RoboSense Technology Co., Ltd - M&A Activity 2017

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.

This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase or subscribe for any securities of the Company.

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(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) PROPOSED ISSUANCE AND PLACING OF A SHARES; AND

(3) APPLICATION FOR WHITEWASH WAIVER

Financial adviser to the Company

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On 7 December 2016, the Company entered into three significant assets restructuring framework agreements with all relevant parties to the transactions to reach preliminary intention in respect of the plan of the Reorganisation.

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THE PROPOSED ACQUISITIONS

The Board is pleased to announce that on 7 February 2017, the Company entered into (i) the First SP Agreement with CLFG and Hefei High-Tech, pursuant to which the Company has conditionally agreed to purchase, and CLFG and Hefei High-Tech have conditionally agreed to sell an aggregate of 100% equity interest in Hefei New Energy at a total consideration of RMB342,146,400 (subject to adjustment) which shall be settled by the Company by allotment and issue of the First Consideration A Shares; (ii) the Second SP Agreement with Huaguang Group, Bengbu Institute and International Engineering, pursuant to which the Company has conditionally agreed to purchase, and Huaguang Group, Bengbu Institute and International Engineering have conditionally agreed to sell an aggregate of 100% equity interest in Tongcheng New Energy at a total consideration of RMB247,266,100 (subject to adjustment) which shall be settled by the Company by allotment and issue of the Second Consideration A Shares; and (iii) the Third SP Agreement with Triumph Group, Yixing Environmental Technology and GCL System Integration, pursuant to which the Company has conditionally agreed to purchase, and Triumph Group, Yixing Environmental Technology and GCL System Integration have conditionally agreed to sell an aggregate of 70.99% equity interest in Yixing New Energy at a total consideration of RMB246,744,500 (subject to adjustment) which shall be settled by the Company by allotment and issue of the Third Consideration A Shares.

On 7 February 2017, the Company also entered into three Profit Guarantee Indemnity Agreements with each of (i) CLFG and Hefei High-Tech, (ii) Huaguang Group, Bengbu Institute and International Engineering and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration, pursuant to which (i) CLFG and Hefei High-Tech, (ii) Huaguang Group, Bengbu Institute and International Engineering and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration respectively have agreed to provide the Profit Guarantee to the Company for the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss during the Profit Guarantee Period.

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THE PROPOSED A SHARE PLACING

Pursuant to the Reorganisation, the Company plans to undertake a proposed placing of not more than 24,454,456 new A Shares based on the issue price of not less than RMB23.45 per A Share to not more than 10 Qualified Investors (including Triumph Group), generating gross proceeds of not more than RMB573,457,000. In respect of the Triumph Group A Share Placing, on 7 February 2017, the Company entered into the Triumph Group Subscription Agreement with Triumph Group, pursuant to which the Company has conditionally agreed to issue, and Triumph Group has agreed to subscribe for 10% of the new A Shares to be placed under the Proposed A Share Placing. The final issue price and number of A Shares to be placed under the Proposed A Share Placing will be subject to the approval of the Class Meetings, the EGM and the CSRC, and determined with reference to the bidding prices offered by target subscribers.

The Proposed A Share Placing and the Triumph Group A Share Placing shall be conditional upon the completion of the Proposed Acquisitions and the issue of the Consideration Shares, but whether the Proposed A Share Placing is implemented will not affect the implementation of the Proposed Acquisitions.

In accordance with the applicable PRC laws and regulation, issuance of A Shares is subject to Shareholders’ approval, regardless of whether a general mandate has been granted at the general meeting of the Company. As such, the issue of the Consideration Shares, the Proposed A Share Placing and the Triumph Group A Share Placing will be subject to the approval by the Independent Shareholders at the EGM, the A Shares Class Meeting and the H Shares Class Meeting.

LISTING RULES IMPLICATIONS

As the highest applicable percentage ratio of the Proposed Acquisitions exceeds 100%, the Proposed Acquisitions constitute very substantial acquisitions of the Company under Chapter 14 of the Listing Rules.

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As at the date of this announcement, CLFG, the substantial Shareholder of the Company, was interested in 105,018,242 A Shares, representing approximately 19.94% of the total issued share capital of the Company, and Bengbu Institute was interested in 69,000,000 A Shares, representing approximately 13.10% of the total issued share capital of the Company. Bengbu Institute directly holds 19.00% equity interest in CLFG and Bengbu Institute is an indirect wholly-owned subsidiary of CNBMG, a wholly state-owned enterprise incorporated in the PRC, which through its another wholly-owned subsidiary, indirectly holds approximately 53.64% interest in CLFG. Therefore, CNBMG is the ultimate controlling Shareholder of the Company and deemed to be interested in 174,018,242 A Shares held by CLFG and Bengbu Institute by virtue of the SFO, representing approximately 33.04% of the total issued share capital of the Company.

As at the date of this announcement, Bengbu Institute is the substantial Shareholder of the Company and an indirect subsidiary of CNBMG, and each of CLFG, Huaguang Group and Triumph Group is either a direct or indirect subsidiary of CNBMG, and International Engineering is an associate of CNBMG. Therefore, each of CLFG, Huaguang Group, Bengbu Institute, Triumph Group and International Engineering is regarded as a connected person of the Company.

Accordingly, the Proposed Acquisitions also constitute connected transactions of the Company under Chapter 14A of the Listing Rules, and are therefore subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

Since Triumph Group, being one of the Qualified Investors, is a connected person of the Company under Chapter 14A of the Listing Rules and the applicable percentage ratios of the Triumph Group A Share Placing are more than 5%, the Triumph Group A Share Placing also constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules and is subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

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TAKEOVERS CODE IMPLICATIONS AND APPLICATION FOR WHITEWASH WAIVER

As mentioned above, as at the date of this announcement, CNBMG is deemed to be interested in 174,018,242 A Shares, representing approximately 33.04% of the total issued share capital of the Company, and after completion of the issue of the Consideration Shares but before the Proposed A Share Placing, CNBMG will indirectly hold 203,345,768 A Shares, representing approximately 36.16% of the issued share capital of the Company as enlarged by the issue of the Consideration Shares. In the absence of the Whitewash Waiver, CNBMG and parties acting in concert with it would be obliged to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by it and parties acting in concert with it pursuant to the Takeovers Code as a result of the issue of the Consideration Shares.

An application to the Executive for the Whitewash Waiver will be made by CNBMG and parties acting in concert with it pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted, would be subject to, among other things, the approval of the Independent Shareholders taken by way of a poll at the EGM. Since CNBMG is the ultimate controlling Shareholder of the Company, CNBMG and parties acting in concert with it and Shareholders who are interested in or involved in the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing will abstain from voting on the relevant resolution(s) to approve the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing at the EGM and the Class Meetings. Save for CNBMG and parties acting in concert with it, there is no other Shareholder who is interested or involved in the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing.

The Executive may or may not grant the Whitewash Waiver. The granting of the Whitewash Waiver is a non-waivable condition precedent to the respective Proposed Acquisitions Agreements. If the Whitewash Waiver is granted by the Executive and approved by the Independent Shareholders, CNBMG and parties acting in concert with it will not be required to make a mandatory general offer which would otherwise be required as a result of the acquisition of the Consideration Shares. If the Whitewash Waiver is not granted by the Executive or the resolutions in respect of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates and the Whitewash Waiver are not approved by the Independent Shareholders, the Proposed Acquisitions Agreements will be terminated and the Reorganisation will not proceed.

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INDEPENDENT BOARD COMMITTEE

The Independent Board Committee, comprising all independent non-executive Directors, namely Mr. Jin Zhanping, Mr. Liu Tianni, Mr. Ye Shuhua and Mr. He Baofeng, has been established by the Company to advise the Independent Shareholders on the terms of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing. The non-executive Directors, namely Mr. Xie Jun, Mr. Zhang Chengong and Mr. Tang Liwei, are not included in the Independent Board Committee as they are senior management of the controlled entities of CNBMG and are therefore considered to have conflicts of interests in the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing.

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

An independent financial adviser will be appointed to advise the Independent Board Committee and the Independent Shareholders as to whether the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing are fair and reasonable, and make recommendation on voting. An announcement will be made upon the appointment of the independent financial adviser.

EGM AND CLASS MEETINGS

The EGM and the Class Meetings will be held to consider and, if thought fit, pass the resolutions in respect of (i) the Proposed Acquisitions Agreements and the transactions contemplated thereunder; (ii) the grant of the Specific Mandates; (iii) the Proposed A Share Placing; (iv) the Triumph Group A Share Placing; and (v) the Whitewash Waiver. The voting in relation to the Proposed Acquisitions Agreements, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing at the EGM and the Class Meetings will be conducted by way of poll. CNBMG and parties acting in concert with it and Shareholders who are interested in or involved in the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandate, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing will abstain from voting on the relevant resolutions to be proposed at the EGM and the Class Meetings for approving the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing.

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GENERAL

A circular containing, among other things, (i) details of the Reorganisation, the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders on the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing; and (iii) a letter of advice from the independent financial adviser of the Company to the Independent Board Committee and the Independent Shareholders on the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing, is required to be despatched to the Shareholders within 15 business days from the date of this announcement pursuant to Rule 14A.68 of the Listing Rules or 21 days from the date of this announcement pursuant to Rule 8.2 of the Takeovers Code, whichever is the earlier.

CONTINUED SUSPENSION OF TRADING IN A SHARES

The trading in A Shares has been suspended from 8 September 2016 as the Company was contemplating the Reorganisation. It is expected that the suspension of trading in A Shares will continue until the SSE has no further comments on the disclosed information of the Company in relation to the Reorganisation published on the SSE in accordance with the SSE Share Listing Rules.

Completion of the Proposed Acquisitions, the issue of the Consideration Shares and the Proposed A Share Placing is subject to the satisfaction of the conditions precedent for the Proposed Acquisitions Agreements and therefore, may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

INTRODUCTION

References are made to the announcements of the Company dated 7 September 2016, 14 September 2016, 23 September 2016, 30 September 2016, 20 October 2016, 7 November 2016, 7 December 2016 and 6 January 2017 respectively in respect of the significant assets restructuring of the Company.

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On 7 February 2017, the Company also entered into three Profit Guarantee Indemnity Agreements with each of (i) CLFG and Hefei High-Tech, (ii) Huaguang Group, Bengbu Institute and International Engineering and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration respectively, pursuant to which (i) CLFG and Hefei High-Tech, (ii) Huaguang Group, Bengbu Institute and International Engineering and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration respectively have agreed to provide the Profit Guarantee to the Company for the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss during the Profit Guarantee Period.

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(1) THE PROPOSED ACQUISITIONS

Principal terms of the First SP Agreement

Date : 7 February 2017

Parties : (1) The Company, as the purchaser; and
(2) CLFG and Hefei High-Tech, as the sellers.

As at the date of this announcement, CLFG is the substantial Shareholder of the Company and therefore is a connected person of the Company under Chapter 14A of the Listing Rules. To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, Hefei High-Tech and its ultimate beneficial owners are Independent Third Parties.

Pursuant to the First SP Agreement, CLFG and Hefei High-Tech have conditionally agreed to sell 76.92% and 23.08% of the equity interest in Hefei New Energy respectively, representing the entire equity interest in Hefei New Energy, and the Company has conditionally agreed to purchase the equity interest in Hefei New Energy held by CLFG and Hefei High-Tech with an aggregate consideration of RMB342,146,400, which was determined on arm’s length negotiations with reference to the initial indicative valuation of the entire equity interest of Hefei New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The consideration is subject to adjustment from the filing result of the valuation report of the Valuer with the SASAC Authorised Office(s).

