 20 trading days immediately prior to the Adjustment Reference Date, and shall not be lower than the net asset value per Tianshan Cement's share (as disclosed in Tianshan Cement's latest regular report by then).

The effectiveness of this adjustment mechanism of the Issue Price is conditional upon obtaining approvals at Tianshan Cement's shareholders' meeting and of the SASAC.

(2) 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 Registration Date, the

Issue Price will be adjusted accordingly.

(IV)Lock-up period:

• (1) 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 Restructuring; or (ii) the closing price of Tianshan Cement's shares at the end of the 6 months after completion of the Restructuring is lower than the Issue Price, the above lock-up period will be automatically extended by 6 months.

• (2) The Company will be prohibited from transferring the shares in Tianshan Cement as held by the Company prior to the Restructuring for the period of 18 months from the Registration Date, except as otherwise permitted by applicable law.

• (3) Each of the Independent Sellers (except for the Excluded 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 increase/decrease in owner's equity attributable to the parent company due to profit, loss or other reasons (as confirmed by a specific audit report issued by an auditor) of the respective Target Companies during the Transitional Period will be attributed to or borne by the existing shareholders of such Target Companies prior to the Restructuring and the Buy-Out Transaction by way of (subject to adjustments following the opinion of the relevant securities regulatory authorities), (1) in the case of increase of owners' equity attributable to the parent company, distribution of cash dividend to all such existing shareholders of such Target Companies; or (2) in the case of decrease of owners' equity attributable to the parent company, compensation in cash to be paid to the Target Companies by all such existing shareholders of such Target Companies on a pro rata basis with reference to their respective paid capital in the Target Companies. The distribution of dividend or payment of compensation shall be settled within three months of the issue of the relevant audit reports.

Impairment compensation

Pursuant to the CNBM Supplemental Agreement and in accordance with the CSRC's requirements, the Company and Tianshan Cement entered into the Impairment Compensation Agreement in light of the use of the market approach for the valuation of the Target Equity Interests. The following is subject to approval by CSRC, and the Company may amend the compensation arrangement in response to CSRC's feedback, pursuant to which the Company's compensation obligations may arise in other circumstances.

According to the Impairment Compensation Agreement (which shall take effect upon (1) the CNBM Indicative Agreement and the CNBM Supplemental Agreement becoming effective and (2) the arrangements under the Impairment Compensation Agreement being approved by the Company's competent decision-making bodies):

• (I) Method of calculation

• (1) Tianshan Cement shall engage a valuer within three months of the end of each accounting year during the Compensation Period for issuing a specific valuation report regarding the CNBM Target Equity Interests. Based on the valuation results, Tianshan Cement shall conduct impairment tests on the total value of the CNBM Target Equity Interests in respect of each accounting year during the Compensation Period and engage an accounting firm with securities and futures business qualifications to issue a specific impairment audit report.

• (2) Where there is an impairment in the total value of the CNBM Target Equity Interests at the end of any accounting year during the Compensation Period when compared with the total amount of consideration for the CNBM Target Equity Interests, the Company shall compensate Tianshan Cement for the impairment amount (as adjusted by disregarding any impacts of the relevant Target Companies' profits distribution and capital increase or reduction etc. during the Compensation Period) by the Compensation Shares (which shall be

bought back by Tianshan Cement at a total consideration of RMB1.00 and be cancelled) in accordance with the following formula:

The impairment amount in respect of the

CNBM Target Equity InterestsNumber of Compensation

=

(as adjusted) as at the end of the relevant accounting year during the

-

Shares

Compensation PeriodCumulated number of Compensation Shares compensated by the Company during the Compensation Period

Issue Price

• (3) Where the impairment amount in respect of the CNBM Target Equity Interests (as adjusted) as at the end of an accounting year during the Compensation Period is lower than the impairment amount compensated by the Company in respect of the previous accounting year(s), no compensation is required to be made in respect of such accounting year, but the Compensated Shares previously compensated will not be returned to the Company.

• (4) The decimals, if exist in the results of calculation of the number of Compensation Shares, shall be rounded up to the nearest integer.

• (5) If there is any ex-right event, such as transfer to share capital from capital reserve, distribution of share dividend, share subdivision or share consolidation, by Tianshan Cement during an accounting year in the Compensation Period, the number of Compensation Shares to be compensated in such accounting year shall be adjusted accordingly.

• (6) If Tianshan Cement distributes cash dividend in any accounting year during the Compensation Period, the accumulated after-tax dividend income attributable to the Compensation Shares in such accounting year shall be returned to Tianshan Cement within 30 trading days of the issue of the relevant specific impairment audit report.

• (7) The total value to be compensated by the Company shall not exceed the corresponding amount of consideration for the CNBM Target Equity Interests, and the maximum number of Compensation Shares to be compensated by the Company shall be the number of Consideration Shares (as may be increased by bonus issue, rights issue or transfer of share capital from capital reserve) received by the Company pursuant to the Restructuring.

(II) Timing for effectuating the indemnity

• (1) Within 30 days of the issue of specific impairment audit reports, Tianshan Cement shall calculate the number of Compensation Shares, give the relevant written notice to the Company, convene a board meeting and a shareholders' meeting, repurchase the Compensation Shares for a total consideration of RMB1.00 upon obtaining approval at its shareholders' meeting, and cancel such Compensation Shares within 10 days thereafter.

• (2) If the proposal in relation to the repurchase and cancellation of the Compensation Shares is not approved at Tianshan Cement's shareholders' meeting or otherwise cannot be effectuated for any other reasons, the Company shall within two months of the occurrence of such events endow the relevant Compensation Shares to shareholders of Tianshan Cement (other than the Company) whose names appear on Tianshan Cement's register of members on the relevant record date according to the proportion of their respective shareholdings in the remaining share capital of Tianshan Cement (i.e. after deducting the shareholding of the Company) on such record date.

• (3) The Company has undertaken to waive the voting rights attached to the Compensation Shares from the date of confirmation of the number of such Compensation Shares until such Compensation Shares are cancelled or endowed to the other shareholders of Tianshan Cement (as the case may be).

• (4) For the avoidance of doubt, the above compensation arrangements are not subject to the lock-up restrictions under the CNBM Indicative Agreement and the CNBM Supplemental Agreement.

