Honghua Group Limited — Capital/Financing Update 2012

Dec 27, 2012

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.

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HONGHUA GROUP LIMITED

宏華集團有限公司

(a company incorporated in the Cayman Islands with limited liability)

(Stock Code: 196)

ENTERING INTO A SALE AND PURCHASE AGREEMENT

This announcement is made by the Company pursuant to Rule 13.09(1) of the Listing Rules.

The Board is pleased to announce that on 26 December 2012, Rushong-Hua and BKE entered into the Sale and Purchase Agreement pursuant to which Rushong-Hua shall sell to BKE and BKE shall purchase from Rushong-Hua 11 units of land drilling rigs with certain specifications in accordance with the terms and conditions of the Sale and Purchase Agreement.

This announcement is made by Honghua Group Limited (the “ Company ”) pursuant to Rule13.09 (1) of the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “ Listing Rules ”).

The Sale and Purchase Agreement

The board of the Company (the “ Board ”) is pleased to announce that on 26 December 2012, Rushong-Hua Co.Ltd ( “ Rushong-Hua ”), an indirect subsidiary of the Company and OOO Burovoya Kompaniya Eurasia (“BKE”) entered into a sale and

purchase agreement (the “ Sale and Purchase Agreement ”) pursuant to which Rushong-Hua shall sell to BKE and BKE shall purchase from Rushong-Hua 11 units of land drilling rigs with certain specifications in accordance with the terms and conditions of the Sale and Purchase Agreement.

The consideration in relation to the transaction contemplated under the Sale and Purchase Agreement amounts to an aggregate of more than USD 150 million(about RMB 944 million), representing about 27% of the Company’s total revenue for the year ended 31 December, 2011.

The Sale and Purchase Agreement was determined after arms’ length negotiation between Rushong-Hua and BKE. The directors of the Company (the “ Directors ”) are of the view that the terms of the Sale and Purchase Agreement are on normal commercial terms, fair and reasonable and in the interest of the Company and the Shareholders as a whole.

The Board takes the view that the transaction contemplated under the Sale and Purchase Agreement is of a revenue nature in the ordinary and usual course of business of the Company under Rule 14.04(1)(g) of the Listing Rules.

Information of Rushong-Hua and BKE

Rushong-Hua is a company incorporated in Russia and is an indirect subsidiary of the Company. It is principally engaged in trading of drilling rigs and related parts.

BKE is a company incorporated in Russia and as measured by meters drilled is the largest onshore drilling contractor in Russia. It is principally engaged in well construction and workover of all types of oil and gas wells.

To the best of the knowledge, information and belief of the Directors and after having made all reasonable enquiries, BKE is an independent third party not connected with the Company and its connected persons (as defined in the Listing Rules).

General

The transaction contemplated under the Sale and Purchase Agreement does not constitute any notifiable transaction of the Company under Chapter 14 of the Listing Rules nor any connected transaction under Chapter 14A of the Listing Rules.

As the transaction contemplated under the Sale and Purchase Agreement will have a material influence on the results for the Company and its subsidiaries (the “ Group ”), the Directors consider that it is appropriate to make disclosure in respect of the entering of the Sale and Purchase Agreement by publication of this announcement in order to enable the shareholders of the Company and the public to appraise the position of the Group.

On behalf of the Board Honghua Group Limited Zhang Mi Chairman

PRC, 27 December 2012

As at the date of this announcement, the executive directors of the Company are Mr. Zhang Mi (Chairman), Mr. Ren Jie and Mr. Liu Zhi, the non-executive directors of the Company are Mr. Siegfried Meissner （ Mr. PoPin Su as his alternate ） and Mr. Huang Dongyang and the independent non-executive directors of the Company are Mr. Liu Xiaofeng, Mr. Qi Daqing, Mr. Tai Kwok Leung, Alexander, Mr. Chen Guoming, Mr. Shi Xingquan and Mr. Guo Yanjun.