SIM Technology Group Limited - Capital/Financing Update 2012

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.

Distribution of this announcement into jurisdictions other than Hong Kong may be restricted by law. Persons into whose possession this announcement comes should inform themselves of and observe any such restrictions. This announcement is not for release, publication or distribution, directly or indirectly, in or into the United States. This announcement is for information purposes only and shall not constitute an offer to sell or the solicitation of an offer to buy any securities, nor shall there be any sale or purchase of securities in any jurisdiction in which such offer, solicitation or sale would be unlawful. Neither this announcement nor anything in this announcement forms the basis for any contract or commitment whatsoever.

The securities referred to herein have not been and will not be registered under the U.S. Securities Act of 1933, as amended (the “U.S. Securities Act”) or the laws of any state of the United States, and may not be offered or sold within the United States, absent registration or an exemption from the registration requirements of the U.S. Securities Act and applicable state laws. There is no intention to register any portion of the rights issue or any securities described herein in the United States or to conduct a public offering of securities in the United States.

This announcement is for information purposes only and does not constitute an invitation or offer to acquire, purchase, or subscribe for any securities of the Company.

SIM TECHNOLOGY GROUP LIMITED 晨訊科技集團有限公司[] (Incorporated in Bermuda with limited liability) (Stock code: 2000)*

PROPOSED RIGHTS ISSUE ON THE BASIS OF ONE RIGHTS SHARE FOR EVERY TWO EXISTING SHARES HELD ON THE RECORD DATE

CONNECTED TRANSACTION

AND

APPLICATION FOR THE WHITEWASH WAIVER

Financial adviser to the Company

(1) PROPOSED RIGHTS ISSUE

The Company proposes to issue not less than 852,499,500 Rights Shares but not more than 878,512,500 Rights Shares at the Subscription Price of HK$0.20 per Rights Share on the basis of one Rights Share for every two existing Shares in issue and held on the Record Date. The proposed Rights Issue is intended to raise not less than approximately HK$170,499,900 (before expenses) but not more than approximately HK$175,702,500 (before expenses).

The last day of dealings in the Shares on the Stock Exchange on a cum-rights basis will be Monday, 26 November 2012. The Shares will be dealt in on an ex-rights basis on the Stock Exchange from Tuesday, 27 November 2012. The Rights Issue is only available to the Qualifying Shareholders and will not be extended to the Non-Qualifying Shareholders. The Record Date is Wednesday, 5 December 2012. To qualify for the Rights Issue, Shareholders must be registered as the members of the Company on the Record Date and not be a Non-Qualifying Shareholder. The register of members of the Company will be closed from Thursday, 29 November 2012 to Wednesday, 5 December 2012, both dates inclusive, to determine the eligibility for the Rights Issue.

The Rights Issue is fully underwritten by the Underwriter. Details of the major terms and conditions of the Underwriting Agreement are set out in the section headed “Underwriting Arrangements” in this announcement.

The Rights Issue is conditional. In particular, it is subject to the Underwriter not terminating the Underwriting Agreement, the granting of the Whitewash Waiver by the Executive and the Independent Shareholders’ approval. Accordingly, the Rights Issue may or may not proceed.

(2) CONNECTED TRANSACTION IN RESPECT OF UNDERWRITING COMMISSION

The payment of underwriting commission by the Company to the Underwriter constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As the maximum underwriting commission to be paid by the Company to the Underwriter is approximately HK$1.95 million and the applicable percentage ratios (as defined in the Listing Rules) are less than 25% and the amount is less than HK$10,000,000, the payment of such underwriting commission is therefore subject to the reporting and announcement requirements but is exempt from the independent shareholders’ approval requirement pursuant to Rule 14A.32 of the Listing Rules.

(3) APPLICATION FOR THE WHITEWASH WAIVER

The Underwriter is a company incorporated in the BVI with limited liability and is a special purpose vehicle 25% owned by Mr Wong Sun, 25% owned by Mr Wong Hei, Simon, 25% owned by Mr Wong Cho Tung and 25% owned by Ms Yeung Man Ying. As at the date of this announcement, the Underwriter and persons acting in concert with it held an aggregate of 775,918,000 Shares representing approximately 45.51% of the existing issued share capital of the Company.

In the event that upon completion of the Rights Issue, no Qualifying Shareholders take up any Rights Shares and the number of issued Shares remains unchanged, the Underwriter pursuant to the Underwriting Agreement will be required to subscribe for up to 852,499,500 Rights Shares that are not subscribed for under the Rights Issue, which will result in the Underwriter and persons acting in concert with it beneficially interested in 1,628,417,500 Shares, representing approximately 63.67% of the enlarged issued share capital of the Company upon completion of the Rights Issue, thereby triggering an obligation of the Underwriter and persons acting in concert with it to make a mandatory general offer under Rule 26.1 of the Takeovers Code for all the Shares not already owned or agreed to be acquired by it and persons acting in concert with it.

In this regard, an application will be made by the Underwriter to the Executive for the Whitewash Waiver pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code. The Whitewash Waiver, if granted by the Executive, would be subject to, among other things, the approval of the Independent Shareholders by way of poll at the SGM. If the Whitewash Waiver is not granted by the Executive or not approved by the Independent Shareholders, the Rights Issue will lapse and will not proceed. The register of members of the Company will be closed from Wednesday, 14 November 2012 to Monday, 19 November 2012, both dates inclusive, to determine the identity of the Shareholders entitled to attend and vote at the SGM.

GENERAL

The Whitewash Waiver is conditional on, among other matters, approval by the Independent Shareholders at the SGM. A resolution proposed to be voted at the SGM will be conducted by way of poll.

The Independent Board Committee will be established to advise the Independent Shareholders as to whether the terms of the Whitewash Waiver are fair and reasonable and in the interests of the Company and the Shareholders as a whole and to advise the Independent Shareholders on how to vote at the SGM. The Board which includes all members of the Independent Board Committee will appoint an independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

The Underwriter and persons acting in concert with it and those who are involved in or interested in the Whitewash Waiver and their respective associates are required by the Listing Rules or the Takeovers Code to abstain from voting on the proposed resolution approving the Whitewash Waiver. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, save for the Underwriter and persons acting in concert with it, no Shareholders have material interest in the Whitewash Waiver which requires him/her/it to abstain from voting on the relevant resolution at the SGM.

A circular containing, among other matters, further details of (i) the Rights Issue; (ii) the Whitewash Waiver; (iii) a letter of recommendation from the Independent Board Committee to the Independent Shareholders; and (iv) a letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Whitewash Waiver, together with a notice of SGM, will be despatched to the Shareholders as soon as practicable in accordance with the Takeovers Code.

Upon passing of the necessary resolution by the Independent Shareholders at the SGM approving the Whitewash Waiver, the Rights Issue Documents will be despatched to the Qualifying Shareholders as soon as practicable. The Prospectus, without the Provisional Allotment Letters and the Excess Application Forms, will be sent to the Non-Qualifying Shareholders (if any) for their information only.

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

The Rights Issue is conditional upon the satisfaction of certain conditions as described in the section headed “Proposed Rights Issue – Conditions of the Rights Issue” in this announcement. In particular, it is subject to the approval of the Whitewash Waiver by the Independent Shareholders at the SGM, the Whitewash Waiver having been granted by the Executive, and the Underwriting Agreement having become unconditional and not having been terminated (see the section headed “Underwriting Arrangements – Termination of the Underwriting Agreement” in this announcement). Accordingly, the Rights Issue may or may not become unconditional and may or may not proceed.

