CMON Limited — Capital/Financing Update 2003

Jun 27, 2003

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

������������ Shenyang Public Utility Holdings Company Limited

(a joint stock limited company incorporated in the People’s Republic of China with limited liability)

CONNECTED TRANSACTION ACQUISITION OF 90% EQUITY INTEREST IN SHENYANG BUSINESS INFORMATION

On 25th June, 2003, Shenyang Education, a subsidiary of the Company, entered into the Agreement with Beijing Tianqiao, pursuant to which Beijing Tianqiao agreed to sell, and Shenyang Education agreed to acquire 90% equity interest in Shenyang Business Information at a cash consideration of approximately RMB8.90 million (equivalent to approximately HK$8.32 million). The remaining 10% equity interest in Shenyang Business Information is held by Beida Jade Bird.

Shenyang Business Information is principally engaged in the development of application software solutions to business enterprises. The Directors are of the view that for the long term benefits of the Group, the acquisition of Shenyang Business Information will ensure that the Group will have the in-house technical know-how in designing software solutions for the management of the Group’s various property development and educational complexes and for the development of the Group’s services relating to the provision of non Compulsory Education.

Based on the reasons as explained below, Beijing Tianqiao is a connected person of the Company under the Listing Rules and the Acquisition constitutes a connected transaction for the Company under the Listing Rules.

As the consideration for the Acquisition is more than the higher of 0.03% of the Company’s net tangible assets or HK$1,000,000 but less than HK$10,000,000, pursuant to Rule 14.25(1) of the Listing Rules, the Acquisition is subject only to the disclosure requirements and does not require independent shareholders’ approval. The Company will include details of the Acquisition in the next published annual report.

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THE ACQUISITION

The Agreement dated 25th June, 2003

Parties:

Vendor: Beijing Tianqiao

Beijing Tianqiao is an associate of Beida Jade Bird by virtue of the fact that (i) Beijing Tianqiao (through its wholly owned subsidiary) and Beida Jade Bird together are interested in more than 30% in the equity capital of Beida Hi-Tech with Beijing Tianqiao’s and Beida Jade Bird’s shareholding in Beida Hi-Tech amounting to 50% and 50% respectively; (ii) Beida Hi-Tech is a contractual joint venture referred to in paragraph (b)(ii) under the definition “associate” in Rule 19A.04 of the Listing Rules; and (iii) Beida Jade Bird is an associate of Beida Hi-Tech, which is also a connected person of the Company by virtue of its 50% shareholding interest in SPU, the controlling shareholder of the Company. Accordingly, Beijing Tianqiao is a connected person of the Company under the Listing Rules and the Acquisition constitutes a connected transaction for the Company under the Listing Rules.

Purchaser: Shenyang Education, a 99.9% owned subsidiary of the Company

Equity interest to be acquired:

Pursuant to the Agreement, Shenyang Education agreed to acquire 90% equity interest in Shenyang Business Information from Beijing Tianqiao. Upon completion of the Acquisition, the Company, through Shenyang Education, will indirectly own approximately 90% equity interest in Shenyang Business Information.

Consideration:

The consideration for the Acquisition, which amounts to approximately RMB8.90 million (equivalent to approximately HK$8.32 million), shall be fully satisfied in cash in accordance with the following manner:

1. Initial payment of approximately RMB4.45 million (equivalent to approximately HK$4.16 million) is payable before 30th June, 2003; and

2. Balance payment of approximately RMB4.45 million (equivalent to approximately HK$4.16 million) will be payable within seven days after completion of the Acquisition.

The consideration for the Acquisition will be funded by the internal resources of Shenyang Education.

The terms of the Agreement are normal commercial terms and have been arrived at after arm’s length negotiations between the parties involved. The consideration for the Acquisition was determined with reference to the net assets of Shenyang Business Information as at 31st December, 2002 of approximately RMB9.90 million (equivalent to approximately HK$9.25 million) as per its PRC audited accounts prepared in accordance with PRC GAAP. The value of the net assets of Shenyang Business Information as at 31st December, 2002 as per the Valuation is approximately RMB9.60 million (equivalent to approximately HK$8.97 million). The Directors consider that the terms and conditions of the Agreement are fair and reasonable and are in the interests of the Company.

