Kerry Properties Limited — Proxy Solicitation & Information Statement 2008

Jan 30, 2008

THIS CIRCULAR 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 and the enclosed form of proxy 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)

CONNECTED TRANSACTIONS REORGANIZATION OF PROPERTY INTERESTS IN THE PRC

Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders

A letter from the Board is set out on pages 6 to 23 of this circular. A letter from the Independent Board Committee is set out on pages 24 and 25 of this circular. A letter from the Independent Financial Adviser containing its advice to the Independent Board Committee and the Independent Shareholders is set out on pages 26 to 37 of this circular.

A resolution will be proposed at the Special General Meeting of Kerry Properties Limited to be held at Atrium Room, Level 39, Island Shangri-La Hotel, Pacific Place, Supreme Court Road, Central, Hong Kong on Thursday, 21 February 2008 at 10:00 a.m. to approve the matters referred to in this circular.

The notice convening the Special General Meeting is set out on pages 67 and 68 of this circular. A form of proxy for use at the Special General Meeting is enclosed with this circular. Whether or not you are able to attend the meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to Tricor Abacus Limited, the Company’s branch share registrar and transfer office in Hong Kong, of 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Special General Meeting.

• for identification purpose only

31 January 2008

CONTENTS

Page

Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	1
Letter from the Board
1.	Introduction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	6
2.	Details of the Amended Framework Reorganization Agreement . . . . . . . .	7
3.	On-going Relationships vis-a`-vis the PRC Companies . . . . . . . . . . . . . . . .	12
4.	Details of the PRC Companies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	13
5.	Details of the PRC Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	14
6.	Financial Effects of the Transactions . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	18
7.	Reasons for and Benefits of the Transactions. . . . . . . . . . . . . . . . . . . . . . .	18
8.	Information about the Company, KHL and AG . . . . . . . . . . . . . . . . . . . . .	19
9.	Implications under the Listing Rules . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	19
10.	Recommendations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	20
11.	Procedures by which a Poll may be Demanded . . . . . . . . . . . . . . . . . . . . .	21
12.	General . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	21
Letter from the Independent Board Committee . . . . . . . . . . . . . . . . . . . . . . . . . .		24
Letter from the Independent Financial Adviser . . . . . . . . . . . . . . . . . . . . . . . . . .		26
**Appendix **	I – Valuation Report on the PRC Properties . . . . . . . . . . . . . . . .	38
**Appendix **	II – General Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	61
**Notice of **	Special General Meeting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .	67

– i –

DEFINITIONS

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

“Affiliate(s)”	in relation to any of the Parties, any subsidiary or holding
	company of that Party or subsidiary of any such holding
	company, in each case from time to time;
“AG”	Allgreen Properties Limited, a company incorporated in
	Singapore with limited liability, the shares of which are
	listed on SGX;
“AG Resolutions”	the resolutions to approve the transactions contemplated
	by the Amended Framework Reorganization Agreement
	by the independent shareholders of AG;
“Amended Framework	the Framework Reorganization Agreement as amended by
Reorganization Agreement”	the Amendment Agreement;
“Amendment Agreement”	the amendment agreement dated 20 December 2007
	entered into between the Company, KHL and AG
	pursuant to which certain terms of the Framework
	Reorganization Agreement were amended;
“Associated Corporations”	has the meaning ascribed to it in Part XV of the SFO;
“associates”	has the meaning ascribed to it in the Listing Rules;
“Board”	the board of directors of the Company;
“Bye-laws”	the bye-laws of the Company;
“circular”	this circular, including the appendices hereto;
“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 Stock
	Exchange;
“Completion”	completion of the Amended Framework Reorganization
	Agreement;
“connected person”	has the meaning ascribed to it in the Listing Rules;
“connected transactions”	has the meaning ascribed to it in the Listing Rules;

– 1 –

DEFINITIONS

“controlling shareholder”

has the meaning ascribed to it in the Listing Rules;

• “Directors” directors of the Company;

“Excluded Businesses” the businesses of the Directors which, as at the Latest Practicable Date, 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;

• “Framework Reorganization the agreement dated 6 December 2007 entered into Agreement” between the Company, KHL and AG pursuant to which KHL and AG shall, respectively, acquire, inter alia , equity interests in each of the PRC Companies holding the PRC Properties;

• “Group” the Company and its subsidiaries;

• “HK$” Hong Kong dollars, the lawful currency of Hong Kong;

• “Hong Kong” Hong Kong Special Administrative Region of the PRC;

• “Independent Board Committee” the independent committee of the Board consisting of all the independent non-executive Directors;

• “Independent Financial Adviser” Anglo Chinese Corporate Finance, Limited, a licensed corporation of Types 1 (dealing in securities), 4 (advising on securities), 6 (advising on corporate finance) and 9 (asset management) regulated activities under the SFO, and appointed as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the Transactions;

• “Independent Shareholders” Shareholders who are not required to abstain from voting in respect of the KPL Resolution at the Special General Meeting;

• “Independent Valuation” the valuation of the PRC Properties as at 31 October 2007 as valued by the Independent Valuer;

– 2 –

DEFINITIONS

“Independent Valuer”	DTZ Debenham Tie Leung Limited, professional
	surveyors and valuers, an independent valuer appointed
	by the Company to provide a valuation on the PRC
	Properties;
“KHL”	Kerry Holdings Limited, a company incorporated in
	Hong Kong, which as at the Latest Practicable Date is
	interested in 757,398,587 Shares as disclosed under the
	SFO, representing approximately 53.18% of the existing
	issued share capital of the Company;
“KPL Resolution”	the resolution to ratify, confirm and approve the
	Transactions by the Independent Shareholders at the
	Special General Meeting;
“KSL”	Kuok (Singapore) Limited, a company incorporated in
	Singapore, being the controlling shareholder of AG;
“Latest Practicable Date”	25 January 2008, being the latest practicable date prior to
	the printing of this circular for ascertaining certain
	information contained in this circular;
“Listing Rules”	The Rules Governing the Listing of Securities on the
	Stock Exchange;
“Long Stop Date”	30 April 2008 or such later date as agreed by the Parties
	in writing;
“Model Code”	the Model Code for Securities Transactions by Directors
	of Listed Issuers, as set out in Appendix 10 to the Listing
	Rules;
“Parties”	collectively, the Company, KHL and AG and the
	expression “Party” shall mean any one of them;
“PRC”	The People’s Republic of China;
“PRC Companies”	collectively, the companies holding the PRC Properties,
	namely PRC Company 3, PRC Company 4, PRC
	Company 5, PRC Company 6 and PRC Company 7,
	further details of which are set out in paragraph 5 of the
	Letter from the Board of this circular, and the expression
	“PRC Company” shall mean any one of them;

– 3 –

DEFINITIONS

“PRC Properties”	collectively, the various properties in the PRC subject to
	this Reorganization, namely Chengdu Site I, Chengdu
	Site II, Qinhuangdao Site I, Qinhuangdao Properties I,
	Qinhuangdao Site II, Qinhuangdao Properties II,
	Shenyang Site and Shenyang Properties, further details of
	which are set out in paragraph 5 of the Letter from the
	Board of this circular;
“Reorganization”	the transfer of equity interests in the PRC Companies
	from the Company’s Affiliates to KHL and AG (or their
	respective Affiliates) upon the terms of the Amended
	Framework Reorganization Agreement;
“RMB”	Renminbi, the lawful currency of the PRC;
“S$”	Singapore dollars, the lawful currency of the Republic of
	Singapore;
“SA”	Shangri-La Asia Limited, an exempted company
	incorporated in Bermuda with limited liability, the shares
	of which are primarily listed on the Main Board of the
	Stock Exchange with secondary listing on SGX;
“SFO”	Securities and Futures Ordinance (Chapter 571 of the
	Laws of Hong Kong);
“SGX”	Singapore Exchange Securities Trading Limited;
“SGX Listing Rules”	the rules set out in the listing manual of SGX;
“Shareholders”	holders of Shares;
“Shares”	ordinary shares of HK$1.00 each in the capital of the
	Company;
“Special General Meeting”	the special general meeting of the Company to be held at
	Atrium Room, Level 39, Island Shangri-La Hotel, Pacific
	Place, Supreme Court Road, Central, Hong Kong on
	Thursday, 21 February 2008 at 10:00 a.m. at which the
	KPL Resolution will be proposed, the notice of which is
	set out on pages 67 and 68 of this circular;
“sq.m.”	square metres;

– 4 –

DEFINITIONS

• “Stock Exchange” The Stock Exchange of Hong Kong Limited;

• “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 Kong);

• “Transactions” the entering into of Amended Framework Reorganization Agreement by the Parties and the transactions contemplated thereunder;

• “US$” United States dollars, the lawful currency of the United States of America; and

• “%” per cent.

Note: In this circular, amounts quoted in RMB have been translated into HK$ at the reference rate of HK$1.00 = RMB0.95 for illustration purpose only. Such translation should not be construed as a representation that the relevant amounts have been, could have been, or could be, converted at that or any other rate or at all.

– 5 –

LETTER FROM THE BOARD

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

Directors:

• Mr. ANG Keng Lam[+] (Chairman)

• Mr. WONG Siu Kong[+]

• (Deputy Chairman and Managing Director)

• Mr. HO Shut Kan[+]

Registered Office:

Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

• Mr. MA Wing Kai, William[+]

• Mr. CHAN Wai Ming, William

• Mr. QIAN Shaohua

• Mr. William Winship FLANZ[#]

Mr. KU Moon Lun[#]

• Mr. LAU Ling Fai, Herald[#]

• Mr. TSE Kai Chi[@]

• Head Office and Principal Place of Business in Hong Kong:

• 13-14/F, Cityplaza 3 14 Taikoo Wan Road Taikoo Shing Hong Kong

31 January 2008

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

Dear Sir or Madam,

CONNECTED TRANSACTIONS REORGANIZATION OF PROPERTY INTERESTS IN THE PRC

1. INTRODUCTION

On 6 December 2007, the Board announced that it proposed to reorganize the Group’s PRC property portfolio by disposing of some equity interests in its portfolio of PRC Properties to KHL and AG. In order to implement the Reorganization, the Company, KHL and AG entered into the Framework Reorganization Agreement on 6 December 2007. On 20 December 2007, the Company, KHL and AG entered into the Amendment Agreement pursuant to certain terms of the Framework Reorganization Agreement were amended.

+ Executive Director

# Independent Non-executive Director

@ Non-executive Director

– 6 –

LETTER FROM THE BOARD

Pursuant to the Amended Framework Reorganization Agreement, the Company agreed to procure the sale to KHL and AG (or their respective nominated Affiliates) of an agreed proportion of equity interests in each of the PRC Companies holding the PRC Properties.

The Amended Framework Reorganization Agreement also sets out the principal terms governing the Parties’ on-going rights and obligations vis-a`-vis the PRC Companies post completion of the Reorganization.

