Chinney Alliance Group Limited — Proxy Solicitation & Information Statement 2003

Sep 16, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any 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 Chinney Alliance Group Limited, you should at once hand this circular together with the enclosed form of proxy to the purchaser or transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected, for transmission to the purchaser or transferee.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular.

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CONNECTED TRANSACTION

Independent financial adviser to the Independent Board Committee of Chinney Alliance Group Limited

Hercules Capital Limited

A letter from the Independent Board Committee is set out on page 11 of this circular and a letter from Hercules Capital Limited, the independent financial adviser, containing its advice to the Independent Board Committee in relation to the Disposal is set out on pages 12 to 17 of this circular.

A notice convening a Special General Meeting of Chinney Alliance Group Limited to be held on Monday, 6 October 2003 at 3:30 p.m. in the Victoria Room, 2nd Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong Kong is set out on pages 34 and 35 of this circular. Whether or not you are able to attend the meeting, you are requested to complete and return the enclosed form of proxy in accordance with the instructions printed thereon as soon as possible and in any event not less than 48 hours before the time appointed for the holding of the meeting or any adjournment thereof. Completion and return of the form of proxy will not preclude you from attending and voting in person at the meeting or any adjournment of the meeting should you so wish.

13 September 2003

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Sale and Purchase Agreement dated 26 August 2003 . . . . . . . . . . . . . . . . . . . . . . . .	5
Information on CPBL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Connected Transaction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
China Parking Limited . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Reasons for the Disposal . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Business of the Group . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Letter from Hercules Capital. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	12
Appendix I – Property Valuation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
Appendix II – General Information. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	26
Notice of the Special General Meeting. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	34

– i –

DEFINITIONS

In this circular, unless the context requires otherwise, the following expressions have the following meanings:

“Agreement”	the sale and purchase agreement dated 26 August 2003
	entered into between DDL, CAL, Hon Kwok and the
	Company pursuant to which the parties conditionally agree
	that (1) DDL will sell and CAL will acquire the Sale Share,
	and (2) the Shareholders’ Loans will be assigned to CAL.
“associate(s)”	has the meaning ascribed to it under the Listing Rules
“Board”	the board of Directors
“CAL”	Careful Action Limited, a company incorporated in the
	British Virgin Islands with limited liability
“China Parking Group”	CPBL and its subsidiaries and associated companies
“CIL”	Chinney Investments, Limited, a company incorporated in
	Hong Kong with limited liability, the shares of which are
	listed on the Stock Exchange
“Companies Ordinance”	the Companies Ordinance (Chapter 32 of the Laws of Hong
	Kong)
“Company”	Chinney Alliance Group Limited, a company incorporated
	in Bermuda with limited liability and registered in Hong
	Kong under Part XI of the Companies Ordinance, the shares
	of which are listed on the Stock Exchange
“Consideration”	HK$15,000,000, the consideration to be paid for the Sale
	Share and the assignment of the Shareholders’ Loans
	pursuant to the Agreement
“CPBL”	China Parking (BVI) Limited, a company incorporated in
	the British Virgin Islands with limited liability
“DDL”	Dharmala Development Limited, a company incorporated
	in Hong Kong with limited liability
“Director(s)”	the director(s) of the Company
“Disposal”	the proposed sale of the Sale Share, the assignment of the
	Shareholders’ Loans and other matters referred to in the
	Agreement

– 1 –

DEFINITIONS

• “Group” the Company and its subsidiaries, other than the members of the China Parking Group

• “Hercules Capital” Hercules Capital Limited, an investment adviser registered under the SFO and the independent financial adviser to the Independent Board Committee

• “Hon Kwok” Hon Kwok Land Investment Company, Limited, a company incorporated in Hong Kong with limited liability, the shares of which are listed on the Stock Exchange

• “Hon Kwok Group” Hon Kwok and its subsidiaries

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

• “HSBC” The Hongkong and Shanghai Banking Corporation Limited

• “HK$” or “HK dollars” Hong Kong dollars, the lawful currency of Hong Kong

• “Independent Board the independent committee of the Board consisting of Committee” Aubrey Kwok-Sing Li and William Gage McAfee, both independent non-executive Directors, to advise the Independent Shareholders on the terms of the Disposal

• “Independent Shareholders” Shareholders other than Multi-Investment and any of its associates

• “Island Parking” Island Parking Limited, a company incorporated in the British Virgin Islands with limited liability and registered in Hong Kong under Part XI of the Companies Ordinance

• “Knight Frank” Knight Frank Hong Kong Limited, an independent valuer

• “Latest Practicable Date” 10 September 2003, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

“Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

“Multi-Investment” Multi-Investment Group Limited, a company incorporated in the British Virgin Islands with limited liability

– 2 –

DEFINITIONS

“PRC”	the People’s Republic of China
“Sale Share”	one share of par value US$1 in CPBL held by DDL,
	representing the entire issued capital of CPBL
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“SGM”	the special general meeting of the Company to be held on
	Monday, 6 October 2003 at 3:30 p.m. in the Victoria Room,
	2nd Floor, Mandarin Oriental Hong Kong, 5 Connaught
	Road Central, Hong Kong, the notice of which is set out on
	pages 34 and 35 of this circular, and any adjournment of
	such meeting
“Shareholders”	the holders of the Shares
“Shareholders’ Loans”	the loans made by the Group to the China Parking Group.
“Shares”	the shares of HK$0.01 each in the issued share capital of
	the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“subsidiary” or	has the meaning ascribed to it under Section 2 of the
“holding company”	Companies Ordinance
“substantial shareholder”	has the meaning ascribed to it under the Listing Rules
“US$”	United States dollars, the lawful currency of the United
	States
“%”	per cent.

– 3 –

LETTER FROM THE BOARD

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Executive Directors:

James Sai-Wing Wong (Chairman) Stephen Sek-Kee Yu Frank Kwok-Kit Chu Peter Chi-Chung Luk

Registered office: Clarendon House Church Street Hamilton HM11 Bermuda

Non-Executive Directors: Herman Man-Hei Fung Kenneth Kin-Hing Lam

Independent Non-Executive Directors: Aubrey Kwok-Sing Li William Gage McAfee

Head office and principal place of business: 18th Floor Hang Seng Building 77 Des Voeux Road Central Hong Kong

13 September 2003

To the Shareholders and

option holders (for information only)

Dear Sir or Madam,

CONNECTED TRANSACTION

INTRODUCTION

On 26 August 2003, the Company announced that it had entered into the Agreement pursuant to which the Company and DDL have agreed that DDL will sell the entire issued share capital of CPBL and assign related shareholders’ loans to CAL, a wholly owned subsidiary of Hon Kwok, for a total cash consideration of HK$15,000,000.

Hon Kwok is a connected person of the Company, and accordingly under the Listing Rules the Disposal will constitute a connected transaction for the Company and the Agreement will be subject to approval by the Independent Shareholders.

The Independent Board Committee (comprising of Aubrey Kwok-Sing Li and William Gage McAfee) has been formed to consider and advise the Independent Shareholders in respect of the Disposal. Hercules Capital has been appointed as independent financial adviser to advise the Independent Board Committee in this regard.

– 4 –

LETTER FROM THE BOARD

The main purposes of this circular are:

• (a) to provide you with details of the Disposal;

• (b) to set out the recommendation of the Independent Board Committee in relation to the Disposal;

• (c) to set out a letter from Hercules Capital, the independent financial adviser, containing its advice to the Independent Board Committee in relation to the Disposal; and

• (d) to provide Shareholders with a notice of the SGM at which an ordinary resolution will be proposed to approve the Disposal.