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Conditions precedent to completion of the Acquisition:

Completion is conditional upon, among other things, the following:

• (1) the parties to the Agreement or its representatives legally and formally execute the Agreement;

• (2) the approval by the shareholders and/or directors of Shenyang Business Information, Beijing Tianqiao and Shenyang Education at their respective shareholder’s meeting or directors’ meeting to approve the Agreement and the Acquisition contemplated therein (depending on the respective applicable articles and regulations);

• (3) the consent letter being obtained from Beida Jade Bird, which holds the remaining 10% equity interest in Shenyang Business Information, to give up the pre-emptive rights to acquire the 90% equity interest in Shenyang Business Information currently held by Beida Tianqiao; and

• (4) the approval being obtained from relevant PRC authorities regarding the corresponding amendments to the articles of association and business license of Shenyang Business Information to reflect the changes in the shareholding structure of Shenyang Business Information.

Pursuant to the Agreement, completion of the Acquisition shall take place on or before 31st December, 2003, failing which the Agreement will lapse and Beijing Tianqiao is required to refund under non-specific term the initial payment (with interest) as mentioned under the paragraph headed “Consideration” above to Shenyang Education.

INFORMATION ON SHENYANG BUSINESS INFORMATION

Shenyang Business Information is a limited liability company incorporated in the PRC on 17th July, 2000 with a registered capital of RMB10 million (equivalent to approximately HK$9.35 million). Shenyang Business Information is principally engaged in the development of applied software and provision of system integration for users in various industries such as logistics, finance, social insurance and campus education network construction. The equity interest of Shenyang Business Information is currently held as to 90% by Beijing Tianqiao and as to 10% by Beida Jade Bird.

According to the PRC audited accounts of Shenyang Business Information prepared in accordance with PRC GAAP, the net assets of Shenyang Business Information as at 31st December, 2001 and 2002 were approximately RMB 11.76 million (equivalent to approximately HK$10.99 million) and RMB 9.90 million (equivalent to approximately HK$9.25 million) respectively. The net profit (both before and after tax) of Shenyang Business Information for the year ended 31st December, 2001 was RMB 2.14 million (equivalent to approximately HK$2.00 million) and the net loss of Shenyang Business Information for the year ended 31st December, 2002 was approximately RMB1.86 million (equivalent to approximately HK$1.74 million). According to the Valuation prepared by the PRC Valuer, the net assets value of Shenyang Business Information as at 31st December, 2002 was approximately RMB9.60 million (equivalent to approximately HK$8.97 million).

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REASONS FOR THE ACQUISITION

Shenyang Business Information is principally engaged in the development of application software solutions to business enterprises. The Directors, including the independent non-executive Directors, are of the view that for the long term benefits of the Group, the acquisition of Shenyang Business Information will ensure that the Group will have the in-house technical know-how in designing software solutions for the management of the Group’s various property development and educational complexes and for the development of the Group’s services relating to the provision of non Compulsory Education.

GENERAL

The Company and its subsidiaries are principally engaged in the development and sale of properties and investment and management of education projects.

Beijing Tianqiao is an associate of Beida Jade Bird by virtue of the fact that (i) Beijing Tianqiao (through its wholly owned subsidiary) and Beida Jade Bird together are directly interested in more than 30% in the equity capital of Beida Hi-Tech with Beijing Tianqiao’s and Beida Jade Bird’s shareholding in Beida Hi-Tech amounting to 50% and 50% respectively; (ii) Beida Hi-Tech is a contractual joint venture referred to in paragraph (b)(ii) under the definition “associate” in Rule 19A.04 of the Listing Rules; and (iii) Beida Jade Bird is an associate of Beida Hi-Tech, which is also a connected person of the Company by virtue of its 50% shareholding interest in SPU, the controlling shareholder of the Company. Accordingly, Beijing Tianqiao is a connected person of the Company under the Listing Rules and the Acquisition constitutes a connected transaction for the Company under the Listing Rules.

