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.

SIM TECHNOLOGY GROUP LIMITED 晨訊科技集團有限公司 *

(Incorporated in Bermuda with limited liability) (Stock code: 2000)

MAJOR AND CONNECTED TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

Financial Adviser to the Company

SALE AND PURCHASE AGREEMENT

On 22 September 2017 (after trading hours), the Company, Simcom International, Queclink Wireless, Richjoy and the Target Companies entered into the Sale and Purchase Agreement under which Simcom International has conditionally agreed to sell, and each of Queclink Wireless and Richjoy has conditionally agreed to purchase, 67% and 33% of the equity interest of Simcom Wireless, respectively, for RMB438 million (equivalent to approximately HK$525.6 million).

Under the Sale and Purchase Agreement, the Company has conditionally agreed to procure that the IP Assets (being certain patents owned by Shanghai Simcom and Shanghai Sunrise and three trademarks owned by Shanghai Simcom) shall be transferred to Simcom Wireless before Completion for RMB90 million (equivalent to approximately HK$108.0 million).

CONTINUING CONNECTED TRANSACTIONS

Supply Contract

Under the Supply Contract, Simcom Electronic and Queclink Wireless are to appoint Shenyang SIM to procure parts and materials for the manufacture of wireless communication modules, and Shenyang SIM (or other members of the Group) to manufacture wireless communication modules for, and sell them to, Simcom Electronic for a term of three years from the effective date of the Supply Contract.

Tenancy Agreement

Under the Tenancy Agreement, Shanghai SIM Technology (as landlord) and Simcom Electronic (as tenant) agree to the leasing of the properties comprising 6/F and a portion of 7/F, Building B, SIM Technology Building, No. 633 Jinzhong Road, Changning District, Shanghai, the PRC ( 中國上海市長寧區金鐘路 633 號 B 樓第六層整層及第七層部分 ) for office use for a term from 1 January 2018 to 31 December 2020.

LISTING RULE IMPLICATIONS

Sale and Purchase Agreement

As the percentage ratio(s) under the Listing Rules in respect of the transactions contemplated under the Sale and Purchase Agreement (including the IP Transfer) exceed 25% but are less than 75%, the entering into of the Sale and Purchase Agreement constitutes a major transaction for the Company under the Listing Rules. Therefore, the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer) are subject to the reporting, announcement and Shareholders’ approval requirements under Chapter 14 of the Listing Rules.

In addition, since Richjoy is wholly-owned by Mr Simon Wong who is one of the sons of Mr Wong Cho Tung and Ms Yeung Man Ying (both are executive Directors and the controlling shareholders of the Company), Mr Simon Wong is an associate of Mr Wong Cho Tung and Ms Yeung Man Ying (both are connected persons of the Company) by virtue of Rule 14A.12(2)(a) of the Listing Rules and Richjoy is an associate of Mr Wong Cho Tung and Ms Yeung Man Ying (both are connected persons of the Company) by virtue of Rule 14A.12(2)(b) of the Listing Rules. Accordingly, the entering into of the Sale and Purchase Agreement (including the IP Transfer) constitutes a connected transaction for the Company under the Listing Rules. Therefore, the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer) are subject to the reporting, announcement and Independent Shareholders’ approval requirements under Chapter 14A of the Listing Rules.

Supply Contract and Tenancy Agreement

The applicable percentage ratio(s) under the Listing Rules in respect of the Supply Contract are more than 5%. The Supply Contract is subject to the reporting, announcement, annual review and Independent Shareholders’ approval requirements under the Listing Rules. Particulars of the Supply Contract will be disclosed in the Company’s circular to be despatched to Shareholders in connection with the Sale and Purchase Agreement, and in the annual reports of the Company in accordance with the requirements under the Listing Rules.

The applicable percentage ratio(s) under the Listing Rules in respect of the Tenancy Agreement are more than 0.1% but are less than 5%. The Tenancy Agreement is only subject to the reporting, announcement and annual review requirements under the Listing Rules but is exempted from the Independent Shareholders’ approval requirements under the Listing Rules. Particulars of the Tenancy Agreement will be disclosed in the annual reports of the Company in accordance with the requirements under the Listing Rules.

SGM AND CIRCULAR

VBG Capital Limited has been appointed as the independent financial adviser to advise the Independent Board Committee and the Independent Shareholders regarding, among other things, the terms of the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer, the Supply Contract and the Annual Cap Amounts for the Supply Contract).

A circular containing, among other things, (1) details of the Sale and Purchase Agreement; (2) the recommendation from the Independent Board Committee to the Independent Shareholders in respect of the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer, the Supply Contract and the Annual Cap Amounts for the Supply Contract); (3) the letter of advice from the independent financial adviser to the Independent Board Committee and the Independent Shareholders; and (4) the notice of SGM, is expected to be despatched to the Shareholders in accordance with requirements under the Listing Rules. As the Company expects that it will require more time to collect and collate the information to be included in the circular, it is currently expected that the circular will be despatched to the Shareholders on or before 24 November 2017.

