Kerry Properties Limited — Proxy Solicitation & Information Statement 2004

Nov 9, 2004

THIS DOCUMENT IS IMPORTANT AND REQUIRES YOUR IMMEDIATE ATTENTION

If you are in any doubt as to any aspect of this circular or as to the action to be taken, you should consult a licensed securities dealer, a bank manager, solicitor, professional accountant or other professional adviser.

If you have sold or transferred all your shares in Kerry Properties Limited, you should at once hand this circular to the purchaser or transferee or to the bank, licensed securities dealer or other agent through whom the sale or transfer was effected for transmission to the purchaser or transferee.

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.

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website: www.kerryprops.com (Stock Code: 00683)

DISCLOSEABLE TRANSACTION

A letter from the board of directors of Kerry Properties Limited is set out on pages 3 to 7 of this circular.

• For identification purpose only

27 October 2004

CONTENTS

	Page
Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	3
Appendix – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	8

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DEFINITIONS

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

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|||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
|“Board”|the|board|of|Directors|of|the|Company;|
|“Changyuan”|(Guodian|Changyuan|Electric|
|Power|Co.,|Ltd.),|a|company|incorporated|under|the|laws|of|the|
|PRC,|whose|A|shares|are|listed|on|the|Shenzhen|Stock|
|Exchange;|its|largest|shareholder,|Guodian,|acquired|its|36.12|
|per|cent.|interest|in|Changyuan|from|(Hubei|
|Province|Electric|Power|Co.|Ltd.),|and|the|formalities|in|
|relation|to|the|transfer|of|such|interest|to|Guodian|were|in|the|
|process|of|being|complied|with;|
|“Company”|Kerry|Properties|Limited,|an|exempted|company|incorporated|
|in|Bermuda|with|limited|liability,|the|shares|of|which|are|listed|
|on|the|Main|Board|of|the|Hong|Kong|Stock|Exchange;|
|“Directors”|the|directors|of|the|Company;|
|“Group”|the|Company|and|its|subsidiaries;|
|“Guodian”|(China|Guodian|Corporation),|a|PRC|state-|
|owned|enterprise;|
|“HK$”|Hong|Kong|dollars,|the|lawful|currency|of|Hong|Kong;|
|“Hong|Kong”|the|Hong|Kong|Special|Administrative|Region|of|the|PRC;|
|“Hong|Kong|Stock|The|Stock|Exchange|of|Hong|Kong|Limited;|
|Exchange”|
|“JV|Agreement”|the|agreement|dated|16|September|2004|made|between|the|JV|
|Parties|relating|to|the|establishment|of|the|JV|Company;|
|“JV|Board”|the|board|of|directors|of|the|JV|Company;|
|“JV|Company”|(Guodian Changyuan Kerry|
|Huangjinbu|Electricity|Company|Ltd.),|a|sino-foreign|equity|
|joint|venture|company|to|be|incorporated|under|the|laws|of|the|
|PRC;|
|“JV|Parties”|Guodian, Kerry Electricity Jiangxi, Changyuan and Yugan City;|

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DEFINITIONS

“Kerry Electricity Jiangxi”	Kerry Electricity (Jiangxi) Ltd.	, a
	company incorporated in Samoa with limited liability, which is
	a wholly-owned subsidiary of the Company;
“Latest Practicable Date”	21 October 2004, being the latest practicable date prior to the
	printing of this circular for ascertaining information contained
	in this circular;
“Listing Rules”	the Rules Governing the Listing of Securities on	the Hong Kong
	Stock Exchange;
“MW”	megawatts or one million watts;
“PRC”	the People’s Republic of China, which for the purpose of this
	circular excludes Hong Kong, the Macao Special
	Administrative Region of the PRC and Taiwan;
“RMB”	Renminbi, the lawful currency of the PRC;
“SFO”	Securities and Futures Ordinance (Chapter 571	of the Laws of
	Hong Kong);
“Shareholders”	the shareholders of the Company;
“subsidiary”	has the meaning ascribed to it in section 2(4) of	the Companies
	Ordinance of Hong Kong (Chapter 32 of the	Laws of Hong
“Yugan City”	Kong); and (Yugan City Development
	Co. Ltd.), a PRC state-owned enterprise.

Note: For the purposes of the Company’s announcement dated 5 October 2004 and in this circular, unless stated otherwise, the exchange rate of RMB1.06 = HK$1.00 has been used.

