China National Materials (HKG:1893) (Sinoma) announced that its non-wholly owned subsidiaries, Suzhou Concrete Cement Products Research & Design Institute Co., Ltd. (SCRI) and Xinjiang Tianshan Cement Co., Ltd. (Tianshan Cement), have entered into a capital increase agreement with Xinjiang Jianhua Industry Co., Ltd. (XJ Jianhua Industry), Xinjiang Tianshan Building Material (Group) Co., Ltd (Tianshan Building Material) and Xinjiang Sinoma Fine Chemical Co., Ltd. (XJ Sinoma Chemical), pursuant to which the SCRI and Tianshan Cement have agreed to make the capital contribution to XJ Sinoma Chemical in the amount of RMB10.2 million and RMB4.8 million respectively.

Upon completion of the transactions contemplated under the agreement, the registered capital of XJ Sinoma Chemical will be RMB30 million and owned as to 59.5%, 19.425%, 16%, and 5.075% by SCRI, XJ Jianhua Industry, Tianshan Cement and Tianshan Building Material, respectively.

Sinoma is of the view that the capital increase agreement will further enhance the operating business of the group in production of chemical composite products such as concrete admixtures in Xin Jiang area, and will generate higher return to the group in the future, should XJ Sinoma Chemical become more profitable.

XJ Sinoma Chemical is a non-wholly owned subsidiary of Sinoma, while the XJ Jianhua Industry and Tianshan Building Material, being non-wholly owned subsidiaries of China National Materials Group Corporation Ltd. (the controlling shareholder of Sinoma), hold in aggregate 49% equity interest in XJ Sinoma Chemical. Therefore XJ Sinoma Chemical is a connected person of Sinoma and the transactions under the capital increase agreement constitute connected transactions of Sinoma.