Any persons contemplating buying or selling Shares from the date of this announcement up to the date on which all the conditions of the Rights Issue are fulfilled will accordingly bear the risk that the Rights Issue may not become unconditional or may not proceed. Shareholders and potential investors of the Company are advised to exercise extreme caution when dealing in the Shares and the nil-paid Rights Shares, and if they are in any doubt about their position, they should consult their professional advisers.

PROPOSED RIGHTS ISSUE

The Board announces that the Rights Issue is proposed with the terms set out as follows:

Basis of the Rights Issue : one Rights Share for every two existing Shares held on the Record Date and payable in full upon application Number of Shares in issue as at the : 1,704,999,000 Shares date of this announcement Number of new Shares to be issued : 52,026,000 Shares upon full exercise of the Vested Options (other than those granted to the Directors) [(Note 1)]

Number of Rights Shares/ : Not less than 852,499,500 Rights Shares [(Note 2) ] but not Underwritten Shares more than 878,512,500 Rights Shares [(Note 2)] Subscription Price : HK$0.20 per Rights Share Enlarged issued share capital of : Not less than 2,557,498,500 Shares but not more than the Company upon completion 2,635,537,500 Shares of the Rights Issue Fund raised before expenses : Not less than HK$170,499,900 but not more than HK$175,702,500

Note 1: As at the date of this announcement, there were 83,163,500 outstanding Share Options, of which 66,426,000 Share Options are vested and exercisable on or before the Record Date (prior to the signing of the Option Undertakings). Among these 66,426,000 Vested Options, 14,400,000 Vested Options were granted to the Directors. Pursuant to the Option Undertakings, each of the Directors has undertaken to the Company and the Underwriter not to exercise their Share Options on or before the Record Date.
Note 2: The figure of 852,499,500 is calculated on the assumption that no Share Options will be exercised on or before the Record Date, and the figure of 878,512,500 is calculated on the assumption that all Vested Options (other than those granted to the Directors) will be exercised on or before the Record Date.

The minimum number of 852,499,500 Rights Shares to be allotted and issued pursuant to the terms of the Rights Issue represents approximately 50.00% of the Company’s existing issued share capital and approximately 33.33% of the enlarged issued share capital of the Company immediately upon completion of the Rights Issue.

The number of Rights Shares which may be allotted and issued pursuant to the Rights Issue will be increased in proportion to any additional new Shares which may be allotted and issued pursuant to the Share Option Schemes on or before the Record Date. As at the date of this announcement, there were 83,163,500 outstanding Share Options, of which 66,426,000 are Vested Options and 16,737,500 are not vested and exercisable on or before the Record Date. Among these 66,426,000 Vested Options, 14,400,000 Vested Options were granted to the Directors. Pursuant to the Option Undertakings, each of the Directors has undertaken to the Company and the Underwriter not to exercise their Vested Options from the date of the Option Undertakings up to and including the Record Date. As a result, only 52,026,000 Vested Options are exercisable on or before the Record Date after taking into account the Option Undertakings.

If all the subscription rights attaching to the Vested Options (other than those granted to the Directors) are duly exercised and Shares are allotted and issued pursuant to such exercise on or before the Record Date, the number of issued Shares is expected to be increased to 1,757,025,000 and the number of Rights Shares that may be issued pursuant to the Rights Issue is expected to be increased to 878,512,500. As at the date of this announcement, the Directors held an aggregate of 18,400,000 Share Options pursuant to the Share Option Schemes, of which an aggregate of 14,400,000 were Vested Options.

As at the date of this announcement, save as disclosed above, the Company has no other outstanding

derivatives, options, warrants, conversion rights or other similar rights which are convertible or exchangeable into Shares.

Save as disclosed above, as at the date of this announcement, the Underwriter and persons acting in concert with it did not hold any convertible securities, warrants or options or did not enter into any outstanding derivative in respect of any relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) of the Company.

Subscription Price

The Subscription Price is HK$0.20 per Rights Share, payable in cash in full when a Qualifying Shareholder accepts his/her/its provisional allotment under the Rights Issue or applies for excess Rights Shares or when a transferee of nil-paid Rights Shares subscribes for the Rights Shares.

The Subscription Price represents:

(i) a discount of approximately 55.56% to the closing price of HK$0.45 per Share as quoted on the Stock Exchange on the Last Trading Day;
(ii) a discount of approximately 53.70% to the average closing price of approximately HK$0.432 per Share for the five consecutive trading days up to and including the Last Trading Day;
(iii) a discount of approximately 53.49% to the average closing price of approximately HK$0.430 per Share for the ten consecutive trading days up to and including the Last Trading Day; and
(iv) a discount of approximately 45.50% to the theoretical ex-rights price of approximately HK$0.367 per Share based on the closing price of HK$0.45 per Share as quoted on the Stock Exchange on the Last Trading Day.

The Subscription Price was arrived at after arm’s length negotiations between the Company and the Underwriter with reference to the recent closing prices of the Shares, the financial conditions of the Group and current market conditions.

The Directors (including the independent non-executive Directors) consider that discount of the Subscription Price would encourage the Qualifying Shareholders to participate in the Rights Issue and accordingly maintain their shareholdings in the Company and participate in the future growth of the Company.

The Directors (excluding the independent non-executive Directors who will form their views after consulting the independent financial adviser to be appointed by the Independent Board Committee) consider the terms of the Rights Issue (including the rate of commission) to be fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions of the Rights Issue

The Rights Issue is conditional upon the following conditions being fulfilled:

(a) the passing by the Independent Shareholders at the SGM of an ordinary resolution to approve the Whitewash Waiver;
(b) the Executive granting to the Underwriter the Whitewash Waiver on or before the Prospectus Posting Date;
(c) the delivery to the Stock Exchange for authorisation and registration with the Registrar of Companies in Hong Kong respectively one copy of each of the Rights Issue Documents duly certified by all Directors (or by their agents duly authorised in writing) as having been approved by a resolution of the Board (and with all other documents required to be attached thereto under the Companies Ordinance) not later than the Prospectus Posting Date and otherwise in compliance with the Listing Rules and the Companies Ordinance;
(d) the posting of the Rights Issue Documents to the Qualifying Shareholders and (subject to the restrictions, if any, under the relevant overseas laws and regulations) the posting of the Prospectus stamped “For Information Only” to the Non-Qualifying Shareholders, in each case, on the Prospectus Posting Date;
(e) the Listing Committee of the Stock Exchange granting or agreeing to grant (subject to allotment), and not having withdrawn or revoked, the listing of, and permission to deal in, the Rights Shares, in nil-paid and fully-paid forms, before 8:00 a.m. on Tuesday, 11 December 2012, being the expected date of commencement of dealings in the nil-paid Rights Shares (or such other date as may be agreed between the Company and the Underwriter), and such listing and permission not being revoked prior to the Latest Time for Termination;
(f) delivery of the duly executed Option Undertakings by each of the Directors who held Share Options to the Company and the Underwriter by facsimile transmission or otherwise and after the execution of the Underwriting Agreement, the original hard copies of which shall be delivered to the Company and the Underwriter by courier as soon as practicable and in any event within five Business Days after the date of the Underwriting Agreement;
(g) fulfilment by the Directors who held Share Options of all of their obligations under the Option Undertakings;
(h) the Shares remaining listed on the Stock Exchange at all times up to and including the Latest Time for Termination and the current listing of the Shares not having been withdrawn or the trading of the Shares not having been suspended for a consecutive period of more than 10 trading days (other than any suspension pending clearance of this announcement) and no indication being received before the Latest Time for Termination from the Stock Exchange to the effect that such listing may be

withdrawn or objected to (or conditions will or may be attached thereto) including but not limited to as a result of the Rights Issue or in connection with the terms of the Underwriting Agreement or for any other reason;

(i) compliance by the Company with all of its undertakings and obligations under the Underwriting Agreement;
(j) obligations of the Underwriter under the Underwriting Agreement not being terminated by the Underwriter in accordance with the terms of the Underwriting Agreement; and
(k) the filing of the Rights Issue Documents with the Registrar of Companies in Bermuda in accordance with the Companies Act.

