CMON Limited — Share Issue/Capital Change 2001

Jul 3, 2001

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims 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 with limited liability)

Proposed Issue of A Shares

in the People'S Republic of China, resignation

and appointment of director

Summary

The Board announces that the Company intends to apply to the relevant PRC authorities for (1) the issue and allotment of not more than 100 million A Shares to institutional and public investors in the PRC and (2) the listing of such A Shares on the Shanghai Stock Exchange in the PRC. After deducting all necessary expenses, the net proceeds from the    proposed A Share Issue will be used to invest in a 2 x 200 megahertz watt low temperature nuclear heat project in Shenyang, the PRC.

Further announcement in respect of the A Share Issue will be made as and when appropriate.

Mr. Chen Jia Sheng resigned as an independent non-executive director of the Company with effect from 29th June, 2001 and Dr. Cheng Wei is nominated for the appointment as an independent non-executive director, subject to the approval of the shareholders of the Company at the 1st EGM.

Shareholders and investors should note that other than the approval of the shareholders of the Company at the 1st EGM,    the A Share Issue is subject to the approval of various relevant PRC authorities, including the CSRC and the Shanghai Stock Exchange. Therefore the A Share Issue may or may not materialise. Shareholders and investors are requested to exercise caution when dealing in the H Shares of the Company.

The Company intends to apply to the CSRC and other relevant PRC authorities for the issue and allotment of A Shares to institutional and public investors in the PRC and for the listing of such A Shares on the Shanghai Stock Exchange. Such application will be made subsequent to the proposed A Share Issue being approved by the shareholders of the Company at the 1st EGM. The effective period of the A Share Issue is one year from the date of the 1st EGM on which the resolution in respect thereof is passed. At present, none of the shares of the Company are listed on any stock exchange in the PRC, other than the H Shares which are listed on the HKSE.

Proposed A Share Issue

The proposed structure of the A Share Issue will comprise the following:

(i) Number of A Shares to be issued:

Not more than 100,000,000 A Shares, and if 100,000,000 A Shares are issued, they will represent approximately 16.7% of the existing issued domestic share of the Company or approximately 14.3% of the total domestic share as enlarged by the A Share Issue. It will also represent approximately 9.8% of the existing issued share capital of the Company or approximately 8.9% of the total issued share capital as enlarged by the A Share Issue.

(ii) Target subscribers:

All natural persons and institutional investors (except those restricted by the relevant PRC laws and regulations) who have A shares stock trading accounts with the Shanghai Stock Exchange.

(iii) Issue price and pricing process:

The final issue price of A Shares will be determined by agreement between the lead underwriter of the A Share Issue and the Company with reference to the result of a simultaneous on-line and off-line "book-building" process in respect thereof. Resolutions to authorise the Board in, inter alia, determining the issue price and the pricing process of the A Shares will be considered by the shareholders of the Company at the 1st EGM.

(iv) Use of proceeds:

The proceeds of the proposed A Shares Issue will be used to invest in a 2 x 200 megahertz watt low temperature nuclear heat project in Shenyang, the PRC. The total investment of this project is estimated to be approximately RMB1,327 million and the Company intends to invest approximately RMB842 million in a company yet to be set up, which will own, operate and develop the nuclear heat project. The Company plans to raise the investment fund of RMB842 million from the A Share Issue and any additional fund required for the nuclear heat project may be satisfied by way of, inter alia, debt borrowing or invitation of other joint venture partner(s) or by the Company's own resources. Accordingly, the Company plans to apply the proceeds received from the A Share Issue to such project and the remaining proceeds, if any, will be used as working capital of the Company. In the event that the proceeds received from the A Share Issue cannot satisfy the funding requirements of the project, the differences will be satisfied by internal resources and other means of financing of the Company.

Reduction of State-owned shares

The Board will comply with the requirements of the reduction of State-owned shares and to make adjustment in accordance with the "Provisional Regulations on Raising Social Security Funds from the Reduction of State-owned Shares" announced by the State Council of the PRC and other relevant regulations.

Reasons for and benefits of the a share issue

The A Share Issue will broaden the shareholders base of the Company. Besides, the investment in the low temperature nuclear heat project will have significant influence in improving the Company's competitiveness and risk resistance ability. The project is in accordance with the State's industry policy and the Company's development strategy. It has good economic returns and prospect for development in the utility industry. While continuing its utility business, the Company will be driven into prospective development in the high technology field.

