China National Building Material : MAJOR TRANSACTION AND DISCLOSEABLE TRANSACTION - RESTRUCTURING OF CEMENT ASSETS

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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

MAJOR TRANSACTION

AND

DISCLOSEABLE TRANSACTION RESTRUCTURING OF CEMENT ASSETS

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

SUPPLEMENTAL AGREEMENTS IN RELATION TO THE RESTRUCTURING AND THE BUY-OUT TRANSACTION

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 the Other Supplemental Agreements with the Independent Sellers (except for the Excluded Sellers) to agree on the consideration of the Buy-Out Transaction.

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 will comply 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.

GENERAL

An EGM will be convened for the Company's shareholders to consider, and if thought fit, approve, among other things, the Restructuring.

A circular containing, among other things, details of the Restructuring, financial information of the Group and the notice convening the EGM, is expected to be despatched to the Company's shareholders on or around 4 March 2021.

INTRODUCTION

Reference is made to the announcements issued by the Company dated 24 July 2020 and 7 August 2020 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.

PRINCIPAL TERMS OF THE INDICATIVE AGREEMENTS AND THE SUPPLEMENTAL AGREEMENTS

Date

• (1) The Indicative Agreements: 7 August 2020

• (2) The Supplemental Agreements: 2 March 2021

Parties

The CNBM Indicative Each of the Other Indicative Agreement and the CNBM Agreements and Other Supplemental Agreement Supplemental AgreementsSeller:

The Company

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

Agreements)

Purchaser:

Tianshan Cement

Target Equity Interests

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	Amount of cash
Number of	issued to	consideration to
Amount of	Consideration	Amount of	the Independent	be paid to
consideration	Shares to be	consideration	Sellers (except	certain
for the	issued to	for the Buy-	for the Excluded	Independent
Target Company	Restructuring	the Company	Out Transaction	Sellers)	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
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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.

  - 5 -

• (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.

    - 6 -

The issuance of Consideration Shares is subject to the following:

(I)	Number of	Determined by dividing the amount of the Appraised
Consideration Shares to	Value attributable to the relevant Target Equity
be issued to each seller	Interests held by the Company or each Independent
of the Target Equity	Seller (except for the Excluded Sellers) (as the case
Interests:	may be) by the Issue Price
(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 ( ܔҿܸᅰ) (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 owners' 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

Number of Compensation Shares

=Target Equity Interests (as adjusted) as at the end of the relevant accounting year during the Compensation Period

-

Cumulated 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 Compensation Shares previously compensated will not be returned to the Company.

• (4) The decimals, if existed 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:

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

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

• (3) waiver in respect of the Company's obligation to make an offer to acquire Tianshan Cement's shares held by other shareholders of Tianshan Cement as a result of the Restructuring and the Buy-Out Transaction being approved at Tianshan Cement's shareholders' meeting;

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

• (5) (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;

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

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

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

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

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).

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 of the Company 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 its shareholders as a whole.

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 year	For the financial year
ended 31 December 2018	ended 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:

• (1) BOCOM Financial Assets Investment Co., Ltd.* ( ʹვږፄ༟ପҳ༟Ϟࠢʮ ̡ ), 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΅Ϟࠢʮ̡ );

• (2) Agricultural Bank of China Financial Assets Investment Co., Ltd.* ( ༵ვږፄ ༟ପҳ༟Ϟࠢʮ̡ ), 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਷ุ༵ვБٰ΅Ϟࠢʮ̡ );

• (3) 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༟ପ္ຖ၍ଣ։ࡰึ );

• (4) 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 );

• (5) 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 );

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

• (7) 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 );

• (8) 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݋ );

• (9) 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

• (10) 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:

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

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

• (3) 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:

Target Company
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
- 16 -

For the financial year ended 31	For the financial year ended 31
December 2018	December 2019
Net profit Net profit	Net profit Net profit
before tax after tax	before tax after tax
(RMB million) (RMB million)	(RMB million) (RMB million)

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

100%

China United CementSouth Cement

Southwest Cement

Sinoma 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

(2) After Completion

The Company

Independent Sellers

(except Excluded

Sellers)

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.

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 will comply 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.

GENERAL

An EGM will be convened for the Company's shareholders to consider, and if thought fit, approve, among other things, the Restructuring.

The Company confirms that, to the best of its directors' knowledge, information and belief having made all reasonable enquiry, no shareholder of the Company has a material interest in the Restructuring and therefore no shareholder of the Company is required to abstain from voting on the resolution to approve the Restructuring at the EGM.

A circular containing, among other things, details of the Restructuring, financial information of the Group and the notice convening the EGM, is expected to be despatched to the Company's shareholders on or around 4 March 2021.

The Completion is conditional upon the fulfillment of all Conditions to Effectiveness. Accordingly, the Restructuring and the Buy-Out Transaction may or may not proceed. Shareholders and potential investors of the Company are advised to exercise caution when dealing in the securities of the Company.

DEFINITIONS

"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

"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

"CNBMTargetEquityInterests"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 the Impairment Compensation Agreement

"Completion"

the completion of the Restructuring and the Buy-Out Transaction

"Conditions to Effectiveness"

"Consideration Shares"

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

"EGM"

the extraordinary general meeting of the Company to be convened to approve, among other things, the Restructuring

"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 Agreement

"Group"

"Hong Kong"

the Company and its subsidiaries from time to time the Hong Kong Special Administrative Region of the PRC

"Impairment Compensation

Agreement"

the impairment compensation agreement dated 2 March 2021 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 this announcement

"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"

"PRC"

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

"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"

"Sinoma Cement"

"South Cement"

the State-owned Assets Supervision and Administration Commission of the State Council ʕҿ˥إϞࠢப΂ʮ̡(Sinoma Cement Co., Ltd.*), a subsidiary of the Company 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

"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"

"Tianshan Cement"

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 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)
"Valuation Date"	30 June 2020, being the reference date for valuating
the Target Companies
"Valuation	8 August 2020, being the reference date for
Reference Date"	determining the Issue Price
"Valuer"	Ӝдಌ€̏ԯ਷ყ༟ପ൙ПϞࠢʮ̡(Vocation
(Beijing) International Asset Valuation Co., Ltd.*)
"%"	per cent
Beijing, the PRC
2 March 2021

By order of the Board

China National Building Material Company Limited*

Cao Jianglin

Chairman

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

* For identification purposes only