Tongwei about purchasing Zhanjiang Yuehua Aquatic Feed Co., Ltd

Introduction: the company and all members of the board of directors guarantee the truthfulness, accuracy and completeness of the contents of the announcement, and shall be jointly and severally liable for the false records, misleading statements or major omissions of the announcement Important content note: ● transaction content: Tongwei Co., Ltd (hereinafter referred to as "the company") respectively accepts 41% equity of Zhanjiang Yuehua Aquatic Feed Co., Ltd (hereinafter referred to as "Yuehua company") and Zhuhai Special Economic Zone HaiHai Aquatic Feed Co., Ltd (hereinafter referred to as "Haihai company") ● name of transaction object: equity acquisition ● transaction amount: total amount: 62.88 million yuan, including 47.48 million yuan of Yuehua company and 15.4 million yuan of Haihai company ● transaction purpose and impact: this equity acquisition is required to give full play to its advantages, further expand and strengthen its main business, and meet the long-term development strategic goal of the company After the acquisition, it will further improve the market share of the company's leading product aquatic feed and consolidate the company's leading position in the aquatic feed industry ● pricing principle: Based on the net asset value of Yuehua company and Haihai company as of June 30, 2005 audited by Sichuan Huaxin accounting firm, In combination with the influence of Yuehua company on the market as the leading enterprise in shrimp production and its existing product brands, all parties to the transaction negotiate to make a price according to the relevant provisions of the Listing Rules of Shanghai Stock Exchange (2004 Revision), Now the relevant matters of this equity acquisition are announced as follows: 1 Transaction overview 1 Acquisition of equity of Yuehua company The company transferred 30% equity of Yuehua company held by Zhanjiang Chikan Huaqiang Industrial Co., Ltd and 11% equity of Yuehua company held by Guangdong Hengxing Group Co., Ltd After the completion of the equity transfer, the equity structure of Yuehua company changed into: 41% of Tongwei shares, 19% of Zhanjiang Chikan Huaqiang Industry Co., Ltd., 15% of Guangdong Hengxing Group Co., Ltd., and 25% of Hong Kong Dafu Engineering Co., Ltd 2 Acquisition of equity of Haihai company: the company transferred 41% equity of Haihai company held by Zhanjiang Yuehua Aquatic Feed Co., Ltd., 19% equity of Haihai company held by Zhanjiang Chikan Huaqiang Industrial Co., Ltd., and 15% equity of Haihai company held by Guangdong Hengxing Group Co., Ltd After the completion of the equity transfer, the equity structure of Haihai company changed into: 41% of Tongwei shares, 19% of Zhanjiang Chikan Huaqiang Industry Co., Ltd., 15% of Guangdong Hengxing Group Co., Ltd., and 25% of Hengyou International Development Co., Ltd As the actual controller of Yuehua company and Haihai company is Mr Xu Zhisheng, the deputy of the people's Congress of Guangdong Province, according to the relevant provisions of the Listing Rules of Shanghai Stock Exchange (revised in 2004), this equity acquisition does not constitute a connected transaction, and has been deliberated and agreed by the ninth session of the second board of directors of the company, according to the relevant provisions of the articles of association, This transaction does not need to be submitted to the general meeting of shareholders for deliberation 2 The subject matter of the transaction 1 The company acquired 41% of the shares of Yuehua company and Haihai company respectively, and the subject matter of the transaction was not pledged 2 Basic information of Yuehua company: Yuehua company was founded on May 14, 1999, with its registered address at No.2, North Chikan Station Road, Zhanjiang City Its legal representative is Xu Zhisheng and its registered capital is US $1 million, Its shareholding structure is as follows: Zhanjiang Chikan Huaqiang Industry Co., Ltd holds 49%, Guangdong Hengxing Group Co., Ltd holds 26% and Hong Kong Dafu Engineering Co., Ltd holds 25%, which is a Sino foreign joint venture with Hong Kong capital Yuehua company's business scope is to produce and sell all kinds of feeds Its main products are grass shrimp feed, luoshizhao shrimp feed and nanmeibai shrimp feed The company has 6 shrimp production lines and 1 expansion production line (4 of which are newly built in the first half of this year), with an annual feed production capacity of 80000 tons In 2004, the company realized a total sales revenue of 148.97 million yuan and a main business profit of 27.546 million yuan As of June 30, 2005, the company's total assets were 238.94 million yuan and its net assets were 42.61 million yuan, audited by Sichuan Huaxin accounting firm 3 Basic information of Haihai company: Haihai company was founded on September 15, 1988, registered in Dawu Bay, Tangjia Town, Zhuhai City Its legal representative is Xu Zhisheng The registered capital of the company is 900000 US dollars Its equity structure is: Guangdong Zhanjiang Yuehua Aquatic Feed Co., Ltd holds 75% of the shares, and Hengyou International Development Co., Ltd holds 25%, It is a Sino foreign joint venture with Hong Kong investment The business scope of Haihai company is to produce and sell its own fish, shrimp feed, pharmaceutical feed additive, animal feed and the acquisition of microelements, agricultural and sideline products, etc Its main products are grass shrimp feed, prawn feed, white shrimp feed and sea fish feed The company has 2 shrimp feed lines and 1 expanded feed production line, with an annual feed production capacity of 30000 tons In 2004, the company realized a total sales revenue of 131.58 million yuan and a main business profit of 16.447 million yuan As of June 30, 2005, through the audit of Sichuan Huaxin certified public accountants, the company's total assets are 72.91 million yuan, and its net assets are 28.03 million yuan III transaction amount, pricing policy, source of funds and payment of funds 1 Pricing principle: pricing principle of equity purchase price: Based on the net asset value of Yuehua company and Haihai company as of June 30, 2005 audited by Sichuan Huaxin accounting firm, In combination with the influence of Yuehua company on the market as the national leading enterprise of shrimp production and its existing product brands, all parties involved in the transaction negotiate the price 2 Transaction amount: 47.48 million yuan for Yuehua company and 15.4 million yuan for Haihai company, with a total transaction amount of 62.88 million yuan 3 Capital source: the capital of this equity acquisition is all from the company's own capital 4 Capital payment: the payment shall be made within 10 days after the parties to the transaction sign a formal agreement, the management handover is completed and the approval of the examination and approval authority is obtained 5 Accumulated amount with the counterparty: there are no other transactions between the company and the counterparty since the beginning of this year IV arrangement after equity acquisition: after the completion of this equity acquisition, Yuehua company and Haihai company will manage and operate in the same way as the company's management of the holding member company, and the candidates for the chairman and financial director will be directly appointed by the company V the transaction of this equity acquisition will not involve personnel resettlement, land leasing and debt restructuring, and there will be no horizontal competition and related transactions after the acquisition VI The purpose of this transaction and its impact on the company the purpose of this equity acquisition is to give full play to its own advantages, further strengthen and expand its main business, and meet the company's long-term development strategic objectives After the acquisition, it will further improve the market share of the company's leading product aquatic feed and consolidate the company's leading position in the aquatic feed industry 7 Documents for future reference 1 Audit report issued by Sichuan Huaxin certified public accountants 2 Resolution of the 9th meeting of the 2nd board of directors of the company is hereby announced Board of directors of Tongwei Co., Ltd July 20, 2005