Huafang Textile Limited By Share Ltd Asset Acquisition And Related Pactions Notice

Stock Code: 600273 securities short: Hua Fang textile announcement number 2011-002

All members of the company and the board of directors guarantee the authenticity, accuracy and completeness of the announcement, and are jointly and severally liable for false statements, misleading statements or major omissions of the announcement.

Important note:

Transactions: the wholly owned subsidiary of our company, Huafang Xiajin Textile Co., Ltd. intends to acquire some spinning equipment closely related to the production and operation of our company.

Related persons avoidance matters: Mr. Qin Daqian, Mr. Dai Weiqing and Mr. Xiao Jingyao of the related directors avoided voting on the above assets acquisition at the seventh meeting of the Fifth Board of directors.

The impact of asset acquisition on Listed Companies: the acquisition involves assets related to the company's business. After the completion of the asset acquisition, it will help enrich the products of the company, improve the integrity and business independence of the company's industrial chain, reduce the volume of related pactions between the company and the related parties, enhance the company's ability to operate continuously and independently, and conform to the company's development plan.

Huafang textile Limited by Share Ltd held the seventh meeting of the Fifth Board of directors in December 30, 2010 to deliberate and adopt the motion on the acquisition of some assets of related parties.

The company is now announcements of related pactions in such bills as follows:

Overview of related party pactions

The wholly-owned subsidiary of our company, Huafang Xiajin Textile Co., Ltd. intends to acquire some spinning equipment assets owned by Huafang group cotton spinning Co., Ltd. (hereinafter referred to as "cotton spinning company"). The assets are mainly 979 (sets / sets) and 252 (sets / sets / items) electronic equipment, corresponding to 63 thousand and 400 sets of spindle spindles.

As the controlling shareholder of Huafang Group Co., Ltd. is also a controlling shareholder of cotton spinning company, according to the relevant provisions of the Listing Rules of the Shanghai stock exchange, the paction is related party pactions.

Two. Introduction of related parties

1, the basic situation

Wholly owned subsidiary: Huafang Xiajin Textile Co., Ltd.

Huafang Xiajin Textile Co., Ltd. is a wholly owned subsidiary of the company. Its specific conditions are:

Legal representative: Tao Shuohu

Registered capital: RMB 100 million yuan.

Enterprise type: limited company

Residence: Xiajin County, Dezhou City, Shandong Province

Main business: textile manufacturing, processing and marketing; textile raw materials.

Related parties Name: Huafang group cotton spinning Co., Ltd.

Legal representative: Hou Rensheng

Registered capital: RMB 110 million 80 thousand yuan.

Enterprise type: limited company

Residence: Tang Qiao Town, Zhangjiagang City, Jiangsu Province

Main business: textile manufacturing, processing and marketing; textile raw materials, wool and lint.

As of November 2010, the total assets of cotton spinning company were 1 billion 400 million yuan and net assets 680 million yuan. In 2010 1-11, the main business revenue was 1 billion 493 million yuan, and the operating profit was 120 million yuan (the above data were not audited). In 2009, the company achieved 1 billion 383 million yuan in main business and completed a net profit of -1748.30 million yuan.

2. Correlation

Huafang Xiajin Textile Co., Ltd. is a wholly owned subsidiary of the company. Huafang Group Co., Ltd. is the controlling shareholder of the company, holding 50.97% of the company's shares.

The controlling shareholder of cotton spinning company is Huafang group (holding 62.55% of the company's shares) and is the same controlling shareholder as the company.

Three. Basic situation of related pactions

The acquisition of some spinning equipment assets owned by the related side cotton spinning company.

The scope and details of assets shall be based on the assets listed in the detailed list of assets assessment of the Shanghai asset and Credit Appraisal Company Limited (Shanghai 2010) B312 part of the assets pfer evaluation annexes. (non pferable assets can not be pferred. The detailed details are "190781~190785" and "B190615~B190621" in the "asset assessment list"). The corresponding equipment is 5 shallow wells, 5 deep wells, 2 wells and 12 wells.

Because it can not be relocated, it is not within the scope of the pfer paction.

As of November 30, 2010, the total book value of assets in the scope of assets appraisal amounted to 16 million 67 thousand yuan, and the adjusted book value amounted to RMB 16 million 67 thousand yuan. The total value of the assessment was 38 million 498 thousand and 900 yuan, the appreciation value was 22 million 431 thousand and 900 yuan, and the appreciation rate was 139.61%.

The total assets of the 12 wells are estimated to be RMB 15 million 969 thousand and 400 yuan, and the adjusted book value is RMB 15 million 969 thousand and 400 yuan. The total value of the assessment is RMB 38 million 171 thousand and 300 yuan. The added value is 22 million 201 thousand and 900 yuan, and the increment rate is 139.03%.

The assessment and evaluation results are as follows:

Summary of assets assessment results

Base date for assessment: November 30, 2010

Asset possession unit: Huafang group cotton spinning Co., Ltd.: RMB yuan.

