CMON Limited — Proxy Solicitation & Information Statement 2011

Jun 23, 2011

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in doubt as to any aspect of this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Shenyang Public Utility Holdings Company Limited (the “Company”), you should at once hand this circular together with the accompanying form of proxy to the purchaser or the transferee, or to the bank, stockbroker or other agent through whom the sale or the transfer was effected for transmission to the purchaser or transferee.

Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited take no responsibility for the contents of this circular, 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 circular.

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)

MAJOR DISPOSAL

Financial Adviser to the Company

Karl Thomson Financial Advisory Limited

A notice convening an extraordinary general meeting of the Company to be held at the conference room of Shenyang Hai Yun Jinjiang International Hotel, Shenyang, the Peoples’s Republic of China on 14 July 2011 (Thursday) at 10:00 a.m., is set out on pages EGM-1 to EGM-2 of this circular. Whether or not you are able to attend such meeting, you are requested to complete the accompany form of proxy in accordance with the instructions printed thereon and return the same to the Company’s branch share registrar in Hong Kong Registrars Limited at Rooms 1806-7, 18/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not less than 24 hours before the time appointed for holding such meeting or any adjourned meeting (as the case may be).

Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or at any adjourned meeting should you so wish.

24 June 2011

CONTENTS

			Page
Definitions	. . . . . . .	. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix I	–	Financial information of the Group . . . . . . . . . . . . . . .	I-1
Appendix II	–	Property valuation report . . . . . . . . . . . . . . . . . . . . . . .	II-1
Appendix III	–	General information . . . . . . . . . . . . . . . . . . . . . . . . . . .	III-1
Notice of EGM . . . . .		. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	EGM-1

DEFINITIONS

In this circular, 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

• “connected persons” has the meaning ascribed to it in the Listing Rules

• “Consideration” the consideration of the Disposal, being RMB231,084,081

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

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

“Disposal Company” Zhuhai Beida Education and Science Park Company Limited* (珠海北大教育科學園有限公司)

• “Disposal Agreement” the sale and purchase agreement dated 26 April 2011 entered into between the Company and the Purchaser in relation to the Disposal

• “EGM”

• an extraordinary general meeting of the Company to be convened and held on 14 July 2011 to approve the Disposal, the Disposal Agreement and the transactions contemplated thereunder

• “Group” the Company and its subsidiaries

• “H-Share(s)” Ordinary share(s) of RMB1 each in the share capital of the Company

• “Hong Kong” the Hong Kong Special Administrative Region of the People’s Republic of China

• “Independent Third Party(ies)”

• the independent third party(ies) who is/are, to the best of the Directors’ knowledge, information and belief having made all reasonable enquiry, independent of the Company and its connected persons (as defined under the Listing Rules)

– 1 –

DEFINITIONS

“Latest Practicable Date” 22 June 2011, being the latest practicable date for the purpose of ascertaining certain information contained in this circular prior to its publication

• “Listing Rules”

• the Rules Governing the Listing of Securities on the Stock Exchange

• “Mr. Li”

• Mr. Li Zhaoxing*(黎照興), a shareholder of the Disposal Company holding 30% of the total issued share capital as at the date of this circular

• “PRC” the People’s Republic of China

• “Property”

• a property in Zhuhai, the PRC, being the sole property of the Disposal Company

• “Proposed Acquisition”

• a proposed acquisition of 100% equity interests of Zhongfang Chaozhou Investment Development Company Limited* (中房潮州投資開發有限公司) by the Company for a consideration of RMB310 million

• “Purchaser”

• Shanghai Buotou Zongrenzong Environmental Science and Technology Company Limited* (上海博投 眾人眾環保科技有限公司)

• “Sale Shares”

• the shares to be disposed of by the Company pursuant to the Disposal Agreement, being 70% of the issued share capital of the Disposal Company

• “Shareholder(s)” holder(s) of the H-Shares

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

• “RMB”

• Renminbi, the lawful currency of the PRC

• “%”

per cent

• For identification purpose only

– 2 –

LETTER FROM THE BOARD

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)

Executive Directors: Registered office: Mr. An Mu Zong (Chairman) No.1-4, 20A, Central Street, Mr. Wang Zai Xing Shenyang Economic and Mr. Chow Ka Wo Alex Technological Development Zone, Mr. Wang Hui the PRC Non-executive Directors: Principal place of business in the PRC: Mr. Bao Yi Qiang 14/F., Jinmao International Apartment, Mr. Lin Dong Hui No. 1 Xiao Dong Road, Da Dong District, Shenyang, Independent Non-executive Directors: the PRC Mr. Cai Lian Jun Mr. Wong Kai Tat Principal place of business in Hong Kong: Mr. Chan Ming Sun Jonathan Suite 201-3, 205, Floor 2, China Insurance Group Building, 141 Des Voeux Road, Central, Hong Kong

24 June 2011

To the Shareholders

Dear Sir or Madam,

MAJOR DISPOSAL

INTRODUCTION

Reference is made to the announcement of the Company dated 27 April 2011 in relation to the Disposal.

The purpose of this circular is to give you further information in respect of the Disposal, the Disposal Agreement, the transactions contemplated thereunder, the notice of EGM and the proxy form.

THE DISPOSAL

On 26 April 2011, the Company entered into the Disposal Agreement with the Purchaser, whereby the Purchaser has conditionally agreed to purchase and the Company

– 3 –

LETTER FROM THE BOARD

has conditionally agreed to sell the Disposal Company at the Consideration of RMB231,084,081. The principal terms of the Disposal Agreement are set out below:

THE DISPOSAL AGREEMENT

Date

26 April 2011

Parties

Vendor: The Company Purchaser: Shanghai Buotou Zongrenzong Environmental Science and Technology Company Limited* (上海博投眾人眾環保科技有限公司)

The Purchaser is a limited company incorporated in the PRC and principally engaged in the research, development and sale of environmental 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 Parties and not connected with the Company and its connected persons.

