Honghua Group Limited — Capital/Financing Update 2012

Apr 5, 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: 0196)

GRANT OF SHARE OPTIONS

This announcement is made pursuant to Rule 17.06A of the Rules Governing the Listing of Securities (the “ Listing Rules ”) on the Stock Exchange of Hong Kong Limited (the “ Stock Exchange ”).

The board of directors (the “Board ”) of Honghua Group Limited (the “Company” ) hereby announces that on 5 April 2012, share options (the “ Share Options ”) to subscribe for a total of 15,400,000 ordinary shares of HK$0.10 each in the capital of the Company (the “ Shares ”) were granted to the grantees, subject to acceptance of the grantees, under the share option scheme adopted by resolutions in writing of all the shareholders of the Company on 21 January 2008.

The Share Options shall entitle the grantees to subscribe for an aggregate of 15,400,000 new Shares to be issued upon the exercise of the Share Options in full at exercise price of HK$1.19 per Share, which represents the highest of (ⅰ) the closing price of HK$ 1.19 per Share as stated in the daily quotations sheet issued by the Stock Exchange on the date of grant of the Share Options, i.e., 5 April 2012 (the “Date of Grant”); (ⅱ) the average closing price of HK$ 1.134 per Share as stated in the daily quotations sheet issued by the Stock Exchange for the five business days immediately preceding the Date of Grant; and (ⅲ) the nominal value of Share, which is HK$0.10. The valid period of the Share Options is up to 4 April 2022.

The Share Options are exercisable on or after 5 April 2013 by the grantees with details as follows:

1. up to 30% of the Share Options granted to each grantee from 5 April 2013 to 4

April 2014 ;

1. up to 60% of the Share Options granted to each grantee on or before 4 April 2015 ;

2. all the remaining Share Options granted to each grantee on or after 5 April 2015 . and in each case, not later than 4 April 2022.

Under the grant of the Share Options, none of the grantees is a director, chief executive or substantial shareholder of the Company, or their respective associates (as defined in the Listing Rules).

By order of the Board of HONGHUA GROUP LIMITED Zhang Mi Chairman

People's Republic of China, 5 April 2012

As at the date of this announcement, the executive directors of the Company are Mr. Zhang Mi, Mr. Ren Jie and Mr. Liu Zhi; the non-executive directors of the Company are Mr. Huang Dongyang and Mr. Siegfried Meissner; 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.