Broadway Industrial Group acquires JV company in China

Subsidiary commits to 49% of total capital.

The board of directors of Broadway Industrial Group Limited announced that its 96.47% owned subsidiary, Shanghai Broadway Packaging & Insulation Materials Co., Ltd. (SHBW), has entered into a joint venture agreement with KAEFER Service- und Wartungs-GmbH (KAEFER), to incorporate the JV company, KAEFER Broadway Insulation Systems (Shanghai) Co., Ltd, a limited liability company incorporated in the People’s Republic of China.

SHBW’s total capital commitment to the JV company, representing 49 per cent. of the registered capital of the JV company, will be €759,500, of which 15 per cent. of such amount will be injected within three months of the incorporation of the JV company, and the balance 85 per cent. will be injected within two years of the Incorporation Date. The remaining 51 per cent. of the registered capital of the JV Co will be contributed by KAEFER.

The Investment will be funded by internal resources. Following the Investment, the JV company will be an associated company of the Company.

Under the terms of the Agreement, the JV company will enter into a hire purchase agreement with SHBW pursuant to which it will acquire SHBW’s assets and machinery relating to its industrial insulation business for a consideration of approximately €1.9 million. The consideration for the Insulation Assets will be paid in cash to SHBW over two years, is based on the net book value of the Insulation Assets as at October 2013, being €1.9 million, and may be adjusted subject to a due diligence exercise to be conducted on the Insulation Assets.

The Transactions are not expected to have a material impact on the earnings per share and net tangible assets of the Group for the financial year ending 31 December 2013.