Kerry Properties Limited — Capital/Financing Update 2003

Jan 9, 2003

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this announcement, makes no representation as to its accuracy or completeness and expressly disclaims any liability whatsoever for any loss howsoever arising from or in reliance upon the whole or any part of the contents of this announcement.

CONNECTED TRANSACTIONS – ACQUISITION OF A TOTAL 40% INTEREST IN KERRY BCI WAREHOUSE HOLDINGS LIMITED

The Directors announce that on 9 January 2003, KWL entered into a Sale and Purchase Agreement with Glad Honour and Wellbusy pursuant to which KWL agreed to acquire from Glad Honour and Wellbusy the Sale Shares, being 40% of the issued share capital of Kerry BCI Holdings, together with the Loan, for a total consideration of HK$110,000,000 (HK$55,000,000 for the GHIL Sale Shares together with the GHIL Loan, and, HK$55,000,000 for the WIL Sale Shares together with the WIL Loan) subject to the terms and conditions as set out therein. The Company held a 60% indirect interest in the issued share capital of Kerry BCI Holdings before the Acquisition. Upon completion of the Acquisition, Kerry BCI Holdings becomes an indirect wholly-owned subsidiary of the Company.

KWL is an indirect wholly-owned subsidiary of the Company. Glad Honour and Wellbusy are substantial shareholders (as defined under the Listing Rules) of Kerry BCI Holdings which in turn is an indirect subsidiary of the Company. Accordingly, Glad Honour and Wellbusy are connected persons of the Company as defined under the Listing Rules.

The Sale and Purchase Agreement was entered into by KWL on normal commercial terms. The Directors, including the independent non-executive directors of the Company, are of the opinion that the entering into by KWL of the Sale and Purchase Agreement is fair and reasonable and in the best interests of the Group so far as the shareholders of the Company are concerned.

The entering into by KWL of the Sale and Purchase Agreement to acquire the GHIL Sale Shares together with the GHIL Loan, and, the WIL Sale Shares together with the WIL Loan constitutes connected transactions of the Company under the Listing Rules. As the total consideration payable under the Sale and Purchase Agreement for the GHIL Sale Shares together with the GHIL Loan, and, the WIL Sale Shares together with the WIL Loan represents less than 3% of the book value of the net tangible assets of the Company as disclosed in the latest published audited consolidated accounts of the Company, the Acquisition falls under Rule 14.25(1) of the Listing Rules. Details of the Sale and Purchase Agreement will be included in the next published annual report and accounts of the Company in accordance with Rule 14.25(1)(A) to (D) of the Listing Rules.

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SALE AND PURCHASE AGREEMENT

• A. Date: 9 January 2003

• B. Parties:

• (1) Vendors:(a) Glad Honour; and

(b) Wellbusy

• (2) Purchaser: KWL

• C. Assets acquired:

• (1) the GHIL Sale Shares;

• (2) the WIL Sale Shares;

• (1) and (2) above represent 40% of the issued share capital of Kerry BCI Holdings,

(3) the GHIL Loan; and

• (4) the WIL Loan.

D. Consideration:

A total of HK$110,000,000, comprising:

• (1) HK$1 for the GHIL Sale Shares;

• (2) HK$1 for the WIL Sale Shares;

• (3) HK$54,999,999 for the GHIL Loan; and

• (4) HK$54,999,999 for the WIL Loan,

payable in cash to Glad Honour and Wellbusy respectively upon the completion of the Sale and Purchase Agreement.

E. Completion:

The completion of the Sale and Purchase Agreement shall take place immediately after the signing of the Sale and Purchase Agreement.

REASONS FOR THE ACQUISITION

KWL is an investment holding company. The core business of its subsidiaries is the provision of logistics services, warehouse operation and ownership. Upon completion of the Acquisition, Kerry BCI Holdings becomes a direct wholly-owned subsidiary of KWL. Thus, it enables the Group to consolidate all the interests in Kerry BCI Holdings.

INFORMATION ON THE GROUP

The Group is principally engaged in (1) property development and investment in Hong Kong, the PRC and the Asia Pacific region; (2) logistics, freight, warehouse ownership and operations; (3) infrastructurerelated investment in Hong Kong and the PRC; and (4) hotel ownership and operations in the PRC.

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CONNECTION BETWEEN THE PARTIES TO THE SALE AND PURCHASE AGREEMENT

KWL is an indirect wholly-owned subsidiary of the Company. Glad Honour and Wellbusy are substantial shareholders (as defined under the Listing Rules) of Kerry BCI Holdings which in turn is an indirect subsidiary of the Company. Accordingly, Glad Honour and Wellbusy are connected persons of the Company as defined under the Listing Rules.

