Luoyang Glass : CONTINUING CONNECTED TRANSACTION - NATURAL GAS PURCHASE FRAMEWORK AGREEMENT

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CONTINUING CONNECTED TRANSACTION NATURAL GAS PURCHASE FRAMEWORK AGREEMENT

The Board announces that, on 3 March 2021, Bengbu CNBM Information Display, a wholly-owned subsidiary of the Company, entered into a natural gas purchase framework agreement (the "Agreement") with Huaguang Group, pursuant to which, Huaguang Group shall provide the natural gas supply and settlement services to Bengbu CNBM Information Display.

As at the date of this announcement, Huaguang Group is an indirect wholly-owned subsidiary of CNBMG (the ultimate controlling shareholder of the Company). Therefore, Huaguang Group is regarded as a connected person of the Company under Chapter 14A of the Listing Rules. The transaction contemplated under the Agreement constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules.

As all applicable percentage ratios are more than 0.1% but less than 5%, the Agreement is subject to the reporting and announcement requirements but exempt from the independent shareholders' approval requirement pursuant to Chapter 14A of the Listing Rules.

INTRODUCTION

The Board announces that, on 3 March 2021, Bengbu CNBM Information Display, a wholly-owned subsidiary of the Company, entered into the Agreement with Huaguang Group, pursuant to which, Huaguang Group shall provide the natural gas supply and settlement services to Bengbu CNBM Information Display.

The summary of the principal terms of the Agreement is set out as follows:

Particulars of the Agreement

Date:	3 March 2021
Parties:	(1) Bengbu CNBM Information Display, as the purchaser;
and
(2) Huaguang Group, as the supplier
Effective term:	From the date of the Agreement to 31 December 2021
Nature of transaction

Pursuant to the Agreement, Huaguang Group shall provide the natural gas supply and settlement services to Bengbu CNBM Information Display.

Pricing basis

• 1. As a general principle, the supply price for the natural gas under the Agreement shall be determined in accordance with the then market price, and in the ordinary course of business on normal commercial terms, and negotiated on arm's length basis by Bengbu CNBM Information Display and Huaguang Group under the principle of impartiality, fairness and openness.

• 2. The price of natural gas used by Bengbu CNBM Information Display shall be implemented at the price in the centralised purchase agreements agreed by Huaguang Group and the gas companies, and shall be lower than the local market price of the natural gas at the same period.

• 3. The supply price for the natural gas collected by Huaguang Group shall not be higher than the supply price for the similar or same natural gas provided by Huaguang Group to an independent third party.

• 4. The supply price for the natural gas purchased by Bengbu CNBM Information Display shall not be higher than the price paid for the similar or same natural gas purchased by Bengbu CNBM Information Display from an independent third party.

Monthly gas consumption and settlement date

The consumption of the natural gas used by Bengbu CNBM Information Display is subject to the monthly meter reading, and shall be confirmed by both Bengbu CNBM Information Display and Huaguang Group in signature. The settlement date shall be the 25th day of each month.

Payment method

Bengbu CNBM Information Display shall pay the gas fee for the current month according to the gas consumption as planned and agreed before the 5th day of each month. The payment shall be made by half-year bank acceptance notes.

Annual transaction amount

The total amount of the estimated annual transactions in aggregate as at 31 December 2021 under the Agreement shall not exceed RMB40 million (tax inclusive) (equivalent to approximately HK$48,000,000). Such cap was determined after taking into account the historical figures of the relevant transactions, including the previous consumption of the natural gas by Bengbu CNBM Information Display, the comprehensive judgement of the operating conditions of the production equipment, the arrangement of the annual production plans and other factors, the expected consumption of natural gas by Bengbu CNBM Information Display by the end of 2021 of approximately 13,330,000 cubic meters and the prevailing and predictable market price of the natural gas in the future which shall not exceed RMB3.00 per cubic meter (tax inclusive).

Miscellaneous

Bengbu CNBM Information Display and Huaguang Group may enter into a separate gas supply contract within the scope of the Agreement in respect of the specific natural gas supply matter, which shall form a part of the Agreement.

MEASURES OF INTERNAL CONTROL

To ensure the Company's conformity with the above pricing policies from time to time, the Company would adopt a series of measures of internal control for its daily operation. Such measures of internal control would be conducted and supervised by the finance department, the office of the Board and the audit department of the Company:

(I) the Company has adopted and implemented a connected transaction management system on connected transaction. According to the system, the office of the Board and finance department are responsible for collecting information on and monitoring the connected transaction, and evaluating the fairness of the transaction terms and the pricing terms;

• (II) the independent non-executive Directors of the Company would review the continuing connected transaction under the Agreement to ensure the Agreement is entered into on normal commercial terms, is fair and reasonable, and is performed pursuant to the terms of the Agreement. The auditor of the Company would also conduct an annual review on the pricing and annual caps of the continuing connected transaction under the Agreement; and

• (III) the internal audit department of the Company shall conduct regular supervision and evaluation on whether the procedures of connected transaction are conformed with the internal control requirements of the Company.

REASONS FOR ENTERING INTO THE AGREEMENT

Bengbu CNBM Information Display and Huaguang Group are both located in Bengbu City, Anhui Province. In order to reduce the procurement costs of natural gas, Huaguang Group has implemented centralised and volume-based purchase of natural gas from the gas companies and provided natural gas supply and settlement services to its group members. Bengbu CNBM Information Display has voluntarily joined the centralised procurement business of Huaguang Group, which will provide centralised purchase, supply and settlement services of natural gas. The terms of the Agreement were determined after arm's length negotiations between the parties thereto. The Directors (including the independent non-executive Directors) are of the view that the Agreement is entered into on normal commercial terms in the ordinary and usual course of business of the Group, and that the Agreement and the proposed annual caps thereof are fair and reasonable and in the interest of the Shareholders and the Group as a whole.