Consideration

Pursuant to the Disposal Agreement, the Consideration for the Disposal is RMB231,084,081. The Consideration was arrived at after arm’s length negotiations among the parties to the Disposal Agreement with reference to the audited net asset value of the 70% shareholding interests in the Disposal Company amounted to RMB110,712,430 owned by the Company as at 31 December 2010 and the shareholders’ loan due from the Disposal Company to the Company amounted to RMB120,371,651.

The Consideration shall be satisfied in the following manners:–

• (a) a refundable deposit of RMB30,000,000 shall be paid by the Purchaser to the Company in seven days upon entering into the Disposal Agreement; and

• (b) the balance of RMB201,084,081 shall be paid by the Purchaser to the Company in six months upon signing the Disposal Agreement.

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 70% of the issued share capital of the Disposal Company. As at the date of the Disposal Agreement, the Disposal Company was owned as to 70% by the Company and 30% by Mr. Li. The sole property of the Disposal Company is located in Zhuhai, the PRC with a gross floor area of 61,521.66 square meters [(note)] . The Property has been leased to the Zhuhai Experimental School Attached to the Peking University* (珠海北大附屬實驗學校) for a total rental income of RMB3,000,000 per annum.

Note: The gross floor area of the Property of 71,000 square meters as shown in the announcement of the Company in relation to the Disposal dated 27 April 2011 (the “ Announcement ”) was only an estimated figure. The actual gross floor area of the Property is 61,521.66 square meters according to the Property valuation report as conducted by the independent professional valuer after publication of the Announcement.

– 4 –

LETTER FROM THE BOARD

Conditions precedent

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

1. the Disposal being approved by the Board;

2. the Disposal being approved by the Shareholders at the EGM;

3. the Disposal Company obtains the change of business registration and the document of business registration shows the Purchaser holding 70% of the issued share capital of the Disposal Company; and

4. the Consideration being paid by the Purchaser.

As at the Latest Practicable Date, condition (1) has been fulfilled.

Completion

Completion shall take place when all conditions precedent to the Disposal Agreement being fulfilled and in any case, no later than six months from the date of the Disposal Agreement or other date as the Company and Purchaser may agree in writing.

INFORMATION OF THE DISPOSAL COMPANY

The Group is principally engaged in property development and educational investment in the PRC.

Set out below summaries the audited financial information of the Disposal Company for the two financial years ended 31 December 2009 and 2010

	For the year ended 31 December	For the year ended 31 December
	2010	2009
	(audited)	(audited)
	RMB	RMB
Revenue	3,000,000	3,000,000
Profit (loss) before taxation and
extraordinary items	3,146,869	(1,812,975)
Profit (loss) after taxation and
extraordinary items	2,846,869	(1,512,975)

As of 31 December 2010, the net asset value of the Disposal Company is RMB158,160,615.

FINANCIAL IMPACT ON THE GROUP AS A RESULT OF DISPOSAL

Upon the completion of Disposal, the Disposal Company will cease to be a subsidiary of the Company and its financial results will no longer be consolidated into the Group’s financial statements.

– 5 –

LETTER FROM THE BOARD

According to the annual report of the Company for the year ended 31 December 2010, the revenue of the Group was approximately RMB20,682,000. Based on the audited financial statements of the Disposal Company for the year ended 31 December 2010, the turnover of the Disposal Company was RMB3,000,000. Thus, the turnover of the Group is expected to decrease by RMB3,000,000 after the Disposal. It is expected that the operating cash flow and earnings of the Group will also decrease accordingly as a result of Disposal. In addition, both total assets and total liabilities of the Group would decrease by approximately RMB303,603,000 and approximately RMB25,070,000 respectively after the completion of Disposal.

Based on the audited net asset value amounted to RMB110,712,430 of the 70% shareholding in the Disposal Company as owned by the Company as at 31 December 2010 and the shareholders’ loan due from the Disposal Company to the Company of RMB120,371,651, there is neither loss or gain from the Disposal based on the size of the Consideration.

USE OF PROCEEDS

The Group tends to utilize approximately RMB200,000,000 for the partial settlement of the Proposed Acquisition and the balance of approximately RMB31,000,000 will be utilized for the general working capital of the remaining Group.

REASONS FOR THE DISPOSAL

Based on the annual rental income generated from the Property of RMB3,000,000 and the fair market value of the Property as at 30 April 2011 of RMB282,500,000 based on the valuation report issued by the independent professional valuer, the return from the Disposal Company before expenses is approximately 1%, which is lower than other projects held by the Group. In light of the low return, the management proposed to cash in the investment in the Disposal Company. With more liquid capitals in hand, the Company will be able to identify other investment opportunities with higher returns to enhance the value of the Company and its Shareholders.

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

FINANCIAL AND TRADING PROSPECT OF THE GROUP

Following the completion of the Disposal, it is the intention of the Board that the Group will continue to engage in the business of development, sales and leasing of real estate in the PRC.

As at the Latest Practicable Date, the Company owned two property assets in the PRC. One of the property assets of the Company is located at the prime area in Beijing, the existing tenants are banking and public utilities enterprises with strong financial background and stable income. Currently, the occupancy rate of the property is 100%. During the year ended 31 December 2010, the property helped to generate a rental income of approximately RMB8,228,000 for the Group.