If any of the conditions of the Rights Issue are not fulfilled and/or (in respect of the condition (i) above) waived in whole or in part by the Underwriter at or before the Latest Time for Termination (or such later time and/or date as the Company and the Underwriter may determine), neither the Company nor the Underwriter shall have any rights or be subject to any obligations arising from the Underwriting Agreement and the Rights Issue will not proceed. Save for condition (i) above, none of the other conditions of the Rights Issue is waivable.

Fractions of the Rights Issue

Fractional entitlements for the nil-paid Rights Shares will not be issued but will be aggregated and sold, if a premium (net of expenses) can be obtained, for the benefit of the Company. Any unsold aggregate of fractions of nil-paid Rights Shares will be made available for Excess Application under the Excess Application Forms.

Status of the Rights Shares

The Rights Shares, when allotted, issued and fully-paid, will rank pari passu in all respects with the then existing Shares in issue on the date of allotment of the Rights Shares. Holders of such Rights Shares will be entitled to receive all future dividends and distributions which are declared, made or paid on or after the date of allotment and issue of the Rights Shares.

Dealings in the Rights Shares in both their nil-paid and fully-paid forms which are registered in the register of members of the Company in Hong Kong will be subject to payment of stamp duty, Stock Exchange trading fees, SFC transaction levy and any other applicable fees and charges in Hong Kong.

The Board has not received any information from any substantial shareholders of the Company of their intention to take up the Rights Shares provisionally allotted or offered to them or to be provisionally allotted or offered to them.

Application for excess Rights Shares

Qualifying Shareholders are entitled to apply, by way of excess application, for any unsold entitlements of the Non-Qualifying Shareholders, any unsold Rights Shares created by adding together fractions of nil-paid Rights Shares and any nil-paid Rights Shares provisionally allotted but not accepted.

Applications for excess Rights Shares may be made by completing the Excess Application Forms and lodging the same with a separate remittance for the excess Rights Shares being applied for.

The Board will allocate the excess Rights Shares being applied for at their discretion on a fair and equitable basis and on the following principles:

(1) subject to the availability of excess Rights Shares, preference will be given to applications for less than a board lot of Rights Shares where they appear to the Directors that such applications are made to top up odd-lot holdings to board-lot holdings (unless the total number of excess Rights Shares is not sufficient to top up all odd-lots into whole board lots) and that such applications are not made with the intention to abuse such mechanism; and
(2) subject to availability of excess Rights Shares after allocation under principle (1) above, the excess Rights Shares will be allocated to the Qualifying Shareholders who have applied for excess Rights Shares on pro-rata basis with reference to their number of excess Rights Shares applied for, and with board-lot allocations to be made on a best effort basis. No reference will be made to the Rights Shares comprised in applications by Provisional Allotment Letters or the existing number of Shares held by the Qualifying Shareholders.

Shareholders with their Shares held by a nominee company (or which are held with CCASS) should note that the Board will regard the nominee company (including HKSCC Nominees Limited) as a single Shareholder according to the register of members of the Company. Accordingly, Shareholders should note that the above arrangement in relation to the allocation of the excess Rights Shares will not be extended to beneficial owners individually. The Shareholders with their Shares held by a nominee company (or which are held with CCASS) are advised to consider whether they would like to arrange for the registration of the relevant Shares in their own names prior to the Record Date.

Shareholders whose Shares are held by their nominee(s) (or which are held with CCASS) and who would like to have their names registered on the register of members of the Company at the close of business on the Record Date, must lodge all necessary documents with the Share Registrar for completion of the relevant registration by 4:30 p.m. on Wednesday, 28 November 2012 (the register of members of the Company will be closed from Thursday, 29 November 2012 to Wednesday, 5 December 2012, both days inclusive).

Share certificate and refund cheques for the Rights Issue

Subject to the fulfilment of the conditions of the Rights Issue, share certificates for all fully-paid Rights Shares and refund cheques in respect of wholly or partially unsuccessful applications for excess Rights Shares (if any) are expected to be posted by ordinary mail to the Qualifying Shareholders and

unsuccessful applicants who have validly accepted and applied for (where appropriate), and paid for the Rights Shares on Friday, 4 January 2013 at their own risk. Each Shareholder will receive one share certificate for all allotted Rights Shares.

Share Option Schemes

As at the date of this announcement, there were 83,163,500 outstanding Share Options. Pursuant to the terms of the Share Option Schemes, adjustments to the outstanding share options may be made in the event of any alteration in the capital structure of the Company including by way of a rights issue. Further announcement on the details of such adjustment (if any) will be made as and when necessary.

Qualifying Shareholders

The Rights Issue is only available to the Qualifying Shareholders. The Company will send (i) the Rights Issue Documents to the Qualifying Shareholders; and (ii) the Prospectus, but without the related Provisional Allotment Letters and Excess Application Forms, to the Non-Qualifying Shareholders (if any) for information only.

To qualify for the Rights Issue, the Shareholders must be registered as members of the Company at the close of business on the Record Date and not be a Non-Qualifying Shareholder.

In order to be registered as a member of the Company on the Record Date, Shareholders must lodge any transfer of Shares (with the relevant share certificate(s)) with the Company’s Share Registrar by 4:30 p.m. on Wednesday, 28 November 2012 so as to enable them to be registered as members of the Company on the Record Date.

Non-Qualifying Shareholders

If there are any Overseas Shareholders at the close of business on the Record Date, such Overseas Shareholders may not be eligible to take part in the Rights Issue.

In compliance with Rule 13.36(2)(a) of the Listing Rules, the Directors will make enquiries as to whether the issue of Rights Shares to the Overseas Shareholders may contravene the applicable securities legislation of the relevant overseas places or the requirements of the relevant regulatory body or stock exchange.

If, after making such enquiry, the Directors are of the opinion that it would be necessary or expedient, on account either of the legal restrictions under the laws of the relevant place or any applicable requirements of the relevant regulatory body or stock exchange in that place, not to offer the Rights Shares to such Overseas Shareholders, the Rights Issue will not be extended to such Overseas Shareholders who will become Non-Qualifying Shareholders. The results of enquiries and the basis of any exclusion of the Overseas Shareholders will be included in the circular and/or the Prospectus.

Arrangements will be made for Rights Shares which would otherwise be provisionally allotted in nil-paid form to the Non-Qualifying Shareholders to a nominee of the Company which will arrange for the sale of such nil-paid Rights Shares as soon as practicable after dealings in the nil-paid Rights Shares commence on the Stock Exchange, if a premium (net of expense) can be obtained. The nominee will thereafter account to the Company for the net proceeds of sale (after deduction of the expenses of sales). Any unsold nil-paid Rights Shares will be available for Excess Application. The net proceeds of sale of such nil-paid Rights Shares representing fractional entitlements shall be retained by the Company for its own benefit. The net proceeds of sale of such nil-paid Rights Shares which would have been provisionally allotted to the Non-Qualifying Shareholders shall be distributed by the Company to such Non-Qualifying Shareholders pro-rata to their shareholdings on the Record Date, except that individual amounts of less than HK$100 shall not be distributed but shall be retained for the benefit of the Company.

