02233 西部水泥 展示文件：(e) 独立财务顾问函件

25July2025

ToTheIndependentBoardComiteand

TheIndependentShareholdersof

WestChinaCementLimited

DearSirorMadam,

MAJORDISPOSALSANDCONECTEDTRANSACTIONS

DISPOSALSOFCOMPANIESANDASETSINXINJIANG

INTRODUCTION

WerefertourapointmentastheindependentfinancialadvisertotheIndependent

BoardComiteandtheIndependentShareholdersinrespectoftheDisposals,detailsof

whicharesetoutintheleterfromtheBoard(the

‘

LeterfromtheBoard

’

)containedinthe

circularisuedbytheCompanytotheShareholdersdated25July2025(the

‘

Circular

’

),of

whichthisleterformspart.Capitalisedtermsusedinthisletershalhavethesamemeanings

asthosedefinedintheCircularunlesthecontextotherwiserequires.

On25June2025(aftertradinghours),theGroupenteredintothefolowingtransactions:

(1)TransactionA:VendorAandthePurchasersenteredintotheEquityTransfer

Agrement,pursuantowhich,VendorAhasconditionalyagredtoselandthe

Purchasershaveconditionalyagredtopurchasethentirequityinterestineachof

theTargetCompaniesataconsiderationofRMB398.0milion,subjecto

adjustment;

(2)TransactionB:VendorB,thePurchasersandVendorA(asguarantor)enteredinto

theAPAB,pursuantowhich,VendorBhasconditionalyagredtoselandthe

AsetPurchaserBhasconditionalyagredtopurchaseAsetsBataconsideration

ofRMB161.5milion,subjectoadjustment;

(3)TransactionC:VendorsC,thePurchasersandVendorA(asguarantor)enteredinto

theAPAC,pursuantowhich,VendorsChasconditionalyagredtoselandthe

AsetPurchaserChasconditionalyagredtopurchaseAsetsCataconsideration

ofRMB920.5milion,subjectoadjustment;and

---

(4)TransactionD:VendorsD,thePurchasersandVendorA(asguarantor)enteredinto

theAPAD,pursuantowhich,VendorsDhasconditionalyagredtoselandthe

AsetPurchaserDhasconditionalyagredtopurchaseAsetsDataconsideration

ofRMB170.0milion,subjectoadjustment.

UponCompletion,theCompanywilnolongerhave(i)anyequityinterestintheTarget

CompaniesandeachoftheTargetCompanieswilceasetobeasubsidiaryoftheCompany;

and(i)anyinterestintheTargetAsets.

LISTINGRULESIMPLICATION

MajorTransactions

Asthehighestaplicablepercentageratios(asdefinedundertheListingRules)forthe

Disposalsexceds25%butislesthan75%,theDisposalsconstitutemajortransactionsforthe

CompanyunderChapter14oftheListingRules,andthereforearesubjectothereporting,

anouncement,circularandShareholders

’

aprovalrequirementsunderChapter14ofthe

ListingRules.

ConectedTransaction

AsatheLatestPracticableDate,ConchInternationalheldaproximately29.01%ofthe

entireisuedsharecapitaloftheCompanyandisasubstantialShareholder.EachofConch

InternationalandPurchaserBiswholy-ownedbyPurchaserAasatheLatestPracticable

Date.Asuch,eachofPurchaserAandPurchaserBisanasociateofConchInternationaland

aconectedpersonoftheCompanyunderChapter14AoftheListingRules.Acordingly,the

transactionscontemplatedundertheEquityTransferAgrementandeachoftheAPAs

constituteconectedtransactionsoftheCompanyunderChapter14AoftheListingRulesand

aresubjectotherequirementsofreporting,anouncement,andtheIndependentShareholders

’

aprovalunderChapter14AoftheListingRule.

AsatheLatestPracticableDate,eachofMr.WangManboandMr.WangZhixin,anon-

executiveDirector,isanemployeofPurchaserA,andeachofthemhasabstainedfromvoting

ontheBoardresolutionsaprovingtheEquityTransferAgrement,eachoftheAPAsandthe

transactionscontemplatedthereunder.Saveastheabove,noneoftheotherDirectorshas

materialinterestinthetransactionscontemplatedundertheEquityTransferAgrementand

eachoftheAPAsorisrequiredtoabstainfromvotingontheBoardresolutionsinrelationto

thetransactionscontemplatedundertheEquityTransferAgrementandeachoftheAPAs.

EGM

TheEGMwilbeconvenedandheldforthepurposeofconsideringand,ifthoughtfit,

aprovingtheEquityTransferAgrementandtheAPAsandthetransactionscontemplated

thereunderbywayofpol.

AtheEGM,anyShareholderswithamaterialinterestintheEquityTransferAgrement,

eachoftheAPAsandthetransactionscontemplatedthereunderarerequiredtoabstainfrom

votinginrespectoftheresolution(s)aprovingtheEquityTransferAgrement,eachofthe

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–

---

APAsandthetransactionscontemplatedthereunder.AsatheLatestPracticableDate,Conch

Internationalanditsasociatesheldanagregateof1,584,849,970Shares(representing

aproximately29.01%ofthetotalisuedsharecapitaloftheCompany)andshalabstainfrom

votinginrespectoftheresolution(s)aprovingtheEquityTransferAgrement,eachofthe

APAsandthetransactionscontemplatedthereunder.AsatheLatestPracticableDate,tothe

bestoftheDirectors

’

knowledge,informationandbeliefhavingmadealreasonablenquiries,

exceptforConchInternationalanditsasociates,notherShareholderswilberequiredto

abstainfromvotingontheresolution(s)inrespectoftheEquityTransferAgrement,eachof

theAPAs,andthetransactionscontemplatedthereunderatheEGM.

THEINDEPENDENTBOARDCOMITE

TheIndependentBoardComitecomprisingaltheindependentnon-executive

Directors,namelyMr.LeKongWaiConway,Mr.TamKingChingKeny,Mr.ZhuDong,

Mr.FengTao,andMr.LauKaKeung,hasbenestablishedbytheCompanytoadvisethe

IndependentShareholdersasto(i)whetherthetermsoftheEquityTransferAgrementand

eachoftheAPAsandthetransactionscontemplatedthereunderareonormalcomercial

termsandintheordinaryandusualcourseofbusinesoftheGroup;and(i)whethertheterms

oftheDisposalsarefairandreasonableandintheinterestsoftheCompanyandthe

Shareholdersasawhole.We,CMBCInternationalCapitalLimited,havebenapointedasthe

independentfinancialadvisertoadvisetheIndependentBoardComiteandtheIndependent

Shareholdersinsuchregard.

OURINDEPENDENCE

AsatheLatestPracticableDate,CMBCInternationalCapitalLimitedidnothaveany

relationshipsorinterestswiththeCompany,VendorA,theAsetTransferVendorsorany

otherpartiesthatcouldreasonablyberegardedasrelevantotheindependenceofCMBC

InternationalCapitalLimited.Inthelastwoyears,CMBCInternationalCapitalLimitedhad

notactedasindependentfinancialadvisertotheCompany.Wearenotawareofanyofthe

circumstancesetoutinRule13.84oftheListingRules,thatwouldafectourindependenceto

adviseyouontheDisposals,existedasatheLatestPracticableDate.

BASISOFOUROPINION

Informulatingouropinion,wehavereliedontheinformation,statementsuplied,facts

andrepresentationscontainedoreferedtointheCircularandtheinformation,factsand

representationsprovidedby,andtheopinionsexpresedbytheDirectors,managementofthe

Companyanditsubsidiaries(the

‘

Management

’

),aswelas,oureferencetotherelevant

publicinformation.Wehaveasumedthataltheinformationprovided,statementsuplied,

andrepresentationsandopinionsexpresedtousorcontainedoreferedtointheCircular

weretrue,acurateandcompleteinalmaterialrespectsathetimetheywereprovidedand

continuetobetrueuptothedateoftheEGMandalsuchstatementsofbelief,opinionsand

intentionoftheDirectorsandtheManagementandthoseasetoutoreferedtointhe

Circularwerereasonablymadeafterdueandcarefulenquiry.Wehavenoreasontodoubthe

truth,acuracyandcompletenesoftheinformationandrepresentationsprovidedtousbythe

–

–

---

Directorsand/ortheManagement.Wehavealsosoughtandreceivedconfirmationfromthe

CompanyandtheDirectorsthatnomaterialfactshavebenwitheldoromitedfromthe

informationandstatementsprovidedaswelasopinionsandrepresentationsexpresedtous.

Weconsiderthatwehavereviewedtherelevantinformationcurentlyavailabletoreach

aninformedviewandtojustifyourelianceontheacuracyoftheinformationcontainedin

theCircularsoastoprovideareasonablebasisforourecomendation.Wehavenot,

however,cariedoutanyindependentverificationoftheinformationprovided,statement

suplied,representationsmadeoropinionexpresedbytheDirectorsandtheManagement,nor

haveweconductedanyformofin-depthinvestigationintothebusines,afairs,operations,

financialpositionorfutureprospectsoftheCompanyoranyoftheirespectivesubsidiariesor

asociates.

PRINCIPALFACTORSANDREASONSCONSIDERED

InformulatingouropinioninrespectoftheDisposals,wehavetakenintoconsideration

thefolowingprincipalfactorsandreasons:

1.BackgroundinformationoftheDisposals

TheBoardherebyanouncesthaton25June2025(aftertradinghours):

(1)TransactionA:VendorAandthePurchasersenteredintotheEquityTransfer

Agrement,pursuantowhich,VendorAhasconditionalyagredtoseland

thePurchasershaveconditionalyagredtopurchasethentirequityinterest

ineachoftheTargetCompaniesataconsiderationofRMB398.0milion,

subjectoadjustment;

(2)TransactionB:VendorB,thePurchasersandVendorA(asguarantor)entered

intotheAPAB,pursuantowhich,VendorBhasconditionalyagredtosel

andtheAsetPurchaserBhasconditionalyagredtopurchaseAsetsBata

considerationofRMB161.5milion,subjectoadjustment;

(3)TransactionC:VendorsC,thePurchasersandVendorA(asguarantor)entered

intotheAPAC,pursuantowhich,VendorsChasconditionalyagredtosel

andtheAsetPurchaserChasconditionalyagredtopurchaseAsetsCata

considerationofRMB920.5milion,subjectoadjustment;and

(4)TransactionD:VendorsD,thePurchasersandVendorA(asguarantor)

enteredintotheAPAD,pursuantowhich,VendorsDhasconditionalyagred

toselandtheAsetPurchaserDhasconditionalyagredtopurchaseAsetsD

ataconsiderationofRMB170.0milion,subjectoadjustment.

UponCompletion,theCompanywilnolongerhave(i)anyequityinterestinthe

TargetCompaniesandeachoftheTargetCompanieswilceasetobeasubsidiaryofthe

Company;and(i)anyinterestintheTargetAsets.

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2.TheEquityTransferAgrementandtheAPAs

TheprincipaltermsoftheEquityTransferAgrementandtheAPAsaresetoutas

below:

A.TheEquityTransferAgrement

Date:25June2025(aftertradinghours)

Parties:(i)VendorA(anindirectwholy-ownedsubsidiaryof

theCompany)

(i)PurchaserA

(i)PurchaserB

Subjectmater:VendorAhasconditionalyagredtoselandthe

Purchasershaveconditionalyagredtopurchasethe

entirequityinterestineachoftheTargetCompanies.

AmongthePurchasers,PurchaserAandPurchaserB

haveagredtoacquire90%and10%ofthentirequity

interestineachoftheTargetCompanies,respectively.

