CMON Limited — Capital/Financing Update 2013

Aug 13, 2013

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)

Financial Adviser to the Company

Karl Thomson Financial Advisory Limited

MAJOR DISPOSAL

THE DISPOSAL

The Board is pleased to announce that on 13 August 2013, after the trading hours, the Company entered into the Disposal Agreement with the Purchaser, whereby the Purchaser has conditionally agreed to purchase and the Company has conditionally agreed to sell the entire issued share capital and the Shareholder’s Loan of the Disposal Company at the consideration of RMB280 million.

Since certain applicable percentage ratios for the Disposal are more than 25% but less than 75%, the Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules. As no Shareholders have any material interest in the Disposal, it is expected that no Shareholders will be required to abstain from voting at the EGM on the resolution to approve the Disposal Agreement and the transactions contemplated thereunder.

A circular containing, amongst other things, further details of the Disposal, the financial information of the Group, other general information of the Company and the notice of the EGM is expected to be dispatched to the Shareholders on or before 3 September 2013.

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THE DISPOSAL AGREEMENT

Date

13 August 2013 (after trading hours)

Parties

Vendor : The Company Purchaser : Shenzhen Chengxin Xingye Trading Company Limited* 深圳市 誠信興業貿易有限公司

The Purchaser is a company incorporated in the PRC with limited liability. Its principal businesses are network technology development and sales of computers and digital products. To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Purchaser and its ultimate beneficial owner(s) are Independent Third Party.

Consideration and payment terms

The Consideration for the Disposal of RMB280 million has been determined after arm’s length negotiations among the parties to the Disposal Agreement with reference to (i) the market value of the Project held by the Disposal Company as at 30 June 2013; (ii) the net asset value of the Disposal Company as at 30 June 2013; and (iii) the Shareholders’ Loan due from the Disposal Company to the Company.

The Consideration shall be satisfied in the following manner:-

• (a) a deposit of RMB41 million shall be paid in cash by the Purchaser to the Company within 5 days upon entering into the Disposal Agreement;

• (b) a consideration of RMB120 million shall be paid in cash by the Purchasers to the Company within 1 month upon the completion of the change of the particulars of the Disposal Company in the Administration For Industry and Commerce Bureau; and

• (c) a remaining balance of RMB119 million shall be paid in cash by the Purchasers to the Company within 50 days upon the final acceptance of the first phase of the Project.

Asset to be disposed of

Pursuant to the Disposal Agreement, the Company has conditionally agreed to sell and the Purchaser has conditionally agreed to acquire the entire issued share capital of and the Shareholder’s Loan of the Disposal Company.

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Conditions precedent

Completion of the Disposal Agreement is conditional upon satisfaction of all of the following conditions:

1. the approval of the Disposal Agreement and the transactions contemplated thereunder by the board of the Disposal Company;

2. the approval of the Disposal Agreement and the transactions contemplated thereunder by the Board and the Shareholders at the EGM; and

3. the completion of the change of the particulars of the Disposal Company in the Administration For Industry and Commerce Bureau and the issue of the new business registration certificate of the Disposal Company.

The above conditions shall be completed within 6 months upon entering into the Disposal Agreement or such later date as the Company and the Purchaser may agree in writing.

Completion

Completion shall take place on the date on which the conditions precedent to the Disposal Agreement had been completely fulfilled or such other date as the Company and Purchaser may agree in writing.

Termination

The Purchaser has the right to terminate the Disposal Agreement upon occurrence of the following event and all the considerations paid pursuant to the Disposal Agreement shall be refunded to the Purchaser by the Company with daily interest of 0.03% as penalty:

• i. the Company fails to complete the conditions within the stipulated time period in accordance with the terms of the Disposal Agreement;

The Company has the right to terminate the Disposal Agreement upon the occurrence of the following events and all the considerations paid pursuant to the Disposal Agreement shall be forfeited as penalty for the termination of the Disposal Agreement:

• i. the Purchaser fails to complete the conditions within the stipulated time period in accordance with the terms of the Disposal Agreement;

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• ii. the Purchaser fails to pay the considerations in accordance with the terms of the Disposal Agreement;

• iii. the Purchaser fails to comply with the warranties as set out in the Disposal Agreement

INFORMATION OF THE DISPOSAL COMPANY

The Disposal Company is a limited company incorporated in the PRC and is principally engaged in real estate investment and development and property management. The Disposal Company is currently engaging a comprehensive real estate development project situated in Zengcheng, Guangzhou, the PRC namely “Jinma Xiangsongju Project” (金馬香頌居項目) with a total gross floor area of approximately 102,751 square meters. It was planned that, among other things, the government resettlement homes, residential apartments and commercial properties will be built on the site. As at the date of this announcement, the Project has finished the construction with a gross floor area of approximately 50,000 square meters. It is expected that the construction of the government resettlement homes will be completed by the end of 2013 while the other parts of the Project are expected to be completed by the end of 2014. The final acceptance of the first phase of the Project is excepted to be completed within 2014.

According to the valuation report on the Project conducted by the independent professional valuer, the market value of the Project in the existing state as at 30 June 2013 was estimated at RMB330 million. The Company acquired the Disposal Company in 2012 for an aggregated consideration of RMB116,000,000. Set out below summaries the audited financial information of the Disposal Company for the two financial years ended 31 December 2011 and 2012 prepared in accordance with the PRC accounting standards:

	For the year ended 31 December	For the year ended 31 December
	2012	2011
	(audited)	(audited)
	RMB	RMB
Revenue	Nil	Nil
Loss before taxation and extraordinary items	195,547	233,958
Loss after taxation and extraordinary items	195,547	233,958

As of 31 December 2012, the net asset value of the Disposal Company is RMB9,570,495.

