Chinney Alliance Group Limited — Proxy Solicitation & Information Statement 2006

May 8, 2006

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

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

If you have sold or transferred all your shares in Chinney Alliance Group Limited, you should at once hand this circular to the purchaser or the transferee or to the bank, stockbroker or other agent through whom the sale or transfer was effected for transmission to the purchaser or the 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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(Stock code: 385)

DISPOSAL OF 32,000,000 SHARES IN SHUN CHEONG HOLDINGS LIMITED

DISCLOSEABLE AND CONNECTED TRANSACTION

8 May 2006

CONTENTS

	Page
DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
LETTER FROM THE BOARD
INTRODUCTION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
THE SALE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
REASONS FOR AND BENEFITS FROM THE SALE. . . . . . . . . . . . . . . . . . . .	4
INTENDED USE OF PROCEEDS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
INFORMATION ON THE PURCHASER. . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	5
INFORMATION ON THE GROUP AND SCH GROUP . . . . . . . . . . . . . . . . . . .	6
REQUIREMENTS OF THE LISTING RULES. . . . . . . . . . . . . . . . . . . . . . . . . .	6
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
APPENDIX – GENERAL INFORMATION . . . . . . . . . . . . . . . . . . . . . . . .	7

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DEFINITIONS

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

“Board”	the board of Directors
“Company”	Chinney Alliance Group Limited, a company
	incorporated in Bermuda with limited liability, the shares
	of which are listed on the Main Board of the Stock
	Exchange (Stock Code: 385)
“Completion”	the completion of the Sale
“connected person(s)”	has the meaning ascribed thereto under the Listing Rules
“Consideration”	the consideration of HK$9.6 million under the Sale
“Director(s)”	the director(s) of the Company
“Group”	the Company and its subsidiaries
“Hong Kong”	Hong Kong Special Administrative Region of the
	People’s Republic of China
“Latest Practicable Date”	2 May 2006, being the latest practicable date prior to the
	printing of this circular for ascertaining certain
	information contained herein
“Listing Rules”	the Rules Governing the Listing of Securities on the
	Stock Exchange
“Mr. Mo”	Mr. Vincent Tian-Quan Mo, an independent non-
	executive Director. He is also a director of and owns
	100% of the Purchaser
“Purchaser”	Upsky Enterprises Limited, a company incorporated in
	British Virgin Islands with limited liability
“Remaining SCH Group”	the remaining SCH Group after the disposal of the entire
	issued share capital of Shun Cheong Investments Limited
	to Chinney Alliance Trading (BVI) Limited, a wholly-
	owned subsidiary of the Company, pursuant to a sale and
	purchase agreement dated 26 January 2006

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	DEFINITIONS
“Sale”	the sale of 32,000,000 SCH Shares by the Company to the
	Purchaser
“SCH”	Shun Cheong Holdings Limited, a company incorporated
	in Bermuda with limited liability, the shares of which are
	listed on the Main Board of the Stock Exchange (Stock
	Code: 650)
“SCH Group”	SCH and its subsidiaries
“SCH Share(s)”	share(s) of HK$0.01 each in the capital of SCH
“Share(s)”	share(s) of HK$0.25 each in the capital of the Company
“Shareholder(s)”	holder(s) of the Shares
“SFO”	the Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong)
“Stock Exchange”	The Stock Exchange of Hong Kong Limited
“HK$”	Hong Kong dollars, the lawful currency of Hong Kong

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LETTER FROM THE BOARD

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(Stock code: 385)

Executive Directors: James Sai-Wing Wong (Chairman) Stephen Sek-Kee Yu Frank Kwok-Kit Chu

Non-Executive Director: Herman Man-Hei Fung

Independent Non-Executive Directors: William Gage McAfee David Chung-Shing Wu Vincent Tian-Quan Mo

Registered Office: Clarendon House Church Street Hamilton HM11 Bermuda

Head Office and Principal place of business in Hong Kong: 18th Floor Hang Seng Building 77 Des Voeux Road Central Hong Kong