SALE AND PURCHASE AGREEMENT DATED 26 AUGUST 2003

1. Parties to the Agreement:

Vendor: DDL, an indirect wholly owned subsidiary of the Company Purchaser: CAL, a wholly owned subsidiary of Hon Kwok Vendor’s Guarantor: the Company Purchaser’s Guarantor: Hon Kwok

2. Interest being sold

The Sale Share will be sold by DDL to CAL as part of the Disposal. The China Parking Group owns carparking spaces in Hong Kong and has an interest in a villa in the PRC.

The Shareholders’ Loans outstanding at the time of completion of the Agreement will also be assigned by the Group to CAL as part of the Disposal. At the Latest Practicable Date, the Shareholders’ Loans amounted to HK$191,339,110.

3. Consideration for the Disposal

The consideration for the Disposal is HK$15,000,000. The Consideration was negotiated between the parties at arm’s length on normal commercial terms, having regard to the unaudited net tangible assets of the China Parking Group of approximately HK$14,733,000 as at 30 June 2003.

– 5 –

LETTER FROM THE BOARD

The unaudited net tangible assets were computed by netting off the Shareholders’ Loans to be assigned against the net liabilities of the China Parking Group as at 30 June 2003. The market value of the properties determined on 25 August 2003 was used to determine the net tangible assets owned by the China Parking Group. The market value was determined by an independent valuer, Knight Frank, on 25 August 2003. A copy of the property valuation report is set out in Appendix I of this circular.

4. Payment Terms

The Consideration shall be satisfied by payments in cash as follows:

• (1) a refundable deposit of HK$2,250,000 was paid upon the signing of the Agreement; and

• (2) the balance of the Consideration of HK$12,750,000 is payable upon completion of the Disposal.

If completion of the Agreement does not take place, the deposit will be refunded by DDL to CAL or its nominee together with interest accrued thereon from the date of the payment of the deposit to the date of the return of the deposit at the best lending rate of HSBC. This repayment obligation is guaranteed by the Company.

5. Conditions and Completion

Completion of the Disposal is conditional upon:

• (a) Hon Kwok and CAL having carried out and being satisfied with their due diligence investigations of the China Parking Group;

• (b) Independent Shareholders’ approval of the Disposal having been obtained at the SGM; and

• (c) all necessary approvals from the relevant banks in respect of the Disposal having been obtained.

Completion shall take place on the date which is the seventh business day after the date on which all of the conditions under the Agreement are satisfied or waived, or such other date as the parties agree in writing.

If all the conditions have not been satisfied or waived (provided that conditions (b) and (c) cannot be waived) on or before 1 November 2003 (or such other date as DDL and CAL may agree in writing), then the Agreement will lapse and no party shall make any claim against the other, save for any antecedent breach.

– 6 –

LETTER FROM THE BOARD

INFORMATION ON CPBL

CPBL is an investment holding company and its sole business is the holding of shares in companies which hold carparks and other real property assets for investment purposes.

CPBL holds the following interests in the members of the China Parking Group:

• (a) 100% of the issued share capital of Full Yip Development Limited, a company incorporated in the British Virgin Islands, the major assets of which are 26 carparks located at Shining Court, Shun Ning Road, Kowloon, Hong Kong. These premises are currently leased for rental income.

• (b) 100% of the issued share capital of Tegdyl Corporation Limited, a company incorporated in the British Virgin Islands, the major assets of which are 115 carparks located at Lido Garden, Sham Tseng, New Territories, Hong Kong. These premises are currently leased for rental income.

• (c) 100% of the issued share capital of China Parking Limited, a company incorporated in Hong Kong, the sole asset of which is an interest in a villa in Shenzhen, PRC. These premises are currently vacant.

• (d) 40% of the issued share capital of Island Parking, the major assets of which are 100% of the issued share capital in CP Management Limited, a company incorporated in Hong Kong which performs carpark management functions, and 369 carparks located at Provident Centre, North Point, Hong Kong. These premises are currently leased for rental income.

A comparison of the book value of the premises as shown in the audited accounts of the relevant members of the China Parking Group as at 31 December 2002 and the market value of the premises, as determined by the independent valuer, Knight Frank on 25 August 2003, is as follows:

	Book value of	Market value of
	the premises	the premises
Description of premises	31 December 2002	25 August 2003
	HK$	HK$
26 carparks located at Shining Court,
Shun Ning Road, Kowloon, Hong Kong	5,600,000	5,600,000
115 carparks located at Lido Garden,
Sham Tseng, New Territories, Hong Kong	21,400,000	22,500,000
Villa W in Shenzhen, PRC	1,538,850	3,100,000
369 carparks located at Provident Centre,
North Point, Hong Kong_(Note)_	110,000,000	110,000,000

Note: The China Parking Group’s interest in this property is 40%.

– 7 –

LETTER FROM THE BOARD

Further information in relation to the property valuation of the above premises is contained in Appendix I.

The unaudited pro-forma consolidated net loss before and after taxation and minority interests of CPBL and its subsidiaries for the year ended 31 December 2002 were both approximately HK$39,960,000 (2001: HK$29,996,000).

The unaudited pro-forma consolidated net tangible assets of CPBL and its subsidiaries, after Shareholders’ Loans, was approximately HK$10,583,000 as at 31 December 2002.

The pro-forma figures were derived from the audited accounts of the individual companies under CPBL as at 31 December 2002.

CONNECTED TRANSACTION

After the Disposal, CPBL will become a wholly owned subsidiary of CAL which in turn is a wholly owned subsidiary of Hon Kwok. CIL is the holding company of Hon Kwok and is a substantial shareholder of the Company (currently holding approximately 29.1% of the issued share capital of the Company through its wholly owned subsidiary, Multi-Investment). Accordingly, Hon Kwok is a connected person of the Company. The Disposal constitutes a connected transaction for the Company under the Listing Rules and requires the approval of the Independent Shareholders at the SGM. Multi-Investment and any of its associates will abstain from voting at the SGM in respect of the resolution approving the Disposal.

SECURITY

The premises owned by Tegdyl Corporation Limited and Full Yip Development Limited are each mortgaged to secure a term loan with an outstanding principal sum of HK$10,000,000 granted to a member of the Group. This loan will be repaid on completion of the Agreement from the Consideration received from CAL, and the mortgages will be discharged.

The Company has provided a guarantee in proportion to its indirect equity interest in Island Parking to secure a term loan to Island Parking. This guarantee will be discharged on completion of the Agreement. Hon Kwok will assume this guarantee.

CHINA PARKING LIMITED

China Parking Limited is in the process of obtaining a real estate ownership certificate in its name in relation to the villa in Shenzhen referred to above. The Agreement contains provisions pursuant to which DDL agrees to use its best endeavours to procure that the legal title of such property is vested in China Parking Limited.

– 8 –

LETTER FROM THE BOARD

The Agreement also provides that if China Parking Limited does not obtain the relevant real estate ownership certificate in its name by the date which is two years from the completion of the Agreement: (a) DDL and the Company will pay HK$3,100,000 to CAL (together with interest from the date of completion of the Agreement to the date of actual payment at a rate equivalent to the best lending rate of HSBC); and (b) subject to the requirements of the Listing Rules, CAL will procure to transfer the entire issued capital of China Parking Limited and assign any outstanding related shareholders’ loans to DDL or its nominee by CPBL.

The approval being sought from the Independent Shareholders for the Disposal at the SGM includes the transfer of China Parking Limited described above, if required pursuant to the terms of the Agreement, and all other transactions contemplated under the Agreement.

