Kerry Properties Limited — Proxy Solicitation & Information Statement 2003

Apr 30, 2003

THIS CIRCULAR IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt about this circular or as to the action to be taken, you should consult your stockbroker or other registered dealer in securities, bank manager, solicitor, professional accountant or other professional adviser.

The Stock Exchange of Hong Kong Limited takes no responsibility for the contents of this circular, 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 circular.

SCRIP DIVIDEND SCHEME IN RELATION TO

THE FINAL DIVIDEND

FOR THE YEAR ENDED 31 DECEMBER 2002

30 April 2003

DEFINITIONS

In this circular, the following expressions shall have the following meanings unless the context otherwise requires:

• “1997 Share Option Scheme”

the executive share option scheme adopted by the Company on Thursday, 27 March 1997 and terminated on Wednesday, 17 April 2002 such that thereafter no further share options shall be offered but the share options which had been granted during the life thereof shall continue to be valid and exercisable in accordance with their terms of issue and in all other respects the provisions thereof shall remain in full force and effect

“2002 Final Dividend”

the final dividend of HK$0.12 per Share for the year ended 31 December 2002 payable on Friday, 30 May 2003 to the shareholders whose names were recorded on the registers of members of the Company on Tuesday, 15 April 2003

“2002 Final Scrip Dividend the scheme proposed by the Directors on Monday, 3 Scheme” March 2003 in relation to the 2002 Final Dividend to offer the shareholders of the Company a scrip alternative to elect to receive such dividend wholly or partly by allotment of new Shares credited as fully paid in lieu of cash

“2002 Share Option Scheme”	the share option scheme adopted by the Company on
	Wednesday, 17 April 2002
“Company”	Kerry Properties Limited, a company incorporated in
	Bermuda with limited liability and the shares of which
	are listed on the Stock Exchange
“Directors”	the directors of the Company
“Final Scrip Dividend Shares”	new Shares to be issued under the 2002 Final Scrip
	Dividend Scheme
“Hong Kong”	the Hong Kong Special Administrative Region of the
	People’s Republic of China
“HK$”	Hong Kong dollars

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DEFINITIONS

“Joint Announcement”	the joint announcement dated 23 April 2003 made by
	the Company and Kerry Holdings Limited regarding the
	Privatisation Proposal
“Privatisation Proposal”	the proposal announced in the Joint Announcement
	relating to the privatisation of the Company by Kerry
	Holdings Limited by way of the Scheme
“Scheme”	a scheme of arrangement under Section 99 of the
	Companies Act 1981 of Bermuda (as amended)
“Scheme Shareholders”	as defined in the Joint Announcement
“Scheme Shares”	Shares held by the Scheme Shareholders
“Share(s)”	ordinary share(s) of par value HK$1.00 each in the share
	capital of the Company
“Stock Exchange”	The Stock Exchange of Hong Kong Limited

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Executive Directors: Mr. KUOK Khoon Loong, Edward (Chairman) Mr. ANG Keng Lam (Deputy Chairman and Joint Managing Director) Mr. WONG Siu Kong (Joint Managing Director) Mr. HO Shut Kan Mr. Thaddeus Thomas BECZAK

Independent Non-executive Directors: Dr. FUNG Kwok King, Victor Mrs. LEE Pui Ling, Angelina Mr. Christopher Roger MOSS, O.B.E.

Registered Office: Cedar House 41 Cedar Avenue Hamilton HM12 Bermuda

Head Office and Principal Place of Business in Hong Kong: 13–14/F, Cityplaza 3 14 Taikoo Wan Road Taikoo Shing Hong Kong

30 April 2003

To the shareholders of Kerry Properties Limited

Dear Sir or Madam,

SCRIP DIVIDEND SCHEME IN RELATION TO THE FINAL DIVIDEND FOR THE YEAR ENDED 31 DECEMBER 2002

INTRODUCTION

On Monday, 3 March 2003, it was announced that the Directors recommended the 2002 Final Dividend. It was also announced that the shareholders of the Company may elect to receive the 2002 Final Dividend wholly or partly in Final Scrip Dividend Shares. At the annual general meeting of the Company held on Tuesday, 15 April 2003, the 2002 Final Dividend was approved. Accordingly, the shareholders of the Company may exercise their option to receive an allotment of Shares credited as fully paid by way of capitalization of profits in lieu of cash dividend.

The purpose of this circular is to set out the procedures which apply in relation to the 2002 Final Scrip Dividend Scheme and the action which should be taken by the shareholders of the Company in relation thereto.

