Hua Fengchao Fiber: Wholly Owned Subsidiary Completes Acquisition Related Company

All members of the company and the board of directors guarantee that the contents of the information disclosure are true, accurate and complete, without false records, misleading statements or major omissions.

Recently, Zhejiang Huafeng spandex Limited by Share Ltd (hereinafter referred to as "Huafeng spandex" or "company"), a wholly owned subsidiary of Liaoning Huafeng Chemical Co., Ltd. (hereinafter referred to as "Liaoning Huafeng") has completed the acquisition of Liaoyang Huafeng Polyurethane Co., Ltd. (hereinafter referred to as "Liaoyang Huafeng"), and has signed a share pfer agreement with the shareholders of the target company, acquiring 100% stake in the target company.

The specific circumstances are as follows:

1. Summary of pactions

In order to avoid potential frequent related pactions, the five eleven board of directors held the motion of acquiring related companies in March 27, 2014. Liaoyang Huafeng is a wholly owned subsidiary of the controlling shareholder Huafeng Group Co., Ltd. (hereinafter referred to as Huafeng Group). This paction constitutes a related paction, and the independent directors of the company issue independent opinions.

This related paction does not constitute a major asset stipulated in the administrative measures for the major asset reorganization of listed companies.

No approval from the relevant departments is required.

The affiliated paction belongs to the approval authority of the board of directors and does not need to be submitted to the shareholders' general meeting for deliberation and approval.

Two, the basic situation of the other party.

Name: Huafeng Group Co., Ltd.

Company type: limited liability company

Registered capital: 1 billion 386 million 800 thousand yuan RMB.

Representative: you Xiaoping

Main business: polyurethane products, plastic products, footwear and other products R & D, manufacturing and marketing; plastic, chemical raw materials (excluding hazardous chemicals), auto parts sales; industrial investment; iron making cans; import and export of goods, technology exports (the scope of operation does not include national laws and regulations prohibit, restrict and permit the operation of the project.

)

Three.

Basic situation of target

Liaoyang Huafeng, founded in October 2000, has a registered capital of 15 million 800 thousand yuan. It is registered in Liaoyang Hongwei hi tech Development Zone. Its main business is production and sales: shoes, leather resins and polyurethane products.

The ownership structure before the acquisition is as follows:

Shareholder name

Amount of investment (10000 yuan)

Capital contribution ratio

Huafeng Group Co., Ltd.

One thousand five hundred and eighty

100%

Audited by Lixin Accounting firm (special general partnership), the latest and latest financial situation:

Unit (yuan)

December 31, 2013 /2013

May 31, 2014 /2014 1-5 months

Total assets

Twelve million fifty-eight thousand seven hundred and five point four nine

Eight million eight hundred and eighty-eight thousand three hundred and twelve point seven five

Total liabilities

Thirty-nine thousand nine hundred and ninety-five point two four

Thirteen thousand seven hundred and thirty-four

Net assets

Twelve million eighteen thousand seven hundred and ten point two five

Eight million eight hundred and seventy-four thousand five hundred and seventy-eight point seven five

operating profit

-2623406.10

-2041752.71

Net profit

-2609327.60

-3144131.50

Net cash flow from operating activities

-1607966.33

-498556.33

Four, the main contents of the paction

1, pricing policy and pricing basis.

The price of the acquired assets and partial liabilities is assessed by the silver trust asset appraisal company (Yin Xin).

According to the word "2014" Shanghai No. 0531, the base date for assessment is May 31, 2014.

2, the signing of related paction agreements.

The purchase agreement between Liaoning Huafeng Chemical Industry Co., Ltd. and Liaoyang Huafeng Polyurethane Co., Ltd. has been signed after the approval of the two powers.

3, paction price

In May 31, 2014, the audit benchmark date was audited by Lixin Accounting firm (special general partnership), and the paction price was assessed at 19 million 406 thousand and 800 yuan.

4, specific circumstances

Assessed by the bank credit asset assessment company (2014) Shanghai 0531, is evaluated.

On the base day May 31, 2014, the total assets of Liaoyang Huafeng Polyurethane Co., Ltd. was 8 million 888 thousand and 300 yuan, with a total liabilities of 13 thousand and 700 yuan and a net asset of 8 million 874 thousand and 600 yuan.