The Overseas Shareholders, so long as they are Independent Shareholders, will be entitled to vote at the SGM to consider and, if thought fit, pass the resolution in relation to the Whitewash Waiver.

The Rights Issue Documents are not intended to be registered or filed under the applicable securities laws or equivalent legislation of any jurisdiction other than Hong Kong, Bermuda and Taiwan.

Application for listing of the Rights Shares on the Stock Exchange

The Company will apply to the Listing Committee of the Stock Exchange for the listing of, and permission to deal in, the Rights Shares in both nil-paid and fully-paid forms. Save as the Company listed 74,346,000 units of TDR on the Taiwan Stock Exchange Corporation as at the date of this announcement and each unit of TDR represents two Shares, none of the securities of the Company is listed or dealt in on any other stock exchange other than the Stock Exchange and no such listing or permission to deal is proposed to be sought. Relevant documents will be filed with the Taiwan Stock Exchange Corporation and the Central Bank of the Republic of China (Taiwan) in accordance with the applicable laws and regulations of Taiwan. The Rights Issue Documents will also be filed with the Registrar of Companies in Bermuda in accordance with the Companies Act.

Subject to the grant of listing of, and permission to deal in, the Rights Shares in both nil-paid and fullypaid forms on the Stock Exchange as well as compliance with the stock admission requirements of HKSCC, the Rights Shares in both nil-paid and fully-paid forms will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the respective commencement dates of dealings in the Rights Shares in both nil-paid and fully-paid forms on the Stock Exchange or such other dates as determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the General Rules of CCASS and CCASS Operational Procedures in effect from time to time.

Notice of book closure periods

The register of members of the Company will be closed from Wednesday, 14 November 2012 to Monday, 19 November 2012 (both days inclusive) for the purpose of, among other things, determining the identity of the Shareholders entitled to attend and vote at the SGM.

The register of members of the Company will be closed from Thursday, 29 November 2012 to Wednesday, 5 December 2012 (both days inclusive) for the purpose of, among other things, determining the eligibility for the Rights Issue.

No transfer of Shares will be registered during the above book closure periods.

Qualifying Shareholders who do not take up the Rights Shares to which they are entitled should note that their shareholding in the Company will be diluted.

THE USE OF PROCEEDS AND REASONS FOR THE RIGHTS ISSUE

THE USE OF PROCEEDS

The proposed Rights Issue is intended to raise funds of approximately HK$170 million (before expenses). The net proceeds from the Rights Issue after deducting expenses are estimated to be approximately HK$165 million. The Company intends to apply the net proceeds from the Rights Issue for the following purposes:

(i) as to approximately HK$143 million for additional funding of the working capital requirements resulting from the extension of the credit terms offered to two major customers; and

(ii) as to approximately HK$22 million for the capital expenditure for the WM Business Plan.

REASONS FOR THE RIGHTS ISSUE

Business position of the Group

The Group is principally engaged in the development and manufacturing of (1) mobile handsets, (2) wireless communications modules; and (3) display modules. The Group manufactures ODM mobile handsets for branded handset providers and develops wireless communications modules for industrial applications.

Since 2011, the Group has encountered difficulties in its businesses and suffered a significant deterioration in financial performance. Based on the unaudited results of the Company for the six months ended 30 June 2012 as set out in the Company’s interim report, the Group recorded a loss attributable to Shareholders of approximately HK$58.3 million, as compared to a loss attributable to Shareholders of approximately HK$18.7 million in the corresponding period in 2011, and in the Group’s mobile handset business, the Group recorded a significant loss of approximately HK$79.6 million (before taxation) in the first half of 2012, as compared to a loss of approximately HK$18.8 million (before taxation) in the corresponding period in 2011. As set out in the annual report of the Company for the year ended 31 December 2011, the Group recorded an audited loss attributable to Shareholders of approximately HK$25.5 million, as compared to an audited profit attributable to Shareholders of approximately HK$233.3 million for the year ended 31 December 2010.

The Directors attribute the deterioration to the increasingly competitive international mobile handset industry, where handset sales are increasingly concentrated in the globally dominant brands. The increasing dominance has resulted in other branded handset providers facing difficulties in their operations as the market demand for handsets has been adversely affected by the sluggish global economy. The Group suffered as a supplier to these branded handset providers which have responded to the competition with product price reduction, delay or termination of development of new products, tightening of credit terms, and a general reduction in volume.

Given the prevailing competitive landscape, the Directors believe the handset business will take time to recover. The business strategy of the Group as regards the handset business is to continue its ongoing efforts in the research and development of mid-range to high-end handsets, including 4G LTE smart phones. The Group aims to meet the increasingly strict quality specifications and price and payment terms requirements of key customers and operators. The Group also puts emphasis on maintaining a healthy financial position to survive in the competitive environment. With strong competitive edge in the wireless communications modules business and the display modules business, the Directors are confident of achieving growth in the medium to long term.

The reasons for the Rights Issue are as follows:

(i) Extension of the credit terms of two major customers

In the past, because of prudent risk management, the Group mainly focused on small or mediumsized customers with limited credit terms. As a result, the Group did not require substantial working capital to support its daily operations.

With stiff competition in the global handset industry, small and medium-sized handset providers have suffered and consolidated to form larger groups. Coupled with the uncertainties associated with the global business environment, the Group has increased its focus to serve certain key players in the market. In its handset business, the Group has collaborated with two major customers, accounting for approximately 57.3% and 45.1% of sales generated from the handset segment and total sales of the Group for the six months ended 30 June 2012, respectively. Under such increasingly difficult business environment, the Group has agreed to provide these two major customers with longer credit periods with a view that the Group is able to secure stable sales from them. Such lengthening of the credit periods increases the anticipated working capital requirement of the Group, therefore giving rise to a need for the Group to strengthen its financial position.

(ii) The WM Business Plan

In view of the diverse application for the wireless module business, the Company plans to develop the WM Business Plan in order to benefit from this growing business opportunity.

In the short run, the implementation of the WM Business Plan may involve the establishment of sales channels, project developments for such specific industries as utilities, medical, warehouse and retailing as well as product developments including importation to Android operating system and expansion of the spectrum of industrial usages.

The Directors consider additional bank borrowings for the above capital requirements will increase the Group’s overall gearing ratio and burden the Group with increased interest expenses, thereby exposing the Group to greater financial risk. As such, the Directors are of the view that the Rights Issue is in the interest of the Group as the increase in the capital base of the Group would strengthen the financial position of the Group in the face of a challenging operating environment in the global mobile handset industry.

The Board considers that the Rights Issue will give the Qualifying Shareholders the opportunity to maintain their respective pro-rata shareholding interests in the Company and to continue to participate in the future developments of the Group. Accordingly, the Directors, excluding the independent non-executive Directors who will form their views after consulting the independent financial adviser to be appointed by the Independent Board Committee, are of the view that fund raising through the Rights Issue is in the interests of the Company and the Shareholders as a whole.

FUND-RAISING EXERCISE OF THE COMPANY DURING THE PAST TWELVE MONTHS

The Company did not conduct any rights issue, open offer or other equity fund raising exercise in the twelve months immediately preceding the date of this announcement.