8 May 2006

To the Shareholders and option holders (for information only)

Dear Sir or Madam,

DISPOSAL OF 32,000,000 SHARES IN SHUN CHEONG HOLDINGS LIMITED DISCLOSEABLE AND CONNECTED TRANSACTION

INTRODUCTION

On 13 April 2006, the Company announced that it had sold 32,000,000 SCH Shares on 12 April 2006, representing approximately 27.6% interest in the issued share capital of SCH, to Upsky Enterprises Limited for a cash consideration of HK$9.6 million. Following the Sale, the Company continues to hold 2,697,500 SCH Shares, representing approximately 2.33% of the issued share capital of SCH.

The purpose of this circular is to provide you with further information in relation to the Sale.

THE SALE

Date

12 April 2006

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LETTER FROM THE BOARD

Parties

Vendor : The Company, beneficially held 34,697,500 SCH Shares immediate prior to the Sale, representing approximately 29.93% of the issued share capital of SCH Purchaser : Upsky Enterprises Limited Upsky Enterprises Limited is owned as to 100% by Mr. Mo. Mr. Mo is an independent non-executive Director and thus Upsky Enterprises Limited is a connected person of the Company under the Listing Rules

Consideration

The Consideration of HK$9.6 million under the Sale was arrived at by the Board after arm’s length negotiation with the Purchaser, after considering the loss making track record of the Remaining SCH Group and the historical share price performance of SCH.

The Consideration is equivalent to HK$0.30 per SCH Share under the Sale (the “Sale Price”) which represents a discount of 1.6% to the closing SCH Share price of HK$0.305 as at 12 April 2006, being the day prior to trading suspension of the SCH Shares pending the release of the announcement in respect of the Sale (the “Pre-suspension Date”). The Sale Price also represents a discount of 3.5% to the 20-day average closing SCH Share price of HK$0.311 ending on the Pre-suspension Date.

The Consideration has been fully received by the Company.

REASONS FOR AND BENEFITS FROM THE SALE

Following the disposal of the building related contracting business in March 2006, details of which were set out in the circular of SCH dated 10 March 2006 (the “SCH Circular”), SCH Group is principally engaged in building related maintenance services that involve the maintenance of electrical equipment, water pump and fire services equipment, air-conditioning systems as well as plumbing and drainage systems in buildings.

For the year ended 31 March 2004, the SCH Group recorded profit before tax and profit after tax of approximately HK$15.7 million and HK$11.2 million respectively. For the year ended 31 March 2005, the SCH Group recorded loss before tax and loss after tax of approximately HK$33.8 million and HK$34.6 million respectively. The consolidated net assets of the SCH Group amounted to approximately HK$119.2 million and HK$84.6 million as at 31 March 2004 and 31 March 2005 respectively. According to the SCH Circular, assuming the disposal of the building related contracting business mentioned above had been completed on 1 April 2004, the pro forma unaudited loss of the Remaining SCH Group for the year ended 31 March 2005 would have been approximately HK$44.5 million. Of this amount,

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LETTER FROM THE BOARD

approximately HK$31.2 million were due to the pro forma losses on disposal of the contracting business by SCH whereas the balance was primarily attributable to operating losses of the building related maintenance services currently left with the Remaining SCH Group. The pro forma unaudited consolidated net assets of the Remaining SCH Group as at 30 September 2005 (being the latest published unaudited balance sheet), assuming the disposal of the building related contracting business mentioned above had been completed on 30 September 2005, amounted to approximately HK$54.2 million.