Principal terms of the Second SP Agreement

Date : 7 February 2017

Parties : (1) The Company, as the purchaser; and

(2) Huaguang Group, Bengbu Institute and International Engineering, as the sellers.

As at the date of this announcement, Bengbu Institute is the substantial Shareholder of the Company and an indirect subsidiary of CNBMG, Huaguang Group is an indirect subsidiary of CNBMG and International Engineering is an associate of CNBMG. Therefore, each of Bengbu Institute, Huaguang Group and International Engineering is regarded as a connected person of the Company under Chapter 14A of the Listing Rules.

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Pursuant to the Second SP Agreement, Huaguang Group, Bengbu Institute and International Engineering have conditionally agreed to sell 67.47%, 25.03% and 7.5% of the equity interest in Tongcheng New Energy respectively, representing the entire equity interest in Tongcheng New Energy, and the Company has conditionally agreed to purchase the equity interest in Tongcheng New Energy held by Huaguang Group, Bengbu Institute and International Engineering with an aggregate consideration of RMB247,266,100, which was determined on arm’s length negotiations with reference to the initial indicative valuation of the entire equity interest of Tongcheng New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The consideration is subject to adjustment from the filing result of the valuation report of the Valuer with the SASAC Authorised Office(s).

Principal terms of the Third SP Agreement

Date : 7 February 2017
Parties : (1) The Company, as the purchaser; and
(2) Triumph Group, Yixing Environmental Technology and GCL System Integration, as the sellers.

As at the date of this announcement, Triumph Group is a direct subsidiary of CNBMG. Therefore, Triumph Group is regarded as a connected person of the Company under Chapter 14A of the Listing Rules. To the best of the knowledge, information and belief of the Directors and having made all reasonable enquiries, each of Yixing Environmental Technology and GCL System Integration and their respective ultimate beneficial owners are Independent Third Parties.

Pursuant to the Third SP Agreement, Triumph Group, Yixing Environmental Technology and GCL System Integration have conditionally agreed to sell 51%, 12.75% and 7.24% of the equity interest in Yixing New Energy respectively, representing an aggregate of 70.99% of the equity interest in Yixing New Energy, and the Company has conditionally agreed to purchase the equity interest in Yixing New Energy held by Triumph Group, Yixing Environmental Technology and GCL System Integration with an aggregate consideration of RMB246,744,500, which was determined on arm’s length negotiations with reference to the 70.99% of the initial indicative valuation of the entire equity interest of Yixing New Energy as at 31 October 2016 as appraised by the Valuer by using income approach valuation method. The consideration is subject to adjustment from the filing result of the valuation report of the Valuer with the SASAC Authorised Office(s).

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The remaining 29.01% equity interest in Yixing New Energy is held by Far East Optoelectronics Company Limited* (遠東光電股份有限公司), an Independent Third Party, and it is their own commercial decision not to dispose their equity interest in Yixing New Energy to the Company.

The initial indicative valuation of the Target Companies is prepared by the Valuer based on income approach. Therefore, such valuation is regarded as a profit forecast of the Target Companies under Rule 14.61 of the Listing Rules. The Company will (i) make further announcement(s) in respect of the profit forecast once the valuation of the Target Companies is approved by the SASAC Authorised Office(s) and finalised; and (ii) comply with the requirements under Rules 14.60A and 14.62 of the Listing Rules as soon as practicable when the final valuation reports of the Target Companies are issued.

Other principal terms of the three Proposed Acquisitions Agreements

Save for the differences in the parties and target assets clauses as well as clauses in relation to the consideration mentioned above, the terms of the three Proposed Acquisitions Agreements are substantially the same.

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Set out below is a summary of the other principal terms of the three Proposed Acquisitions Agreements:

The Consideration Shares

Pursuant to the Proposed Acquisitions Agreements, all the respective parties have agreed that the consideration for the Proposed Acquisitions would be settled by the allotment and issue of the Consideration Shares by the Company. Details of the number of the Consideration Shares to be issued to the respective sellers under the Proposed Acquisitions Agreements are shown below:

Name of Seller *The First SP Agreement* CLFG Hefei High-Tech Total *The Second SP Agreement* Huaguang Group Bengbu Institute International Engineering Total *The Third SP Agreement* Triumph Group Yixing Environmental Technology GCL System Integration Total	Consideration (subject to adjustment) RMB263,189,538 RMB78,956,862 RMB342,146,400 RMB166,834,989 RMB61,893,890 RMB18,537,221 RMB247,266,100 RMB177,274,899 RMB44,318,725 RMB25,150,876 RMB246,744,500	Consideration Shares to be issued (approximately) 11,223,434 A Shares 3,367,030 A Shares 14,590,464 A Shares 7,114,498 A Shares 2,639,398 A Shares 790,499 A Shares 10,544,395 A Shares 7,559,697 A Shares 1,889,924 A Shares 1,072,532 A Shares 10,522,153 A Shares	Percentage to the total issued share capital of the Company as at the date of this announcement (approximately) 2.13% 0.64% 2.77% 1.35% 0.5% 0.15% 2.00% 1.44% 0.36% 0.20% 2.00%

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Pursuant to the Proposed Acquisitions Agreements, the issue price of the Consideration Shares is RMB23.45 (equivalent to approximately HK$26.50) per Consideration Share, which (i) shall not be less than 90% of the ratio of the total turnover over the total volume of the A Shares for the last 20 trading days of A Shares as quoted on the SSE prior to the announcement date of the Board meeting approving the Proposed Acquisitions; and (ii) is subject to the approval of the EGM and the CSRC and adjustment in case of ex-rights or ex-dividend during the period from the announcement date of the Board meeting to the issue date in accordance with the relevant rules of the CSRC and the SSE. The issue price of the Consideration Shares was determined in accordance with the “Administrative Measures on Significant Assets Restructuring of Listed Companies (上市公司重大資產重組管理辦法)” issued by the CSRC (the “ PRC Reorganisation Measures ”), which stipulates that the issue price of the consideration shares to be issued by a PRC listed company under the significant assets restructuring shall not be less than 90% of the market reference price, being the average trading price of the PRC listed shares (i.e. the ratio of the total turnover over the total volume) for the last 20 trading days, 60 trading days or 120 trading days of the PRC listed shares prior to the announcement date of the board meeting approving the transactions contemplated under the significant assets restructuring. As trading in the A Shares has been suspended since 8 September 2016, the issue price of the Consideration Shares was determined based on 90% of the ratio of the total turnover over the total volume of the A Shares for the last 20 trading days of A Shares prior to 8 September 2016. Such issue price of RMB23.45 represents:

(a) a premium of approximately 397.19% over the closing price of HK$5.33 per H Share as quoted on the Stock Exchange on the Last Trading Day;
(b) a premium of approximately 403.80% over the average closing price of approximately HK$5.26 per H Share as quoted on the Stock Exchange for the last 5 trading days up to and including the Last Trading Day;
(c) a premium of approximately 402.56% over the average closing price of approximately HK$5.27 per H Share as quoted on the Stock Exchange for the last 10 trading days up to and including the Last Trading Day;
(d) a premium of approximately 412.54% over the average closing price of approximately HK$5.17 per H Share as quoted on the Stock Exchange for the last 30 trading days up to and including the Last Trading Day;
(e) a discount of approximately 8.43% to the closing price of RMB25.61 (equivalent to approximately HK$28.94) per A Share as quoted on the SSE on 7 September 2016 (the last trading day before the suspension of the trading in A Shares); and

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(f) a premium of approximately 2,564.77% over the unaudited net assets attributable to the Shareholders per Share of approximately RMB0.88 (equivalent to approximately HK$0.99), calculated based on the Company’s unaudited net assets attributable to the Shareholders of approximately RMB462,224,386 as at 30 June 2016 (as quoted from the interim report of the Company for the six months ended 30 June 2016 published on 22 September 2016).

The aggregate number of Consideration Shares to be issued by the Company of 35,657,012 new A Shares represent approximately 6.77% of the total issued share capital of the Company as at the date of this announcement and approximately 6.34% of the total issued share capital of the Company as enlarged by the issue of such Consideration Shares (before the Proposed A Share Placing). The final number of Consideration Shares to be issued is subject to the final consideration under the Proposed Acquisitions Agreements, and the approval of the EGM and the CSRC, which is expected to be finalized before despatching the circular in respect of the Reorganisation to the Shareholders. It is expected that the adjustment, if any, to the final consideration under the Proposed Acquisitions Agreements may not be significant, and the number of Consideration Shares to be issued will be adjusted accordingly if there are adjustments to the final consideration. The Company will make further announcement in accordance with the requirements of the Listing Rules and the Takeovers Code as and when appropriate when the number of Consideration Shares is finalized.

The Consideration Shares shall rank pari passu among themselves and with the A Shares in issue. The issue of the Consideration Shares will be subject to the approval by the Independent Shareholders at the EGM, the A Shares Class Meeting and the H Shares Class Meeting.

Each of CLFG, Huaguang Group, Bengbu Institute, International Engineering, Triumph Group, Yixing Environmental Technology and GCL System Integration has undertaken that the respective Consideration Shares to be issued to them could not be transferred within 36 months after completion of the issue of the Consideration Shares. The above 36-month lock-up period is made in accordance with the PRC Reorganisation Measures, which requires, among other things, that if (i) the consideration shares are obtained by any of the controlling shareholder, de facto controller or their related parties of a PRC listed company (applicable to CLFG, Huaguang Group, Bengbu Institute, International Engineering and Triumph Group); or (ii) the owner of the target company receiving the consideration shares of a PRC listed company within 12 months from the date on which such owner acquiring equity interest in the target company (applicable to Yixing Environmental Technology and GCL System Integration), such consideration shares shall not be transferred within 36 months from the completion of the issue of such consideration shares.

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In addition, in accordance with the PRC Reorganisation Measures, any person who obtains shares of a PRC listed company through asset acquisition transaction shall not transfer such shares within 12 months from the completion of the issue. Therefore, Hefei High-Tech has undertaken that the Consideration Shares issued to it could not be transferred within 12 months after completion of the issue of the Consideration Shares (except for fulfillment of its compensation obligation under the Profit Guarantee Indemnity Agreements as further explained below). Hefei High-Tech has further undertaken that after the 12-month lock-up period and within the Profit Guarantee Period, it may transfer the Consideration Shares issued to it after fulfillment of the Profit Guarantee or its compensation obligation for the relevant financial year under the Profit Guarantee Indemnity Agreement, subject to the restriction that it shall not transfer more than 25% of the Consideration Shares issued to it for each of any 12 months within the Profit Guarantee Period.

Each of CLFG, Huaguang Group, Bengbu Institute, International Engineering and Triumph Group has also undertaken that if (i) the closing prices of the A Shares for 20 consecutive trading days are below the issue price of the Consideration Shares within the 6-month period from the completion date of the Proposed Acquisitions; or (ii) the closing price of the A Shares as at the end of the 6-month period after completion of the Proposed Acquisitions is below the issue price of the Consideration Shares, their 36-month lock-up period of the Consideration Shares will be automatically extended for at least 6 months. The above lock-up period of the Consideration Shares shall also be subject to the requirements of the CSRC and/or the SSE in respect of lock-up period, including but not limited to any additional requirement(s) on top of the lock-up period measures as mentioned in this announcement that may be further imposed by the CSRC and/or the SSE and any amendments to the existing measures or imposition of new measures in respect to the lock-up period for PRC listed company.