Shareholders and potential investors should note that the Completion is subject to the satisfaction of the conditions precedent set out in the Sale and Purchase Agreement. Therefore, the Completion may or may not proceed. Shareholders and potential investors are advised to exercise caution when dealing in the securities of the Company, and are recommended to consult their professional advisers if they are in any doubt about their position and as to actions that they should take

1 THE SALE AND PURCHASE AGREEMENT

1.1 Principal terms of the Sale and Purchase Agreement

The principal terms of the Sale and Purchase Agreement are set out below:

Date:

22 September 2017

Parties:

(1) the Company
(2) Simcom International (as seller)
(3) Queclink Wireless (as buyer)
(4) Richjoy (as buyer)
(5) Target Companies

Assets to be disposed of and consideration:

Simcom International has conditionally agreed to to sell, and each of Queclink Wireless and Richjoy has conditionally agreed to purchase, 67% and 33% of the equity interest of Simcom Wireless, respectively. Before Completion, all the equity interest in Simcom Electronic will be transferred by Simcom International to Simcom Wireless so that Queclink Wireless and Richjoy can acquire the Target Companies through the acquisition and holding of the direct interest in a single entity, being Simcom Wireless.

Under the Sale and Purchase Agreement, the Company has conditionally agreed to procure that certain patents owned by Shanghai Simcom and Shanghai Sunrise and three trademarks owned by Shanghai Simcom shall be transferred to Simcom Wireless before Completion.

The total Consideration is RMB528 million (equivalent to approximately HK$633.6 million).

The Share Consideration is RMB438 million (equivalent to approximately HK$525.6 million) which was determined after an arm’s length negotiation with reference to, among other things, (1) the net asset value of the Target Companies as at 30 June 2017; (2) the purchase price of the Wireless Communication Modules Business to be disposed of under the technology assignment contract and the asset purchase agreement as referred to in the Company’s circular dated 28 February 2017; and (3) the current operations and business prospects of the Wireless Communication Modules Business. Of the Share Consideration, RMB293.46 million (equivalent to approximately HK$352.2 million) is payable by Queclink Wireless and RMB144.54 million (equivalent to approximately HK$173.4 million) is payable by Richjoy.

The parties agree that (1) 10% of the Share Consideration shall be payable within 10 days after the effective date of the Sale and Purchase Agreement; (2) 57% of the Share Consideration shall be payable within 10 days after the Completion Date; and (3) 33% of the Share Consideration shall be payable on or before the last working day of the 12th month after the Completion Date.

The Intellectual Property Consideration is RMB90 million (equivalent to approximately HK$108.0 million) which was determined after an arm’s length negotiation with reference to the valuation of the IP Assets prepared by the Company’s valuer as at 31 August 2017.

The parties agree that the Intellectual Property Consideration shall be payable in cash within 7 days after the acceptance of the registration of the transfer of the trademarks under the IP Assets and the completion of the transfer of the patents under the IP Assets by the relevant PRC authorities by Simcom Wireless to Shanghai Simcom and Shanghai Sunrise.

Effective date and conditions:

The effectiveness of the Sale and Purchase Agreement is subject to the satisfaction of the following conditions by 31 January 2018 (or on such other date as agreed by the parties):

(1) the obtaining of all the internal approvals of the Transaction by Queclink Wireless (including approvals by its board of directors and shareholders);
(2) the obtaining of all the internal approvals of the Transaction by Richjoy (including approvals by its board of directors and shareholders);
(3) the obtaining of all the internal approvals of the Transaction by Simcom International (including approvals by its board of directors and shareholders);
(4) the obtaining of all the internal approvals of the Transaction by the Company (including approvals by its board of directors and shareholders);
(5) the obtaining of the approvals of the Transaction by the shareholders of the Target Companies;
(6) the obtaining of the approvals of the Transaction by, or the making of the necessary filings with, the relevant PRC authorities;
(7) the Shenzhen Stock Exchange having no objections to the Transaction; and
(8) the obtaining of the approval of the Transaction by the Stock Exchange.

If the conditions precedent to the effectiveness of the Sale and Purchase Agreement are not satisfied on or before 31 January 2018 (or such other date as the parties may agree), the Sale and Purchase Agreement shall be null and of no further effect, save for any antecedent breaches.

Completion:

Completion shall take place on a day to be agreed by the parties which is within 30 days after the provision of sufficient information by Queclink Wireless and Richjoy and the satisfaction of the following conditions:

(1) the satisfaction of the conditions for the Sale and Purchase Agreement becoming effective as mentioned above;
(2) the Sale and Purchase Agreement not having been terminated under its terms;
(3) Simcom Electronic having been transferred to Simcom Wireless and the registration of the transfer with the relevant PRC Administration for Industry and Commerce having been completed;
(4) the execution of the agreement for the transfer of the patents and three trademarks subject to the Sale and Purchase Agreement and the completion of the transfer or, if the transfer has yet to be completed, the acknowledgement of the acceptance of the transfer applications by the relevant PRC governmental authorities and, under such circumstances, a licence shall be granted to the Target Companies for use of such patents pending completion of the transfer, and the Intellectual Property Consideration has been paid by Simcom Wireless;
(5) the execution of the employment contracts for a term of not less than three years after the Completion Date by certain key employees of the Target Companies; and
(6) the execution of the Supply Contract and the Supply Contract becoming effective.