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LETTER FROM THE BOARD

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website: www.kerryprops.com (Stock Code: 00683)

Executive Directors:

Mr. ANG Keng Lam (Chairman) Mr. WONG Siu Kong (Deputy Chairman and Managing Director) Mr. HO Shut Kan Mr. MA Wing Kai, William

Independent Non-executive Directors:

Mr. William Winship FLANZ Mr. LAU Ling Fai, Herald Mr. Christopher Roger MOSS, O.B.E.

Registered Office:

Canon’s Court 22 Victoria Street 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

27 October 2004

To the Shareholders and for information only, the optionholders of Kerry Properties Limited

Dear Sir or Madam,

DISCLOSEABLE TRANSACTION

1. INTRODUCTION

On 5 October 2004, the Company announced that Kerry Electricity Jiangxi, a whollyowned subsidiary of the Company, entered into the JV Agreement on 16 September 2004 with Changyuan, Guodian and Yugan City to form the JV Company. The scope of business of the JV Company is to construct and operate a coal-generated electricity power plant in the Yugan County, Jiangxi Province in the PRC with an installed capacity of 2 x 600 MW.

The establishment of the JV Company constitutes a discloseable transaction for the Company under the Listing Rules.

The purpose of this circular is to provide the Shareholders with further information relating to this discloseable transaction.

• For identification purpose only

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LETTER FROM THE BOARD

2. THE JV AGREEMENT

2.1 Date of the JV Agreement

16 September 2004

2.2 Scope of the business of the JV Company

The scope of the business of the JV Company is to construct and operate a coal-generated electricity power plant in the Yugan County, Jiangxi Province in the PRC with an installed capacity of 2 x 600 MW. The electricity generated is expected to be sold to one or more of the relevant power grid companies in the PRC for transmission for the benefit of end users. Subject to the approval by the relevant PRC regulatory authorities of the JV Agreement and the articles of association of the JV Company, the term of the JV Company shall be 35 years from the date of issue of its business licence.

2.3 Information on the JV Parties

Kerry Electricity Jiangxi is an investment holding company incorporated on 17 December 2002 under the laws of Samoa and a wholly-owned subsidiary of the Company.

Changyuan is a company incorporated in the PRC, the shares of which are listed on the Shenzhen Stock Exchange. It is principally engaged in the generation and supply of electricity, heat and hot water and the manufacturing of related equipments.

Guodian is a PRC state-owned enterprise and is principally engaged in the generation and supply of electricity.

Yugan City is a PRC state-owned enterprise and is principally engaged in infrastructure development and related investments in the Yugan County, Jiangxi Province in the PRC.

2.4 Total investment and registered capital of the JV Company

The total investment of the JV Company is RMB5,000,000,000 (equivalent to approximately HK$4,716,981,132). The registered capital of the JV Company is RMB1,250,000,000 (equivalent to approximately HK$1,179,245,283).

Kerry Electricity Jiangxi, Changyuan, Guodian and Yugan City are obliged to contribute RMB412,500,000, RMB625,000,000, RMB187,500,000 and RMB25,000,000 respectively (equivalent to approximately HK$389,150,943, HK$589,622,642, HK$176,886,792 and HK$23,584,906 respectively) to the registered capital of the JV Company and hold 33 per cent., 50 per cent., 15 per cent. and 2 per cent. respectively of the registered capital of the JV Company. The registered capital of the JV Company is to be paid by each of the JV Parties in cash. Profits derived from the JV Company are to be shared in proportion to the JV Parties’ contributions to the registered capital of the JV Company.

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LETTER FROM THE BOARD

The remaining RMB3,750,000,000 (equivalent to approximately HK$3,537,735,849) of the total investment in the JV Company is to be funded by financing from financial institutions or the JV Parties as approved by the JV Board from time to time. The JV Parties are obliged to provide guarantees or other security, as and when required by any financial institution, in respect of the provision of any financing in proportion to their contribution to the registered capital of the JV Company. The substantial terms of any guarantees or the nature and terms of any security to be provided have not been agreed between the JV Parties and are to be approved by more than two thirds of the members present at a JV Board meeting. Any further contribution by Kerry Electricity Jiangxi to the total investment in excess of the registered capital of the JV Company will be funded as determined by the directors of Kerry Electricity Jiangxi from time to time.

