Honghua Group Limited — Share Issue/Capital Change 2016

Sep 21, 2016

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 21 September 2016, share options (the “ Share Options ”) to subscribe for a total of 41,350,000 ordinary shares of HK$0.10 each in the capital of the Company (the “ Shares ”) were granted to the grantees (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 41,350,000 new Shares to be issued upon the exercise of the Share Options in full at an exercise price of HK$0.44 per Share, which represents the highest of (ⅰ) the closing price of HK$0.44 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. 21 September 2016 ( the “Date of Grant”) ; (ⅱ) the average closing price of HK$0.413 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 the Share, which is HK$0.10. The valid period of the Share Options is from the Date of Grant and up to 20 September 2026.

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The Share Options are exercisable on or after 21 September 2017 by the Grantees with details as follows:

1. up to 30% of the Share Options granted to each Grantee from 21 September 2017 to 20 September 2018 ;

2. up to 60% of the Share Options granted to each Grantee on or before 20 September 2019 ;

3. all the remaining Share Options granted to each Grantee on or after 21 September 2019,and in each case, not later than 20 September 2026.

8,450,000 Shares out of 41,350,000 Shares to be subscribed under the Share Options were granted to the following Grantees who are directors, or substantial shareholders of the Company (as defined in the Listing Rules) with details as follows:

Name	Grantee’s relationship with the Company	Number of Shares to be subscribed under the Share Optionsgranted
Ren Jie	executive director, senior vice president, substantial Shareholder	2,000,000
Qi Daqing	independent non-executive director of the Company	700,000
Liu Xiaofeng	independent non-executive director of the Company	700,000
Chen Guoming	independent non-executive director of the Company	500,000
Shi Xingquan	independent non-executive director of the Company	500,000
Guo Yanjun	independent non-executive director of the Company	700,000
Tian Yu	substantial Shareholder	800,000
Zuo Huixian	substantial Shareholder	700,000
ZhengYong	substantial Shareholder	700,000
Lv Lan	substantial Shareholder	700,000
Liu Lulu	substantial Shareholder	450,000

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Save as disclosed above, 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).

In accordance with Rule 17.04(1) of the Listing Rules, the grant of the Share Options to each of the aforesaid directors and substantial shareholders of the Company has been approved by the independent non-executive directors of the Company.

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

People's Republic of China, 21 September 2016

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 director of the Company is Mr. Siegfried Meissner （ Mr. Popin Su as his alternate ） and the independent non-executive directors of the Company are Mr. Liu Xiaofeng, Mr. Qi Daqing, Mr. Chen Guoming, Mr. Shi Xingquan and Mr. GuoYanjun.

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