Non-competition:

Each of the Company and Simcom International undertakes that, for a period of five years after the Completion Date, it shall not, and shall procure that its affiliates shall not, engage in any form and manner in the sale business of the 2G, 3G, 4G wireless communication modules and GNSS modules, nor invest directly or indirectly in any entity which competes directly or indirectly with the sale business of such modules, nor solicit the employment of the key employees of the Target Companies.

Other terms:

Under the Sale and Purchase Agreement, the Group is responsible for the loss (if any) of the parts and materials relating to wireless communication modules held by the Group (including Simcom Electronic) on or before the date of the Sale and Purchase Agreement and those parts and materials ordered on or before the date of the Sale and Purchase Agreement but yet to be delivered on the date of the Sale and Purchase Agreement.

In addition, under the Sale and Purchase Agreement, if the parts and materials relating to wireless communication modules, the related semi-finished products and the related finished products remain unconsumed on the Completion Date, the Group (or its designated third parties) shall purchase from Simcom Electronic such unutilised parts and materials, semi-finished products and finished products at their book value. The aggregate amount for the purchase of such unutilised parts and materials, semi-finished products and finished products is expected to be not more than RMB40 million (equivalent to approximately HK$48 million) and, the payment for the amount (if any) which exceeds RMB40 million shall be subject to compliance with the requirements of the Listing Rules.

1.2 Effect of the transactions

After Completion, the Target Companies will cease to be subsidiaries of the Company, and their financial results, assets and liabilities will no longer be included in the consolidated financial statements of the Group.

It is estimated that the Group will record an unaudited net gain before taxation of approximately RMB346.0 million (equivalent to approximately HK$415.2 million) from the transactions contemplated under the Sale and Purchase Agreement (including the IP Transfer), which is calculated with reference to the gross proceeds from the Consideration to be payable to the Group less the unaudited net asset value of the Target Companies as at 30 June 2017 together with the costs related to the transactions contemplated under the Sale and Purchase Agreement (including the IP Transfer). However, the Group may incur other costs in connection with the transactions contemplated under the Sale and Purchase Agreement (including the IP Transfer) which have not been included in the calculation of the unaudited net gain before taxation, including but not limited to loss from unused parts and materials, semi-finished products and finished products as a result of the Transaction, staff layoff cost and net profit of the Target Companies after 30 June 2017 to Completion Date which belongs to Queclink Wireless and Richjoy. The actual gain or loss as a result of the transactions contemplated under the Sale and Purchase Agreement (including the IP Transfer) to be recorded by the Group is subject to the final audit to be performed by its auditors.

1.3 Use of proceeds

Based on the total Consideration, the Company intends to apply the net proceeds of approximately RMB479.7 million (equivalent to approximately HK$575.6 million) for the following purposes:

(1) approximately 35% of the net proceeds (approximately HK$201.5 million) for the purchase of the land for the Group’s operations centre in Dongguan, the PRC and the construction of the operations centre, which is expected to (a) house the research and development team, production facilities, logistics facilities, warehouses and sales force of the Group, and (b) enable the Group to excel its growth by utilizing the strengths of lower costs and locations of supplies chains in Dongguan, the PRC;

(2) approximately 20% of the net proceeds (approximately HK$115.1 million) for upgrading the production facilities of the Group in Shanghai and the above operations centre and development of an automated intelligent 3D-warehouse; further implementation of the digitization, networking and intelligent processes by Industry 4.0; enhancing the competiveness of the high-end handsets ODM (original design manufacturing) and EMS (electronic manufacturing services) businesses; and
(3) approximately 45% of the net proceeds (approximately HK$259.0 million) for the payment of a special interim dividend (subject to Completion) and for general working capital. It is expected that approximately 35% of the actual net gain from the transactions contemplated under the Sale and Purchase Agreement will be used for the payment of a special interim dividend and the balance will be used for general working capital. Further details of the amount of the special interim dividend and the record date of the entitlements will be announced by the Company after Completion.

2 INFORMATION ON THE PARTIES

2.1 The Group

The Group is principally engaged in the PRC in (1) the design and OEM (original equipment manufacturer) of handsets and intelligent terminals; (2) the design and development, manufacturing and sale of the Group’s SIMCom-branded wireless communication modules; (3) intelligent manufacturing business; (4) internet of things business; and (5) property development in a small scale.

2.2 Queclink Wireless

Queclink Wireless is a company incorporated in the PRC whose shares are listed on the Shenzhen Stock Exchange. Queclink Wireless belongs to the IoT (Internet of Things) industry, whose primary businesses at present are research and development, and sales of embedded wireless M2M terminal devices. Its major products are classified into three categories, which are communication devices for vehicle, asset and person tracking. Queclink Wireless’ M2M terminal devices are either embedded into fleet vehicles, assets or taken with natural persons in order to collect related data information, and via communication networks they deliver the data information to M2M servers.

