Company Announcement No. 01/2022

Company Announcement No. 01

February 28, 2022

Erria A/S Enters into Conditional Agreement to Acquire Cathay Seal Pte Ltd

Erria A/S (the ”Company”) has today entered into a conditional agreement to acquire all the equity interests of Cathay Seal Pte Ltd (”Cathay Seal”), a Singapore company engaged in the design, manufacture and supply of security seals. The acquisition is conditional upon approval of the board of directors of the Company, including the satisfication of customary due diligence, and the approval by the shareholders of the Company of issuance of new shares to the sellers of Cathay Seal.

Background of Cathay Seal
Founded in 2010, Cathay Seal sells its products to a variety of customers ranging from international container shipping lines to port authorities, as an example, addressing their respective niche requirements. Through its Singapore office with five employees and a distributor network covering nearly 15 countries, Cathay Seal serves customers worldwide. Its products are manufactured in Ningbo, China and Batam, Indonesia. The largest customer sector for Cathay Seal is the maritime industry. Other customer segments relate to the transportation of pharmaceutical and biomedical materials, retail, cash handling, secured distribution and the utility industries. In 2021, Cathay Seal had sales in excess of USD 4.3m (DKK 28.7m) and an EBITDA of about USD 0.12m (DKK 0.8m).

Rationale for Acquisition
Cathay Seal is a well-established and recognized brand in the security seals industry with a strong focus on serving the demanding needs of the container shipping industry. ”We are very keen to consummate this transaction and contribute to the further success of Cathay Seal and its customers. Through a combination of our diverse professional experience within the container shipping industry, our European presence and the Erria commercial network, our objective is to expand the Cathay Seal presence in current and new markets,” said Henrik N. Andersen, the chief executive officer of the Company. Sylvia Tan, co-shareholder and general manager of Cathay Seal, added: ”I am happy for our employees, customers and other stakeholders that Cathay Seal will be part of the Erria family of companies. What was important for me and the three other shareholders of Cathay Seal is the fact that we and Erria share the same business values and philosophy and that Erria is committed to growing our business.”

Consideration and Shareholder Approval
Under the proposed acquisition terms, which are subject to the Company’s shareholder approval and customary due diligence, the four shareholders of Cathay Seal will receive a cash payment and and new shares to be issued by the Company. The total consideration is USD 1.1m (DKK 7.3m). Søren Storgaard, chairman of the board of directors of the Company, said: ”With this business combination, we deliver on our promise to serve the maritime industry and maximize value for all our stakeholders. At the same time, this business integration also enables us to diversify our risk profile into non-shipping markets by serving segments such as banks.” If the transaction terms are approved at a shareholders’ meeting, the Company’s existing shareholders will be diluted by 14.9 percent. The sellers of Cathay Seal have agreed to subscribe for 1,621,622 new shares at a price of DKK 3.70 per share (approximately equal to the average share price during the preceeding on year) or the market price at closing of the acquisition, whichever is the higher.

Outlook
Following the date of the acquisition and share issuance, the Company expects Cathay Seal at an Erria group level to contribute pro-rata with about USD 4.3m (DKK 28.7m) in sales and an EBITDA of about USD 0.2m (DKK 1.3m). The Company will announce its financial expectations for 2022 on March 17, 2022.

For further information, please contact the chief executive officer of the Company Henrik N. Andersen at +45 3336 440.

Søren Storgaard                Henrik N. Andersen
Chairman of the Board of Directors        Chief Executive Officer

Certified adviser
Norden CEF ApS
John Norden
Toldbodgade 55B, Third Floor
1253 Copenhagen K
Denmark
+45 2072 0200