Chinney Alliance Group Limited — Proxy Solicitation & Information Statement 2005

Apr 28, 2005

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 and Hong Kong Securities Clearing Company 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.

==> picture [302 x 43] intentionally omitted <==

(Stock Code: 385)

PROPOSALS FOR

CAPITAL REORGANISATION INVOLVING CANCELLATION OF CAPITAL RESERVE AND SHARE PREMIUM ACCOUNTS AND SHARE CONSOLIDATION

RE-ELECTION OF DIRECTORS

GENERAL MANDATE TO ISSUE SHARES

AND

NOTICE OF ANNUAL GENERAL MEETING

A notice convening the Annual General Meeting of Chinney Alliance Group Limited to be held on Friday, 3 June 2005 at 3:30 p.m. at Pheasant Room, 1st Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong Kong is set out on pages 14 to 17 of this circular. Whether or not you are able to attend the Annual General Meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return the same to the Company’s principal place of business in Hong Kong at 18th Floor, Hang Seng Building, 77 Des Voeux Road Central, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for 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.

27 April 2005

CONTENTS

	Page
Expected timetable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	2
Letter from the Board
Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	4
Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
Effects of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Board lots . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
Trading arrangements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Free exchange of new share certificates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	7
Fractional entitlement of the New Shares,
odd lots arrangement and matching services . . . . . . . . . . . . . . . . . . . . . . . . .	8
Reasons for the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8
Conditions of the Capital Reorganisation . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Application for listing of the New Shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Adjustment to the Share Options . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	9
Re-election of Directors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
General mandate to issue shares . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	10
Annual General Meeting and proxy arrangement . . . . . . . . . . . . . . . . . . . . . . .	10
Recommendation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	11
Appendix – Biographical details of Directors to be re-elected . . . . . . . . . . . . . . .	12
Notice of Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14

−i −

2005

EXPECTED TIMETABLE

Publication of notice in Bermuda on
the Share Premium Cancellation . . . . . . . . .	. .	. . . . . . . . . . . . . . . . . .Wednesday, 11 May
Latest time for lodging proxy forms for
Annual General Meeting . . . . . . . . . . . . . . . . . . . . . . . . .3:30 p.m. on Wednesday, 1 June
Annual General Meeting . . . . . . . . . . . . . . . .	. .	. . . . . . . . . . . .3:30 p.m. on Friday, 3 June
Effective date of the Capital Reorganisation . .	. .	. . . . . . . . . . .9:30 a.m. on Monday, 6 June
Dealings in New Shares to commence . . . . . .	. .	. . . . . . . . . . . . . . . . . . . . .Monday, 6 June
Original counter for trading in Existing Shares
(represented by existing share certificates)
in board lots of 10,000 closes . . . . . . . . . .	. .	. . . . . . . . . . .9:30 a.m. on Monday, 6 June
Temporary counter for trading in New Shares
(represented by existing share certificates)
in board lots of 400 opens . . . . . . . . . . . . .	. .	. . . . . . . . . . .9:30 a.m. on Monday, 6 June
First day of free exchange of existing share
certificates for new share certificates for New Shares . . . . . . . . . . . . . . . .Monday, 6 June
Original counter for trading in New Shares
(represented by new shares certificates)
in board lots of 10,000 reopens . . . . . . . . .	. .	. . . . . . . . . .9:30 a.m. on Monday, 20 June
Parallel trading in New Shares (represented by
both existing and new share certificates) begins . . . . . . . . .9:30 a.m. on Monday, 20 June
First day for the designated broker to stand
in the market to provide matching services	. .	. . . . . . . . . .9:30 a.m. on Monday, 20 June
Temporary counter for trading in New Shares
(represented by existing share certificates)
in board lots of 400 closes . . . . . . . . . . . . .	. .	. . . . . . . . . .4:00 p.m. on Tuesday, 12 July
Parallel trading in New Shares (represented by
both existing and new share certificates) ends		. . . . . . . . . .4:00 p.m. on Tuesday, 12 July
Last day for the designated broker to stand
in the market to provide matching services . . . . . . . . . . . . . . . . . . . . . . .Tuesday, 12 July
Last day for free exchange of existing share
certificates for new share certificates for New Shares . . . . . . . . . . . . . . . .Friday, 15 July