Based on the total maximum contribution of the Company to the PRC Companies, the Transactions constitute non-exempt connected transactions for the Company under the Listing Rules and require the approval of the Independent Shareholders.

The purpose of this circular is to provide you with, inter alia , further information in respect of the Transactions and other information prescribed by the Listing Rules. This circular also contains a letter of advice from the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders in respect of the Transactions, a letter of advice containing the recommendation of the Independent Board Committee to the Independent Shareholders in relation to the Transactions and a notice of the Special General Meeting.

2. DETAILS OF THE AMENDED FRAMEWORK REORGANIZATION AGREEMENT

The principal terms of the Amended Framework Reorganization Agreement are set out below:

Date: 6 December 2007 (as amended on 20 December 2007)

Parties: 1. The Company; 2. KHL; and 3. AG.

– 7 –

LETTER FROM THE BOARD

Pre and Post Reorganization Interests:

Prior to Completion, the Company owns 100% of the equity interest in all the PRC Companies. The equity interests of the Company, KHL and AG (or their respective Affiliates) after Completion shall be as set out below:

PRC Companies/
PRC Properties	Company	KHL	AG
PRC Company 3	55%	20%	25%
Chengdu Site I
PRC Company 4	55%	20%	25%
Chengdu Site II
PRC Company 5	60%	30%	10%
Qinhuangdao Site I and
Qinhuangdao Properties I
PRC Company 6	60%	30%	10%
Qinhuangdao Site II and
Qinhuangdao Properties II
PRC Company 7	60%	10%	30%
Shenyang Site and
Shenyang Properties

Consideration:

The consideration payable by each of KHL and AG shall be the aggregate of the proportional value of the equity interest of each PRC Company to be acquired by KHL or AG (as the case may be).

For this purpose, the value of each PRC Company is calculated as the aggregate of (i) the Independent Valuation of the real properties held by the relevant PRC Company as at 31 October 2007 less any part of the acquisition cost for the real properties which remains unpaid as at the date of the Completion (the “Outstanding Land Cost”), and (ii) the PRC Company’s total assets (excluding the acquisition cost paid for the real properties) less its total liabilities (the “Non-property Net Asset Value”) as at the date of the Completion.

– 8 –

LETTER FROM THE BOARD

The Non-property Net Asset Value and the Outstanding Land Cost, both as at 31 October 2007, and the Independent Valuation of each PRC Company are summarized as follows:

PRC Companies PRC Company 3 PRC Company 4 PRC Company 5 PRC Company 6 PRC Company 7 Total	Independent Valuation (RMB million) (HK$ million) 794.38 836 664.20 699 772.32 813 596.23 628 2,822.25 2,971 5,649.38 5,947	Outstanding Land Costs as at 31 October 2007 (RMB million) (HK$ million) 232.50 245 196.95 207 526.58 554 353.61 372 1,935.25 2,037 3,244.89 3,415	Non-property Net Asset Value as at 31 October 2007 (RMB million) (HK$ million) 16.86 18 10.19 11 131.34 138 101.24 107 127.21 134 386.84 408	Estimated Value of Each PRC Company (RMB million) (HK$ million) 578.74 609 477.44 503 377.08 397 343.86 363 1,014.21 1,068 2,791.33 2,940	Estimated Value of Each PRC Company (RMB million) (HK$ million) 578.74 609 477.44 503 377.08 397 343.86 363 1,014.21 1,068 2,791.33 2,940
					2,940

Based on the Independent Valuation, the Outstanding Land Cost and the Non-property Net Asset Value as at 31 October 2007, and the equity interest of each PRC Company to be acquired by KHL or AG, the considerations payable by KHL and AG for the acquisitions are estimated to be HK$555,722,398 and HK$672,832,745, respectively. The actual considerations payable by KHL and AG at Completion are expected to be greater than the estimated figures above because further capital contributions are expected to be made by the Company to the PRC Companies before the date of Completion to fund the Outstanding Land Cost and/or the on-going development of the PRC Properties. The actual considerations payable by KHL and AG will be adjusted on Completion to take into account any changes to the Non-property Net Asset Value and the Outstanding Land Cost.

Payment:

• (a) Within seven working days after the signing of the Amendment Agreement, KHL and AG shall pay (or procure their respective Affiliates to pay) HK$55,572,240 and HK$67,283,275, respectively, in cash as deposits to the Company in accordance with the Company’s written payment instructions. Such deposits were received by the Company on 3 January 2008.

• (b) Within two working days after Completion, KHL and AG shall pay (or procure their respective Affiliates to pay) the balance of the consideration in cash to the Company in accordance with the Company’s written payment instructions.

– 9 –

LETTER FROM THE BOARD

The considerations are payable by KHL and AG in Hong Kong dollars, being converted (a) as to the estimated value of the PRC Companies as at 31 October 2007, at the prevailing market exchange rate between HK$ and RMB agreed by the Parties as at the date of signing of the Framework Reorganization Agreement (HK$1.00 = RMB0.9518); and (b) as to any completion adjustment above such estimated value, at the exchange rate agreed by the Parties by reference to the prevailing market exchange rate between HK$ and RMB as at the date of Completion.

Conditions Precedent:

Completion of the Amended Framework Reorganization Agreement is conditional upon:

• (a) The Company having complied with all its obligations to consummate the transactions contemplated by the Amended Framework Reorganization Agreement under the Listing Rules including the passing of the KPL Resolution;

• (b) AG having complied with all its obligations to consummate the transactions contemplated by the Amended Framework Reorganization Agreement under the SGX Listing Rules including the passing of the AG Resolutions;

• (c) each Party having obtained all necessary internal approvals for the Amended Framework Reorganization Agreement and the transactions contemplated thereunder;

• (d) receipt by the Parties of the independent valuation of the PRC Properties as at 31 October 2007, such valuation to be conducted in accordance with Chapter 5 and Practice Note 12 of the Listing Rules; and

• (e) the Parties agreeing the shareholders’ agreements and the new articles of association of each PRC Company.

As at the Latest Practicable Date, the conditions (c), (d) and (e) above have been fulfilled.

– 10 –

LETTER FROM THE BOARD

Long Stop Date:

The Long Stop Date is 30 April 2008 or such later date as agreed by the Parties in writing.

If the KPL Resolution is not passed or any other conditions precedent to the Amended Framework Reorganization Agreement (except the passing of the AG Resolutions) are not satisfied or waived on or before the Long Stop Date, the Amended Framework Reorganization Agreement shall be terminated. Within seven working days after the termination of the Amended Framework Reorganization Agreement, the Company shall refund (or procure its Affiliates to refund) to KHL and AG, free of interest, any part of the consideration already paid by KHL and AG under the Amended Framework Reorganization Agreement.

Under the Amended Framework Reorganization Agreement, if the condition precedent in relation to the passing of the AG Resolutions cannot be fulfilled or has no reasonable prospect of being fulfilled as determined by the Parties but all the other conditions precedent (including the passing of the KPL Resolution) are satisfied or waived on or before the Long Stop Date, AG shall be deemed to have withdrawn from the Amended Framework Reorganization Agreement. Within seven working days after the deemed withdrawal of AG, the Company shall refund (or procure its Affiliates to refund) to AG, free of interest, any part of the consideration already paid by AG under the Amended Framework Reorganization Agreement. The Company and KHL shall make the necessary amendments to the Amended Framework Reorganization Agreement to the effect as if AG has never entered into the Amended Framework Reorganization Agreement. Under such circumstances, the Company will continue to hold the relevant equity interests in the PRC Companies which are originally contracted to be sold to AG under the Amended Framework Reorganization Agreement.

Completion:

• (a) Completion shall take place within seven working days after all the condition precedents have been satisfied or waived.

• (b) Following Completion and pending the obtaining of the necessary approvals from the PRC Authorities to complete the formalities to transfer the equity interests in the PRC Companies to KHL and AG, the Company shall hold those equity interests for the benefit of KHL and AG, respectively, and to deal with such equity interests in accordance with the instructions of KHL or AG (as the case may be).

– 11 –

LETTER FROM THE BOARD

• (c) In the event that the formalities for the transfer of the equity interests of any of the PRC Companies could not be completed within 18 months after Completion (or such longer period as agreed by the Parties in writing), and the Parties consider that there is no reasonable prospect in obtaining approvals from the relevant PRC Authorities to execute such transfer of equity interests, the Parties shall terminate the transaction in respect of that PRC Company. Within seven working days after such termination, the Company shall refund (or procure its Affiliate to refund) to KHL and AG, free of interest and after deducting the relevant proportion of such costs and expenses incurred in connection with the attempted transfer of equity interests, any part of the consideration already paid by KHL and AG under the Amended Framework Reorganization Agreement in respect of the relevant PRC Company.

3. ON-GOING RELATIONSHIPS VIS-À-VIS THE PRC COMPANIES

Following Completion, the PRC Companies will become joint venture companies of the Company, KHL and AG (or their respective Affiliates). Pursuant to the Amended Framework Reorganization Agreement, the Parties (or their respective Affiliates) will enter into a shareholders’ agreement and new articles of association to govern their relationships vis-a`-vis each PRC Company at Completion, the principal terms of which are set out below:

Maximum The maximum commitment (whether equity, loan or otherwise) of each Commitment: of the Company, KHL and AG in respect of that PRC Company shall be as follows (assuming both the KPL Resolution and the AG Resolutions are passed):

PRC Company 3 PRC Company 4 PRC Company 5 PRC Company 6 PRC Company 7 Total	Company (RMB million) (HK$ million) 759.00 798.95 640.75 674.47 1,320.00 1,389.47 810.00 852.63 9,634.80 10,141.89 13,164.55 13,857.41	Maximum Commitment KHL AG (RMB million) (HK$ million) (RMB million) (HK$ million) 276.00 290.53 345.00 363.16 233.00 245.26 291.25 306.58 660.00 694.74 220.00 231.58 405.00 426.32 135.00 142.11 1,605.80 1,690.32 4,817.40 5,070.95 3,179.80 3,347.17 5,808.65 6,114.38	Total (RMB million) (HK$ million) 1,380 1,452.64 1,165 1,226.31 2,200 2,315.79 1,350 1,421.06 16,058 16,903.16 22,153 23,318.96	Total (RMB million) (HK$ million) 1,380 1,452.64 1,165 1,226.31 2,200 2,315.79 1,350 1,421.06 16,058 16,903.16 22,153 23,318.96
				23,318.96

– 12 –

LETTER FROM THE BOARD

Registered Capital: To be agreed by the Parties (subject to the maximum commitment set out above).

Business Scope: Real estate development, operation, leasing and property management.

Funding and The sources and terms of future funding requirements of each PRC Provision of Company shall be determined by the board of directors of the relevant Securities: PRC Company from time to time. If any funding by banks, financial institutions or other third parties is required, each Party shall provide or procure the provision of or make available by itself and/or its Affiliates such form of financial assistance (including, without limitation, the provision of collateral or security for the benefit of the PRC Company and/or the provision of several corporate guarantees and indemnities by the Parties) as such lender(s) and the Parties may agree. All shareholders’ funding or financial assistance from the Parties shall be provided on a pro-rata and several basis in accordance with each Party’s equity interest in the PRC Company.