As the consideration for the Acquisition is more than the higher of 0.03% of the Company’s net tangible assets or HK$1,000,000 but less than HK$10,000,000, pursuant to Rule 14.25(1) of the Listing Rules, the Acquisition is subject only to the disclosure requirements and does not require independent shareholders’ approval. The Company will include details of the Acquisition in the next published annual report.

DEFINITION

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

“Acquisition”	the acquisition of 90% equity interest in Shenyang Business Information
	by Shenyang Education from Beijing Tianqiao pursuant to the Agreement
“Agreement”	the agreement dated 25th June, 2003 entered into between Shenyang
	Education and Beijing Tianqiao in relation to the acquisition of 90% equity
	interest in Shenyang Business Information by Shenyang Education from
	Beijing Tianqiao
“associates”	has the same meaning as defined in the Listing Rules
“Beida Hi-Tech”	���������������(Beijing Beida Hi-tech Industrial
	Investment Limited), a company incorporated in the PRC with limited
	liability and is beneficially owned as to approximately 60.5% by Beida
	Jade Bird

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• “Beida Jade Bird” ������������� (Beijing Beida Jade Bird Company Limited), a limited liability company incorporated in the PRC and 46% equity interest of which is beneficially owned by Peking University.

• “Beijing Tianqiao” ����������������(Beijing Tianqiao Beida Jade Bird Sci-Tech Company Limited), a joint stock limited company incorporated in the PRC which shares are listed on Shanghai Stock Exchange and approximately 21% equity interest of which is owned by Beida Jade Bird

• “Board” the board of Directors

• “Company” ������������� (Shenyang Public Utility Holdings Company Limited), a joint stock limited company established in the PRC with limited liability, the H Shares of which are listed on the Stock Exchange

• “Compulsory Education” primary and junior high school education in the PRC

• “Directors” the directors of the Company

• “Listing Rules” The Rules Governing the Listing of Securities on the Stock Exchange

• “PRC” The People’s Republic of China which for the purpose of this announcement, excludes Hong Kong, Macau Special Administrative Region and Taiwan

• “PRC GAAP” PRC General Accepted Accounting Practice

• “PRC Valuer” �����������������(Beijing Long Yuan Zhi Bo Assets Appraisal Corporation Limited), an authorized asset valuer in the PRC

• “Shenyang Education” ���������������(Shenyang Development Beida Education Science Park Company Limited), a company established in the PRC with limited liability and a 99.9% owned subsidiary of the Company

• “Shenyang Business ���������������� (Shenyang Beida Jade Bird Information” Business Information System Company Limited), a company established in the PRC with limited liability and is beneficially owned as to 90% by Beijing Tianqiao and as to 10% by Beida Jade Bird

• “SPU” ���������� (Shenyang Public Utility Group Company Limited), a company established in the PRC with limited liability and the existing controlling shareholder of the Company with an interest of approximately 58.8% in the issued share capital of the Company

• “Stock Exchange” The Stock Exchange of Hong Kong Limited

• “Valuation” the valuation dated 20th June, 2003 on the net assets of Shenyang Business Information as at 31st December, 2002 prepared by the PRC Valuer

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong “RMB” Renminbi, the lawful currency of the PRC

“%” per cent.

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For the purpose of illustration in this announcement, unless otherwise indicated, conversion of RMB into HK$ is calculated at the approximate exchange rate of HK$0.9346 to RMB1.00. The use of such rates of exchange is not a representation that the RMB or HK$ could have been or could be exchanged at this rate or at any other rates at all.

By Order of the Board of Shenyang Public Utility Holdings Company Limited Wang Se Executive Director

Shenyang, the PRC, 27th June, 2003

Please also refer to the published version of this announcement in The Standard / Hong Kong Economic Times.

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