UNDERWRITING ARRANGEMENTS

Underwriting Agreement

The principal terms of the Underwriting Agreement are summarised as below:

Date : 5 October 2012 Underwriter : Toman Investments Limited Number of Underwritten Shares : All Rights Shares to be issued pursuant to the Rights Issue, being not less than 852,499,500 Rights Shares but not more than 878,512,500 Rights Shares

Commission : (i) 2 per cent. of the aggregate Subscription Price in respect of a maximum of 488,121,500 Underwritten Shares in which Independent Shareholders are entitled under the Rights Issue; and
(ii) Nil for the Underwritten Shares in which the connected persons of the Company (including Info Dynasty, Simcom (BVI), Intellipower, Mr Wong Cho Tung, Ms Yeung Man Ying and the Directors) are entitled under the Rights Issue,

payable by the Company to the Underwriter in cash upon completion of the Rights Issue

The underwriting arrangement pursuant to the Underwriting Agreement constitutes a connected transaction of the Company under the Listing Rules but is exempt from the reporting, announcement and independent shareholders’ approval requirements pursuant to Rule 14A.31(3)(c) of the Listing Rules.

The payment of underwriting commission by the Company to the Underwriter constitutes a connected transaction of the Company under Chapter 14A of the Listing Rules. As the maximum underwriting commission to be paid by the Company to the Underwriter is approximately HK$1.95 million and the applicable percentage ratios (as defined in the Listing Rules) are less than 25% and the amount is less than HK$10,000,000, the payment of such underwriting commission to the Underwriter is therefore subject to the reporting and announcement requirements but is exempt from the independent shareholders’ approval requirement pursuant to Rule 14A.32 of the Listing Rules.

The underwriting commission was determined on an arm’s length basis between the Company and the Underwriter, having considered, among other things, the prevailing market condition and the commission payable in other similar transactions in the market. The Directors consider that the terms of underwriting arrangement (including the underwriting commission payable to the Underwriter) are on normal commercial terms and are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

Conditions of the Underwriting Agreement

The conditions of the Underwriting Agreement have been set out in the paragraph headed “Conditions of the Rights Issue” above.

Termination of the Underwriting Agreement

The Underwriting Agreement contains provisions granting the Underwriter, by notice in writing, the ability to terminate its obligations under the Underwriting Agreement on the occurrence of certain events. The Underwriter may terminate its commitment under the Underwriting Agreement at any time prior to the Latest Time for Termination if:

(a) there shall develop, occur, exist or come into effect:
(i) any new law or regulation or any change in existing laws or regulations or any change in the interpretation or application thereof by any court or other competent authority in Hong Kong or any other place in which any member of the Group conducts or carries on business; or
(ii) any local, national or international event or change of a political, military, financial, economic or other nature, or in the nature of any local, national or international outbreak or escalation of hostilities or armed conflict, or affecting local securities markets; or
(iii) any act of God, war, riot, public disorder, civil commotion, fire, flood, explosion, epidemic or threatened epidemic, terrorism, strike or lock-out; or

(iv) the imposition of any moratorium, suspension or material restriction on trading in securities generally on the Stock Exchange occurring due to exceptional financial circumstances; or
(v) the occurrence of any event, or series of events, beyond the control of the Underwriter;

which, in the reasonable opinion of the Underwriter:

(1) is or will or is likely to have a material adverse effect on the business or financial condition of the Group as a whole or the Rights Issue; or
(2) has or will have or is likely to have a material adverse effect on the success of the Rights Issue or the level of Rights Shares taken up; or
(3) makes it inadvisable or inexpedient for the Company to proceed with the Rights Issue; or
(b) there comes to the notice of the Underwriter:
(i) any matter or event showing any of the representations, warranties and undertakings made by the Company was, when given, untrue or misleading or as having been breached in any respect; or
(ii) any breach by any of the other parties to the Underwriting Agreement of any of their respective obligations or undertakings under the Underwriting Agreement or under the Option Undertakings,

then and in any such case the Underwriter may, upon giving notice to the Company terminate the Underwriting Agreement with immediate effect.

If the Underwriting Agreement is terminated by the Underwriter on or before the Latest Time for Termination or does not become unconditional, the Rights Issue will not proceed.

CHANGES IN SHAREHOLDING STRUCTURE

The below table shows the changes in the shareholding structure of the Company arising from the Rights Issue:

Shareholder The Underwriter and persons acting in concert with it (Notes 1 to 8) Director_(Note 9)_ Public Total	As at the date of this Announcement No. of Shares % 775,918,000 45.51 4,864,000 0.28 924,217,000 54.21 1,704,999,000 100.00	Immediately after completion of the Rights Issue assuming full acceptance by the Qualifying Shareholders under the Rights Issue and no exercise of the Vested Options on or before the Record Date No. of Shares % 1,163,877,000 45.51 7,296,000 0.28 1,386,325,500 54.21 2,557,498,500 100.00	Immediately after completion of the Rights Issue assuming no acceptance by the Qualifying Shareholders under the Rights Issue and no exercise of the Vested Options on or before the Record Date Immediately after completion of the Rights Issue assuming full acceptance by the Qualifying Shareholders under the Rights Issue and full exercise of the Vested Options (other than those Vested Options of the Directors) on or before the Record Date Immediately after completion of the Rights Issue assuming no acceptance by the Qualifying Shareholders under the Rights Issue and full exercise of the Vested Options (other than those Vested Options of the Directors) on or before the Record Date No. of Shares % No. of Shares % No. of Shares % 1,628,417,500 63.67 1,163,877,000 44.16 1,654,430,500 62.77 4,864,000 0.19 7,296,000 0.28 4,864,000 0.19 924,217,000 36.14 1,464,364,500 55.56 976,243,000 37.04 2,557,498,500 100.00 2,635,537,500 100.00 2,635,537,500 100.00	Immediately after completion of the Rights Issue assuming no acceptance by the Qualifying Shareholders under the Rights Issue and no exercise of the Vested Options on or before the Record Date Immediately after completion of the Rights Issue assuming full acceptance by the Qualifying Shareholders under the Rights Issue and full exercise of the Vested Options (other than those Vested Options of the Directors) on or before the Record Date Immediately after completion of the Rights Issue assuming no acceptance by the Qualifying Shareholders under the Rights Issue and full exercise of the Vested Options (other than those Vested Options of the Directors) on or before the Record Date No. of Shares % No. of Shares % No. of Shares % 1,628,417,500 63.67 1,163,877,000 44.16 1,654,430,500 62.77 4,864,000 0.19 7,296,000 0.28 4,864,000 0.19 924,217,000 36.14 1,464,364,500 55.56 976,243,000 37.04 2,557,498,500 100.00 2,635,537,500 100.00 2,635,537,500 100.00
				100.00

Notes:

Info Dynasty, Intellipower, Simcom (BVI), Mr Wong Cho Tung, Ms Yeung Man Ying, the spouse of Mr Wong Cho Tung, Mr Wong Sun and Mr Wong Hei, Simon (both are the sons of Mr Wong Cho Tung) are persons acting in concert with the Underwriter under the Takeovers Code.
As at the date of this announcement, the Underwriter and persons acting in concert with it were interested in a total of 775,918,000 Shares representing approximately 45.51% of the existing issued share capital of the Company.
As at the date of this announcement, Info Dynasty owned 703,675,000 Shares, representing approximately 41.27% of the issued share capital of the Company. Mr Wong Cho Tung controlled more than one-third of the voting power of Info Dynasty and he was therefore deemed to be interested in all the 703,675,000 Shares held by Info Dynasty by virtue of Part XV of the SFO.
As at the date of this announcement, Intellipower owned 48,825,000 Shares, representing approximately 2.86% of the issued share capital of the Company. Intellipower was wholly-owned by Mr Wong Cho Tung and he was therefore deemed to be interested in all the 48,825,000 Shares held by Intellipower.
As at the date of this announcement, Simcom (BVI) owned 20,000,000 Shares, representing approximately 1.17% of the issued share capital of the Company. Simcom (BVI) was wholly-owned by Mr Wong Cho Tung and he was therefore deemed to be interested in all the 20,000,000 Shares held by Simcom (BVI).
As at the date of this announcement, Mr Wong Cho Tung and Ms Yeung Man Ying jointly owned 3,098,000 Shares via CCASS, representing approximately 0.18% of the issued share capital of the Company.
As at the date of this announcement, Ms Yeung Man Ying, the spouse of Mr Wong Cho Tung, controlled more than one-third of the voting power of Info Dynasty. Ms Yeung Man Ying is therefore deemed to be interested in all the 703,675,000 Shares held by Info Dynasty by virtue of Part XV of the SFO.