The total assets after the assessment are 19 million 420 thousand and 500 yuan, total liabilities 13 thousand and 700 yuan, and net assets 19 million 406 thousand and 800 yuan. (uppercase: RMB 1000 yuan, 100 thousand yuan), the appreciation value is 10 million 532 thousand and 200 yuan, and the appreciation rate is 118.68%. The specific value-added items are as follows:

Unit: 10000 yuan

project

book value

Valuation value

Value added

Appreciation rate

current assets

Seven hundred and ninety-four point zero nine

One thousand and seventy-nine point three seven

Two hundred and eighty-five point two eight

Thirty-five point nine three

fixed assets

Forty point nine four

Eighty-one point six five

Forty point seven one

Ninety-nine point four four

Among them: equipment

Forty point nine four

Eighty-one point six five

Forty point seven one

Ninety-nine point four four

Net bal of intangible assets

Fifty-three point eight zero

Seven hundred and eighty-one point zero three

Seven hundred and twenty-seven point two three

One thousand three hundred and fifty-one point seven three

Total Assets

Eight hundred and eighty-eight point eight three

One thousand nine hundred and forty-two Point Zero Five

One thousand and fifty-three point two two

One hundred and eighteen point five zero

current liabilities

One point three seven

One point three seven

Total Liabilities

One point three seven

One point three seven

Net assets

Eight hundred and eighty-seven point four six

One thousand nine hundred and forty point six eight

One thousand and fifty-three point two two

One hundred and eighteen point six eight

Due to the objective difference between the actual delivery date and the base date of acquisition, Liaoning Huafeng and Liaoyang Huafeng agree that the final paction price will be based on the data of the benchmark day debt and debt items assessed by the silver trust asset appraisal company and determined according to the net assets assessed by the delivery date.

5, the way of payment: Liaoning Huafeng, within ten working days from the date of the effective implementation of the pfer agreement, will move to Huafeng.

The group pays 70% of the assets pfer, and 30% of the remaining share pfer is paid within 5 working days after the relevant departments have changed their registration.

The pferor guarantees that it has the right to complete the disposition of its proposed pfer of shares, guarantees that the shares are not set up to pledge, guarantees that the shares are not sealed up, and is free from third party's recovery, otherwise the pferor shall bear all the economic and legal rules arising therefrom.

6. The burden of related expenses.

The costs involved in the pfer of shares (e.g. certification or notarization, evaluation or audit, business and industry)

Fees for alteration registration shall be borne by the pferor.

7. Conditions for entry into force of the agreement: the two parties will enter into force after signing the agreement.

Six. Other arrangements related to pactions.

Liaoning Huafeng pays the share pfer fund with its own funds. After the completion of the acquisition, Liaoyang Huafeng has become a wholly owned subsidiary of Liaoning Huafeng. Liaoning Huafeng takes over the business of Huafeng in Liaoyang, and will not compete with Huafeng Group and other related parties in the same industry. It can separate the shareholders and their associated personnel from personnel, assets and finance.

The acquisition does not involve personnel resettlement, land leasing and so on.

Five, related party pactions and the impact on listed companies.

To avoid potential recurring related pactions, Liaoning Huafeng will hold 100% stake in Liaoyang Huafeng after the completion of the paction, which will reduce the related pactions between Liaoning Huafeng and other controlling enterprises of the controlling shareholder of Huafeng Group.

This paction will not have a greater impact on the company's performance.

Six. The total amount of related pactions accumulated from the beginning of the year to the date of disclosure and the associated persons.

From the beginning of 2014 to the date of disclosure, the total amount of related pactions involving Huafeng Group (including other related persons controlled by Huafeng Group) was 19701748.13 yuan.

Seven. Views of independent directors

The independent directors of the company think that the price of the paction is objective and fair, which embodies the principle of fairness and openness, and there is no damage to the interests of the company.

This paction constitutes a connected paction. When the board deliberate on the related paction matters, the relevant directors shall avoid voting, and the non related directors shall vote on the related pactions.

The acquisition is conducive to reducing related party pactions and does not damage the rights and interests of minority shareholders.

For details, see March 29, 2014 www.cninfo.com.cn.

Eight. The conclusion of intermediaries

Audit opinion: Liaoyang Huafeng financial statements are prepared in accordance with the accounting standards of enterprises in all major respects. It reflects the financial situation of your company in December 31, 2013 and May 31, 2014 and its operating results and cash flows in 2013 and 2014 1-5.

Evaluation conclusion: on the basis of assessment date, the market value of the total interests of shareholders is estimated to be 19 million 406 thousand and 800 yuan, 10 million 532 thousand and 200 yuan higher than book assets appreciation and 118.68% of appreciation rate.

Nine, paction progress

Up to now, Liaoyang Huafeng has completed the industrial and commercial registration of this paction.

Ten. Reference documents

1. resolution of the board of directors.

2. independent directors' opinions.

3. share pfer agreement.

4. the financial statements of acquired assets.

5. audit report.

6. evaluation report.

Zhejiang Huafeng spandex Limited by Share Ltd