CMON Limited — Capital/Financing Update 2014

Dec 12, 2014

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)

DISCLOSEABLE TRANSACTION

THE ACQUISITION

The Board is pleased to announce that on 12 December 2014, after trading hours, the Purchaser, a wholly owned subsidiary of the Company, entered into the Acquisition Agreement with the Vendor, pursuant to which the Vendor has conditionally agreed to sell, and the Purchaser has conditionally agreed to acquire the Sale Shares, representing 70% equity interest of the Target Company and the Shareholder’s Loan at a total consideration of RMB150,000,000.

Upon Completion of the Acquisition, the Target Company will become a non whollyowned subsidiary of the Company and the financial statements of the Target Company will be consolidated in the accounts of the Group.

IMPLICATION OF LISTING RULES

As the relevant percentage ratios under the Listing Rules in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction for the Company and is subject to notification and announcement requirements of Chapter 14 of the Listing Rules.

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THE ACQUISITION AGREEMENT

Date

12 December 2014

Parties

• Purchaser: Shenzhen Shen He Chuang Jian Investment Development Company Limited* 深圳市沈和創建投資發展有限公司, a company established in the PRC and a wholly owned subsidiary of the Company

Vendor: Shenzhen Newpont Investment Company Limited* 深圳市新邦投資集團有限公 司, a company established in the PRC

To the best of the Directors’ knowledge, information and belief having made all reasonable enquiries, the Vendor is principally engaged in investment holding and each of the Vendor and its respective ultimate beneficial owners is an Independent Third Party.

Assets to be acquired

The Sale Shares represent 70% of the equity interest of the Target Company and the Shareholder’s Loan.

Consideration

The Consideration for the Acquisition is RMB150,000,000 and shall be payable in cash by the Purchaser to the Vendor in the following manner:

• (a) as to RMB20,000,000 payable within 5 days upon the signing of the Acquisition Agreement;

• (b) as to RMB80,000,000 payable within 40 days upon the signing of the Acquisition Agreement; and

• (c) as to the remaining balance of RMB50,000,000 payable within 15 days upon fulfilling condition (iii) of the conditions precedent.

The Consideration was determined after arm’s length negotiations between the Purchaser and the Vendor with reference to (i) the fair market value of the Land of RMB170 million as at 31 October 2014 as valued by an independent professional valuer; (ii) the unaudited net asset value of the Target Company of approximately RMB17,348,000 as at 30 November 2014; and (iii) the shareholder’s loan due from Target Company to the Vendor of RMB67,118,000 as at 30 November 2014.

The Consideration will be settled by the internal resources of the Group.

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Conditions precedent

Completion of the Acquisition shall be subject to the following conditions being satisfied:

• i. the passing by the board of the Target Company of the resolution to approve the Acquisition Agreement and the transactions contemplated thereunder;

• ii. the passing by the Board of the resolution to approve the Acquisition Agreement and the transactions contemplated thereunder; and

• iii. the procedures of change in industry and commercial registration (工商登記) of the Target Company being completed and the new business registration certificate being obtained by the Target Company.

If any of the above conditions has not been fulfilled or waived by the agreement between the parties in six months upon entering into the Acquisition Agreement or such later date as the Vendor and the Purchaser may agree in writing, the Purchaser has right to terminate the Acquisition Agreement and its obligations thereunder with immediate effect. The Vendor shall refund all the consideration and the capital cost being paid by the Purchaser under the Acquisition and the Project.

INFORMATION OF THE TARGET COMPANY

The Target Company is a company with limited liability established under the laws of the PRC and is owned as to 70% by the Vendor and 30% by Mr. Liu Wen Jie, an Independent Third Party. Its principal businesses include domestic logistics, freight forwarding, warehousing and distribution services. The major asset of the Target Company currently consists of the land use right of a parcel of land located at Henggangjie Road, Longgang District, Shenzhen* (深圳市 龍崗區橫崗街), with a total site area of approximately 70,793.7 square meters.

The Target Company is currently engaged in an integrated logistics park development project to be constructed on the Land. The project will be developed into an integrated and multifunctional logistics park, providing comprehensive range of integrated logistics and warehouse storage facilities and service.

The total planned gross floor area of the Project is approximately 277,186 square meters and the major buildings to be constructed include warehouses, office buildings and store rooms. The construction of Project has been started from September 2013 and the completion of construction is scheduled before December 2015. It is expected that the logistics park will starts operation in December 2015.