Conditions precedent

Each of the Proposed Acquisitions Agreements shall become effective after satisfaction of the conditions set forth below (the “ Proposed Acquisitions Conditions Precedent ”). If any of the Proposed Acquisitions Conditions Precedent is not satisfied, the Proposed Acquisitions Agreements shall not become effective:

(i) the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the Board;
(ii) the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the Non-connected Shareholders at the EGM and the A Shares Class Meeting; and the approval of the waiver from the obligation of CLFG and parties acting in concert with it to make a mandatory general offer (according to the laws and regulations of the PRC) in respect of their acquisition of the Shares of the Company by the Non-connected Shareholders at the EGM;

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(iii) the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the Independent Shareholders at the EGM and the H Shares Class Meeting; and the approval of the Whitewash Waiver by the Independent Shareholders at the EGM;
(iv) the approval by the Stock Exchange of the circular to be despatched to the Shareholders in respect of the transactions contemplated under the respective Proposed Acquisitions Agreements and/or the Reorganisation, and that the transactions contemplated under the respective Proposed Acquisitions Agreements and/or the Reorganisation have not been regarded as a reverse takeover of the Company under the Listing Rules before or in the course of vetting the circular;
(v) the filing of valuation results of the respective Target Companies as confirmed in the valuation reports of the respective Target Companies with the SASAC of the State Council;
(vi) the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the SASAC Authorised Office(s);
(vii) the granting of the Whitewash Waiver by the Executive; and
(viii) the approval of the transactions contemplated under the respective Proposed Acquisitions Agreements by the CSRC.

Each of the above Proposed Acquisitions Conditions Precedent is not waivable.

If any term of the Proposed Acquisitions is adjusted or changed (e.g. adjustment to the final consideration) or any one of the three Proposed Acquisitions Agreements does not proceed such that the Whitewash Waiver is no longer required, the Proposed Acquisitions Conditions Precedent in relation to the Whitewash Waiver will not be required to be fulfilled. The terms of the Proposed Acquisitions are expected to be finalized before despatching the circular in respect of the Reorganisation to the Shareholders.

If the Whitewash Waiver as mentioned in item (vii) above is not granted, which is conditional on the approval by the Independent Shareholders at the EGM, by the Executive, the Proposed Acquisitions Agreements will be void and invalid and the Reorganisation will not proceed.

The three Proposed Acquisitions Agreements are not inter-conditional upon each other. A resolution will be proposed for the three Proposed Acquisitions Agreements at the EGM for the Independent Shareholders’ approval. Should any of the three Proposed Acquisitions Agreements does not proceed, the remaining Proposed Acquisitions Agreements will not be affected.

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Profit Guarantee

Pursuant to the Proposed Acquisitions Agreements, each of the sellers under the Proposed Acquisitions Agreements has undertaken to provide the Profit Guarantee to the Company during the Profit Guarantee Period and enter into the Profit Guarantee Indemnity Agreements to set out details of the Profit Guarantee. Details of the Profit Guarantee Indemnity Agreements are set out in the subsection headed “Principal terms of the Profit Guarantee Indemnity Agreements” below.

Profit of the Target Companies during transitional period

Each of the respective parties under the three Proposed Acquisitions Agreements has agreed that upon completion of the Proposed Acquisitions, all the profit or loss (as the case may be) of each of the Target Companies (with respect to Yixing New energy, 70.99% of its profit or loss (as the case may be)) arising from or incurred during the period from 31 October 2016 to the completion date of the Proposed Acquisitions, as shown in each of the financial accounts of the Target Companies as prepared by the auditors of the Company, shall (in case of profit) belong to the Company or (in case of loss) be compensated by the respective sellers under the three Proposed Acquisitions Agreements in cash pro-rata to their respective percentage of equity interest in the Target Companies, and there would not be a cap to the compensation amount during such period.

Completion of the Proposed Acquisitions

Pursuant to the Proposed Acquisitions Agreements, there is no specific deadline for the parties to satisfy the Proposed Acquisitions Conditions Precedent. However, each of the respective parties under the three Proposed Acquisitions Agreements has agreed that the transactions contemplated under the Proposed Acquisitions Agreements shall be completed within 12 months from the date of approval of the CSRC in respect of the Proposed Acquisitions.

The Proposed A Share Placing shall be conditional upon the completion of the Proposed Acquisitions and the issue of the Consideration Shares, but whether the Proposed A Share Placing is implemented will not affect the implementation of the Proposed Acquisitions.

– 17 –

Principal terms of the Profit Guarantee Indemnity Agreements

On 7 February 2017, the Company entered into three Profit Guarantee Indemnity Agreements respectively with each of (i) CLFG and Hefei High-Tech, (ii) Huaguang Group, Bengbu Institute and International Engineering, and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration (collectively, the “ Guarantors ”), pursuant to which the respective Guarantors have agreed to provide the Profit Guarantee to the Company for the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss during the Profit Guarantee Period. According to the announcement of the CSRC [2008] No. 43, extraordinary profit or loss refers to profit or loss arising in various transactions and matters that has no direct relation with the ordinary course of business of a company, or that is related to the ordinary course of business but affects the reasonable judgment on the company’s operation performance and profitability due to the special and occasional nature of such transaction and matter. The relevant extraordinary profit or loss items will be determined with reference to the announcement of CSRC [2008] No. 43. The Profit Compensation Amount (as defined below) shall be determined by an independent auditor appointed by the Company, and the Company and each of the respective Guarantors shall agree with the respective Profit Compensation Amount.

Set out below is a summary of the principal terms of the three Profit Guarantee Indemnity Agreements:

Profit Guarantee Indemnity

Each of the respective Guarantors has undertaken to the Company that the net profit attributable to equity holders of each of the respective Target Companies after deduction of extraordinary profit or loss as shown in their respective audited accounts (in case of Hefei New Energy and Tongcheng New Energy, excluding the profit or gains derived from investment of the proceeds from the Proposed A Share Placing in project(s) of Hefei New Energy and Tongcheng New Energy[1] ) for each of the three financial years ending 31 December 2017, 2018 and 2019 shall not be less than certain Profit Guarantee amounts.

1 The reasons for excluding the profit or gains derived from investment of the proceeds from the Proposed A Share Placing in project(s) of Hefei New Energy and Tongcheng New Energy when calculating the Profit Guarantee of these two Target Companies are (i) the Proposed A Share Placing may or may not proceed; and (ii) the Profit Guarantee amount of these two Target Companies will be determined without taking into account the Proposed A Share Placing and the effect of investment of proceeds therefrom in project(s) of these two Target Companies.

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The Profit Guarantee amounts for the relevant financial years for each of the Target Companies under the respective Profit Guarantee Indemnity Agreements are not ascertained for the time being and shall be determined upon the valuation reports of the Target Companies have been issued and approved by the SASAC Authorised Office(s), which are expected to be finalized before despatching the circular in respect of the Reorganisation to the Shareholders. The Company and the Guarantors will enter into supplemental agreements for the Profit Guarantee upon finalization of the Profit Guarantee amounts, and the Company will make further announcement in this regard in accordance with the requirements of the Listing Rules and the Takeovers Code as and when appropriate.

In the event that the Reorganisation cannot complete by 31 December 2017, the period for the Profit Guarantee provided by the relevant Guarantors under each of the three Profit Guarantee Indemnity Agreements will start from 1 January 2018 and end on 31 December 2020 (instead of starting from 1 January 2017 and ending on 31 December 2019).

The audited accounts of the Target Companies will be prepared in accordance with the PRC Accounting Standards for Business Enterprises by the auditor of the Company or by a PRC accounting firm listed on the List of Approved Mainland Accounting Firms Eligible for Acting as Reporting Accountants and/or Auditors of Mainland Incorporated Companies Listed in Hong Kong of the Stock Exchange.

Compensation for Profit Guarantee

If any of the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss as shown in the audited accounts of the respective Target Companies (the “ Actual Net Profit ”) for the relevant financial year during the Profit Guarantee Period falls short of the Profit Guarantee for the relevant financial year, the relevant Guarantors shall compensate the Company for the deficiency.

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The formula for calculating the annual compensation amount for the Profit Guarantee (the “ Profit Compensation Amount ”) is as follows:

= The Profit Compensation (the accumulated Profit Guarantee amount as Amount for the relevant at the end of the relevant financial year of the financial year respective Target Companies – the accumulated Actual Net Profit of the respective Target Companies as at the end of the relevant financial year) ÷ the sum of the Profit Guarantee amount for the respective Target Companies during the Profit Guarantee Period × the acquisition consideration for the respective Target Companies – the accumulated compensated amount

Note: If the Profit Compensation Amount calculated from the above formula is below zero (0), it shall be deemed as zero (0).

If the Actual Net Profit of the respective Target Companies can meet the Profit Guarantee in the first and/or second financial year(s) during the Profit Guarantee Period but fail to meet the Profit Guarantee in the subsequent financial year(s) (i.e. the second and/or third financial year(s)), and the accumulated Actual Net Profit (i.e. the accumulated Actual Net Profit for the first and second financial years or for all the three financial years (as the case may be)) exceed or equal to the sum of the accumulated Profit Guarantee amount (i.e. the accumulated Profit Guarantee amount for the first and second financial years or for all the three financial years (as the case may be)) and the accumulated actual net losses (if any) (i.e. the accumulated actual net losses for the first and second financial years or for all the three financial years (as the case may be)), the respective Guarantors will not be required to compensate (i.e. the amount of Actual Net Profit which exceeds the Profit Guarantee amount in the first and/or second financial year(s) (as the case may be) can be used to offset the shortfall in the subsequent year(s)).

To summarize, the Profit Compensation Amount for each of the Target Companies for the relevant financial year during the Profit Guarantee Period can be calculated as follows:

For the first (the Profit Guarantee amount for the first financial financial year year – the Actual Net Profit for the first financial year (the “ FY Amount ”): (if any) + the actual net losses for the first financial year (if any)) ÷ the sum of the Profit Guarantee amount during the Profit Guarantee Period × the acquisition consideration of the Target Company

If the FY Amount is positive, the relevant Guarantors will be required to compensate the Company with such amount.

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For the second financial year (the “ SY Amount ”):

(the Profit Guarantee amount for the second financial year – the Actual Net Profit for the second financial year (if any) + the actual net losses for the second financial year (if any)) ÷ the sum of the Profit Guarantee amount during the Profit Guarantee Period × the acquisition consideration of the Target Company

If the SY Amount is positive and the sum of the FY Amount and SY Amount is also positive, the relevant Guarantors will be required to compensate the Company with the SY Amount (minus the FY Amount if it is negative).

For the third financial year (the “ TY Amount ”):

(the Profit Guarantee amount for the third financial year – the Actual Net Profit for the third financial year (if any) + the actual net losses for the third financial year (if any)) ÷ the sum of the Profit Guarantee amount during the Profit Guarantee Period × the acquisition consideration of the Target Company

If the TY Amount is positive and the sum of the FY Amount, SY Amount and TY Amount is also positive, the relevant Guarantors will be required to compensate the Company with the TY Amount (minus the sum of FY Amount and SY Amount if such sum is negative).

Note: The Actual Net Profit or the actual net losses for the respective financial year will be zero if the respective Target Companies records zero profit or loss for the respective financial year. In addition, the Actual Net Profit and the actual net losses will not occur simultaneously in any respective financial year.