To the best knowledge, information and belief of the Directors, and having made all reasonable enquiries, Queclink Wireless and its ultimate beneficial owners are Independent Third Parties and are not connected persons of the Company.

2.3 Richjoy

Richjoy is a company incorporated in Hong Kong with limited liability and is wholly-owned by Mr Simon Wong. Richjoy’s principal business is investment holding.

3 INFORMATION ON THE TARGET COMPANIES

Set out below is the unaudited financial statements of Simcom Wireless prepared in accordance with International Financial Reporting Standards for each of the two financial years ended 31 December 2015 and 2016:

	For the year ended	For the year ended
		31 December
	2016	2015
	(HK$’000)	(HK$’000)
	(Unaudited)	(Unaudited)
Net profit before tax	23,036	36,123
Net profit after tax	23,036	36,123
	As	at 31 December
	2016	2015
	(HK$’000)	(HK$’000)
	(Unaudited)	(Unaudited)
Net asset value	146,698	130,726

Set out below is the unaudited financial statements of Simcom Electronic prepared in accordance with International Financial Reporting Standards for each of the two financial years ended 31 December 2015 and 2016:

	For the year ended	For the year ended
	31	December
	2016	2015
	(HK$’000)	(HK$’000)
	(Unaudited)	(Unaudited)
Net loss before tax	1,019	2,565
Net loss after tax	1,019	2,565

	As at	31 December
	2016	2015
	(HK$’000)	(HK$’000)
	(Unaudited)	(Unaudited)
Net asset value	1,357	2,461
As at 30 June 2017, the aggregate unaudited net asset value of the Target Companies amounted to
approximately HK$154.6 million.

The segmental results of the Wireless Communication Modules Business for the two years ended 31 December 2016 as extracted from the annual report of the Group for the year ended 31 December 2016 are as follows:

	For the	For the
	year ended	year ended
	31 December	31 December
	2016	2015
	HK$’000	HK$’000
Segment revenue	815,016	638,847
Segment profit	63,974	58,567

As at 30 June 2017, although the aggregate unaudited net book value of the IP Assets amounted to nil, the expenses incurred in connection with the research and development of the IP Assets have been capitalised on the financial statements of the Group.

The value of the IP Assets as assessed by the valuer appointed by the Company as at 31 August 2017 was approximately RMB89.6 million (equivalent to approximately HK$107.52 million).

Simcom Wireless is an indirect wholly-owned subsidiary of the Company and its principal business is the design and research and development of wireless communication modules.

Simcom Electronic is an indirect wholly-owned subsidiary of the Company and its principal business is the procurement, warehousing, logistics and sale of wireless communication modules and related parts.

4 REASONS FOR AND BENEFITS OF THE TRANSACTIONS

In the past five years, following the change in trends, the Group has been committed to shift from the manufacturing industry to the information technology services industry and transform itself from a product-oriented manufacturer to a service-oriented service provider.

Since the Wireless Communication Modules Business involves research and development, procurement, production, and sales and marketing of the Group’s own-branded products and related parts and materials, the Group intends to continue to focus on its strengths in research and development, procurement and production. It is expected that, after the Completion, the scale of the Wireless Communication Modules Business will remain similar but the nature will change to a service-oriented provider (that is, from sales and marketing and the provision of other services to research and development, procurement and production) by providing EMS (electronic manufacturing services).

Having considered the reasons for and benefits of the Transaction as mentioned above, the Board (including the independent non-executive Directors, whose views will be provided after taking into account the opinion and advice from the independent financial adviser of the Company) is of the view that the terms of the Sale and Purchase Agreement (including the Consideration and the Amount for the Loss of the Goods) and the transactions contemplated under it (including the IP Transfer) are on normal commercial terms and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

5 CONTINUING CONNECTED TRANSACTIONS

On 22 September 2017 (after trading hours), Shenyang SIM entered into the Supply Contract with Simcon Electronic and Queclink Wireless which will be a continuing connected transaction for the Company under the Listing Rules, and Shanghai SIM Technology entered into the Tenancy Agreement with Simcom Electronic which will be a continuing connected transaction for the Company under the Listing Rules.