Effectiveness of the Indicative Agreements and Supplemental Agreements

Each of the Indicative Agreements and the Supplemental Agreements will take effect upon fulfilment of all Conditions to Effectiveness as set out below:

• (I) signing and/or stamping of the relevant Indicative Agreement and Supplemental Agreement by the relevant parties;

• (II) approval of the Restructuring and the Buy-Out Transaction at Tianshan Cement's board and shareholders' meetings;

• (III) 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 Restructuring and the

  Buy-Out Transaction being approved at Tianshan Cement's shareholders' meeting;

(IV) approval of the Restructuring and the Buy-Out Transaction by the Company's competent decision-making bodies;

• (V) (where applicable) approval of the transfer of the relevant Target Equity Interests under the Buy-Out Transaction by the relevant Independent Seller's internal investment committee and obtaining of relevant approval documents;

• (VI) filing of the valuation results in respect of the Target Equity Interests with the competent authorities with respect to state-owned assets;

• (VII) approval of the Restructuring and the Buy-Out Transaction by the SASAC;

• (VIII) approval of the Restructuring and the Buy-Out Transaction by the CSRC; and

(IX) passing of the undertaking concentration assessment conducted by the State Administration for Market Regulation with respect to the Restructuring and the Buy-Out Transaction.

As at the Latest Practicable Date, the Condition to Effectiveness (VI) and (IX) above have been fulfilled. It is expected that as at the date of this Circular, the Conditions of Effectiveness (I) and (V) will have been fulfilled, and the board approval in Condition of Effectiveness (II) will have been obtained.

Completion

As stated in the Indicative Agreements and the Supplemental Agreements, the relevant parties will sign the transfer and other documents relating to the Target Equity Interests and procure the relevant Target Companies to submit an application to the Relevant Departments for registration of the relevant transfer within 10 business days of the fulfilment of all Conditions to Effectiveness. The procedures in relation to such registration will be completed within 10 business days of the application to the Relevant Departments.

Where consideration is to be satisfied by Consideration Shares, the parties will complete the relevant procedures with respect to the issuance of the Consideration Shares within 30 business days of the relevant Transfer Registration Date.

Where consideration is to be satisfied by cash, Tianshan Cement will pay the relevant amount to the relevant Independent Sellers within 30 business days of the relevant Transfer Registration Date.

Upon Completion, the Target Companies and Tianshan Cement will remain as subsidiaries of the Company, and the Company's equity interests in the Target Companies will be held indirectly through Tianshan Cement.

Others

Pursuant to the Other Supplemental Agreements, each relevant Independent Seller shall proactively communicate with the relevant securities regulatory authorities regarding the queries raised by such authorities (regarding the Target Equity Interests and whether the Independent Seller meets the conditions or qualifications of a recipient of the issued shares). In the event that such Independent Seller fails to so communicate or to obtain approval from such authorities, it shall (1) agree to cease to participate in the Buy-Out Transaction; (2) agree on the transfers of the Target Equity Interests held by other sellers to Tianshan Cement pursuant to the Restructuring or the Buy-Out Transaction (as the case may be) and cooperate in completing the procedures for such relevant transfers; and (3) waive its right of first refusal with respect to such Target Equity Interests.

As stated in the Indicative Agreements, the provisions of the Indicative Agreements and Supplemental Agreements are subject to the relevant parties' compliance with the laws, regulations and regulatory requirements of the PRC 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).

• 3. REASONS FOR AND BENEFITS OF THE RESTRUCTURING AND THE BUY-OUT TRANSACTION

  The Restructuring will promote the integration of high-quality resources, strengthen the Company's leading position in the cement industry, and facilitate resolving industry competition among subsidiaries of the Company in the cement business sector, and the Buy-Out Transaction will enable Tianshan Cement to hold a higher percentage at, or close to, 100% of the shares in each of the Target Companies, thereby further consolidating its interests in the Target Companies.

  The Directors are of the view that each of the Restructuring and the Buy-Out Transaction is on terms which are fair and reasonable and is in the interests of the Company and the Shareholders as a whole.

• 4. INFORMATION ON RELEVANT PARTIES AND TARGET COMPANIES

  The Company

  The Company is a leading building materials company in the PRC with significant operations in the cement, new materials and engineering services businesses.

Tianshan Cement

Tianshan Cement is a subsidiary of the Company and is principally engaged in the development, production and sale and technical services of cement and related products; import and export of building materials; production and sale of commercial concrete; mining, processing and sale of limestone and sandstone. Its A-shares are listed and traded on the Shenzhen Stock Exchange (stock code: 000877).

Pursuant to the latest audited accounts prepared in accordance with the accounting principles of the PRC, Tianshan Cement's net asset value as at 31 December 2019 is approximately RMB10,138,158,636.12, and its net profits (before and after taxation) for the financial years ended 31 December 2018 and 2019 are as follows:

For the financial	For the financial
year ended	year ended
31 December 2018	31 December 2019
Net profit before tax (RMB)	1,662,748,765.98	2,327,392,860.95
Net profit after tax (RMB)	1,238,022,878.38	1,828,981,216.62
Independent Sellers (except for the Excluded Sellers)

The Independent Sellers (except for the Excluded Sellers) in relation to South Cement are as follows:

• (I) BOCOM Financial Assets Investment Co., Ltd.* (ʹვږፄ༟ପҳ༟Ϟࠢʮ̡), the principal activities of which are conversion of debt to equity and ancillary supporting business, and the ultimate beneficial owner of which is Bank of Communications Co., Ltd. (ʹஷვБٰ΅Ϟ ࠢʮ̡);

• (II) Agricultural Bank of China Financial Assets Investment Co., Ltd.* (༵ვږፄ༟ପҳ༟Ϟࠢ ʮ̡), the principal activities of which are market-oriented conversions of debt to equity, and the ultimate beneficial owner of which is Agricultural Bank of China Limited (ʕ਷ุ༵ვБ ٰ΅Ϟࠢʮ̡);

• (III) Jiangxi Wannianqing Cement Co., Ltd.* (ϪГຬϋڡ˥إٰ΅Ϟࠢʮ̡), the principal activities of which are production and sale of ceramics cement, commercial concrete and new wall materials, and the ultimate beneficial owner of which is the State-owned Assets Supervision and Administration Commission of Jiangxi Province (ϪГ޲ɛ͏ִ݁਷Ϟ༟ପ ္ຖ၍ଣ։ࡰึ);