Consideration:Theconsiderationforthetransferofthentirequity

interestintheTargetCompaniesisRMB398.0milion,

subjectotheadjustment.

TheconsiderationshalbepaidbythePurchasersto

VendorAbyinstalmentinthefolowingmaner:

(i)Firstinstalment:within10workingdaysfromthe

dateonwhichVendorAcompletesalofthe

folowingconditions,40%oftheconsiderationshal

besetledbyPurchasers:

(a)theshareholders

’

aprovalofeachofthe

TargetCompanies,andtheboard

’

saprovalof

VendorA,aprovingthetransferofthentire

equityinterestoftherelevantTargetCompany

havingbenprovidedbyVendorAtothe

Purchasers,andtheShareholders

’

aproval

aprovingthetransferofthentirequity

interestoftherelevantTargetCompanyhaving

benobtained;

–

–

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(b)aleterofguarantehavingbenisuedby

VendorAguaranteingitsobligationsand

liabilitiesundertheEquityTransferAgrement

andtheAPAs,onajointandseveraliability

basis;

(c)anunconditionalandirevocablebank

guaranteintheamountofnotlesthan

RMB100miliontoguarantetheobligations

andliabilitiesundertheEquityTransfer

AgrementandtheAPAshavingbenisued

andobtained;

(d)withinsevendaysaftertheEquityTransfer

Agrementbecomefective,theTarget

Companieshavingobtainedandeliveredto

thePurchasersthewritenconsentsofits

respectivetop10creditors;

(e)thehandoverofthemanagementrightsofthe

TargetCompanies,theisuanceoftheaudited

reportoftheTargetCompaniesforthe

TransitionalPeriod,thedeterminationofthe

adjustmentandthesigningofanyhandover

memorandumand/orsuplementaryagrement

inacordancewiththetermsandconditionsof

theEquityTransferAgrementhavingben

completed;

(f)within10workingdaysaftertheEquity

TransferAgrementbecomefective,an

anouncementinrelationtothetransactions

contemplatedundertheEquityTransfer

AgrementhavingbenpublishedbyVendor

Aonationalycirculatednewspaperathe

provincialevelorabove,aswelasonthe

NationalEnterpriseCreditInformation

PublicitySystem(国家企业信

息公示系统

);

and

(g)theEquityTransferAgrementhavingben

signedandbecomefective,andtheaproval

fromthestateanti-monopolyagency(国家反垄

断机构)havingbenobtained,andindustrial

andcomercialregistrationproceduresforthe

necesarychangesinrelationtothetransferof

thentirequityinterestintheTarget

Companieshavingbencompleted.

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–

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(i)Secondinstalment:within10workingdaysfromthe

dateonwhichVendorAcompletesalofthe

folowingconditions,40%oftheconsiderationshal

besetledbythePurchasers:

(a)withtheasistanceofVendorA,thevaluation

ofthemployesbytheTargetCompanies

havingbencompletedwithin1monthafter

theManagementTransferDate,andentering

intonewlabourcontractbytheTarget

Companieswiththosemployeswhohave

pasedsuchevaluation;VendorAhaving

procuredtheterminationofthelabourcontract

withitsemployes,setledtherelatedsocial

security,overtimewages,andcompensationfor

work-relatedinjuriesandeathswithsuch

employes,andVendorAhavingprovidedto

thePurchaserstherelevantsuportingevidence

forsuchterminationandsetlement(suchas

leteroftermination,profofpaymentof

compensationand/oremployesundertaking,

etc.),alofwhichshalbeconductedin

acordancewiththetermsandconditionsof

theEquityTransferAgrement;

(b)alencumbrancesonthoseasetswhichis

withinthescopeoftheEquityTransfer

Agrementhavingbenfulydischarged(if

any),andevidenceoftherelevantdischarge

havingbenprovidedbyVendorAtothe

Purchasers;

(c)terminationofexistingcontract(s)and/orthe

enteringintosuplementalagrement(s)for

contractsoftheTargetCompaniesinrelation

tomining,logistics,securityandsaleand

purchaseordershavingbencompleted;and

(d)theconditionsaspecifiedinsub-paragraph(i)

abovehavingbencompleted.

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(i)Thirdinstalment:within10workingdaysfromthe

dateonwhichVendorAcompletesalofthe

folowingconditions,14%oftheconsiderationshal

besetledbythePurchasers:

(a)within10workingdaysaftertheEquity

TransferAgrementbecomefective,thejoint

apointmentofanintermediaryorganisation

withprofesionaltestingqualificationsto

conductsamplingtestsonstelreinforcement

spacing,concretestrengthandstructuralsafety

ofthexistingsilosandshedsofclinker

storage,cementstorage,rawmaterialstorage,

etc.,oftheTargetCompanies,byVendorA

andthePurchasershavingbencompleted.

Basedontheconclusionofsuchtestingresults,

anreinforcementplanforsilosandshedsin

nedofreinforcementjointlyformulatedby

VendorAandthePurchasershavingben

completed,andengagementofacontractorto

completethesilosreinforcementworkswithin

sixmonthsaftertheManagementTransferDate

havingbencompleted;

(b)mininglicencefortheTargetCompaniesfor

thexpandedareaoftheCangyingou

limestonemineinHuochengCounty(霍城县

苍英沟石灰岩矿)havingbenobtained;

(c)withintheperiodof10monthsfromthe

ManagementTransferDate,nosituationthat

causesormaycauseconomiclosesor

atractslegaliabilitiestothePurchasersasa

resultof(1)anymaterspriortothe

ManagementTransferDate(including,butnot

limitedto,liabilities,busines,labourelations,

taxation,environmentalprotection,project

construction,construction,etc.);or(2)the

acquisitionofthentirequityinterestinthe

TargetCompanies,havingocured,saveand

exceptforthosesituationthathaveben

resolvedathexpenseofVendorA.Ifthe

setlementisactualyresolvedbythe

Purchasers,thePurchasershaldeductsuch

setlementamountfromtheconsiderationfor

thetransferofthentirequityinterestinthe

TargetCompanies,andanyshortfalshalbe

madeupbyVendorAincash;

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–

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(d)withintheperiodof10monthsfromthe

ManagementTransferDate,noformeror

curentemployehasapliedforlabour

arbitrationorfiledalawsuitorpetitiondueto

(1)thetransferofthentirequityinterestin

theTargetCompanies;or(2)materspriorto

theManagementTransferDate;or(3)maters

ocuringpriortotheManagementTransfer

Datebutcontinuingaftersuchdate,having

ocured,saveandexceptforthoselabour

arbitrationordisputesthathavebenresolved

athexpenseofVendorA.Ifthesetlementis

actualyresolvedbythePurchasers,the

Purchasershaldeductsuchsetlementamount

fromtheconsiderationforthetransferofthe

entirequityinterestintheTargetCompanies,

andanyshortfalshalbemadeupbyVendor

Aincash;

(e)alreceivableswhichiswithinthescopeofthe

listotheEquityTransferAgrementhaving

benrecoveredordisposedofinamaneras

agredbythePurchasers;

(f)therealestaterightscertificatefortheland,

withflorareaofaproximately84mu,

ocupiedby伊犁尧柏水泥有限公司(Yili

YaobaiCementCo.,Ltd.*),aTargetCompany,

havingbenobtainedbysuchTargetCompany;

and

(g)theconditionsaspecifiedinsub-paragraph(i)

abovehavingbencompleted.

(iv)Finalinstalment:within10workingdaysfromthe

dateonalofthefolowingconditionshavingben

completed,aloftheremainingconsiderationshal

besetledbythePurchasers:

(a)theManagementTransferDatehavingben

elapsedfor18months;

(b)aprovalfortheminesafetyfacilitydesign

planfortheTargetCompaniesforthe

expandedareaoftheCangyingoulimestone

mineinHuochengCounty(霍城县苍英沟石灰

岩矿)havingbenobtained;

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(c)thespecifiedobligationsandresponsibilitiesof

VendorAastipulatedintheEquityTransfer

Agrementhavingbencompletedin

acordancewiththetermsandconditions

thereof;and

(d)theconditionsaspecifiedinsub-paragraph

(i)abovehavingbencompleted.

Adjustmentofthe

Consideration

Theconsiderationforthetransferofthentirequity

interestintheTargetCompanieshalbeadjustedby(i)

adingtheamountequaltothediferencebetwenthe

amountofcurentasetsoftheTargetCompaniesasat

theManagementTransferDateandAcountsDate;and

(i)deductingtheamountequaltothediferencebetwen

theamountoftotaliabilitiesoftheTargetCompaniesas

atheManagementTransferDateandtheAcountsDate

tobetakenup,asauditedandconfirmedbytheparties.

Condition

precedent

TheEquityTransferAgrementshalonlybecome

efectiveuponsatisfactionofthefolowingconditions:

(i)theEquityTransferAgrementhavingbensigned

andsealedbyVendorAandthePurchasers;

(i)thepasingofthenecesaryresolutionsbythe

IndependentShareholdersatheEGMaprovingthe

EquityTransferAgrementandthetransactions

contemplatedthereunder;

(i)theshareholders

’

aprovalofeachoftheTarget

Companies,andtheboards

’

aprovalofVendorA,

aprovingthetransferofthentirequityinterestof

therelevantTargetCompanyhavingbenprovided

byVendorAtothePurchasers;

(iv)thePurchasershavingcompleteditsinternal

decision-makingandaprovalproceduresin

acordancewiththetermsoftheEquityTransfer

Agrement;

(v)theboardandshareholders

’

aprovalofVendorA

aprovingthetransferofthentirequityinterestof

theTargetCompanies,andtheleterofguaranteas

setoutundertheparagrapheaded

‘

I.The

Disposals

—

TransactionA

—

Considerationand

PaymentTerms

—

(i)(b)

’

intheLeterfromthe

Board,havingbenprovidedbyVendorAtothe

Purchasers;and

(vi)theaprovalfromthestateanti-monopolyagency

(国家反垄断机构)havingbenobtained.

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Completion:WithinsevenworkingdaysaftertheEquityTransfer

Agrementbecomefective,VendorAandthe

PurchasershaldeterminetheManagementTransfer

Date.

Completionshaltakeplaceonadatewithin10days

aftertheManagementTransferDate.UndertheEquity

TransferAgrementandtheAPAs,itwasagred

betwenthepartiesthathetransactionscontemplated

undertheEquityTransferAgrementandtheAPAsare

inseparable,ifanyofthemdoesnotbecomefective,

thenoneoftheEquityTransferAgrementandthe

APAshalbecomefective.Hence,ifanyoftheEquity

TransferAgrementandtheAPAsiscanceledor

terminatedwithinoneyearfromtheirespective

efectivedate(otherthanduetoreasonoforcemajeure

orStateAnti-monopolyComiteoritsubordinate

bodies),partiestotheEquityTransferAgrementandthe

APAs(whereaplicable)shalhavetherightorequest

forthecancelationorterminationofaltheEquity

TransferAgrementandtheAPAs.

UponCompletion,theCompanywilnolongerhaveany

equityinterestintheTargetCompaniesandeachofthe

TargetCompanieswilceasetobeasubsidiaryofthe

Company.

Bankguarante

andothers

TosecuretheobligationofVendorAundertheEquity

TransferAgrement,VendorAshalprovidean

unconditionalandirevocablebankguaranteinthe

amountofnotlesthanRMB100miliontothe

Purchaserstoguarantetheobligationsandliabilities

undertheEquityTransferAgrementandtheAPAsfora

termof42monthsfromtheManagementTransferDate.