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PARTICULARS OF THE 2002 FINAL SCRIP DIVIDEND SCHEME

Each eligible shareholder of the Company has the following choices in respect of the 2002 Final Dividend:

• (a) to receive a cash dividend of HK$0.12 per Share; or

• (b) to be allotted Final Scrip Dividend Shares credited as fully paid and having an aggregate market value (as described below), save for adjustment for fractions, equal to the total amount of the 2002 Final Dividend which such shareholder would otherwise receive in cash (new Shares will be allotted by way of capitalization of profits to the shareholders of the Company electing to receive new Shares in lieu of cash dividend); or

• (c) to receive the 2002 Final Dividend partly in cash and partly in Final Scrip Dividend Shares.

The Final Scrip Dividend Shares will rank pari passu in all respects with the existing issued Shares except that they shall not rank for the 2002 Final Dividend.

BASIS OF ALLOTMENT OF THE FINAL SCRIP DIVIDEND SHARES

For the purpose of calculating the number of Final Scrip Dividend Shares to be allotted, the market value of Final Scrip Dividend Shares will be calculated as an amount equal to the average closing prices of the Shares on the Stock Exchange for the five consecutive trading days immediately preceding and including Wednesday, 30 April 2003 on which such prices are available (the “Average Closing Price”). However, in the event that there are no dealings in the Shares on any one or more of those five trading days, the Directors shall determine the market value of Final Scrip Dividend Shares by reference to the average closing prices of the Shares for the latest five trading days up to and including Wednesday, 30 April 2003 on which there are dealings in the Shares. Consequently, it will not be possible to determine the exact number of Final Scrip Dividend Shares to which shareholders of the Company electing to receive Final Scrip Dividend Shares will be entitled until after the close of business on Wednesday, 30 April 2003. Accordingly, the number of Final Scrip Dividend Shares which the shareholders of the Company will receive, in respect of the existing Shares registered in their names as at Tuesday, 15 April 2003 and for which elections to receive the Final Scrip Dividend Shares are lodged with Abacus Share Registrars Limited, the Company’s branch share registrars in Hong Kong, of G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong on or before 4:00 p.m. on Tuesday, 20 May 2003 will be calculated as below:

Number of Final Scrip Number of existing Shares held on Dividend Shares = Tuesday, 15 April 2003 for which x to be received election is made under the 2002 Final Scrip Dividend Scheme	HK$0.12
	Average Closing Price

A press announcement setting out the basis of allotment of the Final Scrip Dividend Shares will be published on Friday, 2 May 2003. The last day on which the shareholders of the Company will be entitled to select their desired form of dividend is Tuesday, 20 May 2003. The number of Final Scrip Dividend Shares to be received will be rounded down to the nearest whole number of the Final Scrip Dividend Shares. No shareholder of the Company is entitled to be issued any fraction of a Share under the 2002 Final Scrip Dividend Scheme. Fractional entitlements to the Final Scrip Dividend Shares in respect of alternatives (b) and (c) above will be aggregated and sold for the benefit of the Company.

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ADVANTAGES OF THE 2002 FINAL SCRIP DIVIDEND SCHEME

The 2002 Final Scrip Dividend Scheme will give the shareholders of the Company an opportunity to increase their investment in the Company at market value without incurring brokerage fees, stamp duty and related dealing costs. The 2002 Final Scrip Dividend Scheme will also benefit the Company because, to the extent that the shareholders of the Company elect to receive the Final Scrip Dividend Shares, in whole or in part in lieu of a cash dividend, such cash, which would otherwise have been paid to the shareholders, will be retained for use by the Company.

EFFECT OF THE 2002 FINAL SCRIP DIVIDEND SCHEME

If no elections for Final Scrip Dividend Shares were received, the total cash dividend payable by the Company would be HK$140,466,095.28.

Shareholders of the Company should note that the Final Scrip Dividend Shares may give rise to notification requirements under the Securities and Futures Ordinance for those shareholders who may have notifiable interests in the Company. Shareholders of the Company who are in any doubt as to how these provisions may affect them are recommended to seek their own professional advice.

The Company, being an exempted company incorporated in Bermuda, has been designated as non-resident for Bermuda exchange control purposes and has been granted an assurance by the Minister of Finance in Bermuda under the Exempted Undertakings Tax Protection Act 1966. Accordingly, no Bermuda withholding tax on dividends or other distributions, nor any Bermuda tax computed on profits or income or on any capital assets, gain or appreciation will be payable by it or its operations, nor is there any Bermuda tax in the nature of estate duty or inheritance tax applicable to Shares, debentures or other obligations of the Company held by non-residents of Bermuda.

FORM OF ELECTION

If you elect to receive your 2002 Final Dividend wholly in cash or if you have already lodged a form of election electing to receive new Shares in lieu of all future cash dividends, you do not need to take any action.

