10:26     CHINNEY ALLI<00385> - Announcement (3)                              

      certificates for New Share certificates  Friday, 15 July                
                                                                              
    FREE EXCHANGE OF NEW SHARE CERTIFICATES AND TRADING ARRANGEMENTS          
                                                                              
    Subject to the Capital Reorganisation becoming effective, Shareholders    
    may submit certificates for the Existing Shares 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              
    certificates for the New Shares. Thereafter, certificates for Existing    
    Shares 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 certificate issued for the New Shares.   
    Nevertheless, certificates for Existing Shares will continue to be good   
    evidence of legal title and may be exchanged for certificates for New     
    Shares at any time at the expense of Shareholders. Further details of     
    the certificates exchange arrangement and colour features of the          
    certificates for the New Shares and the Existing Shares will be           
    provided in the circular to be despatched to the Shareholders.            
                                                                              
    Trading arrangements for the Existing Shares and New Shares are set out   
    in the expected timetable above.                                          
                                                                              
    In order to facilitate the trading of odd lots of the New Shares as a     
    result of the Capital Reorganisation, the Company will procure a broker   
    to arrange the matching of the sales and purchases of odd lots of the     
    New Shares. Details of such odd lots arrangement will be provided in      
    the circular to be despatched to the Shareholders.                        
                                                                              
    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 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$0.029 per Existing Share today, the      
    market value of a board lot of 10,000 Existing Shares is HK$290 and       
    that a board lot of 10,000 New Shares is expected to be HK$7,250. The     
    Share Consolidation is intended to reduce the transaction cost per        
    dollar value of each New Share.                                           
                                                                              
    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 the New    
    Shares falling to be issued upon exercise of the Share Options; 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 upon passing of     
    the special resolution to be proposed at the Annual General Meeting.      
                                                                              
    Application will be made to the Stock Exchange for the listing of, and    
    permission to deal in, the New Shares (including the New Shares falling   
    to be issued upon exercise of the Share Options).                         
                                                                              
    GENERAL