The Board of Honghua Group Limited announced that based on the unaudited consolidated management accounts of the Group for the year ended 31 December 2021 and the information currently available to the company, the Group is expected to record a loss attributable to the shareholders of the company ranging from RMB 700.00 million to RMB 800.00 million for the year ended 31 December 2021, as compared to the profit attributable to the shareholders of RMB 49.66 million for the year ended 31 December 2020. The expected loss for the year ended 31 December 2021 is primarily due to (1) the financial losses caused by the debt default of the Offshore Segment; (2) the continual spread of the COVID-19 pandemic leading to significant decline in international drilling equipment business while the new orders which were mainly signed in the fourth quarter which failing to make up the shortfall of the revenue for the period; (3) the decline of service prices and gross profit margins of its projects resulting from the customers' prudent measures on capital expenditures; and (4) the effects of impairment of other assets and reversal of deferred income tax assets.