As at the date of this announcement, Ms Yeung Man Ying owned 320,000 Shares via CCASS, representing approximately 0.02% of the issued share capital of the Company.
As at the date of this announcement, Mr Zhang Jianping, a Director who is not a person acting in concert with the Underwriter, owned 4,864,000 Shares via CCASS, representing approximately 0.29% of the issued share capital of the Company.

Shareholders and public investors should note that the above shareholding changes are for illustration purposes only and the actual changes in the shareholding structure of the Company upon completion of the Rights Issue are subject to various factors, including the results of acceptance of the Rights Issue. Further announcement(s) will be made by the Company in accordance with the Listing Rules following the conclusion of the SGM and the completion of the Rights Issue.

APPLICATION FOR THE WHITEWASH WAIVER

Whitewash Waiver

As at the date of this announcement, the Underwriter and persons acting in concert with it were interested in a total of 775,918,000 Shares representing approximately 45.51% of the existing issued share capital of the Company.

Pursuant to the Underwriting Agreement, the Underwriter has conditionally agreed to underwrite the balance of the Rights Shares which are not taken up by the Qualifying Shareholders on a fully underwritten basis. Assuming no acceptance by the Qualifying Shareholders under the Rights Issue and no exercise of the Vested Options on or before the Record Date, the Underwriter is therefore required to take up all the Underwritten Shares and the total shareholding of the Underwriter and persons acting in concert with it upon completion of the Rights Issue would amount to approximately 63.67% of the then issued share capital of the Company as enlarged by the allotment and issue of the Rights Shares. Accordingly, the aggregate shareholding in the Company of the Underwriter and persons acting in concert with it upon completion of the Rights Issue may be increased from approximately 45.51% to 63.67%, thereby triggering an obligation for the Underwriter and persons acting in concert with it to make an mandatory offer under Rule 26.1 of the Takeovers Code to acquire all the Shares other than those already held by or agreed to be acquired by them.

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

The Rights Issue is conditional upon the satisfaction of certain conditions as described in the section headed “Proposed Rights Issue-Conditions of the Rights Issue” in this announcement. In particular, it is subject to the approval of the Whitewash Waiver by the Independent Shareholders at the SGM, the Whitewash Waiver having been granted by the Executive, and the Underwriting Agreement having become unconditional and not having been terminated (see the section headed “Underwriting Arrangements-Termination of the Underwriting Agreement” in this announcement). Accordingly, the Rights Issue may or may not become unconditional and may or may not proceed.

INFORMATION OF THE UNDERWRITER

The Underwriter is a company incorporated in the BVI with limited liability and 25% owned by Mr Wong Sun, 25% owned by Mr Wong Hei, Simon, 25% owned by Mr Wong Cho Tung and 25% owned by Ms Yeung Man Ying. Mr Wong Cho Tung, Ms Yeung Man Ying and Mr Wong Hei, Simon are Directors. Accordingly, the Underwriter is a connected person of the Company. The Underwriter is an investment holding company not engaged in the business of underwriting. As at the date of this announcement, the Underwriter and persons acting in concert with it were beneficially interested in approximately 45.51% of the issued share capital of the Company.

As at the date of this announcement, the Underwriter or any persons acting in concert with it have not received any irrevocable commitment to vote for or against the proposed resolution approving the Whitewash Waiver at the SGM. Save for the transactions contemplated under the Underwriting Agreement, there is no arrangement (whether by way of option, indemnity or otherwise) under Note 8 to Rule 22 of the Takeovers Code in relation to the Shares entered into by the Underwriter or any persons acting in concert with it and which might be material to the Rights Issue and the Whitewash Waiver.

None of the Underwriter or parties acting in concert with it has any dealings in any securities of the Company in the six-month period preceding the date of this announcement.

As at the date of this announcement, save for the Underwriting Agreement, there is no arrangement or agreement to which the Underwriter or any persons acting in concert with it is a party which relates to the circumstances in which it may or may not invoke or seek to invoke a pre-condition or a condition to the Rights Issue (other than those listed under “Conditions of the Rights Issue”) and the Whitewash Waiver. There is no relevant securities (as defined in Note 4 to Rule 22 of the Takeovers Code) in the Company which the Underwriter or any persons acting in concert with it has borrowed or lent as at the date of this announcement.

EXPECTED TIMETABLE FOR THE RIGHTS ISSUE

The expected timetable for the Rights Issue set out below is indicative only and it has been prepared on the assumption that all the conditions of the Rights Issue will be fulfilled and/or waived (where appropriate).

All time and dates in this announcement are reference to Hong Kong local time and dates. Dates or deadlines specified in this announcement for events in the timetable below are indicative only and may be extended or varied. Any consequential changes to the anticipated timetable will be announced as and when appropriate.

Despatch of Company’s circular with notice of the SGM . . . . . . . . . . . . . . . . . . Friday, 26 October 2012 Latest time for lodging transfers of Shares in order to qualify for attendance and voting at the SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Tuesday, 13 November 2012 Register of members of the Company closes for the SGM (both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 14 November 2012 to Monday, 19 November 2012 Record date for the SGM. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 14 November 2012 Latest time for lodging proxy form for the SGM (not less than 48 hours before time of the SGM) . . . . . . . . . . . . . . . . . . . . . . . . .9:30 a.m. on Saturday, 17 November 2012 SGM . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9:30 a.m. on Monday, 19 November 2012 Announcement of results of the SGM to be published on the Stock Exchange website . . . . . . . . . . . . . . . . . . . . . . . . . Monday, 19 November 2012 Register of members of the Company reopens. . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 20 November 2012 Last day of dealings in Shares on a cum-rights basis . . . . . . . . . . . . . . . . . . . Monday, 26 November 2012 First day of dealing in Shares on an ex-rights basis . . . . . . . . . . . . . . . . . . . . Tuesday, 27 November 2012 Latest time for lodging transfer of Shares in order to qualify for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .4:30 p.m. on Wednesday, 28 November 2012