If, pursuant to the Agreement, China Parking Limited is required to be transferred as described above, the Company will issue an announcement at the time of such transfer.

REASONS FOR THE DISPOSAL

The Group wishes to focus on its core operations which comprise of trading and manufacturing of plastics and chemical products, distribution and installation of building supplies, electrical and mechanical products, wholesaling of electrical appliances, engineering contracting business in the air-conditioning industry and the provision of maintenance services. Continuing to operate carpark businesses is not consistent with the Group’s strategy to explore and develop the trading business.

After completion of the Disposal, the Company currently intends to use the Consideration for the bank loan repayments referred to in the section titled “Security” above as well as working capital to fund its core operations.

The terms and conditions of the Disposal are arrived at after arm’s length negotiations between the parties to the Agreement.

The Board considers that the Disposal on the terms set out in the Agreement is in the best interests of the Company and the Shareholders.

On completion of the Disposal, the Group will enhance its net asset value by an estimated sum of approximately HK$2,500,000.

BUSINESS OF THE GROUP

The Company is an investment holding company. The principal activities of its subsidiaries comprise of trading and manufacturing of plastics and chemical products, distribution and installation of building supplies, electrical and mechanical products, wholesaling of electrical appliances, engineering contracting business in the air-conditioning industry and the provision of maintenance services.

– 9 –

LETTER FROM THE BOARD

SPECIAL GENERAL MEETING

The SGM will be held on Monday, 6 October 2003 at 3:30 p.m. in the Victoria Room, 2nd Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong Kong for the purpose of considering, and if thought fit, approving the Disposal. Only Independent Shareholders will be entitled to vote on the resolution relating to the Disposal at the SGM. A notice of the SGM is set out on pages 34 and 35 of this circular.

A form of proxy for use at the SGM is enclosed. Whether or not you are able to attend the SGM, you are requested to complete the enclosed form of proxy and return the same to the Company Secretary at the Company’s principal place of business in Hong Kong at 18th Floor, Hang Seng Building, 77 Des Voeux Road Central, Hong Kong in accordance with the instructions printed thereon not less than 48 hours before the time of the SGM (or any adjournment thereof). Completion and return of the form of proxy will not preclude Shareholders from attending and Independent Shareholders from voting in person at the SGM (or at any adjournment thereof) should the Shareholders so wish.

RECOMMENDATIONS

Your attention is drawn to:

• (a) the letter from the Independent Board Committee set out on page 11 of this circular, which contains its recommendation to the Independent Shareholders concerning the Disposal; and

• (b) the letter from the independent financial adviser, Hercules Capital, set out on pages 12 to 17 of this circular, which contains its advice to the Independent Board Committee in relation to the Disposal and the principal factors and reasons considered by it in arriving at its advice.

The Board considers that the terms of the Disposal are fair and reasonable so far as the Company and the Shareholders are concerned. The Independent Board Committee has considered the terms of the Disposal and the advice given by Hercules Capital and is of the opinion that such terms are fair and reasonable so far as the Independent Shareholders are concerned and are in the interests of the Company and the Shareholders. Accordingly, the Board recommends the Independent Shareholders to vote in favour of the ordinary resolution as set out in the notice of the SGM.

ADDITIONAL INFORMATION

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

Yours faithfully,

For and on behalf of the Board

Chinney Alliance Group Limited James Sai-Wing Wong

Chairman

– 10 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

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13 September 2003

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTION

We refer to the circular dated 13 September 2003 issued by the Company to the Shareholders of which this letter forms part. Terms defined in the circular shall have the same meanings when used in this letter, unless the context requires otherwise.

The Disposal and the terms of the Agreement are summarised in the “Letter from the Board” set out on pages 4 to 10 of the circular. In addition, the Independent Board Committee has been advised by the independent financial adviser, Hercules Capital, in considering the Disposal. You are strongly urged to read Hercules Capital’s letter to the Independent Board Committee, which is set out on pages 12 to 17 of the circular.

As the Independent Board Committee, we have discussed with the management of the Company the reasons for the Disposal. We have also discussed with Hercules Capital the basis upon which its advice has been given to the Independent Board Committee.

Having taken into account the advice of Hercules Capital, the Independent Board Committee considers that the terms of the Disposal are in the interests of the Company and the Shareholders as a whole and are fair and reasonable so far as the Independent Shareholders are concerned. Accordingly, we recommend the Independent Shareholders to vote in favour of the ordinary resolution to approve the Disposal to be proposed at the SGM.

Yours faithfully, Independent Board Committee

Aubrey Kwok-Sing Li and William Gage McAfee

Independent Non-executive Directors

– 11 –

LETTER FROM HERCULES CAPITAL

The following is the text of the letter of advice prepared by Hercules Capital to the Independent Board Committee in respect of the connected transaction for incorporation in this circular:

Hercules Capital Limited

1503 Ruttonjee House 11 Duddell Street Central Hong Kong

13 September 2003

To the Independent Board Committee of Chinney Alliance Group Limited

Dear Sirs,

CONNECTED TRANSACTION

We refer to the Disposal, details of which are set out in the “Letter from the Board” contained in this circular dated 13 September 2003 to the Shareholders (the “Circular”) of which this letter forms part. Hercules Capital has been appointed as the independent financial adviser to advise the Independent Board Committee of the Company as to whether the terms of the Disposal insofar as the Independent Shareholders are concerned are fair and reasonable. Terms used in this letter have the same meanings as defined elsewhere in the Circular unless the context otherwise requires and specifies.

In formulating our recommendations, we have relied on the information and representations provided to us by the Directors and have assumed that all information and representations made or referred to in the Circular, including the valuations on the relevant assets owned by the China Parking Group conducted by Knight Frank set out on pages 18 to 25, were true at the time they are made and continue to be true at the date of the Circular. We have also assumed that all statements of belief, opinion and intention made by the Directors in the Circular were reasonably made after due enquiry. We have no reasons to doubt the truth, accuracy and completeness of the information and representations provided to us by the Directors and have been advised by the Directors that no material facts have been omitted from the information provided and referred to in the Circular. We have no reason to suspect that any material information has been withheld by the Directors or is misleading. We consider that we have reviewed sufficient information to reach an informed view in order to provide a reasonable basis for our recommendation. We have not, however, for the purpose of this exercise, conducted any independent detailed investigation or audit into the businesses or affairs of the Group and the related subjects and parties of the Disposal.

– 12 –

LETTER FROM HERCULES CAPITAL

PRINCIPAL FACTORS AND REASONS CONSIDERED

The principal factors and reasons we have taken into consideration in assessing the Disposal and arriving at our opinion to the Independent Board Committee are set out as follows.

(1) Background and reasons

The Group’s core business includes trading and manufacturing of plastics and chemical products, distribution and installation of building supplies, electrical and mechanical products, wholesaling of electrical appliances, engineering contracting business in the air-conditioning industry and the provision of maintenance services.

The Directors are of the view that the continual operation of the car park businesses is not consistent with the Group’s corporate strategy to focus on its core business abovementioned and to explore and develop potential trading business. The Directors believe that the Disposal would allow the Group to realize the value of these non-core assets held by the China Parking Group and redirect its resources to pursue the Group’s corporate strategy.

(2) Basis of the Consideration

Pursuant to the Agreement, the Consideration for the Disposal is HK$15,000,000. The Directors confirmed that the terms of the Agreement have been arrived at arm’s length on normal commercial terms with reference to the unaudited net tangible assets of the China Parking Group as at 30 June 2003 (the “NTA”) after netting off the Shareholders’ Loans and taking into account of the market value of the relevant properties held by the China Parking Group.