In the event that any funding is provided in the form of shareholders’ loans, such shareholders’ loans shall be non-revolving (unless the shareholders of the relevant PRC Company agree otherwise) and shall only be repaid subject to, inter alia , any restrictions imposed by banks or financial institutions which have extended loans or facilities to the relevant PRC Company. Where such shareholders’ loans are interestbearing, interest may be charged at such prevailing rate(s) as the shareholders of the relevant PRC Company shall agree.

Operating Term: 50 years from the date of issuance of the business licence of the relevant PRC Company.

4. DETAILS OF THE PRC COMPANIES

Each of the PRC Companies is a single purpose company formed for the purposes of developing and operating the sites held by it.

Since their respective dates of incorporation, the PRC Companies have not carried on any other business save for the property investment set out below. Other than holding the respective PRC Properties set out below and other assets and liabilities associated with the holding of such PRC Properties, none of the PRC Companies has any other assets or liabilities.

– 13 –

LETTER FROM THE BOARD

The dates of incorporation and the unaudited net assets and total assets of the PRC Companies as per their respective unaudited management accounts as at 31 October 2007 are set out below:

		Date of	**Unaudited **	Net Assets as	Unaudited Total Assets as	Unaudited Total Assets as
**PRC **	Company	Incorporation	at 31 October 2007		at 31 October 2007
			(RMB)	(HK$)	(RMB)	(HK$)
PRC	Company 3	6 August 2007	365,609,160	384,851,747	392,368,671	413,019,654
PRC	Company 4	5 September 2007	305,619,700	321,704,947	305,663,910	321,751,484
PRC	Company 5	17 May 2007	362,678,140	381,766,463	364,775,543	383,974,256
PRC	Company 6	17 May 2007	332,483,830	349,982,979	334,494,472	352,099,444
PRC	Company 7	13 June 2007	959,048,340	1,009,524,568	959,442,537	1,009,939,513

None of the PRC Companies has prepared any profit and loss accounts, whether audited or unaudited.

None of the PRC Companies has prepared audited financial statements since their respective dates of incorporation.

All the PRC Companies will become non wholly-owned subsidiaries and connected persons of the Company following Completion.

5. DETAILS OF THE PRC PROPERTIES

The following are property interests held for future development:

PRC Properties Descriptions Held by “ Chengdu Site I ” A plot of land (Lot No. GX49(252/211): ( ) 2007-037) situated at Dengta Village Lot (Kerry 8, Huayin Village Lot 10 and Huayin Development Village Lot 9, Hi-Tech Industrial (Chengdu) Ltd.) Development Zone, Chengdu, Sichuan (“ PRC Company Province, the PRC. It has a gross site area 3* ”) of approximately 46,130.95 sq.m.

The land was purchased on 15 June 2007. The original purchase price was RMB581,249,760 (HK$611,841,853).

Construction of Chengdu Site I is expected to commence in the first quarter of 2008. Chengdu Site I will mainly be developed into a residential complex and is expected to be completed in phases up to the fourth quarter of 2010.

– 14 –

LETTER FROM THE BOARD

PRC Properties Descriptions Held by “ Chengdu Site II ” A plot of land (Lot No. GX50(252/211): ( ) 2007-038) situated at Dengta Village Lot (Wealthy 8, Huayin Village Lot 10 and Huayin Plaza Development Village Lot 9, Hi-Tech Industrial (Chengdu) Ltd.) Development Zone, Chengdu, Sichuan (“ PRC Company Province, the PRC. It has a gross site area 4* ”) of approximately 38,617.84 sq.m.

The land was purchased on 15 June 2007. The original purchase price was RMB492,377,800 (HK$518,292,421).

Construction of Chengdu Site II is expected to commence in the third quarter of 2008. Chengdu Site II will mainly be developed into a residential complex and is expected to be completed in phases up to the fourth quarter of 2010. “ Qinhuangdao A plot of land (Lot No. 272-2) situated at ( ) Site I ” West Section of Hebei Street, Haigang (Lucky District, Qinhuangdao, Hebei Province, Billion Development the PRC. It has a gross site area of (Qinhuangdao) Co., approximately 113,393.31 sq.m. Ltd.) (“ PRC Company 5 ”)

The land was purchased on 18 April 2007. The original purchase price was RMB756,600,000 (HK$796,421,053).

Construction of Qinhuangdao Site I is expected to commence in the first quarter of 2008. Qinhuangdao Site I will mainly be developed into a residential complex and is expected to be completed in phases up to the fourth quarter of 2012.

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LETTER FROM THE BOARD

PRC Properties Descriptions Held by “ Qinhuangdao A plot of land (Lot No. 253-3) situated at ( ) Site II ” West Section of Hebei Street, Haigang (Sky Fair District, Qinhuangdao, Hebei Province, Development the PRC. It has a gross site area of (Qinhuangdao) Co., approximately 92,250.92 sq.m. Ltd.) (“ PRC Company 6 ”) The land was purchased on 18 April 2007. The original purchase price was RMB583,632,000 (HK$614,349,474).

Construction of Qinhuangdao Site II is expected to commence in the first quarter of 2008. Qinhuangdao Site II will mainly be developed into a residential complex and is expected to be completed in phases up to the fourth quarter of 2012.

“ Shenyang Site ” A plot of land (Lot No. 2007-053, No. 8 Golden Corridor) situated at the east side of Qingnian Street, Shenhe District, (Kerry (Shenyang) Shenyang, Liaoning Province, the PRC. It Real Estate has a gross site area of approximately Development Co., 172,694.30 sq.m. Ltd.) (“ PRC Company 7 ”)

The land was purchased on 28 June 2007. The original purchase price was RMB2,764,835,743 (HK$2,910,353,414).

Construction of Shenyang Site is expected to commence in mid-2008. Shenyang Site will be developed into a mixed-use development, consisting of hotels, offices, retail shops, convention centre and apartments and is expected to be completed in phases up to mid-2016.

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LETTER FROM THE BOARD

The following are property interests held for self use as staff quarters of the PRC Companies:

PRC Properties	Descriptions	Held by
“Qinhuangdao	Room No. 3601 on Level 31 and Room	PRC Company 5
Properties I”	No. 3701 on Level 32, Unit 2, Block 3,
	Sunshine Coast, situated at the junction of
	Hebin Road and Wenti Road, Haigang
	District, Qinhuangdao, Hebei Province,
	the PRC
	The properties were purchased on 21
	August 2007. The original purchase price
	was RMB1,316,725 (HK$1,386,026).
“Qinhuangdao	Room No. 2001 on Level 17 and Room	PRC Company 6
Properties II”	No. 2901 on Level 25, Unit 2, Block 3,
	Sunshine Coast, situated at the junction of
	Hebin Road and Wenti Road, Haigang
	District, Qinhuangdao, Hebei Province,
	the PRC
	The properties were purchased on 21
	August 2007. The original purchase price
	was RMB1,228,156 (HK$1,292,796).
“Shenyang	Room No. 6 on Level 11, Room No. 7 on	PRC Company 7
Properties”	Level 18 and Room No. 7 on Level 26,
	Unit 2, Block 13, Diwang International
	Club, No. 19 Wenyi Road, Shenhe District,
	Shenyang, Liaoning Province, the PRC
	The properties were purchased on 5
	September 2007. The original purchase
	price was RMB2,249,687 (HK$2,368,091).

In connection with the development and project management of the above properties, it is expected that the Company will provide certain on-going project management, construction management and project consultancy services to the PRC Companies during the period of construction at a fee of not more than 2% of the total construction costs. In this connection, the Company will comply with the relevant requirements under the Listing Rules.

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LETTER FROM THE BOARD

6. FINANCIAL EFFECTS OF THE TRANSACTIONS

The consideration for the transfer of equity interests in the PRC Companies was arrived at based on arms’ length negotiations between the Parties by reference to the Independent Valuation of the PRC Properties.

The Company was advised that the Independent Valuation is based on direct comparison approach by reference to comparable sales evidence as available in the relevant markets.

The proportion of equity interests to be transferred by the Company to KHL and AG in respect of each PRC Company was arrived at following arms’ length negotiations between the Parties. The maximum commitment of each PRC Company was arrived at based on arm’s length negotiations between the relevant parties by reference to the land costs and the expected development costs of each project.

The Company expects to record a profit of approximately HK$216,000,000 (before expenses and tax) from the Reorganization as the PRC Properties as set out in the Independent Valuation is higher than the Company’s book cost of such properties.

Following Completion, each of the Parties will commit further amounts to the PRC Companies. Based on the maximum commitment (as set out in paragraph 3 of this Letter from the Board), the maximum commitment of the Parties to the PRC Company (including both existing and future commitments) is RMB22,153 million (HK$23,318.96 million). Assuming both the KPL Resolution and the AG Resolutions are passed, the maximum contributions of the Company, KHL and AG to the PRC Companies are expected to be RMB13,164.55 million (HK$13,857.41 million), RMB3,179.80 million (HK$3,347.17 million) and RMB5,808.65 million (HK$6,114.38 million), respectively.

It is currently expected that the funding required by the Company for making the contribution to the PRC Companies will be sourced by the Company from its internal cash reserves and/or external bank borrowings. The funding requirement for making the maximum contribution is not expected to have any material impact on the Group. The proceeds derived from the partial sale of equity interests in the PRC Companies under the Reorganization will be used by the Group to expand its portfolio of PRC properties and if unutilised within a reasonable period will be used as general working capital or to repay bank borrowings.

7. REASONS FOR AND BENEFITS OF THE TRANSACTIONS

The Directors believe that the Company needs to expand its land bank in strategic locations in the PRC, with a view to further strengthening its presence there. The Directors believe that the PRC has excellent potential for developers. However, the scales of property projects in the PRC are getting increasingly larger and require ever greater financial commitment from the developers.

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LETTER FROM THE BOARD

In order to maximise the utilization of the Group’s financial resources, the Directors have always intended to co-develop its property interests in the PRC with friendly parties. The intention is reflected in the various PRC development projects of the Group such as the Jingan Complex Development in Shanghai (co-developed with SA), Shanghai Pudong Kerry Centre (co-developed with SA and AG) and Tianjin Kerry Centre at Hedong District, Tianjin (co-developed with SA and AG).

By inviting KHL and AG to participate in the development of the PRC Properties, the Group is able to benefit from their extensive business affiliation and network in securing a strong and quality customer profile for the new development. With the combined experience, standing and expertise of the Parties in commercial and residential projects, the development of the PRC Properties is expected to enhance Shareholders’ value and provide recurrent income for the Group. The Reorganization allows the Group to spread the project risk and maintain the borrowing at a reasonable level so that the Group can take up other investment opportunities as and when such opportunities arise.

