09:31     KINGWAY BREW<00124> - Announcement (3)                              

    For the three years ended 31st December, 2004, the                        
    Group's purchases of malt from the SDL Group amounted                     
    to RMB71,175,000 (equivalent to approximately                             
    HK$67,068,000), RMB85,571,000 (equivalent to                              
    approximately HK$80,634,000) and RMB108,928,000                           
    (equivalent to approximately HK$102,643,000),                             
    respectively.                                                             
                                                                              
    The Proposed Annual Caps have been determined by                          
    reference to the estimated beer production volume of                      
    the Group for the three years ending 31st December,                       
    2007 and the current market prices for malt. The                          
    Company is in the process of building new beer                            
    production plants in Shantou, Dongguan and Tianjin,                       
    the PRC, and following completion of the building of                      
    these new plants, the Company expects that the maximum                    
    annual production capacity of the Group will reach                        
    approximately 1,000,000 tonnes by mid-2006 (compared                      
    to approximately 400,000 tonnes as at the end of 2004).                   
    Accordingly, it is anticipated that the production                        
    volume of the Group will also increase in tandem with                     
    market expansion and such increase in production                          
    capacity. In addition, the Company estimates that the                     
    demand for malt, being one of the major raw materials                     
    for producing beer, will continue to increase on the                      
    back of a steady growth trend of beer consumption in                      
    the PRC, and therefore, the prices for malt will at                       
    least remain stable, if not increase, in the                              
    foreseeable future.                                                       
                                                                              
    For the above reasons, the Company estimates that the                     
    total consideration (excluding value-added tax)                           
    payable by the Group to the SDL Group under the                           
    Continuing Connected Transactions for the three years                     
    ending 31st December, 2007 will not exceed                                
    RMB212,000,000 (equivalent to approximately                               
    HK$199,768,000), RMB294,000,000 (equivalent to                            
    approximately HK$277,036,000) and RMB368,000,000                          
    (equivalent to approximately HK$346,766,000),                             
    respectively, and such amounts have accordingly been                      
    set as the Proposed Annual Caps for these Continuing                      
    Connected Transactions. The percentage of increase                        
    in the Proposed Annual Caps over the three years                          
    ending 31st December, 2007 is greater than the                            
    percentage of increase in the expected production                         
    volume of the Group over the same period as a buffer                      
    has been included in calculating the Proposed Annual                      
    Caps. In addition, the Proposed Annual Caps have been                     
    prepared based on the assumptions that there will be                      
    inflation increase on the price of malt in the PRC                        
    and that the purchases of malt by the Group from the                      
    SDL Group will increase to 100% (from approximately                       
    88% for the year 2004) of the Group's purchases of                        
    malt for the following three years.                                       
                                                                              
    Since the Proposed Annual Caps for the said purchases                     
    from the SDL Group for the three years ending 31st                        
    December, 2007 amount to more than HK$10 million,                         
    under Rule 14A.48, these Continuing Connected                             
    Transactions for the three years ending 31st December,                    
    2007 constitute non-exempt continuing connected                           
    transactions of the Company under Chapter 14A of the                      
    Listing Rules and, after the publication of this                          
    announcement (and assuming that the approval from the                     
    Independent Shareholders (being Shareholders other                        
    than GDH and its associates (if any), who will abstain                    
    from voting at the EGM in relation to the resolution                      
    to be proposed in respect of the Proposed Annual Caps                     
    referred to in this section, and no other Shareholders                    
    will be required to abstain from voting in relation                       
    thereto at the EGM) at the EGM will be forthcoming),                      
    will be subject to the