As part of the Disposal, CAL agreed, inter alia, to take over the Shareholders’ Loans outstanding upon completion of the Agreement. The Directors confirmed that as of the date of the Circular, the Shareholders’ Loans amounted to HK$191,339,110.

(a) Net tangible asset value

The NTA was approximately HK$14,733,000 and was computed by netting off the Shareholders’ Loans to be assigned against the net liabilities of approximately HK$174,497,000 as at 30 June 2003. We consider it fair and reasonable to use the NTA as the basis to determine the Consideration for the purpose of this transaction. As of 30 June 2003, the major assets of the China Parking Group comprised of properties held for resale of approximately HK$31,200,000 (based on valuation as at 25 August 2003) and the major liabilities of the China Parking Group comprised of the provision for loans payable of approximately HK$16,000,000, exclusive of the Shareholders’ Loans to be assigned. The Consideration of HK$15,000,000 represents a premium of approximately 1.8% over the NTA. The Directors consider that the Consideration is fair and reasonable and is in the best interests of the Company and its Shareholders as a whole. We are of the view that the basis for determining the Consideration with reference to the net tangible asset value is in line with market practice.

– 13 –

LETTER FROM HERCULES CAPITAL

(b) Valuation consideration

The value of the NTA was determined by reference to the market value of the properties owned by the China Parking Group as independently valued by Knight Frank on 25 August 2003. The capital value of the properties attributable to the Group amounted to HK$75,200,000, of which HK$3,100,000 is attributable to Villa W in Shenzhen (the “Villa”).

In assessing the reasonableness of the Consideration, we have discussed with Knight Frank on the methodology and assumptions used in their valuation of the properties, which was primarily based on the direct comparison method. Based on our discussions with Knight Frank, we are of the view that the valuation of the relevant assets of the China Parking Group performed by Knight Frank have been conducted after due and careful consideration and, accordingly, we have used the valuation performed by Knight Frank as a reference in our independent evaluation of the Consideration.

Based on the above analysis, we consider the Consideration of the Disposal fair and reasonable.

(3) Payment method

The Directors confirmed that a refundable deposit of HK$2,250,000 was received by DDL on 26 August 2003, the date on which the Agreement was signed, while the balance of HK$12,750,000 will be received upon completion of the Disposal. In the event that the conditions are not satisfied or waived by CAL by 1 November 2003 (or such later date as all parties shall mutually agree), the deposit will be refunded by DDL to CAL or its nominee together with interest accrued thereon from the date of the payment of the deposit to the date of the return of the deposit at the best lending rate of HSBC. This payment obligation is guaranteed by the Company. In view of the above, we consider the payment method fair and reasonable.

(4) Procurement of the legal title of the Villa

The Group is applying for the real estate ownership certificate of the Villa in the name of China Parking Limited. It is stipulated in the Agreement that if such ownership certificate is not obtained within two years from completion of the Agreement: (a) DDL and the Company will pay HK$3,100,000 to CAL (together with interest from the date of completion of the Agreement to the date of actual payment at a rate equivalent to the best lending rate of HSBC); and (b) subject to the requirement of the Listing Rules, CAL will procure the transfer of the entire issued capital of China Parking Limited to DDL or its nominee. We consider this arrangement fair and reasonable because, in the event that the ownership certificate is not obtained before the time limit abovementioned, it could put the relevant parties back in the position that they would have been in before the disposal of the Villa.

– 14 –

LETTER FROM HERCULES CAPITAL

FINANCIAL EFFECTS ON THE GROUP

The Directors informed us that the Disposal, upon its completion, would have the following financial effects of significance on the consolidated balance sheet of the Group as at 31 December 2002:

Current Assets

Properties held for resale decrease by approximately HK$28,500,000 (Note 1) Cash increase by approximately HK$5,000,000 Net effect decrease by approximately HK$23,500,000 Current Liabilities Bank loan decrease by approximately HK$10,000,000 Other current liabilities decrease by approximately HK$16,000,000 (Note 2) Net effect decrease by approximately HK$26,000,000

Notes:

1. the decrease in properties held for resale represents the book cost, in the pro-forma consolidated balance sheet of the China Parking Group, of the following premises:

2. 26 carparks located at Shining Court, Shun Ning Road, Kowloon, Hong Kong (approximately HK$5,600,000)

3. the Villa (approximately HK$1,540,000)

4. 115 carparks located at Lido Garden, Sham Tseng, New Territories, Hong Kong (approximately HK$21,400,000)

5. The 40% interest in Island Parking which book cost had been fully written down to zero for the year ended 31 December 2002

6. the decrease in other current liabilities represents a provision for a loan payable to Island Parking in the book of the pro-forma consolidated balance sheet of the China Parking Group, exclusive of the Shareholders’ Loans to be assigned

7. the financial effects other than those stated above are insignificant

Net asset value

As shown in the above table, the net asset value of the Group would increase by approximately HK$2,500,000 upon completion of the Disposal.

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LETTER FROM HERCULES CAPITAL

Earnings

The China Parking Group has a loss-making record as follows:

The unaudited pro-forma consolidated profit and loss items of the China Parking Group

	For	6-months ended	For the year ended	For the year ended
		30 June	31 December	31 December
		2003	2002	2001
		HK$’000	HK$’000	HK$’000
Turnover		1,286	3,333	3,895
Provision for loans
to an associate		519	9,480	21,156
Provision for/(write back of)
diminution in value of
properties held for resale		(1,100)	27,000	4,000
Inter-company interest expenses		1,953	3,893	5,307
Net loss before taxation
and minority interests		1,070	39,960	29,996
Net loss after taxation
and minority interests		1,070	39,960	29,996

Upon completion of the Disposal, the Group would no longer be required to bear any possible loss of the China Parking Group in the future. In addition, the Group would record an estimated profit on disposal of HK$2,500,000 (including the write back of diminution in value of properties held for resale of approximately HK$2,700,000) upon completion of the Disposal.

Gearing

The premises owned by Tegdyl Corporation Limited and Full Yip Development Limited are mortgaged to secure a term loan to an indirect wholly owned subsidiary of the Company with an outstanding principal sum of HK$10,000,000. The loan will be settled out of the balance of the Consideration to be received upon completion of the Disposal. As shown in the table above, total liabilities of the Group would reduce by approximately HK$26,000,000. Assuming there would be no change in the shareholders’ funds upon completion of the Disposal, the gearing level of the Group would decrease.

Apart from that, the contingent liability of the Company will decrease pursuant to the discharge of the corporate guarantee for the term loan to Island Parking upon completion of the Disposal.

– 16 –

LETTER FROM HERCULES CAPITAL

Cashflow

The Directors confirmed that part of the Consideration of HK$2,250,000 was received by the Group in form of a refundable deposit upon signing of the Agreement. The balance of the Consideration of HK$12,750,000 will be received upon completion of the Disposal. After repaying the outstanding mortgage loan of HK$10,000,000 upon completion of the Disposal, there would be a net cash inflow of HK$5,000,000 and the Group would no longer be required to bear any related debt repayment obligation set out in “Gearing” above. The effect on cashflow is therefore positive to the Group in the future.

Working capital

Upon completion of the Disposal, there would be a decrease in current assets and current liabilities of approximately HK$23,500,000 and approximately HK$26,000,000, respectively. Thus, the working capital of the Group (i.e. current assets minus current liabilities) upon completion of the Disposal would increase by approximately HK$2,500,000.

RECOMMENDATION

Having considered the abovementioned principal factors and reasons, we consider the terms of the Disposal fair and reasonable insofar as the Independent Shareholders are concerned. Accordingly, we would recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the ordinary resolution to be proposed at the upcoming SGM.