8. INFORMATION ABOUT THE COMPANY, KHL AND AG

The Company is an investment holding company. Its subsidiaries are principally engaged in (i) property development, investment and management in Hong Kong, the PRC and the Asia Pacific region; (ii) logistics, freight and warehouse ownership and operations; (iii) infrastructure-related investment in Hong Kong and the PRC; and (iv) hotel ownership in Hong Kong, and hotel ownership and operations in the PRC.

KHL is the main investment holding company of the Kuok Group in Hong Kong. The Kuok Group’s principal businesses include commodities trading, property development and investment, warehouse and logistics operations, hotel ownership and management and media. KHL is a substantial shareholder of three listed companies in Hong Kong, namely, the Company, SA and SCMP Group Limited.

AG is listed on the SGX. AG and its subsidiaries are principally engaged in property development and investment, project management and trading in building materials.

9. IMPLICATIONS UNDER THE LISTING RULES

As at the Latest Practicable Date, KHL is interested in 757,398,587 Shares as disclosed under the SFO, representing approximately 53.18% of the existing issued share capital of the Company. KHL is the controlling shareholder and therefore a connected person of the Company.

As at the Latest Practicable Date, KSL is interested in approximately 34.1% of the existing issued share capital of AG. KSL owns 100% of a company which is interested in 33% of the issued shares of a 67%-owned subsidiary of the Company. Therefore, AG is a connected person of the Company.

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LETTER FROM THE BOARD

Accordingly, both the disposal of equity interests in the PRC Companies to KHL and AG by the Company and the formation of joint venture among them in respect of such PRC Companies constitute connected transactions for the Company under the Listing Rules.

Assuming both the KPL Resolution and the AG Resolutions are passed, the maximum aggregate contribution of the Company to the PRC Companies is expected to be approximately RMB13,164.55 million (HK$13,857.41 million). If the KPL Resolution is passed but the AG Resolutions are not passed so that AG is deemed to have withdrawn from the Amended Framework Reorganization Agreement, the maximum aggregate contribution of the Company to the PRC Companies will increase to approximately RMB18,973.2 million (HK$19,971.79 million).

Based on the maximum aggregate contribution of the Company as described above, the transactions contemplated by the Amended Framework Reorganization Agreement constitute non-exempt connected transactions for the Company under the Listing Rules and require the approval of the Independent Shareholders.

The Independent Board Committee has been formed to advise the Independent Shareholders in relation to the Transactions. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the Transactions.

10. RECOMMENDATIONS

Having taken into account the recommendation and advice from the Independent Financial Adviser in relation to the Transactions (as contained in the letter from the Independent Financial Adviser set out on pages 26 to 37 of this circular), the Independent Board Committee is of the view that the disposal and the formation of the joint venture under the Amended Framework Reorganization Agreement are on normal commercial terms, in the ordinary and usual course of business, and are fair and reasonable and in the interests of the Company and its Shareholders as a whole. Accordingly, the Directors (including the independent non-executive Directors) consider that the disposal and the formation of the joint venture under the Amended Framework Reorganization Agreement are on normal commercial terms, in the ordinary and usual course of business, and are fair and reasonable and in the interests of the Company and its Shareholders as a whole.

Your attention is drawn to the letter from the Independent Board Committee set out on pages 24 and 25 of this circular, which contains its recommendation to the Independent Shareholders, and the letter from the Independent Financial Adviser set out on pages 26 to 37 of this circular, which contains its advice to the Independent Board Committee and the Independent Shareholders in relation to the Transactions.

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LETTER FROM THE BOARD

11. PROCEDURES BY WHICH A POLL MAY BE DEMANDED

Pursuant to the Bye-laws, a resolution put to the vote of a general meeting of the Company shall be decided on a show of hands, but a poll may be demanded (before or on the declaration of the result of the show of hands or on the withdrawal of any other demand for a poll):

• (i) by the Chairman of the general meeting of the Company; or

• (ii) by at least three Shareholders present in person or by duly authorised corporate representative or by proxy for the time being entitled to vote at the general meeting of the Company; or

• (iii) by any Shareholder or Shareholders present in person or by duly authorised corporate representative or by proxy and representing not less than one-tenth of the total voting rights of all the Shareholders having the right to vote at the general meeting of the Company; or

• (iv) by any Shareholder or Shareholders present in person or by duly authorised corporate representative or by proxy and holding Shares conferring a right to vote at the general meeting, being Shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the Shares conferring that right.

In addition:

• (a) if the aggregate proxies held by (i) the Chairman of a particular meeting, and (ii) the Directors account for 5% or more of the total voting rights at that meeting, and

• (b) if on a show of hands in respect of any resolution, the Shareholders at the meeting vote in the opposite manner to that instructed in the proxies referred to in (a) above,

the Chairman of the meeting and/or any Director holding the proxies referred to above shall demand a poll. However, if it is apparent from the total proxies held by the persons referred to in (a) above that a vote taken on a poll will not reverse the vote taken on a show of hands, then no poll shall be required.

12. GENERAL

The notice convening the Special General Meeting is set out on pages 67 and 68 of this circular. At the Special General Meeting, the KPL Resolution will be proposed to confirm, ratify and approve the Transactions.

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LETTER FROM THE BOARD

A form of proxy for use at the Special General Meeting is enclosed with this circular. Whether or not you are able to attend the meeting, you are requested to complete the enclosed form of proxy in accordance with the instructions printed thereon and return it to Tricor Abacus Limited, the Company’s branch share registrar and transfer office in Hong Kong, of 26th Floor, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong not less than 48 hours before the time appointed for holding the Special General Meeting. Completion and return of the accompanying form of proxy will not prevent you from attending and voting at the Special General Meeting should you so wish.

Under the Listing Rules, any connected person of the Company with a material interest in the Transactions, and any other Shareholders and their respective associates with a material interest in the Transactions, shall abstain from voting on the KPL Resolution.

The following persons (the “ Abstaining Shareholders ”) will abstain from voting in respect of the KPL Resolution:

• (i) KHL and its associates, which are interested in 774,671,098 Shares (representing approximately 54.39% of all Shares in issue) as at the Latest Practicable Date;

• (ii) KSL and/or its associates, which are interested in 24,101,968 Shares (representing approximately 1.69% of all Shares in issue) as at the Latest Practicable Date;

• (iii) Mr. Ang Keng Lam (a common director of the Company, KHL and AG) and his associates, who are interested in 115,367 Shares (representing approximately 0.01% of all Shares in issue) as at the Latest Practicable Date; and

• (iv) Lochtenny Investments Limited, a company indirectly owned by a discretionary trust whose contingent beneficiaries include Mr. Ang Keng Lam and Mr. Wong Siu Kong (a common director of the Company and KHL), which is interested in 50,000 Shares (representing approximately 0.004% of all the Shares in issue) as at the Latest Practicable Date.

As far as the Directors are aware, having made all reasonable enquiries, as at the Latest Practicable Date:

• (i) the Abstaining Shareholders controlled or were entitled to exercise control over the voting rights in respect of their respective Shares;

• (ii) there were no voting trusts or other agreements or arrangements or understandings (other than an outright sale) entered into by or binding upon the Abstaining Shareholders; and there were no obligations or entitlements of the Abstaining Shareholders, whereby such persons have or might have temporarily or permanently passed control over the exercise of the voting right in respect of their Shares to third parties, either generally or on a case-by-case basis; and

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LETTER FROM THE BOARD

• (iii) there were no discrepancies between the beneficial shareholding interests in the Company of the Abstaining Shareholders and the number of Shares in respect of which they would control or would be entitled to exercise control over the voting right at the Special General Meeting.

The KPL Resolution will be decided by way of a poll.

The Company will publish an announcement on the results of the Special General Meeting on the business day following the Special General Meeting with respect to whether or not the KPL Resolution has been passed by the Independent Shareholders.

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

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

* for identification purpose only

– 23 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

==> picture [225 x 122] intentionally omitted <==

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

Independent Board Committee:

Mr. LAU Ling Fai, Herald (Chairman) Mr. William Winship FLANZ Mr. KU Moon Lun

Registered Office: Canon’s Court 22 Victoria Street Hamilton HM12 Bermuda

31 January 2008

To the Independent Shareholders

Dear Sir or Madam,

CONNECTED TRANSACTIONS REORGANIZATION OF PROPERTY INTERESTS IN THE PRC

We refer to the circular of which this letter forms part. Terms defined in the circular shall have the same meanings when used herein unless the context otherwise requires.

The Independent Board Committee has been formed to advise the Independent Shareholders as to whether, in our opinion, the entering into of the Amended Framework Reorganization Agreement and the Transactions, in accordance with the terms set out in the Amended Framework Reorganization Agreement, are in the interests of the Company and its Shareholders as a whole and the terms of which are fair and reasonable. The Independent Financial Adviser has been appointed to advise the Independent Board Committee and the Independent Shareholders in relation to the Transactions.

* for identification purpose only

– 24 –

LETTER FROM THE INDEPENDENT BOARD COMMITTEE

Having considered the recommendation and advice of the Independent Financial Adviser, in our opinion, the disposal and the formation of the joint venture under the Amended Framework Reorganization Agreement are on normal commercial terms, in the ordinary and usual course of business, and are fair and reasonable and in the interests of the Company and its Shareholders as a whole. Accordingly, we recommend the Independent Shareholders to vote in favour of the KPL Resolution to be proposed at the Special General Meeting to approve the Amended Framework Reorganization Agreement and the Transactions.

Yours faithfully,

The Independent Board Committee of Kerry Properties Limited Mr. LAU Ling Fai, Herald (Chairman) Mr. William Winship FLANZ Mr. KU Moon Lun

– 25 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The following is the text of the letter of advice from Anglo Chinese Corporate Finance, Limited (“Anglo Chinese”), the Independent Financial Adviser to the Independent Board Committee and the Independent Shareholders, for the purpose of incorporation into this circular.

40th Floor, Two Exchange Square, 8 Connaught Place, Central, Hong Kong

The Independent Board Committee and the Independent Shareholders

31 January 2008

Dear Sirs,

CONNECTED TRANSACTIONS REORGANIZATION OF PROPERTY INTERESTS IN THE PRC

INTRODUCTION

We refer to our appointment as the independent financial adviser to the Independent Board Committee and the Independent Shareholders in relation to the disposal of equity interests in the PRC Companies to KHL and AG by the Company and the formation of joint venture among them in respect of the PRC Companies. These transactions are set out in the Amended Framework Reorganization Agreement. Expressions used in this letter have the same meanings as defined in the circular of the Company dated 31 January 2008 (the “Circular”) of which this letter forms part, unless stated otherwise.

