10:43 DYNASTY FINE WINES GROOUP LIMITED<00828> - Announcement (3) The net proceeds of the Share Offer, after deducting the estimated underwriting fees and estimated expenses payable by the Company in relation to the Share Offer, is approximately HK$623 million, before the exercise of the Over-allotment Option. The Company currently intends to use these proceeds as follows: . approximately HK$200 million to expand the Group's production capability, of which approximately HK$65 million, HK$90 million and HK$45 million will be spent on wine cellar construction, wine production machineries and land and building construction, respectively; . approximately HK$160 million to fund partly the establishment of new production facilities; . approximately HK$20 million to expand the Group's sales and distribution network by expanding its sales force and marketing activities in the PRC; . approximately HK$47 million for the Smiling East Acquisition; and . the remaining amount, approximately HK$196 million or 31.5% of the estimated net proceeds of the Share Offer, to provide funding for possible acquisition of complementary wine businesses although such acquisition has not yet been identified, and general working capital. Should the Over-allotment Option be exercised in full, the Company will receive additional net proceeds of approximately HK$99 million. APPLICATIONS RECEIVED AND ALLOCATION OF HONG KONG PUBLIC OFFER SHARES The Directors are pleased to announce that at the close of the application lists at 12:00 noon on Thursday, 20 January 2005 a total of 25,160 valid applications had been received pursuant to the Hong Kong Public Offering on white and yellow Application Forms and through giving electronic application instructions to HKSCC for a total of 18,760,200,000 Hong Kong Public Offer Shares, representing approximately 625 times of the total number of 30,000,000 Shares initially available for subscription under the Hong Kong Public Offering. Of the 25,160 valid applications for Hong Kong Public Offer Shares received on white and yellow Application Forms and through giving electronic application instructions to HKSCC, a total of 23,380 valid applications in respect of a total of 5,346,200,000 Hong Kong Public Offer Shares were for Shares with an aggregate subscription amount (excluding brokerage of 1%, SFC transaction levy of 0.005%, investor compensation levy of 0.002% and Stock Exchange trading fee of 0.005% based on the maximum Offer Price of HK$2.25 per Share) of HK$5 million or less in Pool A (representing approximately 356 times the 15,000,000 Hong Kong Public Offer Shares initially comprised in Pool A), and a total of 1,780 valid applications in respect of a total of 13,414,000,000 Hong Kong Public Offer Shares were for Shares with an aggregate subscription amount (excluding brokerage of 1%, SFC transaction levy of 0.005%, investor compensation levy of 0.002% and Stock Exchange trading fee of 0.005% based on the maximum Offer Price of HK$2.25 per Share) of more than HK$5 million in Pool B (representing approximately 894 times the 15,000,000 Hong Kong Public Offer Shares initially comprised in Pool B). 12 multiple and 35 suspected multiple applications in the Hong Kong Public Offering have been rejected. No application for more than 50% of the Hong Kong Public Offer Shares initially offered for subscription under the Hong Kong Public Offer (that is, more than 15,000,000 Hong Kong Public Offer Shares) has been identified. The Hong Kong Public Offer Shares validly applied for on white and yellow Application Forms and through giving electronic application instructions to HKSCC were conditionally allocated on the basis as set out in the paragraph headed ``Basis of Allocation'' below. Due to the very significant over-subscription in the Hong Kong Public Offering, the clawback mechanism as specified in the section headed ``Structure of the Share Offer'' in the Prospectus has been applied. A total of 120,000,000 International Placing Shares, 40% of the Offer Shares, initially available for subscription under the International Placing have been reallocated to the Hong Kong Public Offering. As a result of such reallocation, there are 150,000,000 Shares available for subscription under the Hong Kong Public Offering, representing approximately 50% of the total number of Shares initially available under the Share Offer, whereas the total number of International Placing Shares available for subscription and/or purchase under the International Placing has been reduced to 114,000,000 Shares, representing approximately 38% of the total number of Shares initially available under the Share Offer. The Shares offered under the Hong Kong Public Offering were conditionally allotted on the basis set out in the paragraph headed ``Basis of Allocation'' below.