SDM Group Holdings Limited (Incorporated in the Cayman Islands with limited liability)

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1 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. This announcement appears for information purposes only and does not constitute an invitation or offer to acquire, purchase, or subscribe for the securities of the Company. SDM Group Holdings Limited (Incorporated in the Cayman Islands with limited liability) (Stock Code: 8363) SHARE TRANSACTION SUPPLEMENTAL AGREEMENT TO THE AGREEMENT IN RELATION TO THE ACQUISITION OF 60% OF THE ENTIRE ISSUED SHARE CAPITAL OF OCTOPUS GROUP LIMITED Reference is made to the announcements of the Company dated 16 March 2016 and 24 March 2016 (the Announcements ) in relation to the acquisition of 60% of the entire issued share capital of Octopus Group Limited. Capitalised terms used herein shall have the same meanings as those defined in the Announcements unless the context requires otherwise. SUPPLEMENTAL AGREEMENT On 14 March 2016, the Purchaser, the Vendors and the Company entered into the Agreement pursuant to which the Purchaser had conditionally agreed to acquire from the Vendors and the Vendors have conditionally agreed to sell to the Purchaser the Sale Shares (which shall represent 60% of the entire issued share capital of the Target Company) at a Consideration of HK$6 million (subject to adjustments), which shall be satisfied by the issue of the Convertible Bonds 1 and the Convertible Bonds 2 by the Company. On 20 July 2016, the Purchaser, the Vendors and the Company entered into a supplemental agreement (the Supplemental Agreement ) to amend certain terms of the Agreement. Pursuant to the Supplemental Agreement: (1) the Consideration for the Sale Shares payable by the Purchaser to the Vendors shall be changed from HK$6,000,000 to HK$4,100,000, which shall be apportioned in accordance with the shareholding of Mr. Chiu Kung Ting ( Mr. Chiu ) and Mr. Leung Wing Lok ( Mr. Leung ), being the Vendors, as follows: (a) the consideration for the sale and purchase of the Sale Shares held by Mr. Chiu shall be HK$2,050,000; and 1

2 (b) the consideration for the sale and purchase of the Sale Shares held by Mr. Leung shall be HK$2,050,000. The Consideration shall be paid and satisfied by cash and an aggregate of 2,400,000 new Shares (the Consideration Shares ) instead of by issuing the Convertible Bonds 1 and the Convertible Bonds 2, in the following manner: - (a) (b) for the consideration payable to Mr. Chiu, HK$250, of which shall be paid by cash; and HK$1,800, of which shall be satisfied by the Company issuing 1,200,000 new Shares at the Issue Price to Mr. Chiu; and for the consideration payable to Mr. Leung, HK$250, of which shall be paid by cash; and HK$1,800, of which shall be satisfied by the Company issuing 1,200,000 new Shares at the Issue Price to Mr. Leung. The Parties agree that the issue price of each Consideration Share shall be determined at HK$1.50 (the Issue Price ), being the same price of the Conversion Price of the Convertible Bonds 1 and Convertible Bonds 2 under the Agreement. The Issued Price of HK$1.5 per Consideration Share represents: (i) a premium of approximately 28.21% to the closing price of HK$1.17 per Share as quoted on the Stock Exchange on 20 July 2016, being the date of the Supplemental Agreement; (ii) a premium of approximately 26.26% to the average closing price of HK$1.188 per Share for the last five consecutive trading days immediately before the date of the Supplemental Agreement; and (iii) a premium of approximately 32.98% to the average closing price of about HK$1.128 per Share for the last ten consecutive trading days immediately before the date of the Supplemental Agreement. The Issued Price was determined after taking into account the recent trading prices of the Shares, the other terms of the Agreement as supplemented by the Supplemental Agreement and future prospect of the Target Group following Completion. The change of the Consideration was primarily due to the change of the Target Group structure. The revised Consideration for the Acquisition has been arrived after arm s length negotiation between the Vendors and the Purchaser, having reference to the financial position and the prospectus and potential of the business of the revised Target Group to be acquired by the Purchaser. (2) The revised Target Group includes Octopus Group Limited, Octopus Education Company Limited, Octopus Experience Company Limited, 深圳市比諾天安兒童學院有限公司 and 傲思 ( 深圳 ) 策劃體驗有限公司 and their respective subsidiaries. Based on the information provided by the Vendors, the revised Target Company is principally engaged in providing extracurricular programs and English courses in the kindergartens currently. 2