Based on the carrying value of the SCH Shares under the Sale as included in the consolidated balance sheet of the Group as at 31 December 2005 of approximately HK$16.2 million, the Sale would bring about a loss of approximately HK$7.1 million for the Group which included the loss in relation to fair value adjustment of the remaining 2,697,500 SCH Shares held by the Company of approximately HK$0.5 million. The Sale will give rise to the following financial effects to the Group: (i) the interest in associates of the Group will be reduced by the carrying value of all the SCH Shares held by the Company as at the date of the completion of the Sale; (ii) the remaining 2,697,500 SCH Shares held by the Company, representing approximately 2.33% of the issued share capital of SCH, will be recognized as an investment of the Company and measured at fair value; and (iii) the consolidated cash and bank balances of the Group will be increased by the net proceeds from the Sale of approximately HK$9.5 million.

The Board is of the view that the Sale is beneficial to the Group as it allows the Company to focus its resources on its existing businesses in the trading of plastics and chemicals, industrial products and equipment, electrical and mechanical engineering and related businesses.

The Board also considers that the Sale was entered on normal commercial terms and is in the interests of the Shareholders as a whole.

INTENDED USE OF PROCEEDS

The Board intends to use the net proceeds of approximately HK$9.5 million from the Sale for working capital requirements.

INFORMATION ON THE PURCHASER

Upsky Enterprises Limited is a company incorporated in British Virgin Islands and is owned as to 100% by Mr. Mo.

Mr. Mo is currently an independent non-executive Director and did not hold any SCH Share prior to the Sale. Mr. Mo is the director and chief executive officer of Soufun Holdings Limited, a company conducting real estate internet business in China. Mr. Mo has over ten years of experience in the provision of on-line information and analysis on the trading, leasing, financing and valuation of real estate properties. Mr. Mo holds a Bachelor’s degree in Mechanical Engineering from South China University of Technology, a Master’s degree in Economics and Management from Tsinghua University and a Master’s degree in Economics from Indiana University, USA.

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LETTER FROM THE BOARD

INFORMATION ON THE GROUP AND SCH GROUP

The Group is principally engaged in the trading of plastics and chemicals, industrial products and equipment, electrical and mechanical engineering and related businesses.

SCH Group is principally engaged in building related maintenance services that involve the maintenance of electrical equipment, water pump and fire services equipment, airconditioning systems as well as plumbing and drainage systems in buildings.

REQUIREMENTS OF THE LISTING RULES

The Sale constitutes a discloseable transaction for the Company under Chapter 14 of the Listing Rules.

Upsky Enterprises Limited is owned as to 100% by Mr. Mo (an independent nonexecutive Director) and thus Upsky Enterprises Limited is a connected person of the Company under the Listing Rules. As each of the percentage ratios (other than the profit ratio) (as defined in Rule 14.07 of the Listing Rules) is less than 25% and the Consideration is less than HK$10,000,000, the Sale constitutes an exempted connected transaction for the Company and is only subject to the reporting and announcement requirements in accordance with Rule 14A.32 of the Listing Rules.

ADDITIONAL INFORMATION

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

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

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GENERAL INFORMATION

APPENDIX

1. 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 herein misleading.

2. DISCLOSURE OF INTERESTS

(a) Directors

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 Issuers, were as follows:

(i) Directors’ interests in the Shares

						Percentage
			**Number of **	Shares held,		of the
		capacity and nature of interest				Company’s
		Personal	Family	Corporate		issued share
**Name **	of Director	interests	interests	interests	Total	capital
James	Sai-Wing Wong	–	–	46,158,319	46,158,319	29.10%
				(Note)
Frank	Kwok-Kit Chu	48,240	47,840	–	96,080	0.06%

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

All the interests stated above represent long positions.

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APPENDIX

GENERAL INFORMATION

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

			Exercise	Number of
			price per	options
Name of Director	Date of grant	Exercise period	share	outstanding
			HK$
Stephen Sek-Kee Yu	16 July 1999	16 July 1999 to	1.75	480,000
		15 July 2009
Frank Kwok-Kit Chu	13 July 1999	13 July 1999 to	1.75	320,000
		12 July 2009
Herman Man-Hei Fung	13 July 1999	13 July 1999 to	1.75	320,000
		12 July 2009

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 Issuers, to be notified to the Company and the Stock Exchange.