VendorAagresthat,within42monthsfromthe

ManagementTransferDate,iftheagregateamount

undertheutilisedbankguaranteandtheremaining

considerationunderthefinalinstalmentoftheEquity

TransferAgrementandtheAPAsislesthanRMB20

milion,VendorAshalobtainaditionalunconditional

andirevocablebankguarante,sothatheagregate

amountofthebankguarantesandtheremaining

considerationunderthefinalinstalmentoftheEquity

TransferAgrementandtheAPAshalnotbelesthan

RMB80milion.

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Intheventofchangeinshareholding,asetsorother

materialchangeofVendorA,VendorAshalprocurethe

Companytoguarante,alobligationsandliabilitiesof

VendorAundertheEquityTransferAgrementandthe

APAs.

Useofbrandand

trademarks

Inordertomaintainthestabilityofthesalesmarketand

customerchanelsafterCompletion,PurchaserAmay

usethebrandandtrademarkofVendorAatnil

considerationforaperiodof12monthsafterthe

ManagementTransferDate.Duringtheperiodinwhich

thePurchasersusesthetrademarkofVendorA,ifthe

qualityofthecementandclinkermanufacturedbythe

PurchaserscauseslosestoVendorA,suchrelatedloses

shalbebornebythePurchasers.

B.TheAPAs

Date25June2025(aftertradinghours)

Parties:(i)VendorB(anindirectwholy-ownedsubsidiaryof

theCompany)forTransactionB,

VendorsC(eachanindirectwholy-owned

subsidiaryoftheCompany)forTransactionC,and

VendorsD(eachanindirectwholy-owned

subsidiaryoftheCompany)forTransactionD

(i)thePurchasers

(i)VendorA(asguarantor)

ThePurchasersintendtoestablishajointventureineach

ofYutianCounty,MoyuCountyandHetianCounty,

Xinjiang,asinvestmentvehicles,inrespectofthe

purchaseofAsetsB,CandDrespectively,among

whichPurchaserAandPurchaserBwilownasto90%

and10%ofthentirequityinterestinsuchinvestment

vehicles.PursuantoeachoftheAPAB,APACand

APAD,uponestablishmentoftherelevantinvestment

vehicles,therightsandobligationsofthePurchasers

undereachoftheAPAB,APACandAPADshalbe

enjoyedandasumedbytheabovementionedinvestment

vehiclesrespectively.

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Subjectmater:TransactionB

VendorBhasconditionalyagredtoselandtheAset

PurchaserBhasconditionalyagredtopurchaseAsets

B.

AsetsBcompriseof(i)non-curentasetsincluding

property,plantandequipment,right-of-useasetsand

miningrightsownedbyVendorB;and(i)receivables,

inventoriesandcashandcashequivalentsasatheAset

TransferDateofVendorB.

TransactionC

EachoftheVendorsChasconditionalyagredtosel

andtheAsetPurchaserChasconditionalyagredto

purchaseAsetsCownedbytherespectiveVendorsC.

AsetsCcompriseof(i)non-curentasetsincluding

property,plantandequipment,right-of-useasetsand/or

miningrightsownedbytherelevantVendorsC;and(i)

receivables,inventoriesandcashandcashequivalentsas

atheAsetTransferDateoftherelevantVendorsC.

TransactionD

EachoftheVendorsDhasconditionalyagredtosel

andtheAsetPurchaserDhasconditionalyagredto

purchaseAsetsDownedbytherespectiveVendorsD.

AsetsDcompriseof(i)non-curentasetsincluding

property,plantandequipment,right-of-useasetsand/or

miningrightsownedbytherelevantVendorsD;and(i)

receivables,inventoriesandcashandcashequivalentsas

atheAsetTransferDateoftherelevantVendorsD.

Consideration:TheconsiderationforthetransferofAsetsBis

RMB161.5milionsubjectoadjustment.

TheconsiderationforthetransferofAsetsCis

RMB920.5milionsubjectoadjustment.

TheconsiderationforthetransferofAsetsDis

RMB170.0milionsubjectoadjustment.

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PaymentTerms

undereachof

theAPAs

TheconsiderationundertherelevantAPAshalbepaid

bytherelevantAsetPurchasertotherelevantAset

TransferVendor,byinstalmentinthefolowingmaner:

(i)Firstinstalment:within10workingdaysfromthe

dateonwhichalofthefolowingconditionshaving

bencompleted,40%oftheconsiderationunderthe

relevantAPAshalbesetledbytherelevantAset

Purchaser:

(a)theboardandshareholders

’

aprovalofthe

relevantAsetTransferVendoraprovingthe

transferoftherelevantTargetAsetsin

acordancewiththetermsandconditionsof

therelevantAPAhavingbenprovidedbythe

relevantAsetVendortotherelevantAset

Purchaser;

(b)theleterofguarantehavingbenisuedby

therelevantAsetTransferVendorandVendor

A,guaranteingitsrespectiveobligationsand

liabilitiesundertheAPAsandtheEquity

TransferAgrement,onajointandseveral

liabilitybasis;

(c)anunconditionalandirevocablebank

guaranteintheamountofnotlesthan

RMB100miliontoguarantetheobligations

andliabilitiesundertheEquityTransfer

AgrementandtheAPAshavingbenisued

andobtainedbytherelevantAsetTransfer

Vendororitsrelatedentity;

(d)oftheliabilitieswhichwilnotbeasumedby

therelevantAsetPurchaser,withinsevendays

aftertherelevantAPAbecomefective,the

relevantAsetTransferVendorhaving

obtainedandeliveredtotherelevantAset

Purchaserthewritenconsentsofitsrespective

creditors(whicharerelatedpartiestosuch

relevantAsetTransferVendor);

(e)thestocktaking,confirmationonsuch

stocktaking,andtransferprocedures,the

isuanceoftheauditedreportoftherelevant

AsetTransferVendorfortheTransitional

Period,thedeterminationoftheadjustment

andthesigningofanyhandovermemorandum

and/orsuplementaryagrementinacordance

withthetermsandconditionsoftherelevant

APAhavingbencompleted;

–

–

---

(f)within10workingdaysaftertherelevantAPA

becomefective,ananouncementinrelation

tothetransactionscontemplatedunderthe

relevantAPAhavingbenpublishedbythe

relevantAsetTransferVendoronationaly

circulatednewspaperatheprovincialevelor

above,aswelasontheNationalEnterprise

CreditInformationPublicitySystem(国家企业

信息公示系统);

(g)thenteringinto(1)leaseagrementand

mortgagebytherelevantAsetTransfer

VendorwiththerelevantAsetPurchaserin

respectoftheleaseandmortgageonthe

mineralresourceswithinthescopeofthe

relevantAPA,(2)mortgagebytherelevant

AsetTransferVendorwiththerelevantAset

Purchaserinrespectofthemortgageofthe

landandotherimovablepropertieswithinthe

scopeoftherelevantAPA,and(3)pledge

agrementbyVendorAandtherelevantAset

TransferVendorwiththerelevantAset

Purchaserinrespectofthepledgeofthentire

equityinterestintherelevantAsetTransfer

Vendor,havingbencompleted,andthe

registrationandfilingoftheaforesaid

agrementshavingbencompleted;and

(h)therelevantAPAbecomefective,andthe

aprovalfromthestateanti-monopolyagency

(国家反垄断机构)havingbenobtained.

–

–

---

(i)Secondinstalment:within10workingdaysfromthe

dateonwhichalofthefolowingconditionshaving

bencompleted,40%oftheconsiderationunderthe

relevantAPAshalbesetledbytherelevantAset

Purchaser:

(a)withtheasistanceoftherelevantAset

TransferVendor,thevaluationofthe

employesbytherelevantAsetPurchaser

within1monthaftertheAsetTransferDate,

andenteringintonewlabourcontractby

relevantAsetPurchaserwiththosemployes

whometheconditionsofemploymentofthe

relevantAsetPurchaserhavingben

completed;andtherelevantAsetTransfer

Vendorhavingbenprovidedtotherelevant

AsetPurchasertherelevantsuporting

evidencefortheterminationofemployment

withsuchemployeswhohavepasedthe

evaluationandemployesundertakingetc.,al

ofwhichshalbeconductedinacordancewith

thetermsandconditionsoftherelevantAPA;

(b)alencumbrancesonthoseasetswhichis

withinthescopeoftherelevantAPAhaving

benfulydischarged(ifany),andevidenceof

therelevantdischargehavingbenprovidedby

therelevantAsetTransferVendortothe

relevantAsetPurchaser;

(c)oftheliabilitieswhichwilnotbeasumedby

therelevantAsetPurchaser,therelevantAset

TransferVendorhavingobtainedandelivered

totherelevantAsetPurchaserthewriten

consentsofitsrespectivetop10creditors

(whicharenotrelatedpartiestosuchrelevant

AsetTransferVendor);

(d)terminationofexistingcontract(s)and/or

amendmentsofexistingcontractsofthe

relevantAsetTransferVendorinrelationto

mining,logistics,securityandsaleand

purchaseordershavingbencompleted;and

(e)altheconditionsaspecifiedinsub-paragraph

(i)aboveinrespectoftherelevantAPAhaving

bencompleted.

–

–

---

(i)Thirdinstalment:within10workingdaysfromthe

dateonwhichalofthefolowingconditionshaving

bencompleted,14%oftheconsiderationunderthe

relevantAPAshalbesetledbytherelevantAset

Purchaser

(a)within10workingdaysaftertherelevantAPA

becomefective,thejointapointmentofan

intermediaryorganisationwithprofesional

testingqualificationstoconductsamplingtests

onstelreinforcementspacing,concrete

strengthandstructuralsafetyofthexisting

silosandshedsofclinkerstorage,cement

storage,rawmaterialstorage,etc.,whichfals

withinthescopeoftherelevantTargetAset,

bytherelevantAsetTransferVendorandthe

relevantAsetPurchaserhavingben

completed.Basedontheconclusionofsuch

testingresults,anreinforcementplanforsilos

andshedsinedofreinforcementjointly

formulatedbytherelevantAsetTransfer

VendorandtherelevantAsetPurchaser

havingbencompleted,andengagementof

contractortocompletethesilosreinforcement

workswithinsixmonthsaftertheAset

TransferDatehavingbencompleted;

(b)withintheperiodof10monthsfromtheAset

TransferDate,nosituationthatcausesormay

causeconomiclosesoratractslegal

liabilitiestotherelevantAsetPurchaserasa

resultof(1)anymaterspriortotheAset

TransferDate(including,butnotlimitedto,

liabilities,busines,labourelations,taxation,

environmentalprotection,projectconstruction,

construction,etc.);or(2)theacquisitionofthe

asetsundertherelevantAPA,having

ocured,saveandexceptforthosesituation

thathavebenresolvedathexpenseofthe

relevantAsetTransferVendor.Ifthe

setlementisactualyresolvedbytherelevant

AsetPurchaser,therelevantAsetPurchaser

shaldeductsuchsetlementamountfromthe

considerationforthetransferoftherelevant

TargetAset,andanyshortfalshalbemade

upbytherelevantAsetTransferVendorin

cash;

–

–

---

(c)withintheperiodof10monthsfromtheAset

TransferDate,noformerorcurentemploye

hasapliedforlabourarbitrationorfileda

lawsuitorpetitiondueto(1)thetransferofthe

asetsundertherelevantAPA;or(2)maters

priortotheAsetTransferDate;or(3)maters

ocuringpriortotheAsetTransferDatebut

continuingaftersuchdate,havingocured,

saveandexceptforthoselabourarbitrationor

disputesthathavebenresolvedathexpense

oftherelevantAsetTransferVendor.Ifthe

setlementisactualyresolvedbytherelevant

AsetPurchaser,therelevantAsetPurchaser

shaldeductsuchsetlementamountfromthe

considerationforthetransferoftherelevant

TargetAset,andanyshortfalshalbemade

upbytherelevantAsetTransferVendorin

cash;

(d)theamendmentortransferof,oraprovalfor

thechangeof,existingcertificate(s)or

aproval(s)underlyingtheasetsoftheTarget

Asetsinrelationtolandand/orealestate

rightscertificate(s);miningrightscertificate(s);

productproductionlicence(s),safety

productionlicence(s),constructionenterprises

qualification(s)(whereaplicable),sewage

licence(s)andotheraproval(s)orlicence(s)

requiredforthecementand/orclinkerand/or

comercialconcreteproductionlines,fromthe

relevantAsetTransferVendortotherelevant

AsetPurchaserhavingbencompleted;

(e)alreceivableswhichiswithinthescopeofthe

listotherelevantAPAhavingbenrecovered

ordisposedofinamanerasagredbythe

relevantAsetPurchaser;and

(f)theconditionsaspecifiedinsub-paragraph(i)

aboveinrespectoftherelevantAPAhaving

bencompleted.