For the avoidance of doubt, the Company will not return to the relevant Guarantors any Shares used to compensate the Profit Compensation Amount in previous year(s) (i.e. there will not be any reversal transfer of compensation Shares which have already been repurchased by the Company).

The above compensation mechanism is based on arm’s length negotiation between the Company and the respective Guarantors. The above mechanism, including terms of annual compensation and non-reversal transfer of compensation Shares, can protect the interest of the Company by safeguarding timely and promising compensation from the relevant Guarantors and at the same time, the accumulating calculation mechanism can motivate the respective Guarantors to achieve the Profit Guarantee. Hence, the compensation mechanism under

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the Profit Guarantee Indemnity Agreements provides a fair measurement of compensation for the Profit Guarantee over the Profit Guarantee Period for all parties therein and therefore is fair and in the interests of the Company and the Shareholders as a whole.

Assets Impairment Indemnity and compensation

Upon expiry of the Profit Guarantee Period, the Company shall engage an accounting firm with securities qualification to conduct impairment tests and issue an impairment test report on each of the Target Companies in accordance with the rules and requirements of the CSRC.

If the impairment amount of any of the Target Companies as at the end of the Profit Guarantee Period exceeds the accumulated Profit Compensation Amount of the respective Target Companies, the relevant Guarantors under the Profit Guarantee Indemnity Agreements shall make further compensation to the Company (the “ Impairment Compensation Amount ”) calculated based on the following formula:

= The Impairment the impairment amount of the respective Compensation Amount Target Companies as at the end of the Profit Guarantee Period – the paid accumulated Profit Compensation Amount for the respective Target Companies during the Profit Guarantee Period

Note: If the Impairment Compensation Amount calculated from the above formula is below zero (0), it shall be deemed as zero (0).

Compensation method and adjustment for the Profit Guarantee Indemnity and the Assets Impairment Indemnity

The relevant Guarantors under the Profit Guarantee Indemnity Agreements shall first make compensation for the Profit Compensation Amount and the Impairment Compensation Amount with the Consideration Shares of the Company acquired in the Proposed Acquisitions. If the Consideration Shares are insufficient for compensation, the balance shall be settled by the relevant Guarantors in cash.

(i) Number of the compensation shares shall be calculated based on the following formula:
Number of the = Profit Compensation Amount or Impairment compensation Compensation Amount ÷ the issue price of the shares for the Consideration Shares relevant period

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(ii) During the Profit Guarantee Period, in the event of capitalization issue by conversion or bonus issue by the Company, the number of compensation shares shall be adjusted correspondingly based on the following formula:

Number of the = Number of the compensation shares for compensation the relevant period × (1 + Proportion of shares (adjusted) capitalization issue by conversion or bonus issue)

(iii) During the Profit Guarantee Period, if the Company distributes cash dividend, the cash dividend shall be correspondingly refunded based on the following formula:

Amount to be = Allocated cash dividend per share (after tax) × refunded Number of compensation shares for the relevant period

The Company shall repurchase and cancel the Shares compensated by the relevant Guarantors under the Profit Guarantee Indemnity Agreements for the relevant period at a total consideration of RMB1.00. Separate resolution for a general mandate in respect of the abovementioned repurchase for the first financial year will be proposed at the EGM for the Independent Shareholders’ approval and renewal of the general mandate will be proposed at the subsequent general meeting(s) of the Company (when necessary).

The aggregate compensation of the Profit Compensation Amount and the Impairment Compensation Amount by each of the relevant Guarantors under the respective Profit Guarantee Indemnity Agreements shall not exceed 100% of the total consideration received by it under the respective Proposed Acquisitions Agreements.

After the end of each year during or upon expiry of the Profit Guarantee Period (as the case may be), if the relevant Guarantors under the Profit Guarantee Indemnity Agreements shall make compensation for the Profit Compensation Amount or the Impairment Compensation Amount, the Company shall, upon the Board’s approval on the number of compensation shares, issue a notice of the respective compensation shares (the “ Compensation Notice ”) to the relevant Guarantors within 10 working days from the issue date of the audited accounts or the impairment test report (as the case may be), and the relevant Guarantors under the Profit Guarantee Indemnity Agreements shall within 10 working days upon the receipt of the Compensation Notice, transfer the respective compensation shares to the dedicated securities account for the repurchase of the Company and for cancellation of the compensation shares by the Company in accordance with relevant laws and regulations.

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In the event that the Consideration Shares of the relevant Guarantors under the respective Profit Guarantee Indemnity Agreements are insufficient for compensation for the Profit Compensation Amount or the Impairment Compensation Amount, the relevant Guarantors under the respective Profit Guarantee Indemnity Agreements shall settle the Profit Compensation Amount or the Impairment Compensation Amount by cash within 30 working days upon receipt of the Compensation Notice.

If there occur compensation pursuant to the Profit Guarantee Indemnity Agreements, resulting in Shares repurchase and cancellation by the Company, the shareholding of CNBMG and parties acting in concert with it in the Company may increase. Nonetheless, it is expected that such repurchase and cancellation of the compensation shares by the Company pursuant to the Profit Guarantee Indemnity Agreement will not result in any obligation of CNBMG and parties acting in concert with it to make a mandatory general offer in accordance with Rule 26 of the Takeovers Code. In case such repurchase and cancellation of the Consideration Shares by the Company during the Profit Guarantee Period trigger mandatory general offer obligation in accordance with Rule 26 of the Takeovers Code, such repurchase and cancellation will constitute an off-market share buy-back by the Company under the Hong Kong Code on Share Buy-backs. The Company shall comply with the relevant rules, regulations and codes, and obtain prior approvals from the relevant regulatory authorities in the PRC and Hong Kong, including but not limited to the compliance with the Hong Kong Code on Share Buy-backs, and approvals from the SFC and the disinterested Shareholders, prior to the Company making any repurchase and cancellation of the Consideration Shares.

Conditions precedent to the Profit Guarantee Indemnity Agreements

Each of the Profit Guarantee Indemnity Agreements shall become effective after satisfaction of (i) the Proposed Acquisitions Conditions Precedent and (ii) the condition that the Proposed Acquisitions Agreements becoming effective and completed. If any of the above conditions precedent is not satisfied, the Profit Guarantee Indemnity Agreements shall not become effective.

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Information of the Target Companies

Hefei New Energy

Hefei New Energy is a company incorporated in the PRC with limited liability in 2011. As at the date of this announcement, Hefei New Energy is owned as to 76.92% by CLFG and 23.08% by Hefei High-Tech. The original acquisition cost of such 76.92% equity interest by CLFG was approximately RMB138,270,841.

Hefei New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass. The unaudited net assets book value of Hefei New Energy was approximately RMB174,479,963 as at 31 October 2016. The table below sets out the unaudited financial information of Hefei New Energy for the years ended 31 December 2014 and 2015 and for the ten months ended 31 October 2016:

	For the	For the	For the
	ten months ended	year ended	year ended
	31 October 2016	31 December 2015	31 December 2014
	(unaudited)	(unaudited)	(unaudited)
	RMB	RMB	RMB
	(approximately)	(approximately)	(approximately)
Revenue	402,889,729	14,505,906	–
Profit/(loss) before tax	22,634,530	(11,782,283)	21,382,159
Profit/(loss) after tax	19,921,468	(11,782,283)	16,036,620
Total assets	1,147,282,204	984,700,810	706,444,653

Hefei New Energy was in the early development stage for the years ended 31 December 2014 and 2015, which as a result generated insignificant amount of revenue. Hefei New Energy commenced full operation in May 2016.

Nature of the products of Hefei New Energy

As at the date of this announcement, Hefei New Energy possesses a 650T/D one furnace with five lines oxy-fuel combustion ultra-white photovoltaic glass production line and four industrial advanced further processing lines. The thickness of the glass products of Hefei New Energy ranges from 2.5mm to 4.0mm.

The photovoltaic glass of Hefei New Energy has the characteristics of high solar transmittance, high mechanical strength, high flatness, low iron content and is considered to be one of the finest glass products for usage within the solar energy industry. The photovoltaic glass widely applies to the cover and back plate of the solar photovoltaic components.

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The target customers of Hefei New Energy are the solar energy enterprises and Hefei New Energy also exports its products to global market.

Tongcheng New Energy

Tongcheng New Energy is a company incorporated in the PRC with limited liability in 2010. As at the date of this announcement, Tongcheng New Energy is owned as to 67.47% by Huaguang Group, 25.03% by Bengbu Institute and 7.5% by International Engineering. The original acquisition costs of such 67.47%, 25.03% and 7.5% equity interest by Huaguang Group, Bengbu Institute and International Engineering were approximately RMB97,640,000, RMB40,000,000 and RMB10,000,000 respectively.

Tongcheng New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass. The unaudited net assets book value of Tongcheng New Energy was approximately RMB210,090,044 as at 31 October 2016. The table below sets out the unaudited financial information of Tongcheng New Energy for the years ended 31 December 2014 and 2015 and for the ten months ended 31 October 2016:

	For the	For the	For the
	ten months ended	year ended	year ended
	31 October 2016	31 December 2015	31 December 2014
	(unaudited)	(unaudited)	(unaudited)
	RMB	RMB	RMB
	(approximately)	(approximately)	(approximately)
Revenue	205,893,596	69,275,702	5,568,563
Profit/(loss) before tax	36,588,858	843,442	(7,435,738)
Profit/(loss) after tax	30,896,406	809,311	(7,238,417)
Total assets	472,687,117	443,656,703	354,816,375

Tongcheng New Energy was in the early development stage for the year ended 31 December 2014, which as a result generated insignificant amount of revenue. Tongcheng New Energy commenced full operation since the year of 2015.

Nature of the products of Tongcheng New Energy

Tongcheng New Energy possesses a 320T/D ultra-white photovoltaic glass production line and two photovoltaic glass further processing production lines, and is principally producing ultra-white rolled glass, tempered ultra-white rolled glass, anti-reflective coated tempered rolled glass and rolled cover glass. The thickness of the glass products of Tongcheng New Energy ranges from 2.5mm to 4.0mm.

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The photovoltaic glass of Tongcheng New Energy has the characteristics of low expansion rate, high compressive strength and anti-potential induced degradation effect.

The design, style and size of the photovoltaic glass of Tongcheng New Energy can be specialized according to the customer’s requirements. The target customers of Tongcheng New Energy are the photovoltaic glass further processing enterprises.

Yixing New Energy

Yixing New Energy is a company incorporated in the PRC with limited liability in 2016. As at the date of this announcement, Yixing New Energy is owned as to 51% by Triumph Group, 29.01% by Far East Optoelectronics Company Limited* (遠東光電股份有限公司) (an Independent Third Party), 12.75% by Yixing Environmental Technology and 7.24% by GCL System Integration. The original acquisition cost of such 51% equity interest by Triumph Group was approximately RMB160,000,000.

Yixing New Energy is principally engaged in the research and development, production and sales of solar photovoltaic glass and further processed glass.

Yixing New Energy is in the early development stage and has not recorded revenue and profit for the ten months ended 31 October 2016. The unaudited consolidated total asset value and unaudited net assets book value of Yixing New Energy as at 31 October 2016 were approximately RMB628,598,852 and RMB320,476,785, respectively.

Nature of the products of Yixing New Energy

Yixing New Energy possesses a 280T/D one furnace with two lines oxy-fuel combustion ultra-white photovoltaic glass production line and two further processing lines and is principally producing ultra-white photovoltaic original glass, tempered photovoltaic glass and coated photovoltaic glass. The thickness of the glass products of Yixing New Energy ranges from 2.0mm to 4.0mm.