Yours faithfully, For and on behalf of

Hercules Capital Limited Louis Koo Warren Cheung Managing Director Managing Director

– 17 –

PROPERTY VALUATION

APPENDIX I

The following is the text of the letter, summary of valuation and valuation certificate (as the case may be) from Knight Frank Hong Kong Limited in respect of the valuations of the premises of the Group:

==> picture [115 x 62] intentionally omitted <==

==> picture [110 x 77] intentionally omitted <==

13 September 2003

The Directors Chinney Alliance Group Limited 18th Floor, Hang Seng Building 77 Des Voeux Road Central Hong Kong

Dear Sirs,

In accordance with your instructions for us to value the property interests held by China Parking (BVI) Limited (the “Company”), its subsidiaries and associates (together referred to as the “Group”) in Hong Kong and the People’s Republic of China (the “PRC”), we confirm that we have carried out inspections, made relevant enquiries and searches and obtained such further information as we consider necessary for the purpose of providing you with our opinion of values of the property interests as at 25 August 2003.

Our valuation of each of the property interests represents its open market value which we would define as meaning “the best price at which the sale of an interest in a property might reasonably be expected to have been completed unconditionally for cash consideration on the date of valuation, assuming:

• (a) a willing seller;

• (b) that, prior to the date of valuation, there had been a reasonable period (having regard to the nature of the property and the state of the market) for the proper marketing of the interest, for the agreement of price and terms and for the completion of the sale;

– 18 –

PROPERTY VALUATION

APPENDIX I

• (c) that the state of the market, level of values and other circumstances were, on any earlier assumed date of exchange of contracts, the same as on the date of valuation;

• (d) that no account is taken of any additional bid by a purchaser with a special interest; and

• (e) that both parties to the transaction had acted knowledgeably, prudently and without compulsion.”

Our valuations have been made on the assumption that the owners sell the property interests on the open market in their existing state without the benefit of deferred term contracts, leasebacks, joint ventures, management agreements or any similar arrangements which would serve to increase the values of the property interests.

In valuing the property interest in the PRC, we have assumed that transferable land use rights in respect of the property for specific term at nominal annual land use fees have been granted and that any premium payable has already been fully paid. We have also assumed that the grantee or user of the property has free and uninterrupted rights to occupy, use and assign the property interest for the whole of the unexpired terms as granted. We have relied on the advice given by the Group and its legal advisers on PRC laws regarding the title to the property interest in the PRC and the interest of the Group in such property.

In forming our opinion of the value of the property interests, we have valued them on an open market basis by making reference to comparable market transactions and where appropriate, on the basis of the capitalization of the income supplied to us. Property which is vacant has been valued assuming sale with the benefit of vacant possession.

In valuing Property Nos. 2 and 3 which are held from the Government for terms expired before 30 June 1997, we have taken into account the provisions of Annex III of the Joint Declaration of the Government of the United Kingdom and the Government of the PRC on the question of Hong Kong and the New Territories Leases (Extension) Ordinance stipulating that such leases may be extended without premium until 30 June 2047 and that an annual rent of 3% of the rateable value of each of the property is charged from the date of extension.

In respect of the properties in Hong Kong, we have caused searches to be made at the Land Registry. Regarding the property in the PRC, we have been provided with copy of title document in relation to the property. However, we have not scrutinised the original documents to verify ownership or to ascertain the existence of any amendments which may not appear on the copies handed to us.

In the course of our valuation, we have relied to a considerable extent on the information provided by the Group and its legal advisers on the PRC laws and have accepted advice given to us by the Group on such matters as planning approvals or statutory notices, easements, tenure, particulars of occupancy, floor areas and all other relevant matters. Dimensions,

– 19 –

APPENDIX I

PROPERTY VALUATION

measurements and areas included in the valuation certificate are based on information contained in the documents provided to us and are therefore only approximations. We have no reason to doubt the truth and accuracy of the information provided to us by the Group which is material to the valuations. We were also advised by the Group that no material facts have been omitted from the information supplied. We consider that we have been provided with sufficient information to reach an informed view.

We have inspected the exterior and where possible, the interior of the properties. During the course of our inspection, we did not note any serious defects. However, no structural survey has been made and we are therefore unable to report as to whether the properties are or are not free of rot, infestation or any other defects. No tests were carried out on any of the services.

We have not been able to carry out detailed on-site measurements to verify the floor areas of the properties and we have assumed that the areas shown on the copies of documents handed to us are correct.

No allowance has been made in our valuation for any charges, mortgages or amounts owing on any properties valued nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that all the properties are free from encumbrances, restrictions and outgoings of any onerous nature which could affect their values.

Unless otherwise stated, all money amounts are stated in Hong Kong dollars. The exchange rate adopted in our valuation is approximately HK$1 = RMB1.0687, which was the approximate exchange rate prevailing as at the date of valuation and there has been no significant fluctuation in such exchange rate between that date and the date of this letter.

We enclose herewith our summary of valuation and valuation certificate.

Yours faithfully, For and on behalf of

KNIGHT FRANK HONG KONG LIMITED C.K. Lau

MHKIS MRICS RPS(GP) Executive Director

Note: Mr. C.K. Lau, who is a member of the Hong Kong Institute of Surveyors, a member of the Royal Institution of Chartered Surveyors and a Registered Professional Surveyor in General Practice, has over 9 years of post-qualification experience in valuing properties in Hong Kong and the PRC.

– 20 –

PROPERTY VALUATION

APPENDIX I

SUMMARY OF VALUATION

Capital value in existing state as at Interest 25 August attributable Property 2003 to the Group 1. Car Park Space Nos. 1-102 on Basement, HK$110,000,000 40% Car Park Space Nos. 1-4, 6-12, 14-31, 33-42, 44-49, 51-57, 59-65, 67-77, 79-85, 87-89, 91, 95, 96, 98, 102, 107, 110-114, 116-123, 125, 127, 129, 132, 135-139, 143, 145-153, 155, 157, 160-177, 180-187, 189-202 and 204-231 on Ground Floor and Car Park Space Nos. 1-38, 45-80 and 83-87 on Upper Ground Floor, Provident Centre, Nos. 21-53 Wharf Road, North Point, Hong Kong 2. Car Parking Space Nos. 1-13 on First Floor and HK$5,600,000 100% Car Parking Space Nos. 1-13 on Second Floor, Shining Court, No. 439 Shun Ning Road, Cheung Sha Wan, Kowloon, Hong Kong 3. Car Parking Space Nos. 9, 11, 26, 38, 41-43, 45, HK$22,500,000 100% 47-48, 55, 57, 90, 92-101, 109, 130-134, 141, 144-147, 149, 153, 155, 159-161, 164-167, 169-170, 172-180, 182-183, 257-260, 262 and 277-279 in the Car Port on Ground Floor, Car Parking Space Nos. 188-190, 192, 195, 197, 202, 204, 207, 209-212, 214, 216-217, 219-220, 224-226, 229-232, 234, 235, 238, 240-246, 249-256, 263-267, 269 and 271 in the Car Port on Mezzanine Floor, Lido Garden, Nos. 41-63 Castle Peak Road, Sham Tseng, Tsuen Wan, New Territories, Hong Kong 4. House W, No commercial value 100% Green Mountain Village, Longgang Botanical Garden, Longgang, Shenzhen City, the PRC Total:

Capital value in existing state attributable to the Group as at 25 August 2003 HK$44,000,000 HK$5,600,000 HK$22,500,000 No commercial value

HK$72,100,000

– 21 –

PROPERTY VALUATION

APPENDIX I

VALUATION CERTIFICATE

Property

1. Car Park Space Nos. 1-102 on Basement, Car Park Space Nos. 1-4, 6-12, 14-31, 33-42, 44-49, 51-57, 59-65, 67-77, 79-85, 87-89, 91, 95, 96, 98, 102, 107, 110-114, 116-123, 125, 127, 129, 132, 135-139, 143, 145-153, 155, 157, 160-177, 180-187, 189-202 and 204-231 on Ground Floor and Car Park Space Nos. 1-38, 45-80 and 83-87 on Upper Ground Floor, Provident Centre, Nos. 21-53 Wharf Road, North Point, Hong Kong

10,484/11,000th of 1,020/21,165th shares of and in Inland Lot No. 8465.