–

–

---

(iv)Finalinstalment:within10workingdaysfromthe

dateonwhichalofthefolowingconditionshaving

bencompleted,aloftheremainingconsideration

shalbesetledbytherelevantAsetPurchaser:

(a)theAsetTransferDatehavingbenelapsed

for18months;

(b)thespecifiedobligationsandresponsibilitiesof

therelevantAsetTransferVendoras

stipulatedintherelevantAPAhavingben

completedinacordancewiththetermsand

conditionsthereof;

(c)thedateofpublicationoftheanouncementas

setoutundertheparagrapheaded

‘

TransactionB,TransactionCandTransaction

D

—

PaymentTerms

—

(i)(f)

’

intheLeter

fromtheBoardhavingbenelapsedforthre

years,anduringsuchperiodnodisputearise

inconectionwithanyliabilitiesduetonon-

relatedpartiesoftherelevantAsetTransfer

VendorinwhichtherelevantAsetTransfer

Vendorhasyetoresolvepursuantotheterms

oftherelevantAPA;and

(d)theconditionsaspecifiedinsub-paragraph

(i)aboveinrespectoftherelevantAPA

havingbencompleted.

Adjustmentsofthe

consideration

undereachof

theAPAs

TheconsiderationforthetransferoftherelevantTarget

Asetshalbeadjustedby(i)adingtheamountequalto

thediferencebetwenamountofcurentasetsofthe

relevantAsetTransferVendorasatheAsetTransfer

DateandtheAcountsDate;and(i)deductingthe

amountoftotaliabilitiesatherelevantAsetTransfer

VendorasatheAsetTransferDatetobetakenup,as

auditedandconfirmedbytheparties.

Conditions

precedentunder

eachofthe

APAs

TheAPAshalonlybecomefectiveuponsatisfaction

ofthefolowingconditions:

(i)therelevantAPAhavingbensignedandsealedby

therelevantAsetTransferVendorandthe

Purchasers;

–

–

---

(i)thepasingofthenecesaryresolutionsbythe

IndependentShareholdersatheEGMaprovingthe

relevantAPAandthetransactionscontemplated

thereunder;

(i)theboardandshareholders

’

aprovaloftherelevant

AsetTransferVendoraprovingthetransferofthe

relevantTargetAsethavingbenprovidedbythe

relevantAsetTransferVendortotherelevantAset

Purchaser;

(iv)therelevantAsetPurchaserhavingcompletedits

internaldecision-makingandaprovalproceduresin

acordancewiththetermsoftheAPAs;

(v)theboardandshareholders

’

aprovalofVendorA

andtherelevantAsetTransferVendor,

respectively,aprovingthetransferoftherelevant

TargetAsets,andtheleterofguaranteasetout

undertheparagrapheaded

‘

I.TheDisposals

—

TransactionB,TransactionCandTransactionD

—

PaymentTerms

—

(i)(b)

’

,intheLeterfromthe

Board,havingbenprovidedtotherelevantAset

Purchasers;and

(vi)theaprovalfromthestateanti-monopolyagency

(国家反垄断机构)havingbenobtained.

CompletionWithinsevenworkingdaysaftertherelevantAPA

becomefective,therelevantAsetTransferVendor

andtherelevantAsetPurchasershaldeterminethe

AsetTransferDate.Completionshaltakeplacewithin

10daysaftertheAsetTransferDate.

UndertheEquityTransferAgrementandtheAPAs,it

wasagredbetwenthepartiesthathetransactions

contemplatedundertheEquityTransferAgrementand

theAPAsareinseparable,ifanyofthemdoesnot

becomefective,thenoneoftheEquityTransfer

AgrementandtheAPAshalbecomefective.Hence,

ifanyoftheEquityTransferAgrementandtheAPAsis

canceledorterminatedwithinoneyearfromtheir

respectivefectivedate(otherthanduetoreasonof

forcemajeureorStateAnti-monopolyComiteorits

subordinatebodies),partiestotheEquityTransfer

AgrementandtheAPAs(whereaplicable)shalhave

therightorequestforthecancelationorterminationof

altheEquityTransferAgrementandtheAPAs.

–

–

---

Bankguarantes

andothers

TosecuretheobligationoftheAsetTransferVendors

undertherelevantAPAs,therelevantAsetTransfer

Vendororitsrelatedentityshalprovidetotherelevant

AsetPurchaseranunconditionalandirevocablebank

guaranteintheamountofnotlesthanRMB100milion

toguarantetheobligationsandliabilitiesunderthe

EquityTransferAgrementandAPAsforatermof42

monthsfromtheAsetTransferDate.

TherelevantAsetTransferVendoragresthat,within

42monthsfromtheAsetTransferDate,iftheagregate

amountundertheutilisedbankguaranteandthe

remainingconsiderationunderthefinalinstalmentofthe

EquityTransferAgrementandtheAPAsislesthan

RMB20milion,therelevantAsetTransferVendorshal

obtainaditionalunconditionalandirevocablebank

guarante,sothatheagregateamountofthebank

guaranteshalnotbelesthanRMB80milion.

Intheventofchangeinshareholding,asetsorother

materialchangeofVendorA,VendorAshalprocurethe

Companytoguarante,alobligationsandliabilitiesof

theAsetTransferVendorsundertheEquityTransfer

AgrementandtheAPAs

Useofbrandand

trademarks

Inordertomaintainthestabilityofthesalesmarketand

customerchanelsafterCompletion,therelevantAset

Purchasermayusethebrandandtrademarkofthe

relevantAsetTransferVendoratnilconsiderationfora

periodof12monthsaftertheAsetTransferDate.

DuringtheperiodinwhichtherelevantAsetPurchaser

usesthetrademarkoftherelevantAsetTransferVendor,

ifthequalityofthecementandclinkermanufacturedby

therelevantAsetPurchasercauseslosestotherelevant

AsetTransferVendor,suchrelatedloseshalbeborne

bytherelevantAsetPurchaser.

3.InformationoftheGroup

TheGroupisprimarilyengagedinthemanufactureandsalesofcementandcement

products,withcementproductionlinesinChinandmorerecentlyinthefastergrowing

overseasdevelopmentmarketsofsub-SaharanAfricandCentralAsia.

TheGroup

’

scementproductionisgearedtowardstheconomicdevelopmentof

WesternChina,Uzbekistan,Mozambique,D.R.CongoandEthiopia,Africa,drivenbythe

ChineseGovernment

’

s

‘

WesternDevelopmentPolicy

’

andthe

‘

SilkRoadEconomic

DevelopmentPlan

’

.TheGroupaimstoservethedevelopmentnedsofShanxi,

Xinjiang,Guizhou,Uzbekistan,Mozambique,D.R.CongoandEthiopia,Africasuplying

cementproductstotheinfrastructure,urbanandruralconstructionmarkets.

–

–

---

FinancialperformanceoftheGroup

SetoutbelowareselectedfinancialinformationoftheGroupforthetwoyears

ended31December2023and2024asextractedfromtheanualreportofthe

Companyfortheyearended31December2024(the

‘

2024AnualReport

’

)

respectively:

Fortheyearended31December

RMB

’

000RMB

’

(audited)(audited)

Revenue9,020,9018,344,946

GrosProfit2,460,0191,973,785

Profitfortheyear685,701827,855

Asat31December

RMB

’

000RMB

’

(audited)(audited)

Totalasets32,902,85036,289,921

Totaliabilities18,734,90022,473,436

Netasets14,167,95013,816,485

(i)RevenueandGrosprofit

TheGroup

’

srevenuedecreasedbyaproximately7.5%from

aproximatelyRMB9,020.9milionfortheyearended31December2023to

aproximatelyRMB8,344.9milionfortheyearended31December2024.

Cementsalesvolumedecreasedby3.0%,fromaproximately19.8miliontons

fortheyearended31December2023toaproximately19.2miliontonsforthe

yearended31December2024.Includingclinkersales,totalsalesvolumeofthe

Groupfortheyearended31December2024amountedtoaproximately20.0

miliontons,representingadecreaseofaproximately2.4%ascomparedtothe

salesvolumeofaproximately20.5miliontonsoldin2023.

Overalcementpriceswere6.1%lowerthanthosein2023,andthishas

resultedinlowerevenuein2024.Averageselingpriceofcementfortheyear

ended31December2024wereRMB338pertonascomparedwiththatof

RMB360pertonin2023.

GrosprofitoftheGroupdecreasedbyaproximatelyRMB486.2milion,

oraproximately19.8%fromaproximatelyRMB2,460.0milionfortheyear

ended31December2023toaproximatelyRMB1,973.8milionfortheyear

ended31December2024.ThedecreaseingrosprofitoftheGroupwasmainly

duetothedecreaseinbothaverageselingpriceandsalesvolumeasdescribed

–

–

---

above.GrosprofitmarginoftheGroupdecreasedfromaproximately27.3%

fortheyearended31December2023toaproximately23.7%fortheyear

ended31December2024.

(i)Profitfortheyear

ProfitfortheyearoftheGroupincreasedfromaproximatelyRMB685.7

milionfortheyearended31December2023toaproximatelyRMB827.9

milionfortheyearended31December2024.Thisisprimarilyduetothenet

efectofthedecreaseingrosprofit,thedecreaseinotherexpensesand

increaseinothergainsandloses,net.

(i)Netasets

Asat31December2024,thenetasetsoftheGroupwereaproximately

RMB13,816.5milion,representingadecreaseofaproximately2.5%as

comparedtothatofaproximatelyRMB14,168.0milionasat31December

2023.Thedecreaseinetasetswasmainlyatributabletotheincreaseintrade

andotherpayables,contractliabilities.

MarketoutlokoncementasetsandcompaniesoftheGroup

Astatedinthereport

‘

Curentstatusandprospectsofcementindustrysuply

chaindevelopment

’

isuedbyChinaCementAsociationin2024,beingafectedby

therealestatemarket,thedemandofcementinChinawasbeingafected.In

adition,cementcorporationsalsofacedchalengesincludinginstabilityofraw

materialsuplies,presurefromenvironmentalprotection,marketcompetitionsand

highcostsoflogistics.

