THE DOCUMENT IS IN DRAFT FORM, INCOMPLETE AND SUBJECT TO CHANGE AND THAT THE INFORMATION MUST BE READ IN CONJUNCTION WITH THE SECTION HEADED “WARNING” OF THE COVER OF THE DOCUMENT. HISTORY, DEVELOPMENT AND CORPORATE STRUCTURE
OVERVIEW
We are a leading ready-mixed concrete producer in China with strong research and development capabilities according to the CIC Report. Our history can be traced back to YNJG Concrete, which was established in April 1996. Its principal businesses included the production and sales of commercial concrete and related products. After being merged and absorbed into YNJG as the Commercial Concrete Division through an asset restructuring, YNJG Concrete was deregistered in May 2012. In December 2016, YNJG injected the operating assets of the Commercial Concrete Division and the equity interests of four operating subsidiaries into the Company through a capital increase.
On June 19, 2007, the Company was established as a limited liability company by YNJG Concrete. On December 22, 2017, the Company was converted into a joint stock limited company and renamed “YCIH Green High-Performance Concrete Company Limited.”
MILESTONES
The following table outlines the milestones in our history of development:
Years Events
1996 YNJG Concrete was established, whose principal businesses included the production and sales of commercial concrete and related products.
2007 The Company was established by YNJG Concrete in Kunming, Yunnan Province as a limited liability company, i.e., YNJG Green High- Performance Concrete Co., Ltd. (雲南建工綠色高性能混凝土有限公司).
2007 YNJG Concrete undertook the project of concrete production and supply for “Kunming University Town (昆明大學城)”, and from 2007 to 2010, it produced and supplied more than 800,000 cubic meters of concrete for this project.
2008 YNJG Concrete became the exclusive producer and supplier of three million cubic meters of concrete for the Kunming Changshui International Airport (昆明長水國際機場) project.
2009 We introduced KMEIC as a shareholder, increased our registered capital to RMB66,000,000, and were renamed “YNJG-KMEIC Green High- Performance Concrete Co., Ltd. (雲南建工經開綠色高性能混凝土有限公 司).”
2011 YNJG Concrete transferred all 51% of its equity interest in the Company to YNJG.
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Years Events
2011 Being injected with the related business and assets of YNJG Concrete, the Commercial Concrete Division successfully won the bid for the relocation project of Suijiang County, Zhaotong (昭通市綏江縣城移民工程) and implemented the model of centralized and unified production and supply of concrete.
2016 We introduced YOIC as a shareholder, increased our registered capital to RMB500,000,000, were renamed as “YCIH Green High-Performance Concrete Co., Ltd. (雲南建投綠色高性能混凝土有限公司)” and changed our place of registration to Zhaotong, Yunnan Province.
2016 YNJG injected the operating assets of the Commercial Concrete Division and the equity interests of four operating subsidiaries into the Company through a capital increase.
2017 Due to YCIH’s merger of YNJG by absorption, YCIH obtained a 73.18% equity interest in our Company.
2017 We were among the first enterprises accredited with the “three-star” rating in the Green Building Materials Star Rating in Yunnan Province.
2017 We were elected 2016 Top Ten Ready-Mixed Concrete Enterprises in China
2017 We were accredited as a High-tech Enterprise.
2017 We were converted into a joint stock limited company and were renamed “YCIH Green High-Performance Concrete Company Limited”.
2018 We were elected 2017 Top Ten Commercial Concrete Enterprises in China.
2018 Our scientific research achievements won the second prize of Yunnan Science and Technology Progress Award.
ESTABLISHMENT OF THE COMPANY AND MAJOR CHANGES IN EQUITY INTERESTS
(1) On June 19, 2007, YNJG Concrete established the Company (i.e. YNJG Green High-Performance Concrete Co., Ltd. (雲南建工綠色高性能混凝土有限公司)) with a registered capital of RMB10,000,000 and with the place of registration in Kunming, Yunnan Province.
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(2) In December 2009, the Company introduced KMEIC as a shareholder, increased the registered capital to RMB66,000,000 and was renamed “YNJG-KMEIC Green High- Performance Concrete Co., Ltd. (雲南建工經開綠色高性能混凝土有限公司)”. The capital contributions subscribed for by YNJG Concrete and KMEIC accounted for 51% and 49% of the then registered capital of the Company, respectively.
(3) As YNJG Concrete was merged by absorption into YNJG as the Commercial Concrete Division, YNJG Concrete transferred to YNJG all 51% of its equity interest in the Company in September 2011.
(4) In December 2016, the Company carried out a capital increase and introduced YOIC (a wholly-owned subsidiary of YCIH) as a shareholder. The registered capital of the Company was proposed to be increased to RMB500,000,000 and its place of registration was changed to Zhaotong, Yunnan Province.
