Honghua Group Limited — Capital/Financing Update 2021

Dec 14, 2021

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)

VOLUNTARY ANNOUNCEMENT

ENTERING INTO SALE AND PURCHASE AGREEMENTS

This is a voluntary announcement made by Honghua Group Limited (the “ Company ”).

The board of directors of the Company (the “ Board ”) is pleased to announce that, Sichuan Honghua Petroleum Equipment Company Limited (“ Sichuan Honghua ”) and Sichuan Honghua Electric Company Limited (“ Honghua Electric ”), two subsidiaries of the Company, submitted a bid to China Petroleum & Chemical Corporation (“ Sinopec ”) for the drilling equipment contract in Africa (“ African Project ”) and recently entered into several sale and purchase agreements（the “ Agreements ”）with the Procurement Division of Sinopec Corp（“ Procurement Division ”）, Wuhan Company of Sinopec International Corp Limited (“ Sinopec Intl Wuhan ”) and Sinopec Zhongyuan Oilfield Company (“ Zhongyuan Oilfield ”), three wholly-owned subsidiaries of Sinopec.

Pursuant to the Agreements, Sichuan Honghua shall provide 3 sets of 1500HP drilling rigs, 9 sets of 1600L pumps and relevant rig parts to Procurement Division and Sinopec Intl Wuhan, whereas Honghua Electric will provide electronic control systems to Zhongyuan Oilfiled. The consideration in relation to the transaction contemplated under the Agreements amounts to approximately RMB 230 million.

African Project has strict requirements for environmental protection, animal friendly operation and noise control. The rigs will be equipped with “one-key linkage” automatic machine system, directly-driven drilling pumps and hammerless quick change tool, which are developed by Honghua and have the advantages of high degree of automation, fast response, good stability at low speed, low noise and environmental friendliness. Meanwhile, automatic drilling solutions designed and developed by Honghua Electric, which consist of comprehensive intelligent drilling systems, territory management systems and rig’s automatic control platforms, will be applied for the electronic control systems. The automatic drilling solutions will help raise the rigs’ automatic control, to get balanced performance during the drilling life circle and to enhance the safety protection of the equipment. The automatic drilling solutions will also update the trip-in and trip out process into an automatic way and self-service of rig floor and monkey board through automation and linked operation of the drilling platform equipment, which will certainly ensure the safety and high-efficiency of the drilling rigs.

After having made all reasonable enquiries by the Company, Sinopec, Procurement Division, Sinopec Intl Wuhan, Zhongyuan Oilfield and their ultimate beneficial owner(s) are independent third parties not connected with the Company and its connected persons（as defined in the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited (the “ Listing Rules ”)). The transactions contemplated under the Agreements do not constitute any notifiable transaction of the Company under Chapter 14 or Chapter 14A of the Listing Rules.

On behalf of the Board Honghua Group Limited Jin Liliang Chairman

PRC, 14 December 2021

As at the date of this announcement, the executive directors of the Company are Mr. Jin Liliang (Chairman), Mr. Zhang Mi and Mr. Ren Jie; the non-executive directors of the Company are Mr. Chen Wenle and Mr. Wang Xiuchang; and the independent non-executive directors of the Company are Mr. Chen Guoming, Ms. Su Mei, Mr. Chang Qing and Mr. Wei Bin.