In2025,thecentralgovernmentwiladheretothegeneralprincipleof

‘

pursuingprogreswhilemaintainingstability

’

,strengthencounter-cyclical

adjustment,andimplementproactivefiscalpoliciesalongsideprudentmonetary

policies.Withtheaceleratedplacementofundsuchasultra-long-termspecial

governmentbondsandspecialbonds,thedemandforcementinongoingprojects

underconstructionisexpectedtoincrease.Infrastructuredevelopmentwilcontinue

tobethemaindrivingforceforcementdemands.Withcontinuousoptimizationand

implementationofsuportingpoliciesof

‘

stabilisingthemarket

’

and

‘

destocking

’

,

andtheacelerationoftheconstructionof

‘

thremajorprojects

’

suchasafordable

housing,therealestatemarketwilberecoveredtoacertainextent.

However,thesituationoftherealestatemarketisdificultoreverseinthe

shorterm,andwilbeinastageofurtheradjustment.TheStateCouncilisuedthe

–

2025EnergyConservationandCarbonReductionActionPlanandOpinionson

AceleratingtheComprehensiveGrenTransformationofEconomicandSocial

Development,whichrequirestrengtheningtheadjustmentandcontrolonthe

productioncapacityandvolumeofbuildingmaterialsindustry,andpromotingthe

normalisationofstageredproduction.Theyalsostrictlyrestrictacestonew

–

–

---

projects,pushforwardgrenandlow-carbontransformationandupgradingof

traditionalindustries,andestablishacomprehensivexitmechanismforproduction

capacity.

Inadition,thecentralgovernmentproposedtostrengthenindustryself-

discipline,prevent

‘

involution

’

viciouscompetition,strengthenthesurvivalofthe

fitestmechanismofthemarket,andfacilitatethexitchanelsforbackwardand

ineficientproductioncapacity,alofwhichcanhelptoaleviatethecontradiction

betwensuplyandemandinthecementmarket,maintaintheindustryecologyand

promotethehealthydevelopmentoftheindustry.

4.InformationontheTargetCompaniesandTargetAsets

A.TargetCompanies

EachoftheTargetCompaniesisacompanyestablishedinthePRCwithlimited

liabilityandadirectwholy-ownedsubsidiaryoftheVendorA.EachoftheTarget

Companiesisprincipalyengagedinthemanufactureandsalesofcementandcement

products,saleoflimestonesandconstructionmaterialsaswelasprovisionofwaste

treatmentservice.

FinancialperformanceoftheTargetCompanies

Setoutbelowisthekeyauditedfinancialinformationforthefinancial

yearsended31December2023and2024ofeachoftheTargetCompanies,both

preparedacordingtothePRCacountingstandards:

Fortheyearended31December

RMBRMB

(audited)(audited)

Netprofit/(los)beforetax:

TargetCompanyA

(Note)

82,693,85279,794,464

TargetCompanyC(5,903,850)(3,535,866)

Netprofit/(los)aftertax:

TargetCompanyA

(Note)

71,413,34168,025,634

TargetCompanyC(5,903,850)(3,526,103)

Note:Asat31December2024,TargetCompanyBwasasubsidiaryofTargetCompany

A.Internalrestructuringtokplaceon15May2025,whenthentirequityinterest

ofTargetCompanyBwastransferedtoVendorA.Therefore,thefinancial

informationofTargetCompanyBisconsolidatedintothefinancialinformationof

TargetCompanyAashownabove.

Asat31January2025,thenetasetvalueofeachofTargetCompanyA

(includingTargetCompanyB)andTargetCompanyCwasaproximately

RMB148.2milionandRMB79.5milion,respectively.

–

–

---

NetprofitaftertaxfortheyearoftheTargetCompaniesdecreasedfrom

RMB65.5milionfortheyearended31December2023toRMB64.5milionfor

theyearended31December2024,whichwasmainlyatributabletothe

decreaseintherevenueoftheTargetCompaniesfortheyearended31

December2024.

ThevalueofthentirequityinterestinrespectofTargetCompanyA

(includingTargetCompanyB)andTargetCompanyCasat31January2025as

asesedbytheIndependentValuer(asdefinedbelow)wasaproximately

RMB180.3milionandRMB81.3milion,respectively.

B.TargetAsets

EachoftheTargetAsetslocatesinXinjiang.AsetsBcomprisesofasets

usedforcementmanufacturing,AsetsCcomprisesofasetsusedforcementand

constructionmaterialsmanufacturing,andAsetsDcomprisesofasetsusedfor

cementmanufacturingandlimestonemining,aswelasthesaleofconstruction

materials.

FinancialperformanceoftheoperationsoftheTargetAsets

Setoutbelowisthekeyauditedprofitorlosatributabletoeachofthe

TargetAsetsforthefinancialyearsended31December2023and2024:

Fortheyearended31December

RMBRMB

(audited)(audited)

Netprofit/(los)beforetax

AsetB(4,075,934)(1,109,078)

AsetC66,423,93754,526,847

AsetD29,004,97016,296,898

Netprofit/(los)aftertax

AsetB(4,068,513)(1,109,078)

AsetC63,116,07453,135,223

AsetD24,721,51112,472,830

Asat31January2025,theauditedtotalasetvalue(excludingcashand

cashequivalent)ofeachofAsetsB,AsetsCandAsetsDwasaproximately

RMB157.7milion,RMB920.4milionandRMB155.1milion,respectively.

NetprofitaftertaxfortheyearoftheoperationsoftheTargetAsets

decreasedfromRMB83.8milionfortheyearended31December2023to

RMB64.5milionfortheyearended31December2024,whichwasmainly

atributabletothedecreaseintherevenuederivedfromtheoperationsofthe

TargetAsetsfortheyearended31December2024.

–

–

---

Thevalue(excludingcashandcashequivalents)oftheachofAsetsB,

AsetsCandAsetsDasat31January2025asasesedbytheIndependent

Valuer(asdefinedbelow)wasaproximatelyRMB227.1milion,RMB966.6

milionandRMB257.7milion,respectively.

5.ReasonsforandbenefitsoftheDisposals

AsdiscusedintheLeterfromtheBoardintheCircularandbasedonour

understandingfromtheManagement,theDisposalsareconsideredtobeinlinewiththe

Group

’

sdevelopmentstrategytakenintoacount:

(i)TheGroupisoptimisticabouthefuturegrowthpotentialofcementinAfrica

inthelongrun

Africa,inparticular,hastheworld

’

sfastestpopulationgrowthprofile,withtotal

populationexpectedtoreachcloseto2.5bilionin2050,from1.5bilionin2024

andsomeofthefastestGDPgrowthratesintheworld.Infrastructuredevelopment

andurbanizationinthesemarketsarebenefitingfromdomesticandinternational

growthinitiatives,includingtheChineseGovernment

’

sBeltandRoadInitiative.

Sub-SaharanAfricahasomeofthelowestpercapitacementconsumptionratesin

theworld,atafractionofthoseindevelopedmarketsandcementproductionin

manycountriesisbackward,undersupliedandhighlyfragmented.

InEthiopia,theGroup

’

splantsenjoyaverystrongmarketpositionandwil

continuetobenefitfromurban,airport,roadandrailwayinfrastructuredevelopment.

TheGroup

’

scurentcapacitynextoMozambique

’

scapitalMaputobenefitsfrom

domesticdemandaswelasexportstoMadagascar,SouthAfricandZimbabwe.A

new1.5miliontonplantinorthernMozambiqueisduetobecomisionedin

2026andisexpectedtobenefitfromMozambique

’

sofshoreLiquefiedNaturalGas

productionplans.IntheDRC,theGreatLakesplantsupliestheastofthecountry,

whichfaceseriousclinkershortages,aswelasexportingtoRwanda,Burundiand

Tanzania.TheGrouphasalsobenabletosecuretheonlysignificantlimestone

resourceinNorth-easternUganda,acountrywithstrongeconomicgrowthpotential

andcementsuplyshortages.CurentcementpricesinUgandaexcedRMB1,200

pertonandtheGroup

’

snewMorotoPlantinNorth-easternUgandaisalsoexpected

tobecomisionedathendof2025.

(i)thenetprocedsfromtheDisposalswilprovidetheGroupwithcashinflow

whichwilstrengthenthefinancialpositionoftheGroupforitslongrun

businesexpansioneds,inparticular,intheAfricamarket

TheGroup

’

sfocusonoverseasdevelopmenthasbenvalidatedbyitsrecent

financialperformance.In2020,aloftheGroup

’

srevenuescamefromChina.Since

then,theGroup

’

spivotowardsub-SaharanAfricandCentralAsiahasledtoa

significantransformationofitsoperatingprofile.Asat31December2024,the

GrouphastotalcementcapacityoutsideofChinaof12.3miliontonscomparedwith

27miliontonsinChina(includingtheTargetCompaniesandtheTargetAsets).

Duetothefastgrowingnatureoftheseoverseasmarketsandsubsequenthigher

–

–

---

ASPs,thisoperationalshifthashadasignificantefectontheGroup

’

sfinancial

performance.In2024,whilecementandclinkersalesvolumesinAfricand

Uzbekistanonlyamountedto4.03miliontonsoutoftotalGroupsalesof

aproximately20.0miliontons,representingaproximately20%ofthetotalsales

volumeoftheGroup,incomefromtheseoverseasmarketsmadeupaproximately

38%oftheGroup

’

stotalrevenueandaproximately67%oftheGroup

’

sgrosprofit.

Thisoutperformancecameasaresultofaveragegrosprofitperton(GP/Ton)in

excesofRMB323inAfricandRMB64inUzbekistan,comparedwithRMB42in

China.

(i)thenetprocedsfromtheDisposalswilbeusedasfundingtosetlecertain

outstandingindebtednes

Asat31December2024,theGrouprecordednetcurentliabilitiesof

aproximatelyRMB3,560.4milion.TheprocedsfromtheDisposalsareintended

tobeusedbytheGroupforepaymentofthe4.95%seniornotesisuedbythe

CompanywhichisdueinJuly2026(stockcode:40756)asotheroverseasdebtis

becomingmorexpensiveduetotheglobalinterestrateoutlok.

BasedonourdiscusionwiththeManagementandoureviewofthe2024Anual

Report,weconcurwiththeviewoftheManagementhatheDisposalsareinlinewith

theGroup

’

sprincipalbusinesanditslong-termdevelopmentstrategy.

6.ValuationoftheTargetGroup

AsdisclosedintheLeterfromtheBoardintheCircular:

Theconsideration(s)of:

(i)TransactionAwasdeterminedafterarm

’

slengthnegotiationsbetwenVendor

AandthePurchasers,after(i)consideringvariousfactors,includingthe

investmentcostsofsimilarcompanies,resources,locationandmarketofthe

TargetCompanies;and(i)thevaluationofthentirequityinterestinthe

TargetCompaniesasasesedbytheIndependentValuer(asdefinedbelow)of

aproximatelyRMB261.6milionasat31January2025usingtheaset-based

aproach.

(i)eachofTransactionsB,CandDwasdeterminedafterarm

’

slength

negotiationsbetwentherelevantAsetTransferVendorandthePurchasers,

after(i)consideringvariousfactors,includingtheinvestmentcostsofsimilar

typesofproject,licencesinvolvedandtherelevantmarket;and(i)the

valuation(excludingcashandcashequivalents)oftheTargetAsetsasasesed

bytheIndependentValuer(asdefinedbelow)ofaproximatelyRMB1,451.4

milionasat31January2025usingthecostmethodand/orthemarket

aproach.