At present, the ultra-white photovoltaic original glass produced by Yixing New Energy is mainly used for the processing of Yixing New Energy’s tempered photovoltaic glass and coated photovoltaic glass.

Pursuant to Rule 10 of the Takeovers Code, the unaudited financial information of each of the Target Companies as disclosed above constitute profit forecasts and should be reported on in accordance with Rule 10 of the Takeovers Code; and the reports must be included in this announcement in accordance with Rule 10.4 of the Takeovers Code. Due to the time constraint

– 27 –

in issuing this announcement in compliance with Chapters 14 and 14A of the Listing Rules, the parties have encountered practical difficulties in meeting the reporting requirements under Rule 10 of the Takeovers Code for the purpose of this announcement. The financial information of each of the Target Companies does not meet the standard required under Rule 10 of the Takeovers Code. Shareholders and potential investors of the Company are advised to exercise caution in placing reliance on the financial information for each of the Target Companies in assessing the merits and demerits of the Proposed Acquisitions. The financial information of each of the Target Companies will be reported on by the Company’s financial advisers and auditors or accountants in the next document to be sent to the Shareholders pursuant to Rule 10 of the Takeovers Code. The further announcement (if any) or circular relating to the Proposed Acquisitions and Proposed A Share Placing to be despatched to the Shareholders will be the next Shareholder’s document.

Shareholding Structure

Based upon the shares in issue for each of the companies identified below, the simplified shareholding structure of the relevant companies as at the date of this announcement and after completion of the Proposed Acquisitions (but before the Proposed A Share Placing) will be as follows:

(1) the following chart reflects the simplified shareholding structure of the relevant companies as at the date of this announcement:

==> picture [362 x 327] intentionally omitted <==

----- Start of picture text -----

Note 1
International 91%
CNBMG
Engineering
100%
100%
Triumph Group
53.64% Bengbu Institute
19%
CLFG
19.94%
13.10%
The Company
100%
(1) CLFG Longmen Glass Co. Ltd.
(2) CLFG Longhai Electronic Glass Limited
(3) Bengbu China National Building Materials Information
Display Material Company
(4) Luoyang Luobo Furuida Commerce Co., Ltd.
----- End of picture text -----

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(2) the following chart reflects the simplified shareholding structure of the relevant companies upon completion of the Proposed Acquisitions (but before the Proposed A Share Placing):

==> picture [398 x 302] intentionally omitted <==

----- Start of picture text -----

Note 1
91%
CNBMG
GCL System International
Integration Engineering
0.34% 0.14% 100%
Triumph Group
100%
1.34% 53.64%
Yixing
Environmental Hefei High-Tech CLFG 19% Bengbu Institute 100%
Technology 0.59%
0.19%
20.67%
12.74%
The Company Huaguang Group
1.27%
100% 70.99%
(1) CLFG Longmen Glass Co. Ltd. (7) Yixing New Energy
(2) CLFG Longhai Electronic Glass Limited
(3) Bengbu China National Building Materials Information
Display Material Company
(4) Luoyang Luobo Furuida Commerce Co., Ltd.
(5) Tongcheng New Energy
(6) Hefei New Energy
----- End of picture text -----

Note 1 CNBMG is indirectly interested in 91% of the equity interest in International Engineering through its holding of 44.25% equity interests in China National Building Material Company Limited* (中國建材股份有限公司).

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(2) THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING

Pursuant to the Reorganisation, the Company plans to undertake a proposed placing of not more than 24,454,456 new A Shares based on the issue price of not less than RMB23.45 per A Share to not more than 10 Qualified Investors (including Triumph Group), generating gross proceeds of not more than RMB573,457,000. Save for Triumph Group, the Other Qualified Investors shall be specific investors in compliance with the requirements of the CSRC, including securities investment funds, insurance institutional investors, trust investment companies, finance companies, securities companies, qualified foreign institutional investors (QFII), natural persons and other qualified investors in compliance with the specific requirements of the Company. The Proposed A Share Placing is conditional on, among other things, completion of the Proposed Acquisitions and the issue of the Consideration Shares. In accordance with the applicable PRC laws and regulation, the Proposed A Share Placing will be subject to the approval by the Independent Shareholders at the EGM, the A Shares Class Meeting and the H Shares Class Meeting.

In respect of the Triumph Group A Share Placing, on 7 February 2017, the Company entered into the Triumph Group Subscription Agreement with Triumph Group, pursuant to which the Company has conditionally agreed to issue, and Triumph Group has agreed to subscribe for 10% of the new A Shares to be placed under the Proposed A Share Placing.

The final issue price and number of A Shares to be placed under the Proposed A Share Placing will be subject to the approval of the Class Meetings, the EGM and the CSRC, and determined with reference to the bidding prices offered by target subscribers in the price inquiry process. Triumph Group will not involve in such price inquiry process of the issue price of the Proposed A Share Placing and has undertaken to accept result of the price inquiry and the same subscription price of the Other Qualified Investors.

As at the date of this announcement, save for Triumph Group, the Company has not yet identified the Other Qualified Investors.

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Summary of the terms of the Proposed A Share Placing and principal terms of the Triumph Group Subscription Agreement

Terms of the Proposed A Share Placing

Type and nominal value of : A Shares, with a nominal value of RMB1.00 shares to be placed each.

Method of issue : Non-public issuance. Target subscribers : The Company will issue the new A Shares to not more than 10 Qualified Investors (including Triumph Group). Save for Triumph Group, the Other Qualified Investors shall be specific investors in compliance with the requirements of the CSRC, including securities investment funds, insurance institutional investors, trust investment companies, finance companies, securities companies, qualified foreign institutional investors (QFII), natural persons and other qualified investors in compliance with the specific requirements of the Company.

Save for Triumph Group, being a connected person to the Company, the Other Qualified Investors and their ultimate beneficial owners shall not include connected persons or Shareholders of the Company and no Other Qualified Investors shall become substantial Shareholders as a result of the Proposed A Share Placing.

Lock-up period : The A Shares to be subscribed by the Other Qualified Investors are not transferable for a period of 12 months from the date of completion of the issue of the new A Shares under the Proposed A Share Placing.

The A Shares to be subscribed by Triumph Group are not transferable for a period of 36 months from the date of completion of the issue of the new A Shares under the Proposed A Share Placing.

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The lock-up period under the Proposed A Share Placing was determined in accordance with the “Measures for Issuance of Securities by Listed Companies ( 上市公司證券發行管理辦法)” issued by the CSRC (the “ PRC Issuance Measures ”), which requires that any shares to be issued by a PRC listed company through non-public share placement shall not be transferred within 12 months (and 36 months, with respect to the controlling shareholder or de facto controlling shareholder and enterprises it controlled) from the completion of the issue.

Subscription method

: All target subscribers will subscribe for the A Shares under the Proposed A Share Placing in cash.
Pricing base date and price : The pricing base date of the Proposed A Share of the issue Placing is the announcement date of the Board meeting approving the Proposed A Share Placing.

The issue price per A Share shall not be less than 90% of the ratio of the total turnover over the total volume of the A Shares for the last 20 trading days of A Shares as quoted on the SSE prior to the pricing base date, i.e. not less than RMB23.45 per A Share. The final issue price will be subject to the approval of the Class Meetings and the EGM, and adjustment in case of ex-rights or ex-dividend during the period from the announcement date of the Board meeting to the issue date, and determined with reference to the bidding prices offered by target subscribers in the price inquiry process.

The issue price per A Share was determined in accordance with the PRC Issuance Measures, which stipulates that for any non-public issuance of shares by a PRC listed company for fund raising purpose, the issue price of the relevant shares shall not be less than 90% of the average share price (i.e. the ratio of the total turnover over the total volume) for the last 20 trading days prior to the relevant price determination date.

– 32 –

The minimum issue price of A Share to be placed under the Proposed A Share Placing is the same as the issue price per Consideration Share. The final issue price of A Shares to be placed under the Proposed A Share Placing will be determined with reference to the bidding prices offered by target subscribers in the price inquiry process, which may be different from and higher than the issue price per Consideration Share.

Amount of gross proceeds : raised and number of A Shares to be issued

The maximum amount of gross funds to be raised through the Proposed A Share Placing will not exceed 100% of the total consideration under the Proposed Acquisitions. In accordance with the PRC Reorganisation Measures, the fund raising size in relation to the significant asset restructuring by a PRC listed company shall not be more than 100% of the transaction price of the assets proposed to be acquired whereas “the transaction price of the assets proposed to be acquired” means the total consideration under the Proposed Acquisitions excluding the amount of capital injection in the Target Companies in cash made by the sellers under the Proposed Acquisitions Agreements within 6 months before and during suspension of trading in A Shares, i.e. RMB836,157,000 (the aggregated consideration of the Proposed Acquisitions) – RMB40,000,000 (the amount of the capital injection in cash by Bengbu Institute in Tongcheng New Energy in October 2016) – RMB222,700,000 (the total amount of the capital injection in cash by Triumph Group, Yixing Environmental Technology and GCL System Integration in Yixing New Energy in October 2016), which is RMB573,457,000. Accordingly, the gross amount of funds to be raised under the Proposed A Share Placing will not exceed RMB573,457,000.

Based on the minimum issue price of RMB23.45 per A Share under the Proposed A Share Placing, the number of new A Shares to be issued will not be more than 24,454,456 A Shares.

– 33 –

The final number of new A Shares to be issued under the Proposed A Share Placing will be determined by the Board based on the final issue price and subject to the approval of the CSRC.

Place of listing

: The A Shares to be issued pursuant to the Proposed A Share Placing will be listed and traded on the SSE.
Use of proceeds : The proceeds to be raised will not exceed RMB573,457,000 through the Proposed A Share Placing and it is preliminarily expected that the proceeds, excluding the relevant transaction expenses, tax and issue expenses, will be used as to (i) approximately RMB450,000,000 of the proceeds will be used for the development cost of Hefei New Energy oxy-combustion new photovoltaic cover material phase II production line project and (ii) approximately RMB100,000,000 of the proceeds will be used for the development cost of Tongcheng New Energy high transparent double photovoltaic glass component further processing with an annual output of 4 million square meters project.

The allocation of the proceeds raised from the Proposed A Share Placing is based on the capital requirement of the projects of Hefei New Energy and Tongcheng New Energy.

Arrangement with regard : The new Shareholders after completion of the to the undistributed Proposed A Share Placing and the existing cumulated profits Shareholders will share the undistributed profits cumulated prior to the Proposed A Share Placing.

Period of validity of the : 12 months from the date of approval at the EGM resolution(s) in relation and the Class Meetings, which may be extended to the Proposed A Share as and when necessary. Placing

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Principal terms of the Triumph Group Subscription Agreement

The terms of the Proposed A Share Placing and the Triumph Group Subscription Agreement are substantially the same. Set out below is a summary of the other principal terms of the Triumph Group Subscription Agreement:

Date : 7 February 2017

Parties : (1) The Company, as the issuer; and

(2) Triumph Group, as the subscriber.

Information on Triumph Group

As at the date of this announcement, Triumph Group, a direct subsidiary of CNBMG, is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector, and is regarded as a connected person of the Company under the Listing Rules.