INFORMATION ON KERRY BCI HOLDINGS

Kerry BCI Holdings is a company incorporated in the British Virgin Islands on 21 August 1991. KWL, Glad Honour and Wellbusy held a 60%, 20% and 20% interest respectively in the issued share capital of Kerry BCI Holdings before the Acquisition. The authorized share capital of Kerry BCI Holdings is HK$10,000,000 divided into 10,000,000 shares of par value HK$1 each with 10,000,000 issued shares. Upon completion of the Acquisition, Kerry BCI Holdings becomes an indirect wholly-owned subsidiary of the Company.

Kerry BCI Holdings is an investment holding company. Its subsidiaries are mainly engaged in warehouse ownership and operation, carpark ownership and building management. The audited consolidated net profits before and after taxation of Kerry BCI Holdings for the year ended 31 December 2001 attributable to the Group were HK$31,909,679 and HK$28,535,976 respectively (2000: HK$13,603,090 and HK$10,901,955 respectively). The audited net asset value of Kerry BCI Holdings as at 31 December 2001 was HK$13,525,449.

BASIS OF THE CONSIDERATION

The total consideration for the Acquisition has been determined after arm’s length negotiations between KWL, Glad Honour and Wellbusy with reference to the audited consolidated accounts of Kerry BCI Holdings for the year ended 31 December 2001.

GENERAL INFORMATION

The Sale and Purchase Agreement was entered into by KWL on normal commercial terms. The Directors, including the independent non-executive directors of the Company, are of the opinion that the entering into by KWL of the Sale and Purchase Agreement is fair and reasonable and in the best interests of the Group so far as the shareholders of the Company are concerned.

The total consideration payable under the Sale and Purchase Agreement was financed by internal resources made available to the Group.

The entering into by KWL of the Sale and Purchase Agreement to acquire the GHIL Sale Shares together with the GHIL Loan, and, the WIL Sale Shares together with the WIL Loan constitutes connected transactions of the Company under the Listing Rules. As the total consideration payable under the Sale and Purchase Agreement for the GHIL Sale Shares together with the GHIL Loan, and, the WIL Sale Shares together with the WIL Loan represents less than 3% of the book value of the net tangible assets of the Company as disclosed in the latest published audited consolidated accounts of the Company, the Acquisition falls under Rule 14.25(1) of the Listing Rules. Details of the Sale and Purchase Agreement will be included in the next published annual report and accounts of the Company in accordance with Rule 14.25(1)(A) to (D) of the Listing Rules.

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DEFINITIONS:

• “Acquisition” the acquisition of the Sale Shares and the Loan by KWL from Glad Honour and Wellbusy

• “Company” Kerry Properties Limited, a company incorporated in Bermuda with limited liability and the shares of which are listed on The Stock Exchange of Hong Kong Limited

• “Directors”

the directors of the Company

• “Glad Honour” Glad Honour Investments Limited, a company incorporated in Hong Kong, the holding company of which is Kiu Kwong Investment Corporation Limited

• “GHIL Loan” the interest-free shareholder’s loan with a principal amount of HK$109,000,000 due by Kerry BCI Holdings to Glad Honour, such loan having no fixed terms of repayment

• “GHIL Sale Shares” 2,000,000 issued shares of par value HK$1 each, representing 20% of the total issued and paid up share capital of Kerry BCI Holdings, legally and beneficially owned by Glad Honour

• “Group” the Company and its subsidiaries

• “Hong Kong” the Hong Kong Special Administrative Region

• “HK$” Hong Kong dollar

• “Kerry BCI Holdings” Kerry BCI Warehouse Holdings Limited

• “KWL” Kerry Warehouse Limited, a company incorporated in the British Virgin Islands

• “Listing Rules” the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

• “Loan” the GHIL Loan and the WIL Loan

• “PRC” the People’s Republic of China excluding Hong Kong

• “Sale and Purchase the sale and purchase agreement dated 9 January 2003 made between KWL, Agreement” Glad Honour and Wellbusy relating to the Acquisition

• “Sale Shares” the GHIL Sale Shares and the WIL Sale Shares, representing 40% of the total issued and paid up share capital of Kerry BCI Holdings

• “Wellbusy” Wellbusy Investment Limited, a company incorporated in Hong Kong, the holding company of which is Bank of China Group Investment Limited

• “WIL Loan” the interest-free shareholder’s loan with a principal amount of HK$109,000,000 due by Kerry BCI Holdings to Wellbusy, such loan having no fixed terms of repayment

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• “WIL Sale Shares”

• 2,000,000 issued shares of par value HK$1 each, representing 20% of the total issued and paid up share capital of Kerry BCI Holdings, legally and beneficially owned by Wellbusy

By Order of the Board Chow Yin Ping, Anita Company Secretary

Hong Kong, 9 January 2003

“Please also refer to the published version of this announcement in the South China Morning Post”

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