5.1 Supply Contract

5.1.1 Principal terms

The effectiveness of the Supply Contract is subject to approval by the Independent Shareholders. The principal terms of the Supply Contract are set out below:

Parties : Shenyang SIM (as supplier) Simcom Electronic (as customer) Queclink Wireless
Subject matter : Simcom Electronic and Queclink Wireless are to appoint Shenyang SIM to procure parts and materials for the manufacture of wireless communication modules, and Shenyang SIM (or other members of the Group) to manufacture wireless communication modules for, and sell them to, Simcom Electronic at the selling prices.
Term : three years from the effective date of the Supply Contract

Price and pricing policy

: The selling prices (DAP delivery at place) of wireless communication modules are based on the following formula (the “ Pricing Formula ”):

Selling prices = ((costs of parts and materials x 1.003) + production costs) x 1.05 + royalty

Where:

(1) Costs of parts and materials are based on the market prices using openBoM (a bill of materials (BoM) setting out the models of all the parts and materials required and their prices);
(2) 1.003 represents that parts and materials during the manufacturing process are damaged at the rate of 0.3%;
(3) Production costs include the depreciation of machines, equipment and manufacturing facilities, labour costs, utilities costs, and auxiliary material costs but exclude molds, clamps, non-standard instruments and equipment, packaging costs, transportation fees, aftersale service costs, and custom taxes;
(4) 1.05 represents electronic manufacturing services (EMS) at the gross profit margin of 5% which includes net profit from EMS, operation management costs, domestic warehouse and logistics costs, costs of capital, and after-sale service costs but excludes custom inspection and taxes and overseas transportation and insurance premium;
(5) Royalty: the fee is to be paid by Simcom Electronic to Shenyang SIM (or other member of the Group) first which will then pay to the owner(s) of the royalty or Simcom Electronic is to pay such fee directly to the owner(s) of the royalty.

Placing ordering : Not less than 45 days

Minimum amount per : 5,000 units or not less than RMB0.5 million order or per type of product

: Delivery upon payment or subject to the terms of the relevant order

Payment term

5.1.2 Parts and materials under the Supply Contract

Under the Supply Contract, where Queclink Wireless has confirmed the procurement plan, if the parts and materials relating to wireless communication modules ordered by the Group (other than the Target Companies) during the period between the day after the date of the Sale and Purchase Agreement and Completion Date (inclusive of the Completion Date) remain unconsumed within 12 months after the date of the Supply Contract, Simcom Electronic and Queclink Wireless shall be responsible for the loss of such unutilised parts and materials which is determined by reference to the original costs.

In addition, under the Supply Contract, Simcom Electronic and Queclink Wireless shall be responsible for the loss (if any) of any parts and materials relating to wireless communication modules of the Group which are ordered for Simcom Electronic after Completion and remain unutilized, and shall settle the loss within six months which is determined by reference to the original costs.

5.1.3 Annual cap

The amount payable to Shenyang SIM (or other members of the Group) under the Supply Contract (including the Amount for the Loss of the Unutilised Parts paid in the relevant financial year but, for the avoidance of doubt, excluding the Amount for the Loss of the Goods) is subject to the following annual caps:

	Annual Cap Amounts
Period	for the Supply Contract
	RMB’000
From 1 January 2018 to 31 December 2018	1,100,000
From 1 January 2019 to 31 December 2019	1,300,000
From 1 January 2020 to 31 December 2020	1,500,000

In determining the amount payable under the Supply Contract and the Annual Cap Amounts for the Supply Contract, the Company has taken into account the historical amount of equivalent portion of sales income would have received (the “ Equivalent Sales Income ”) by the Group. Equivalent Sales Income is derived by applying the Pricing Formula to the historical costs of parts and materials, production costs and royalty in each of the respective financial year/period. The amounts of the Equivalent Sales Income paid to the Group during the following years/period are:

				For the six
				months ended
		For the year	ended	30 June
	2014	2015	2016	2017
	RMB’000	RMB’000	RMB’000	RMB’000
Equivalent Sales Income	360,654	433,856	596,447	519,335

5.1.4 Reasons for the Supply Contract

The Board considers that (a) the Supply Contract will enable the Group to continue to utilize its existing production capacity and avoid its production capacity from being idled; (b) the provision of EMS (electronic manufacturing services) will bring revenue and profit to the Group; (c) through the provision of EMS, the Group will be able to maintain purchase volume with its suppliers under a number of purchase contracts with suppliers for parts and materials of wireless communication modules and, therefore, strengthen its bargaining power when the Group negotiates purchases of parts and materials for the Group’s other businesses.

5.2 Tenancy Agreement

5.2.1 Principal terms

The principal terms of the Tenancy Agreement are set out below:

Parties	:	Shanghai SIM Technology (as landlord)
		Simcom Electronic (as tenant)
Properties being leased	:	6/F and a portion of 7/F, Building B, SIM
		Technology Building, No. 633 Jinzhong Road,
		Changning District, Shanghai, the PRC（中國上海市
		長寧區金鐘路633號B樓第六層整層及第七層部分）
Area and use	:	2,770.65 sq.m. in total for office use
Tenancy term	:	Effective from 1 January 2018 to 31 December 2020
Rental	:	RMB4.3 per sq.m. per day and the annual rental is
		calculated based on 365 days a year
		Annual rental (exclusive of management fee and other
		utilities charges) is about RMB4,348,535.18 (equivalent
		to approximately HK$5,218,242.22)
Rental deposit	:	RMB1,087,133.79, being three months’ rental
Management fee deposit	:	RMB207,798.75, being three months’ management
		fee which is calculated based on RMB25 per sq.m. per
		month
Termination	:	If the tenant is to early terminate the Tenancy
		Agreement, it has to pay a sum representing
		three times the amount of the monthly rental. If
		the landlord is to early terminate the Tenancy
		Agreement, it has to pay a sum representing the
		rental deposit.
Rent free period	:	Nil