Description and tenure

The property comprises 102 covered carparking spaces on the Basement, 188 covered carparking spaces on the Ground Floor, 8 open carparking spaces and 71 covered carparking spaces on the Upper Ground Floor of a residential estate known as Provident Centre.

Provident Centre

accommodates 17 high-rise residential blocks and was completed in about 1982.

The property is held under a Government lease for a term of 75 years from 5 September 1921 renewable for a further term of 75 years.

The Government rent payable for the property is HK$233,420 per annum.

Capital value in Particulars existing state as at of occupancy 25 August 2003 The property is let on HK$110,000,000 monthly or quarterly (40% interest basis. The total income attributable to the generated from the Group: property for the period HK$44,000,000) from 1 January 2003 to 30 June 2003 was approximately HK$4,656,000.

Particulars of occupancy

Notes:

• (1) The registered owner of the property is Island Parking Limited (formerly known as Guangdong Parking Limited), in which the Company has a 40% attributable interest.

• (2) The property is subject to a Mortgage dated 31 July 1997 in favour of The Hongkong and Shanghai Banking Corporation Limited registered by Memorial No. 7232790.

• (3) The property is subject to an Assignment of Rentals dated 31 July 1997 in favour of The Hongkong and Shanghai Banking Corporation Limited registered by Memorial No. 7232791.

• (4) The property is subject to a Supplement to Mortgage Memorial No. 7232790 in favour of The Hongkong and Shanghai Banking Corporation Limited registered by Memorial No. 8938265 dated 2 May 2003.

• (5) The property is subject to a Supplement to Assignment of Rentals Memorial No. 7232791 in favour of The Hongkong and Shanghai Banking Corporation Limited registered by Memorial No. 8938266 dated 2 May 2003.

– 22 –

PROPERTY VALUATION

APPENDIX I

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 25 August 2003

The property comprises 26 carparking spaces on the 1st and 2nd Floors of a 23-storey composite building completed in 1996.

1. Car Parking Space The property comprises 26 Nos. 1-13 on First carparking spaces on the 1st Floor and Car Parking and 2nd Floors of a 23-storey Space Nos. 1-13 on composite building completed Second Floor, in 1996. Shining Court, No. 439 The property is held under a Shun Ning Road, Government lease for a term Cheung Sha Wan, of 75 years from 1 July 1898 Kowloon, renewable for a further term Hong Kong of 24 years less the last 3 days. The lease term is 26/975th shares of and statutorily extended until 30 in The Remaining June 2047. Portions of Subsections 1, 2, 3, 4, The annual Government rent 5 and 7 of Section B payable for the property is an of New Kowloon amount equal to 3% of the Inland Lot No. 2711. rateable value for the time being of the property.

The property is either let HK$5,600,000 on monthly or hourly basis. The total income generated from the property for the period from 1 January 2003 to 30 June 2003 was approximately HK$455,000.

Notes:

• (1) The registered owner of the property is Full Yip Development Limited, a wholly owned subsidiary of the Company.

• (2) The property is subject to a Mortgage to secure general banking facilities and a Rent Assignment both dated 30 November 2000 in favour of China Construction Bank registered by Memorial Nos. 8261836 and 8261837 respectively.

– 23 –

PROPERTY VALUATION

APPENDIX I

Property

Description and tenure

Particulars of occupancy

Capital value in existing state as at 25 August 2003

The property comprises 65 carparking spaces on the Ground Floor and 50 carparking spaces on the Mezzanine Floor of a residential development known as Lido Garden.

1. Car Parking Space The property comprises 65 Nos. 9, 11, 26, 38, 41carparking spaces on the 43, 45, 47-48, 55, 57, Ground Floor and 50 90, 92-101, 109, 130carparking spaces on the 134, 141, 144-147, Mezzanine Floor of a 149, 153, 155, 159residential development 161, 164-167, 169known as Lido Garden. 170, 172-180, 182183, 257-260, 262 and Lido Garden accommodates 277-279 in the Car 5 high-rise residential blocks Port on Ground Floor, and was completed in about Car Parking Space 1989. Nos. 188-190, 192, 195, 197, 202, 204, The property is held under 207, 209-212, 214, Conditions of Sale No. 2309 216-217, 219-220, for a term of 75 years from 224-226, 229-232, 1 July 1898 renewable for a 234, 235, 238, 240further term of 24 years less 246, 249-256, 263the last 3 days. The lease term 267, 269 and 271 in is statutorily extended until 30 the Car Port on June 2047. Mezzanine Floor, Lido Garden, The annual Government rent Nos. 41-63 payable for the property is an Castle Peak Road, amount equal to 3% of the Sham Tseng, rateable value for the time Tsuen Wan, being of the property. New Territories, Hong Kong

The property is held under Conditions of Sale No. 2309 for a term of 75 years from 1 July 1898 renewable for a further term of 24 years less the last 3 days. The lease term is statutorily extended until 30 June 2047.

The annual Government rent payable for the property is an amount equal to 3% of the rateable value for the time being of the property.

The property is either let on quarterly, monthly or hourly basis. The total income generated from the property for the period from 1 January 2003 to 30 June 2003 was approximately HK$830,000.

HK$22,500,000

115/279th of 1,280/ 81,042nd shares of and in Tsuen Wan Marine Lot No. 4.

Notes:

• (1) The registered owner of the property is Tegdyl Corporation Limited, a wholly owned subsidiary of the Company.

• (2) The property is subject to a Mortgage to secure general banking facilities and a Rent Assignment both dated 30 November 2000 in favour of China Construction Bank registered by Memorial Nos. 8261840 and 8261841 respectively.

– 24 –

PROPERTY VALUATION

APPENDIX I

Property

Description and tenure

Capital value in Particulars existing state as at of occupancy 25 August 2003

1. House W, The property comprises a Green Mountain Village, 2-storey detached house Longgang Botanical situated within the Botanical Garden, Garden of Green Club Golf Longgang, Club. Shenzhen City, the PRC The property was completed in about 1999 and has a gross floor area of approximately 297.58 sq.m. (3,203.12 sq.ft.)

The property is vacant. No commercial value

The property has been granted for a land use term of 70 years from 17 March 1999.

Notes:

• (1) Pursuant to the Shenzhen Real Estate Pre-Sale Contract No. 723988 and its supplemental agreement entered into between Shenzhen Longgang Botanical Garden Co., Ltd. (深圳市龍崗植物園有限公司 ) (“the Vendor”) and Lindeteves Jacoberg (China) Limited (“Jacoberg”), a fellow subsidiary of the Company, dated 12 May 2000, the Vendor agreed to sell and Jacoberg agreed to purchase the property at a consideration of HK$2,678,220, which has been fully paid.

