Honghua Group Limited — Capital/Financing Update 2012

Apr 3, 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 2 April 2012, Sichuan Honghua and PDVSA SERVICIOS entered into the Sale and Purchase Agreement pursuant to which Sichuan Honghua shall sell to PDVSA SERVICIOS and PDVSA SERVICIOS shall purchase from Sichuan Honghua 12 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 Rule 13.09 (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 directors of the Company (the “ Board ”) is pleased to announce that on 2 April 2012, Sichuan Honghua Petroleum Equipment Co., Ltd. ( “ Sichuan Honghua ”), an indirect wholly-owned subsidiary of the Company and PDVSA Servicios Petroleros, S.A. (“PDVSA SERVICIOS”) entered into a sale and purchase agreement (the “ Sale and Purchase Agreement ”) pursuant to which Sichuan Honghua shall sell to PDVSA SERVICIOS and PDVSA SERVICIOS shall purchase from Sichuan Honghua 12 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 sum of approximately US dollars 187 million (approximately equivalent to RMB 1.18 billion), representing approximately 34% of the Company’s total revenue for the year ended 31 December 2011 respectively.

The Sale and Purchase Agreement was determined after arm’s length negotiation between Sichuan Honghua and PDVSA SERVICIOS. 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 its 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 Sichuan Honghua and PDVSA SERVICIOS

Sichuan Honghua, a limited liability company established in the Peoples’ Republic of China, is an indirect wholly-owned subsidiary of the Company. It is a large scale equipment manufacturing enterprise and is principally engaged in research, design, manufacturing and general assembly of oil drilling rig and equipments for oil exploration and development.

PDVSA SERVICIOS，a company incorporated in Bolivarian Republic of Venezuela， is a subsidiary of Petróleros de Venezuela,S.A.. It is principally engaged in well drilling and other oil field services.

To the best of the knowledge, information and belief of the Directors and after having made all reasonable enquiries, PDVSA SERVICIOS and its ultimate beneficial owner(s) are an independent third parties 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.

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

The PRC 3 April 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. 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.