Gelonghui November 21丨Futian Industrial (00420.HK) announced that Jiangyin Fuhui has signed a land expropriation agreement with the local government to expropriate the right to use part of the land at No. 12, Xiaoshan Road West District, Jiangyin City, along with all buildings, structures and annexes thereto.
According to the land expropriation agreement, Jiangyin FXCM must hand over land use rights for land expropriated by the government to the local government. The land expropriated by the government is located at No. 12, Xiaoshan Road West District, Jiangyin City, China. It covers an area of about 119,408 square meters, accounting for about 26% of the land. The total construction area of the land and buildings it houses is about 62,607 square meters. As of the date of this announcement, the land expropriated by the Government is now for non-major production purposes, mainly employee living areas, including employee dormitories, canteens, recreation activity centers, an idle garment factory, a water treatment center to support production, and some vacant land.
According to the land expropriation agreement, the total compensation payable by the local government to Jiangyin Fuhui due to the land expropriation is RMB 259 million.
Jiangyin Fuhui is a wholly-owned subsidiary owned indirectly by the company. It is mainly engaged in the production and sale of knitted fabrics, the production and sale of clothing, and the provision of knitting, dyeing, printing and finishing services. As of the date of this announcement, Jiangyin Fuhui had about 490 full-time employees and 300 part-time employees.
The land expropriated by the government this time is mainly for employees' living areas, not for production purposes. After the land is expropriated, Jiangyin Fuhui will continue to operate as usual. Therefore, compared with the current level of production capacity, land expropriation will not have a significant impact on the overall production capacity of the Group. At the same time, land expropriation is expected to have the following effects on the Group's financial situation and operations: (1) reduce asset size and depreciation expenses, thereby reducing costs and increasing profitability; (2) the Group will obtain asset exchange income, supplement the Group's cash flow, reduce external financing expenses, and provide cash security for the Group's current operations and future overall layout.