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.

PAX Global Technology Limited

百 富 環 球 科 技 有 限 公 司*

(Incorporated in Bermuda with limited liability)

(Stock Code: 00327) SUPPLEMENTAL ANNOUNCEMENT IN RELATION TO CONTINUING CONNECTED TRANSACTIONS FRAMEWORK AGREEMENT FOR THE PURCHASE OF CHIPS

Reference is made to the announcement published by the Company dated 30 December 2016 in relation to the continuing connected transactions (the "Announcement"). Unless otherwise defined herein, capitalised terms used in this announcement shall have the same respective meanings as defined in the Announcement.

ANNUAL CAPS

For ease of reference, the historical transaction figures for the years ended 31 December 2014, 31 December 2015 and 31 December 2016 under the Existing Framework Agreement are set forth below:

Historical transaction figures Future caps

Actual

(In HK$)

Actual transaction amount for the year ended 31 December

2014

Actual

transaction

amount for the year ended 31

December 2015

transaction

amount for the period for the year ended 31

December 2016

Proposed cap for the year ending 31

December 2017

Proposed cap for the year ending 31

December 2018

Proposed cap for the year ending 31

December 2019

45,389,518 45,701,554 37,119,124 65,000,000 70,000,000 75,000,000

In the years ended 31 December 2014, 31 December 2015 and 31 December 2016, the Group purchased the Security Decoder Chips, which are, precisely mag-stripe card security decoder chips (磁條卡加密解碼芯片), from the Hi Sun Group. For the years commencing from 1 January 2017 and ending on 31 December 2019, in addition to the Security Decoder Chips, the Group will also purchase the Controller Unit Chips and the Contactless Readers Chips from the Hi Sun Group under the 2017 Framework Agreement. While the sales amount of the Security Decoder Chips is expected to fall within the bounds of the relevant annual caps under the Existing Framework Agreement, the Company estimates higher annual caps for the years commencing from 1 January 2017 and ending on 31 December 2019 by taking into account of the additional purchase of Controller Unit Chips and the Contactless Reader Chips. The slightly increasing annual caps from the year ending 31 December 2017 to the year ending 31 December 2019 are determined based on the market expectation of inflation and potential business growth of the Group.

MEASURES TO SAFEGUARD THE INTERESTS OF THE SHAREHOLDERS

The continuing connected transactions contemplated under the 2017 Framework Agreement are on a non-exclusive basis, which means that the Group will maintain its discretionary rights to source the products from other suppliers. Pursuant to the 2017 Framework Agreement, either party may terminate the agreement by giving a written notice to the other party three (3) months in advance.

In order to ensure that the quality and the terms of the purchase of products from existing suppliers are equally good or more favourable to the Group as compared with market standard for similar products, the Company has adopted a supplier management policy which provides supplier selection procedures, quality testing methods and overall appraisal and evaluation system on potential and existing suppliers and their products and performance.

According to the Company's supplier management policy, the department of control, the department of development and the department of quality control are responsible for continuing sourcing and evaluating potential suppliers in the open market by inviting submission of quotations. The Company has put in place a standard procedural flow, pursuant to which the responsible departments shall conduct due diligence including on-site visits on the potential suppliers and obtain product samples and quotations from them. Each potential supplier will be given an overall score based on individual scores on different categories such as pricing, product quality, quality control, product delivery and after-sales services and only those with good or excellent scores will be engaged.

Under the Company's supplier management policy, the department of quality control and department of merchandising are responsible for conducting semi-annual and annual appraisal and evaluation on the existing suppliers and their products, including the Hi Sun Group and the products it supplied. There should be checks on pricing, product quality, punctuality of delivery and after-sale services. On-site assessment will be carried out as well to make sure the products are manufactured properly. Each supplier will be given an overall score after considering its performance in different aspects. Those suppliers with excellent scores will be included in the Company's preferred suppliers list and those which obtained low scores may be removed from the suppliers list.

By following the procurement and evaluation procedures under the supplier management policy and taking into consideration of various factors, including the pricing and quality of products of a number of independent third party suppliers which offer similar products as the Hi Sun Group, the corporate background, reputation, reliability and quality of customer and after-sale services of the Hi Sun Group and other independent third party suppliers, the Company has determined that the Hi Sun Group offers more favourable terms to the Group than other independent third party suppliers for the purchase of the relevant Chips. Furthermore, because of the close and long-term relationship between the Group and the Hi Sun Group, the Hi Sun Group has provided the Group with supportive customer and after-sale services and timely and reliable product delivery. The Directors believe that sourcing the relevant Chips from the Hi Sun Group would help maintain the effectiveness of the Group's production and bring benefits to the Group's operation as a whole.

Going forward, the Group will continue carrying out regular review and evaluation on the performance of contracts by the Hi Sun Group and other suppliers. The independent non-executive Directors will also review and confirm whether the Company's connected transactions are fair and reasonable and are in the interests of the Company and its shareholders as a whole.

Hong Kong, 10 January 2017

By Order of the Board

PAX Global Technology Limited Li Wenjin

Executive Director

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

PAX Global Technology Ltd. published this content on 10 January 2017 and is solely responsible for the information contained herein.
Distributed by Public, unedited and unaltered, on 10 January 2017 08:48:03 UTC.

Original documenthttp://file.irasia.com/listco/hk/paxglobal/announcement/a170110.pdf

Public permalinkhttp://www.publicnow.com/view/CE8BA8512E897FF6BED95CE1EF1DF64E73F351D7