Connected Transaction Acquisition Of

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. CONNECTED TRANSACTION ACQUISITION OF EQUITY INTERESTS HELD BY PARENT On 17 December 2010, South Cement, a subsidiary of the Company, entered into the Share Transfer Agreement with Parent to acquire 30,090,951 shares of Fujian Cement (representing 7.88% of the issued share capital of Fujian Cement) held by Parent. Fujian Cement is principally engaged in the production and sale of cement. As Parent is a connected person of the Company by virtue of Parent being a substantial Shareholder (as defined under the Listing Rules) of the Company, the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As all the percentage ratios (as defined under the Listing Rules) are less than 5%, the Acquisition is only subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules and is exempt from the independent shareholders’ approval requirement under Chapter 14A. — 1 — The Board is pleased to announce that on 17 December 2010, South Cement, a subsidiary of the Company, entered into the Share Transfer Agreement with Parent to acquire Equity Interests in Fujian Cement. Share Transfer Agreement Date: 17 December 2010 Parties: (i) Parent (ii) South Cement Equity Interests to be acquired: On 17 December 2010, South Cement entered into the Share Transfer Agreement with Parent to acquire 30,090,951 shares of Fujian Cement (representing 7.88% of the issued share capital of Fujian Cement) held by Parent. The shares of Fujian Cement are traded on the Shanghai Stock Exchange. Consideration and payment term: The Consideration payable in cash for the proposed Acquisition of Equity Interests in Fujian Cement is RMB225,682,133 (approximately HK$263,542,673). South Cement is to pay RMB162,500,000 (approximately HK$189,761,076) to Parent within 1 business day from the signing of the Share Transfer Agreement. The remaining balance of the Consideration will be payable upon the obtaining of approvals from the SASAC, in any event before the Equity Interests are transferred to South Cement. The RMB162,500,000 shall be refunded to South Cement in the event that the SASAC does not approve the Acquisition. — 2 — Based on the PRC audited accounts of Fujian Cement which have been prepared in accordance with PRC GAAP, the net profits attributable to Fujian Cement before and after taxation for the year ended 31 December 2008 were approximately RMB4.71 million (approximately HK$5.50 million) and approximately RMB5.70 million (approximately HK$6.66 million) respectively. The net profits attributable to Fujian Cement before and after taxation for the year ended 31 December 2009 were approximately RMB-85.47 million (approximately HK$-99.81 million) and approximately RMB-95.69 million (approximately HK$-111.74 million) respectively. The Consideration for the Acquisition of Equity Interests in Fujian Cement and related costs will be financed by internal resources of South Cement. Basis of Consideration: In accordance with “Tentative Measures for the Administration of the Transfer of Shares of Listed Companies Held by State-owned Shareholders”, the price per share for the Acquisition of Equity Interests is determined on basis of the arithmetic mean of the daily weighted average price in the 30 trading days preceding the date of signing of the agreement. Where discount is necessary, the final price should not be less than 90% of the arithmetic mean. As such, Parent and South Cement have agreed on the price per share of RMB7.5, representing a 1.96% discount of the arithmetic mean of the daily weighted average price of Fujian Cement’s shares on the Shanghai Stock Exchange in the 30 trading days preceding 17 December, being the date of signing of the Share Transfer Agreement, the total value for the transfer of Equity Interests is: RMB7.5 X 30,090,951 = RMB225,682,133 (approximately HK$263,542,673). Conditions: The Share Transfer Agreement for the Acquisition of Equity Interests in Fujian Cement will become effective upon (1) Parent and South Cement having signed and affixed their seals to the Share Transfer Agreement; and (2) the obtaining of approvals of the SASAC. Completion: The Equity Interests shall be transferred to South Cement upon the obtaining of approvals from the SASAC and the full payment of Consideration. Upon completion of the Acquisition, South Cement will hold 7.88% of the issued share capital of Fujian Cement, which will not be a subsidiary of the Company. — 3 — Reasons for and benefits of the Acquisition The Company believes that the proposed Acquisition of Equity Interests is in line with the strategic development of the Group, and will enable the Group to further develop and expand its cement business in the South East Region. The directors of the Company (including the independent non-executive