– 6 –

LETTER FROM THE BOARD

Another commercial property held by the Group is Beida Jade Bird Building located at Shenzhen Hi-tech Development Zone. Currently, the occupancy rate of Beida Jade Bird Building is 100%. Beida Jade Bird Building is held by the Company through its wholly-owned subsidiary namely Shenzhen Jade Bird Shenfa Guangdian Company Limited (深圳青鳥瀋發光電有限公司) (“ Shenfa Guangdian ”). On 23 May 2011, it was announced that the Company had entered into an agreement in relation to the proposed disposal of 100% equity interests in Shenfa Guangdian for a consideration of RMB81 million (the “ Proposed Disposal* ”). Further details of the Proposed Disposal has been disclosed in the announcement of the Company dated 23 May 2011. As completion of the Proposed Disposal is subject to the fulfillment of a number of conditions, the Proposed Disposal may or may not be completed. As at the Latest Practicable Date, the Proposed Disposal of Shenfa Guangdian has yet been completed.

Looking ahead, the Board is optimistic about the long-term future prospects of the Group. However, the tightening policies launched by the PRC government to cool the property market in last year have been adding additional volatility to the Company, creating more risks and unforeseeable operating difficulties. In view of such uncertainties, the Company has been actively identifying potential projects to enhance return for its Shareholders.

On 11 May 2011, the Group has entered into an agreement in relation to the proposed acquisition of 100% equity interests of Zhongfang Chaozhou Investment Development Company Limited (中房潮州投資開發有限公司) (“ Zhongfang Chaozhou* ”) for a consideration of RMB310 million. Zhongfang Chaozhou is principally engaged in property development and construction. Currently, the major project of Zhongfang Chaozhou in progress is a land development project in Chaozhou, the PRC. The Board is of the view that the Proposed Acquisition is in the benefit of the Company as it can provide new opportunity for the Company to expand its existing business and it will also generate promising income to the Company in the future. As at the Latest Practicable Date, the Proposed Acquisition of Zhongfang Chaozhou has yet been completed. As completion of the Proposed Acquisition is subject to the fulfillment of a number of conditions, the Proposed Acquisition may or may not proceed. Further details of the Proposed Acquisition has been disclosed in the announcement of the Company dated 11 May 2011.

LISTING RULES IMPLICATION OF THE DISPOSAL

As certain applicable percentage ratios under Rule 14.07 of the Listing Rules in respect of the Disposal exceed 25% but less than 75%, the Disposal constitutes a major transaction for the Company under the Listing Rules. Accordingly, the Disposal is subject to the Shareholders’ approval at the EGM.

To the best of the knowledge, information and belief of the Directors, after having made all reasonable enquiries, none of the Shareholders has a material interest in the Disposal Agreement or is required to abstain from the voting on the resolution to approve the Disposal, Disposal Agreement and the transactions contemplated thereunder.

– 7 –

LETTER FROM THE BOARD

EGM

A notice convening the EGM with the resolutions, among other matters, is set out on page EGM-1 to EGM-2 in this circular. Whether or not the Shareholders are able to attend the meeting or any adjourned meeting, they are requested to complete the accompany form of proxy and return it to the Company’s branch share registrar in Hong Kong, the Hong Kong Registrars Limited at Rooms 1806-7, 18/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong as soon as possible and in any event not later than 24 hours before the time of the meeting or any adjourned meeting. Completion and return of the form of proxy will not preclude the Shareholders from attending and voting at the meeting or at any adjourned meeting should they wish to do so.

RECOMMENDATION

The Board considers that the terms of the Disposal Agreement are fair and reasonable and the Disposal is in the interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends the Shareholders to vote in favour of the ordinary resolution as set out in the notice of the EGM.

ADDITIONAL INFORMATION

Your attention is drawn to the additional information set out in the appendices to this circular.

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

• For identification purposes only

– 8 –

APPENDIX I

FINANCIAL INFORMATION OF THE GROUP

STATEMENT OF INDEBTEDNESS

Provision for potential liabilities

As at the close of business on 31 May 2011, the Group had provision of potential liabilities of approximately RMB1,041,000. The provisions were derived from the delayed delivery of apartment to customers in one of the real estate development project of Shenyang Development Real Estate Company Limited (“SDRE”). Therefore SDRE was potentially liable to pay penalty charges to the buyer for unable to discharge the sales contracts on time.

Apart from the above paragraph and as at the Latest Practicable Date, the Directors were not aware of any material change in respect of the indebtedness or other contingent liabilities of the Group since 31 May 2011.

Disclaimer

Save as aforesaid or as otherwise disclosed herein, and apart from intra-group liabilities, normal trade and other payables, receipt in advance as at 31 May 2011, the Group did not have any loan capital issued or agreed to be issued, bank overdrafts, loans, debt securities issued and outstanding, and authorized or otherwise created but unissued term loans or other borrowings, indebtedness in nature of borrowings, liabilities under acceptances (other than trade bills) or acceptance credits, debentures, mortgages, charges, finance lease or hire purchase commitments, which are either guaranteed, unguaranteed, secured, or unsecured, guarantees or other material contingent liabilities outstanding at the close of business on 31 May 2011.

The Directors confirmed that there has been no material change in the indebtedness and contingent liabilities of the Group since 31 May 2011.

WORKING CAPITAL

The Directors, are of the opinion that, taking into account its internal resources and the existing available credit facilities of the Group, the Group will have sufficient working capital for its present requirements for at least 12 months from the date of publication of this circular in the absence of unforeseen circumstances.