The disposal of equity interests in the PRC Companies to KHL and AG by the Company and the formation of joint venture among them in respect of the PRC Companies constitute non-exempt connected transactions for the Company under the Listing Rules and require the approval of the Independent Shareholders. On 6 December 2007, being the date of the Framework Reorganization Agreement, KHL was a controlling shareholder of the Company and exercised control over approximately 52.93% of the issued share capital of the Company. KHL is therefore a connected person of the Company. As at the Latest Practicable Date, KHL was interested in 757,398,587 Shares, representing 53.18% of the existing issued share capital of the Company. As at the Latest Practicable Date, KSL is interested in approximately 34.1% of the issued share capital of AG. As KSL owns 100% of a company which is interested in 33% of the issued shares of a subsidiary of the Company, AG is an associate of KSL and a connected person of the Company.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Independent Board Committee, comprising the Company’s independent nonexecutive Directors, namely Messrs. William Winship Flanz, Ku Moon Lun and Lau Ling Fai, Herald, has been formed to consider whether the connected transactions described above are on normal commercial terms, fair and reasonable and in the interests of the Company and its shareholders as a whole. We have been appointed to advise the Independent Board Committee and the Independent Shareholders accordingly.

In formulating our opinions and recommendations, we have reviewed the Amended Framework Reorganization Agreement; the published information on the Company and AG, including their respective audited annual financial statements for 2006; unaudited interim report of the Company up to 30 June 2007; feasibility studies and cash flow projections prepared by the Company relating to the PRC Properties; and the Independent Valuation as at 31 October 2007. We have been given the opportunity to discuss with management of the Company development plans of the PRC Properties, the disposal of interests in the PRC Companies to, and co-investment with, KHL and AG contemplated under the Amended Framework Reorganization Agreement, the business strategies and prospects of the Company. We have also visited the various sites held by the PRC Companies.

We have relied on the accuracy of the information, facts and representations and the opinions expressed by the Company and the Directors contained or referred to in the Circular. We have assumed that the information, facts, representations and opinions were true at the time they were made and continue to be true at the date of the Circular. We consider we have reviewed sufficient information to reach the conclusions set out in this letter and have no reason to believe any of the information provided to us by the Directors is inaccurate or that any material information has been omitted or withheld from the information supplied or the opinions expressed in this Circular. We have not, however, conducted an independent investigation into the business and affairs of the Group.

Apart from normal professional fees for our services to the Company in connection with the engagement described above, no arrangement exists whereby Anglo Chinese will receive any fees or benefits from the Company, its subsidiaries, Directors, chief executive, substantial shareholders or any associates of any of them.

In the sections that follow, we set out the principal factors that we have taken into account in arriving at our advice to the Independent Board Committee and the Independent Shareholders.

PRINCIPAL FACTORS

Background

The Group has a long history in successfully developing large scale and quality integrated property projects in Hong Kong and the PRC. For the six months ended 30 June 2007, the Group generated turnover of some HK$605.3 million from its PRC property business and HK$1,777.7 million from its property business in Hong Kong. Such turnover mainly comprised

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

proceeds from continuing sales of properties, rental income and revenue from hotel operations. In particular, the increase in property sales in Hong Kong contributed to the strong performance in the Group’s property business operations. During the same period, the PRC and Hong Kong property businesses of the Group contributed total profits of some HK$2,092.9 million, or about 81% of the Group’s net profit. Out of the profit attributable to shareholders of HK$2,470 million for the six months ended 30 June 2007, the Group recorded a net increase in fair values of investment properties (and related tax effects) of HK$1,098 million. The particulars of the Group’s land portfolio and development projects in the PRC, excluding the PRC Properties, are shown below:

• A. Investment Properties as at 30 June 2007

(Figures in square feet, unless stated otherwise) Office Commercial Residential Total	Beijing 814,665 184,998 277,330 1,276,993	Shanghai 632,259 398,498 435,789 1,466,546	Shenzhen 30,218 107,256 – 137,474	Fuzhou – 63,986 – 63,986	Total gross floor area 1,477,142 754,738 713,119
					2,944,999 (or 273,597 square metres)

• B. Properties under development or to be developed, excluding the PRC Properties as at the Latest Practicable Date

			Approximate
			gross floor
Cities	Project		area
			(square feet)
Beijing	–	Xinyuanli residential project	334,000
Shanghai	–	Kerry Everbright City Phase II project in Zhabei	1,598,000
		District which is a joint venture project partnered
		with third parties
	–	Jingan Complex Development, a joint venture project	2,750,000
		with a subsidiary of SA in Jingan District
	–	A joint venture project with subsidiaries of SA and AG	2,476,000
		and another party in Pudong District

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Cities Project Shenzhen – Grade A office complex project in Futian Central District – Office property site adjacent to the project in Futian Central District Manzhouli – Residential and commercial project in Inner Mongolia Yangzhou – Hotel and apartment project Chengdu – Joint venture project with subsidiaries of KHL and AG Tianjin – Tianjin Kerry Centre, a joint venture project with subsidiaries of SA and AG in Hedong District Hangzhou – Two sites in Hangzhou that were purchased in October 2005 and October 2006 Total

Approximate gross floor area (square feet) 807,000 850,000 927,000 1,032,000 2,647,000 5,565,000 4,917,000

23,903,000 (or 2,220,643 square metres)

Under the original Reorganization, it is intended that certain equity interests in the companies holding the two sites in Hangzhou (referred to in the table above) will be disposed of by the Company to KHL and AG. After the execution of the Framework Reorganization Agreement on 6 December 2007, the Company became aware that market responses to the Reorganization had not been positive. Later on 20 December 2007, the Parties entered into the Amendment Agreement under which the proposed sale of interests in the companies holding the two sites in Hangzhou will be excluded from the Reorganization. According to the announcement of the Company on 6 December 2007, the total estimated maximum contribution for the development of these two sites in Hangzhou is HK$7,551.59 million. The Board does not consider the exclusion of these sites in Hangzhou from the Reorganization to have any material effect on the financial position of the Company.

The acquisition and proposed development of the PRC Properties situated in prime locations at Chengdu, Qinhuangdao and Shenyang will diversify the Group’s land portfolio in the PRC to major second tier cities in the PRC where the Directors believe offer attractive investment returns. In particular, it is believed that the Company will be able to leverage on its competence and past experience in developing large scale integrated development in the PRC to develop the PRC Properties. As described more fully later in this letter, the entire portfolio of the PRC Properties will upon development have a total gross floor area of 2,870,477 square metres which is about 1.3 times the total area of the development projects of

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

the Group, excluding the PRC Properties. The Reorganization will enable the Group to derive additional financial resources to further expand its property development portfolio in the PRC. This is in line with the Company’s strategy to strengthen its presence in the PRC real estate market that the Directors believe offers high potential returns.

The property projects

The Company acquired through public bidding the sites of the PRC Properties between April 2007 and June 2007. The project sites occupy a total area of 463,087 square metres and will upon development have a total gross floor area of 2,870,477 square metres. These sites are held by five PRC Companies formed for the purpose of developing and operating the sites held. Given the magnitude of the PRC Properties relative to the existing land bank of the Group, the Company agreed, under the Amended Framework Reorganization Agreement, to procure the sale to KHL and AG (or their respective nominated Affiliates) of a proportion of equity interests in each of the PRC Companies. The table below shows further details of the Reorganization and the property projects:

PRC Companies/ PRC Properties Respective share of the PRC Company (Company/ KHL/AG) (per cent) PRC Company 3 Chengdu Site I 55/20/25 PRC Company 4 Chengdu Site II 55/20/25 PRC Company 5 Qinhuangdao Site I and Qinhuangdao Properties I 60/30/10 PRC Company 6 Qinhuangdao Site II and Qinhuangdao Properties II 60/30/10 PRC Company 7 Shenyang Site and Shenyang Properties 60/10/30 Total	Approximate site area (square metre) 46,131 38,618 113,393 (Qinhuangdao Site I) 92,251 (Qinhuangdao Site II) 172,694 (Shenyang Site) 463,087	Maximum permitted construction area (square metre) 193,750 162,195 442,200 (includes PRC Company 6) See above 2,072,332 2,870,477	Approximate original purchase price (date of purchase) (HK$ million) 611.8 (15/6/07) 518.3 (15/6/07) 796.4 (18/4/07) for Qinhuangdao Site I, and 1.4 (21/8/07) for Qinhuangdao Properties I 614.3 (18/4/07) for Qinhuangdao Site II, and 1.3 (21/8/07) for Qinhuangdao Properties II 2,910.4 (28/6/07) for Shenyang Site, and 2.4 (5/9/07) for Shenyang Properties 5,456.3	Approximate valuation as at 31 October 2007 Construction and fitting out period Intended usage (HK$ million) 836.2 2008 to 2010 Residential complex 699.2 2008 to 2010 Residential complex 811.6 for Qinhuangdao Site I, and 1.4 for Qinhuangdao Properties I 2008 to 2012 Residential complex 626.3 for Qinhuangdao Site II, and 1.3 for Qinhuangdao Properties II 2008 to 2012 Residential complex 2,968.4 for Shenyang Site, and 2.4 for Shenyang Properties 2008 to 2016 Hotels, offices, retail shops, convention centre and apartment 5,946.8

The locations of the PRC Properties are stated in the Letter from the Board of the Circular.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Future maximum commitment

Under the Amended Framework Reorganization Agreement, the Parties or their respective Affiliates will enter into a shareholders’ agreement which stipulates their respective estimated maximum commitment in respect of the PRC Companies (assuming the KPL Resolution and the AG Resolutions are passed) as follows:

PRC Companies/ PRC Properties PRC Company 3/ Chengdu Site I PRC Company 4/ Chengdu Site II PRC Company 5/ Qinhuangdao Site I PRC Company 6/ Qinhuangdao Site II PRC Company 7/ Shenyang Site Total	Company (HK$ million) 798.95 674.47 1,389.47 852.63 10,141.89 13,857.41	Maximum Commitment KHL AG (HK$ million) (HK$ million) 290.53 363.16 245.26 306.58 694.74 231.58 426.32 142.11 1,690.32 5,070.95 3,347.17 6,114.38	Total (HK$ million) 1,452.64 1,226.31 2,315.79 1,421.06 16,903.16
			23,318.96

The maximum commitment for each Party is calculated prorata to its equity interest in the PRC Companies, and by reference to the land costs and expected development costs of each project held by the PRC Companies. We consider the apportionment and basis of determination of the maximum commitment for each Party to the PRC Companies to be ordinary commercial terms.

Pursuant to the shareholders’ agreement to be entered into by the Parties, the maximum total commitment for developing the PRC Properties is approximately HK$23,319 million. After Completion and assuming the KPL Resolution and the AG Resolutions are duly passed, the Company’s maximum commitment for the PRC Properties will be reduced by some 41% to approximately HK$13,857 million. If the KPL Resolution is passed but the AG Resolutions are not passed so that AG is deemed to have withdrawn from the Amended Framework Reorganization Agreement, the Company will be required to made a higher maximum contribution of approximately HK$19,972 million. Such commitment can be made in the form of equity, loan or otherwise. As at 31 October 2007, the Company had contributed land costs and other net assets of approximately HK$2,448 million. Assuming the KPL Resolution and the AG Resolutions are duly passed, the Company will be committed to make a further contribution of approximately HK$2,027 million for outstanding land cost in 2007 and 2008. The remaining contribution of approximately HK$10,397 million will be made by the Company throughout the development period of the PRC Properties over the next nine years.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Registered capital of the joint venture companies

Following Completion, the PRC Companies will become joint venture companies of the Company, KHL and AG, or their respective Affiliates. The registered capital of the joint venture companies will be agreed by the Parties, subject to the maximum commitment of each Party described above (which is calculated based on the Parties’ respective proportion of equity interest in the PRC Companies). We consider this arrangement to be ordinary commercial terms and in line with market practice.