• (IV) Zhejiang Jianfeng Group Co., Ltd.* (एϪφࢤණྠٰ΅Ϟࠢʮ̡), the principal activities of which are manufacturing and sale of cement and pharmaceutical products, and the ultimate beneficial owner of which is the State-owned Assets Supervision and Administration Commission of Jinhua City (ږശ̹ɛ͏ִ݁਷Ϟ༟ପ္ຖ၍ଣ։ࡰึ);

• (V) Beijing Huachen Century Investment Co., Ltd.* (̏ԯശԕ˰ߏҳ༟Ϟࠢʮ̡), the principal activities of which are equity investments in high-growth companies in the PRC, and the ultimate beneficial owner of which is Liu Ying (ᄎᆦ);

• (VI) Hangzhou Zhaoji Investment Partnership* (؄ψΊਿҳ༟ΥྫΆุ€ϞࠢΥྫ)), the principal activity of which is investment holding of South Cement, and the ultimate beneficial owner of which is Feng Miaoting (ඹѶࢬ);

• (VII) Lima Holding Group Co., Ltd.* (ͭ৵છٰණྠٰ΅Ϟࠢʮ̡), the principal activities of which are investments in textile fabrics, building materials and real estate, and the ultimate beneficial owner of which is Zhang Shugen (௝ዓ࣬);

• (VIII) Zhejiang Bangda Investment Co., Ltd.* (एϪԞ༺ҳ༟Ϟࠢʮ̡), the principal activities of which are businesses related to investment, financial management and property leasing, and the ultimate beneficial owner of which is Zhang Jianxing (ੵᄏ݋);

• (IX) Shanghai Tanxi Group Co., Ltd.* (ɪऎᏥ๣ණྠϞࠢʮ̡), the principal activities of which are building materials trading, construction and real estate development (including contracting of property construction projects etc.), and the ultimate beneficial owner of which is Wang Xiangdong (ˮΣ؇); and

• (X) the following natural persons who are citizens of the PRC: Wang Youren (ˮС΂), Lu Haihong (௔ऎݳ), Zeng Yongqiang (ಀ͑੶), Ni Biao (ࡎஉ), Li Xiujuan (ҽӸࢇ), Chen Shaohua (௓ჭശ), Duan Shoujun (ݬྪࠏ), Chen Wang (௓׶), Ding Zelin (ɕዣ؍), Xiao Xiao (ӽጽ), Ning Shaoke (ྐྵˇ̙) and Ma Zhixin (৵қอ).

The Independent Sellers (except for the Excluded Sellers) in relation to Southwest Cement are as follows:

• (I) BOCOM Financial Assets Investment Co., Ltd.* (ʹვږፄ༟ପҳ༟Ϟࠢʮ̡) (please see above for relevant information);

• (II) Agricultural Bank of China Financial Assets Investment Co., Ltd.* (༵ვږፄ༟ପҳ༟Ϟࠢ ʮ̡) (please see above for relevant information); and

(III) the following natural persons who are citizens of the PRC: Wang Yong (ˮۇ), Zhang Weibo (ੵವت), Zhu Qinling (ϡೞޛ) and Yan Maoye (ᕙ߱໢).

The Company confirms that, to the best of its Directors' knowledge, information and belief having made all reasonable enquiry, the Independent Sellers (except for the Excluded Sellers) and their ultimate beneficial owners (where applicable) are third parties independent of the Company and connected persons of the Company.

Target Companies

Each of the Target Companies is principally engaged in the production and sale of cement and related products (including cement clinker), commercial concrete, limestone and sandstone.

The net asset value as at 31 October 2020 (based on the latest audited accounts) and the Appraised Value as at the Valuation Date (based on the valuation reports issued by the Valuer on 29 December 2020) of 100% equity interests in each of the Target Companies are as follows:

Target Company	Net asset value	Appraised Value
(RMB million)	(RMB million)
China United Cement	18,213.5912	21,964.5138
South Cement	31,944.7993	48,804.9855
Southwest Cement	14,877.7072	16,808.5586
Sinoma Cement	6,743.1668	11,319.4882
Total	71,779.2645	98,897.5461

Pursuant to the audited accounts prepared in accordance with the accounting principles of the PRC, the net profits (before and after taxation) of each of the Target Companies for the financial years ended 31 December 2018 and 2019 are as follows:

For the financial year ended	For the financial year ended
31 December 2018	31 December 2019
Net profit Net profit	Net profit Net profit

Target Company	before tax	after tax	before tax	after tax
(RMB million)	(RMB million)	(RMB million)	(RMB million)
China United Cement	2,503.9539	1,187.3268	3,426.6081	1,501.5206
South Cement	7,607.9155	4,185.8637	10,178.7566	6,044.8493
Southwest Cement	2,039.6715	1,648.8452	2,032.9584	1,353.4779
Sinoma Cement	2,257.9019	1,699.8876	2,627.2397	2,000.6432
Total	14,409.4428	8,721.9233	18,265.5628	10,900.4910

5. SHAREHOLDING STRUCTURE (I) Shareholding structure before and after the Restructuring

The diagrams in this part are for facilitating the understanding of the implications of the Restructuring under the Listing Rules, and therefore do not take into account the effect of the

Buy-Out Transaction.

(1) Before the Restructuring

The Company

(2) After the Restructuring (without taking into account the compensation arrangements under the Impairment Compensation Agreement)

The Company

92.57356%

Tianshan Cement

(3) After the Restructuring (taking into account the extreme case where the Company is required to transfer all of its Consideration Shares to Tianshan Cement pursuant to the compensation arrangements under the Impairment Compensation Agreement)

The Company

45.86562%

Tianshan Cement

(II) Shareholding structure before and after the Buy-Out Transaction

The diagrams in this part are for facilitating the understanding of the implications of the Buy-Out Transaction under the Listing Rules, and therefore do not take into account the effect of the Restructuring.

(1)Before the Buy-Out Transaction

(2)After the Buy-Out Transaction

(III) Shareholding structure before and after Completion

(1)

Before Completion
Independent Sellers	Independent Sellers
(except Excluded	(except Excluded
Sellers)	Sellers)

(2)After Completion

The Company

Independent Sellers (except Excluded

Sellers)

6.

FINANCIAL EFFECT OF THE RESTRUCTURING AND THE BUY-OUT TRANSACTION

The Group does not expect to record any gain or loss in relation to either the Restructuring or the Buy-Out Transaction.