The Target Company has obtained the Real Estate Title Certificate《房地產證》and Planning Permit on Land for Construction Use《建設用地規劃許可證》for the Project. The Vendor will assist the Target Company to obtain all other necessary approvals and licenses required for the construction of the Project including but not limited to Planning Permit for Construction Works《建設工程規劃許可證》and Commencement Permit for Construction Works《施工許可證》.

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FINANCIAL INFORMATION OF THE TARGET COMPANY

The unaudited net asset value of the Target Company as at 30 November 2014 was approximately RMB17,348,000.

The unaudited net loss before and after taxation of the Target Company for each of the two years ended 31 December 2012 and 2013 are set out below:

	For the year ended	For the year ended
	31 December
	2012	2013
	(RMB)	(RMB)
Net loss before taxation	1,497,000	103,000
Net loss after taxation	1,497,000	103,000

Upon completion of the Acquisition, the Target Company will become a non wholly-owned subsidiary of the Company and the financial statements of the Target Company will be consolidated in the accounts of the Group.

REASONS FOR THE ACQUISITION

As at the date of this announcement, the Group is principally engaged in infrastructure and construction business in the PRC.

The Longgang District is currently one of the main area for investment development expansion in Shenzhen, Guangdong Province and this project is located next to the Yantian District and Pinghu District, being the logistics hub in the Pearl River Delta region. Given the unique geographical advantage of Longgang District, the Longgang District government has highly focused on the development of the logistics industry and thus the Project is currently one of the major construction projects in Longgang District.

Given the Project is in line with the principal business of the Company, the Directors consider the Project is a good investment opportunity for the Group to expand its existing business which also helps to diversify the sources of income for the Company. In view of such favorable terms and conditions, the Board is of the view that the Project is in the benefit of the Company.

In light of the above, the Directors (including the independent non-executive Directors) are of the view that the Acquisition is in the interest of the Group and the terms and conditions of the Acquisition Agreement are on normal commercial terms, which are fair and reasonable, and are in the interests of the Company and the Shareholders as a whole.

LISTING RULES IMPLICATION OF THE ACQUISITION

As the relevant percentage ratios under the Listing Rules in respect of the Acquisition are more than 5% but less than 25%, the Acquisition constitutes a discloseable transaction for the Company and is subject to notification and announcement requirements of Chapter 14 of the Listing Rules.

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DEFINITIONS

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

“Acquisition”	the proposed acquisition of the Sale Shares and the
	Shareholder’s Loan by the Purchaser pursuant to the
	Acquisition Agreement
“Acquisition Agreement”	the acquisition agreement dated 12 December 2014 entered into
	between the Purchaser and the Vendor for the Acquisition
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“Company”	Shenyang Public Utility Holdings Company Limited
“connected person”	has the meaning ascribed to it in the Listing Rules
“Consideration”	consideration for the Acquisition, being RMB150,000,000
“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
“Group”	the Company and its subsidiaries
“H-Share(s)”	overseas listed foreign ordinary share(s) in 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
“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)
“Land”	a parcel of land located at Henggangjie Road, Longgang
	District, Shenzhen深圳市龍崗區橫崗街, with a total site area
	of approximately 70,793.7 square meters
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange

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“PRC”	the People’s Republic of China
“Purchaser”	Shenzhen Shen He Chuang Jian Investment Development
	Company Limited*深圳市沈和創建投資發展有限公司, a
	company established in the PRC and a wholly-owned subsidiary
	of the Company
“Project”	the integrated logistics park development project engaged by
	the Target Company in Longgang District
“Sale Shares”	70% of the issued share capital of the Target Company to be
	purchased by the Purchaser from the Vendor according to the
	Acquisition Agreement
“Shareholder(s)”	holder(s) of the H-Shares and the Domestic Shares
“Shareholder’s Loan”	an aggregate amounts due from Target Company to the Vendor
	and outstanding as at Completion
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Company”	Shenzhen Zhong De Logistics Company Limited* (深圳市眾
	德物流有限公司), a company established in the PRC and is
	owned as to 70% by Vendor and 30% by Mr. Liu Wen Jie, an
	Independent Third Party
“Vendor”	Shenzhen Newpont Investment Company Limited*深圳市新邦
	投資集團有限公司, a company established in the PRC and an
	Independent Third Party
“RMB”	Renminbi, the lawful currency of the PRC
“%”	per cent.

• For identification purpose only

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

Shenyang, PRC 12 December 2014

As at the date of this announcement, the executive directors of the Company are Mr. Ma Zhong Hong, Mr. Deng Xiao Gang and Mr. Huang Zhen Kun, the non-executive directors are Mr. Yin Zong Chen 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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