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APPENDIX

GENERAL INFORMATION

(b) Substantial shareholders

• (i) 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:

				Percentage
				of the
				Company’s
			Number of	issued
		Capacity and	Shares	share
Name of Shareholder	Notes	nature of interest	held	capital
James Sai-Wing Wong	1	Interest through a	46,158,319	29.10%
		controlled corporation
Madeline May-Lung Wong	1	Interest through a	46,158,319	29.10%
		controlled corporation
Lucky Year Finance Limited	1	Interest through a	46,158,319	29.10%
		controlled corporation
Chinney Holdings Limited	1	Interest through a	46,158,319	29.10%
		controlled corporation
Chinney Investments, Limited	1	Interest through a	46,158,319	29.10%
		controlled corporation
Newsworthy Resources	1	Interest through a	46,158,319	29.10%
Limited		controlled corporation
Multi-Investment Group	1	Beneficial owner	46,158,319	29.10%
Limited
Sumitomo Mitsui Banking	2	Beneficial owner	12,792,000	8.06%
Corporation
Credit Suisse First Boston	2	Beneficial owner	12,792,000	8.06%
International
Dresdner Kleinwort	2	Beneficial owner	12,792,000	8.06%
Wasserstein Limited
Krung Thai Bank Public	2	Beneficial owner	12,792,000	8.06%
Company Limited
PT. Bank Mandiri (Persero)	2	Beneficial owner	12,792,000	8.06%
PT. NISP Sekuritas	2	Beneficial owner	12,792,000	8.06%

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APPENDIX

GENERAL INFORMATION

Notes:

1. Dr. James Sai-Wing Wong, Ms. 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 parcel of 46,158,319 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 of the Company (the “Syndicate”). The Syndicate’s interest in the relevant shares was acquired as a result of security given by the 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 First Boston International, Dresdner Kleinwort Wasserstein Limited, Krung Thai Bank Public Company Limited, PT. Bank Mandiri (Persero) and PT. NISP Sekuritas are each deemed to have a security interest in the relevant shares.

All the interests stated above represent long positions.

• (ii) So far as was known to any Director, as at the Latest Practicable Date, the following person was directly or indirectly interested in 10% or more of the nominal value of any class of share capital carrying rights to vote in all circumstances at general meetings of any other member of the Group other than the Company and the amount of such person’s interest in such securities was as follows:

		Approximate
Name of person having	Name of member	percentage of
10% or more interest	of the Group	interest held
Saengsup Supaporn	Dharmala Sulee Limited	30%

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

3. COMPETING INTEREST

None of the Directors or their respective associates had an interest in a business which competes or may compete either directly or indirectly with the business of the Group, or have or may have any other conflicts of interest with the Group.

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GENERAL INFORMATION

APPENDIX

4. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors has any existing or proposed service contract (excluding contracts expiring or determinable by the Group within one year without payment of compensation (other than statutory compensation)) with any member of the Group.

5. LITIGATION

As at the Latest Practicable Date, none of the members of the Group were engaged in any litigation or arbitration of material importance and there was no litigation, arbitration or claim of material importance known to the Directors to be pending or threatened against any members of the Group.

6. GENERAL

• (a) The secretary of the Company is Mr. Yun-Sang Lo, BBA, CPA, FCCA.

• (b) The qualified accountant of the Company is Miss Sai-Man Lau, CPA.

• (c) The registered office of the Company is situated at Clarendon House, Church Street, Hamilton HM11, Bermuda. The head office and principal place of business of the Company is situated at 18th Floor, Hang Seng Building, 77 Des Voeux Road Central, Hong Kong.

• (d) The Hong Kong branch share registrars and transfer office of the Company is Tengis Limited at Level 25, Three Pacific Place, 1 Queen’s Road East, Wanchai, Hong Kong.

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

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