7. IMPLICATIONS UNDER THE LISTING RULES

Restructuring

Application has been made to, and approval has been obtained from, the Stock Exchange for the adoption of the Alternative Tests in respect of the Restructuring pursuant to Rule 14.20 of the Listing Rules. As the Restructuring is in substance a group reorganisation which would result in a net disposal of approximately 7.43% interest, and a maximum net disposal (taking into account the compensation arrangements under the Impairment Compensation Agreement) of approximately 54.13% interest, in the Target Companies by the Company to the minority shareholders of Tianshan Cement, the impact of the acquisitions and disposals under the Restructuring should be considered on a net disposal basis.

The compensation arrangements under the Impairment Compensation Agreement (which is contemplated in the CNBM Supplemental Agreement) are part and parcel of the Restructuring. In the extreme case where the Company is required to transfer all of its Consideration Shares to Tianshan Cement pursuant to such compensation arrangements, the highest of the relevant percentage ratios under Rule 14.07 (after adopting the Alternative Tests) of the Listing Rules for the Restructuring will be more than 25% but less than 75%, and therefore the Restructuring will constitute a major transaction of the Company under the Listing Rules. In light of this possibility, the Company now complies with the reporting, announcement, circular and shareholders' approval requirements under Chapter 14 of the Listing Rules.

Buy-Out Transaction

The issue and allotment of Consideration Shares by Tianshan Cement to the Independent Sellers (except for the Excluded Sellers) under the Buy-Out Transaction will result in a reduction of the Company's percentage of equity interests in Tianshan Cement, and therefore constitute a Deemed Disposal pursuant to Rule 14.29 of the Listing Rules.

As the highest of the relevant percentage ratios under Rule 14.07 of the Listing Rules for each of the Acquisition and the Deemed Disposal under the Buy-Out Transaction is more than 5% but less than 25%, the Buy-Out Transaction constitutes a discloseable transaction of the Company under the Listing Rules and is subject to the reporting and announcement requirements but is exempt from the circular and shareholders' approval requirements under Chapter 14 of the Listing Rules.

• 8. EGM

  The EGM will be held at Tower 2, Guohai Plaza, No. 17 Fuxing Road, Haidian District, Beijing, the PRC on Tuesday, 23 March 2021 at 9:30 a.m.. A form of proxy for use at the EGM is enclosed with this circular. A notice of the EGM is set out on pages EGM-1 to EGM-4 of this circular.

  Pursuant to Rule 13.39(4) of the Listing Rules, all resolutions will be passed by way of poll at the EGM. Any Shareholder with a material interest in the Restructuring and his close associates will abstain from voting on the ordinary resolution for approving the Restructuring at the EGM. To the extent that the Company is aware, no Shareholder will be required under the Listing Rules to abstain from voting on the ordinary resolution for approving the Restructuring at the EGM.

  Holders of H Shares of the Company whose names appear on the register of the Company maintained by Tricor Investor Services Limited, the Company's H Share Registrar in Hong Kong, and holders of Domestic Shares and Unlisted Foreign Shares of the Company whose names appear on the register of the Company on Tuesday, 23 March 2021 shall be entitled to attend the EGM.

  Whether or not you are able to attend the EGM, you are requested to complete the accompanying form of proxy in accordance with the instructions printed thereon as soon as practicable and in any event not less than 24 hours before the time appointed for the EGM (i.e. not later than 9:30 a.m. on Monday, 22 March 2021) or any adjournment thereof (as the case may be), and deposit it with Tricor Investor Services Limited, the Company's H Share Registrar in Hong Kong, at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong for holders of H Shares; or the office of the Company, at Tower 2, Guohai Plaza, No. 17 Fuxing Road, Haidian District, Beijing, the PRC for holders of Domestic Shares and Unlisted Foreign Shares. Completion and return of the form of proxy will not preclude you from attending and voting at the EGM or any adjournment thereof should you so desire.

• 9. RECOMMENDATIONS

  The Directors are of the view that each of the Restructuring and the Buy-Out Transaction is on terms which are fair and reasonable and is in the interests of the Company and the Shareholders as a whole. Accordingly, the Directors recommend the Shareholders to vote in favour of the relevant resolution(s) set out in the notice of the EGM.

10.

ADDITIONAL INFORMATION

Your attention is drawn to other information set out in the appendices to this circular.

By order of the Board

China National Building Material Company Limited*

Cao Jianglin

Chairman of the Board

Beijing, the PRC 4 March 2021

*For identification purpose only

1. THE GROUP'S FINANCIAL INFORMATION

The audited consolidated financial information of the Company for each of the three years ended 31 December 2017, 2018 and 2019 have been disclosed in the annual reports of the Company for the years ended 31 December 2017, 2018 and 2019 in accordance with IFRS, respectively. The unaudited condensed consolidated interim financial information of the Company as of and for the six months ended 30 June 2020 has been disclosed in the interim report of the Company for the six months ended 30 June 2020. Details of the financial statements have been published on the Stock Exchange's website (http://www.hkexnews.hk) and the Company's website (http://www.cnbmltd.com/index.jsp):

• (I) in respect of the interim report of the Company for the six months ended 30 June 2020 published on 31 August 2020 (pages 85 to 152);

• (II) in respect of the annual report of the Company for the year ended 31 December 2019 published on 2 April 2020 (pages 155 to 352);

• (III) in respect of the annual report of the Company for the year ended 31 December 2018 published on 3 April 2019 (pages 148 to 338); and

• (IV) in respect of the annual report of the Company for the year ended 31 December 2017 published on 25 April 2018 (pages 148 to 294).

2.

INDEBTEDNESS

(I)
RMB'000
Borrowings:
- Bank borrowings, secured	4,779,835
- Bank borrowings, guaranteed	56,345,689
- Bank borrowings, unsecured	54,656,352
- Bonds	57,751,790
- Borrowings from other financial institutions, secured	1,536,246
175,069,912
Lease liabilities	3,330,660
Other borrowings	18,459,840
196,860,412
(II)	Pledge of assets

Borrowings

At the close of business on 31 December 2020, being the latest practicable date for the purpose of this indebtedness statement prior to the printing of this circular, the Group had the following outstanding borrowings:

At the close of business on 31 December 2020, the Group pledged the following assets for securing bank borrowings:

RMB'000
Property, plant and equipment	1,964,973
Right-of-use assets	242,434
Cash and cash equivalents	4,995,816
Trade receivables	61,131
Bills receivables	1,263,183
8,527,537

• (III) Commitment

  At the close of business on 31 December 2020, the Group had commitment for acquisition of property, plant and equipment of approximately RMB1,068 million.