directors) are of the view that the Share Transfer Agreement have been entered into on normal commercial terms in the ordinary and usual course of business of the Company and the terms of the Share Transfer Agreement are fair and reasonable and in the interests of the Company and its Shareholders as a whole. Information on Parent Parent is a state-owned limited liability company engaged in building material business in the PRC. Information on Fujian Cement Fujian Cement is engaged in the production and sale of cement. Fujian Cement has a total share capital of 381,873,666 shares, all being tradable A shares on the Shanghai Stock Exchange. The controlling shareholder of Fujian Cement is Fujian Building Materials (Holding) Company Limited (福建省建材（控股）有限責任公司) which holds an aggregate of 109,913,089 shares, representing 28.78% in the issued share capital of Fujian Cement. Parent holds 30,090,951 shares of Fujian Cement, representing 7.88% in the issued share capital of Fujian Cement. Fujian Cement currently has established 7 cement production lines, with an annual production capacity of approximately 5 million tons. It is also constructing a clinker production line with a projected production capacity of 4,500 tons per day. Fujian Cement has established grinding stations in Fuzhou, the major consumption area of Fujian Province, with grinding capacity and projected grinding capacity under construction of approximately 1.05 million tons per annum and approximately 0.75 million tons per annum respectively. — 4 — Information on South Cement South Cement is engaged in the production and sale of cement. It is 80% owned by the Company and was established for the purpose of developing the Group’s cement business in the South East Region. South Cement has a cement production capacity of more than 100 million tons per annum. Information on the Company The Company is a leading building materials company in the PRC with significant operations in cement, lightweight building materials, glass fibre and composite materials, and engineering services business segments. Listing Rules implications As Parent is a connected person of the Company by virtue of Parent being a substantial Shareholder (as defined under the Listing Rules) of the Company, the Acquisition constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As all the percentage ratios (as defined under the Listing Rules) are less than 5%, the Acquisition is only subject to the reporting and announcement requirements under Rules 14A.45 to 14A.47 of the Listing Rules and is exempt from the independent shareholders’ approval requirement under Chapter 14A. Definitions In this announcement, the following expressions shall have the following meanings unless the context requires otherwise: “Acquisition” the proposed acquisition of 30,090,951 shares of Fujian Cement (representing 7.88% of issued share capital of Fujian Cement) by South Cement “Board” the board of directors of the Company “Company” 中國建材股份有限公司(China National Building Material Company Limited*), a joint stock limited company incorporated under PRC law, the H shares of which are listed on The Stock Exchange of Hong Kong Limited — 5 — “Consideration” the aggregate purchase price for the Equity Interests “Equity Interests” 30,090,951 shares of Fujian Cement, representing 7.88% of issued share capital of Fujian Cement “Fujian Cement” 福建水泥股份有限公司(Fujian Cement Inc.*), a joint stock company incorporated under the PRC law, the A shares of which are listed on the Shanghai Stock Exchange “Group” the Company and its subsidiaries from time to time “HK$” Hong Kong dollars, the lawful currency of Hong Kong “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited “Parent” 中國建築材料集團有限公司(China National Building Material Group Corporation*), a limited liability company established under the law of the PRC and a controlling shareholder of the Company “PRC” the People’s Republic of China. Geographical references in this announcement to the PRC exclude Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan “RMB” Renminbi, the lawful currency of the PRC “SASAC” the State-owned Assets Supervision and Administration Commission of the State Council “Share Transfer the transfer agreement dated 17 December 2010 entered into Agreement” between Parent and South Cement for the purpose of transferring the Equity Interests “Shareholders” the shareholder(s) of the Company — 6 — “South Cement” 南方水泥有限公司(South Cement Company Limited*), a limited liability company incorporated under the PRC law and a subsidiary of the Company “South East Region” the southeast region of the PRC, including but not limited to Shanghai, Zhejiang, Jiangsu, Hunan, Jiangxi and Fujian As at the date of this announcement, the executive Directors are Mr.

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