INFORMATION OF THE COMPANY, BENGBU CNBM INFORMATION DISPLAY AND HUAGUANG GROUP

The principal activities of the Company are production and sales of information display glass and new energy glass. The scope of business includes development, production, manufacture and installation of information display glass, new energy glass, photoelectric material for functional-glass category and its processed products and components, relevant materials, mechanical equipment and its electric appliances and accessories, relevant technical consultancy and technical services, as well as sales and after-sales services of self-produced products.

Bengbu CNBM Information Display is a wholly-owned subsidiary of the Company and is principally engaged in the development, production, sale and deep processing of ultra-thin glass.

Huaguang Group, an indirect subsidiary of CNBMG, is principally engaged in manufacturing and sales of float glass, ITO conductive film glass and further processed glass products.

LISTING RULES IMPLICATIONS

In light of the above, as at the date of this announcement, Huaguang Group is an indirect wholly-owned subsidiary of CNBMG (the ultimate controlling shareholder of the Company). Therefore, Huaguang Group is regarded as a connected person of the Company under Chapter 14A of the Listing Rules. The transaction contemplated under the Agreement constitutes a continuing connected transaction of the Company under Chapter 14A of the Listing Rules.

As all applicable percentage ratios are more than 0.1% but less than 5%, the Agreement is subject to the reporting and announcement requirements, but exempt from the independent shareholders' approval requirement pursuant to Chapter 14A of the Listing Rules.

Mr. Zhang Chong, the Chairman of the Company, Mr. Xie Jun, the vice Chairman of the Company, Mr. Chen Yong and Mr. Ren Hongcan, the non-executive Directors of the Company, have abstained from voting on the approval of the Agreement at the Board meeting due to the fact that they are connected with Huaguang Group and are therefore not regarded as independent to make any recommendation to the Board.

DEFINITIONS

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

"A Share(s)"

the domestic ordinary share(s) of RMB1.00 each in the share capital of the Company, which are listed on the Shanghai Stock Exchange and subscribed for and traded in RMB

"Agreement"

the natural gas purchase framework agreement dated 3 March 2021 entered into between Bengbu CNBM Information Display and Huaguang Group, pursuant to which Huaguang Group shall provide natural gas supply and settlement services to Bengbu CNBM Information Display

"Bengbu CNBM

Information Display"

Bengbu China National Building Materials Information Display Materials Company Limited* ( ঵਽ʕܔҿ ڦࢹᜑͪҿࣘϞࠢʮ̡ ), a company incorporated in the PRC with limited liability and a wholly-owned subsidiary of the Company

"Board"

the board of Directors

"CNBMG"

China National Building Materials Group Co., Ltd.* ( ʕ਷ܔҿණྠϞࠢʮ̡ ), a wholly state-owned enterprise incorporated in the PRC and the ultimate controlling shareholder of the Company

"Company"

Luoyang Glass Company Limited* ( ݾජޚᆨٰ΅Ϟ ࠢʮ̡ ), a joint stock limited company incorporated in the PRC with limited liability, the H Shares and A Shares of which are listed on the main board of the Stock Exchange (stock code: 1108) and the Shanghai Stock Exchange (stock code: 600876) respectively

"connected person(s)"

has the same meaning as ascribed to it under the Listing Rules

"Directors"

the directors of the Company, including the independent non-executive directors of the Company

"Group"

the Company and its subsidiaries

"H Share(s)"

overseas listed foreign share(s) of RMB1.00 each in the share capital of the Company, listed on the main board of the Stock Exchange and traded in Hong Kong dollars

"HK$"

Hong Kong dollars, the lawful currency of Hong Kong

"Hong Kong"

Hong Kong Special Administrative Region of the PRC

"Huaguang Group"

Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd.* ( τᏏശΈΈཥҿࣘ߅Ҧණ ྠϞࠢʮ̡ ), a company incorporated in the PRC with limited liability and an indirect wholly-owned subsidiary of CNBMG

"Listing Rules"

the Rules Governing the Listing of Securities on the Stock Exchange

"percentage ratios"

has the same meaning as ascribed to it under the Listing Rules, as applicable to a transaction

"PRC"

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

"RMB"	Renminbi, the lawful currency of the PRC
"Shareholder(s)"	the shareholder(s) of the Company
"Stock Exchange"	The Stock Exchange of Hong Kong Limited
"subsidiary(ies)"	has the same meaning as ascribed to it under the Listing
Rules
"%"	per cent

For the purpose of this announcement, the following exchange rate is used: RMB1.00 to HK$1.20.

By order of the Board Luoyang Glass Company Limited*

Zhang Chong

Chairman

Luoyang, the PRC

3 March 2021

As at the date of this announcement, the Board comprises five executive Directors: Mr. Zhang Chong, Mr. Xie Jun, Mr. Ma Yan, Mr. Wang Guoqiang and Mr. Zhang Rong; two non-executive Directors: Mr. Ren Hongcan and Mr. Chen Yong; and four independent non-executive Directors: Mr. Jin Zhanping, Mr. Ye Shuhua, Mr. He Baofeng and Ms. Zhang Yajuan.

* For identification purposes only