• (IV) Contingent liabilities and guarantee

  At the close of business on 31 December 2020, the Group did not have any contingent liabilities of potential future payments.

  At the close of business on 31 December 2020, the Group has provided financial guarantee of approximately RMB64 million.

• (V) Disclaimers

  Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities and normal trade and other payables in the ordinary course of business, the Group did not have any other loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities issued and outstanding, and authorised or otherwise created but unissued and term loans or other borrowings, indebtedness in the nature of borrowings, liabilities under acceptance (other than normal trade bills) or acceptance credits, debentures, mortgages, charges, hire purchase commitments, which are either guaranteed, unguaranteed, secured or unsecured, guarantees or other material contingent liabilities outstanding on 31 December 2020.

3. FINANCIAL AND TRADING PROSPECTS OF THE COMPANY

The year of 2021 marks the first year of the 14th Five-Year Plan and also the first year of the new journey to build a modern socialist country in an all-round way. From the international perspective, the Covid-19 epidemic is still spreading all over the world. The global economy is still in a complex and difficult situation with certain unstable and unbalanced recovery as well as unignorable risks arising from the epidemic. From the domestic perspective, China will accelerate the construction of a new development pattern in which domestic circulation serves as the main body, and domestic and international circulations reinforce each other, being in an important period of strategic opportunities. From the industry perspective, the construction of a new development pattern and the strategy of expanding domestic demand are expected to support the stability of market demand, and the continuous tightening on environmental protection policies will promote the supply-side structural reform.

In 2021, the Company will, under the theme of promoting high-quality development, follow the main line of supply-side structural reform, enable development through innovation, empower development by reform, promote development through internationalization, and guide development by Party building, so as to vigorously promote the development of basic building materials and engineering services and accelerate the industry optimization and upgrading, and vigorously promote the development of new materials business and create advantageous industrial clusters. The Company will also continue to improve in aspects such as quality and efficiency, structural adjustment, innovation ability and deepening reform, and take solid steps in the journey to build a world-class comprehensive building materials and new materials industry group with global competitiveness.

• 4. WORKING CAPITAL

  The Directors are of the opinion that, the financial resources available to the Group, including but not limited to the internally generated funds, cash and cash equivalents on hands, available facilities from bank and financial institutions, the working capital available to the Group is sufficient for the Group's requirements for at least 12 months from the date of this circular.

• 5. FINANCIAL EFFECT OF THE RESTRUCTURING AND THE BUY-OUT TRANSACTION ON THE EARNINGS, ASSETS AND LIABILITIES OF THE GROUP

  The Restructuring and the Buy-Out Transaction do not, and the Group expects that they will not, have any material impact on the earnings and assets and liabilities of the Group.

• 1. RESPONSIBILITY STATEMENT

  This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

• 2. DISCLOSURE OF INTERESTS IN SHARES

  • (I) Interests and short positions of the Directors, Chief Executive and Supervisors

    As at the Latest Practicable Date, so far as the Directors, chief executive or Supervisors of the Company are aware, none of the Directors, chief executive or Supervisors of the Company had interests or short positions in the Shares, underlying Shares and/or debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required (a) to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO); or (b) pursuant to section 352 of the SFO, to be entered in the register referred to therein; or (c) pursuant to the Model Code of Securities Transactions by Directors of Listed Issuers to be notified to the Company and the Stock Exchange.

  • (II) Interests of substantial Shareholders disclosable pursuant to the SFO

    As at the Latest Practicable Date, so far as is known to the Directors, chief executive or Supervisors of the Company, the following persons (other than a Director, chief executive or Supervisor of the Company) had an interest or short position in the Shares or underlying Shares of Company (as the case may be) which would fall to be disclosed to Company and the Stock Exchange under the provisions of Division 2 and 3 of Part XV of the SFO or which

were recorded in the register required to be kept by Company under Section 336 of the SFO or had otherwise notified the Company are as follows:

Name of substantial ShareholdersLong/short position/Lending Pool

Number of Shares held

Percentage of the relevant class of Percentage of total

Class of Shares

Capacity

Notesshare capital (%) 1

share capital (%) 1

China National Building Material Domestic Shares Group Co., Ltd. ("Parent")

Long

Beneficial owner

628,592,008

Domestic SharesLong

Interest of controlled corporations

2,984,713,973

3,613,305,981 2

81.11 42.84

H Shares H SharesLong LongBeneficial owner Interest of controlled corporations

8,536,000 6,800,000

15,336,000

0.40 0.18

Beijing New Building Material (Group) Co., Ltd. ("BNBMG")China National Materials Group Corporation Ltd. ("Sinoma Parent")

China Cinda Asset Management Co., Ltd. ("Cinda")

Taian Taishan Finance

Investment Co., Ltd. ("Taishan Finance")

Taian Taishan Investment Co., Ltd. ("Taishan Investment")

Domestic SharesDomestic SharesDomestic SharesDomestic SharesDomestic SharesDomestic SharesChina National Building Material Domestic Shares Import and Export Co., Ltd.

("CNBM Trading")

Long

Beneficial owner

1,485,566,956

Long

Other

227,719,530 3

• 1,713,286,486 2

  Long

• Beneficial owner 1,270,254,437 2

Long

Beneficial owner

286,651,926

Long

• Interest of 263,318,181 4 controlled corporations

  Long

• Beneficial owner 263,318,181 4

  Long

• Beneficial owner 227,719,530 2

38.46 20.31

28.51 15.06

6.43 3.40

5.91 3.12

5.91 3.12

5.11 2.70

Name of substantial ShareholdersLong/short position/LendingClass of Shares

Pool

CapacityNumber of Shares held

Percentage of the relevant class of Percentage of total

Notesshare capital (%) 1

share capital (%) 1

Citigroup Inc.

• H Shares

  Long

• H SharesLongInterest of controlled corporations Approved lending agent

  44,175,886

  191,458,916

• H SharesShort

• H Shares

Forchn International Co., Limited Unlisted ForeignLending Pool LongInterest of controlled corporations -

235,634,802 7,380,160

5 5

6.09 2.79

0.19 0.08

Beneficial owner

191,458,916 111,174,235

5

4.94 2.26

100 1.32

("Forchn International")

Shares

Notes:

• 1. As at the Latest Practicable Date, the Company's total issued share capital comprised 8,434,770,662 Shares, including 4,454,898,633 Domestic Shares, 3,868,697,794 H Shares and 111,174,235 Unlisted Foreign Shares.