The Company shall, as and when required to make further contributions to or provide any guarantees or other security for the benefit of the JV Company, comply with the provisions of the Listing Rules.

The JV Company will be accounted for as an associated company in the consolidated accounts of the Company.

2.5 Representation of the JV Board

The JV Board comprises nine directors. Guodian is entitled to appoint two directors, each of Kerry Electricity Jiangxi and Changyuan is entitled to appoint three directors and Yugan City is entitled to appoint one director.

2.6 Timing of capital contribution

The JV Parties are obliged, within 30 days of the issue of JV Company’s business licence, to make an initial contribution of RMB187,500,000 (equivalent to approximately HK$176,886,792) to the registered capital of the JV Company, being 15 per cent. of the registered capital in the JV Company, in proportion to their contribution to the registered capital of the JV Company. The issue of the business licence is subject to the approval by the relevant PRC regulatory authority. The Company anticipates that the JV Company will obtain its business licence within 12 months from the date of the JV Agreement. The JV Board has the power to determine the timing and amount of the subsequent contributions to the remaining registered capital of the JV Company provided that the last contribution must be made before the second 600 MW power generator begins its operation, which is currently anticipated to begin in December 2007.

2.7 Condition

Pursuant to the JV Agreement, the establishment of the JV Company is conditional upon the obtaining of all necessary approvals from the relevant PRC regulatory authorities. If the relevant PRC regulatory authorities do not approve the JV Agreement and the articles of association of the JV Company within 12 months (or such longer period as the JV Parties may agree) of the date of the JV Agreement, the JV Agreement will become unenforceable automatically.

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LETTER FROM THE BOARD

3. REASONS FOR ESTABLISHING THE JV COMPANY

The demand for electricity in the Jiangxi Province in the PRC is high and is expected to increase steadily. The JV Company is formed to build the first coal-generated electricity power plant with an installed capacity of 2 x 600 MW in the Jiangxi Province. It is intended that the capacity of the power plant to be built by the JV Company will be higher than that of any of the other power plants in the Jiangxi Province. It is therefore expected that the costs of production of the power plant of the JV Company will be lower than those of the other power plants in the Jiangxi Province. The formation of the JV Company also enables the Company to benefit from the expertise of the other JV Parties and to participate in the development of the electricity industry in the PRC. The Company, through its participation in the JV Company, hopes to strengthen its portfolio of infrastructure-related investments and to build its experience and expertise in this sector.

The Directors believe that the terms of the JV Agreement entered into by Kerry Electricity Jiangxi are fair and reasonable and in the interests of the Shareholders as a whole.

The entering into of the JV Agreement by Kerry Electricity Jiangxi is not expected to have any material effect on the earnings or the assets and liabilities of the Group.

4. FUNDING

The contribution to the registered capital of the JV Company by Kerry Electricity Jiangxi was agreed upon after arm’s length negotiations with the other JV Parties and is to be funded from internal resources of the Group and/or bank borrowings. No decision has yet been made in respect of the split.

5. ARTICLES OF ASSOCIATION

The articles of association of the JV Company were entered into between the JV Parties on 16 September 2004 and contain substantially the same terms as the JV Agreement.

6. INFORMATION ON THE COMPANY

The Company is an investment holding company. The principal activities of the Company’s subsidiaries comprise (1) property development and investment in Hong Kong, the PRC and the Asia Pacific region; (2) logistics, freight, warehouse ownership and operations; (3) infrastructure-related investment in Hong Kong and the PRC; and (4) hotel ownership in the PRC.

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LETTER FROM THE BOARD

7. GENERAL

The establishment of the JV Company constitutes a discloseable transaction for the Company under the Listing Rules.

To the best of the Directors’ knowledge, information and belief, having made all reasonable enquiries, Changyuan, Guodian and Yugan City and their respective ultimate beneficial owners are third parties which are independent of and are not connected with or related to the Company or its subsidiaries or their respective associates or connected persons of the Company.

Your attention is drawn to the additional information set out in the Appendix to this circular.

Yours faithfully, For and on behalf of Kerry Properties Limited Ang Keng Lam Chairman

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GENERAL INFORMATION

APPENDIX

1. RESPONSIBILITY STATEMENT

This circular includes particulars given in compliance with the Listing Rules for the purpose of giving information with regard to the Company. The Directors collectively and individually accept full responsibility for the accuracy of the information contained in this circular and confirm, having made all reasonable enquiries, that to the best of their knowledge and belief there are no other facts the omission of which would make any statement herein misleading.