Funding requirements

It is intended that the board of directors of the relevant PRC Company will from time to time decide on the sources and terms of future funding requirements of each PRC Company. (Note: As stated in the Amended Framework Reorganization Agreement, the joint venture agreements and articles of association relating to the PRC Companies will provide that the board of directors of each PRC Company will consist of such number of directors as the Parties shall agree and, in the absence of such an agreement, shall consist of a board which reflects the proportion of voting rights of the shareholders in general meetings of the relevant PRC Company.)

Under the shareholders’ agreement to be entered into by the Parties, the Parties including the Company are expected to provide (on a prorata and several basis in accordance with each Party’s equity interest in the PRC Company) funding or such form of financial assistance including the provision of security or several corporate guarantee if any funding by third parties is required. In addition, the Parties may provide funding by way of shareholders’ loans and interest may be charged at prevailing rates as agreed by the Parties.

We consider the above terms governing the Company’s obligations to fund the development of the PRC Properties to be ordinary commercial terms.

We have reviewed the feasibility study and cash flow projections prepared by the Company relating to the PRC Properties. During the course of our review, we have conducted site inspections on the PRC Properties and discussed with the valuer and the project manager regarding the bases and assumptions made in the feasibility study and cash flow projections. We note that all the property projects will be financed by way of either shareholder equity, bank loans and, or proceeds from pre-sale of the properties at different stages of the investment period. For some of the projects, pre-sale of properties may be as early as the last quarter of 2008.

Financial conditions of the Company

Based on the 2007 interim report of the Group, the Group had cash and bank balances of some HK$3,682 million and pledged bank deposits of some HK$24.6 million as at 30 June 2007. During the six months ended 30 June 2007, the Group recorded a net cash outflow used in operating and investing activities of some HK$395.7 million, and generated a net cash

– 32 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

inflow of HK$1,354.8 million from the issue of convertible bonds and other financing activities. As at 30 June 2007, the Group had capital commitments in respect of interests in leasehold land, properties under development and property, plant and equipment of approximately HK$8,457 million.

Given the total maximum investment amount of the PRC Properties of approximately HK$23,319 million when compared to the Group’s current financial conditions described above, and the long term nature of the investment, it is necessary and commercially prudent for the Group to dispose of part of its interest in the PRC Properties to other parties. As discussed above, the Reorganization will significantly reduce the Company’s estimated maximum commitment for developing the PRC Properties by some 41% to approximately HK$13,857 million, assuming the KPL Resolution and the AG Resolutions are passed. The co-investment with KHL and AG will also enable the Company to diversify its development risk while maintaining a reasonable level of working capital and gearing for its other investments in the future.

Consideration for the transfer of interest to KHL and AG

Under the Amended Framework Reorganization Agreement, the consideration payable by each of KHL and AG shall be the aggregate of the proportional value of the equity interest of each PRC Company to be acquired by KHL or AG, as the case maybe. The value of each PRC Company is the aggregate of:

• (i) the aggregate values of the real properties held by the relevant PRC Company equivalent to the Independent Valuation as at 31 October 2007 less any part of the acquisition cost for the real properties that remains unpaid as at the date of Completion (the “Outstanding Land Cost”); and

• (ii) the relevant PRC Company’s total assets (excluding the acquisition cost paid for the real properties) less its total liabilities (the “Non-property Net Asset Value”) as at the date of Completion.

Based on the Independent Valuation, the Outstanding Land Cost and the Non-property Net Asset Value as at 31 October 2007, the estimated total considerations payable by KHL and AG for the acquisition are HK$555,722,398 and HK$672,832,745, respectively. The actual considerations payable by KHL and AG at Completion are expected to be greater than the estimated amounts as the Company is expected to make further capital contributions to the PRC Companies before the date of Completion for funding the Outstanding Land Cost and, or continuing development of the PRC Properties. The Amended Framework Reorganization Agreement provides that the actual considerations payable by KHL and AG will be adjusted for changes to the Non-property Net Asset Value and Outstanding Land Cost on Completion.

The Independent Valuation of the portfolio of the PRC Properties concerned as at 31 October 2007 is HK$5,946,710,526. We have discussed with the Independent Valuer its methodology used in valuing the PRC Properties. In particular, we note that the valuation has

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

been carried out based on comparison with sale and public bidding activities in Chengdu, Qinhuangdao and Shenyang during 2007. We have been informed by the Independent Valuer that the direct comparison method is a common and an appropriate valuation method used to value property project sites in China.

As the consideration payable by KHL and AG for the acquisition of interests in the PRC Companies is determined with reference to the Independent Valuation and which represents the prevailing market valuation of the PRC Properties, we are of the opinion that the consideration payable under the Amended Framework Reorganization Agreement to be fair and reasonable.

It is noted that the recent valuation of the PRC Properties, other than Chengdu Site I and Chengdu Site II, increased about 2% since the date of the original purchases by the Company. Since June 2007, the valuation of Chengdu Site I and Chengdu Site II increased sharply by 36.7% and 34.9%, respectively. Based on our discussions with the management of the Company, we understand that the Parties agreed that the considerations payable by KHL and AG be based on, amongst other things, the Independent Valuation without reference to the original acquisition cost of the PRC Properties. We have therefore only considered the amounts payable by KHL and AG with reference to the Independent Valuation rather than the original purchase prices paid by the Company.

Co-investment with KHL and AG

The Company has selected KHL and AG as its investment partners to develop the PRC Properties given the Company’s prior experience in co-investing with them to develop integrated property projects in the PRC, their financial standing, ability and readiness to provide the requisite financing for the development that is capital intensive. KHL is an investment company and a controlling shareholder of the Company. AG is listed on SGX and has a long history in property development in Singapore and experience in taking part in large scale property development projects in China. As at the latest practicable date, the market capitalisation of AG is approximately S$2,099.3 million. We understand from the management of the Company that the Group’s previous co-investment experience with KHL and AG has been satisfactory and the Group was able to benefit from their extensive business affiliation and customer network. An example is the first co-investment arrangement between the Group and KHL in October 2007 to develop a mixed residential and commercial real estate project at Chengdu, Sichuan Province, China. Further, in 2006, AG invested in the Group’s two large scale integrated property development projects in Pudong District, Shanghai and Hedong District, Tianjin. The co-investment with KHL and AG which will contribute their proportionate share of investment in the PRC Properties allows the Company to participate in the development of the PRC Properties and maintain a reasonable level of working capital in the form of cash or bank borrowings. We also concur with the Directors’ view that with the combined experience, standing and expertise among the Company, KHL and AG in commercial and residential projects, the co-investment with these investment partners on the PRC Properties is expected to enhance the Shareholders’ value and provide recurrent income to the Group.

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LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

Development and project management of the sites

It is intended that the Group will provide ongoing project development, construction management and project consultancy services during the period of construction of the sites at a fee of not more than 2% of the total construction costs. On the basis of our discussions with the management of the Company, we understand that the proposed project management fee is in line with market practice. The actual terms relating to the provision of project development and related services by the Group will be subject to contract and fulfillment of obligations of the Company and AG under the Listing Rules and SGX Listing Rules, respectively. The Amended Framework Reorganization Agreement has specifically provided that the terms shall be on normal commercial terms to be agreed by the Parties.

Reasons for the transactions

As mentioned above, the Company acquired through public bidding the various sites of the PRC Properties. Given the magnitude of the proposed development of the PRC Properties relative to the size of the current land portfolio of the Group, and with a view to diversifying project risk and maintaining an appropriate level of gearing, the Group had always intended to divest part of its equity interest in the PRC Companies to other parties that have the relevant experience in property development and can work well with the Group. The intended disposal and formation of a joint venture with KHL and AG will constitute connected transactions within the meaning of the Listing Rules and require prior independent shareholders’ approval. As it is not practicable for the Company to obtain the requisite shareholders’ approval before acquiring the sites, the Parties entered into the Amended Framework Reorganization Agreement to effect the disposal after the Company acquired the sites.

Further, the Company invited KHL and AG to participate in the development of the PRC Properties in view of their financial standing and expertise in property development in large-scale integrated property projects. The Directors further believe that the Group will benefit from the strong business network of KHL and AG to secure a quality customer profile for the development. All the combined experience, financial standing, expertise of the Parties in property development and the Company’s previous satisfactory co-investment experience with KHL and AG are expected to enhance the potential returns from the development of the PRC Properties.

Financial effects on the Group

Net assets

As at 30 June 2007, the unaudited net asset value of the Group amounted to some HK$34,173.5 million. Under the Amended Framework Reorganization Agreement, the Parties will enter into the relevant shareholders’ agreements under which the Company will be required to make a total maximum commitment (whether equity, loan or otherwise) for all the PRC Companies of approximately HK$13,857 million. It is presently expected that the Company will fund its contribution to the PRC Companies from internal cash reserves,

– 35 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

proceeds from partial pre-sale of the PRC Properties and, or external bank borrowings. The Directors believe that the Company’s maximum contribution will not have a material impact within the financial capabilities of the Group. Under the shareholders’ agreement to be entered into by the Parties, the sources and terms of future funding requirements of each PRC Company will be determined by the board of directors of the relevant PRC Company from time to time.

Upon Completion, the Company will own over 50% of all the PRC Companies which will become subsidiaries of the Company. Therefore, the financial results of all the PRC Companies will be consolidated into the Group’s consolidated financial statements. The total existing and future maximum commitment (that can be in the form of equity, loan or otherwise) of all the PRC Companies amounted to HK$23,319 million.

Based on the foregoing, we are of the opinion that the investment in the PRC Companies will comprise a significant part of the Group’s net assets, and has the potential to make a contribution in the future as the PRC Properties are developed.

Earnings

The Group posted an audited net profit attributable to shareholders of HK$4,689 million for the year ended 31 December 2006. For the six months ended 30 June 2007, the Group’s unaudited net profit attributable to shareholders amounted to HK$2,470.3 million.

The Group expects to record a profit of approximately HK$216 million, before expenses and tax, from the Reorganization as the Independent Valuation of the PRC Properties exceeds the Group’s book cost of such properties.

As described above, the PRC Properties are expected to be completed between 2010 and 2016. Since the PRC Properties are still at the initial stage of development and construction work, the future earnings for the Group cannot be determined at this stage. That said, the Directors expect to realise returns from pre-sales of part of the PRC Properties as early as the last quarter in 2008. We are of the view that the PRC Properties may provide additional sources of earning in the future.