The net increase or decrease of the net book value after the adjustment of the net book value of the project

BCD=C-BE=D/B

Machinery and equipment 15854414.4715854414.4738287786.7522433372.28141.50

Electronic equipment 212576.72212576.72211090.00-1486.72-0.70

Total 16066991.1916066991.1938498876.7522431885.56139.61

The assessment of 12 wells not in the trading area is as follows:

equipment

Number of equipment, name, specification, type, quantity, book value, net book value after adjustment, net value increment rate%{page_break}

190781 shallow well 80M114789.1214789.122526070.8

190782 shallow well 80M114789.1214789.122526070.8

190783 shallow well 80M114789.1214789.122526070.8

190784 shallow well 80M114789.1214789.122526070.8

190785 shallow well 80M114789.1214789.122526070.8

B190615 deep well 130M13325.683325.6828000741.93

B190616 deep well 130M13325.683325.6828000741.93

B190617 deep well 130M13325.683325.6828000741.93

B190618 deep well 130M13325.683325.6828000741.93

B190619 deep well 130M13325.683325.6828000741.93

B190620 recharge well 150M13504350430660775

B190621 recharge well 150M13504350430660775

After excluding the 12 wells, the assessment within the paction scope is:

The net increase or decrease of the net book value after the adjustment of the net book value of the project

BCD=C-BE=D/B

Machinery and equipment 15756832.4715756832.4737960166.7522203334.28140.91

Electronic equipment 212576.72212576.72211090.00-1486.72-0.70

Total 15969409.1915969409.1938171256.7522201847.56139.03

Four. Reasons for acquiring assets by related party pactions

In order to strengthen and expand the main business, increase the company's product line and improve the industrial chain, the company increases the textile investment in Xiajin County, Shandong Province, which enjoys preferential policies.

On the one hand, in order to improve the industrial chain, the company decided to increase the roving production line, because the original textile in Xiajin was mainly made of high count yarn. On the other hand, if the price of new equipment was very high and the cost of raw materials was also rising sharply, the company had too much capital pressure, so the company decided to purchase these equipment from cotton companies.

The cotton industry also responds to the call of the state to promote the pfer of traditional textile industry to the central and western regions. Xiajin County of Shandong province has such investment conditions and is willing to sell it to Huafang Xiajin Textile Co., Ltd.

After the completion of the asset acquisition, the company can increase the production capacity of 63 thousand and 400 spindles with a small amount of input, and the installation time is short, the efficiency is high, and the benefits can be produced as soon as possible.

Our company has already produced the weaving products in Xiajin county. After the production of the spindle ingot, Xiajin textile company has a wide variety of spindles, which can completely meet the raw materials needed for weaving production, thus greatly reducing related party pactions.

Five, the pricing basis of related party pactions.

The price of this asset pfer is based on the evaluation results of the asset appraisal report (Shanghai credit rating industry (B312) No. 2010). Based on the assessment value, the two sides agreed that the pfer price of the asset is RMB 38171256.75 yuan, and the company will purchase it in cash.

Shanghai Yin Xin Hui Asset Appraisal Co., Ltd. used the cost method in the asset appraisal. After consulting relevant information and market investigation, and inquiring directly to relevant manufacturers, the valuation value was determined according to market value.

Because of the general rise in asset prices over the past year and the rise in the price of textile equipment, the assessment value has a 139.61% increase compared with the net book value. The asset assessment report and asset list are detailed on the Shanghai stock exchange website.

Six, the main contents of related party pactions agreement

1, the legal name of the parties to sign the agreement.

Party A: Huafang Xiajin Textile Co., Ltd.

Party B: Huafang group cotton spinning Co., Ltd.

2, the date of signing the agreement: December 29, 2010

3, the subject matter of the paction:

Our company intends to acquire some spinning equipment which is closely related to the production and operation of the related party Hua Fang Group cotton spinning Co., Ltd.

4, paction price:

Based on the evaluation report of part B312 of Shanghai Yin Yin Hui Assets Appraisal Co., Ltd., Shanghai credit rating industry (2010), part B312, the two sides confirmed that the assessment value of the benchmark date in November 30, 2010 was 38171256.75 yuan as the paction price of this asset acquisition.

5, the delivery status, delivery and pfer time of the paction target:

According to the agreement on asset pfer signed by the two parties, the company will pay all the pfer money to the designated account of cotton spinning company within twenty working days after the entry into force of the agreement. The cotton spinning company will jointly handle the pfer of related assets with the company within ten working days after receiving the above payment.

6. The conditions for the entry into force of the agreement and the time for the entry into force:

The agreement is signed and sealed by the parties of the trading party and will come into force after the approval of the board of directors of this company.

Seven, the purpose of this paction and its impact on listed companies.

After the completion of the acquisition, the acquisition of assets through related party pactions enhanced the integrity of the company's industrial chain, effectively reduced related party pactions, and rapidly increased the company's capacity to further enhance the company's ability to continue operation.

The paction price is based on the assessment results of the appraisal institutions with securities qualification, and the two sides conduct pactions according to the principles of fairness, fairness and openness. There is no case of damaging the interests of minority shareholders.

Eight. Views of independent directors

The independent directors of the company made prior representations and issued independent opinions on the related pactions of the acquisition of assets. They believe that the proposed acquisition of related party assets follows the principle of "fairness, impartiality and fairness". At the same time, it is considered that this asset purchase method is reasonable, which is conducive to increasing the independence of the company and reducing related pactions, which is in line with the interests of the company and all shareholders.

Nine. Reference documents

1, resolution of the seventh session of the Fifth Board of directors of the company;

2. Independent directors' independent opinions on the acquisition of related pactions.

3, the evaluation report of part of assets pfer of Huafang group cotton spinning Co., Ltd. issued by Shanghai silver letter industry assets appraisal Co., Ltd. (Shanghai silver letter industry appraisal (2010) No. B312);

4. The agreement on asset pfer signed by Huafang Xiajin Textile Co. Ltd. and Huafang group cotton spinning Co., Ltd.

Notice hereby

Huafang textile Limited by Share Ltd

December 31, 2010