2. DIRECTORS’ DISCLOSURE OF INTERESTS

As at the Latest Practicable Date, the interests of the Directors in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO) (the “Associated Corporations”) which were (a) required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), (b) required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (c) required, pursuant to the Model Code for Securities Transactions by Directors of Listed Companies (the “Model Code”), to be notified to the Company and the Hong Kong Stock Exchange were as follows:

(i) The Company

Name of Director	Number of ordinary shares Number of underlying ordinary shares heldunder Percentage of aggregate interests to total number ofordinary
	equity derivatives Total shares in issue Personal interests Family interests Corporate interests Other interests* %
Mr. ANG Keng Lam+ Mr. WONG Siu Kong+ Mr. HO Shut Kan Mr. MA Wing Kai, William Mr. William Winship FLANZ Mr. LAU Ling Fai, Herald Mr. Christopher Roger MOSS, O.B.E.	2,6211 – – 531,1772 4,639,8583 5,173,656 0.43 – – – – 2,091,8573 2,091,857 0.17 – – – – 991,0843 991,084 0.08 2,6691 – – – 974,0103 976,679 0.08 – – – – – – – – – – – – – – – – – – – – –

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GENERAL INFORMATION

APPENDIX

(ii) Associated Corporations

Name of Associated Corporation Name of Director	Number of ordinary shares Number of underlying ordinary shares held under equity derivatives Total Percentage of aggregate interests to total number of ordinary shares in issue Personal interests Family interests Corporate interests Other interests % 1,5701 – – – – 1,570# 0.00 – 7,050,0004 – 7,000,0002 6,000,0005 20,050,000 1.40@ – – 5,254,3006 – 5,000,0005 10,254,300 0.72@ 465,0001 – – – 1,000,0005 1,465,000 0.10@ 710,6201 – – – – 710,620 0.05@ 11 – – – – 1 0.00 11 – – – – 1 0.00
	equity derivatives Total shares in issue Personal interests Family interests Corporate interests Other interests %
EDSA Properties Holdings Inc. Mr. HO Shut Kan Kerry Group Limited Mr. ANG Keng Lam Mr. WONG Siu Kong Mr. HO Shut Kan Mr. MA Wing Kai, William Kerry Siam Seaport Limited (formerly known as Siam Seaport Terminal & Warehouses Co., Ltd.) Mr. ANG Keng Lam Mr. MA Wing Kai, William

Notes:

1. This represents interests held by the relevant director as beneficial owner.

2. This represents interests held by the relevant director through a discretionary trust of which the relevant director is a beneficiary.

3. This represents interests in options held by the relevant director as a beneficial owner to subscribe for the relevant underlying ordinary shares in respect of the options granted by the Company under the executive share option scheme adopted by the Company on 27 March 1997.

4. This represents interests held by the relevant director’s spouse.

5. This represents interests in options held by the relevant director as a beneficial owner to subscribe for the relevant underlying ordinary shares in respect of the options granted by Kerry Group Limited.

6. This represents interests held by the relevant director through his controlled corporations.

7. The percentage has been adjusted based on the total number of ordinary shares of the Company in issue as at the Latest Practicable Date (i.e. 1,209,991,633 ordinary shares).

8. The relevant notification was filed under the repealed Securities (Disclosure of Interests) Ordinance.

9. @ The percentage has been adjusted based on the total number of ordinary shares of Kerry Group Limited in issue as at the Latest Practicable Date (i.e. 1,434,016,206 ordinary shares).

10. • As at the Latest Practicable Date, Mr. Ang Keng Lam and Mr. Wong Siu Kong were directors of Kerry Holdings Limited, which had an interest in the shares of the Company which were required under the provisions of Divisions 2 and 3 of Part XV of the SFO to be disclosed to the Company.

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GENERAL INFORMATION

APPENDIX

All the interests disclosed in sections (i) and (ii) above represent long positions in the shares of the Company or the Associated Corporations.

Saved as disclosed herein, as at the Latest Practicable Date, none of the Directors had any other interests or short positions in the shares, underlying shares or debentures of the Company or any of its Associated Corporations which were (a) required to be notified to the Company and the Hong Kong Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken or deemed to have under such provisions of the SFO), (b) required, pursuant to section 352 of the SFO, to be entered in the register referred to therein, or (c) required, pursuant to the Model Code, to be notified to the Company and the Hong Kong Stock Exchange.

