PAX Global Technology Limited — M&A Activity 2014

Dec 9, 2014

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this announcement, make no representation as to its accuracy or completeness and expressly disclaim any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

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PAX Global Technology Limited 百富環球科技有限公司 *

(incorporated in Bermuda with limited liability)

(Stock Code: 327)

VOLUNTARY ANNOUNCEMENT

PROPOSED PURCHASE OF AN ATTRIBUTABLE 51% EQUITY INTEREST IN 南昌卡說信息技術有限公司 (Nanchang Kashuo Information Technology Company Limited*)

This is a voluntary announcement made by the Company.

On 9 December 2014, the Purchaser, a wholly-owned subsidiary of the Company entered into the Sale and Purchase Agreement with the Vendors to acquire an attributable 51% equity interests in the Target Company in consideration of (i) payment of a cash consideration of RMB30,600,000 and (ii) issuance of Consideration Shares by Shanghai Kashuo, the vehicle used by the Purchaser to take up the entire equity interests of the Target Company, to the Vendors upon Completion.

The Acquisition and the transactions contemplated under the Sale and Purchase Agreement do not constitute any notifiable transactions of the Company under the Listing Rules nor constitute any Inside Information under the Listing Rules and Part XIVA of the SFO. This announcement is made on voluntary basis to inform the shareholders and investors of the Company as to the updated business development of the Group .

This is a voluntary announcement made by the Company.

THE ACQUISITION AND THE SALE AND PURCHASE AGREEMENT

On 9 December 2014, the Purchaser entered into the Sale and Purchase Agreement with the Vendors to acquire an attributable 51% equity interests in the Target Company in consideration of (i) payment of a cash consideration of RMB30,600,000 and (ii) issuance of Consideration Shares by Shanghai Kashuo, the vehicle used by the Purchaser to take up the entire equity interests of the Target Company, to the Vendors upon Completion.

• For identification purposes only

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Date

9 December 2014

Parties

• (1) Purchaser: Pax Technology Limited, a wholly-owned subsidiary of the Company. The Purchaser will designate Shanghai Kashuo which shall be established and wholly owned by the Purchaser as the vehicle to acquire and hold the entire interest in the Target Company upon Completion

• (2) Vendors: Certain PRC individuals in aggregate holding the entire interest in the Target Company which shall be disposed to Shanghai Kashuo upon Completion

To the best of the Directors’ knowledge, information and belief and having made all reasonable enquiries, all the Vendors are Independent Third Parties.

Conditions of the Acquisition and Completion

Completion is subject to fulfilment of certain conditions including, among others, that the results of the due diligence on the Target Group is satisfactory to the Purchaser, all the loans (including any shareholders loans) owed by the Target Group shall have been settled in full prior to Completion and designated trademark shall have been duly transferred to the Target Company prior to Completion.

If the conditions have not been fulfilled by 30 January 2015 (or such other date as the Purchaser may determine) and subject to the right of the Purchaser to waive certain of the conditions, the Sale and Purchase Agreement shall thereupon become null and void.

Completion will take place within three Business Days after the conditions have been fulfilled in accordance with the Sale and Purchase Agreement (or such other date as the parties to the Sale and Purchase Agreement may agree).

Consideration

• (a) Cash Consideration

The cash consideration of RMB30,600,000 for the Acquisition was arrived at after arm’s length negotiations between the Purchaser and the Vendors with reference to the performance of the Target Group, the expected prospects of consumer market in China and the fair value of the equity interest in the Target Company as appraised by an independent valuer.

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The cash consideration of RMB30,600,000 shall be payable by way of cash in the following instalments:

• (i) RMB12,720,000 payable upon Completion;

• (ii) RMB14,700,000 payable within one month after Completion which shall be withheld by the Purchaser and applied by the Purchaser to make capital contribution to Shanghai Kashuo for the Vendors pursuant to the increase of registered share capital of Shanghai Kashuo as set out below;

• (iii) RMB1,590,000 payable on the first anniversary date after Completion provided that certain business performance targets set for the Target Group shall have been fulfilled; and

• (iv) RMB1,590,000 payable on the second anniversary date after Completion provided that certain business performance targets set for the Target Group shall have been fulfilled.

In respect of a(iii) and a(iv) above, if the business performance targets could not be fulfilled, the Purchaser has no obligation to pay the amount of money set out in a(iii) and/or a(iv) above (as the case may be) to the Vendors.

(b) Consideration Shares

The Purchaser shall procure Shanghai Kashuo to issue and allot new Consideration Shares to the Vendors at time of Completion as a result of which the Vendors shall hold an aggregate of 49% equity interest in Shanghai Kashuo on diluted basis.

Increase of the Registered Share Capital of Shanghai Kashuo

Within one month from Completion, the Purchaser and the Vendors shall make capital contribution to Shanghai Kashuo pro-rata to their respective shareholding interest in Shanghai Kashuo thereby increasing the registered capital of Shanghai Kashuo from RMB30,000 to RMB30,000,000. The contribution to be made by the Vendors will be financed by the money stated in paragraph a(ii) above and the remaining RMB15,270,000 shall be contributed by the Group. With such increase in registered share capital, Shanghai Kashuo will be provided more funds for expansion of its business.

INFORMATION ON THE GROUP AND THE TARGET GROUP

The Group is a E-payment Terminal solutions provider principally engaged in the development and sale of E-payment Terminal products and provision of related services.

