CMON Limited — Capital/Financing Update 2015

Jul 27, 2015

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 IN RELATION TO THE ACQUISITION OF 30% EQUITY INTEREST OF THE TARGET COMPANY

ACQUISITION

The Board is pleased to announce that on 27 July 2015, 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 conditionally agreed to sell and the Purchaser conditionally agreed to acquire the Sale Shares at a total consideration of RMB195,000,000.

LISTING RULES IMPLICATIONS

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.

THE ACQUISITION AGREEMENT

Date

27 July 2015

Parties

Purchaser: Shenzhen Shi Cheng He Chuang Jian Investment and Development Company Limited* 深圳市城合創建投資發展有限公司, a limited company incorporated under the laws of the PRC and a wholly-owned subsidiary of the Company

Vendor: Shenzhen Shi Hou Feng Trading Company Limited* 深圳市厚豐貿易有限公司

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The Vendor is a limited company incorporated under the laws of the PRC and principally engaged in sales of electrolytic copper, lead, zinc, precious metals and lubricants; domestic trade; and goods and technology import and export business. To the best of the Directors knowledge, information and belief and having made all reasonable enquiries, the Vendor and its ultimate beneficial owner(s) is/are third party(ies) independent of the Company and its connected persons (as defined in Chapter 14A of the Listing Rules).

Assets to be acquired

The Sale Shares represent 30% equity interest of Guangzhou Hai Yue Real Estate Development Company Limited* 廣州海粵房地產發展有限公司.

Consideration

The Consideration for the Acquisition is RMB195,000,000 and shall be payable in cash by the Purchaser to the Vendor in the following manner:-

• (a) as to RMB45,000,000 payable within 5 Business Days upon the signing of the Acquisition Agreement;

• (b) as to RMB130,000,000 payable within 30 Business Days upon the signing of the Acquisition Agreement; and

• (c) the remaining balance of the Consideration amounted to RMB20,000,000 (the “ Remaining Balance ”) payable within 15 Business Days upon fulfilling condition (iii) of the conditions precedent.

The Vendor shall repay RMB118,382,436 to the Target Company before the Remaining Balance of the Consideration is settled by the Purchaser.

The Consideration was arrived at based on normal commercial terms after arm’s length negotiations between the Purchaser and the Vendor with reference to the fair market value of the Target Company. According to the valuation report prepared by BMI Appraisals Limited, the fair market value of 100% equity interest of the Target Company as at 30 June 2015 is RMB680,000,000. The Consideration will be settled by the internal resources of the Group.

Conditions Precedent

Completion of the Acquisition is subject to the following conditions having been fulfilled:

• i. the passing by the board or shareholders 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.

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If any of the above conditions has not been fulfilled between the parties in three 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 being paid by the Purchaser under the Acquisition.

Completion

Completion shall take place upon the fulfillment of the conditions precedent of the Acquisition Agreement (or such later date as the parties to the Acquisition Agreement may agree in writing).

INFORMATION ON THE TARGET COMPANY

The Target Company is a company with limited liability established under the laws of the PRC and is wholly-owned by the Vendor immediately prior to Completion. It is principally engaged in developing, constructing, selling, renting and managing of commercial building, namely Dongshan Plaza (東山廣場) (the “ Property ”) located at No. 69 Xian Lie Zhong Road, Yue Xiu District, Guangzhou, the PRC.

As at the date of this announcement, the Property covers 197 commerce units with a gross floor area of approximately 27,030 square meters for leasing and the current occupancy rate is approximately 96.3%. The monthly rental income generated by the Property is approximately RMB2,900,000.

Financial information of the Target Company

The audited net asset value of the Target Company as of 31 December 2014 was approximately RMB221,900,003. As at 30 June 2015, the outstanding bank loan due to Bank of China of the Target Company amounted to RMB394,608,120.

The audited net profit before and after taxation and extraordinary items of the Target Company for each of the two years ended 31 December 2013 and 2014 are set out below:

	For the year	ended
	31 December
	2014	2013
	(RMB)	(RMB)
Revenue	45,167,875	48,557,860
Net profit before taxation and extraordinary items	3,584,869	8,769,321
Net profit after taxation and extraordinary items	2,688,606	7,883,374

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REASONS FOR AND BENEFITS OF THE ACQUISITION

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

Given the Property is located in prime area of Guangzhou, the Directors consider the Acquisition represents a good investment opportunity for the Group to further expand its property investment portfolio in Guangdong Province and is in line with the Group’s business strategies. In view of high occupancy rate of the Property, the Board believes that the Acquisition also allows the Group to generate stable rental income with reasonable return.

Taking into account the benefits of the Acquisition, the 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 IMPLICATIONS

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.

DEFINITIONS

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

“Acquisition”	the acquisition of the Sale Shares and by the Purchaser
	from the Vendor pursuant to the terms of the Acquisition
	Agreement
“Acquisition Agreement”	the conditional sale and purchase agreement dated 27 July
	2015 entered into the Purchaser and the Vendor in relation
	to the Acquisition
“Board”	the board of Directors
“Business Days”	a day on which banks are open for business (excluding
	Saturday or Sunday or public holidays) in the PRC
“Company”	Shenyang Public Utility Holdings Company Limited
“Completion”	the completion of the Acquisition Agreement in
	accordance with the terms thereof
“Connected person(s)”	has the same meaning ascribed to it in the Listing Rules

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“Consideration”	the consideration of RMB195,000,000 for the Sale Shares
	payable by the Purchaser to the Vendor pursuant to the
	Acquisition Agreement
“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
“Listing Rules”	the Rules Governing the Listing of Securities on the Stock
	Exchange
“PRC”	the People’s Republic of China
“Purchaser”	Shenzhen Shi Cheng He Chuang Jian Investment and
	Development Company Limited*深圳市城合創建投資
	發展有限公司, a limited company incorporated under the
	laws of the PRC and a wholly-owned subsidiary of the
	Company
“Sale Shares”	30% equity interest of the Target Company which shall be
	legally and beneficially owned by the Vendor immediately
	prior to Completion
“Share(s)”	H-Share(s) and Domestic Share(s)
“Shareholder(s)”	holder(s) of the Share(s)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“Target Company”	Guangzhou Hai Yue Real Estate Development Company
	Limted*廣州海粵房地產發展有限公司
“HK$”	Hong Kong dollar(s) , the lawful currency of Hong Kong
“RMB”	Renminbi, the lawful currency of the PRC

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“Vendor”

Shenzhen Shi Hou Feng Trading Company Limited* 深圳市厚豐貿易有限公司 , a l i m i t e d c o m p a n y incorporated under the laws of the PRC

“%”

per cent

By Order of the Board Shenyang Public Utility Holdings Company Limited Zhang Jing Ming Chairman

Shenyang, the PRC, 27 July 2015

As at the date of this announcement, the executive directors of the Company are Mr. Zhang Jing Ming, Mr. Deng Xiao Gang and Mr. Huang Zhen Kun, the non-executive directors are Mr. Yin Zong Chen and Ms. Li Yu Xiang and the independent non-executive directors are Mr. Chan Ming Sun Jonathan, Mr. He Qing Jia and Mr. Yu Guan Jian.

• For identification purposes only

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