3. SERVICE CONTRACTS

As at the Latest Practicable Date, none of the Directors had entered into, or proposed to enter into, a service contract with any member of the Group which does not expire or is not terminable by such member of the Group within one year without payment of compensation, other than statutory compensation.

4. COMPETING INTERESTS

As at the Latest Practicable Date, the following Directors were considered to have interests in the following businesses (the “Excluded Businesses”), being businesses which competed or were likely to compete, either directly or indirectly, with the businesses of the Group, other than those businesses in which (a) the Group was interested and (b) the Directors’ only interests were as directors appointed to represent the interests of the Group.

As at the Latest Practicable Date:

• (a) Mr. Ang Keng Lam was a director of and had interests in shares in the Allgreen Properties Limited (“Allgreen”) group of companies, the businesses of which consisted of property investment and development, property and project management and operation of office premises, retail space and serviced apartments in Singapore. The Directors believe that as the size of these Excluded Businesses is not insignificant when compared with the property businesses of the Group, it is likely that these Excluded Businesses may compete with the property businesses of the Group in the Asia Pacific region. Allgreen was listed on the Singapore Exchange Securities Trading Limited as at the Latest Practicable Date;

• (b) Messrs. Ang Keng Lam and Wong Siu Kong were directors of and had interests in shares in the Shangri-La Asia Limited (“SA”) group of companies, the businesses of which consisted of hotel ownership and operation. The Directors believe that as the size of that part of these Excluded Businesses in Beijing, where the Group has hotel businesses, is not insignificant when compared with the hotel businesses of the Group in Beijing, it is likely that these Excluded Businesses may compete with the hotel businesses of the Group in Beijing. SA was listed on the Hong Kong Stock Exchange as at the Latest Practicable Date;

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GENERAL INFORMATION

APPENDIX

• (c) Messrs. Ang Keng Lam and Wong Siu Kong were directors of (but did not have any interests in shares in) the China World Trade Center Ltd. group of companies, the businesses of which consisted of property investment and development and hotel ownership and operation in the PRC. The Directors believe that as the size of these Excluded Businesses is not insignificant when compared with the property and hotel businesses of the Group in the PRC, it is likely that these Excluded Businesses may compete with the property and hotel businesses of the Group in the PRC; and

• (d) the executive Directors were directors of and/or had interests in shares in the Kerry Group Limited group of companies, the businesses of which consisted of property investment and development, hotel ownership and operation, warehouse ownership and operation, port terminal ownership and operation and freight operations. The size of these Excluded Businesses is considered to be insignificant when compared with similar businesses of the Group. On this basis, the Directors do not consider any competition between these Excluded Businesses and similar businesses of the Group to be significant.

The Excluded Businesses are operated and managed by companies (and in the case of Allgreen and SA, by publicly listed companies) with independent management and administration. On this basis, the Directors believe that the Group is capable of carrying on its businesses independently of the Excluded Businesses.

The Directors, including those interested in the Excluded Businesses, will, as and when required under the bye-laws of the Company, abstain from voting on any resolution of the Board in respect of any contract, arrangement or proposal in which he or any of his associates has a material interest.

5. LITIGATION

As at the Latest Practicable Date, neither the Company nor any of its subsidiaries was engaged in any litigation or arbitration or claim of material importance and, so far as the Directors were aware, no litigation or arbitration or claim of material importance was pending or threatened by or against any member of the Group.

6. MISCELLANEOUS

• (a) The Qualified Accountant of the Company is Chew Fook Aun. Mr. Chew is a Fellow of The Institute of Chartered Accountants in England and Wales, a Fellow of Hong Kong Institute of Certified Public Accountants and a Council Member of Hong Kong Institute of Certified Public Accountants.

• (b) The Secretary of the Company is Chow Yin Ping, Anita. Ms. Chow is an associate member of both the Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Company Secretaries.

• (c) The Company’s Hong Kong branch share registrar is Abacus Share Registrars Limited, G/F, Bank of East Asia Harbour View Centre, 56 Gloucester Road, Wanchai, Hong Kong.

• (d) This circular has been prepared in both English and Chinese. In the case of any discrepancy, the English text shall prevail.

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