Wine Industry Report

Pursuant to the Sale and Purchase Agreements, Sino-French Joint-Venture Dynasty Winery Ltd., an indirect wholly-owned subsidiary of Dynasty, has agreed to acquire certain properties situated in Tianjin and machinery and equipment from Tianjin Heavenly Palace Winery Co., Ltd., a wholly-owned subsidiary of Tianjin Development Holdings Ltd. at a total consideration of RMB 3,095,470 (equivalent to approximately HK$2,976,413).

The Vendor is a wholly-owned subsidiary of Tianjin Development, a substantial shareholder(within the meaning ascribed to it in the Listing Rules) of the Company. The Acquisition therefore constitutes a connected transaction for the Company. Since, each of the applicable ratios is less than 2.5%, the Acquisition is only subject to reporting and announcement requirements and is exempt from independent shareholders’ approval under Rule 14A.32 ofthe Listing Rules. Details of the transaction will be included in the next published annualreport and accounts of the Company.

Premises acquisition agreement. Date : 28 November 2005

Purchaser Dynasty Winery

Vendor: Heavenly Palace

Consideration: RMB1,694,635 (equivalent to approximately HK$1,629,456)

Pursuant to the Premises Acquisition Agreement, Dynasty Winery, an indirect wholly-ownedsubsidiary of the Company, has agreed to acquire certain premises situated in Tianjin.

MACHINERY AND EQUIPMENT ACQUISITION AGREEMENT
Date : 28 November 2005

Purchaser Dynasty Winery

Vendor: Heavenly Palace

Consideration: RMBI,400,835 (equivalent to approximately HK$1,346,957)

Pursuant to the Machinery and Equipment Acquisition Agreement, Dynasty Winery, an indirect wholly-owned subsidiary of the Company, has agreed to acquire certain machinery and equipment.

The Premises Acquisition Agreement and the Machinery and Equipment Acquisition Agreement are not inter-conditional.

CONSIDERATION

The total consideration of RMB3,095,470 (equivalent to approximately HK$2,976,413) for theAcquisition was agreed on an arms length basis between Dynasty Winery and the Vendor and on normal commercial terms. In determining the consideration, the Group has considered, among other factors, the Asset’s aggregate unaudited net book value of RMB3,095,470 (equivalent to approximately HK$2,976,413) as at 31 August 2005. The original purchase cost of these Assets by Vendor is RMB7,882,574 (equivalent to approximately HK$7,579,398).

The consideration for the Acquisition will be funded by the Group’s internal resources. Part of the consideration in the amount of RMB 1,400,835 (equivalent to approximately HK$1,346,957) shall be paid in cash by Dynasty Winery within 10 days from the date of the Sale and Purchase Agreements, the balance of RMBI,694,635 (equivalent to approximately HK$1,629,456) will be paid in cash within 3 days after the application by the parties for registration of transfer of the Premises. If the building title certificate is not obtained within 180 days from the date of Premises Acquisition Agreement, the Vendor will refund the consideration in relation to the Premises to Dynasty Winery. There is no obligation arises if Dynasty Winery fails to pay the consideration according to the payment schedule.

INFORMATION ON CERTAIN PROPERTIES SITUATED IN TIANJIN, MACHINERY AND EQUIPMENT

Prior to the Acquisition, the Assets were leased by Heavenly Palace to Dynasty Winery pursuant to the Tenancy Agreement. Monthly rental payable is RMB300,000 (equivalent to approximatelyHK$288,462).

The Assets being acquired was previously the subject matter of a continuing connected transaction and the Stock Exchange has granted to the Company, a waiver in respect of the assets leased from Heavenly Palace from strict compliance in respect of the announcement requirements pursuantto Rule 14A.42(3) of the Listing Rules.

REASON FOR THE ACQUISITION

Dynasty Winery is principally engaged in production and sale of grape wine products. Upon Completion, the Assets will be directly owned and controlled by the Group. The Tenancy Agreement will expire on 31 December 2005, so in order to enhance the administrative efficiency, the Board decided to enter into the Sale and Purchase Agreements to eliminate connected transactions in the future. In addition, as the Group has used the Assets including machinery and equipment for pressing, filtration, refrigeration processes and for storage purposes, which facilitate its wine production since 1997, and the consideration is determined based on arm’s length negotiation between Dynasty Winery and Heavenly Palace with reference to net book value of the Assets as at 31 August 2005, the Directors (including, the independent non-executive Directors) believe that it is beneficial to the Group to enter into the Sale and Purchase Agreements and consider the terms of the Acquisition including, inter alias, the consideration and the terms of payment under the Acquisition to be fair and reasonable, on normal commercial terms and in the interests of the shareholders of the Company as a whole. The Board considers that there will be no material adverse impact on the operation of the Company after the Acquisition.

CONNECTED TRANSACTION

Heavenly Palace is a wholly-owned subsidiary of Tianjin Development which is a substantial shareholder (within the meaning ascribed to it in the Listing Rules) of the Company. Accordingly, the Vendor is a connected person of the Company within the meaning of the Listing Rules and thus the Acquisition constitutes a connected transaction for the Company. Since each of the applicable ratios is less than 2.5%, the Acquisition is only subject to reporting and announcement requirements and is exempt from independent shareholders’ approval under Rule 14A.32 of the Listing Rules. Details of the transaction will be included in the next published annual report.

For the purpose of illustration only, the exchange rate between RMB and HK$ at RMB1.04 toHK$1.00 is used. It does not constitute a representation that any amounts were or may have been exchanged at this or another rates or at all.

By order of the Board
DYNASTY FINE WINES GROUP LIMITED
Hong Kong, 28 November 2005

Please also refer to the published version of this announcement in SCMP-Classified.