The Target Group is the first Internet information technology research operator which endeavors to promote bankcard transaction value added service. The mission of the Target Group is “Make our bankcards moving” and its philosophy is “Swiping bankcard creates value and changes our lives”. The Target Group targets to be the most reliable bankcard value added service regional and national level provider in 3 and 5 years respectively. The Target Group integrated with finance service providers, telecommunication operators, Internet, merchants

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and consumer resources to provide an automatic discount, reward loyalty and in-net integrated sales and marketing platform. At offline merchants, members can enjoy automatic merchant discount and collect reward points by paying with preregistered bankcards. Merchants can offer more timely promotions and service to members based on consumption data analytics. That achieves real two-way interaction between merchants and consumers, and formed an online-to-offline closed loop (“OTO Closed Loop”). The Target Company has 6 subsidiaries incorporated in the PRC with their principal places of business located in Wuhan, Chengdu, Kunming, Nanning, Shenzhen and Chongqing.

REASONS FOR THE ACQUISITION AND BENEFITS EXPECTED

The Target Group has proven track record in value-added merchant service for consumer payments and bank card promotion activities. Through the Acquisition, the Group could extend its business from the well-established front end service with focus on E-payment Terminal provider to a downstream role in the whole payment value chain. It will enable the Group to (a) collect data relating to transactions using bank cards so as to build big data reserve for consumer behaviour analytics (OTO Closed Loop analysis); (b) build direct relationship with merchants by providing Integrated Marketing Account Analytic Platform service; (c) work with merchant acquirers for value-added service such as loyalty program; (d) cooperate with banks for bank card promotion activities among merchants; and (e) increase stickness with merchant acquirers. It is expected that potential recurring income could be generated by the Group in respect of such value-added service and the relationship with the customers of the Group, for example, merchant acquirers could further be strengthened and enhanced.

The Directors consider that the terms of the Acquisition (including the Consideration) are fair and reasonable and in the interests of the Company and its shareholders as a whole.

FINANCIAL EFFECT OF THE ACQUISITION

The Target Company will become an indirect subsidiary of the Company the financial results of which will be consolidated into the accounts of the Group upon Completion. It is expected that the Acquisition will increase both the total asset and liabilities of the Group upon Completion. The Acquisition will be financed by internal resources of the Group.

GENERAL

The Acquisition and the transactions contemplated under the Sale and Purchase Agreement do not constitute any notifiable transactions of the Company under the Listing Rules nor constitute any Inside Information under the Listing Rules and Part XIVA of the SFO.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following terms shall have the meanings set out below:

“Acquisition”	the acquisition of an attributable 51% equity interest in the
	Target Company by the Group pursuant to the Sale and Purchase
	Agreement
“Board”	the board of Directors of the Company
“Business Day”	means a day (other than a Saturday, Sunday or public holiday)
	on which commercial banks in Hong Kong and PRC are open for
	business to the general public
“Company”	Pax Global Technology Limited, a company incorporated in
	Bermuda with limited liability and the shares of which are listed
	on the Main Board of the Stock Exchange (Stock Code: 327)
“Completion”	completion of the Acquisition under the Sale and Purchase
	Agreement
“Consideration”	cash consideration of RMB30,600,000 and the issuance of
	Consideration Shares by Shanghai Kashuo to the Vendors
“Consideration Shares”	such number of new shares to be issued by Shanghai Kashuo to
	the Vendors upon Completion, representing approximately 49% of
	the enlarged issued share capital of Shanghai Kashuo
“Directors”	director(s) of the Company
“E-payment Terminal”	electronic funds transfer point-of-sale terminal
“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s
	Republic of China
“Independent Third	any persons or company(ies) and their respective ultimate
Party(ies)”	beneficial owners, to the best of the Directors’ knowledge,
	information and belief having made all reasonable enquiries,
	are not connected persons of the Company and are third parties
	independent of the Company and its connected persons in
	accordance with the Listing Rules
“Inside Information”	has the meaning ascribed to it under the Listing Rules
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange

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“PRC”	the People’s Republic of China which, for the purpose of this
	announcement, excludes Hong Kong, Taiwan and the Macau
	Special Administrative Region of the People’s Republic of China
“Purchaser”	Pax Technology Limited (百富科技有限公司), a company
	incorporated in Hong Kong with limited liability and a wholly
	owned subsidiary of the Company
“Sale and Purchase	the sale and purchase agreement dated 9 December 2014 made
Agreement”	between the Purchaser and the Vendors in respect of the purchase
	of an attributable 51% equity interest in the Target Company
“SFO”	The Securities and Future Ordinance (Chapter 571 of the Laws of
	Hong Kong)
“Shanghai Kashuo”	上海卡說公司or such other name as may be determined by the
	Purchaser (Shanghai Kashuo Limited*), a company proposed to
	be established by the Purchaser in PRC with limited liability with
	registered capital of RMB30,000 and the entire interest of which
	will be held by the Purchaser upon establishment
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Company”	南昌卡說信息技術有限公司(Nanchang Kashuo Information
	Technology Company Limited*), a limited liability company
	incorporated in PRC
“Target Group”	the Target Company and its subsidiaries
“Vendors”	certain PRC individuals who are Independent Third Parties
“RMB”	Renminbi, the lawful currency of the People’s Republic of China
“%”	per cent
	By Order of the Board
	PAX Global Technology Limited
	Li Wenjin
	Executive Director

Hong Kong, 9 December 2014

As at the date of this announcement, the Board comprises three Executive Directors, namely, Mr. Nie Guoming, Mr. Lu Jie and Mr. Li Wenjin and three Independent Non-Executive Directors, namely Mr. Yip Wai Ming, Dr. Wu Min and Mr. Man Kwok Kuen, Charles.

• For identification purposes only

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