According to the Agreement on Capital Increase entered into by YNJG, KMEIC, and YOIC, of the RMB434,000,000 intended increase in the registered capital of the Company, YNJG subscribed for RMB332,240,000, KMEIC subscribed for RMB19,410,000 and YOIC subscribed for RMB82,350,000. As part of the capital contribution, YNJG injected the operating assets of the Commercial Concrete Division and the equity interest of four subsidiaries into the Company and paid up RMB194,940,000 through assets in kind, YOIC paid up RMB51,450,000 in cash and KMEIC did not pay up. The total paid-up capital of the shareholders amounted to RMB312,390,000. Upon completion of the above-mentioned capital contributions, YNJG, KMEIC, and YOIC held 73.18%, 10.35%, and 16.47% equity interest in the Company, respectively.
(5) Due to YCIH’s merger of YNJG by absorption, YNJG’s 73.18% equity interest in the Company was transferred to YCIH in March 2017.
(6) On May 26, 2017, the shareholders’ general meeting of the Company unanimously passed the capital reduction plan to reduce the registered capital of the Company from RMB500,000,000 to RMB312,390,000 in accordance with the paid-up registered capital of each shareholder. On July 26, 2017, the Company’s registered capital was reduced from RMB500,000,000 to RMB312,390,000 with the shareholders and their respective shareholding percentages unchanged.
(7) On December 22, 2017, the Company was converted into a joint stock limited company as a whole and renamed “YCIH Green High-Performance Concrete Company Limited.”
As confirmed by our PRC Legal Advisers, the above capital changes and equity transfer of the Company have been legally performed and have been completed in compliance with relevant PRC laws and regulations; and the changes have been duly registered with relevant administration authorities for industry and commerce pursuant to applicable PRC laws and regulations.
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ESTABLISHMENT AND DEVELOPMENT OF OUR SUBSIDIARIES
The Company had the following six subsidiaries as of the Latest Practicable Date.
Baoshan Building Material
Baoshan Building Material is a limited liability company established on January 21, 2015 and carrying out its business in the PRC. Its principal businesses include the research and development, production, sale, transport and pumping of commercial concrete; and the research and development, production and sales of prefabricated concrete components, new wall materials, admixtures, ready-mixed mortar and other building components, and concrete admixtures. It also provides technical consultation, technology research and development, technology transfer and technology services in the field of concrete. When Baoshan Building Material was established, YNJG held 50% of its equity interest, and Baoshan Yongchang Investment Development Co., Ltd. (保山市永昌投資開發有限公司), the predecessor of Yongchang Investment, held 50% of its equity interest.
On January 22, 2017, YNJG transferred all of the equity interest it held in Baoshan Building Material to the Company as an in-kind capital contribution to the Company.
As of the Latest Practicable Date, the registered capital of Baoshan Building Material was RMB26,000,000. The Company held a 50% equity interest and Yongchang Investment held a 50% equity interest in Baoshan Building Material. The total assets of Yongchang Investment as of December 31, 2018 was approximately RMB15,794.52 million. According to the Articles of Association of Baoshan Building Material, the Company is entitled to nominate three out of the five directors of Baoshan Building Material, while Yongchang Investment is entitled to nominate the remaining two directors, and it is agreed that such directors nominated by Yongchang Investment would act in concert with the directors nominated by the Company in exercising their voting power on certain major operating and management affairs of Baoshan Building Material at its board meetings as long as those affairs do not substantially compromise the interests of Yongchang Investment. Such arrangement had been agreed upon between the Company and Yongchang Investment because of the similarity between the principal business of the Company and Baoshan Building Material, with Yongchang Investment being a policy-based investment and financing platform and principally engaged in the investment and financing business. As such, the involvement of Yongchang Investment in the management of Baoshan Building Material is limited.
Qujing Building Material
Qujing Building Material is a limited liability company established on August 19, 2014 and carrying out its business in the PRC. Its principal businesses include the research and development, production, sale, transportation and pumping of commercial concrete; the research and development, production and sales of prefabricated concrete components, wall materials, admixtures, ready-mixed mortar, building components, and concrete admixtures; and the provision of technical consultation, technology research and development, technology transfer and technology services in the field of concrete. When Qujing Building Material was established, YNJG held 50% of its equity interest, Yunnan Zhujiang held 30% of its equity interest and Qujing Zhongwei held 20% of its equity interest.
On January 19, 2017, YNJG transferred all of the equity interest it held in Qujing Building Material to the Company as an in-kind capital contribution to the Company.