– I-1 –

APPENDIX II

PROPERTY VALUATION REPORT

The following is the text of a letter, summary of value and valuation certificate, prepared for the purpose of incorporation in this circular received from BMI Appraisals Limited, an independent valuer, in connection with its valuation as at 30 April 2011 of the property located in the PRC.

BMI Appraisals Limited 中和邦盟評估有限公司

33[rd] Floor, Shui On Centre, Nos. 6-8 Harbour Road, Wanchai, Hong Kong 香港灣仔港灣道 6-8 號瑞安中心 33 樓 Tel 電話： (852) 2802 2191 Fax 傳真： (852) 2802 0863 Email 電郵： info@bmintelligence.com Website 網址： www.bmi-appraisals.com

24 June 2011

The Directors Shenyang Public Utility Holdings Company Limited

14/F, Jin Mao International Apartment No. 1 Xiao Dong Road Dadong District, Shenyang City Liaoning Province The People’s Republic of China

Dear Sirs,

INSTRUCTIONS

We refer to the instructions from Shenyang Public Utility Holdings Company Limited (the “Company”) for us to value the property held by the Company and/or its subsidiaries (together referred to as the “Group”) located in the People’s Republic of China (the “PRC”). We confirm that we have performed an inspection, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing you with our opinion of the market value of the property as at 30 April 2011 (the “date of valuation”).

BASIS OF VALUATION

Our valuation of the concerned property has been based on the Market Value, which is defined as “the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion”.

VALUATION METHODOLOGY

In the course of our valuation, we have adopted the Depreciated Replacement Cost Approach. Depreciated replacement cost is defined as “the aggregate amount of the value of the land for the existing use or a notional replacement site in the same locality and the new replacement cost of the buildings and other site works, from which appropriate

– II-1 –

APPENDIX II

PROPERTY VALUATION REPORT

deductions may then be made to allow for the age, condition, economic or functional obsolescence and environmental factors, etc.; all of these might result in the existing property being worth less to the undertaking in occupation than would a new replacement”. This basis has been used due to the lack of an established market upon which to base comparable transactions, which generally furnishes the most reliable indication of value for assets without a known used market. This opinion of value does not necessarily represent the amount that might be realized from the disposition of the subject asset in the market and is subject to adequate profitability of the business compared to the value of the total assets employed.

TITLE INVESTIGATION

We have been provided with copies of title documents and have been advised by the Group that no further relevant documents have been produced. However, we have not examined the original documents to verify ownership or to ascertain the existence of any amendment documents, which may not appear on the copies handed to us. In the course of our valuation, we have relied upon the advice and information given by the Group’s PRC legal advisor – Kaiwen Law Firm (北京市凱文律師事務所) regarding the title of the property located in the PRC. All documents have been used for reference only.

VALUATION ASSUMPTIONS

Our valuation has been made on the assumption that the property is sold in the market in its existing state without the benefit of deferred terms contract, leaseback, joint venture, management agreement or any other similar arrangement which might serve to affect the value of the property.

In addition, no account has been taken of any option or right of pre-emption concerning or effecting sale of the property and no forced sale situation in any manner is assumed in our valuation.

VALUATION CONSIDERATIONS

We have inspected the exterior and wherever possible, the interior of the property. During the course of our inspections, we did not note any serious defects. However, no structural surveys have been made nor have any tests been carried out on any of the services provided in the property. We are, therefore, unable to report that the property is free from rot, infestation or any other structural defects.

In the course of our valuation, we have relied to a considerable extent on the information given by the Group and have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenures, particulars of occupancy, site/floor areas, identification of the property and other relevant information.

We have not carried out detailed on-site measurements to verify the correctness of the site/floor areas in respect of the property but have assumed that the site/floor areas shown on the documents handed to us are correct. Dimensions, measurements and areas included in the valuation certificate are based on information contained in the documents provided to us by the Group and are therefore only approximations.

– II-2 –

APPENDIX II

PROPERTY VALUATION REPORT

We have no reason to doubt the truth and accuracy of the information provided to us by the Group and we have relied on your confirmation that no material facts have been omitted from the information provided. We consider that we have been provided with sufficient information for us to reach an informed view.

No allowances have been made in our valuation for any charges, mortgages or amounts owing on the property or for any expenses or taxation, which may be incurred in effecting a sale or purchase.

Unless otherwise stated, it is assumed that the property is free from encumbrances, restrictions and outgoings of an onerous nature, which could affect its value.

Our valuation has been prepared in accordance with the HKIS Valuation Standards on Properties (First Edition 2005) published by the Hong Kong Institute of Surveyors.

Our valuation has been prepared under the generally accepted valuation procedures and are in compliance with the requirements contained in Chapter 5 and Practice Note 12 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited.

REMARKS

Unless otherwise stated, all money amounts stated herein are in Renminbi (RMB) and no allowances have been made for any exchange transfers.

Our Summary of Value and the Valuation Certificate are attached herewith.

Yours faithfully, For and on behalf of

BMI APPRAISALS LIMITED

Dr. Tony C. H. Cheng Joannau W. F. Chan BSc., MUD, MBA(Finance), MSc.(Eng), PhD(Econ), BSc., MSc., MRICS, MHKIS, RPS(GP) MHKIS, MCIArb, AFA, SIFM, FCIM, MASCE, Senior Director MIET, MIEEE, MASME, MIIE Managing Director

Notes:

Dr. Tony C.H. Cheng is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 18 years’ experience in valuations of properties in Hong Kong and the People’s Republic of China.

Ms. Joannau W.F. Chan is a member of The Hong Kong Institute of Surveyors (General Practice) who has over 18 years’ experience in valuations of properties in Hong Kong and over 12 years’ experience in valuations of properties in the People’s Republic of China.