Register of members of the Company closes for the Rights Issue (both days inclusive) . . . . . . . . . . . . . . . . . . . . . . . . . Thursday, 29 November 2012 to Wednesday, 5 December 2012 Record date for the Rights Issue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Wednesday, 5 December 2012 Register of members of the Company reopens. . . . . . . . . . . . . . . . . . . . . . . . Thursday, 6 December 2012 Despatch of the Rights Issue Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .Friday, 7 December 2012 First day of dealing in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 11 December 2012 Latest time for splitting of nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . . . 4:30 p.m. on Thursday, 13 December 2012 Last day of dealings in nil-paid Rights Shares . . . . . . . . . . . . . . . . . . . . . . . Tuesday, 18 December 2012 Latest time for acceptance of and payment for Rights Shares and application and payment for excess Rights Shares. . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Friday, 21 December 2012 Underwriting Agreement becoming unconditional. . . . . . . . . . . . . . . . . . . . . . . . . 4:00 p.m. on Thursday, 27 December 2012 Announcement of results of allotment of the Rights Issue to be published on the Stock Exchange website . . . . . . . . . . . . . . . . . . . . . . .Friday, 28 December 2012 Despatch of share certificates for fully-paid Rights Shares and refund cheques . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Friday, 4 January 2013 Commencement of dealings in fully-paid Rights Shares . . . . . . . . . . . . . . . . . . . Monday, 7 January 2013

EFFECT OF BAD WEATHER ON THE LATEST ACCEPTANCE DATE

The Latest Acceptance Date will be postponed if there is:

a tropical cyclone warning signal number 8 or above; or
a “black” rainstorm warning

in force in Hong Kong at any local time between 12:00 noon and 4:00 p.m. on Friday, 21 December 2012. Instead, the Latest Acceptance Date will be rescheduled to 12:00 noon on the next Business Day which does not have either of those warnings in force at any time between 9:00 a.m. and 12:00 noon. If the Latest Acceptance Date is postponed in accordance with the foregoing, the dates mentioned in

the section headed “Expected timetable for the Rights Issue” in this announcement may be affected. An announcement will be made by the Company in such event.

LISTING RULES IMPLICATIONS

The Underwriter is 25% owned by Mr Wong Sun, 25% owned by Mr Wong Hei, Simon, 25% owned by Mr Wong Cho Tung and 25% owned by Ms Yeung Man Ying. Both Mr Wong Sun and Mr Wong Hei, Simon, a Director, are the sons of Mr Wong Cho Tung, a Director and Ms Yeung Man Ying, a Director. Accordingly, the Underwriter is a connected person of the Company and the entering into of the Underwriting Agreement between the Company and the Underwriter (including the payment of underwriting commission) constitutes a connected transaction under Chapter 14A of the Listing Rules.

Pursuant to Rule 14A.31(3)(c) of the Listing Rules, provided that Rule 7.21(2) of the Listing Rules has been complied with, the allotment and issue of the Rights Shares to the Underwriter pursuant to the Underwriting Agreement will be exempted from the reporting, announcement and independent shareholders’ approval requirements of Chapter 14A of the Listing Rules. As the Company has made arrangements to apply for the Rights Shares by the Qualifying Shareholders in excess of their entitlements under the Rights Issue as referred to in Rule 7.21(1) of the Listing Rules, Rule 7.21(2) of the Listing Rules has been complied with and the allotment and issue of the Rights Shares to the Underwriter pursuant to the Underwriting Agreement will be exempted from the reporting, announcement and independent shareholders’ approval requirements of Chapter 14A of the Listing Rules.

Pursuant to Rule 7.19(6)(a) of the Listing Rules, since the Rights Issue would increase neither the issued share capital nor the market capitalisation of the Company by more than 50%, the Rights Issue is not conditional on approval by the Shareholders.

GENERAL

The Whitewash Waiver is conditional on, among other matters, approval by the Independent Shareholders at the SGM. The resolution proposed to be voted at the SGM will be conducted by way of poll.

The Board which includes all members of the Independent Board Committee will appoint an independent financial adviser to advise the Independent Board Committee and the Independent Shareholders in this regard.

DEFINITIONS

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

“associate”	has the same meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Business Day”	any day (excluding Saturdays, Sundays and public holidays) on which
	banks are generally open for normal business in Hong Kong
“BVI”	the British Virgin Islands
“CCASS”	the Central Clearing and Settlement System established and operated by
	HKSCC
“Company”	SIM Technology Group Limited (stock code: 02000), a company
	incorporated in Bermuda with limited liability as an exempted company
	under the Companies Act and the issued Shares of which are listed on the
	Stock Exchange

“Companies Act”	the Companies Act 1981 of Bermuda, as amended from time to time
“Companies Ordinance”	Companies Ordinance (Chapter 32 of the Laws of Hong Kong)
“connected person(s)”	has the meaning ascribed thereto under the Listing Rules
“controlling shareholder”	has the meaning ascribed thereto under the Listing Rules
“Director(s)”	the director(s) of the Company
“Excess Application”	applications made by the Qualifying Shareholders in accordance with the
	terms of the Rights Issue Documents for Underwritten Shares in excess of
	Underwritten Shares provisionally allotted to them pursuant to the Rights
	Issue
“Excess Application	the form(s) of application for Rights Shares in excess of those
Form(s)”	provisionally allotted to the Qualifying Shareholders
“Executive”	the Executive Director of the Corporate Finance Division of the SFC or
	any of his delegate(s)
“Group”	the Company and its subsidiaries
“HK$”	Hong Kong dollar(s), the lawful currency of Hong Kong
“HKSCC”	Hong Kong Securities Clearing Company Limited
“Hong Kong”	the Hong Kong Special Administrative Region of the People’s Republic
	of China
“Independent Board	a committee of the Board (comprising Mr Liu Hing Hung, Mr Xie
Committee”	Linzhen and Mr Dong Yunting, all being independent non-executive
	Directors) established to advise the Independent Shareholders on the
	Whitewash Waiver
“Independent Shareholders”	Shareholders other than the Underwriter and persons acting in concert
	with it and those who are involved in or interested in the Whitewash
	Waiver and their respective associates who are required by the Listing
	Rules or the Takeovers Code to abstain from voting on the relevant
	resolution at the SGM
“Info Dynasty”	Info Dynasty Group Limited, a company incorporated in BVI with
	limited liability and 49.95% owned by Mr Wong Cho Tung, 49.95%
	owned by Ms Yeung Man Ying, 0.05% owned by Mr Wong Sun and
	0.05% owned by Mr Wong Hei, Simon, respectively, a controlling
	shareholder of the Company

“Intellipower”

Intellipower Investments Limited, a company incorporated in the BVI with limited liability and wholly-owned by Mr Wong Cho Tung

“Last Trading Day” Friday, 5 October 2012, being the last full trading day of the Shares on the Stock Exchange immediately preceding the publication of this announcement
“Latest Acceptance Date” 4:00 p.m. on Friday, 21 December 2012, the latest date upon which provisional allotments of Rights Shares in nil-paid form may be validly accepted
“Latest Time for 4:00 p.m. on Thursday, 27 December 2012 or such later time as may be Termination” agreed between the Company and the Underwriter, being the latest time by which the Underwriter may terminate the Underwriting Agreement
“Listing Rules” the Rules Governing the Listing of Securities on the Stock Exchange
“Non-Qualifying Shareholder(s) whose name(s) appear(s) on the register of members Shareholder(s)” of the Company as at the close of business on the Record Date but whose addresses as shown on such register are outside Hong Kong where the Directors, based on opinions provided by legal advisers, consider it necessary or expedient not to offer the Rights Shares to such Shareholders on account either of legal restrictions under the laws of the relevant place or the requirements of the relevant regulatory body or stock exchange in that place
“Option Undertakings” the undertakings dated 5 October 2012 from each of the Directors who held Vested Options to the Company and the Underwriter not to exercise any of their Vested Options to subscribe for Shares granted pursuant to the Share Option Schemes from the date of the undertakings up to and including the Record Date
“Overseas Shareholder(s)” Shareholders with registered addresses (as shown in the register of members of the Company on the Record Date) which are outside Hong Kong
“PRC” the People’s Republic of China
“Prospectus” the prospectus relating to the Rights Issue to be despatched to the Shareholders
“Prospectus Posting Date” Friday, 7 December 2012 (subject to, if required, the approval of the Stock Exchange) or such other date as the Underwriter may agree in writing with the Company for the despatch of the Rights Issue Documents