Other terms

: Not more than 33 car park units will be available to the employees of the Target Companies. The monthly rental per car park unit is RMB400 which is the same as the amount of rental of car park units for other users in the same building. The rental for the car park unit is to be paid by the relevant employees of the Target Companies and is not to be paid or reimbursed by the Target Companies.
5.2.2 Annual cap

The amount of the annual rental under the Tenancy Agreement is subject to the following annual caps:

Period	Annual Cap
	RMB
From 1 January 2018 to 31 December 2018	4,348,536
From 1 January 2019 to 31 December 2019	4,348,536
From 1 January 2020 to 31 December 2020	4,348,536

In determining the rental and the annual cap, the Company has taken into account the rental of the properties in the same building and the next building leased by the landlord to third party tenants.

5.2.3 Reasons for the Tenancy Agreement

The Board considers that the leasing of the Properties under the Tenancy Agreement will provide rental income which is comparable to rental income receivable had the Properties be leased to other third parties and that the Group has to find a replacement tenant if the Group does not continue to lease the Properties to Simcom Electronic.

6 IMPLICATIONS UNDER THE LISTING RULES

For the reasons set out above, Simcom Wireless will become a connected person of the Company upon Completion. Therefore, the Supply Contract and the Tenancy Agreement will become continuing connected transactions of the Company under the Listing Rules. Depending on when the Completion will take place, the amount payable under the Supply Contract and the amount of rental payable under the Tenancy Agreement from the actual date of Completion, in each case, will be used to determine whether the amount paid has exceeded the relevant annual cap for the Supply Contract and the Tenancy Agreement, respectively.

The Board (including the independent non-executive Directors, whose views will be provided after taking into account the opinion and advice from the independent financial adviser of the Company) considers that the terms of the Supply Contract (including the Annual Cap Amounts for the Supply Contract) are on normal commercial terms and are fair and reasonable, and in the interests of the Company and its Shareholders as a whole.

The Directors (including the independent non-executive Directors) consider that the terms of the Tenancy Agreement (including the annual cap amounts for the Tenancy Agreement) are on normal commercial terms and are fair and reasonable, and in the interest of the Company and its Shareholders as a whole.

Richjoy is an associate of Mr Wong Cho Tung and Ms Yeung Man Ying, and Richjoy has a material interest in the Transaction. Each of Mr Wong Cho Tung and Ms Yeung Man Ying has abstained from voting on the Board resolutions considering and approving the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer, the Supply Contract and the Tenancy Agreement). Save as disclosed above, no other Directors abstained from voting on the Board resolutions considering and approving the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer, the Supply Contract and the Tenancy Agreement).

7 THE SGM AND DESPATCH OF THE CIRCULAR

The Directors shall seek the approval of the Independent Shareholders on the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer, the Supply Contract and the Annual Cap Amounts for the Supply Contract) at the SGM. The Company is to assess whether or not, for the reason mentioned above, each of Mr Wong Cho Tung, Ms Yeung Man Ying, Info Dynasty, Intellipower and Simcom (BVI) will have to abstain from voting on the resolution(s) approving the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer, the Supply Contract and the Annual Cap Amounts for the Supply Contract) at the SGM in accordance with Rule 14A.36 of the Listing Rules and will consider

whether or not a submission will be made to the Stock Exchange on this issue. The outcome of the discussion with the Stock Exchange (if any) will be disclosed in the Company’s circular. Any vote exercised by the Independent Shareholders at the SGM shall be taken by poll.

8 DEFINITIONS

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

“Amount for the Loss of the the estimated maximum amount for the loss of the parts and Goods” materials relating to wireless communication modules, the related semi-finished products and the related finished products remain unconsumed before Completion as referred to in paragraph headed “Other terms” in paragraph 1.1 of this announcement
“Amount for the Loss of the the amount of the loss of the parts and materials relating to wireless Unutilised Parts” communication modules remain unutilised as referred to in paragraph 5.1.2 of this announcement
“Annual Cap Amounts for the the annual cap amounts for the Supply Contract as referred to in Supply Contract” paragraph 5.1.3 of this announcement
“associate(s)” has the meaning ascribed to it under the Listing Rules “Board” the board of Directors “BVI” the British Virgin Islands “Company” SIM Technology Group Limited ( 晨訊科技集團有限公司 *), a company incorporated in Bermuda with limited liability, the Shares of which are listed on the Main Board of the Stock Exchange
“Completion” completion of the sale and purchase of the Target Companies under the Sale and Purchase Agreement
“Completion Date” the date of approval and registration of the transfer of the Target Companies as contemplated under the Sale and Purchase Agreement by the PRC Administration for Industry and Commerce