If you elect to receive Final Scrip Dividend Shares, or partly in cash and partly in Final Scrip Dividend Shares, you should use the enclosed form of election. If you complete the form of election but do not specify the number of Shares in respect of which you wish to receive Final Scrip Dividend Shares, or if you elect to receive Final Scrip Dividend Shares in respect of a greater number of Shares than your registered holding on Tuesday, 15 April 2003, you will be deemed to have exercised your election to receive Final Scrip Dividend Shares in respect of all the Shares of which you were then registered as the holder.

The enclosed form of election enables the shareholders of the Company, choosing to receive their 2002 Final Dividend wholly in Final Scrip Dividend Shares, to further elect, until notice in writing to cancel such election is received by Abacus Share Registrars Limited, the Company’s branch share registrars in Hong Kong, of G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong, to receive new Shares in lieu of all future cash dividends in the event that shareholders are given the choice of receiving new Shares or cash in respect of future dividends. Such election will be valid only when all the prevailing conditions required by any scrip dividend scheme offered by the Company are fulfilled.

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The form of election should be completed in accordance with the instructions printed thereon and returned so that it is received by Abacus Share Registrars Limited, the Company’s branch share registrars in Hong Kong, of G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong not later than 4:00 p.m. on Tuesday, 20 May 2003. No acknowledgment of receipt of the form of election will be issued.

SHAREHOLDERS RESIDENT OUTSIDE HONG KONG

No shareholder whose address as recorded in the registers of members of the Company as being located outside Hong Kong will be permitted to participate in the 2002 Final Scrip Dividend Scheme. Accordingly, such shareholder will receive the 2002 Final Dividend wholly in cash. No form of election is being sent to such shareholder.

STOCK EXCHANGE LISTING AND DEALINGS AND DISPATCH OF DIVIDEND WARRANTS AND/OR SHARE CERTIFICATES

Application will be made to the Stock Exchange for the grant of listing of, and permission to deal in, the Final Scrip Dividend Shares. It is expected that the dividend warrants in relation to the 2002 Final Dividend and/or share certificates with respect to the Final Scrip Dividend Shares will be dispatched at the risk of those entitled thereto on or about Friday, 30 May 2003. On this basis, dealings in the Final Scrip Dividend Shares are expected to commence on Friday, 30 May 2003 subject to the proper receipt of the share certificates with respect to the Final Scrip Dividend Shares by the relevant shareholders of the Company.

The Shares are listed and dealt in on the Stock Exchange. Save as disclosed herein, no equity or debt securities of the Company are listed or dealt in on any other stock exchange nor is listing or permission to deal in on any other exchange being or proposed to be sought.

Dealings in Shares may be settled through the Central Clearing and Settlement System and you should seek the advice of your stockbroker or other professional adviser for details of these settlement arrangements and how such arrangements will affect your rights and interests.

ADJUSTMENTS IN RELATION TO SHARE OPTIONS GRANTED UNDER THE COMPANY’S SHARE OPTION SCHEMES

In accordance with the terms of the 1997 Share Option Scheme, the Final Scrip Dividend Shares may result in adjustments to the subscription price of and/or the number of Shares subject to the share options which had been granted during the life of the 1997 Share Option Scheme as such share options or part thereof remain unexercised. If and when any adjustments have to be made, the Company will give due notification according to the 1997 Share Option Scheme.

The Company has not granted any options under the 2002 Share Option Scheme and accordingly, no adjustments will be required.

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EFFECT OF THE PRIVATISATION PROPOSAL

On Wednesday, 23 April 2003, the Company and Kerry Holdings Limited made the Joint Announcement regarding the Privatisation Proposal. Under the Privatisation Proposal, all Shares which are issued to Scheme Shareholders as a result of elections under the 2002 Final Scrip Dividend Scheme will be treated as Scheme Shares and be subject to the Scheme. Payment of the 2002 Final Dividend in cash and the issue of Final Scrip Dividend Shares will not be affected by the Privatisation Proposal. For details of the Privatisation Proposal, please refer to the Joint Announcement.

RECOMMENDATION AND ADVICE

Whether or not it is to your advantage to receive cash or the Final Scrip Dividend Shares, in whole or in part, depends upon your own individual circumstances, and the decision in this regard and all effects resulting therefrom are the responsibility of each shareholder. If you are in any doubt as to what to do, you should consult your professional advisers as to whether or not you are permitted to receive the 2002 Final Dividend in scrip form or if any government or other consent is required. Shareholders of the Company who are trustees are recommended to take professional advice as to whether the choice of the Final Scrip Dividend Shares is within their powers and as to its effect having regard to the terms of the relevant trust instrument.

Yours faithfully, For and on behalf of the Board Kerry Properties Limited Kuok Khoon Loong, Edward Chairman

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