• (2) Pursuant to the minutes of the board meeting of Jacoberg, the attendees resolved that the owner to be registered in the Shenzhen Municipal Planning and Land Administration Bureau was China Parking Limited. We have been advised by the Group that the application process for obtaining the Real Estate Ownership Certificate was in progress.

• (3) The legal opinion of the Group’s legal advisers on the PRC law states, inter alia, that:

• (i) The Pre-Sale Contract and its supplemental agreement are legally valid and binding on both the vendor and the purchaser.

• (ii) The purchase price for the property has been fully paid.

• (iii) The property cannot be transferred in the open market as the Real Estate Ownership Certificate has not been obtained.

• (4) We have ascribed no commercial value to the property because the Real Estate Ownership Certificate has not been obtained.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by the Group and the aforesaid legal opinion are as follows:

Pre-Sale Contract

Yes

• (6) We are of the opinion that the open market value of the property as at 25 August 2003 was HK$3,100,000 if the property had a marketable title.

– 25 –

GENERAL INFORMATION

APPENDIX II

RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief, there are no other facts the omission of which would make any statement contained in this circular misleading.

DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests and short positions of the Directors in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests or short positions which they are taken or deemed to have under such provisions of the SFO) or which were required to be entered in the register maintained by the Company pursuant to Section 352 of the SFO or which were required to be notified to the Company and the Stock Exchange pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, were as follows:

(a) Directors’ interests in the Shares of the Company

				Approximate
	Nature of	Number of	Total number	percentage of
Name of Directors	interest	Shares held	of Shares	shareholding
James Sai-Wing Wong	Corporate	961,957,982	961,957,982	29.10%
	(Note)
Frank Kwok-Kit Chu	Personal	1,206,000
	Family	1,196,000	2,402,000	0.07%
Peter Chi-Chung Luk	Family	320,000	320,000	0.01%
Kenneth Kin-Hing Lam	Personal	276	276	–

All the interests stated above represent long positions.

Note: These shares are held by Multi-Investment, a company in which James Sai-Wing Wong is a director and has a beneficial interest.

– 26 –

GENERAL INFORMATION

APPENDIX II

(b) Directors’ interests in options/underlying shares granted by the Company

					Total number of
					share options
			Exercise		outstanding as
Name of	Date of	Exercise	price per	Number of	at the Latest
Directors	grant	period	share	share options	Practicable Date
			HK$
Stephen Sek-Kee Yu	1 June 1994	1 June 1994 to	0.78	1,000,000
		31 May 2004
	22 December 1995	22 December 1995 to	0.78	500,000
		21 December 2005
	7 June 1997	1 June 1994 to	0.78	500,000
		31 May 2004
	7 June 1997	22 December 1995 to	0.78	250,000
		21 December 2005
	16 July 1999	16 July 1999 to	0.07	12,000,000	14,250,000
		15 July 2009
Frank Kwok-Kit Chu	9 June 1994	9 June 1994 to	0.78	800,000
		8 June 2004
	7 June 1997	9 June 1994 to	0.78	400,000
		8 June 2004
	13 July 1999	13 July 1999 to	0.07	8,000,000	9,200,000
		12 July 2009
Peter Chi-Chung Luk	12 July 1999	12 July 1999 to	0.07	4,000,000	4,000,000
		11 July 2009
Herman Man-Hei Fung	13 July 1999	13 July 1999 to	0.07	8,000,000	8,000,000
		12 July 2009
Kenneth Kin-Hing Lam	2 June 1994	2 June 1994 to	0.78	800,000
		1 June 2004
	8 January 1996	8 January 1996 to	0.78	800,000
		7 January 2006
	7 June 1997	2 June 1994 to	0.78	400,000
		1 June 2004
	7 June 1997	8 January 1996 to	0.78	400,000
		7 January 2006
	21 July 1999	21 July 1999 to	0.07	8,000,000	10,400,000
		20 July 2009

– 27 –

GENERAL INFORMATION

APPENDIX II

(c) Directors’ interests in shares of an associated corporation

Listed below is a director’s interest in the shares of Island Parking, a 40% associate of the Company. The interest stated below represents a long position.

			Approximate
	Nature of	Number of	percentage of
Name of Director	interests	shares held	shareholding
James Sai-Wing Wong	Corporate	10	100%

Note: James Sai-Wing Wong is deemed to be interested in these shares in Island Parking, of which 6 shares representing 60% of the issued share capital of Island Parking are indirectly held by Hon Kwok which is deemed under the control of James Sai-Wing Wong. The remaining 4 shares are indirectly held by the Company and have contracted to be disposed to a wholly owned subsidiary of Hon Kwok under the Agreement.

Save as disclosed in this circular, so far as was known to any Director as at the Latest Practicable Date, none of the Directors had any interest or short position in the Shares, underlying shares and debentures of the Company or any associated corporations (within the meaning of the Part XV of the SFO) which were required to be notified to the Company and the Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which the Director is taken or deemed to have under such provisions of the SFO), or which were required to be entered in the register maintained by the Company pursuant to Section 352 of the SFO or which were required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies, to be notified to the Company and the Stock Exchange.

SUBSTANTIAL SHAREHOLDERS

(a) As at the Latest Practicable Date, so far as was known to any Director, the following persons had an interest or short position in the Shares and underlying shares of the Company which would fall to be disclosed to the Company pursuant to the provisions of Divisions 2 and 3 of Part XV of the SFO:

		Approximate
	Number of	percentage of
Name of Shareholders	Shares held	shareholding
James Sai-Wing Wong	961,957,982_(Note 1)_	29.10%
Madeline May-Lung Wong	961,957,982_(Note 1)_	29.10%

– 28 –

GENERAL INFORMATION

APPENDIX II

		Approximate
	Number of	percentage of
Name of Shareholders	Shares held	shareholding
Lucky Year Finance Limited	961,957,982 (Note 1)	29.10%
Chinney Holdings Limited	961,957,982 (Note 1)	29.10%
Chinney Investments, Limited	961,957,982 (Note 1)	29.10%
Newsworthy Resources Limited	961,957,982 (Note 1)	29.10%
Multi-Investment Group Limited	961,957,982 (Note 1)	29.10%
Sumitomo Mitsui Banking Corporation	319,800,000 (Note 2)	9.67%
Credit Suisse Group	319,800,000 (Note 2)	9.67%
Dresdner Kleinwort Wasserstein Limited	319,800,000 (Note 2)	9.67%
Indover bank (Asia) Limited	319,800,000 (Note 2)	9.67%
Krung Thai Bank Public Company Limited	319,800,000 (Note 2)	9.67%
PT. Bank Mandiri (Persero)	319,800,000 (Note 2)	9.67%

All the interests stated above represent long positions.

Notes:

1. James Sai-Wing Wong, Madeline May-Lung Wong, Lucky Year Finance Limited, Chinney Holdings Limited, Chinney Investments, Limited, Newsworthy Resources Limited and Multi-Investment Group Limited are deemed to be interested in the same parcels of Shares by virtue of Section 316 of the SFO.

2. These Shares are registered in the name of an agent bank on behalf of six banks that comprise a syndicate of lenders to a shareholder (the “Syndicate”). The Syndicate’s interest in the relevant Shares was acquired as a result of security given by a shareholder over such Shares in respect of a loan advanced to the shareholder by the Syndicate. Such interest became discloseable upon the Syndicate becoming entitled to exercise the power of sale and voting rights in respect of the interest in the Shares as a result of a default by the shareholder. Accordingly, Sumitomo Mitsui Banking Corporation, Credit Suisse Group, Dresdner Kleinwort Wasserstein Limited, Indover bank (Asia) Limited, Krung Thai Bank Public Company Limited and PT. Bank Mandiri (Persero) are each deemed to have a security interest in the relevant Shares.

