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CONNECTED TRANSACTION CAPITAL CONTRIBUTION TO THE JOINT VENTURE

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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)

CONNECTED TRANSACTION

CAPITAL CONTRIBUTION TO THE JOINT VENTURE

On 18 May 2021, CNBM United Investment (a wholly-owned subsidiary of the Parent), Sinoma Science & Technology (an non-wholly-owned subsidiary of the Company) and China Composites (a wholly-owned subsidiary of the Company) entered into the Capital Contribution Agreement, pursuant to which, all parties agreed to make a capital contribution totaling RMB950 million to the joint venture, CNBM Aviation, in cash in accordance with their respective shareholding on pro rata basis. Among them, CNBM United Investment, Sinoma Science & Technology and China Composites will make a capital contribution of RMB570 million, RMB237.5 million and RMB142.5 million, respectively. Upon completion of the said capital contribution, the registered capital of CNBM Aviation will increase from RMB100 million to RMB1,050 million. CNBM United Investment, Sinoma Science & Technology and China Composites have made a capital contribution of RMB630 million, RMB262.5 million and RMB157.5 million, respectively.

On 8 April 2021, CNBM United Investment, Sinoma Science & Technology and China Composites entered into a shareholders’ agreement, pursuant to which, the parties agreed to establish the joint venture, CNBM Aviation, of which CNBM United Investment, Sinoma Science & Technology and China Composites agreed to subscribe for RMB60 million, RMB25 million and RMB15 million, respectively. The aforementioned parties commenced to make capital contributions to the joint venture in May 2021. As at the date of this announcement, the aforementioned parties have made capital contributions to the joint venture totaling RMB20 million,

(2)

As the Parent has a direct and indirect equity interest of 43.02% in aggregate in the Company, it is a controlling shareholder of the Company. Therefore, pursuant to the Listing Rules, CNBM United Investment constitutes a connected person of the Company, and thus the transaction contemplated under the Capital Contribution Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. The transaction contemplated under the Capital Contribution Agreement will be aggregated with the transaction in respect of the establishment of the joint venture. As one or more applicable percentage ratios as defined under Rule 14.07 of the Listing Rules are higher than 0.1% but all applicable percentage ratios are less than 5%, according to Rule 14A.76 of the Listing Rules, the transaction contemplated under the Capital Contribution Agreement is exempt from the circular and shareholders’ approval requirements and is only subject to the announcement and reporting requirements under the Listing Rules.

ESTABLISHMENT OF THE JOINT VENTURE

On 8 April 2021, CNBM United Investment, Sinoma Science & Technology and China Composites entered into a shareholders’ agreement, pursuant to which, the parties agreed to establish the joint venture, CNBM Aviation. The business scope of the joint venture includes general projects in the field of aviation technology, such as technical consultation, technology development, technology transfer, technical services; sales of civil aviation materials; information technology consulting services; import and export of goods; import and export of technology. Each shareholder of the joint venture proposed to enter into the Capital Contribution Agreement considering the construction progress and capital needs of the construction project of CNBM Aviation. The joint venture was established on 8 April 2021, the net asset value and net profit (before and after tax) of the joint venture as at 30 April 2021 were nil.

PRINCIPAL TERMS OF THE CAPITAL CONTRIBUTION AGREEMENT Date

18 May 2021

Parties

(1) CNBM United Investment (a wholly-owned subsidiary of the Parent);

(2) Sinoma Science & Technology (an non-wholly-owned subsidiary of the Company); and

(3)

Nature of the Transaction

The joint venture, CNBM Aviation, intends to increase its registered capital due to the capital needs of its construction project. Each shareholder agreed to make a capital contribution totaling RMB950 million to CNBM Aviation in cash in accordance with their respective shareholding on pro rata basis. Among them, CNBM United Investment, Sinoma Science & Technology and China Composites will make a capital contribution of RMB570 million, RMB237.5 million and RMB142.5 million, respectively.

After the said capital contribution, the registered capital of CNBM Aviation will increase from RMB100 million to RMB1,050 million (representing an increase of RMB950 million in the registered capital), and CNBM United Investment, Sinoma Science & Technology and China Composites have made a capital contribution of RMB630 million, RMB262.5 million and RMB157.5 million, respectively. Before and after the said capital contribution, the proportion of equity interest held by each of CNBM United Investment, Sinoma Science & Technology and China Composites in CNBM Aviation will remain unchanged.