“connected persons” has the meaning ascribed to it under the Listing Rules “Consideration” the Share Consideration and the Intellectual Property Consideration “controlling shareholders” has the meaning ascribed to it under the Listing Rules “Directors” the directors of the Company “Financial Adviser” CIMB Securities Limited, a corporation licensed to conduct type 1 (dealing in securities), type 4 (advising on securities), and type 6 (advising on corporate finance) regulated activities under the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)
“Group” the Company and its subsidiaries from time to time “HK$” Hong Kong dollar(s), the lawful currency of Hong Kong “Hong Kong” the Hong Kong Special Administrative Region of the PRC “Independent Board the Board committee comprising all the independent non-executive Committee” Directors, namely, Mr Liu Hing Hung, Mr Wang Tianmiao and Mr Wu Zhe, which has been established by the Board for the purpose of advising the Independent Shareholders in relation to the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer, the Supply Contract and the Annual Cap Amounts for the Supply Contract)
“Independent Shareholders”
Shareholders other than Shareholders who have a material interest in the Sale and Purchase Agreement and the transactions contemplated under it (including the IP Transfer, the Supply Contract and the Annual Cap Amounts for the Supply Contract)
“Independent Third Party/ Paries”
a person or persons who is or are independent of, and not connected with, any directors, chief executive or substantial shareholders (within the meaning under the Listing Rules) of the Company or any of its subsidiaries or any of their respective associate(s) (within the meaning under the Listing Rules)
“Info Dynasty”
Info Dynasty Limited, a company incorporated in the BVI and more than one-third of the voting power of Info Dynasty is controlled by Mr Wong Cho Tung and more than one-third of the voting power of Info Dynasty is controlled by Ms Yeung Man Ying
“Intellectual Property the consideration for the transfer of the patents and three Consideration” trademarks under the Sale and Purchase Agreement

“Intellipower”	Intellipower Investments Limited, a company incorporated in the
	BVI and is 25% owned by each of Mr Wong Cho Tung, Ms Yeung
	Man Ying and their two sons including Mr Simon Wong
“IP Assets”	the patents and three trademarks to be transferred under the Sale
	and Purchase Agreement
“IP Transfer”	the transfer of the IP Assets as contemplated under the Sale and
	Purchase Agreement
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“Mr Simon Wong”	Mr Wong Hei, Simon, one of the sons of Mr Wong Cho Tung and
	Ms Yeung Man Ying
“percentage ratio”	has the meaning ascribed to it under the Listing Rules
“PRC”	the People’s Republic of China
“Properties”	6/F and a portion of 7/F, Building B, SIM Technology Building,
	No. 633 Jinzhong Road, Changning District, Shanghai, the PRC (中
	國上海市長寧區金鐘路633號B樓第六層整層及第七層部分)
“Queclink Wireless”	上海移為通信技術股份有限公司(Queclink Wireless Solutions
	Co., Ltd.*), a company incorporated in the PRC with limited
	liability, the shares of which are listed on the Shenzhen Stock
	Exchange (stock code: 300590.SZ)
“Richjoy”	Richjoy Talent Limited (日領有限公司), a company incorporated
	in the Hong Kong and is wholly-owned by Mr Simon Wong
“RMB”	Renminbi, the lawful currency of the PRC
“Sale and Purchase	the sale and purchase agreement dated 22 September 2017 entered
Agreement”	into between the Company, Simcom International, Queclink
	Wireless, Richjoy and the Target Companies in respect of the
	Transaction and the IP Transfer
“SGM”	the special general meeting of the Company to be convened and
	held to consider, and, if thought fit, approve, the Sale and Purchase
	Agreement and the transactions contemplated under it (including
	the IP Transfer, the Supply Contract and the Annual Cap Amounts
	for the Supply Contract)

“Shanghai Simcom”

Shanghai Simcom Limited ( 希姆通信息技術（上海）有限公司 ), a company incorporated in the PRC and an indirect wholly-owned subsidiary of the Company

“Shanghai SIM Technology”	Shanghai SIM Technology Limited (晨訊科技（上海）有限公司),
	a company incorporated in the PRC and an indirect wholly-owned
	subsidiary of the Company
“Shanghai Sunrise”	Shanghai Sunrise Simcom Limited (上海晨興希姆通電子科技有限
	公司), a company incorporated in the PRC and an indirect wholly-
	owned subsidiary of the Company
“Share Consideration”	the consideration for the sale and purchase of the Target
	Companies under the Sale and Purchase Agreement
“Share(s)”	ordinary share(s) of HK$0.10 each in the share capital of the
	Company
“Shareholder(s)”	the holder(s) of the Share(s)
“Shenyang SIM”	Shenyang SIM Simcom Technology Limited (瀋陽晨訊希姆通科
	技有限公司), a company incorporated in the PRC and an indirect
	wholly-owned subsidiary of the Company
“Simcom (BVI)”	Simcom (BVI) Limited, a company incorporated in the BVI and is
	wholly-owned by Mr Wong Cho Tung
“Simcom Electronic”	Shanghai Simcom Electronic Limited (上海芯通電子有限公司),
	a company incorporated in the PRC and an indirect wholly-owned
	subsidiary of the Company
“Simcom International”	Simcom International Holdings Limited, a company incorporated in
	the BVI and an indirect wholly-owned subsidiary of the Company
“Simcom Wireless”	Shanghai Simcom Wireless Solutions Limited (芯訊通無線科
	技（上海）有限公司), a company incorporated in the PRC and an
	indirect wholly-owned subsidiary of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiary” or “subsidiaries”	has the meaning ascribed to in under the Listing Rules
“Supply Contract”	the supply contract entered into between Shenyang SIM, Simcom
	Electronic and Queclink Wireless in respect of the procurement of
	parts and materials and the production of wireless communication
	modules