−1 −

DEFINITIONS

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

“Annual General Meeting” the annual general meeting of the Company to be held on Friday, 3 June 2005 at 3:30 p.m. at Pheasant Room, 1st Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong Kong (and any adjournment thereof) and notice of which is set out on pages 14 to 17 of this circular

“Board”	the board of Directors
“Bye-laws”	the bye-laws of the Company
“CCASS”	the Central Clearing and Settlement System established
	and operated by HKSCC
“Capital Reorganisation”	the proposed Capital Reserve Cancellation, Share
	Premium Cancellation and Share Consolidation
“Capital Reserve Cancellation”	the proposed cancellation of the capital reserve account
	of the Company as at 31 December 2004 of
	HK$236,500,000
“Companies Act”	The Companies Act 1981 of Bermuda (as amended)
“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
“Director(s)”	the director(s) of the Company
“Existing Share(s)”	existing share(s) of nominal value HK$0.01 each in the
	share capital of the Company prior to the Capital
	Reorganisation becoming effective
“Group”	the Company and its subsidiaries
“HKSCC”	Hong Kong Securities Clearing Company Limited

−2 −

DEFINITIONS

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

• “Issue Mandate” the proposed general mandate to be granted to the Directors to exercise the powers of the Company to allot, issue and deal with shares in accordance with the terms set out in ordinary resolution no. 4 as set out in the notice convening the Annual General Meeting

• “Latest Practicable Date” 25 April 2005, being the latest practicable date prior to the printing of this circular for ascertaining certain information contained in this circular

• “New Share(s)” share(s) of nominal value HK$0.25 each in the share capital of the Company subject to and immediately after the Capital Reorganisation becoming effective

• “Share Option(s)” the share options granted under the Share Option Scheme carrying the right to subscribe in cash for shares in the Company

• “Share Option Scheme” the employee share option scheme adopted by the Company on 24 September 1993 (as amended by the shareholders of the Company on 28 June 2001)

• “SFO” the Securities and Futures Ordinance (Chapter 571 of the Laws of Hong Kong)

• “Share Consolidation” the proposed consolidation of every twenty-five (25) Existing Shares (issued and unissued) into one (1) New Share

• “Share Premium Cancellation” the proposed cancellation of the share premium account of the Company as at 31 December 2004 of HK$568,986,000

• “Shareholder(s)” the holder(s) of Existing Share(s) or New Share(s) (as the case may be)

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

−3 −

LETTER FROM THE BOARD

==> picture [302 x 43] intentionally omitted <==

(Stock Code: 385)

Executive Directors: Registered office: James Sai-Wing Wong (Chairman) Clarendon House Stephen Sek-Kee Yu Church Street Frank Kwok-Kit Chu Hamilton HM11 Peter Chi-Chung Luk Bermuda Non-Executive Director: Head office and principal Herman Man-Hei Fung place of business: 18th Floor Independent Non-Executive Directors: Hang Seng Building William Gage McAfee 77 Des Voeux Road Central David Chung-Shing Wu Hong Kong Vincent Tian-Quan Mo 27 April 2005

To the Shareholders and option holders (for information only)

Dear Sir or Madam,

PROPOSALS FOR

CAPITAL REORGANISATION INVOLVING CANCELLATION OF CAPITAL RESERVE AND SHARE PREMIUM ACCOUNTS AND SHARE CONSOLIDATION

RE-ELECTION OF DIRECTORS

GENERAL MANDATE TO ISSUE SHARES

INTRODUCTION

On 13 April 2005, the Company announced, amongst others, the Capital Reorganisation.

The purpose of this circular is to provide you with information regarding (a) the Capital Reorganisation; (b) the re-election of Directors; (c) the granting of the Issue Mandate and to give you notice of the Annual General Meeting for the purpose of considering and, if thought fit, approving the relevant resolutions.

−4 −

LETTER FROM THE BOARD

CAPITAL REORGANISATION

The Board proposes to seek approval from the Shareholders to effect the Capital Reorganisation pursuant to the Companies Act involving:

• (a) the cancellation of the entire amount of HK$236,500,000 standing to the credit of the capital reserve account of the Company as at 31 December 2004 and the application of the credit arising therefrom towards partial elimination of the accumulated losses of the Company of HK$708,335,000 as at 31 December 2004;

• (b) the cancellation of the entire amount of HK$568,986,000 standing to the credit of the share premium account of the Company as at 31 December 2004 and the application of the credit arising therefrom:

• (i) to eliminate the balance of HK$471,835,000 of the accumulated losses of the Company as at 31 December 2004; and

• (ii) to apply the remaining credit of HK$97,151,000 arising therefrom to the Company’s contributed surplus account; and

• (c) the consolidation of every twenty-five (25) Existing Shares (issued and unissued) into one (1) New Share.

