CMON Limited — Capital/Financing Update 2012

Aug 8, 2012

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.

瀋陽公用發展股份有限公司 Shenyang Public Utility Holdings Company Limited

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

(Stock code: 747)

ANNOUNCEMENT – UPDATES ON THE MAJOR ACQUISITION

On 8 June 2012, all the conditions precedent under the Acquisition Agreement in relation to the acquisition of the entire issued share capital of Zhongfang Chaozhou had been fulfilled and therefore the Acquisition was completed.

Reference is made to the announcements of Shenyang Public Utility Holdings Company Limited (the “ Company ”) dated 11 May 2011 and 31 May 2011 and the circular of the Company (the “ Circular ”) dated 25 September 2011 in relation to the acquisition of the entire issued share capital of Zhongfang Chaozhou Investment Development Company Limited (“ Zhongfang Chaozhou ”). Capitalized terms used herein shall have the same meanings as those defined in the Circular unless the context requires otherwise.

DELAY IN COMPLETION OF ACQUISITION

Due to the delay in obtaining the registration of the change of business of Zhongfang Chaozhou from the PRC government, the Acquisition could not be completed before the financial year ended 31 December 2011 as originally expected by the Company and the Vendors. And therefore the completion of the Acquisition had been delayed until 8 June 2012, on which all the conditions precedent under the Acquisition Agreement had been fulfilled. Following the completion, Zhongfang Chaozhou has become a wholly owned subsidiary of the Company and its results, assets and liabilities have been consolidated into the consolidated financial statements of the Group.

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According to the Acquisition Agreement, the Vendors agreed to make the compensation on the profit guarantee if Zhongfang Chaozhou achieves a net profit of less than RMB30 million for the year ended 31 December 2011. However, the profit guarantee has not been exercised given the facts that the Acquisition has not been completed before the financial year ended 31 December 2011 and the delay in completion of Acquisition is mainly due to the unforeseen external factors which were out of the expectation of both parties, the Vendors and the Company acknowledged that the profit guarantee as stated in the Acquisition Agreement shall be postponed to the financial year ending 31 December 2012.

Accordingly, the Vendors have issued an acknowledgment to the Company in relation to the postponement of the profit guarantee after the completion of Acquisition. Save as the postponed date of profit guarantee, other terms in relation to the profit guarantee remain unchanged.

CURRENT STATUS OF THE PROJECT

As mentioned in the Circular, Zhongfang Chaozhou is currently carrying out a land development project in Chaozhou (the “ Project ”). Phase one of the Project was originally targeted to be finished by November 2011. However, the progress of the Project has been delayed for about five months due to the reasons including 1) some adjustments have been made on the construction design after the start of construction; 2) part of the land transferred from Chaozhou Jinshan required further demolition before construction, additional time has been utilized for demolishing the obstacles; and 3) bad weather condition resulted in the occurrence of landslides during the construction which required extra time to repair and reinforce the slopes around the land.

The first phase of the Project was preliminarily finished in early April 2012. Zhongfang Chaozhou has only completed construction on 1,000 mu land in the first phase of the Project because of the delay. On 17 April 2012, Chaozhou Jinshan has entered into an agreement with Zhongfang Chaozhou in relation to the transfer of 1,000 mu constructed land from Zhongfang Chaozhou to Chaozhou Jinshan (the “ Agreement ”). Pursuant to the Agreement, Chaozhou Jinshan would only pay the entire land development cost and construction cost with a premium of 18% only if the constructed land could meet the acceptance standard as agreed by both parties under the Cooperation Agreement. Since there was still details to be finalized in the first phase in order to reach the acceptance standard, Chaozhou Jinshan only agreed to prepay RMB140 million (the “ Prepayment ”) to settle part of the payment to Zhongfang Chaozhou. The Prepayment was determined based on 60% of the total land development cost and construction cost (i.e. RMB235,000 per mu) being paid by Zhongfang Chaozhou on the 1,000 mu constructed land. Zhongfang Chaozhou is required to complete the remaining construction in phase one so as to fully comply with the acceptance standard. Chaozhou Jinshan will fully settle the outstanding payment to Zhongfang Chaozhou upon the acceptance standard was fully met.

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According to the terms of the Agreement, part of the Prepayment shall be used to settle a loan of RMB60 million due from Zhongfang Chaozhou to Chaozhou Jinshan. As at 31 July 2012, Zhongfang Chaozhou has received a prepayment of approximately RMB60 million from Chaozhou Jinshan. The remaining balance of the Prepayment amounted to approximately RMB20 million is expected to be received from Chaozhou Jinshan in due course. The amount received by Zhongfang Chaozhou is expected to be recognized as the income for the Group for the current financial year.

Since the Acquisition has not been completed as at 31 December 2011, the Company didn’t disclose any financial information of Zhongfang Chaozhou in the Group’s 2011 financial statements. However, the Company expects to disclose more information of Zhongfang Chaozhou in the Group’s upcoming financial report. In the meantime, Zhongfang Chaozhou is working on phase two of the Project and it is expected to be finished by end of 2012. According to the management of Zhongfang Chaozhou, a total of 2,000 mu land will be constructed in phase two and the constructed land will be transferred to Chaozhou Jinshan upon completion. The whole Project is targeted to be completed by June 2013.

By Order of the Board Shenyang Public Utility Holdings Company Limited An Mu Zong Chairman

Shenyang, PRC, 8 August 2012

As at the date of this announcement, the directors of the Company are as follows:

Executive directors:	Mr. An Mu Zong, Mr. Wang Zai Xing,
	Mr. Alex Chow Ka Wo and Mr. Wang Hui
Non-executive directors:	Mr. Bao Yi Qiang and Ms. Zhang Lei Lei
Independent non-executive directors:	Mr. Cai Lian Jun, Mr. Wong Kai Tat,
	Mr. Chan Ming Sun Jonathan and Mr. Wei Jie Sheng

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