– II-3 –

APPENDIX II

PROPERTY VALUATION REPORT

SUMMARY OF VALUE

Property

Market Value in existing state as at 30 April 2011 (RMB)

Property held by the Group for investment in the PRC A land parcel (Land Parcel No. A0101018), 22 buildings and various structures located at Nan Mang Wan, Qiao Island, Zhuhai City, Guangdong Province, The PRC 位於中國廣東省 珠海市淇澳島南芒灣 之一塊土地（地號：A0101018）、 22棟房屋及若干構築物 Total:	282,500,000
	282,500,000

– II-4 –

APPENDIX II

PROPERTY VALUATION REPORT

VALUATION CERTIFICATE

Property held by the Group for investment in the PRC

Market Value in Particulars of existing state Property Description and tenure occupancy as at 30 April 2011 (RMB) A land parcel The property comprises a land According to a 282,500,000 (Land Parcel No. parcel with a site area of Tenancy Contract, A0101018), 22 approximately 420,002 sq.m. and portions of the buildings and 22 buildings and various property with a total various structures ancillary structures completed in GFA of approximately located at various stages between 2002 and 61,124 sq.m. (the Nan Mang Wan, 2007 erected thereon. “rented portion”) Qiao Island, were leased to Zhuhai Zhuhai City, The total gross floor area (“GFA”) Subsidiary Guangdong of the buildings of the property is Experimental School Province, approximately 61,521.66 sq.m. of Beijing University The PRC (珠海北大附屬實驗學 The land use rights of the 校), an independent 位於中國廣東省珠海 property have been granted for a third party, for a term 市淇澳島南芒灣之一 term expiring on 13 June 2051 for expiring on 31 August 塊土地（地號：A010 education, research and ancillary 2013 as at the date of 1018）、22棟房屋及 uses. valuation. The annual 若干構築物 rent of the rented portion together with relevant machineries and equipment was RMB3,000,000 exclusive of water, electricity and other miscellaneous charges as at the date of valuation.

As advised by the Group, the remaining portion of the property was vacant as at the date of valuation.

Notes:

1. Pursuant to a Real Estate Title Certificate, Yue Fang Di Zheng Zi Di No. C0587330 (粵房地證字第C0587330 號), the land use rights of the property with a site area of approximately 420,002 sq.m. have been granted to Zhuhai Beida Education & Science Park Company Limited (珠海北大教育科學園有限公司) (“Zhuhai Education”) for a term expiring on 13 June 2051.

2. Pursuant to 14 Real Estate Title Certificates, Yue Fang Di Zheng Zi Di Nos. C3940410 to C3940423 (粵房地 證字第C3940410 至C3940423號), the building ownership rights of 14 buildings of the property with a total GFA of approximately 53,641.1 sq.m. are legally vested in Zhuhai Education.

3. For the remaining 8 buildings of the property with a total GFA of approximately 7,880.56 sq.m., we have not been provided with any title certificates.

4. Pursuant to a Construction Works Planning Permit, 2004 Gui (Xiang) Zi No. 064, 3 buildings of the property stated in Note 3 with a total GFA of approximately 7,465.19 sq.m. are permitted to be developed by Zhuhai Education.

– II-5 –

APPENDIX II

PROPERTY VALUATION REPORT

1. Pursuant to a Construction Works Commencement Permit, No. 440400200605100501, the construction work of 3 buildings of the property stated in Note 4 with a total GFA of approximately 7,465.19 sq.m. was permitted to commence on the property.

2. Pursuant to a Construction Works Planning Completion Inspection Certificate, (2007) Gui Yan Zi (Gao Xin) Di No. 006, the construction work of 3 buildings of the property stated in Note 4 with a total certified GFA of approximately 7,415.89 sq.m. is in compliance with the requirements of relevant Construction Works Planning Permit and Zhuhai City Urban Planning Regulations, and has passed the completion inspection.

3. In the valuation of this property, we have attributed no commercial value to the buildings of the property stated in Note 3 as relevant title certificates of the buildings have not been obtained. However, for your reference purpose, we are of the opinion that the depreciated replacement cost of the buildings (excluding the land) as at the date of valuation would be in the sum of approximately RMB14,740,000 assuming all relevant title certificates have been obtained and the buildings could be freely transferred in the market. The estimated annual market rental of the property in existing state as at the date of valuation would be in the sum of approximately RMB5,000,000 exclusive of management fees, water and electricity charges.

4. The opinion of the PRC legal advisor to the Group contains, inter alia, the following:

5. a. The land use rights of the property are legally vested in Zhuhai Education;

6. b. The land premium of the property has been settled in full;

7. c. The use of the land parcel of the property is in compliance with the local land use planning;

8. d. The buildings of the property with title certificates are legally owned by Zhuhai Education and Zhuhai Education has the rights to occupy, lease, mortgage or dispose of these buildings in the market;

9. e. The buildings of the property with title certificates are not subject to mortgage or other material encumbrances; and

10. f. The 8 buildings of the property without title certificates stated in Note 3 may be ordered by relevant authorities to be demolished and Zhuhai Education may be subject to a fine or penalty. The application for Building Ownership Certificates of 3 buildings stated in Note 4 is being processed and there exist no legal impediments to obtain the relevant title certificates. After relevant title certificates of the 3 buildings have been obtained, Zhuhai Education has the rights to occupy, lease, mortgage or dispose of the 3 buildings in the market.