−5 −

LETTER FROM THE BOARD

EFFECTS OF THE CAPITAL REORGANISATION

The table below illustrates the effects of the Capital Reorganisation on the capital structure of the Company as at 31 December 2004:

Issued share capital Share premium account Capital reserve account Accumulated losses Contributed surplus Number of authorised shares Authorised share capital Nominal value per share Number of shares issued and fully paid Issued share capital	As at 31 December 2004 (Audited) HK$’000 39,660 568,986 236,500 (708,335) – 136,811 25,000,000,000 HK$250,000,000 HK$0.01 3,965,994,984 HK$39,659,949	After Capital Reserve Cancellation HK$’000 39,660 568,986 – (471,835) – 136,811 25,000,000,000 HK$250,000,000 HK$0.01 3,965,994,984 HK$39,659,949	After Share Premium Cancellation HK$’000 39,660 – – – 97,151 136,811 25,000,000,000 HK$250,000,000 HK$0.01 3,965,994,984 HK$39,659,949	After Share Consolidation HK$’000 39,660 – – – 97,151
				136,811
				1,000,000,000 HK$250,000,000 HK$0.25 158,639,799 HK$39,659,949

Implementation of the Capital Reorganisation will not, by itself, alter the underlying assets, liabilities or financial position of the Group nor will the rights of the Shareholders, particularly with respect to their proportional interests in the Company and voting rights, be affected in any way.

BOARD LOTS

The Existing Shares are currently traded in board lots of 10,000 Existing Shares. Based on the closing price of HK$0.023 per Existing Share as at the Latest Practicable Date, the market value per board lot of Existing Shares is HK$230.

The New Shares will be traded in board lots of 10,000 New Shares and the estimated market value per board lot of the New Shares will be HK$5,750 (calculated based on the closing price of HK$0.023 per Existing Share as at the Latest Practicable Date and assuming the Capital Reorganisation has become effective). The New Shares, when issued, will rank pari passu in all respects with each other.

−6 −

LETTER FROM THE BOARD

TRADING ARRANGEMENTS

Subject to the Capital Reorganisation becoming effective, dealings in the New Shares are expected to commence on Monday, 6 June 2005 and it is proposed that arrangements for trading in the New Shares will be as follows:

• (a) with effect from 9:30 a.m. on Monday, 6 June 2005, the original counter for trading in the Existing Shares in board lots of 10,000 Existing Shares will be temporarily closed. A temporary counter for trading in the New Shares in board lots of 400 New Shares (represented by existing share certificates) will be established and every 25 Existing Shares will be deemed to represent 1 New Share. Only existing share certificates can be traded at the temporary counter;

• (b) with effect from 9:30 a.m. on Monday, 20 June 2005, the original counter will be reopened for trading in the New Shares in board lots of 10,000 New Shares (represented by new share certificates). Only new share certificates for New Shares can be traded at this counter;

• (c) during the period from 9:30 a.m. on Monday, 20 June 2005 to 4:00 p.m. on Tuesday, 12 July 2005 (both dates inclusive), parallel trading will be permitted at the two counters detailed in paragraphs (a) and (b) above; and

• (d) the temporary counter for trading in the New Shares in board lots of 400 New Shares will be closed after the close of trading on 4:00 p.m. on Tuesday, 12 July 2005. Thereafter, trading will only be in the New Shares in board lots of 10,000 New Shares (represented by new share certificates). Existing share certificates will cease to be marketable and will not be acceptable for trading and settlement purposes. However, valid share certificates for Existing Shares will remain effective as documents of title on the basis of 1 New Share for 25 Existing Shares.

FREE EXCHANGE OF NEW SHARE CERTIFICATES

Subject to the Capital Reorganisation becoming effective, Shareholders may submit existing share certificates to the Company’s share registrar in Hong Kong, Tengis Limited, at G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, during the period from Monday, 6 June 2005 to Friday, 15 July 2005 (both dates inclusive) for exchange, at the expense of the Company, for new share certificates for the New Shares. Thereafter, existing share certificates will be accepted for exchange only on payment of a fee of HK$2.50 (or such higher amount as may from time to time be allowed by the Stock Exchange) for each new share certificate issued for the New Shares or each existing share certificate cancelled (whichever number is higher).