“Provisional Allotment	the provisional allotment letter(s) to be issued to the Qualifying
Letter(s)”	Shareholders in respect of their assured entitlements under the Rights
	Issue
“Qualifying Shareholder(s)”	Shareholder(s), other than the Non-Qualifying Shareholders, whose
	name(s) appear(s) on the register of members of the Company at the close
	of business on the Record Date
“Record Date”	Wednesday, 5 December 2012, the record date to determine entitlement
	to the Rights Issue, or such other date as may be agreed between the
	Company and the Underwriter
“Rights Issue”	the proposed issue of Rights Shares by the Company on the basis of one
	Rights Share for every two existing Shares held on the Record Date to the
	Qualifying Shareholders at the Subscription Price, pursuant to the terms
	and conditions contained and more particularly described in the Rights
	Issue Documents
“Rights Issue Documents”	the Prospectus, the Provisional Allotment Letters and the Excess
	Application Forms
“Rights Share(s)”	not less than 852,499,500 but not more than 878,512,500 Shares to be
	issued by the Company pursuant to the Rights Issue
“SFC”	the Securities and Futures Commission of Hong Kong
“SFO”	Securities and Futures Ordinance (Chapter 571 of the Laws of Hong
	Kong)
“SGM”	the special general meeting of the Company to be convened and held at
	which resolution will be proposed to consider, and, if thought fit, approve
	the Whitewash Waiver
“Share(s)”	the ordinary share(s) of HK$0.10 each in the share capital of the
	Company
“Share Options”	the outstanding options to subscribe for 83,163,500 new Shares granted
	to the Directors and employees of the Group pursuant to the Share Option
	Schemes
“Share Option Schemes”	the pre-IPO share option scheme and the post-IPO share option scheme
	both adopted by the Company on 30 May 2005
“Shareholder(s)”	the registered holder(s) of the Share(s)

“Share Registrar” the branch share registrar of the Company in Hong Kong, being Computershare Hong Kong Investor Services Limited at Shops 1712-16, 17th Floor, Hopewell Centre, 183 Queen’s Road East, Wanchai, Hong Kong
“Simcom (BVI)” Simcom Limited, a company incorporated in the BVI with limited liability and wholly-owned by Mr Wong Cho Tung
“Stock Exchange” The Stock Exchange of Hong Kong Limited “Subscription Price” the subscription price of HK$0.20 per Rights Share “substantial shareholder” has the meaning ascribed thereto under the Listing Rules “Takeovers Code” the Hong Kong Code on Takeovers and Mergers
“TDR” the Taiwan depository receipts issued by the Trust Department of Yuanta Commercial Bank Limited ( 元大商業銀行股份有限公司信託部 ) and listed on the Taiwan Stock Exchange Corporation on 25 April 2011
“Underwriter” Toman Investments Limited, a company incorporated in the BVI with limited liability and 25% owned by Mr Wong Sun, 25% owned by Mr Wong Hei, Simon, 25% owned by Mr Wong Cho Tung and 25% owned by Ms Yeung Man Ying.
“Underwriting Agreement” the underwriting agreement dated 5 October 2012 entered into between the Company and the Underwriter in relation to the Rights Issue
“Underwritten Shares” not less than 852,499,500 Rights Shares but not more than 878,512,500 Rights Shares, being all the Rights Shares to be issued pursuant to the Rights Issue
“Vested Options” 66,426,000 Share Options which are vested and exercisable on or before the Record Date, prior to the signing of the Option Undertakings
“Whitewash Waiver” a waiver from the Executive pursuant to Note 1 on dispensations from Rule 26 of the Takeovers Code in respect of the Underwriter’s obligation to make a mandatory offer under Rule 26.1 of the Takeovers Code for all the securities of the Company not already owned or agreed to be acquired by the Underwriter and persons acting in concert with it as a result of its underwriting obligations under the Underwriting Agreement

“WM Business Plan”

the wireless module business plan of the Group

“%”

per cent.

By order of the Board SIM Technology Group Limited Wong Cho Tung Director

Hong Kong, 5 October 2012

The Directors jointly and severally accept full responsibility for the accuracy of the information contained in this announcement (other than those in relation to the Underwriter) and confirm, having made all reasonable enquiries, that to the best of their knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement the omission of which would make any statement in this announcement misleading.

The director of the Underwriter accepts full responsibility for the accuracy of the information contained in this announcement (other than those in relation to the Group) and confirms, having made all reasonable enquiries, that to the best of his knowledge, opinions expressed in this announcement have been arrived at after due and careful consideration and there are no other facts not contained in this announcement the omission of which would make any statement in this announcement misleading.

As at the date of this announcement, the executive directors of the Company are Ms Yeung Man Ying, Mr Wong Cho Tung, Mr Wong Hei, Simon, Mr Zhang Jianping, Ms Tang Rongrong and Mr Chan Tat Wing, Richard, and the independent non-executive directors of the Company are Mr Liu Hing Hung, Mr Xie Linzhen and Mr Dong Yunting.

For identification purposes only

AI assistant

SIM Technology Group Limited — Capital/Financing Update 2012

50331_rns_2012-10-05_3747b26f-121f-4708-8053-579b33a67c49.pdf

CONNECTED TRANSACTION

AND

APPLICATION FOR THE WHITEWASH WAIVER

Financial adviser to the Company

(1) PROPOSED RIGHTS ISSUE

(2) CONNECTED TRANSACTION IN RESPECT OF UNDERWRITING COMMISSION

(3) APPLICATION FOR THE WHITEWASH WAIVER

GENERAL

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

PROPOSED RIGHTS ISSUE

Subscription Price

Conditions of the Rights Issue

Fractions of the Rights Issue

Status of the Rights Shares

Application for excess Rights Shares

Share certificate and refund cheques for the Rights Issue

Share Option Schemes

Qualifying Shareholders

Non-Qualifying Shareholders

Application for listing of the Rights Shares on the Stock Exchange

Notice of book closure periods

Qualifying Shareholders who do not take up the Rights Shares to which they are entitled should note that their shareholding in the Company will be diluted.

THE USE OF PROCEEDS AND REASONS FOR THE RIGHTS ISSUE

THE USE OF PROCEEDS

REASONS FOR THE RIGHTS ISSUE

Business position of the Group

(i) Extension of the credit terms of two major customers

(ii) The WM Business Plan

FUND-RAISING EXERCISE OF THE COMPANY DURING THE PAST TWELVE MONTHS

UNDERWRITING ARRANGEMENTS

Underwriting Agreement

Conditions of the Underwriting Agreement

Termination of the Underwriting Agreement

CHANGES IN SHAREHOLDING STRUCTURE

APPLICATION FOR THE WHITEWASH WAIVER

Whitewash Waiver

WARNING OF THE RISKS OF DEALING IN THE SHARES AND NIL-PAID RIGHTS SHARES

INFORMATION OF THE UNDERWRITER

EXPECTED TIMETABLE FOR THE RIGHTS ISSUE

EFFECT OF BAD WEATHER ON THE LATEST ACCEPTANCE DATE

LISTING RULES IMPLICATIONS

GENERAL

DEFINITIONS

By order of the Board SIM Technology Group Limited Wong Cho Tung Director

Hong Kong, 5 October 2012

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