–

–

---

ThefolowingsetsforthasumaryoftheconsiderationsofTransactionsA,B,

CandDandtherespectivenetbokvaluesandapraisedvaluesofthe(i)entire

equityinterestsoftheTargetCompanies;and(i)eachofAsetsB,CandDasat31

January2025(the

‘

ValuationDate

’

)asetoutinthevaluationreportsinrelation

totheTargetCompaniesandTargetAsets(the

‘

ValuationReports

’

)preparedby

theShenzhenYitongAsetApraisalRealEstateandLandValuationCo.,Limited

(深圳亿通资产评估房地产土地估价有限公司)(the

‘

IndependentValuer

’

).Please

refertoApendixI,I,IV,VtotheCircularfordetailedinformationofthe

ValuationReports.

SubjectMater

Netbokvalue

asat

31January2025

Apraisedvalue

asat

31January2025Consideration

(RMBmilion)(RMBmilion)(RMBmilion)

TransactionAEntirequity

interestsofthe

Target

Companies

227.7261.6398.0

TransactionBAsetsB157.7227.1161.5

TransactionCAsetsC920.4966.6920.5

TransactionDAsetsD155.1257.7170.0

Total1,460.81,713.11,650.0

6.1ScopeofworkandqualificationoftheIndependentValuer

WehaveperformedtheworkasrequiredunderRule13.80oftheListingRules

inrelationtotheIndependentValuer.Inparticular,wehavereviewedtheValuation

ReportsandrelevantdocumentsobtainedfromtheIndependentValuerand

interviewedtheIndependentValuerwithparticularatentionto(i)thetermsof

engagementoftheIndependentValuerwiththeCompanyinrelationtothevaluation

ofthequityinterestsoftheTargetCompaniesandtheTargetAsets;(i)the

certificatesofqualificationsandexperienceoftheIndependentValuer;and(i)the

valuationmethodologiesandasumptionsusedbytheIndependentValuerin

formulatingtheValuationReports.

WeunderstandthatheIndependentValueriscertifiedwithrelevant

profesionalqualificationsrequiredtoperformthevaluationsoftheTarget

CompaniesandtheTargetAsets.Mr.TangJianwenandMr.HanXiaozhe,having

over10yearsofexperienceinvaluationofproperties,businesandminingrightsin

thePRC,areresponsiblefortheoveralvaluations.Basedonoureviewofthe

IndependentValuer

’

stermsofengagementwiththeCompanyinrelationtothe

valuationsoftheTargetCompaniesandtheTargetAsetsandiscusionwiththe

IndependentValuerontheworkithasperformedinformulatingtheValuation

Reports,wenotedthathescopeofworkisapropriateforarivingathevaluations

oftheTargetCompaniesandtheTargetAsetsandwearenotawareofany

–

–

---

limitationsonthescopeofworkwhichmightadverselyimpactonthedegreof

asurancegivenbytheValuationReports.Nothinghascometouratentionthathe

partiestotheDisposalshadmadeformalorinformalrepresentationtothe

IndependentValuerthatcontraveneswithourunderstandingoftheinformation,toa

materialextent,asetoutintheCircular.TheIndependentValuerhasconfirmedthat

itisanindependenthirdpartytothepartiesoftheDisposalsandtheirespective

coreconectedpersons.

Inlightoftheabove,wearenotawareofanymatersthatwouldcauseusto

questiontheIndependentValuer

’

scompetenceandindependence,andweconsider

thatheIndependentValuerhasuficientexpertisetoperformthevaluationsofthe

TargetCompaniesandtheTargetAsets.

6.2Valuationmethodologyandasumptions

WehavereviewedtheValuationReportsandiscusedwiththeIndependent

Valueronthemethodologiesof,andbasesandasumptionsadoptedforthe

valuations,andadjustmentsmadetoariveatheValuationReports.

TransactionA

AsadvisedbytheIndependentValuer,inarivingatheasesedvaluesof

theTargetCompanies,theIndependentValuerhasconsideredseveralacepted

aproaches,namely,incomeaproach,aset-basedaproachandmarket

aproach:

Incomeaproach:providesanindicationofvaluebyconverting

futurecashflowstoasinglecurentaset

value,andiscomonlyapliedtoan

agregationofasetsconsistingofalasetsof

abusinesenterprise,includingworkingcapital

andtangibleandintangibleasets.Valueis

derivedbaseduponthepresentworthof

economicbenefitsofownershipofaset

Aset-basedaproach:providesanindicationofvalueusingthe

economicprinciplethatabuyerwilpayno

moreforanasethanthecostobtainan

asetofequalutility,whetherbypurchaseor

byconstruction.Valueisestablishedbasedon

costofreproducingoreplacingtheaset,les

depreciationoramortisationfromfunctional

andeconomicobsolescence,ifpresentand

measurable

–

–

---

Marketaproach:providesanindicationofvaluebycomparing

thesubjectasetwithidenticalorsimilarasets

forwhichpriceinformationisavailable,and

incorporatingadjustmentstobemadeforany

diferencebetwenthepropertiesofthe

comparableasetsandthesubjectasetbeing

apraised

TheIndependentValuerconsidered:

(a)theselectionofthevaluationaproachinvaluingtheTarget

Companiesisbasedon,amongothercriteria,themeritsand

limitationsofeachoftheaforesaidvaluationmethodologies,the

quantityandqualityoftheinformationprovided,acesibilityto

availabledata,availabilityofrelevantmarketinformation,the

operation,businesnature,financialperformanceandfinancial

positionoftheTargetCompanies,profesionaljudgmentand

technicalexpertise;

(b)incomeaproachisnotconsideredbecauseitrequiresignificant

levelofunobservableandsubjectiveasumptionstobemadetoarive

at,amongothers,detailedoperationalinformationandlong-term

financialprojections,towhichthevaluationishighlydependenton

thefinancialprojectionoftheTargetCompaniespreparedbythe

Management;and

(c)resultfromusingmarketaproachisnotconsideredascement

manufacturingindustryisatypicalaset-intensiveindustry,inwhich

theasetvalueofanenterpriseacountsforalargeproportionofits

overalvalue,andtheproductionandoperationofacompanyoften

reliesonalargenumberofixedasets,whileresultsofthemarket

aproachmayfluctuategreatlyduetochangesinmarketsentiment,

short-termsuplyandemandandforcementbusineswhichis

greatlyafectedbymacroeconomicandindustrycycles,thestability

advantageoftheaset-basedaproachispreferable.

Theaset-basedaproachisadoptedforandconcludedthevaluationofthe

entirequityinterestoftheTargetCompanies.Wehavereviewedthefinancial

informationoftheTargetCompaniesandnotedthatheTargetCompaniesare

aset-heavycompanies.Giventheiridentifiableasetsandliabilities,weconcur

withtheIndependentValuerthatheaset-basedaproachisthemost

apropriatemethodologyinthevaluationoftheTargetCompanies.

–

–

---

TransactionsB,CandD

AsadvisedbytheIndependentValuer,inarivingatheasesedvaluesof

theTargetAsets,theIndependentValuerhasconsideredseveralacepted

aproaches,namely,incomeaproach,costaproachandmarketaproach:

Incomeaproach:providesanindicationofvaluebyconverting

futurecashflowstoasinglecurentaset

value,andiscomonlyapliedtoan

agregationofasetsconsistingofalasetsof

abusinesenterprise,includingworkingcapital

andtangibleandintangibleasets.Valueis

derivedbaseduponthepresentworthof

economicbenefitsofownershipofaset

Costaproach:considersthecostoreproduceoreplacethe

asetsapraisedinacordancewithcurent

marketpricesforsimilarasets,withalowance

foracruedepreciationarisingfrom

condition,utility,age,wearandtear,or

obsolescence(physical,functionalor

economical)present,takingintoconsideration

pastandpresentmaintenancepolicyand

rebuildinghistory

Marketaproach:providesanindicationofvaluebycomparing

thesubjectasetwithidenticalorsimilarasets

forwhichpriceinformationisavailable,and

incorporatingadjustmentstobemadeforany

diferencebetwenthepropertiesofthe

comparableasetsandthesubjectasetbeing

apraised

TheIndependentValuerconsidered:

(a)theselectionofthevaluationaproachinvaluingtheTargetAsetsis

basedon,amongothercriteria,themeritsandlimitationsofeachof

theaforesaidvaluationmethodologies,thequantityandqualityofthe

informationprovided,acesibilitytoavailabledata,availabilityof

relevantmarketinformation,theoperation,businesnature,financial

performanceandfinancialpositionoftheTargetAsets,profesional

judgmentandtechnicalexpertise;and

(b)incomeaproachisnotconsideredbecausetheTargetAsetsare

unabletogenerateincomeindividualyanditisdificultoquantify

costsandexpensesrelatedtolabor,managementandoperationand

landthatareasignedtotheAsetsinmonetaryterms.Inadition,it

requiresignificantlevelofunobservableandsubjectiveasumptions

–

–

---

tobemadetoariveat,amongothers,detailedoperational

informationandlong-termfinancialprojections,towhichthe

valuationishighlydependentonthefinancialprojectionofthe

TargetAsetspreparedbytheManagement.

Thecostaproachisadoptedforthevaluationoftheproperty,plantand

equipment,receivablesandinventoriesintheTargetAsets,whichconsiders

thecostoreproduceoreplacetheasetsapraisedinacordancewithcurent

marketpricesforsimilarasets,withalowanceforacruedepreciationarising

fromcondition,utility,age,wearandtear,orobsolescence(physical,functional

oreconomical)present,takingintoconsiderationpastandpresentmaintenance

policyandrebuildinghistory.Themarketaproachisadoptedforthevaluation

ofthelanduserightsandminingrightsasitprovidesanindicationofvalueby

comparingthesubjectasetwithidenticalorsimilarasetsforwhichprice

informationisavailable,andincorporatingadjustmentstobemadeforany

diferencebetwenthepropertiesofthecomparableasetsandthesubjectaset

beingapraised.SincethesubjectmaterofTransactionsB,C,DaretheTarget

AsetswhichismainlyselectedasetsoftheTargetCompaniesB,CandD,

comprisedof(i)non-curentasetsincludingproperty,plantandequipment,

right-of-useasetsandminingrights;and(i)receivables,inventoriesandcash

andcashequivalents,weconcurwiththeIndependentValuerthathecost

aproachand/ormarketaproachis/arethemostapropriatemethodologyin

thevaluationoftheTargetAsets.

InrespectofthevaluationmethodologiesadoptedbytheIndependent

Valuer,weconsiderthatheIndependentValuerhasgivendueconsiderationto

theselectionofvaluationaproaches.Weconsiderthathebenefitsofusing

theseaproachesincludesimplicity,clarity,spedandthenedforfew

asumptions.Italsointroducesobjectivityinaplicationaspubliclyavailable

inputsareused.WeconcurwiththeIndependentValuerinchosingtheaset-

basedaproach,costaproachandmarketaproachovertheincomeaproach,

consideringthatheincomeaproachrequiresubjectiveasumptionstowhich

thevaluationishighlysensitive.

TheIndependentValuerhasconductedthevaluationontheasumptions

thatheTargetCompaniesandTargetAsetscaryoutnormalbusinesina

usualmanerwithoutmajordisruptions,whichweconsiderarefairand

reasonable.

6.3AsesmentofthevaluationoftheTargetCompaniesandTargetAsets

A.ValuationoftheTargetCompanies

AsetoutintheValuationReports,theapraisedvalueofthentire

equityinterestoftheTargetCompanieswasderivedbasedonasesingthe

valueofon-balanceshetandidentifiableof-balanceshetasetsandliabilities

onthebasisofthebalanceshetoftheapraisedentityatheapraisal

referencedateofwhichalindividualasetandliabilityacountcategoriesare

–

–

---

analysedandvaluedseparately.ItisnotedfromtheValuationReportsthathe

bokvalueandapraisedvalueofnetasetsvalueoftheTargetCompaniesas

oftheValuationDatewasaproximatelyRMB227.7milionandRMB261.6

milion,respectively,representinganapreciationofaproximatelyRMB33.9

milionor14.9%.Theapreciationofnetasetvalueascomparedtothebok

valuewasprimarilyduetothecombinedefectoftheincreaseinrevaluationof

(i)property,plantandequipment;and(i)curentasets.