“Target Companies” Simcom Electronic and Simcom Wireless

“Tenancy Agreement” the tenancy agreement entered into between Shanghai SIM Technology and Simcom Electronic in respect of the leasing of the Properties “Transaction” the sale and purchase of the Target Companies under the Sale and Purchase Agreement “Wireless Communication the wireless communication modules business operated by the Modules Business” Group, comprising the 2G, 3G, 4G wireless communication modules and GNSS module business “%” per cent

For the purpose of this announcement, the exchange rate of RMB1.00 to HK$1.20 has been used, where applicable, for illustrative purposes only and does not constitute a representation that any amount has been, could have been or may be exchanged at such rate or any other rate or at all on the date or dates in question or any other date.

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

22 September 2017

As of the date of this announcement, the executive Directors are Ms Yeung Man Ying, Mr Wong Cho Tung, Ms Tang Rongrong, Mr Chan Tat Wing, Richard, Mr Liu Hong and Mr Liu Jun, and the independent non-executive Directors of the Company are Mr Liu Hing Hung, Mr Wang Tianmiao and Mr Wu Zhe.

For identification purposes only

AI assistant

SIM Technology Group Limited Regulatory Filings 2017

50331_rns_2017-09-24_635e375c-4bf4-447d-ab2e-5e8578a17b4e.pdf

SIM TECHNOLOGY GROUP LIMITED 晨訊科技集團有限公司 *

MAJOR AND CONNECTED TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

Financial Adviser to the Company

SALE AND PURCHASE AGREEMENT

CONTINUING CONNECTED TRANSACTIONS

Supply Contract

Tenancy Agreement

LISTING RULE IMPLICATIONS

Sale and Purchase Agreement

Supply Contract and Tenancy Agreement

SGM AND CIRCULAR

1 THE SALE AND PURCHASE AGREEMENT

1.1 Principal terms of the Sale and Purchase Agreement

Parties:

Assets to be disposed of and consideration:

Effective date and conditions:

Completion:

Non-competition:

Other terms:

1.2 Effect of the transactions

1.3 Use of proceeds

2 INFORMATION ON THE PARTIES

2.1 The Group

2.2 Queclink Wireless

2.3 Richjoy

4 REASONS FOR AND BENEFITS OF THE TRANSACTIONS

5 CONTINUING CONNECTED TRANSACTIONS

5.1 Supply Contract

5.1.3 Annual cap

5.1.4 Reasons for the Supply Contract

5.2.1 Principal terms

7 THE SGM AND DESPATCH OF THE CIRCULAR

8 DEFINITIONS

22 September 2017

AI assistant

SIM Technology Group Limited — Regulatory Filings 2017

50331_rns_2017-09-24_635e375c-4bf4-447d-ab2e-5e8578a17b4e.pdf

SIM TECHNOLOGY GROUP LIMITED 晨訊科技集團有限公司 *

MAJOR AND CONNECTED TRANSACTION AND CONTINUING CONNECTED TRANSACTIONS

Financial Adviser to the Company

SALE AND PURCHASE AGREEMENT

CONTINUING CONNECTED TRANSACTIONS

Supply Contract

Tenancy Agreement

LISTING RULE IMPLICATIONS

Sale and Purchase Agreement

Supply Contract and Tenancy Agreement

SGM AND CIRCULAR

1 THE SALE AND PURCHASE AGREEMENT

1.1 Principal terms of the Sale and Purchase Agreement

Parties:

Assets to be disposed of and consideration:

Effective date and conditions:

Completion:

Non-competition:

Other terms:

1.2 Effect of the transactions

1.3 Use of proceeds

2 INFORMATION ON THE PARTIES

2.1 The Group

2.2 Queclink Wireless

2.3 Richjoy

4 REASONS FOR AND BENEFITS OF THE TRANSACTIONS

5 CONTINUING CONNECTED TRANSACTIONS

5.1 Supply Contract

5.1.3 Annual cap

5.1.4 Reasons for the Supply Contract

5.2.1 Principal terms

7 THE SGM AND DESPATCH OF THE CIRCULAR

8 DEFINITIONS

22 September 2017

More from SIM Technology Group Limited

SIM Technology Group Limited Regulatory Filings 2017