3 Following the Acquisition, the revised Target Group will be engaging in the operation of day care centers, kindergartens and indoor theme-based kids clubs in Shenzhen, PRC that provide branded education programs and a series of entertainment services for both children and parents. Pursuant to the Supplemental Agreement, it is expected that the organizational chart of the revised Target Group to be acquired by the Group will be as follows: Organization Chart to the Revised Target Group Octopus Group Limitd ( ) 100% Octopus Education Company Limited ( ) 100% Octopus Experience Company Limited ( ) 51% 51% ( ) Note: Equity ownership Contractual control Save for the amendments contained in the Supplemental Agreement as stated above, all other terms and conditions of the Agreement shall remain in full force and effect. 3

4 FINANCIAL INFORMATION OF THE REVISED TARGET GROUP Based on the financial information provided by therevisedtargetgroupandsubjecttothe Group s further verification, set out below is the summary of the key unaudited combined financial figures of the revised Target Group for the period from 19 September 2013 (being date of incorporation of the first operating subsidiary)to31march2015andfortheyear ended 31 March 2016 respectively: For the period from 19 September 2013 to 31 March 2015 HK$ For the year ended 31 March 2016 HK$ Revenue 1,682,934 1,567,424 Profit/(loss) before tax (Note) 136,335 (1,312,088) Profit/(loss) after tax (Note) 130,473 (1,312,088) Total assets 546,164 2,020,151 Net assets 140, ,788 Note: Total expenses of HK$1,000,471 incurred relating to construction of day care centre, kindergartens and indoor theme-based kids clubs for the year ended 31 March 2016, which was inclusive profit/(loss) before/after tax for the year ended 31 March Those expenses are mainly represented by initial costs for design, search and analysis and staff s salaries for developing of day care centre, kindergartens and indoor theme-based kids club. 4

5 EFFECT ON SHAREHOLDINGS STRUCTURE OF THE COMPANY As at the date of this announcement, the Company has a total 200,000,000 Shares in issue. Assuming there is no further issue or repurchase of the Shares, based on the 2,400,000 Consideration Shares will be issued for the Acquisition, representing of 1.2% of the total number of Shares in issue as at the date of this announcement and approximately 1.19% of the total number of Shares in issue as enlarged by the issue of the Consideration Shares. The Consideration Shares will be allotted and issued pursuant to the general mandate of not exceeding 40,000,000 Shares granted to the Directors at the annual general meeting of the Company held on 13 May As at the date of this announcement, total of 40,000,000 Shares are available for issue under the general mandate. Shareholders As at the date of this announcement Number of Approximate issued shares percentage Immediately after the completion of the Acquisition Number of issued shares Approximate percentage Wealthy Together Limited (Note) 140,000,000 70% 140,000, % The Vendors 2,400, % Public Shareholders 60,000,000 30% 60,000, % Total 200,000, % 202,400, % The above table is for illustration only. Note: Wealthy Together Limited is beneficially and wholly owned by Mr. Chiu Ka Lok, an executive Director. Dr. Chun Chun is the spouse of Mr. Chiu Ka Lok and is a non-executive Director of the Company. GEM LISTING RULES IMPLICATIONS As all of the applicable percentage ratios (as defined in the GEM Listing Rules) in respect of the Acquisition and the transactions contemplated under the Agreement are less than 5% and the Consideration shall be satisfied by the Company issuing to the Vendors the Consideration Shares, the Acquisition constitutes a share transaction for the Company under the GEM Listing Rules and is subject to the reporting and announcement requirements, but is exempt from Shareholders approval as required under the GEM Listing Rules. Application will be made to the Stock Exchange for the listing of and permission to deal in the Consideration Shares. 5

6 GENERAL This announcement appears for information purposes only and do not constitute an invitation or offer to acquire, purchase, or subscribe for the securities of the Company. Save for the above information, the information contained in the Announcements remains unchanged. Shareholders and investors should note that Completion is subject to the fulfillment, or waiver, of various conditions precedent as stated in the Announcements. Shareholders and investors are therefore urged to exercise caution when dealing with the Shares. Hong Kong, 20 July 2016 By Order of the Board SDM Group Holdings Limited Mr. Chiu Ka Lok Chairman As at the date of this announcement, the executive Directors are Mr. Chiu Ka Lok and Mr. Chun Chi Ngon Richard, non-executive Directors are Dr. Chun Chun, Ms. Yeung Siu Foon and Ms. Yip Sze Pui Fione and the independent non-executive Directors are Mr. Lau Sik Yuen, Dr. Yuen Man Chun Royce and Mr. Lee Kwok Ho David. This announcement, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the GEM Listing Rules for the purpose of giving information with regard to the Company. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this announcement is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this announcement misleading. This announcement will remain at on the Latest Company Announcements page of the GEM website for at least 7 days from the date of its posting and on the Company website at 6