InvaluingtheTargetCompaniesunderaset-basedaproach,the

IndependentValuerapraisedthevalueoflong-termequityinvestment,

buildings,structures,machineryequipment,vehiclesandelectronicequipment

bytakingintoacount:(i)thereplacementcost;and(i)theresidualratio.

Replacementcostisdeterminedbyreferencetothecurentmarket

acquisitionprice,whileresidualratioisdeterminedbasedprimarilyonthe

economicusefulifeoftheworkingcapitalmaterialinusebyaplyingthe

ageingrate.

AsdiscusedwiththeIndependentValuer,theconomicusefulifeand

ageingrateoftheTargetAsetswasreferencedfromthe

‘

Handbokof

ComonUsedMethodsandParametersforAsetApraisal*(资产评估常用资

料与参数手册)publishedbyChinaMachinePres,acomonlyusedreference

intheasetandequityvaluationsinthePRC.

ThelanduserightsoftheTargetCompaniesareapraisedundermarket

aproachaspriceinformationofcomparablesisavailable.Threcomparables

arereferencedforthevaluationofthelanduserights.Adjustmentsaremade

basedonlocationfactorpremium,individualfactorpremiumandtenure

corectionofthecomparables.Weobtainedthelistofcomparablesand

understandthathecomparablesareselectedbasedonthelocation(Yilin,PRC),

availableforbidingandauctionandofindustrialuseandthepriceinformation

isextractedfromlandchina.com(中国土地市场网站),thewebsitewithland

informationhostedbyRealEstateRegistrationCenterofMinistryofNatural

Resources*(自然资源部不动产

登记中心

).

ThevehiclesfortransportationoftheTargetCompaniesareapraised

undermarketaproachaspriceinformationofcomparablesisavailable.Thre

comparablesarereferencedforthevaluationofthevehiclesfortransportation.

Adjustmentsaremadebasedontheyearandmonthofactivationandmileageof

thecomparables.Weobtainedthelistofcomparablesandunderstandthathe

comparablesareselectedbasedonthevehiclemodelandtimeofactivation,and

thepriceinformationisextractedfromseveralcomonlyusedindependent

thirdpartywebsitesforsecondhandedcarsincludingw.autohome.com.cn

(汽车之家).

–

–

---

ThecurentasetsoftheTargetCompaniesareapraisedasbelow:

1.Curencyfunds:Thebokvalueafterinventoryverificationwasused

astheapraisedvalue.

2.Bilsreceivable:Theapraisedvalueisdeterminedonthebasisofthe

probablerecoverableamountofeachbilafterverification.

3.Theapraisedvaluesofvariousacountsreceivablearedetermined

onthebasisoftheamounthatcanberecoveredfromeachpayment

afterverificationoftheacuracyoftheinformation.Theapraised

valuesofprepaymentsaredeterminedonthebasisofthevalueofthe

asetsorightsformedbythecorespondingodsorservices

receivedthatcanberecovered.

4.Theapraisedvaluesofinventories

—

rawmaterialsaredetermined

bymultiplyingtheinventoriedandverifiedquantitiesbythecurent

marketpurchasepriceplusreasonablexpenses.

5.Theapraisedvaluesofinventories

—

products-in-procesare

determinedbymultiplyingthequantityafterinventoryverificationby

thecurentmarketselingpriceiftheinventorycanbesoldtothe

outsideworld,andbytheverifiedbokvalueiftheinventorycanot

besoldtotheoutsideworld.

6.Theapraisedvaluesofinventories

—

workingcapitalmaterialsin

usearegeneralydeterminedbyreferencetotheapraisalmethodfor

fixedasets,andthecostmethodisadopted.

7.Othercurentasetsarevaluedbokvalueafterinventory

verification.

8.Deferedincometaxasetsareapraisedbasedonthereasonsfor

theiroriginationandthestimatedrecoverableamountsafterthe

valuationdate.

WeobtainedandreviewedthedatausedbytheIndependentValuerfor

apraisingtheTargetCompanies,whichalignswiththeirmethodology.Based

ontheabove,weconsiderthemethodology,computationandatadoptedby

theIndependentValuerarereasonable.

B.ValuationoftheTargetAsets

TheIndependentValueradoptedcostaproachandmarketaproachfor

thevaluationofTargetAsetsB,CandD.

–

–

---

Costaproach

1.CurentAset

TheformuladoptedbytheIndependentValueratheapraised

valueoftheTargetAsetsusingcostaproachisasfolow:

Apraisedvalueunderthecostaproach=Replacementcost×

Residueratio

Replacementcostisdeterminedbyreferencetothecurentmarket

acquisitionprice,whileresidualratioisdeterminedbasedprimarilyonthe

economicusefulifeoftheworkingcapitalmaterialinusebyaplyingthe

ageingrate.

Theapraisedvaluesofvariousacountsreceivablearedetermined

onthebasisoftheamounthatcanberecoveredfromeachpaymentafter

verificationoftheacuracyoftheinformation.Theapraisedvaluesof

prepaymentsaredeterminedonthebasisofthevalueoftheasetsorights

formedbythecorespondingodsorservicesreceivedthatcanbe

recovered.

Theapraisedvaluesofinventories

—

rawmaterialsaredetermined

bymultiplyingtheinventoriedandverifiedquantitiesbythecurent

marketpurchasepriceplusreasonablexpenses.

Theapraisedvaluesofinventories

—

finishedproductsare

determinedbymultiplyingthequantityafterinventoryverificationbythe

curentmarketselingprice.

Theapraisedvaluesofinventoriesproductsinprocesare

determinedbytheverifiedbokvalue.

Theapraisedvaluesofinventories

—

workingcapitalmaterialsin

usearegeneralydeterminedbyreferencetotheapraisalmethodforfixed

asets,andthecostaproachisadopted.

2.FixedAsets

—

Buildingsandstructures

Basedonthearchitecturalfeatures,scopeofuseandperformanceof

buildings,theapraisaladoptedthecostaproachforthebuildingasets

declaredbytheapraisedentity.

Whenthecostaproachisadopted,thevalueoflanduserights

ocupiedbybuildingsisnotincludedinthevaluation,andthevalueof

landuserightsiseparatelyreflectedintheintangibleasetsacount.

–

–

---

Thecostaproachisbasedontheprincipleofsubstitution,i.e.,asan

alternativetopurchasingaparticularaset,onecanbuildanasethatis

identicaltorhasthesamefunctionasthataset.Itisamethodof

apraisalinwhichthediferencebetwenthetotalcostofacquiringthe

apraisedasetinewconditionundercurentconditionsandthephysical,

functionalandeconomicobsolescenceoftheapraisedasetisubtracted

fromtheapraisedvalueofthehome.Theformulais

Apraisedvalue=Replacementcost×Comprehensiveresidueratio

Replacementcost=preliminarycost+comprehensiveconstruction

cost+othercosts+capitalcost

Comprehensiveresidueratio=residueratioundertheusefulife

method×weight+residueratioundertheon-siteinspectionmethod

×weight

3.Fixedasets

—

equipmentandvehicles

(1)Replacementcost

Acordingtotheinformationprovidedbytheapraisedentity,it

isageneraltaxpayerandcandeductinputax,therefore,the

replacementcostintheapraisalisexcludingtax.

Replacementcost=purchaseprice(includingtax)+

transportationandmiscelaneousfes+instalationand

comisioningfes+basicfes+capitalcosts

–

deductible

VATonthepurchasepriceofthequipment

–

deductibleVAT

onthetransportationfes,instalationandcomisioningfes

andbasicfesofthequipment.

(2)Residueratio

Therateofreconditioningismainlybasedontheconomic

servicelifeofthequipment,andonthisbasis,itisdeterminedby

takingintoacountfactorsuchastheuseofthequipment,the

maintenancestatus,andtheworkingenvironment,etc.

4.Intangibleasets

—

landuserights

Landuserightswasapraisedbycostaproximationmethodandcost

aproachwhenmarketdataisnotavailable.Thecostaproximation

methodisusedforapraisal.Thecostaproximationmethodisamethod

ofdeterminingthelandpricebasedmainlyonthesumoftheland

acquisitioncostsandvariousexpensesconsumedinlandevelopment,plus

acertainamountofprofit,interest,taxespayableandlandapreciation

income.

–

–

---

Costaproximationmethodcalculationformula:

Landprice=unlimitedyearcostlandprice×otherfactorscorection

=(landacquisitionfe+landevelopmentfe+investmentinterest+

investmentprofit+landapreciationincome)×otherfactorsmodification

Theformulaofcostaproachisasfolow:

Apraisedvalueunderthecostaproach=Replacementvalue×

residueratio,whileresidueratioisnotinvolvedoflandasthebokvalue

representstheamortisedresidualvalueoftheoriginalpurchasecostofthe

land.

5.Intangibleasets

—

miningrights

Sincethemineralminedundertheminingrightisandforcement

ingredients,whichisonlyusedasaningredientincementproductionand

isnoteligibleforexternalsale,theverifiedexpenditurecostofthemining

rightisusedasthevalueintheapraisal.

AsdiscusedwiththeIndependentValuer,theconomicusefulife

andageingrateoftheTargetAsetswasreferencedfromthe

‘

Handbok

ofComonUsedMethodsandParametersforAsetApraisal*(资产评估

常用资料与参数手册)publishedbyChinaMachinePres,acomonly

usedreferenceintheasetandequityvaluationsinthePRC.Weobtained

andreviewedthedatausedbytheIndependentValuerforapraisingthe

TargetAsets,whichalignswiththeirmethodology.Basedontheabove,

weconsiderthemethodology,computationandatadoptedbythe

IndependentValuerarereasonable.

Marketaproach

Undermarketaproach,thevalueisapraisedbasedonthe

transactioncasesofthesameorsimilarequipmentintherelevantmarket,

variousinfluencingfactorsarecomparedandadjustedtodeterminethe

apraisalvalue.

1.Fixedasets

—

vehicles

Basedonthetransactioncasesofthesameorsimilarequipmentin

theusedvehiclemarket,variousinfluencingfactorsarecomparedand

adjustedtodeterminetheapraisalvalue.Thevehiclesfortransportation

oftheTargetCompaniesareapraisedundermarketaproachasprice

informationofcomparablesisavailable.Threcomparablesarereferenced

forthevaluationofthevehiclesfortransportation.Adjustmentsaremade

basedontheyearandmonthofactivationandmileageofthecomparables.

Weobtainedthelistofcomparablesandunderstandthathecomparables

areselectedbasedonthevehiclemodelandtimeofactivation,andthe

–

–

---

priceinformationisextractedfromseveralcomonlyusedindependent

thirdpartywebsitesforsecondhandedcarsincluding

w.autohome.com.cn(汽车之家).Basedontheabove,weconsiderthe

methodology,computationandatadoptedbytheIndependentValueris

reasonable.

2.Landuserightsandminingrights

ThelanduserightsandminingrightsoftheTargetAsetsare

apraisedundermarketaproachaspriceinformationofcomparablesis

available.Threcomparablesoflanduserightsandfourcomparablesof

miningrightsarereferencedforthevaluationofthelanduserightsand

miningrightsrespectively.

