China Binary Sale Technology : CONNECTED TRANSACTION

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China Binary Sale Technology Limited

神 州 數 字 銷 售 技 術 有 限 公 司

(Incorporated in the Cayman Islands with limited liability)

(Stock Code: 8255)

CONNECTED TRANSACTION

On 29 August 2017, Prajna (a wholly-owned subsidiary of the Company) and Sanbao Star entered into the Share Transfer Agreement 1 and Share Transfer Agreement 2, pursuant to which Prajna conditionally agreed to acquire and Sanbao Star conditionally agreed to sell approximately 4.5% and 20.7% equity interest in Goopal and Joy Credit, at a consideration of US$0.3 million (equivalent to approximately HK$2.3 million) and approximately US$0.4 million (equivalent to approximately HK$3.1 million), respectively.

PRINCIPAL TERMS AND PARTICULARS OF SHARE TRANSFER AGREEMENT 1

The principal terms and particulars of Share Transfer Agreement 1 are as follows: Date: 29 August 2017

Parties: Prajna, being the purchaser

Sanbao Star, being the vendor

Target: Approximately 4.5% equity interest in Goopal

As at the date of this announcement, Sanbao Star was ultimately beneficially owned as to approximately 72.8% by Mr. Sun, 13.1% by Mr. Tang, and the remaining balance held by three other independent third parties.

Upon completion, the Company, through Prajna, will increase its interests in Goopal from approximately 11.1% to 15.6%, and its financials will continue not to be consolidated into the financials of the Group.

Consideration

The consideration for the acquisition of approximately 4.5% equity interests in Goopal is US$0.3 million (equivalent to approximately HK$2.3 million), which will be payable in cash with internal resources upon completion. The consideration was determined after arm's length negotiations between Prajna and Sanbao Star with reference to (i) the net assets value of Goopal; and (ii) the prospects of Goopal.

In light of the above, the Directors consider that the acquisition of the 4.5% equity interests in Goopal is on normal commercial terms, which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

PRINCIPAL TERMS AND PARTICULARS OF SHARE TRANSFER AGREEMENT 2

The principal terms and particulars of Share Transfer Agreement 2 are as follows: Date: 29 August 2017

Parties: Prajna, being the purchaser

Sanbao Star, being the vendor

Target: Approximately 20.7% equity interest in Joy Credit

As at the date of this announcement, Sanbao Star was ultimately beneficially owned as to approximately 72.8% by Mr. Sun, 13.1% by Mr. Tang, and the remaining balance held by three other independent third parties.

Upon completion, the Company, through Prajna, will increase its interests in Joy Credit from approximately 45.9% to 66.6%. Joy Credit will become a subsidiary of the Company, and its financials will be consolidated into the financials of the Group.

Consideration

The consideration for the acquisition of approximately 20.7% equity interests in Joy Credit is approximately US$0.4 million (equivalent to approximately HK$3.1 million), which will be payable in cash with internal resources upon completion. The consideration was determined after arm's length negotiations between Prajna and Sanbao Star with reference to (i) the net assets value of Joy Credit; and (ii) the prospects of Joy Credit.

In light of the above, the Directors consider that the acquisition of the 20.7% equity interests in Joy Credit is on normal commercial terms, which are fair and reasonable and in the interests of the Company and the Shareholders as a whole.

INFORMATION ABOUT GOOPAL

Goopal is an investment holding company, incorporated in the Cayman Islands. Goopal, through Beijing Guorenbao Technology Co., Ltd.* (北京果仁寶科技有限公 司), is principally engaged in financial information on the internet and mobile internet

as well as segment-chain technology services. As at the date of this announcement, Goopal was owned (directly or indirectly) as to approximately 11.1% by the Company, 7.6% by Sanbao Star, 46.9% by Mr. Sun Kunshan, 7.6% by Mr. Sun and the remaining balance by four independent third parties.

Based on the unaudited management accounts of Goopal prepared in accordance with the PRC GAAP, the consolidated financials of Goopal and its subsidiaries are set out as below:

For the year ended 31 December

2015 2016

(RMB million) (RMB million)

Revenue	0.0	0.1
Net (loss) before tax	(3.7)	(20.8)
Net (loss) after tax	(3.7)	(20.8)
Net assets INFORMATION ABOUT JOY CREDIT	28.9	59.0

Joy Credit is an investment holding company, incorporated in the Cayman Islands. Joy Credit, through Beijing Wanlefu Technology Limited* (北京玩樂付科技有限公司), is

principally engaged in provision of promotion and distribution services of online game products for online game operators. As at the date of this announcement, it was owned as to approximately 45.9% by the Company, 26.1% by Sanbao Star, 11.8% by IDG- Accel China Growth Fund II L.P. and IDG-Accel China Investors II L.P., who are the substantial Shareholders, and the remaining balance by two independent third parties.

Based on the unaudited management accounts of Joy Credit prepared in accordance with the PRC GAAP, the consolidated financials of Joy Credit are set out as below:

For the year ended 31 December

2015 (RMB million)	2016 (RMB million)
Revenue	0.0	0.5
Net (loss) before tax	(0.1)	(3.4)
Net (loss) after tax	(0.1)	(3.4)
Net assets	12.5	9.7

REASONS FOR AND BENEFITS OF THE ACQUISITION

The Company's subsidiaries are principally engaged in providing online transaction services by facilitating transactions between online game operators and online game users, and providing mobile top-up service to mobile subscribers in the PRC.

The Directors are of the view that there is potential for the businesses of Goopal and Joy Credit, and thus intends to increase its interests in Goopal and Joy Credit. Upon completion, the Group could better utilize its resources in the development of their businesses, and integrate into the Group to bring more synergy effect to its existing business of the Group.

IMPLICATIONS UNDER THE LISTING RULES

Sanbao Star was an investment holding company. As at the date of this announcement, Sanbao Star, Mr. Sun and Mr. Sun Kunshan (being the father of Mr. Sun) currently held approximately 7.6%, 7.6% and 46.9% interests in Goopal. As such, the transaction contemplated under Share Transfer Agreement 1 is a connected transaction under Rule

20.26 of the GEM Listing Rules.

As at the date of this announcement, (i) Sanbao Star currently held 26.1% of the interests in Joy Credit, and (ii) Sanbao Star was owned as to approximately 72.8% by Mr. Sun, 13.1% by Mr. Tang, both of which are directors of the Company, Sanbao Star is a connected person under Rule 20.07 of the GEM Listing Rules, and thus the transaction contemplated under the Share Transfer Agreement 2 is a connected transaction.