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FINANCIAL EFFECT OF THE DISPOSAL

As a result of the Disposal, it is estimated that the Group will recognize an estimated gain before taxation of approximately RMB90 million with reference to (i) the Consideration of the Disposal; and (ii) the net asset value and the Shareholder’s Loan of the Disposal Company as at 30 June 2013.

The sale proceeds from the Disposal will be utilized as the general working capital of the Company and for further investment on the infrastructure and construction project engaged by Zhongfang Chaozhou. Upon completion of the Disposal, the Disposal Company will cease to be a subsidiary of the Company and its assets and liabilities and its profits and losses will no longer be consolidated into the consolidated financial statements of the Company.

REASONS FOR THE DISPOSAL

As at the date of this announcement, the Group is principally engaged in infrastructure and construction business in the PRC. The Directors believe that the Disposal represents a good opportunity for the Group to realize the value of the Project with positive return. Moreover, the sale proceeds from the Disposal could enhance the Group’s working capital position as well as providing additional capital resources for the Group to make further investment on the infrastructure and construction project engaged by Zhongfang Chaozhou. Therefore, the Directors consider the Disposal is in line with the Group’s overall business strategy.

The Directors also consider that the terms and conditions of the Disposal are on normal commercial terms, fair and reasonable and are in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATION OF THE DISPOSAL

Since certain applicable percentage ratios for the Disposal are more than 25% but less than 75%, the Disposal constitutes a major transaction for the Company under Chapter 14 of the Listing Rules and is subject to the reporting, announcement and shareholders’ approval requirements under the Listing Rules. As no Shareholders have any material interest in the Disposal, it is expected that no Shareholders will be required to abstain from voting at the EGM on the resolution to approve the Disposal Agreement and the transactions contemplated thereunder.

A circular containing, amongst other things, further details of the Disposal, the financial information of the Group, and other general information of the Company and the notice of the EGM is expected to be dispatched to the Shareholders on or before 3 September 2013.

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DEFINITIONS

In this announcement, unless the context otherwise requires, the following expressions shall have the following respective meanings.

• “Board” the board of Directors “Company” Shenyang Public Utility Holdings Company Limited* (瀋陽 公用發展股份有限公司), a joint stock limited company incorporated in the PRC and whose H Shares are listed on the main board of the Stock Exchange

• “Completion” the completion of the Disposal “connected person” has the meaning ascribed to it in the Listing Rules

• “Consideration” consideration of the Disposal amounted to RMB280 million

• “Disposal” the disposal of the Disposal Company by the Company to the Purchasers pursuant to the Disposal Agreement

• “Disposal Agreement” the sale and purchase agreement dated 13 August 2013 entered into between the Company and the Purchasers in relation to the Disposal

• “Disposal Company” Guangzhou Zhongzhan Investment Holdings Company Limited* (廣州市中展投資控股有限公司), a company incorporated in the PRC with limited liability, which is a wholly-owned subsidiary of the Company

• “Director(s)” means the directors of the Company

• “Domestic Share(s)” domestic share(s) with a nominal value of RMB1 each in the share capital of the Company which are subscribed for in RMB

• “EGM” an extraordinary general meeting of the Company to be convened and held to approve the Disposal, the Disposal Agreement and the transactions contemplated thereunder

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“Group”	the Company and its subsidiaries
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“Independent Third	the independent third party(ies) who is/are, to the best of the
Party(ies)”	Directors’ knowledge, information and belief having made
	all reasonable enquiry, independent of the Company and its
	connected persons (as defined under the Listing Rules)
“H-Share(s)”	overseas listed foreign ordinary share(s) in the share capital
	of the Company, with a nominal value of RMB1 each, all of
	which are listed on the main board of the Stock Exchange,
	and subscribed for and traded in Hong Kong dollars
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China
“Project”	“Jinma Xiangsongju Project” (金馬香頌居項目), a real
	estate development project situated in Zengcheng,
	Guangzhou, the PRC engaged by the Disposal Company
“Purchaser”	Shenzhen Chengxin Xingye Trading Company Limited* 深
	圳市誠信興業貿易有限公司, a company incorporated in the
	PRC, being the purchaser of the Disposal Agreement
“Shareholder(s)”	holder(s) of the H-Shares and the Domestic Shares
“Shareholder’s Loan”	Approximately RMB150.8 million being the aggregate
	amount due from the Disposal Company to the Company as
	at 30 June 2013
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“RMB”	Renminbi, the lawful currency of the PRC

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“Zhongfang Chaozhou”

Zhongfang Chaozhou Investment Development Company Limited* (中房潮州投資開發有限公司), a company incorporated in the PRC, which is a wholly-owned subsidiary of the Company

“%”

per cent.

• For identification purpose only

By Order of the Board Shenyang Public Utility Holdings Company Limited Ma Zhong Hong

Chairman

Shenyang, PRC, 13 August 2013

As at the date of this announcement, the executive directors of the Company are Mr. Ma Zhong Hong, Mr. Deng Xiao Gang and Mr. Chau Ngai Ming, the non-executive directors are Mr. Huang Zhen Kun and Ms. Zhang Lei Lei and the independent non-executive directors are Mr. Wong Kai Tat, Mr. Wei Jie Sheng and Mr. Yu Guan Jian.

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