– 29 –

GENERAL INFORMATION

APPENDIX II

• (b) So far as was known to any Director, as at the Latest Practicable Date, the following persons were 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 Group other than the Company and the amount of each of such persons’ interests in such securities were as follows:

Name of persons		Approximate
having more than	Name of members	percentage of
10% interest	of the Group	interest held
Saengsup Supaporn	Dharmala Sulee Limited	30%
Lung Yee Cheong	DMT PVC Compounding Ltd.	30%

Notes:

1. Dharmala Sulee Limited has an interest of approximately 99.9% in each of Cosper Enterprise Co., Ltd., Mail Order Gallery Enterprise Co., Ltd. and Shopper Express Enterprise Co., Ltd.

2. Dongguan Dharmala PVC Compounding Ltd. （東莞大馬膠粒有限公司）is a wholly owned subsidiary of DMT PVC Compounding Ltd.

Save as disclosed in this circular, the Directors are not aware of any person as at the Latest Practicable Date who had an interest or short position in the Shares or underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO, or, was directly or indirectly, interested in 10% or more of the nominal value of the issued share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group other than the Company, or any options in respect of such capital.

MATERIAL ADVERSE CHANGE

Save for the interim results announcement to be released on 15 September 2003, the Directors are not aware of any material adverse change in the Group’s financial or trading position since 31 December 2002, being the date of which the Company’s latest published audited consolidated financial statements were made up.

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GENERAL INFORMATION

APPENDIX II

EXPERTS

The following are the qualifications of the experts who have given an opinion or advice contained in this circular:

Hercules Capital is a Hong Kong licensed corporation under the SFO.

Knight Frank is a property valuer.

As at the Latest Practicable Date, neither of Hercules Capital or Knight Frank were beneficially interested in the share capital of any member of the Group nor did they have any right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group nor did they have any interest, either direct or indirect, in any assets which have been, since 31 December 2002 being the date to which the latest published audited consolidated financial statements of the Company were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

CONSENTS

Hercules Capital and Knight Frank have given and have not withdrawn their respective written consents to the issue of this circular with the inclusion of their letters and/or reports and/or references to their respective names, in the form and context in which they respectively appear.

DIRECTORS’ INTERESTS IN CONTRACTS

Management fees are charged by CIL based on the time involvement of the personnel providing services. James Sai-Wing Wong and Herman Man-Hei Fung, both Directors, are also directors of and have beneficial interests in CIL.

• (a) Save as disclosed in this circular, no Director is materially interested in any contract or arrangement subsisting at the date of this circular which is significant in relation to the business of the Group.

• (b) None of the Directors has entered or is proposing to enter into any service contract with any member of the Group (excluding contracts expiring or determinable within one year without payment of compensation (other than statutory compensation)).

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GENERAL INFORMATION

APPENDIX II

• (c) Save as in relation to the Disposal, none of the Directors has any interest, either direct or indirect, in any assets which have been, since the date to which the latest published audited consolidated financial statements of the Company were made up, acquired or disposed of by or leased to or are proposed to be acquired or disposed of by or leased to any member of the Group.

GENERAL

• (a) The registered office of the Company is situated at Clarendon House, Church Street, Hamilton HM11, Bermuda.

• (b) The head office and principal place of business of the Company is at 18th Floor, Hang Seng Building, 77 Des Voeux Road Central, Hong Kong.

• (c) The Hong Kong branch share registrars and transfer office of the Company is Tengis Limited at Ground Floor, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (d) The secretary of the Company is Peter Chi-Chung Luk, FCCA, FHKSA, FCS, FCIS.

• (e) The English text of this circular shall prevail over the Chinese text for the purpose of interpretation.

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GENERAL INFORMATION

APPENDIX II

DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours up to and including the date of the SGM at the head office and principal place of business of the Company at 18th Floor, Hang Seng Building, 77 Des Voeux Road Central, Hong Kong:

• (a) the Agreement;

• (b) the letter of recommendation from the Independent Board Committee set out in this circular;

• (c) the letter from Hercules Capital set out in this circular;

• (d) the valuation report from Knight Frank set out in this circular;

• (e) the written consents from Hercules Capital and Knight Frank referred to in the section headed “Consents” in this appendix;

• (f) the memorandum of association and bye-laws of the Company; and

• (g) the 2002 annual report of the Company.

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NOTICE OF THE SPECIAL GENERAL MEETING

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NOTICE IS HEREBY GIVEN that a special general meeting of Chinney Alliance Group Limited (the “Company”) will be held on Monday, 6 October 2003 at 3:30 p.m. in the Victoria Room, 2nd Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong Kong for the purpose of considering and, if thought fit, passing (with or without modifications) the following resolution as an ordinary resolution:

ORDINARY RESOLUTION

“ THAT :

• (A) the sale and purchase agreement (the “Agreement”) dated 26 August 2003 made between Dharmala Development Limited as vendor, Careful Action Limited as purchaser, the Company as vendor’s guarantor and Hon Kwok Land Investment Company, Limited as purchaser’s guarantor (a copy of which has been produced to this meeting marked “A” and signed by the Chairman for the purpose of identification) relating to the sale and purchase of the entire issued share capital of China Parking (BVI) Limited and the assignment of related shareholders’ loans, and the transactions contemplated by the Agreement (including but not limited to the transfer of the entire issued share capital of China Parking Limited and the assignment of any outstanding related shareholders’ loans from China Parking (BVI) Limited to Dharmala Development Limited or its nominee if required pursuant to the terms of the Agreement), be and are hereby approved, confirmed and ratified; and

• (B) the directors of the Company be and are hereby irrevocably and unconditionally authorised to do all such acts and things (including without limitation to the generality of the foregoing, the execution of any additional document, instrument or agreement) as they may, in their absolute discretion, consider necessary, desirable or expedient to implement and/or to give effect to the transactions contemplated in the Agreement.”

By Order of the Board

Peter Chi-Chung Luk

Company Secretary

Hong Kong, 13 September 2003.

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NOTICE OF THE SPECIAL GENERAL MEETING

Registered office: Head office and principal Clarendon House place of business: Church Street 18th Floor, Hang Seng Building Hamilton HM11 77 Des Voeux Road Central Bermuda Hong Kong

Notes:

1. A shareholder of the Company entitled to attend and vote at the meeting (or any adjournment thereof) is entitled to appoint one or more proxies to attend and vote in his stead in accordance with the bye-laws of the Company. A proxy need not be a shareholder of the Company.

2. A form of proxy for use at the meeting is enclosed.

3. To be valid, the form of proxy, together with the power of attorney or other authority, if any, under which it is signed or a notarially certified copy of that power of attorney or authority must be deposited with the Company Secretary at the Company’s principal place of business in Hong Kong at 18th Floor, Hang Seng Building, 77 Des Voeux Road Central, Hong Kong not less than 48 hours before the time for holding the meeting (or any adjournment thereof) and in default the form of proxy shall not be treated as valid. Completion and return of the form of proxy will not preclude shareholders of the Company from attending and voting in person at the meeting (or any adjournment thereof) and in such event, the instrument appointing a proxy shall be deemed to be revoked.

4. Where there are joint registered holders of a share in the Company, any one of such persons may vote at the meeting, either personally or by proxy, in respect of such share as if he were solely entitled thereto, but if more than one of such joint holders shall be present at the meeting personally or by proxy, that one of the holders so present whose name stands first on the register of members of the Company in respect of such share shall alone be entitled to vote in respect thereof.

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