AsdiscusedwiththeIndependentValuer,whileadoptingmarket

aproachtoapraisethevalueofthelanduserightsandminingrights,

theyhavegatheredtheactualtransactions,determinedthecomparable

transactions,establishedabasisforcomparison,apliedadjustmentstothe

comparabletransactions(ifany)andcalculatedthecomparativepricesand

determinedthevalueoftheproperties.Wehaveobtainedandreviewedthe

datausedbytheIndependentValuer,andnotethatatleasthre

comparablesforeachlandfromlandchina.com(中国土地市场网站),the

websitewithlandinformationhostedbyRealEstateRegistrationCenterof

MinistryofNaturalResources*(自然资源部不动产

登记中心

)andfour

comparablesforminingrightfromoficialwebsitesofMinistryofNatural

Resources,namelyTurpanMunicipalBureauofNaturalResources*(

吐鲁

番地区国土资源局),TachengPrefectureNaturalResourcesBureau*(塔城

地区国土资源局)andKashgarPrefectureNaturalResourcesBureau*(喀

什地区自然资源局).Wealsodiscusedwithandunderstodfromthe

IndependentValueronthecriteriaofcomparableselectionandnotedthat

(i)thecomparablesforthelandshouldbeinthesamecountyoftheland

userightstobeapraised,theyareforindustrialuseandbeingunder

tender,auctionandlisting;and(i)thecomparablesfortheminingright

shouldbeinXinjiang,minedmineralbeinglimestoneandthemining

rightsareundertender,auctionandlistingortransfer.Basedontheabove,

weconsiderthemethodology,computationandatadoptedbythe

IndependentValuerarereasonable.

Havingconsideredthat(i)thequalifications,experienceandindependenceof

theIndependentValuerinrelationtothepreparationoftheValuationReports;(i)

thestepsanduediligencemeasurestakenbytheIndependentValuerforconducting

thevaluationsoftheTargetCompaniesandTargetAsets;(i)themethodology,

bases,asumptions,parametersandcomputationadoptedbytheIndependentValuer

forthevaluationoftheTargetCompaniesandTargetAsets;(iv)thetotal

considerationoftheDisposalswasdeterminedafterarm

’

slengthnegotiations

betwenVendorAandthePurchasersafterconsideringvariousfactorsandwith

referencetotheapraisedvalueoftheTargetCompaniesandtheTargetAsetsasat

–

–

---

theValuationDate,whichwasfairlyandreasonablydeterminedbytheIndependent

Valuer;and(v)thereasonsforandbenefitsoftheDisposalsasdiscusedinthe

sectionheaded

‘

5.ReasonsforandbenefitsoftheDisposals

’

above,weconsider

thathevaluationsofTargetCompaniesandTargetAsetsarefairandreasonable.

7.Basisofconsideration

InaditiontotheValuationReportspreparedbytheIndependentValuer,wehave

alsoasesedtheimpliedprice-to-earningsratio(

‘

PERatio

’

)oftheTargetCompanies

andTargetAsets(i.e.thetotalconsiderationoftheTargetCompaniesandtheTarget

Asets(i.e.RMB1,650.0milion)dividedbytheagregatedprofitaftertaxoftheTarget

CompaniesandtheTargetAsets(i.e.RMB129.0milion),onabestefortbasis,by

researchingPERatiofthelistedcompanieswhoareprincipalyengagedincement

businesontheMainBoardoftheStockExchangeandprofitmakingin2024.Thelistof

selectedmarketcomparablecompaniesisexhaustiveintermsoftheabovecriteria.The

PERatiofthemarketcomparablecompaniesareasbelow:

#CompanynameStockcodePERatio

1PurchaserA914.HK12.22

ChinaResourcesBuildingMaterials

TechnologyHoldingsLimited1313.HK51.56

3TheCompany2233.HK11.42

4AnhuiConchMaterialTechnologyCo.,Ltd.2560.HK5.10

5HuaxinCementCo.,Ltd.6655.HK7.18

Maximum51.56

Minimum5.10

Average17.50

TheTargetCompaniesand

theTargetAsets12.79

Source:StockExchangeasathedateoftheEquityTransferAgrementandtheAPAs

Basedontheaboveanalysis,weconsidertheimpliedPERatioftheTarget

CompaniesandTargetAsetsiswithintherangeofmarketcomparablecompaniesand

comparabletotheaveragePERatiofsimilarcompaniesintheindustry.Weareofthe

viewthathetotalconsiderationoftheTargetCompaniesandtheTargetAsetsare

comparabletothecurentvaluationofsimilarcompaniesintheindustry.

–

–

---

Asilustratedabove,theimpliedPERatioftheTargetCompaniesandTarget

AsetsishigherthanthePERatioftheCompanyandthePurchaserA.Inadition,

althoughthetotalconsiderationislowerthanthetotalapraisedvalueoftheTransactions

A,B,CandD,indicatingadiscountofaproximately3.7%,itishigherthanthetotalnet

bokvaluesoftheTransactionsA,B,CandD,indicatingapremiumofaproximately

13.0%.TheGroupisalsoexpectedtorecordgainofaproximatelyRMB189.2milion

(unaudited)ontheDisposals.TheManagementisoftheviewthatheconsiderationofthe

DisposalsisintheinterestoftheCompany.

Inadition,asexplainedbytheManagement,excesuplyhasledtocapacity

utilizationratesoftheGroup

’

sproductionlinesintheregionfalingtoaproximatelyhalf

ofthedesignedcapacityinXinjiang.DuringFY2024,thesefalingutilizationrateshave

ledtofalsinASPs(averageselingprices)oftheGroup

’

scementproductsintheregion

andthexpectationisthatoperationstherewilremainsubduedinthemediumtermat

least.ThePurchasersoftheTargetCompaniesandTargetAsetsisoneofthelargest

cementproducersinChinandhasthescale,thatheGroupdoesnotposes,tomanage

thesecementasetsinamoresubduedemandenvironmentandaspartofamuchlarger

instaledcapacitybaseinChina.

Furthermore,thePurchasersoftheTargetCompaniesandtheTargetAsetshavethe

scaletopurchasetheTargetCompaniesandTargetAsetsasawholeinaninseparable

transaction.ThisalowstheGrouptonotonlysavesignificantransactionand

administrativecostsinhandlingtheDisposaloftheXinjiangasetsbutalsosaves

managementime,alowingtheGrouptodirectmanagementresourcesandDirectorfocus

ontoitsnew,fastergrowingmarkets,insub-SaharanAfricandCentralAsia.

Lastbutnotleast,asdiscusedwiththeManagement,sincethenetprocedsfrom

theDisposalswilbebeterutilisedgoingtowardspartlyrepayingthe4.95%seniornotes

isuedbytheCompanyandfreingupoperatingcashflowfortheGroup

’

sexpansion

projects,particularlyinAfrica,aswelaspartialyrepayingotheroverseasdebtwhichis

becomingmorexpensiveduetoglobalinterestrateoutlokanditisnoteasytohave

purchaserstoacquiretheTargetCompaniesandTargetAsetsinonebatch.

Basedontheabove,weareoftheviewthathetotalconsiderationoftheTarget

CompaniesandtheTargetAsetsisintheinterestsoftheCompanyandtheShareholders

asawhole.

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8.FinancialefectsoftheDisposalsontheGroup

UponCompletion,theCompanywilnolongerhave(i)anyequityinterestinthe

TargetCompaniesandeachoftheTargetCompanieswilceasetobeasubsidiaryofthe

Company,andthefinancialresults,asetsandliabilitiesoftheTargetCompanieswil

ceasetobeconsolidatedintotheconsolidatedfinancialstatementsoftheGroup;and(i)

anyinterestintheTargetAsets.SetoutbelowarethefinancialefectsoftheDisposals

ontheGroup:

(i)Netasetvalue

UponCompletion,theCompanywilnolongerhave(i)anyequityinterestin

theTargetCompaniesandeachoftheTargetCompanieswilceasetobea

subsidiaryoftheCompany,andthefinancialresults,asetsandliabilitiesofthe

TargetCompanieswilceasetobeconsolidatedintotheconsolidatedfinancial

statementsoftheGroup;and(i)anyinterestintheTargetAsets.Itisestimated

thathenetasetsoftheGroupwilhaveadecreaseofaproximatelyRMB1,349.5

milion,beingthenetefectofthechangesofthetotalasetsandtotaliabilitiesof

theGroup.

(i)Revenueandearnings

Subjectothefinalaudit,itisexpectedthatheGroupwilrecordanunaudited

gainondisposalofaproximatelyRMB189.2milion.Suchunauditedgainis

estimatedaftertakingintoacountheagregateconsiderationoftheDisposalsof

RMB1,650.0milionandtheauditedcaryingvalueoftheTargetCompaniesandthe

TargetAsetsasat31January2025.

(i)Cashflow

TheGroupintendstousethenetprocedsfromtheDisposaltorepay4.95%

seniornotesisuedbytheCompanywhichisdueinJuly2026(stockcode:40756).

ItsoveralfinancialpositionwilbeimprovedaftertheDisposalsastheGroupwil

bealeviatedfromtheseniornotes.

Theaforesaidfinancialimpactishownforilustrativepurposeonlyandoesnot

purportorepresenthefinancialpositionoftheGroupaftertheCompletion.Theactual

financialefectoftheDisposalswilbedeterminedwithreferencetothefinancialstatus

oftheTargetCompaniesandTargetAsetsasathedateoftheCompletion.

DISCUSIONANDANALYSIS

Havingtakenintoconsiderationoftheaboveprincipalfactorsandreasons,including:

(i)theGroupisoptimisticabouthefuturegrowthpotentialofcementinAfricainthe

longrun;

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(i)theDisposalsareinlinewiththeGroup

’

soveralstrategytoredirectheGroup

’

s

financialandmanagementresourcestofocusondevelopmentintheoverseas

markets;

(i)thenetprocedsfromtheDisposalswilbebeterutilisedinstrengtheningthe

financialpositionoftheGroup;

(iv)giventhetransactionscontemplatedundertheEquityTransferAgrementandthe

APAsareinseparable,thetotalconsiderationoftheTransactionsA,BCandD,

which(a)weredeterminedwithreferencetotheirespectiveapraisedvalueasat31

January2025basedontheValuationReports,isfairandreasonablesofarasthe

IndependentShareholdersareconcerned;and(b)representedapremiumof

aproximately13.0%ascomparedtothenetbokvalueoftheTargetCompanies

andTargetAsetsasat31January2025,isintheinterestsoftheCompanyandthe

Shareholders;and

(v)thetermsoftheDisposals,includingthosecontemplatedundertheEquityTransfer

AgrementandtheAPAs,areonormalcomercialtermsandfairandreasonable

sofarastheIndependentShareholdersareconcerned,

weareoftheviewthathetermsoftheDisposalsarefairandreasonableandintheinterests

oftheCompanyandShareholders,VendorAandtherelevantAsetTransferVendorsasa

whole.

OPINIONANDRECOMENDATION

Havingconsideredtheaboveprincipalfactorsandreasons,weareoftheopinionthat:

(a)theDisposals,whicharenotintheordinaryandusualcourseofbusinesofthe

Group,areonormalcomercialterms;and

(b)thetermsoftheEquityTransferAgrementandeachoftheAPAsandthe

transactionscontemplatedthereunderarefairandreasonableandintheinterestsof

theCompanyandtheShareholdersasawhole.

Acordingly,werecomendtheIndependentBoardComitetoadvise,andwe

ourselvesadvise,theIndependentShareholderstovoteinfavouroftheresolutiontobe

proposedatheEGMtoaprovetheEquityTransferAgrementandtheAPAsandthe

transactionscontemplatedthereunder.

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