Number of A Shares to be subscribed by Triumph Group

Pursuant to the Triumph Group Subscription Agreement, Triumph Group will subscribe for not more than 10% of the A Shares to be issued under the Proposed A Share Placing, i.e. 2,445,445 A Shares. The A Shares to be subscribed represent (i) approximately 0.46% of the Company’s total issued share capital as at the date of this announcement; (ii) approximately 0.44% of the Company’s total issued share capital as enlarged by the Proposed A Share Placing; and (iii) approximately 0.42% of the Company’s total issued share capital as enlarged by the issue of the Consideration Shares and the Proposed A Share Placing.

Conditions precedent to completion of the Triumph Group Subscription Agreement

The Triumph Group Subscription Agreement shall become effective after satisfaction of the conditions set forth below. If any of the below conditions precedent is not satisfied, the Triumph Group Subscription Agreement shall not become effective:

(i) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the Board;

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(ii) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the Non-connected Shareholders at the EGM and the A Shares Class Meeting, and the approval of the waiver from the obligation of CLFG and parties acting in concert with it to make a mandatory general offer (according to the laws and regulations of the PRC) in respect of their acquisition of the Shares of the Company by the Non-connected Shareholders at the EGM;
(iii) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the Independent Shareholders at the EGM and the H Shares Class Meeting, and the approval of the Whitewash Waiver by the Independent Shareholders at the EGM;
(iv) the approval by the Stock Exchange of the circular to be despatched to the Shareholders in respect of the transactions contemplated under the respective Proposed Acquisitions Agreements and/or the Reorganisation, and that the transactions contemplated under the respective Proposed Acquisitions Agreements and/or the Reorganisation have not been regarded as a reverse takeover of the Company under the Listing Rules before or in the course of vetting the circular;
(v) the filing of valuation results of the respective Target Companies as confirmed in the valuation reports of the respective Target Companies with the SASAC of the State Council;
(vi) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the SASAC Authorised Office(s);
(vii) the granting of the Whitewash Waiver by the Executive;
(viii) the approval of the transaction contemplated under the Triumph Group Subscription Agreement by the CSRC; and
(ix) the Proposed Acquisitions Agreements becoming effective.

None of the above conditions is waivable.

If any term of the Proposed Acquisitions is adjusted or changed (e.g. adjustment to the final consideration) or any one of the Three Proposed Acquisitions Agreements does not proceed such that the Whitewash Waiver is no longer required, the conditions precedent to completion of the Triumph Group Subscription Agreement in relation to the Whitewash Waiver will not be required to be fulfilled. The terms of the Proposed Acquisitions are expected to be finalized before despatching the circular in respect of the Reorganisation to the Shareholders.

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Subscription price under the Triumph Group Subscription Agreement

The issue price per A Share under the Triumph Group Subscription Agreement shall not be less than 90% of the ratio of the total turnover over the total volume of the A Shares for the last 20 trading days of A Shares as quoted on the SSE prior to the pricing base date, i.e. not less than RMB23.45 per A Share. The issue price per A Share under the Triumph Group Subscription Agreement was determined in accordance with the PRC Issuance Measures, which stipulates that for any non-public issuance of shares by a PRC listed company for fund raising purpose, the issue price of the relevant shares shall not be less than 90% of the average share price (i.e. the ratio of the total turnover over the total volume) for the last 20 trading days prior to the relevant price determination date.

The minimum issue price of A Share to be placed under the Proposed A Share Placing is the same as the issue price per Consideration Share. The final issue price of A Shares to be placed under the Proposed A Share Placing will be subject to the approval of the Class Meetings and the EGM, and adjustment in case of ex-rights or ex-dividend during the period from the announcement date of the Board meeting to the issue date, and determined with reference to the bidding prices offered by target subscribers in the price inquiry process. The final issue price per A Share may be different from and higher than the issue price per Consideration Share.

Pursuant to the Triumph Group Subscription Agreement, upon satisfaction of all the conditions precedent to the Triumph Group Subscription Agreement, the subscription price shall be paid by Triumph Group within 3 working days in full upon receipt of the payment notice from the Company.

Lock-up period

The A Shares to be subscribed by Triumph Group are not transferable for a period of 36 months from the date of completion of the issue of the new A Shares under the Triumph Group A Share Placing.

Listing Rules Implications

Triumph Group is regarded as a connected person of the Company and the Triumph Group A Share Placing will constitute a connected transaction of the Company subject to the reporting, announcement and the independent shareholders’ approval requirements under Chapter 14A of the Listing Rules.

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EFFECT OF THE COMPLETION OF THE PROPOSED ACQUISITIONS AND THE PROPOSED A SHARE PLACING ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

The following sets out the shareholding structure of the Company (i) as at the date of this announcement; (ii) immediately after completion of the Proposed Acquisitions (but before the Proposed A Share Placing); and (iii) immediately after completion of the Proposed Acquisitions and the Proposed A Share Placing:

Shareholders A Shares *CLFG and parties acting in* *concert* CLFG Bengbu Institute Huaguang Group International Engineering Triumph Group Sub-total of CLFG and parties acting in concert Yixing Environmental Technology GCL System Integration Hefei High-Tech Other Qualified Investors Other A Shareholders Sub-total H Shares HKSCC (Nominees) Limited_(Note)_ Public H Shareholders Sub-total Total	(i) As at the date of this announcement Number of Shares Approximate % 105,018,242 19.94 69,000,000 13.10 – – – – – – 174,018,242 33.04 – – – – – – – – 102,748,633 19.51 276,766,875 52.54 248,660,699 47.21 1,339,301 0.25 250,000,000 47.46 526,766,875 100	(ii) Immediately after completion of the Proposed Acquisitions (but before the Proposed A Share Placing) Number of Shares Approximate % 116,241,676 20.67 71,639,398 12.74 7,114,498 1.26 790,499 0.14 7,559,697 1.34 203,345,768 36.16 1,889,924 0.34 1,072,532 0.19 3,367,030 0.59 – – 102,748,633 18.27 312,423,887 55.55 248,660,699 44.21 1,339,301 0.24 250,000,000 44.45 562,423,887 100	(iii) Immediately after completion of the Proposed Acquisitions and the Proposed A Share Placing Number of Shares Approximate % 116,241,676 19.81 71,639,398 12.21 7,114,498 1.21 790,499 0.13 10,005,142 1.70 205,791,213 35.07 1,889,924 0.32 1,072,532 0.18 3,367,030 0.57 22,009,011 3.75 102,748,600 17.51 336,878,310 57.40 248,660,699 42.37 1,339,301 0.23 250,000,000 42.60 586,878,310 100

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Notes:

(1) To the best knowledge of the Company, HKSCC (Nominees) Limited holds the H Shares as nominee of public H Shareholders.
(2) As at the date of this announcement, none of the Directors is interested in any Shares.

REASONS FOR AND BENEFITS OF THE PROPOSED ACQUISITIONS

Upon reviewing the business nature of Hefei New Energy, Tongcheng New Energy and Yixing New Energy and with a view to expanding the Group’s business within the new energy glass sector in the glass industry, the Company considers that it is suitable and appropriate to acquire the equity interest in the Target Companies and expects that the Proposed Acquisitions would allow the Group to leverage its experience in operation and management and leading position established within the glass industry to further enhance the performance of the Target Companies and also enable the Group to expand its footprint within the glass industry and enrich the Group’s products relating to the new specialized functional glass sector, which can enhance the Company’s competitiveness and value to the Shareholders of the Company.

Hence, the Company is of the view that the Proposed Acquisitions are consistent with the existing development strategy and principal glass business of the Group, given that the Target Companies are also specialized in new energy glasses segment.

The terms of the Proposed Acquisitions Agreements and Profit Guarantee Indemnity Agreements were determined after arm’s length negotiations between the parties thereto. Accordingly, the Directors (excluding the independent non-executive Directors whose views will be rendered upon having received the advice of the independent financial adviser of the Company) are of the view that the terms of the Proposed Acquisitions Agreements and Profit Guarantee Indemnity Agreements and the transactions contemplated thereunder are on normal commercial terms or better and in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

REASONS FOR AND BENEFITS OF THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING

The Directors (including the independent non-executive Directors) consider that the Proposed A Share Placing (including the Triumph Group A Share Placing) represents an opportunity to raise additional capital for the Group to enhance its general working capital base for the business operation of the Group, which is in the interests of the Group.

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The proceeds to be raised from the Proposed A Share Placing as to (excluding the relevant transaction expenses, tax and issue expenses) (i) approximately RMB450,000,000 intends to be used for the development cost of Hefei New Energy oxy-combustion new photovoltaic cover material phase II production line project and (ii) approximately RMB100,000,000 intends to be used for the development cost of Tongcheng New Energy high transparent double photovoltaic glass component further processing with an annual output 4 million square meters project.

The Directors (including the independent non-executive Directors) consider that the terms of the Proposed A Share Placing are on normal commercial terms and are fair and reasonable based on the current market conditions and in the interests of the Company and the Shareholders as a whole.

The terms of the Triumph Group Subscription Agreement were determined after arm’s length negotiations between the parties thereto. The Directors (excluding the independent non-executive Directors whose views will be rendered upon having received the advice of the independent financial adviser of the Company) are of the view that the terms of the Triumph Group Subscription Agreement and the transaction contemplated thereunder are on normal commercial terms or better and in the ordinary and usual course of business of the Group, fair and reasonable and in the interests of the Company and the Shareholders as a whole.

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

The Company had not conducted any other fund raising exercise in the past 12 months immediately preceding the date of this announcement.

INFORMATION OF THE COMPANY, CLFG, HEFEI HIGH-TECH, H U A G U A N G G R O U P , B E N G B U I N S T I T U T E , I N T E R N A T I O N A L ENGINEERING, TRIUMPH GROUP, YIXING ENVIRONMENTAL TECHNOLOGY AND GCL SYSTEM INTEGRATION

The Company is principally engaged in the production and sales of ultra-thin electronic glass. The scope of business includes manufacturing of glass and relevant further processing goods, mechanical equipment, electric appliances and accessories, sales of self-produced products, provision of technical consultancy and technical services.

CLFG, the substantial Shareholder of the Company, is principally engaged in the production and sale of float glass, imports, exports and the domestic sale of processing technology of glass, design and subcontracting of engineering works, labour export and other businesses.

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Hefei High-Tech, an Independent Third Party, is principally engaged in five major business sectors including construction of infrastructure, sales of real estate, sales of production facilities, leasing business and disposal of assets.

Huaguang Group, an indirect subsidiary of CNBMG, is principally engaged in manufacturing and sales of float glass, ITO conductive film glass and further processed glass products.

Bengbu Institute, the substantial Shareholder of the Company and an indirect subsidiary of CNBMG, is principally engaged in engineering management and services sector, manufacture of equipment sector, new materials sector and new glass sector (including ITO conductive film glass, TFT-LCD glass and float glass).

International Engineering, an associate of CNBMG, is principally engaged in engineering technology research and service, which mainly includes general contracting business of glass, cement and new energy and engineering project design business.

Triumph Group, a direct subsidiary of CNBMG, is principally engaged in glass sector, new materials sector, new energy sector, new equipment sector and project management sector.

Yixing Environmental Technology, an Independent Third Party, is principally engaged in the business of investment venture.

GCL System Integration, an Independent Third Party, is principally a collective supplier for an integrated photovoltaic electricity station with a “Design + Products + Services” system with research and development in technology, optimization of design, collective system, support to financial services and operation and maintenance services.

LISTING RULES IMPLICATIONS

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Therefore, CNBMG is the ultimate controlling Shareholder of the Company and deemed to be interested in 174,018,242 A Shares held by CLFG and Bengbu Institute by virtue of the SFO, representing approximately 33.04% of the total issued share capital of the Company.