• 2. Of these 3,613,305,981 Shares, 628,592,008 Shares are directly held by the Parent, the remaining 2,984,713,973 Shares are deemed corporate interest indirectly held through BNBMG, Sinoma Parent, CNBM Trading and China Building Materials Academy Co., Ltd.* (ʕ਷ܔ ጘҿࣘ߅ኪ޼Ӻᐼ৫Ϟࠢʮ̡) ("Building Materials Academy"). Sinoma Parent, CNBM Trading and Building Materials Academy are wholly-owned subsidiaries of the Parent. BNBMG is a subsidiary of the Parent which directly and indirectly holds 100% of its equity interests, of which 70.04% is directly held and 29.96% is indirectly held through CNBM Trading. Under the SFO, the Parent is deemed to own the shares directly held by BNBMG (1,485,566,956 Shares), Sinoma Parent (1,270,254,437 Shares), CNBM Trading (227,719,530 Shares) and Building Materials Academy (1,173,050 Shares).

• 3. BNBMG is taken to have an interest in such Shares as it is entitled to control the exercise of a right conferred by the holding of such Shares.

• 4. Taishan Investment is a wholly-owned subsidiary of Taishan Finance. Under the SFO, Taishan Finance is deemed to own 263,318,181 Shares directly held by Taishan Investment.

5.

Citigroup Inc. was deemed to hold interests in a total of 235,634,802 H Shares (long position) and 7,380,160 H Shares (short position) in the Company by virtue of its control over the following corporations, which held direct interests in the Company:

• 5.1. Citibank, N.A. held 219,595,043 H Shares (long position) and 773,299 H Shares (short position) in the Company. Citibank, N.A. was an indirect wholly-owned subsidiary of Citigroup Inc..

• 5.2. Citigroup First Investment Management Limited held 6,800,000 H Shares (long position) in the Company. Citigroup First Investment Management Limited was a direct wholly-owned subsidiary of Citigroup Global Markets Hong Kong Holdings Limited (indirectly held as to 51.86% by Citigroup Global Markets (International) Finance GmbH (an indirect wholly-owned subsidiary of Citigroup Inc.), and 48.14% by Citigroup Global Markets Switzerland Holding GmbH (an indirect wholly-owned subsidiary of Citigroup Inc.)).

• 5.3. Citigroup Global Markets Hong Kong Limited held 539,812 H Shares (long position) and 1,695,210 H Shares (short position) in the Company. Citigroup Global Markets Hong Kong Limited was an indirect wholly-owned subsidiary of Citigroup Inc..

• 5.4. Citigroup Global Markets Inc. held 174,350 H Shares (long position) in the Company. Citigroup Global Markets Inc. was an indirect wholly-owned subsidiary of Citigroup Inc..

• 5.5. Citigroup Global Markets Limited held 6,813,974 H Shares (long position) and 4,911,651 H Shares (short position) in the Company. Citigroup Global Markets Limited was a direct wholly-owned subsidiary of Citigroup Global Markets Holdings Bahamas Limited, which in turn was directly held as to 90% by Citigroup Financial Products Inc., which in turn was an indirect wholly-owned subsidiary of Citigroup Inc..

• 5.6. Citibank (Switzerland) AG held 1,037,760 H Shares (long position) in the Company. Citibank (Switzerland) AG was an indirect wholly-owned subsidiary of Citigroup Inc..

• 5.7. Citibank Europe plc held 615,163 H Shares (long position) in the Company. Citibank Europe plc was an indirect wholly-owned subsidiary of Citigroup Inc..

• 5.8. Citicorp Trust Delaware, National Association held 17,500 H Shares (long position) in the Company. Citicorp Trust Delaware, National Association was an indirect wholly-owned subsidiary of Citigroup Inc..

• 5.9. Citicorp Trust South Dakota held 41,200 H Shares (long position) in the Company. Citicorp Trust South Dakota was an indirect wholly-owned subsidiary of Citigroup Inc..

The entire interest and short position of Citigroup Inc. in the Company included a lending pool of 191,458,916 H Shares. Besides, 1,523,949 H Shares (long position) and 5,716,509 H Shares

(short position) of Citigroup Inc. in the Company were held through derivatives as follows:

376,650 H Shares (long position)

• - through physically settled listed derivatives

  and 180,000 H Shares (short position)

  1,123,299 H Shares (long position) and 2,288,509 H Shares (short position)

• - through physically settled unlisted derivatives

  24,000 H Shares (long position)

• - through cash settled unlisted derivatives

and 3,248,000 H Shares (short position)

Save as disclosed above, as at the Latest Practicable Date, the Company has not been notified by any persons who have interests or short positions in the Shares or underlying Shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or which were recorded in the register required to be kept by the Company under Section 336 of the SFO.

3. DIRECTORS' AND SUPERVISORS' EMPLOYMENT WITH SUBSTANTIAL SHAREHOLDERS

The followings are the particulars of Directors' and Supervisors' employment with substantial Shareholders as at the Latest Practicable Date:

Position held in
Name	Position in the Company	the substantial Shareholder
Cao Jianglin	Chairman and executive Director of	Director and general manager of the
the Company	Parent
Peng Shou	President and executive Director of	General Engineer of the Parent
the Company
Zhan Yanjing	Non-executive Director of the	Chief accountant of the Parent
Company
Chang Zhangli	Non-executive Director of the	Deputy general manager of the Parent
Company
Tao Zheng	Non-executive Director of the	Director and general manager of BNBMG
Company
Chen Yongxin	Non-executive Director of the	Director and general manager of CNBM
Company	Trading
Shen Yungang	Non-executive Director of the	Deputy general manager of the No. 1
Company	strategic client department of Cinda

APPENDIX II	GENERAL INFORMATION
Position held in
Name	Position in the Company	the substantial Shareholder
Fan Xiaoyan	Non-executive Director of the	Director and general manager of Taishan
Company	Finance
Li Xinhua	Supervisor of the Company	Vice Chairman of the Parent
Wang Yumeng	Supervisor of the Company	Deputy general manager of the Parent

4. MATERIAL CONTRACTS

The following contracts (being contracts not entered into in the ordinary course of business) have been entered into by the Group within the two years up to and including the Latest Practicable Date which are or may be material:

(I) the following agreements entered into between China United Cement and Henan Investment Group Co., Ltd.* (the "Henan Investment Group"):

• (1) a shareholders agreement dated 27 September 2019, pursuant to which the parties agreed to establish a joint venture in the PRC. The registered capital of the joint venture is RMB9,225.3358 million, of which RMB5,535.2015 million (representing 60% of the registered capital of the joint venture) will be contributed by China United Cement in cash and RMB3,690.1343 million (representing 40% of the registered capital of the joint venture) will be contributed by Henan Investment Group by way of injecting the "injected assets" (i.e. 10 subsidiaries of Henan Investment Group and trademarks under the "Tongli" series owned by Henan Investment Group);

• (2) a supplemental agreement dated 27 December 2019 in relation to the above shareholders agreement, pursuant to which the registered capital of the joint venture will increase from RMB9,225.3358 million to RMB10,000 million, whereby China United Cement will contribute in cash an additional RMB464.7985 million (representing 60% of the additional registered capital of the joint venture) and Henan Investment Group will contribute in cash an additional RMB309.8657 million (representing 40% of the additional registered capital of the joint venture); and

• (3) a further supplemental agreement dated 30 September 2020 in relation to the above shareholders agreement and supplemental agreement, pursuant to which China United Cement may contribute its portion of registered capital of the joint venture by way of transferring equity interests in certain of its subsidiaries to the joint venture. As at the date of this circular, this further supplemental agreement has not become effective and no definitive agreement has been reached in respect of the scope of subsidiaries to be transferred by China United Cement to the joint venture;

• (II) the Company entered into a financial services framework agreement dated 30 September 2019 with China National Building Material Group Finance Co., Ltd. (the "Finance Company"), pursuant to which the Finance Company has agreed to provide the Group with, among others, deposit services on a non-exclusive basis, with the maximum daily balance of deposits (including accrued interest) placed by the Group being RMB16,800 million, RMB17,800 million and RMB18,800 million for the three years ending 31 December 2022, respectively;

• (III) the CNBM Indicative Agreement; and

• (IV) the Other Indicative Agreements.

5. MATERIAL LITIGATION

As at the Latest Practicable Date, save as disclosed below, none of the members of the Group was engaged in any litigation of material importance and there was no litigation or claim of material importance known to the Directors to be pending or threatened by or against any member of the Group:

References are made to the overseas regulatory announcement of the Company dated 30 May 2010 in respect of an announcement released by Beijing New Building Materials Public Limited Company* (̏อණྠܔҿٰ΅Ϟࠢʮ̡) (an A-share listed subsidiary of the Company) ("BNBM"), relating to the gypsum board incident in the United States and the information on subsequent development of the gypsum board litigation in the United States set out in the announcements dated 18 July 2014, 20 August 2014, 13 February 2015, and 13 March 2015, the 2014 annual report, the 2015 interim report, the 2015 third-quarterly report and the 2015 annual report, the 2016 interim report, the 2016 annual report, the announcement dated 22 June 2017, the 2017 interim report, the announcement dated 22 March 2018, the 2017 annual report, the announcement dated 22 August 2018, the 2018 interim report, the announcement dated 19 March 2019, the 2018 annual report, the announcement dated 30 July 2019, the 2019 interim report, the 2019 annual report and the 2020 interim report of the Company.

In August 2019, Taishan Gypsum Co., Ltd.* (इʆͩၷϞࠢʮ̡) (a wholly-owned subsidiary of BNBM, "Taishan Gypsum") and Taian Taishan Plasterboard Co., Ltd.* (इτ̹इʆॷࠦͩ ၷؐϞࠢʮ̡) (a wholly-owned subsidiary of Taishan Gypsum, together with Taishan Gypsum, "Taishan"), entered into a class settlement agreement (the "Settlement Agreement") with the counsel acting for the plaintiff settlement class (the "Settlement"), and the procedure of the

Settlement proceeded normally in accordance with the Settlement Agreement.

In May 2020, the district court in the U.S. issued a formal order ruling that the claims against Taishan and Additional Released Parties (as defined in the Company's 2019 annual report) and that the Released Claims (as defined in the Company's 2019 annual report) are released and barred from reviving, and that the claims brought by plaintiffs who opted out from the Settlement are not released and are reserved in the litigation. This order is the final procedure of the Settlement process, and the cases of the plaintiffs who did not opt out of the case against Taishan and Additional Released Parties have closed.

In the Settlement, a total of 90 plaintiffs opted out from the Settlement, and the litigation of these plaintiffs will continue. In addition, the case of The Mitchell Co., Inc. against Knauf Gips KG is also ongoing. The Company will continue to monitor the progress of the gypsum board litigation in the U.S. and will make further announcements if and when necessary or appropriate.

• 6. SERVICE CONTRACTS

  None of the Directors or Supervisors has entered into a service contract with any member of the Group (excluding contracts expiring or determinable within one year without payment of compensation (other than statutory compensation)).

• 7. OTHER INTERESTS OF THE DIRECTORS AND SUPERVISORS

  As at the Latest Practicable Date:

  • (I) none of the Directors or Supervisors had any direct or indirect interest in any assets which have been, since 31 December 2019, the date of the latest published audited accounts of the Company, acquired or disposed of by or leased to any member of the Group, or are proposed to be acquired or disposed of by or leased to any member of the Group;

  • (II) none of the Directors or Supervisors was materially interested in any contract or arrangement entered into by any member of the Group which is subsisting as at the date of this circular and which is significant in relation to the business of the Group; and

  • (III) none of the Directors and their close associates had any competing interest in a business which competes or is likely to compete, either directly or indirectly, with the business of the

    Group.

• 8. OTHER INFORMATION

  • (I) The Company has joint company secretaries, namely Mr. Yu Kaijun and Ms. Lee Mei Yi.

    Mr. Yu is a vice president of the Company and the secretary of the Board. Mr. Yu has over 35 years' experience in financial management and enterprise management.

    Ms. Lee is an executive director of Corporate Services Department of Tricor Services Limited and a fellow member of both The Hong Kong Institute of Chartered Secretaries and The Chartered Governance Institute.

  • (II) The address of the registered office and principal place of business of the Company is located at Tower 2 (Building B), Guohai Plaza, No. 17 Fuxing Road, Haidian District, Beijing, the PRC. The address of the Company's place of business in Hong Kong is at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong.