Liquidity

As at 30 June 2007, the Group had cash and bank balances of approximately HK$3,682.3 million and pledged bank deposits of approximately HK$24.6 million. Bank loans due within one year amounted to approximately HK$656.1 million. Upon Completion, the Group will receive estimated total proceeds of approximately HK$1,228.6 million from the sale of equity interests in the PRC Companies to KHL and AG. It is intended that such proceeds will be applied for expansion of the Group’s property portfolio in China, general working capital and, or to repay bank borrowings. As at 30 June 2007, the Group had total undrawn bank loan and overdraft facilities of HK$10,725 million.

– 36 –

LETTER FROM THE INDEPENDENT FINANCIAL ADVISER

The Directors expect that the Group’s funding for the PRC Properties will be sourced from the Group’s internal cash reserves and, or external bank borrowings. We are of the opinion that the Reorganization allows the Company to maintain its working capital at a reasonable level during the investment period of the PRC Companies.

Gearing

Based on the unaudited financial statements of the Group as at 30 June 2007, the gearing ratio of the Group was approximately 26%. Upon Completion, the Group will have a maximum commitment of HK$19,972 million if the KPL Resolution is passed and the AG Resolutions are not passed. Depending on the period in which the Group is required to contribute to the PRC Properties and the results of the intended pre-sale of the properties development, the investment in the PRC Properties will have the effect of increasing the gearing ratio of the Group if a large part of the commitment is financed by external bank borrowings.

Recommendation

Having considered the principal factors and reasons for the disposal of equity interests in the PRC Companies to KHL and AG by the Group and the formation of joint venture among the Parties in respect of such PRC Companies, we consider the disposal and the formation of the joint venture under the Amended Framework Reorganization Agreement are on normal commercial terms, in the ordinary and usual course of business, and are fair and reasonable and in the interests of the Company and its shareholders as a whole. Accordingly, we recommend the Independent Board Committee to advise the Independent Shareholders to vote in favour of the KPL Resolution to be proposed at the Special General Meeting to approve the Amended Framework Reorganization Agreement and the transactions contemplated thereunder.

Yours faithfully, for and on behalf of

Anglo Chinese Corporate Finance, Limited Stephanie Wong Director

– 37 –

APPENDIX I VALUATION REPORT ON THE PRC PROPERTIES

The following is the text of the letter, summary of valuations and valuation certificates received from DTZ Debenham Tie Leung Limited, an independent property valuer, in connection with its opinion of value of the property interests as at 31 October 2007 prepared for the purpose of incorporation in this circular.

==> picture [87 x 82] intentionally omitted <==

10th Floor Jardine House 1 Connaught Place Central Hong Kong

31 January 2008

The Directors Kerry Properties Limited 13th Floor Cityplaza 3 14 Taikoo Wan Road Taikoo Shing Hong Kong

Dear Sirs,

Re: Portfolio Valuation

Instruction, Purpose & Date of Valuation

We refer to your instruction for us to value the interests in the properties held by Kerry Properties Limited (referred to as the “Company” or “KPL”) or its subsidiaries (together referred to as the “KPL Group”) in the People’s Republic of China (the “PRC”). We confirm that we have carried out inspections, made relevant enquiries and obtained such further information as we consider necessary for the purpose of providing KPL with our opinion of the market values of the property interests as at 31 October 2007 (the “Date of Valuation”).

Definition of Market Value

Our valuation of each of the property interests is our opinion of its market value in accordance with The HKIS Valuation Standards on Properties (First Edition 2005) issued by The Hong Kong Institute of Surveyors which is defined as the estimated amount for which a property should exchange on the date of valuation between a willing buyer and a willing seller in an arm’s-length transaction after proper marketing wherein the parties had each acted knowledgeably, prudently and without compulsion.

– 38 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

Valuation Assumptions

Our valuations exclude an estimated price inflated or deflated by special terms or circumstances such as atypical financing, sale and leaseback arrangement, special considerations or concessions granted by anyone associated with the sale, or any element of special value.

We have relied on the information given by the KPL Group and the opinion of the PRC legal adviser, Zhong Lun Law Firm ( ), of the KPL Group, regarding the titles of the properties and the interests of the KPL Group in the properties. The status of titles and grants of major approvals and licences, in accordance with the information provided by the KPL Group and the PRC legal opinion are set out in the notes in the valuation certificates.

No allowance has been made in our valuations of the property interests for any charges, mortgages or amounts owing on the property interests nor for any expenses or taxation which may be incurred in effecting a sale. Unless otherwise stated, it is assumed that the properties are free from encumbrances, restrictions and outgoings of an onerous nature which could affect their values.

Method of Valuation

In valuing the property interests, we have adopted the Direct Comparison Approach by making reference to comparable sales evidence as available in the relevant market.

We have valued the properties in Group I in accordance with the KPL Group’s respective latest development proposals provided to us.

In valuing the property interests, we have complied with the requirements set out in Chapter 5 and Practice Note 12 of the Listing Rules and The HKIS Valuation Standards on Properties (First Edition 2005) of The Hong Kong Institute of Surveyors.

Source of Information

In the course of our valuation, we have relied to a very considerable extent on the information given by the KPL Group and the opinion of the legal adviser to the KPL Group as to PRC laws regarding the title to the property interests in the PRC. We have accepted advice given to us on such matters as planning approvals or statutory notices, easements, tenure, identification of property, particulars of occupancy, development schemes, site and floor areas and all other relevant matters.

Dimensions, measurements and areas included in the valuation certificates are based on information provided to us and are therefore only approximations. We have no reason to doubt the truth and accuracy of the information provided to us by the KPL Group which is material to the valuation. We were also advised by the KPL Group that no material facts have been omitted from the information provided.

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VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

Title Investigation

We have been provided with extracts of documents relating to the property interests in the PRC. However, we have not searched the original documents to ascertain ownership or to verify any amendments which may not appear on the copies handed to us. We are also unable to ascertain the KPL Group’s title to the property interests in the PRC and we have therefore relied on the advice given by the KPL Group and the opinion of the legal adviser to the KPL Group as to PRC laws regarding the interests of the KPL Group in the properties.

Site Inspection

We have inspected the exterior and, wherever possible, the interior of the properties. However, we have not carried out investigations on site to determine the suitability of the soil conditions and the services etc. for any development. Also, no structural survey has been made, but in the course of our inspections, we did not note any serious defects. We are not, however, able to report whether the properties are free of rot, infestation or any other structural defect. Our valuations are prepared on the assumption that these aspects are satisfactory and that no extraordinary expenses or delays will be incurred during the construction period. Unless otherwise stated, we have not been able to carry out detailed on-site measurements to verify the site areas of the properties and we have assumed that the areas shown on the documents handed to us are correct.

Currency

Unless otherwise stated, all sums stated in our valuation certificates are in Renminbi (“RMB”), the official currency of the PRC.

The valuation summary and valuation certificates are attached.

Yours faithfully, for and on behalf of DTZ Debenham Tie Leung Limited Andrew K F Chan Registered Professional Surveyor (GP) Registered China Real Estate Appraiser MSc., M.H.K.I.S., M.R.I.C.S.

Director

Note: Mr. Andrew K F Chan is a Registered Professional Surveyor who has over 20 years of experience in the valuation of properties in the PRC.

– 40 –

APPENDIX I VALUATION REPORT ON THE PRC PROPERTIES

SUMMARY OF VALUATIONS

Property interests

Capital value in existing state as at 31 October 2007 (RMB)

Group I – Property interests held for future development by the KPL Group in the PRC

==> picture [426 x 442] intentionally omitted <==

----- Start of picture text -----

|||||||||||
|---|---|---|---|---|---|---|---|---|---|
|1.|A|plot|of|land|(Lot|No.|GX49(252/211):|2007-037)|794,380,000|
|situated|at|Dengta|Village|Lot|8|(|),|
|Huayin|Village|Lot|10|(|)|and|
|Huayin|Village|Lot|9|(|),|
|Hi-Tech|Industrial|Development|Zone,|
|Chengdu,|
|Sichuan|Province,|
|the|PRC|
|(|)|
|(Kerry|Development|(Chengdu)|Ltd.)|
|2.|A|plot|of|land|(Lot|No.|GX50(252/211):|2007-038)|664,200,000|
|situated|at|Dengta|Village|Lot|8|(|),|
|Huayin|Village|Lot|10|(|)|and|
|Huayin|Village|Lot|9|(|),|
|Hi-Tech|Industrial|Development|Zone,|
|Chengdu,|
|Sichuan|Province,|
|the|PRC|
|(|)|
|(Wealthy|Plaza|Development|(Chengdu)|Ltd.)|
|3.|A|plot|of|land|(Lot|No.|272-2)|771,000,000|
|situated|at|West|Section|of|Hebei|Street|(|),|
|Haigang|District,|
|Qinhuangdao,|
|Hebei|Province,|
|the|PRC|

----- End of picture text -----

( )

(Lucky Billion Development (Qinhuangdao) Co., Ltd.)

– 41 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

Capital value in existing state as at Property interests 31 October 2007 (RMB) 4. A plot of land (Lot No. 253-3) 595,000,000 situated at West Section of Hebei Street ( ), Haigang District, Qinhuangdao, Hebei Province, the PRC ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.) 5. A plot of land (Lot No. 2007-053, No. 8 Golden Corridor) 2,820,000,000 situated at the east side of Qingnian Street ( ), Shenhe District, Shenyang, Liaoning Province, the PRC

Property interests

(Kerry (Shenyang) Real Estate Development Co., Ltd.)

Sub-total: 5,644,580,000

Group II – Property interests held for owner-occupation by the KPL Group in the PRC

1. Room No. 3601 on Level 31 and 1,317,000 Room No. 3701 on Level 32, Unit 2, Block 3, Sunshine Coast, situated at the junction of Hebin Road ( ) and Wenti Road ( ), Haigang District, Qinhuangdao, Hebei Province, the PRC

( )

(Lucky Billion Development (Qinhuangdao) Co., Ltd.)

– 42 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

==> picture [426 x 383] intentionally omitted <==

----- Start of picture text -----

||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Capital|value|in|
|existing|state|as|at|
|Property|interests|31|October|2007|
|(RMB)|
|7.|Room|No.|2001|on|Level|17|and|1,228,000|
|Room|No.|2901|on|Level|25,|
|Unit|2,|Block|3,|Sunshine|Coast,|
|situated|at|the|junction|of|Hebin|Road|(|)|and|
|Wenti|Road|(|),|
|Haigang|District,|
|Qinhuangdao,|
|Hebei|Province,|
|the|PRC|
|(|)|
|(Sky|Fair|Development|(Qinhuangdao)|Co.,|Ltd.)|
|8.|Room|No.|6|on|Level|11,|Room|No.|7|on|Level|18|and|2,250,000|
|Room|No.|7|on|Level|26,|Unit|2,|Block|13,|
|Diwang|International|Club,|
|No.|19|Wenyi|Road|(|),|
|Shenhe|District,|
|Shenyang,|
|Liaoning|Province,|
|the|PRC|

----- End of picture text -----

(Kerry (Shenyang) Real Estate Development Co., Ltd.)