11. Zhuhai Education is a 70%-owned subsidiary of the Company.

– II-6 –

APPENDIX III

GENERAL INFORMATION

1. RESPONSIBILITY STATEMENT

This circular, for which the Directors collectively and individually accept full responsibility, includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Group. The Directors, having made all reasonable enquiries, confirm that to the best of their knowledge and belief the information contained in this circular is accurate and complete in all material respects and not misleading or deceptive, and there are no other matters the omission of which would make any statement herein or this circular misleading.

2. DISCLOSURE OF INTERESTS

(a) Disclosure of interests and short positions in the securities of the Company and its associated corporations

As at the Latest Practicable Date, none of the Directors and chief executive of the Company had or was deemed to have any interests and short positions in the shares, underlying shares and debentures of the Company or any of its associated corporation (within the meaning of Part XV of the SFO), which were notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including any interests and short positions which they have taken or deemed to have taken under such provisions of the SFO); or which were required, pursuant to section 352 of the SFO, to be entered in the register referred to therein; or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Company, to be notified to the Company and the Stock Exchange.

(b) Substantial Shareholders and other person’s interests and short position in the Shares, underlying Shares and securities of the Company

As at the Latest Practicable Date, so far as was known to the Directors or the chief executive of the Company, the following persons (other than Director or chief executive of the Company) had, an interest or short position in the shares or underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO or, who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstance at

– III-1 –

APPENDIX III

GENERAL INFORMATION

general meetings of any other member of the Company (if any) or had any options in respect of such capital:

		Number of
Name	Class of Shares	Shares
Beijing Mingde Guangye Investment	Domestic Shares	600,000,000
Consultant Company Limited
(the “Controlling Shareholder”)
Beijing Mingyude Business and Trade	Domestic Shares	600,000,000
Company Limited (Note 1)
(“Beijing Mingyude”)
Li Peng (Note 2)	Domestic Shares	600,000,000
Shen Yun Xie (Note 3)	Domestic Shares	600,000,000
HKSCC Nominees Limited (Note 4)	H Shares	418,343,200

• Note 1: Beijing Mingyude is a limited company established in the PRC which holds 90% equity interest in the Controlling Shareholder. Pursuant to SFO, Beijing Mingyude is regarded as holding interests in the shares of the Company held by the Controlling Shareholder.

• Note 2: Li Peng is a PRC legal person who holds 10% equity interest in the Controlling Shareholder and 60% equity interest in Beijing Mingyude, which holds 90% equity interest in the Controlling Shareholder. Pursuant to SFO, Li Peng is deemed to be interested in the shares of the Company held by the Controlling Shareholder.

• Note 3: Shen Yun Xie is a PRC legal person who holds 40% interest in Beijing Mingyude, which holds 90% equity interest in the Controlling Shareholder. Pursuant to SFO, Shen Yun Xie is deemed to be interested in the shares of the Company held by the Controlling Shareholder.

• Note 4: As notified by HKSCC Nominees Limited, as at 31 May 2011, the following participants in the central clearance system have interests amounting to 5% or more of the total issued H-Shares of the Company as shown in the securities accounts in the central clearance system:

• (a) Bank of China (Hong Kong) Limited as nominee holds 50,324,000 H-shares, representing 11.97% of the issued H-shares of the Company.

• (b) The Hong Kong and Shanghai Banking Corporation Limited as nominee holds 31,499,000 H-shares, representing 7.49% of the issued H-shares of the Company.

• (c) Purdential Brokerage Limited as nominee holds 23,340,000 H-shares, representing 5.55% of the issued H-shares of the Company.

Save as aforesaid, as at the Latest Practicable Date, so far as was known to the Directors, no person had any interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company and the Stock Exchange under the provisions of Divisions 2 and 3 of Part XV of the SFO, or who was, directly or indirectly, interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Company (if any) or who had any option in respect of such capital.

– III-2 –

APPENDIX III

GENERAL INFORMATION

3. DIRECTORS’ INTERESTS IN ASSETS, CONTRACT OR ARRANGEMENT

As at the Latest Practicable Date, none of the Directors or proposed Directors had any direct or indirect interests in any assets which have since 31 December 2010 (being the date to which the latest published audited accounts of the Company were made up) been acquired or disposed of by or leased to any member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 December 2010, being the date to which the latest audited consolidated financial statements of the Company have been made up), or were proposed to be acquired or disposed of by or leased to any member of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 December 2010, being the date to which the latest audited consolidated financial statements of the Company have been made up). As at the Latest Practicable Date, none of the Directors was materially interested in any contract or arrangement which was significant in relation to the business of the Group (including any company which will become a subsidiary of the Company by reason of an acquisition which has been agreed or proposed since 31 December 2010, being the date to which the latest audited consolidated financial statements of the Company have been made up).

4. SERVICE CONTRACTS

The existing service contracts between the Company and the Directors are of a term of 3 years commencing on 12 February 2009, and will be expired on the date of the 2012 annual general meeting. The existing service contracts are subject to termination in certain circumstances as stipulated in the relevant service contracts.

Fixed remuneration of the Directors as set out in their respective existing service contract with the Company are as follows:

	Annual
Director	emoluments
	(RMB)
Mr. An Mu Zong	30,000
Mr. Wang Zai Xing	30,000
Mr. Chow Ka Wo Alex	120,000
Mr. Wang Hui	30,000
Mr. Bao Yi Qiang	30,000
Mr. Lin Dong Hui	30,000
Mr. Cai Lian Jun	30,000
Mr. Wong Kai Tat	120,000
Mr. Chan Ming Sun Jonathan	120,000

Save as disclosed above, none of the Directors had entered or proposed to entered into other service contracts with any member of the Group.