  • (III) In case of inconsistency, the English version of this circular shall prevail over the Chinese version.

• 9. DOCUMENTS AVAILABLE FOR INSPECTION

  Copies of the following documents are available for inspection from the date of this circular until the date of the EGM (both days inclusive) at the place of business in Hong Kong of the Company at Level 54, Hopewell Centre, 183 Queen's Road East, Hong Kong during normal business hours (i.e. from 9:30 a.m. to 5:30 p.m. on any weekday, except public holidays):

  • (I) the Articles of Association;

  • (II) the annual reports of the Company for the two financial years ended 31 December 2018 and 2019, and the interim report of the Company for the six months ended 30 June 2020;

  • (III) the letter from the Board, the full text of which is set out in this circular from pages 1 to 23;

  • (IV) the material contracts referred to in the paragraph headed "Material Contracts" in this Appendix; and

  • (V) this circular.

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

NOTICE OF THE EXTRAORDINARY GENERAL MEETING

NOTICE IS HEREBY GIVEN that the extraordinary general meeting ("EGM") of China National Building Material Company Limited (the "Company") will be held at 9:30 a.m. on Tuesday, 23 March 2021 at Tower 2, Guohai Plaza, No. 17 Fuxing Road, Haidian District, Beijing, the People's Republic of China for the purpose of considering and, if thought fit, passing the following resolution. Unless otherwise indicated, capitalised terms used herein shall have the same meanings as those defined in the circular of the Company dated 4 March 2021 (the "Circular").

AS ORDINARY RESOLUTION

1. To consider and approve the CNBM Indicative Agreement, the CNBM Supplemental Agreement, and the Restructuring and all other matters incidental thereto or in connection therewith:

"THAT

(A) the CNBM Indicative Agreement, the CNBM Supplemental Agreement, and the Impairment

Compensation Agreement a copy of each of which has been produced to the meeting marked "A", "B", and "C" respectively and signed by the chairman of the meeting for identification purposes, and the Restructuring and all other matters incidental thereto or in connection therewith be and are hereby approved and confirmed; and

(B) any one executive director or Secretary of the Board of the Company be and is hereby authorised for and on behalf of the Company, amongst other matters, to sign, seal, stamp, execute, perfect, deliver, do or to authorise signing, executing, perfecting and delivering and doing all such documents, deeds, acts, matters and things as he/she may in his/her discretion consider necessary, expedient or desirable to give effect to and implement the Restructuring and to make and agree such variations in or to the terms of the CNBM Indicative Agreement and/or the CNBM Supplemental Agreement and/or the Impairment Compensation Agreement as the Board may think fit."

By order of the Board

China National Building Material Company Limited*

Cao Jianglin

Chairman of the Board

Beijing, the PRC

4 March 2021

Notes:

• (1) All resolutions at the meeting will be taken by poll except where the chairman, in good faith, decides to allow a resolution which relates purely to a procedural or administrative matter to be voted on by a show of hands pursuant to the Listing Rules. The chairman of the meeting will therefore demand a poll for the resolution put to vote at the EGM in accordance with the Articles of Association. An announcement on the poll vote results will be made by the Company after the EGM in the manner prescribed under Listing Rule 13.39(5). The results of the poll will be published on the websites of Hong Kong Exchanges and Clearing Limited and the Company in accordance with the Listing Rules.

• (2) For determining the entitlement to attend and vote at the above meeting, the register of members of the Company will be closed from Thursday, 18 March 2021 to Tuesday, 23 March 2021, both dates inclusive, during which period no transfer of Shares will be registered. In order to be eligible to attend and vote at the EGM, holders of the H Shares whose transfers have not been registered shall deposit all transfer documents accompanied by the relevant share certificates at the Company's H Share Registrar in Hong Kong, Tricor Investor Services Limited for registration not later than 4:30 p.m. on Wednesday, 17 March 2021.

• (3) A Shareholder entitled to attend and vote at the EGM may appoint one or more proxies to attend and vote on his behalf. A proxy need not be a Shareholder of the Company. Where a Shareholder appoints more than one proxy, his proxies can only vote on a poll.

• (4) The instrument appointing a proxy must be in writing under the hand of a Shareholder or his attorney duly authorised. If the Shareholder is a corporation, that instrument must be either under its common seal or under the hand of its director(s) or duly authorised attorney(s). If that instrument is signed by an attorney of a Shareholder, the power of attorney authorising that attorney to sign or other authorisation document must be notarised.

• (5) In order to be valid, the form of proxy together with the power of attorney or other authorisation document (if any) must be deposited at the Secretariat of the Board at the Company's principal place of business in the PRC for holders of the Domestic Shares and the Unlisted Foreign Shares, and at the Company's H Share Registrar in Hong Kong, Tricor Investor Services Limited, for holders of the H Shares not less than 24 hours before the time appointed for the EGM (i.e. not later than 9:30 a.m. on Monday, 22 March 2021) or any adjournment thereof (as the case may be).

• (6) A vote given in accordance with the terms of an instrument of proxy shall be valid notwithstanding the death or loss of capacity of the appointer, or the revocation of the proxy or of the authority under which the proxy was executed, or the transfer of shares in respect of which the proxy is given, provided that no notice in writing of these matters shall have been received by the Company prior to the commencement of the EGM.

• (7) The address and contact details of the Company's H Share Registrar in Hong Kong, Tricor Investor Services Limited, are as follows:

  Level 54, Hopewell Centre

  183 Queen's Road East

  Hong Kong

  Telephone No.: ([phone]

  Facsimile No.: ([phone]

• (8) The address and contact details of the Company's principal place of business in the PRC are as follows:

  Tower 2, Guohai Plaza

  No. 17 Fuxing Road

  Haidian District

  Beijing, the PRC

  Telephone No.: ([phone]

  Facsimile No.: ([phone]

• (9) In accordance with the Articles of Association, where two or more persons are registered as the joint holders of any share, only the person whose name appears first in the register of members shall be entitled to receive this notice, to attend and exercise all the voting powers attached to such share at the EGM, and this notice shall be deemed to be given to all joint holders of such share.

• (10) The EGM is expected to be concluded within half a day. Shareholders (in person or by proxy) attending the EGM are responsible for their own transportation and accommodation expenses. Shareholders or their proxies attending the EGM shall produce identity documents.

• (11) References to time and dates in this notice are to Hong Kong time and dates.

* For identification purpose only