As at the date of this announcement, Bengbu Institute is the substantial Shareholder of the Company and an indirect subsidiaries of CNBMG and each of CLFG, Huaguang Group and Triumph Group is either a direct or indirect subsidiary of CNBMG and International Engineering is an associate of CNBMG. Therefore, each of CLFG, Huaguang Group, Bengbu Institute, Triumph Group and International Engineering is regarded as a connected person of the Company.

Accordingly, the Proposed Acquisitions also constitutes connected transactions of the Company under Chapter 14A of the Listing Rules, and are therefore subject to the reporting, announcement and independent shareholders’ approval requirements under the Listing Rules.

T A K E O V E R S C O D E I M P L I C A T I O N S A N D A P P L I C A T I O N F O R WHITEWASH WAIVER

As mentioned above, as at the date of this announcement, CNBMG is deemed to be interested in 174,018,242 A Shares, representing approximately 33.04% of the total issued share capital of the Company, and after completion of the issue of the Consideration Shares but before the Proposed A Share Placing, CNBMG will indirectly hold 203,345,768 A Shares, representing approximately 36.16% of the total issued share capital of the Company as enlarged by the issue of the Consideration Shares. In the absence of the Whitewash Waiver, CNBMG and parties acting in concert with it would be obliged to make a mandatory general offer for all the Shares not already owned or agreed to be acquired by it and parties acting in concert with it pursuant to the Takeovers Code as a result of the issue of the Consideration Shares.

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contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing will abstain from voting on the relevant resolutions to approve the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing at the EGM and the Class Meetings. Save for CNBMG and parties acting in concert with it, there is no other Shareholder who is interested or involved in the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing.

As at the date of this announcement, the Company does not believe that the Proposed Acquisitions (including the allotment and issue of the Consideration Shares) and the Triumph Group A Share Placing would give rise to any concerns in relation to compliance with other applicable rules or regulations (including the Listing Rules). If any concern arises after release of this announcement, the Company will endeavour to resolve the matter to the satisfaction of the relevant authority as soon as possible but in any event before despatching the circular in respect of the Reorganisation to the Shareholders. The Company notes that the Executive may not grant the Whitewash Waiver if the Proposed Acquisitions (including the allotment and issue of the Consideration Shares) and the Triumph Group A Share Placing does not comply with other applicable rules and regulations.

As at the date of this announcement, other than the Shares to be acquired under the Proposed Acquisitions Agreements and the Triumph Group Subscription Agreement and save for the 174,018,242 A Shares (representing approximately 33.04% of the total issued share capital of the Company) currently interested by CNBMG or parties acting in concert with it as disclosed in the section headed “Effect of the completion of the Proposed Acquisitions and the Proposed A Share Placing on the shareholding structure of the Company” in this announcement, CNBMG or parties acting in concert with it confirm that:

(a) there is no holding of voting rights in the Company or rights over any Share which is owned, controlled or directed by CNBMG or any person acting in concert with CNBMG;
(b) none of CNBMG or parties acting in concert with it has received any irrevocable commitment in relation to voting of the resolutions in respect of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Proposed A Share Placing, the Triumph Group A Share Placing, the Specific Mandates and the Whitewash Waiver;
(c) there is no outstanding derivative in respect of the securities of the Company which has been entered into by any of CNBMG and parties acting in concert with it;

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(d) CNBMG and parties acting in concert with it do not hold any outstanding options, warrants, derivatives or any securities that are convertible into Shares or any derivatives in respect of securities in the Company;
(e) there is no arrangement (whether by way of option, indemnity or otherwise) in relation to the shares of any of CNBMG and parties acting in concert with it or the Company and which might be material to the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Proposed A Share Placing, the Triumph Group A Share Placing, the Specific Mandates and the Whitewash Waiver;
(f) there is no agreement or arrangement to which any of CNBMG and parties acting in concert with it is a party which relates to circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Proposed A Share Placing, the Triumph Group A Share Placing, the Specific Mandates and the Whitewash Waiver;
(g) none of CNBMG or parties acting in concert with it has borrowed or lent any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company; and
(h) save for the completion of transfer of 69,000,000 A Shares between CLFG and Bengbu Institute as disclosed in the announcement of the Company dated 18 October 2016, CNBMG or parties acting in concert with it have not acquired or entered into any agreement or arrangement to acquire any voting rights in the Company within the six months prior to the date of this announcement.

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INDEPENDENT BOARD COMMITTEE

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

EGM AND CLASS MEETINGS

The EGM and the Class Meetings will be held to consider and, if thought fit, pass the resolutions in respect of (i) the Proposed Acquisitions Agreements and the transactions contemplated thereunder; (ii) the Specific Mandates; (iii) the Proposed A Share Placing; (iv) the Triumph Group A Share Placing; and (v) the Whitewash Waiver. The voting in relation to the Proposed Acquisitions Agreements, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing at the EGM and the Class Meetings will be conducted by way of poll. CNBMG and parties acting in concert with it and Shareholders who are interested or involved in the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing will abstain from voting on the relevant resolutions to be proposed at the EGM and the Class Meetings for approving the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing.

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GENERAL

A circular containing, among other things, (i) details of the Reorganisation, the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing; (ii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders on the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing; and (iii) a letter of advice from an independent financial adviser to the Independent Board Committee and the Independent Shareholders on the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing, is required to be despatched to the Shareholders within 15 business days from the date of this announcement pursuant to Rule 14A.68 of the Listing Rules or 21 days from the date of this announcement pursuant to Rule 8.2 of the Takeovers Code, whichever is the earlier.

CONTINUED SUSPENSION OF TRADING IN A SHARES

Completion of the Proposed Acquisitions, the issue of the Consideration Shares and the Proposed A Share Placing is subject to the satisfaction of the conditions precedent of the Proposed Acquisitions Agreements and therefore, may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the Shares.

DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms and expressions shall have the following meanings when used herein:

“A Share(s)” domestic ordinary share(s) with a par value of RMB1.00 each in the share capital of the Company which are listed on the SSE and traded in RMB

“A Shareholder(s)” holder(s) of A Share(s)

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“A Shares Class Meeting” the class meeting of A Shareholders to be held to consider and, if thought fit, approve, among other things, each of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Proposed A Share Placing and the Triumph Group A Share Placing
“Assets Impairment the assets impairment indemnity under the Profit Guarantee Indemnity” Indemnity Agreements
“associate(s)” has the same meaning as ascribed to it under the Listing Rules
“Bengbu Institute” Bengbu Design & Research Institute for Glass Industry (蚌埠玻璃工業設計研究院), a company incorporated in the PRC with limited liability, the substantial Shareholder of the Company and a wholly-owned subsidiary of Triumph Group
“Board” the board of the Directors “Class Meetings” the A Shares Class Meeting and the H Shares Class Meeting
“CLFG” China Luoyang Float Glass (Group) Company Limited* ( 中國洛陽浮法玻璃集團有限責任公司 ), a company incorporated in the PRC with limited liability and the substantial Shareholder of the Company
“CNBMG” China National Building Materials Group Corporation (中國建材集團有限公司), a wholly state-owned enterprise incorporated in the PRC and the ultimate controlling Shareholder of the Company
“Company” Luoyang Glass Company Limited* (洛陽玻璃股份有限公司), a joint stock company incorporated in the PRC with limited liability, the H Shares and A Shares of which are listed on the main board of the Stock Exchange (stock code: 1108) and the SSE (stock code: 600876) respectively
“connected person(s)” has the same meaning as ascribed to it under the Listing Rules

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“Consideration Share(s)” a total of 35,657,012 new A Shares to be allotted and issued by the Company to (i) CLFG and Hefei HighTech pursuant to the First SP Agreement to settle the consideration of the acquisition of 100% equity interest in Hefei New Energy; (ii) Huaguang Group, Bengbu Institute and International Engineering pursuant to the Second SP Agreement to settle the consideration of the acquisition of 100% equity interest in Tongcheng New Energy; and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration pursuant to the Third SP Agreement to settle the consideration of the acquisition of 70.99% equity interest in Yixing New Energy
“CSRC” China Securities Regulatory Commission
“Director(s)” director(s) of the Company
“EGM” the extraordinary general meeting to be convened and held by the Company to consider and, if thought fit, approve, among other things, each of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing
“Executive” the Executive Director of the Corporate Finance Division of the SFC or any delegate of the Executive Director
“First Consideration 14,590,464 new A Shares to be allotted and issued by A Shares” the Company to CLFG and Hefei High-Tech pursuant to the First SP Agreement to settle the consideration of the acquisition of 100% equity interest in Hefei New Energy
“First SP Agreement”

the first sale and purchase agreement dated 7 February 2017 entered into among the Company, CLFG and Hefei High-Tech, pursuant to which the Company has conditionally agreed to purchase, and CLFG and Hefei High-Tech have agreed to sell a total of 100% equity interest in Hefei New Energy with consideration to be settled by the Company by allotment and issue of the First Consideration A Shares

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“GCL System Integration” GCL System Integration Technology Co., Ltd. (協鑫集成科技股份有限公司), a joint stock company incorporated in the PRC with limited liability and the shares of which are listed on the Shenzhen Stock Exchange
“Group” the Company and its subsidiaries
“Hefei High-Tech” Hefei High-Tech Construction Investment Group Company* (合肥高新建設投資集團公司), an enterprise under ownership of the whole people incorporated in the PRC
“Hefei New Energy”
CNBM (Hefei) New Energy Company Limited* (中建材
（合肥）新能源有限公司), a company incorporated in the PRC with limited liability in 2011 which is owned as to 76.92% by CLFG and 23.08% by Hefei High-Tech as at the date of this announcement
“H Share(s)” overseas listed foreign share(s) with a par value of RMB1.00 each in the share capital of the Company, listed on the Main Board of the Stock Exchange and traded in Hong Kong dollars
“H Shareholder(s)” holder(s) of the H Share(s)
“H Shares Class Meeting” the class meeting of H Shareholders to be held to consider and, if thought fit, approve, among other things, each of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Proposed A Share Placing and the Triumph Group A Share Placing
“HK$” Hong Kong dollars, the lawful currency of Hong Kong
“Hong Kong” Hong Kong Special Administrative Region of the PRC
“Huaguang Group” Anhui Huaguang Photoelectricity Materials Technology Group Co., Ltd. (安徽華光光電材料科技集團有限公司), a company incorporated in the PRC with limited liability

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“Independent Board an independent committee of the Board comprising all Committee” independent non-executive Directors, namely Mr. Jin Zhanping, Mr. Liu Tianni, Mr. Ye Shuhua and Mr. He Baofeng, established by the Company to advise the Independent Shareholders on, among other things, each of the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing
“Independent Shareholders other than (i) CNBMG and its associate(s); Shareholders” (ii) parties acting in concert with CNBMG; and (iii) all other parties (if any) who are interested or involved in the Proposed Acquisitions Agreements and the transactions contemplated thereunder, the Specific Mandates, the Whitewash Waiver, the Proposed A Share Placing and the Triumph Group A Share Placing
“Independent Third any person(s) or company(ies) and their respective Party(ies)” ultimate beneficial owner(s) whom, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, are third parties independent of the Company and its connected persons
“International Engineering”
China Triumph International Engineering Co., Ltd. (中國建材國際工程集團有限公司), a company incorporated in the PRC with limited liability
“Last Trading Day” 6 February 2017, being the last trading day of H Shares prior to the date of this announcement
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Non-connected Shareholders other than the connected shareholders (has Shareholders” the meaning ascribed to it under Rule 10.2.2 of the listing rules of the SSE)
“Other Qualified Qualified Investors except for Triumph Group Investors”
“PRC” The People’s Republic of China, which for the purpose of this announcement excludes Hong Kong, the Macau Special Administrative Region of the PRC and Taiwan

