Karen Group Advances Dual Business Strategy, Plans to Transfer Construction Waterproofing Business Assets to Wholly-Owned Subsidiary and Increase Capital

On March 23, Jiangsu Kailun Building Materials Co., Ltd. (Stock Code: 300715, Stock Name: Kailun Shares (Rights Protection)) announced that the company’s 25th meeting of the fifth board of directors approved the proposal to transfer part of assets to a wholly owned subsidiary and increase capital. To optimize the corporate structure and promote the coordinated development of dual main businesses, the company plans to transfer assets related to the waterproofing business to its wholly owned subsidiary Suzhou Kailun Polymer New Materials Technology Co., Ltd. (hereinafter referred to as “Kailun Polymer”) and to increase its capital with these assets.

Asset Transfer Supports Business Structure Optimization

The announcement shows that Kailun Shares has formed a dual-main-business model focusing on new building waterproof materials and new display panel testing and repair services. To further clarify business boundaries, define responsibilities and assessments, and improve operational efficiency, the company has decided to integrate existing assets and resources, transferring assets related to the waterproofing business to Kailun Polymer.

This transfer is based on December 31, 2025, with the final scope and amount of transferred assets subject to implementation results. After the transfer, the company will still hold 100% equity in Kailun Polymer, with no change to the scope of consolidated financial statements, nor does it constitute a major asset restructuring. This matter is within the authority of the board of directors and does not require shareholder approval.

Basic Information of Both Parties

Main Content of the Transfer Plan

According to the announcement, the asset transfer and capital increase plan includes the following key points:

• Asset Transfer: The company will transfer assets related to the waterproofing business to Kailun Polymer, with clear ownership and no major disputes or rights restrictions.
• Employee Arrangements: Following the principle of “assets go with personnel,” relevant employees’ labor relations will be transferred to Kailun Polymer, with proper handling of labor contracts and social security transfers according to law.
• Tax Arrangements: Both parties will comply with applicable tax policies, subject to tax authority determinations.
• Accounting Treatment: The company will transfer assets at book value, increasing its long-term equity investment in Kailun Polymer; Kailun Polymer will account for the investment accordingly.
• Payment Method: No cash payment is involved; the transfer will be made through asset contribution to increase capital.

Risk Warning and Strategic Significance

The announcement notes that there are risks such as the need for tax authority approval of the tax treatment and obtaining employee consent for personnel changes. The company states that this transfer is a strategic decision aimed at long-term development, which will help enhance management functions in strategic investment, capital operations, and subsidiary control, thereby improving operational decision-making efficiency.

This transfer is within the scope of the company’s consolidated financial statements and will not significantly impact the company’s financial position or operating results. It does not involve changes to the company’s share capital or shareholder structure; the company’s registered capital, equity structure, and board and management composition remain unchanged.

The board has authorized management to handle the specific matters related to this asset transfer and capital increase, and related work will proceed as planned.

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