– III-3 –

APPENDIX III

GENERAL INFORMATION

5. DIRECTORS’ INTERESTS IN COMPETING BUSINESS

To the best knowledge of the Directors, none of the Directors or their respective associates (within the meaning of the Listing Rules) had any interests in any business which competed or might compete with the business of the Group as at the Latest Practicable Date.

6. MATERIAL CONTRACTS

The following contracts (not being contracts entered into in the ordinary course of business carried on or intended to be carried on by the Company or any of its subsidiaries) had been entered into by the Company within the two years preceding the Latest Practicable Date and are or may be material:

• (i) the Disposal Agreement;

• (ii) the acquisition agreement dated 11 May 2011 entered into between Tianjin Zhongfang Yongyang Property Company Limited (天津中房雍陽置業有限公 司), Shenzhen Zhongfang Chuangzhan Investment Group Company Limited (深圳市中房創展投資集團有限公司) and the Company in relation to the acquisition of 100% equity interests of Zhongfang Chaozhou Investment Development Company Limited* (中房潮州投資開發有限公司) for a consideration of RMB310 million;

• (iii) the disposal agreement dated 23 May 2011 entered into between Beijing Sihai Huaao Trading Company Limited (北京四海華澳貿易有限公司) and the Company in relation to the disposal of the entire equity interests of Shenzhen Jade Bird Shenfa Guangdian Company Limited (深圳青鳥瀋發光電有限公司) at a consideration of RMB 81million;

• (iv) the deed of termination dated 14 May 2009 entered into between Shenyang Public Utility Group Company Limited (“ Shenyang Public Utility Group ”), Mr. Cheung Tsun Yung Thomas and the Company in relation to the termination of the restructuring agreement, the first supplemental agreement and the second supplemental agreement, and there is no consideration involved under this deed of termination [(note][1)] ;

• (v) the supplemental agreement dated 15 May 2009 entered into between Beijing Zhong Yi Chong Yi Technology Development Company (“ Zhong Yi ”), Beijing Diye Real Estate Development Company Limited (“ Beijing Diye ”) and the Company in relation to the amendment of the long stop date stipulated under the share transfer agreement dated 31 December 2008 in relation to the disposal of 80% equity interest in Beijing Diye;

• (vi) the supplemental agreement dated 20 October 2009 entered into between Zhong Yi and the Company in relation to the amendment of terms of the asset transfer agreement dated 5 January 2009 in relation to the acquisition of the

– III-4 –

APPENDIX III

GENERAL INFORMATION

property located at 1st floor and 2nd floor, Huipu Building, No. 112, Jianguo Road, Chaoyang District, Beijing, the PRC; and

• (vii) the supplemental agreement dated 17 December 2009 entered into between Zhong Yi, Beijing Diye and the Company in relation to the amendment of the long stop date stipulated under the share transfer agreement dated 31 December 2008 aforesaid.

Note:

1. Pursuant to the deed of termination dated 14 May 2009, the following agreements were also terminated accordingly:

2. a) the restructuring agreement dated 28 August 2008 entered into between Shenyang Public Utility Group, Mr. Cheung Tsun Yung Thomas and the Company in relation to the restructuring of the Company which is intended to assist the resumption of trading in the H-Shares on the Stock Exchange;

3. b) the first supplemental agreement dated 14 October 2008 entered into between Shenyang Public Utility Group, Mr. Cheung Tsun Yung Thomas and the Company in relation to the amendment of the restructuring agreement; and

4. c) the second supplemental agreement dated 2 January 2009 entered into between Shenyang Public Utility Group, Mr. Cheung Tsun Yung Thomas and the Company in relation to the cancellation of the first supplemental agreement and the amendment of the restructuring agreement.

7. LITIGATION

As at the Latest Practicable Date, the Company was not engaged in any litigation, arbitration or claim of material importance and no litigation, arbitration or claim of material importance is known to the Directors to be pending or threatened against the Company.

8. QUALIFICATIONS AND CONSENT OF EXPERTS

The following is the qualification of the each of the experts who has given its opinion or advice which is contained in circular:

Name Qualifications BMI Appraisals Limited independent professional valuer Beijing Kaiwen Law Firm registered law firm in the PRC (北京凱文律師事務所) Lo and Kwong C.P.A. Certified Public Accountants Company Limited

Each of BMI Appraisals Limited, Beijing Kaiwen Law Firm (北京凱文律師事務所) and Lo and Kwong C.P.A. Company Limited has given and has not withdrawn its written consent to the issue of this circular with the inclusion of its letter and/or references to its name in the form and context in which they appear.

– III-5 –

APPENDIX III

GENERAL INFORMATION

As at the Latest Practicable Date, each of the above experts was not beneficially interested in the share capital of the Company nor did it has any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in the Company nor did it have any interest, either direct or indirect, in any asset which has been, since the date to which the latest published audited consolidated financial statements of the Company were made up, acquired, disposed of by or leased to or are proposed to be acquired or disposed of by or leased to the Company.

9. CONTINGENT LIABILITIES

Save as disclosed in the paragraph headed “Statement of Indebtedness” in Appendix I to this circular, the Directors were not aware of any material changes in respect of the indebtedness or other contingent liabilities of the Group since 31 May 2011.

10. MISCELLANEOUS

• (i) The registered address of the Company is at No.1-4, 20A, Central Street, Shenyang Economic and Technological Development Zone, the PRC.

• (ii) The principal place of business of the Company in the PRC is at 14/F., Jinmao International Apartment, No. 1 Xiao Dong Road, Da Dong District, Shenyang, the PRC.