To distinguish between the existing share certificates and the new share certificates, the new share certificates will be orange in colour, which is different from the existing share certificates in green.

−7 −

LETTER FROM THE BOARD

It is expected that the new share certificates will be available for collection on or after the 10th business day from the date of submission of the existing share certificates to the Company’s share registrar in Hong Kong at the above address. Unless otherwise instructed, the new share certificates will be issued in board lots of 10,000 New Shares.

FRACTIONAL ENTITLEMENT OF THE NEW SHARES, ODD LOTS ARRANGEMENT AND MATCHING SERVICES

Where the Share Consolidation gives rise to fractions of a share, such fractional shares will be disregarded and not issued to the Shareholders. All such fractional entitlement to the New Shares will be aggregated, sold and retained for the benefit of the Company.

In order to facilitate the trading of odd lots of the New Shares as a result of the Capital Reorganisation, the Company has appointed Magnum International Securities Limited to provide matching services on a best efforts basis to Shareholders who wish to top up or sell their holding of odd lots of New Shares during the period from Monday, 20 June 2005 to Tuesday, 12 July 2005, both dates inclusive. Holders of the New Shares who wish to take advantage of this facility may contact Magnum International Securities Limited during the aforesaid period as follow:

Contact person	Address	Telephone	Fax
Mr. Tony To	1301A, 13th Floor	2918 8952	2815 9980
	Bank of America Tower
	12 Harcourt Road
	Hong Kong

REASONS FOR THE CAPITAL REORGANISATION

As at 31 December 2004, the Company had accumulated losses of approximately HK$708,335,000. The credit arising from the Capital Reserve Cancellation and the Share Premium Cancellation will be applied to eliminate all such accumulated losses and will put the Company in a better position to declare and pay dividends.

The Capital Reserve Cancellation and the Share Premium Cancellation will create a credit of HK$97,151,000 in the contributed surplus account of the Company. There is no specific provision in the Companies Act which regulates the use of contributed surplus save that the Company cannot make a distribution out of the contributed surplus to the Shareholders if there are reasonable grounds for believing that the Company is, or would after the payment be, unable to pay its liabilities as they become due or the realisable value of the Company’s assets would thereby be less than the aggregate of its liabilities and its issued share capital and share premium accounts.

Based on the closing price of HK$0.023 per Existing Share as at the Latest Practicable Date, the market value of a board lot of 10,000 Existing Shares is HK$230 and that a board lot of 10,000 New Shares is expected to be HK$5,750. The Share Consolidation is intended to reduce the transaction cost per dollar value of each New Share.

−8 −

LETTER FROM THE BOARD

In view of the above, the Directors consider that the Capital Reorganisation is in the interests of the Company and the Shareholders as a whole.

CONDITIONS OF THE CAPITAL REORGANISATION

The Capital Reorganisation is conditional upon:

• (a) the passing of the special resolution by the Shareholders to approve the Capital Reorganisation at the Annual General Meeting;

• (b) the Listing Committee of the Stock Exchange granting the listing of, and permission to deal in, the New Shares to be issued; and

• (c) the compliance with the relevant procedural requirements under the Companies Act to effect the Capital Reorganisation (including the publication of a press notice in an appointed newspaper in Bermuda advertising the Share Premium Cancellation).

Assuming that all the above conditions are fulfilled, it is expected that the Capital Reorganisation will become effective at 9:30 a.m. on Monday, 6 June 2005 upon the passing of the special resolution to be proposed at the Annual General Meeting.

APPLICATION FOR LISTING OF THE NEW SHARES

The Company will apply to the Listing Committee of the Stock Exchange for the granting of the listing of, and permission to deal in, the New Shares to be issued as soon as practicable.

Subject to the granting of the listing of, and permission to deal in, the New Shares to be issued, the New Shares will be accepted as eligible securities by HKSCC for deposit, clearance and settlement in CCASS with effect from the commencement date of dealings in the New Shares on the Stock Exchange or such other date determined by HKSCC. Settlement of transactions between participants of the Stock Exchange on any trading day is required to take place in CCASS on the second trading day thereafter. All activities under CCASS are subject to the general rules of CCASS and CCASS operational procedures in effect from time to time.