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“Profit Guarantee”

profit guarantee to be provided by the respective sellers under the Proposed Acquisitions Agreements to the Company in respect of the net profit attributable to equity holders of the respective Target Companies after deduction of extraordinary profit or loss during each of the three financial years ending 31 December 2017, 31 December 2018 and 31 December 2019 (or, as the case maybe, 31 December 2018, 31 December 2019 and 31 December 2020), details of which are set out in the subsection headed “Profit Guarantee” in this announcement
“Profit Guarantee Indemnity Agreements”
the three profit guarantee indemnity agreements all dated 7 February 2017 entered into among the Company and, in each case, (i) CLFG and Hefei High-Tech, (ii) Huaguang Group, Bengbu Institute and International Engineering, and (iii) Triumph Group, Yixing Environmental Technology and GCL System Integration, in respect of the Profit Guarantee and Assets Impairment Indemnity, and each of them a “Profit Guarantee Indemnity Agreement”
“Profit Guarantee Period” the three-financial year guarantee period under the Profit Guarantee
“Proposed A Share the proposed placing of not more than 24,454,456 new A Placing” Shares by the Company based on the minimum issue price of RMB23.45 per A Share to not more than 10 Qualified Investors
“Proposed Acquisitions” the proposed acquisitions by the Company of (i) 100% of the entire issued share capital of Hefei New Energy from CLFG and Hefei High-Tech; (ii) 100% of the entire issued share capital of Tongcheng New Energy from Huaguang Group, Bengbu Institute and International Engineering; and (iii) 70.99% of the entire issued share capital of Yixing New Energy from Triumph Group, Yixing Environmental Technology and GCL System Integration
“Proposed Acquisitions Agreements”
the First SP Agreement, the Second SP Agreement and the Third SP Agreement
“Qualified Investors”
Triumph Group, an indirect Shareholder of the Company as at the date of this announcement, and other independent specific investors for the Proposed A Share Placing

– 51 –

“Reorganisation”

the transactions contemplated under the Proposed Acquisitions Agreements and the Proposed A Share Placing

“RMB” Renminbi, the lawful currency of the PRC
“SASAC of the State Council”
the State-owned Assets Supervision and Administration Commission of the State Council of the PRC
“SASAC Authorised the authorised management office(s) of the State-owned Office(s)” Assets Supervision and Administration Commission of the PRC
“Second Consideration 10,544,395 new A Shares to be allotted and issued by A Shares” the Company to Huaguang Group, Bengbu Institute and International Engineering pursuant to the Second SP Agreement as the consideration of the acquisition of 100% equity interest in Tongcheng New Energy
“Second SP Agreement”
the second sale and purchase agreement dated 7 February 2017 entered into among the Company, Huaguang Group, Bengbu Institute and International Engineering, pursuant to which the Company has conditionally agreed to purchase, and Huaguang Group, Bengbu Institute, and International Engineering have agreed to sell a total of 100% equity interest in Tongcheng New Energy with consideration to be settled by the Company by allotment and issue of the Second Consideration A Shares
“SFC”
the Securities and Futures Commission of Hong Kong
“SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong), as amended from time to time
“Share(s)”
ordinary share(s) of RMB1.00 each in the share capital of the Company, including A Share(s) and H Share(s)
“Shareholder(s)”

holder(s) of the Share(s)

– 52 –

“Specific Mandates”

the special mandate to be sought from Independent Shareholders for the allotment and issuance of the Consideration Shares and the special mandate to be sought from Independent Shareholders for the allotment and issuance of the new A Shares under the Proposed A Share Placing
“SSE”

the Shanghai Stock Exchange

“Stock Exchange”
The Stock Exchange of Hong Kong Limited
“Takeovers Code”
the Hong Kong Code on Takeovers and Mergers
“Target Companies”
Hefei New Energy, Tongcheng New Energy and Yixing New Energy
“Third Consideration A Shares”
10,522,153 new A Shares to be allotted and issued by the Company to Triumph Group, Yixing Environmental Technology and GCL System Integration pursuant to the Third SP Agreement as the considerations of the acquisition of 70.99% equity interest in Yixing New Energy
“Third SP Agreement” the third sale and purchase agreement dated 7 February 2017 entered into among the Company, Triumph Group, Yixing Environmental Technology and GCL System Integration, pursuant to which the Company has conditionally agreed to purchase, and Triumph Group, Yixing Environmental Technology and GCL System Integration have agreed to sell a total of 70.99% equity interest in Yixing New Energy with consideration to be settled by the Company by allotment and issue of the Third Consideration A Shares
“Tongcheng New Energy” CNBM (Tongcheng) New Energy Materials Company L i m i t e d * ( 中國建材桐城新能源材料有限公司 ) , a company incorporated in the PRC with limited liability in 2010 which is owned as to 67.47% by Huaguang Group, 25.03% by Bengbu Institute and 7.5% by International Engineering

– 53 –

“Triumph Group”

Triumph Technology Group Company* (凱盛科技集團公司), an enterprise under ownership of the whole people incorporated in the PRC and an indirect controlling Shareholder of the Company
“Triumph Group A Share the proposed issue of approximately 2,445,445 new A Placing” Shares to Triumph Group by the Company under the Proposed A Share Placing
“Triumph Group the subscription agreement dated 7 February 2017 entered Subscription into between the Company and Triumph Group, pursuant Agreement” to which the Company has conditionally agreed to issue, and Triumph Group has agreed to subscribe for 10% of the new A Shares to be placed under the Proposed A Share Placing
“Valuer” Beijing Pan-China Assets Appraisal Co. Ltd., an independent professional valuer in the PRC engaged by the Company for the purpose of the Proposed Acquisitions
“Whitewash Waiver” a waiver from the Executive pursuant to Note 1 on the dispensations from Rule 26 of the Takeovers Code in respect of the obligations of CNBMG, CLFG, Bengbu Institute, Huaguang Group, International Engineering and Triumph Group to make a mandatory general offer under Rule 26 of the Takeovers Code for all the securities not already owned or agreed to be acquired by CNBMG and parties acting in concert with it as a result of the issue of the Consideration Shares and the new A Shares under the Triumph Group Subscription Agreement
“Yixing Environmental Yixing Environmental Technology Innovation Venture Technology” Investment Company Limited* (宜興環保科技創新創業投資有限公司), a company incorporated in the PRC with limited liability and a wholly state-owned company

– 54 –

“Yixing New Energy”

“%”

CNBM (Yixing) New Energy Company Limited* (中建材
（宜興）新能源有限公司), a company incorporated in the PRC with limited liability in 2016 which is owned as to 51% by Triumph Group, 29.01% by Far East Optoelectronics Company Limited* (遠東光電股份有限公司) (an Independent Third Party), 12.75% by Yixing Environmental Technology and 7.24% by GCL System Integration

per cent

By order of the Board Luoyang Glass Company Limited* Zhang Chong Chairman

Luoyang, the PRC 7 February 2017

– 55 –

As at the date of this announcement, the Board comprises four executive Directors: Mr. Zhang Chong, Mr. Ni Zhisen, Mr. Wang Guoqiang and Mr. Ma Yan; three non-executive Directors: Mr. Zhang Chengong, Mr. Xie Jun and Mr. Tang Liwei; and four independent non-executive Directors: Mr. Jin Zhanping, Mr. Liu Tianni, Mr. Ye Shuhua and Mr. He Baofeng.

For the purpose of this announcement, all amounts denominated in RMB have been translated (for information only) into HK$ using the exchange rate of RMB1:HK$1.13. No representation is made that any amounts in RMB or HK$ can be or could have been converted at the relevant dates at the above rate or any other rates at all.

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than those relating to CNBMG) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

As at the date of this announcement, the directors of CNBMG are Song Zhiping, Liu Zhigang, Yao Yan, Cao Jianglin, Li Xinhua, Zhao Xiaogang, Chen Jinen, Zhao Jibin, Xu Lipeng, Sha Ming, Zhang Yanling and Liu Xinquan.

The directors of CNBMG jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than those relating to the Group) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement, the omission of which would make any statement in this announcement misleading.

For identification purposes only

– 56 –

AI assistant

RoboSense Technology Co., Ltd — M&A Activity 2017

50628_rns_2017-02-07_17860406-6e90-4248-b027-b59707088707.pdf

(1) VERY SUBSTANTIAL ACQUISITIONS AND CONNECTED TRANSACTIONS;

(2) PROPOSED ISSUANCE AND PLACING OF A SHARES; AND

(3) APPLICATION FOR WHITEWASH WAIVER

Financial adviser to the Company

THE PROPOSED ACQUISITIONS

THE PROPOSED A SHARE PLACING

LISTING RULES IMPLICATIONS

TAKEOVERS CODE IMPLICATIONS AND APPLICATION FOR WHITEWASH WAIVER

INDEPENDENT BOARD COMMITTEE

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

EGM AND CLASS MEETINGS

GENERAL

CONTINUED SUSPENSION OF TRADING IN A SHARES

INTRODUCTION

(1) THE PROPOSED ACQUISITIONS

Principal terms of the First SP Agreement

Principal terms of the Second SP Agreement

Principal terms of the Third SP Agreement

Other principal terms of the three Proposed Acquisitions Agreements

The Consideration Shares

Conditions precedent

Profit Guarantee

Profit of the Target Companies during transitional period

Completion of the Proposed Acquisitions

Principal terms of the Profit Guarantee Indemnity Agreements

Profit Guarantee Indemnity

Compensation for Profit Guarantee

Assets Impairment Indemnity and compensation

Compensation method and adjustment for the Profit Guarantee Indemnity and the Assets Impairment Indemnity

Conditions precedent to the Profit Guarantee Indemnity Agreements

Information of the Target Companies

Hefei New Energy

Tongcheng New Energy

Nature of the products of Tongcheng New Energy

Yixing New Energy

Shareholding Structure

(2) THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING

Summary of the terms of the Proposed A Share Placing and principal terms of the Triumph Group Subscription Agreement

Terms of the Proposed A Share Placing

Principal terms of the Triumph Group Subscription Agreement

Subscription price under the Triumph Group Subscription Agreement

Lock-up period

Listing Rules Implications

EFFECT OF THE COMPLETION OF THE PROPOSED ACQUISITIONS AND THE PROPOSED A SHARE PLACING ON THE SHAREHOLDING STRUCTURE OF THE COMPANY

REASONS FOR AND BENEFITS OF THE PROPOSED ACQUISITIONS

REASONS FOR AND BENEFITS OF THE PROPOSED A SHARE PLACING AND THE TRIUMPH GROUP A SHARE PLACING

FUND RAISING ACTIVITIES IN THE PAST TWELVE MONTHS

LISTING RULES IMPLICATIONS

T A K E O V E R S C O D E I M P L I C A T I O N S A N D A P P L I C A T I O N F O R WHITEWASH WAIVER

INDEPENDENT BOARD COMMITTEE

APPOINTMENT OF INDEPENDENT FINANCIAL ADVISER

EGM AND CLASS MEETINGS

GENERAL

CONTINUED SUSPENSION OF TRADING IN A SHARES

DEFINITIONS

“Profit Guarantee”

“Triumph Group”

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