Extraordinary General Meeting

The 1st EGM will be held on 24th August, 2001, at which special resolutions will be proposed to consider and to approve, inter alia, the proposed A Share Issue of the Company. It should be noted that the A Share Issue, upon the approval by the shareholders of the Company at the 1st EGM, is still subject to approval of the CSRC and the Shanghai Stock Exchange in respect of the listing of and trading in the A Shares on the Shanghai Stock Exchange.

Book Closure

The register of members of the Company will be closed from Thursday, 26th July, 2001 to Friday, 24th August, 2001 (both dates inclusive), during which period no transfers of H Shares will be effected.

Shareholders whose names appear on the register of members of the Company on Thursday, 26th July, 2001 will be entitled to attend and vote at the meeting. In order to be entitled to attend and vote at the meeting, all transfers of H Shares accompanied by the relevant share certificates must be lodged with the Company's H share registrar, Hong Kong Registrars Limited at 2/F, Vicwood Plaza, 199 Des Voeux Road Central, Hong Kong, not later than 4:00 p.m. on Wednesday, 25th July, 2001.

Resignation and appointment of director

The Board announces that Mr. Chen Jia Sheng has tendered his resignation, with effect from 29th June, 2001, as an independent non-executive director of the Company due to personal reasons.

The Board also wishes to announce that the controlling shareholder of the Company, Shenyang Public Utility Group Company Limited, has proposed the appointment of Dr. Cheng Wei as an independent non-executive director of the Company at the 1st EGM.

Dr. Cheng Wei, aged 47, professor, is the president and deputy secretary of the party committee of Liaoning University in the PRC. Dr. Cheng Wei graduated with doctoral degree in world economics in 1990. Dr. Cheng Wei joined the Liaoning University in 1976 as an assistant lecturer. Mr. Cheng is well versed in theoretical and empirical economics and has rich experience in corporate strategy.

General

The Company will make necessary amendments to the relevant provisions of the Articles of Association of the Company subsequent to the completion of the A Share Issue and the registration of the change in the registered capital of the Company upon the completion of the A Share Issue.

Further announcement in respect of the A Share Issue will be made by the Company as and when appropriate.

Shareholders and investors should note that other than the approval of the shareholders of the Company at the 1 st EGM, the A Share Issue is subject to the approval of various relevant PRC authorities, including the CSRC and the Shanghai Stock Exchange. Therefore the A Share Issue may or may not materialise. Shareholders and investors are requested to exercise caution when dealing in the H shares of the Company.

Definitions

In this announcement, the following expressions have the meanings set out below unless the context requires otherwise:

"A Share(s)" the domestic ordinary share(s) of the Company with a nominal value of RMB1.00 each in the share capital of the Company

"A Share Issue" the proposed issue of A Shares to institutional and public investors in the PRC by the Company and the proposed listing thereof on the Shanghai Stock Exchange

"Board" the board of directors of the Company

"Company" Shenyang Public Utility Holdings Company Limited (瀋陽公用發展股份有限公司), a joint stock limited company established in the PRC with limited liability in July, 1999, the H Shares of which are listed on the HKSE

"CSRC" China Securities Regulatory Commission (中國證券監督管理委員會)

"H Shares" the overseas listed foreign shares of the Company with a nominal value of RMB1.00 each and listed on the HKSE

"HKSE" The Stock Exchange of Hong Kong Limited

"Hong Kong" the Hong Kong Special Administrative Region of the PRC

"PRC" the People's Republic of China excluding, for the purpose of this announcement, the Hong Kong Special Administration Region, the Macau Special Administration Region and Taiwan

"1st EGM" the first extraordinary general meeting of the Company in 2001 to be held at the conference room located at the office of the Company at Level 9, Shenyang Golden International Tower, 355 Zhong Shan Road, Shenhe District, Shenyang, the PRC at 9:00a.m. on 24th August, 2001 to, inter alia, consider and approve the A Share Issue

"Shanghai Stock Exchange" Shanghai Stock Exchange (上海證券交易所)

"RMB" Renminbi, the lawful currency of the PRC

By the order of the Board

Wang Se

Company Secretary

Shenyang, the PRC, 29th June, 2001