ADJUSTMENT TO THE SHARE OPTIONS

At the Latest Practicable Date, there are 40,975,000 outstanding Share Options. The exercise price of the Share Options and/or the number of shares subject to the Share Options may have to be adjusted in accordance with the rules of the Share Option Scheme as a result of the Share Consolidation becoming effective. If any Share Option(s) granted under the Share Option Scheme becomes or remains exercisable upon the Capital Reorganisation becoming effective, the Company will request the auditors of the Company to provide a certificate as to the adjustment (if any) required to be made in accordance with the rules of the Share Option Scheme and Listing Rule 17.03(13) once the Capital Reorganisation becomes effective. Any adjustment shall be made on the basis that the proportion of the issued share capital of the Company to which a grantee of Share Options is entitled shall remain the same before and after such adjustment. The Company will make a further announcement if such adjustment is necessary.

−9 −

LETTER FROM THE BOARD

RE-ELECTION OF DIRECTORS

In accordance with the Bye-laws, the Directors who will retire at the Annual General Meeting are Mr. Herman Man-Hei Fung and Mr. William Gage McAfee. Mr. Fung and Mr. McAfee, being eligible, offer themselves for re-election at the Annual General Meeting. Biographical details of Mr. Fung and Mr. McAfee are set out in the appendix to this circular.

GENERAL MANDATE TO ISSUE SHARES

At the last annual general meeting of the Company held on 3 June 2004, an ordinary resolution was passed granting a general mandate authorising the Directors to allot, issue and deal with shares not exceeding 20 per cent. of the aggregate nominal amount of the issued share capital of the Company as at that date of passing such resolution. The Directors have not exercised the mandate up to the Latest Practicable Date, which mandate will lapse at the conclusion of the Annual General Meeting.

At the Annual General Meeting, an ordinary resolution will be proposed to grant the Directors a fresh general mandate to exercise the power of the Company during the Relevant Period (as defined in ordinary resolution no. 4 as set out in the notice convening the Annual General Meeting) to allot, issue and deal with shares up to 20 per cent. of the aggregate nominal amount of the issued share capital of the Company as at the date of passing such resolution.

ANNUAL GENERAL MEETING AND PROXY ARRANGEMENT

A notice convening the Annual General Meeting, which contains, inter alia, a special resolution to approve the Capital Reorganisation and an ordinary resolution to approve the Issue Mandate, is set out on pages 14 to 17 of this circular.

A form of proxy for use at the Annual General Meeting is enclosed. Whether or not you are able to attend the Annual General Meeting, you are requested to complete the form of proxy in accordance with the instructions printed thereon and return the same to the Company’s principal place of business in Hong Kong at 18th Floor, Hang Seng Building, 77 Des Voeux Road Central, Hong Kong as soon as possible and in any event not less than 48 hours before the time appointed for holding 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.

−10 −

LETTER FROM THE BOARD

Pursuant to Bye-law 66, a resolution put to the vote of a general meeting shall be decided on a show of hands unless (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll) a poll is demanded by:

• (a) the chairman of such meeting; or

• (b) at least three Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy for the time being entitled to vote at the meeting; or

• (c) a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and representing not less than one-tenth of the total voting rights of all Shareholders having the right to vote at the meeting; or

• (d) a Shareholder or Shareholders present in person or in the case of a Shareholder being a corporation by its duly authorised representative or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all shares conferring that right.

A demand by a person as proxy for a Shareholder or in the case of a Shareholder being a corporation by its duly authorised representative shall be deemed to be the same as a demand by a Shareholder.

RECOMMENDATION

The Board believes that the proposed resolutions as set out in the notice convening the Annual General Meeting are all in the best interests of the Company and the Shareholders as a whole. Accordingly, the Board recommends that the Shareholders to vote in favour of all such resolutions at the Annual General Meeting.

Yours faithfully, For and on behalf of the Board James Sai-Wing Wong Chairman

−11 −

BIOGRAPHICAL DETAILS OF DIRECTORS TO BE RE-ELECTED

APPENDIX

In accordance with the Bye-laws, the following Directors will retire from office at the Annual General Meeting and, being eligible, offer themselves for re-election.

Herman Man-Hei Fung

Aged 67, was appointed a director of the Company in 1998.