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As of the Latest Practicable Date, the registered capital of Qujing Building Material was RMB40,000,000. The Company held a 50% equity interest, Yunnan Zhujiang held a 30% equity interest and Qujing Zhongwei held a 20% equity interest in Qujing Building Material. The principal businesses of Yunnan Zhujiang include the sales of agricultural seeds, fertilizer and agricultural equipment, leasing and corporate management services. The total assets of Yunnan Zhujiang as of December 31, 2018 was approximately RMB154.80 million. The principal businesses of Qujing Zhongwei include sales of cement, building materials and other commodities. The total assets of Qujing Zhongwei as of December 31, 2018 was approximately RMB169.83 million. The involvement of Yunnan Zhujiang and Qujing Zhongwei in the management of Qujing Building Material is limited.
Yuxi Building Material
Yuxi Building Material is a limited liability company established on July 10, 2015 and carrying out its business in the PRC. Its principal businesses include the research and development, production, sale, transportation and pumping of commercial concrete; the research and development, production and sale of prefabricated concrete components, new wall materials, admixtures, ready-mixed mortar and other building components, and concrete admixtures; and the provision of technical consultation, technology research and development, technology transfer and technology services in the field of concrete. When Yuxi Building Material was established, YNJG held 55% of its equity interest and Yuanjiang Zhikai Materials Industry and Trade Co., Ltd. (元江志開物資工貿有限公司) held 45% of its equity interest.
On January 23, 2017, YNJG transferred all the equity interest it held in Yuxi Building Material to the Company as an in-kind capital contribution to the Company.
On August 8, 2019, Yuanjiang Zhikai Materials Industry and Trade Co., Ltd. (元江志開 物資工貿有限公司), a shareholder of Yuxi Building Material, transferred 30% equity interest in Yuxi Building Material to Yuxi Yanhe Land Development Investment Co., Ltd. (玉溪研和土 地開發投資有限公司) at a consideration of RMB4,331,200.
As of the Latest Practicable Date, the registered capital of Yuxi Building Material was RMB12,000,000. The Company held a 55% equity interest, Yuxi Yanhe Land Development Investment Co., Ltd. held a 30% equity interest and Yuanjiang Zhikai Materials Industry and Trade Co., Ltd. held a 15% equity interest in Yuxi Building Material.
Polymer Company
Polymer Company is a limited liability company established on September 3, 2013 and carrying out its business in the PRC. Its principal businesses include the research and development, production and sale of concrete admixtures. It also provides technical consultation, research and development, technology transfer and technical services in the field of concrete. When Polymer Company was established, YNJG held 100% of its equity interest.
On January 10, 2017, YNJG transferred all the equity interest it held in Polymer Company to the Company as an in-kind capital contribution to the Company.
As of the Latest Practicable Date, Polymer Company was a wholly-owned subsidiary of the Company with a registered capital of RMB33,000,000.
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Aggregate Company
Aggregate Company is a limited liability company established on September 30, 1999 and carrying out its business in the PRC. Its business scope includes processing and selling construction sand and stone, as well as the wholesale, retail and commission purchase and sales of construction materials, decorative materials and metal materials.
To further streamline its business structure, on May 31, 2018, YCIH transferred all the equity interest it held in the Aggregate Company to the Company. Based on the evaluation report issued by an independent valuer, the consideration of the transfer of the above- mentioned equity interest was RMB18,215,400, which was settled in cash in June 2018.
As of the Latest Practicable Date, the Aggregate Company was a wholly-owned subsidiary of the Company with a registered capital of RMB23,000,000.
14th Metallurgical New Material Company
14th Metallurgical New Material Company is a limited liability company established on January 3, 2014 and carrying out its business in the PRC. Its principal businesses include the research and development, production, sale, transportation and pumping of commercial concrete; the research and development, production and sale of prefabricated concrete components, new wall materials, admixtures, ready-mixed mortar, building components, and concrete admixtures; and the provision of technical consultation, technology research and development, technology transfer and technology services in the field of concrete. When 14th Metallurgical New Material Company was established, 14th Metallurgical Construction Group Yunnan Fifth Construction and Installation Engineering Co., Ltd. (十四冶建設集團雲南第五建 築安裝工程有限公司), a non-wholly-owned subsidiary of YCIH, held 100% of its equity interest.
For the purpose of further streamlining the internal business structure of YCIH, on February 13, 2018, 14th Metallurgical Construction Group Yunnan Fifth Construction and Installation Engineering Co., Ltd. transferred all the equity interest it held in 14th Metallurgical New Material Company to the Aggregate Company (at that time it was a wholly-owned subsidiary of YCIH). On December 5, 2018, the Aggregate Company transferred all the equity interest it held in 14th Metallurgical New Material Company to the Company. Based on the audited net assets in the audit report issued by an independent auditor, the consideration of the transfer of the above-mentioned equity interest was RMB32,647,209.12, which was settled in cash in November 2018.
