09:30     KINGWAY BREW<00124> - Announcement (2)                              

    advice from the Independent Financial Adviser to the                      
    Independent Board Committee and the Independent                           
    Shareholders and the notice convening the EGM, will                       
    be despatched to the Shareholders as soon as                              
    practicable in accordance with the Listing Rules.                         
                                                                              
    A.      Background to the Continuing Connected                            
    Transactions                                                              
    The Group is principally engaged in the production                        
    and distribution of beer under its Kingway brand.                         
    Since the listing of the Company's shares on the Stock                    
    Exchange in 1997, the Company has been purchasing malt                    
    (being one of the major raw materials for producing                       
    beer) from certain members (namely, GMCL and NMCL)                        
    of the SDL Group (which are currently subsidiaries                        
    of GDH, the holding company of the Company). At the                       
    time of the Listing, the Company obtained from the                        
    Stock Exchange a waiver from strict compliance with                       
    the announcement and independent shareholders'                            
    approval requirements of the Listing Rules in respect                     
    of the said purchasing of malt, and the Company has                       
    been complying in full with the conditions imposed                        
    under the waiver, including reporting the details of                      
    such purchasing in its annual reports since the                           
    Listing.                                                                  
                                                                              
    The Company estimates that the Continuing Connected                       
    Transactions (on an annual basis) for each of the                         
    three years ending 31st December, 2007 will fall                          
    within the ambit of Rule 14A.48 (as, on an annual basis,                  
    they amount to more than HK$10 million). The Company                      
    will, after the publication of this announcement,                         
    need to seek the approval of the Independent                              
    Shareholders at the EGM for the Continuing Connected                      
    Transactions and the Proposed Annual Caps in respect                      
    thereof, and, assuming that the said approval of the                      
    Independent Shareholders will be forthcoming, will                        
    also need to comply with the reporting requirements                       
    set out in Rules 14A.45 and 14A.46 and the annual                         
    review requirements of Rules 14A.37 and 14A.38 of the                     
    Listing Rules.                                                            
                                                                              
    B.      The Continuing Connected Transactions                             
    The provisions of Rule 14A.35 of the Listing Rules                        
    permit the Agreement to have a term of not exceeding                      
    three years, and therefore the Company and SDL have                       
    entered into the Agreement in respect of the                              
    Continuing Connected Transactions between the Group                       
    and the SDL Group on 3rd May, 2005. The Agreement is                      
    conditional upon the obtaining of the approval of the                     
    Independent Shareholders at the EGM in respect of the                     
    Continuing Connected Transactions and the Proposed                        
    Annual Caps.                                                              
                                                                              
    The Agreement                                                             
    Parties:        1.      the Company                                       
    2.      SDL                                                               
                                                                              
    Expiry date:    31st December, 2007                                       
                                                                              
    Other details and terms:                                                  
    The SDL Group holds certain manufacturing facilities                      
    for the supply of malt, which is one of the major raw                     
    materials used in the production of beer by the Group.                    
    The Group has been purchasing malt from the SDL Group                     
    since the Listing by reference to market prices.                          
    Accordingly, the Agreement provides that, for the                         
    three years ending 31st December, 2007, when a member                     
    of the Group places a purchase order with any member                      
    of the SDL Group for the purchase of malt, the relevant                   
    member of the SDL Group will supply such member of                        
    the Group with malt at a price not higher than the                        
    then prevailing market price and on a priority basis.