• (iii) The principal place of business of the Company in Hong Kong is at Suite 201-3, 205, Floor 2, China Insurance Group Building, 141 Des Voeux Road, Central, Hong Kong.

• (iv) The H-Share registrar and transfer office of the Company in Hong Kong is Hong Kong Registrars Limited at Rooms 1806-7, 18/F, Hopewell Centre, 183 Queen’s Road East, Wan Chai, Hong Kong.

• (v) Unless otherwise stated, in the event of inconsistency, the English text of this circular shall prevail over the Chinese text.

11. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours from 9:00 a.m. to 5:00 p.m. (other than Saturdays, Sundays and public holidays) at 14/F., Jinmao International Apartment, 1 Xiao Dong Road, Da Dong District, Shenyang, the PRC and on the Company website at www.sygyfz.com.cn during normal business hours on any business day from the date of this circular up to and including the date of EGM:

• (i) the memorandum and articles of association of the Company;

• (ii) the “Letter from the Board”, the text of which is set out on pages 3 to 8 of this circular;

• (iii) the letter, summary of values and valuation certificates prepared by BMI Appraisals Limited, the text of which is set out in Appendix II to this circular;

– III-6 –

APPENDIX III

GENERAL INFORMATION

• (iv) the written consents referred to in the section headed “Qualifications and Consent of Experts” in this Appendix;

• (v) the annual reports of the Company for the two years ended 31 December 2009 and 2010;

• (vi) the interim report of the Company for the six months ended 30 June 2010;

• (vii) the material contracts referred to in the section headed “Material Contracts” in this Appendix; and

• (viii) the service contracts referred to in the section headed “Service Contracts” in this Appendix.

• For identification purposes only

– III-7 –

NOTICE OF EGM

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)

NOTICE OF THE FIRST EXTRAORDINARY GENERAL MEETING FOR 2011

NOTICE IS HEREBY GIVEN that the first extraordinary general meeting for 2011 (“EGM”) of Shenyang Public Utility Holdings Company Limited (the “Company”) will be held at the conference room of Shenyang Hai Yun Jinjiang International Hotel, Shenyang, the People’s Republic of China on 14 July 2011 (Thursday) at 10:00 a.m. for the following purposes:

BY WAY OF ORDINARY RESOLUTION:

THAT

• (a) the disposal agreement (“ Disposal Agreement ”) dated 26 April 2011 between the Company as the vendor, and Beijing Shanghai Buotou Zongrenzong Environmental Science and Technology Company Limited (上海博投眾人眾環保科技有限公司) as the purchaser regarding the disposal of the 70% equity interests in Zhuhai Beida Education and Science Park Company Limited (珠海北大教育科學園有限公司) (a copy of which has been produced to the EGM marked “A” and signed by the chairman of the EGM for the purpose of identification) and the transactions contemplated thereunder, be and are hereby approved and confirmed; and

• (b) any one or more of the directors (“Directors”) of the Company be and is/are hereby authorized to sign, execute, perfect, deliver and do all such documents, deeds, acts, matters and things, as the case may be, as they may in their discretion consider necessary desirable or expedient to carry and implement the Disposal Agreement and all the transactions contemplated thereunder.

By order of the Board

Shenyang Public Utility Holdings Company Limited An Mu Zong

Chairman

Shenyang, the PRC, 26 May 2011

– EGM-1 –

NOTICE OF EGM

Registered office: No.1-4, 20A, Central Street, Shenyang Economic and Technological Development Zone the PRC

Principal place of business in Hong Kong: Suite 06-12, 33/F, Shui On Centre, 6-8 Harbour Road, Wanchai, Hong Kong

Principal place of business in the PRC: 14/F., Jinmao International Apartment Da Dong District, Shenyang the PRC

Notes:

1. Each shareholder entitled to attend and vote at the EGM is entitled to appoint in written form one or more proxies to attend and vote at the EGM on his/her behalf. A proxy need not be a member of the Company. Shareholders or their proxies are entitled to attend the EGM and vote.

2. To be valid, the proxy form together with the certified power of attorney or authority (if any) must be delivered to the Company’s H share registrar in Hong Kong, Hong Kong Registrars Limited at Rooms 1806-7, 18/F, Hopewell Centre, 183 Queen’s Road East, Hong Kong or the place of operation of the Company at 14/F, Jin Mao International Apartment, 1 Xiao Dong Road, Da Dong District, Shenyang, the People’s Republic of China not less than 24 hours before the time of the EGM.

3. Shareholders or their proxies shall produce their identity documents when attending the EGM.

4. The register of the members of the Company will be closed from 25 June 2011 to 14 July 2011 (both dates inclusive), during which period no transfers of H shares will be effected.

5. Shareholders whose names appear on the register of members of the Company on 24 June 2011 will be entitled to attend and vote at the EGM.

6. Shareholders who intend to attend the EGM should complete the reply slip for attending the EGM and return it to the Company’s H Share registrar in Hong Kong, Hong Kong Registrars Limited at Rooms 1806-7, 18/F, Hopewell Centre, 183 Queen’s Road East, Hong Kong or the place of operation of the Company at 14/F, Jin Mao International Apartment, 1 Xiao Dong Road, Da Dong District, Shenyang, the People’s Republic of China on or before 24 June 2011. The reply slip may be delivered by hand, by post or by facsimile at facsimile number (852) 28650990. Completion and return of the reply slip shall not affect the shareholder’s right to attend the EGM pursuant to note 5 above.

7. The EGM is expected to last for less than one day. Shareholders and their proxies attending the EGM shall be responsible for their own traveling and accommodation expenses.

8. For identification purpose only

– EGM-2 –