As of the Latest Practicable Date, 14th Metallurgical New Material Company was a wholly-owned subsidiary of the Company with a registered capital of RMB30,000,000.
As confirmed by the PRC Legal Advisers, the above equity transfers of the subsidiaries have been legally performed and have been completed in compliance with relevant PRC laws and regulations; and the above equity transfers have been duly registered with relevant administration authorities for industry and commerce pursuant to applicable PRC laws and regulations.
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SHAREHOLDING AND CORPORATE STRUCTURE
The following chart sets out the shareholding and corporate structure of the Company immediately prior to the completion of the [REDACTED]:
YCIH(1) KMEIC(3)
100.00%
YOIC(2)
16.47% 73.18% 10.35%
Our Company
55.00% 50.00% 50.00% 100.00% 100.00% 100.00%
14th Yuxi Building Qujing Building Baoshan Building Aggregate Polymer Metallurgical New Material(4) Material(5) Material(6) Company Company Material Company
Notes:
(1) YCIH is a limited liability company established in the PRC on April 19, 2016. Yunnan SASAC holds 90.27% of its equity interest and Yunnan Provincial Department of Finance (雲南省財政廳) holds 9.73% of its equity interest.
(2) YOIC is a limited liability company established in the PRC on November 16, 2009 and a wholly-owned subsidiary of YCIH.
(3) KMEIC is a limited liability company established in the PRC on July 6, 2006. The State-owned Assets Administration Commission of Kunming Economic and Technological Development Zone (昆明經濟技術開發 區國有資產管理委員會) holds 100% of its equity interest.
(4) As of the Latest Practicable Date, the Company held 55% equity interest of Yuxi Building Material, Yuxi Yanhe and Land Development Investment Co., Ltd., which, except for its equity interest in Yuxi Building Material, had no other connected relationship with the Company, held 30% equity interest and Yuanjiang Zhikai Materials Industry and Trade Co., Ltd., which, except for its equity interest in Yuxi Building Material, had no other connected relationship with the Company, held 15% equity interest. Yanhe Industrial Park Administration Commission of Yuxi (玉溪研和工業園區管理委員會) held 100% equity interest in Yuxi Yanhe Land Development Investment Co., Ltd.. Each of Mr. Li Zhifeng (李志鋒) and Mr. Wang Kaiming (王開明) held 50% equity interest in Yuanjiang Zhikai Materials Industry and Trade Co., Ltd., respectively. Mr. Li Zhifeng served as a director of Yuxi Building Material. Save as disclosed above, they had no other connected relationship with the Company.
(5) As of the Latest Practicable Date, the Company held 50% equity interest of Qujing Building Material, Yunnan Zhujiang, which, except for its equity interest in Qujing Building Material, had no other connected relationship with the Company, held 30% equity interest, and Qujing Zhongwei, which, except for its equity interest in Qujing Building Material, had no other connected relationship with the Company, held 20% equity interest. Qujing Fuli Development Co., Ltd. (曲靖富力發展有限責任公司) and Mr. Li Rufeng (李如峰) held 56.67% and 43.33% equity interest of Yunnan Zhujiang, respectively. Mr. Jiang Deyou (姜德有), who served as the deputy chairman of Qujing Building Material, held 75% equity interest in Qujing Fuli Development Co., Ltd., and Ms. Li Lixian (李麗仙), Ms. Li Lijuan (李麗娟), Mr. Jiang Desheng (姜德生) and Mr. Huang Chengcai (黃成才) collectively held 25% equity interest of Qujing Fuli Development Co., Ltd. Save as disclosed above, they had no other connected relationship with the Company. Mr. Qiu Guangxiong (邱光雄) and Mr. Qiu Xuezhi (邱學 治) were the ultimate beneficial owners of Qujing Zhongwei, holding 60% and 40% equity interest of such company, respectively. Save as disclosed above, they had no other connected relationship with the Company.
(6) As of the Latest Practicable Date, the Company held 50% equity interest of Baoshan Building Material, and Yongchang Investment, which, except for its equity interest in Baoshan Building Material, had no other connected relationship with the Company, held 50% equity interest. The State-Owned Assets Supervision and Administration Commission of Baoshan (保山市國有資產監督管理委員會) held 100% equity interest of Yongchang Investment.
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The following chart sets out the shareholding and corporate structure of the Company immediately upon the completion of the [REDACTED] (assuming that the [REDACTED]is not exercised):
[REDACTED]
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