Capital structure of the Joint Venture before the capital contribution:

Shareholders Amount of contribution Percentage of registered capital (RMB0’000) CNBM United Investment 6,000 60%

Sinoma Science & Technology 2,500 25%

China Composites 1,500 15%

Total 10,000 100%

Capital structure of the Joint Venture after the capital contribution:

Shareholders Amount of contribution Percentage of registered capital (RMB0’000) CNBM United Investment 63,000 60%

Sinoma Science & Technology 26,250 25%

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BASIS FOR DETERMINATION OF AMOUNT OF CONTRIBUTION

CNBM Aviation was established on 8 April 2021. Due to the capital needs of the construction project of CNBM Aviation, the amount of the said capital contribution will be RMB950 million. Shareholders negotiated to increase the registered capital of CNBM Aviation in cash on a basis of RMB1/registered capital on pro rata basis in accordance with the Capital Contribution Agreement. Among them, CNBM United Investment, Sinoma Science & Technology and China Composites will make a capital contribution of RMB570 million, RMB237.5 million and RMB142.5 million, respectively. Before and after the said capital contribution, the proportion of equity interest held by each of CNBM United Investment, Sinoma Science & Technology and China Composites in CNBM Aviation will remain unchanged, that is, CNBM United Investment, Sinoma Science & Technology and China Composites accounted for 60%, 25% and 15% of the registered capital of CNBM Aviation. Sinoma Science & Technology and China Composites will pay the capital contribution with internal funds.

REASONS FOR AND BENEFITS OF THE TRANSACTION

The capital contribution can give full play to the advantages of material industry and technology reserve of Sinoma Science & Technology and China Composites, extend the carbon fiber industry chain, expand the application depth and breadth of the composite downstream industry, promote the application level of international advanced technology and high-end industrialization, and further enhance the enterprise value.

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

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

(5)

LISTING RULES IMPLICATIONS

As the Parent has a direct and indirect equity interest of 43.02% in aggregate in the Company, it is a controlling shareholder of the Company. Therefore, pursuant to the Listing Rules, CNBM United Investment constitutes a connected person of the Company, and thus the transaction contemplated under the Capital Contribution Agreement constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. The transaction contemplated under the Capital Contribution Agreement will be aggregated with the transaction in respect of the establishment of the joint venture. As one or more applicable percentage ratios as defined under Rule 14.07 of the Listing Rules are higher than 0.1% but all applicable percentage ratios are less than 5%, according to Rule 14A.76 of the Listing Rules, the transaction contemplated under the Capital Contribution Agreement is exempt from the circular and shareholders’ approval requirements and is only subject to the announcement and reporting requirements under the Listing Rules.

INFORMATION ON THE PARTIES

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

Sinoma Science & Technology is principally engaged in the production and sales of wind turbine blades, glass fibers and products and lithium battery separators.

China Composites is principally engaged in the production and sales of wind turbine blades, carbon fiber and FRP cans.

CNBM United Investment is principally engaged in the investment management, asset management and investment consulting. The parent is a state-owned limited liability company engaged in the business of building materials in the PRC.

DEFINITIONS

“Board” the board of directors of the Company

“Capital Contribution Agreement”

the capital contribution agreement dated 18 May 2021 entered into among CNBM United Investment, Sinoma Science & Technology and China Composites in relation to the capital contribution by CNBM United Investment, Sinoma Science & Technology and China Composites to CNBM Aviation

(6)

“Company” China National Building Material Company Limited* (中國建材股份有限公司), a joint stock limited company established under the laws of the PRC, the H shares of which are listed on The Stock Exchange of Hong Kong Limited

“CNBM Aviation” China National Building Material (Shanghai) Aviation

Technology Co., Ltd.* (中建材(上海)航空技術有限公 司 ), a limited liability company established under the laws of the PRC

“China Composites” China Composites Group Corporation Limited* ( 中 國

複合材料集團有限公司), a limited liability company established under the laws of the PRC

“CNBM United Investment” CNBM United Investment Co., Ltd.* ( 中 建 材 聯 合 投 資 有 限 公 司 ), a limited liability company established under the laws of the PRC

“Director(s)” the director(s) of the Company

“Group” the Company and its subsidiaries from time to time

“Listing Rules” The Rules Governing the Listing of Securities on The

Stock Exchange of Hong Kong Limited

“Parent” China National Building Material Group Co., Ltd.* (中

國建材集團有限公司), a state-owned limited liability company established under the laws of the PRC and a controlling shareholder of the Company

“PRC” the People’s Republic of China, excluding, for the

purpose of this announcement, Hong Kong Special Administrative Region of the PRC, Macau Special Administrative Region of the PRC and Taiwan

(7)

“Sinoma Science & Technology”

Sinoma Science & Technology Company Ltd.* (中 材科技股份有限公司), a joint stock company with limited liability established under the laws of the PRC, the shares of which are listed on the Shenzhen Stock Exchange

“%” per cent

By order of the Board

China National Building Material Company Limited* Yu Kaijun

Secretary of the Board

Beijing, the PRC 18 May 2021

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

References

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