Mr. Fung is the managing director of Chinney Investments, Limited (“Chinney Investments”) and a director of Lucky Year Finance Limited, Chinney Holdings Limited, Newsworthy Resources Limited and Multi-Investment Group Limited, all being substantial shareholders of the Company. He is also the vice chairman of Hon Kwok Land Investment Company, Limited (“Hon Kwok”). Chinney Investments and Hon Kwok are both listed on the Stock Exchange. Save as disclosed above, Mr. Fung does not have other business relationship with any directors, senior management or substantial or controlling shareholders of the Company.

As at the Latest Practicable Date, Mr. Fung has options to subscribe for 8,000,000 shares of the Company within the meaning of Part XV of the SFO.

There is no service contract between the Company and Mr. Fung. During the financial year ended 31 December 2004, Mr. Fung did not receive any director’s emoluments. Mr. Fung is not appointed for a specific term and he is subject to retirement by rotation and re-election at the Company’s annual general meeting in accordance with the Bye-laws.

William Gage McAfee

Aged 62, was appointed an independent non-executive director of the Company in 2000.

He is the managing director of The GE Asia Pacific Capital Technology Fund, Asia Pacific Capital Limited and APC Asset Management (HK) Limited and a director of Internet Technology Group Limited. Mr. McAfee is a member of the Listing Committee of the Stock Exchange, the Council on Foreign Relations, the International Institute for Strategic Studies, the Asia Center Committee of Harvard University, the Development Board of Philips Academy, Andover, Board of Governors of the Chinese International School and served as an adviser to the Hong Kong Basic Law Consultative Committee. A former president of the American Chamber of Commerce in Hong Kong, Mr. McAfee has acted as an adviser to the Asian Development Bank, served on the General Committee of the Hong Kong General Chamber of Commerce, the Law Reform Commission and was the deputy chairman of the Hong Kong Community Chest. He received an A.B. in Government from Harvard College and a J.D. from Columbia Law School. Other than his capacity as a Director, he does not have any business relationship with any directors, senior management or substantial or controlling shareholders of the Company.

As at the Latest Practicable Date, Mr. McAfee did not have any interests in the shares of the Company within the meaning of Part XV of the SFO.

−12 −

BIOGRAPHICAL DETAILS OF DIRECTORS TO BE RE-ELECTED

APPENDIX

There is no service contract between the Company and Mr. McAfee. Mr. McAfee is entitled to a director’s fee, the amount of which is determined by the Directors with reference to his experience together with his work and contribution to the Company. During the financial year ended 31 December 2004, Mr. McAfee received a director’s fee of HK$50,000. Mr. McAfee is not appointed for a specific term and he is subject to retirement by rotation and re-election at the Company’s annual general meeting in accordance with the Bye-laws.

−13 −

NOTICE OF ANNUAL GENERAL MEETING

==> picture [302 x 43] intentionally omitted <==

(Stock Code: 385)

NOTICE IS HEREBY GIVEN THAT the annual general meeting of the shareholders of Chinney Alliance Group Limited (the “Company”) will be held on Friday, 3 June 2005 at 3:30 p.m. at Pheasant Room, 1st Floor, Mandarin Oriental Hong Kong, 5 Connaught Road Central, Hong Kong for the following purposes:

1. To receive and consider the audited financial statements of the Company for the year ended 31 December 2004 together with the reports of the directors and the auditors thereon.

2. To re-elect directors and to authorise the board of directors to fix the directors’ remuneration.

3. To re-appoint auditors and to authorise the board of directors to fix their remuneration.

4. To consider as special business and, if thought fit, pass with or without amendments the following resolution as an Ordinary Resolution:

ORDINARY RESOLUTION

“ THAT :

• (a) subject to paragraph (c) below, a general mandate be and is hereby unconditionally granted to the directors of the Company to exercise during the Relevant Period (as hereinafter defined) of all the powers of the Company to allot, issue and deal with additional Shares (as hereinafter defined) in the capital of the Company and to make or grant offers, agreements and options which would or might require the exercise of such powers;

• (b) the mandate in paragraph (a) above shall authorise the directors of the Company during the Relevant Period to make or grant offers, agreements and options which would or might require the exercise of such powers after the end of the Relevant Period;

• (c) the aggregate nominal amount of share capital allotted or agreed conditionally or unconditionally to be allotted (whether pursuant to an option or otherwise) and issued by the directors of the Company pursuant to the mandate in paragraph (a) above, otherwise than pursuant to:

• (i) a Rights Issue (as hereinafter defined),

−14 −

NOTICE OF ANNUAL GENERAL MEETING

• (ii) an issue of Shares under any option scheme or similar arrangement for the time being adopted and approved by the shareholders of the Company for the grant or issue to officers and/or employees of the Company and/or any of its subsidiaries of Shares or rights to acquire Shares of the Company,

• (iii) an issue of Shares as scrip dividends or similar arrangement providing for the allotment of Shares in lieu of the whole or part of a dividend on Shares of the Company in accordance with the Bye-laws of the Company, or

• (iv) a specific authority granted by the shareholders of the Company in general meeting,

shall not exceed 20 per cent. of the aggregate nominal amount of the issued share capital of the Company at the date of passing this Resolution, and the said mandate shall be limited accordingly; and

• (d) for the purpose of this Resolution,

“Relevant Period” means the period from the passing of this Resolution until whichever is the earlier of:

• (i) the conclusion of the next annual general meeting of the Company;

• (ii) the expiration of the period within which the next annual general meeting of the Company is required by the Bye-laws of the Company or any applicable laws to be held; or

• (iii) the date of the passing of an ordinary resolution by the shareholders of the Company in general meeting revoking or varying the authority given to the directors of the Company by this Resolution.

“Rights Issue” means an offer of Shares in the Company, or an offer of warrants, options or other securities giving rights to subscribe for Shares, open for a period fixed by the directors of the Company to the holders of Shares of the Company on the register of members of the Company on a fixed record date in proportion to their then holdings of such Shares as at that date (subject to such exclusions or other arrangements as the directors of the Company, after making enquiry, may deem necessary or expedient in relation to fractional entitlements or having regard to any legal restrictions under the laws of the relevant place, or the requirements of the relevant regulatory body or any stock exchange in that place).”

“Shares” mean the new shares of nominal value of HK$0.25 each subject to the passing of the special resolution no. 5 as set out in the notice convening this meeting or else the existing shares of nominal value of HK$0.01 each.

−15 −

NOTICE OF ANNUAL GENERAL MEETING

1. To consider as special business and, if thought fit, pass the following resolution as a Special Resolution:

SPECIAL RESOLUTION

“ THAT :

• (a) the entire amount of HK$236,500,000 standing to the credit of the capital reserve account of the Company as at 31 December 2004 be cancelled and the credit arising therefrom be applied towards the partial elimination of the accumulated losses of the Company as at 31 December 2004 in the amount of HK$708,335,000;

• (b) the entire amount of HK$568,986,000 standing to the credit of the share premium account of the Company as at 31 December 2004 be cancelled and the credit arising therefrom be applied to eliminate the balance of the accumulated losses of the Company as at 31 December 2004 and the remaining credit of HK$97,151,000 arising therefrom be transferred to the Company’s contributed surplus account;

• (c) every twenty-five (25) existing shares (issued and unissued) of nominal value HK$0.01 each in the authorised share capital of the Company be consolidated into one (1) share of nominal value HK$0.25 each (“New Share(s)”), such New Shares shall rank pari passu in all respect with each other and the directors of the Company be and are hereby authorised to sell any fractional entitlements arising therefrom and to retain the proceeds for the benefit of the Company; and

• (d) the directors of the Company be and are hereby authorised to do all acts and things which in their opinion are necessary to effect and implement any of the foregoing.”

By Order of the Board Peter Chi-Chung Luk Company Secretary

Hong Kong, 27 April 2005

Notes:

• (1) A shareholder entitled to attend and vote at the above meeting (or at any adjournment thereof) is entitled to appoint one or more proxies to attend and vote instead of the shareholder. The proxy need not be a shareholder of the Company.

(2) In order to be valid, a form of proxy in the prescribed form, together with the power of attorney or other authority (if any) under which it is signed or a certified copy of that power or authority must be completed, signed and 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 appointed for holding the above meeting or any adjournment thereof.

−16 −

NOTICE OF ANNUAL GENERAL MEETING

• (3) Where there are joint registered holders of any shares, any one of such joint holders may vote at the above meeting (or at any adjournment thereof), either in person or by proxy, in respect of such shares as if he were solely entitled thereto, but if more than one of such joint holders be present at the meeting, the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders, and for this purpose seniority shall be determined by the order in which the names stand in the register of members of the Company in respect of the joint holding.

−17 −