Haikui Seafood : signs relocation agreement with Dongshan authorities and commences construction works for its new processing facilities

Frankfurt, 20. October 2014

Haikui Seafood signs relocation agreement with Dongshan authorities and commences construction works for its new processing facilities

Frankfurt am Main, October 20, 2014 - The Chinese subsidiary of Haikui Seafood AG has signed an agreement regarding the relocation of its existing seafood processing facilities to the new Dongshan Marine Biotechnology Industrial Park (the "Relocation Agreement"). Accordingly, the existing seafood processing facilities and the planned new plant will eventually be located at one site. After having completed ground levelling, the construction works for the new plant have started in line with the time schedule set last year.

Haikui Seafood's existing processing facilities are located within a residential and commercial zone under Dongshan's city development plan. Therefore, the local authorities and Haikui Seafood mutually agreed to bundle the relocation of the current operations with the construction of the new plant at the Dongshan Marine Biotechnology Industrial Park.

Based on the Relocation Agreement with the local authorities, Haikui Seafood will acquire land use rights for around 13 hectares (200 mu) for the construction of the new processing plant, which, next to the planned new facilities, will now also include processing facilities, which are currently still based in Haikui Seafood's existing plant in Dongshan. Further land use rights for around 52 hectares (800 mu) at the same location will be reserved for Haikui Seafood for future expansion opportunities.

Haikui Seafood will receive a compensation payment for the existing factory based on market values as determined by a mutually agreed independent valuation firm.

According to the Relocation Agreement, the shift will be carried out within six months after completion of the new factory, and is therefore expected to occur towards the end of 2016 or beginning of 2017. During this intervening period, Haikui Seafood does not expect any significant interruption of its business activities arising from the planned relocation.

"The Relocation Agreement enables us to build a highly efficient seafood processing plant with modern and faster equipment on one site at very attractive terms. This puts us in an excellent position to pursue our ambitious mid and long term growth plans", says Chen Zhenkui, CEO of Haikui Seafood.

The Management Board has updated Haikui Seafood's investment and facility design plans for the new plant in line with the Relocation Agreement. The total expected investment for the new processing facilities remains stable at around 550 million Renminbi (approximately 70 million Euro). This is due to the reduced land size and the accompanying land development expenses as well as a reduced price for the land use rights granted by the local authorities. The new and optimised facility design comprises more floors and a higher density of the processing area, resulting in a more efficient use of the land.

The investment will be financed by the loan Haikui Seafood secured from DEG (Deutsche Investitions- und Entwicklungsgesellschaft) at the end of 2013, by cash generated from operations and by the compensation payment from the local authorities of Dongshan for the old processing facilities.

Haikui Seafood expects the new plant to provide several advantages not only due to the installation of modern processing facilities but also because of its location. The Marine Biotechnology Industrial Park is dedicated to the seafood processing industry and offers easy accessibility to the various entry and exit points into and out of Dongshan.

Construction of seafood processing factory has started
The ground levelling for the new factory has already been completed. The construction of the perimeter walls and the development works on the basic ancillary facilities such as lighting, piping, sewerage and access routes began in September 2014 and are expected to be completed by the end of the year.
Haikui Seafood has recently awarded the contract to construct the new seafood processing facilities for the production of various canned and frozen seafood products to the bidder who tendered the most competitive quote. The first construction activities include the piling of the foundation with the completion of the new facilities expected in H1 2016.

"We are very happy that the construction of our new factory is proceeding as planned. Barring unforeseen events, we can expect first contributions from the new plant in 2016", says Chen Zhenkui, CEO of Haikui Seafood.

About Haikui Seafood AG
Haikui Seafood processes fish and seafood for the Chinese and international markets. Its products range includes frozen or canned fish and seafood, produced from a large variety of species of raw fish and seafood, including prawn, crab, various fish species and shellfish as well as cephalopods. Clients of Haikui Seafood are distributors in China and overseas, located mainly in Asia, the U.S. and Europe. Haikui Seafood employs 666 permanent employees and 836 additional temporary workers as of June 30, 2014. The company has an annual processing capacity of more than 34,000 tonnes (output). The processing facilities are located in the South-East of China on Dongshan Island, Zhangzhou, Fujian Province. Haikui Seafood operates a streamlined supply chain including self-owned processing facilities, in-house research and product development capacities as well as warehousing and cold storage facilities while simultaneously cooperating closely with raw goods suppliers.