==> picture [193 x 45] intentionally omitted <==

----- Start of picture text -----

|||
|---|---|
|Sub-total:|4,795,000|
|Grand-total:|5,649,375,000|

----- End of picture text -----

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VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

VALUATION CERTIFICATE

Group I – Property interests held for future development by the KPL Group in the PRC

Property interest Description and tenure 1. A plot of land The property comprises a plot of (Lot No. land with a site area of GX49(252/211): approximately 46,130.95 sq.m. 2007-037) situated at Dengta Village According to Contract for the Lot 8 ( ), Grant of the State-owned Land Huayin Village Lot Use Rights, the property has a 10 ( ) permitted total gross floor area and Huayin Village of 193,750 sq.m. Lot 9 ( ), Hi-Tech Industrial The land use right of the Development property is agreed to be granted Zone, for a term for 70 years for Chengdu, residential use and a term of 40 Sichuan Province, years for commercial use. the PRC

Capital value in Particulars of existing state as at occupancy 31 October 2007 The property is RMB794,380,000 currently a vacant site. (Please see Note 1)

( ) (Kerry Development (Chengdu) Ltd.*)

Notes:

• (1) The relevant Certificate for the Use of State-owned Land has not been issued. We have prepared the capital value of the property interest in existing state as at 31 October 2007 assuming all relevant title certificates have been obtained.

• (2) According to Contract for the Grant of the State-owned Land Use Rights No. (2007) 17 entered into between Chengdu Land Resources Bureau (the “Grantor”) and ( ) (Kerry Development (Chengdu) Ltd.*) (the “Grantee”), a wholly-owned subsidiary of KPL, on 11 September 2007, the land use rights with a site area of approximately 46,130.95 sq.m. is agreed to be granted to the Grantee as follows:

Location : Lot 8 of Dengta Village, Lots 10 and 9 of Huayin Village, Hi-Tech Industrial Development Zone Lot No. : GX49(252/211): 2007-037 Granted Site Area : 46,130.95 sq.m. Land Use : Residential (Urban mixed) Land Use Term : 70 years for residential use and 40 years for commercial use from the date of this contract signed Construction Density : Not exceed 30% (Residential portion: Plot ratio shall not exceed 4.2 and construction density shall not exceed 18%, gross floor area of commercial use shall not exceed 20% of the permitted plot ratio gross floor area)

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VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

Green Belt Area Ratio	:	Not less than 25%
Type of Development	:	Not less than 70% of the total gross floor area should be designated for
		residential unit below 90 sq.m.
Height Restriction	:	The height of main building shall not exceed the height restriction of
		airport obstacles
Construction Period	:	From 13 January 2008 to 13 January 2010
Land Grant Fee and	:	RMB581,249,760
Payment Schedule		(RMB174,374,928 (30% of the land grant fee) shall be paid			at the date
		of contract signed. RMB174,374,928 shall	be	paid	before	13
		September 2007 and RMB232,499,904 shall be	paid	before	13 January
		2008)

The Certificate for the Use of State-owned Land should be applied within 30 days after land grant fee is fully settled; and the Certificate for the Use of State-owned Land should be issued within 30 days following the application.

• (3) According to Business Licence No. Qi Du Chuan Rong Zong Zi Di No. 004371 ( 004371 ), ( ) (Kerry Development (Chengdu) Ltd.*) was established with a registered capital of RMB675,000,000 for a valid period from 6 August 2007 to 26 July 2008.

• (4) The PRC legal opinion states that:

• (i) According to the Contract for the Grant of the State-owned Land Use Rights (Note 2), the land use rights of the property is agreed to be granted to ( ) (Kerry Development (Chengdu) Ltd.*), comprising a total site area of 46,130.95 sq.m., for a term of 70 years for residential use and 40 years for commercial use. The plot ratio of residential shall not exceed 4.2 and the gross floor area of commercial shall not exceed 20% of the permitted total gross floor area.

• (ii) The Contract for the Grant of the State-owned Land Use Rights (Note 2) is valid and legally binding on the contract parties. ( ) (Kerry Development (Chengdu) Ltd.*) can legitimately obtain the land use rights of the property subject to the terms and conditions under the land granting documents, including but not limited to the full payment of the land premium in accordance with their respective terms under the land granting documents.

• (iii) Up to the issuance date of the PRC legal opinion, the steps, procedures and actions taken by ( ) (Kerry Development (Chengdu) Ltd.*) for purpose of acquiring the

• land use rights of the property are in conformity with the PRC laws and shall have the full legal effect pursuant to the relevant PRC laws.

• (iv) ( ) (Kerry Development (Chengdu) Ltd.*) is entitled to transfer the land use rights of the property subject to the land use rights have been obtained and has invested in and developed the land pursuant to the land granting documents and has invested 25% of the total investment amount thereon.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by the KPL Group and the PRC legal opinion are as follows:

Certificate for the Use of State-owned Land	No
Contract for the Grant of the State-owned Land Use Rights	Yes
Red-line Drawing	Yes
Business Licence	Yes

– 45 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

VALUATION CERTIFICATE

Capital value in Particulars of existing state as at Property interest Description and tenure occupancy 31 October 2007 2. A plot of land The property comprises a plot of The property is RMB664,200,000 (Lot No. land with a site area of currently a vacant GX50(252/211): approximately 38,617.84 sq.m. site. (Please see Note 1) 2007-038) situated at Dengta Village According to Contract for the Lot 8 ( ), Grant of the State-owned Land Huayin Village Lot Use Rights, the property has a 10 ( ) permitted total gross floor area and Huayin Village of 162,195 sq.m. Lot 9 ( ), Hi-Tech Industrial The land use right of the Development property is agreed to be granted Zone, for a term for 70 years for Chengdu, residential use and a term of 40 Sichuan Province, years for commercial use. the PRC

( ) (Wealthy Plaza Development (Chengdu) Ltd.*)

Notes:

• (1) The relevant Certificate for the Use of State-owned Land has not been issued. We have prepared the capital value of the property interest in existing state as at 31 October 2007 assuming all relevant title certificates have been obtained.

• (2) According to Contract for the Grant of the State-owned Land Use Rights No. (2007) 18 entered into between Chengdu Land Resources Bureau (the “Grantor”) and ( ) (Wealthy Plaza Development (Chengdu) Ltd.*) (the “Grantee”), a wholly-owned subsidiary of KPL, on 31 October 2007, the land use rights with a site area of approximately 38,617.84 sq.m. is agreed to be granted to the Grantee as follows:

Location : Lot 8 of Dengta Village, Lots 10 and 9 of Huayin Village, Hi-Tech Industrial Development Zone Lot No. : GX50(252/211): 2007-038 Granted Site Area : 38,617.84 sq.m. Land Use : Residential (Urban mixed) Land Use Term : 70 years for residential use and 40 years for commercial use from the date of this contract signed Construction Density : Not exceed 30% (Residential portion: Plot ratio shall not exceed 4.2 and construction density shall not exceed 18%, gross floor area of commercial use shall not exceed 20% of the permitted plot ratio gross floor area)

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VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

Green Belt Area Ratio	:	Not less than 25%
Type of Development	:	Not less than 70% of the total gross floor area should be designated for
		residential unit below 90 sq.m.
Height Restriction	:	The height of main building shall not exceed the height restriction of
		airport obstacles
Construction Period	:	From 15 March 2008 to 15 March 2010
Land Grant Fee and	:	RMB492,377,800
Payment Schedule		(RMB147,713,340 (30% of the land grant fee) shall be paid at the date
		of contract signed. RMB147,713,340 shall be paid before 31 October
		2007 and RMB196,951,120 shall be paid before 15 January 2008)

The Certificate for the Use of State-owned Land should be applied within 30 days after land grant fee is fully settled; and the Certificate for the Use of State-owned Land should be issued within 30 days following the application.

• (3) According to Business Licence No. Qi Du Chuan Rong Zong Zi Di No. 004397 ( 004397 ), ( ) (Wealthy Plaza Development (Chengdu) Ltd.*) was established with a registered capital of RMB750,000,000 for a valid period from 5 September 2007 to 3 September 2008.

• (4) The PRC legal opinion states that:

• (i) According to the Contract for the Grant of the State-owned Land Use Rights (Note 2), the land use rights of the property is agreed to be granted to ( ) (Wealthy Plaza Development (Chengdu) Ltd.*), comprising a total site area of 38,617.84 sq.m., for a term of 70 years for residential use and 40 years for commercial use. The plot ratio of residential shall not exceed 4.2 and the gross floor area of commercial shall not exceed 20% of the permitted total gross floor area.

• (ii) The Contract for the Grant of the State-owned Land Use Rights (Note 2) is valid and legally binding on the contract parties. ( ) (Wealthy Plaza Development (Chengdu) Ltd.*) can legitimately obtain the land use rights of the property subject to the terms and conditions under the land granting documents, including but not limited to the full payment of the land premium in accordance with their respective terms under the land granting documents.

• (iii) Up to the issuance date of the PRC legal opinion, the steps, procedures and actions taken by ( ) (Wealthy Plaza Development (Chengdu) Ltd.*) for purpose of

• acquiring the land use rights of the property are in conformity with the PRC laws and shall have the full legal effect pursuant to the relevant PRC laws.

• (iv) ( ) (Wealthy Plaza Development (Chengdu) Ltd.*) is entitled to transfer the land use rights of the property subject to the land use rights have been obtained and has invested in and developed the land pursuant to the land granting documents and has invested 25% of the total investment amount thereon.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by the KPL Group and the PRC legal opinion are as follows:

Certificate for the Use of State-owned Land	No
Contract for the Grant of the State-owned Land Use Rights	Yes
Red-line Drawing	Yes
Business Licence	Yes

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VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

VALUATION CERTIFICATE

Property interest

Description and tenure

1. A plot of land (Lot The property comprises a plot of No. 272-2) situated land with a site area of at West Section of approximately 113,393.31 sq.m. Hebei Street ( ), According to Contract for the Haigang District, Grant of the State-owned Land Qinhuangdao, Use Rights, the property has a Hebei Province, permitted total gross floor area the PRC of 291,000 sq.m.

Capital value in Particulars of existing state as at occupancy 31 October 2007 The property is RMB771,000,000 currently a vacant site. (Please see Note 1)

( ) The land use right of the property is agreed to be granted (Lucky Billion from 18 October 2007 for a term Development for 70 years for residential use (Qinhuangdao) and a term of 40 years for Co., Ltd.) commercial use.

Notes:

• (1) The relevant Certificate for the Use of State-owned Land has not been issued. We have prepared the capital value of the property interest in existing state as at 31 October 2007 assuming all relevant title certificates have been obtained.

• (2) According to Contract for the Grant of the State-owned Land Use Rights and its supplementary agreement signed between Qinhuangdao Land Resources Bureau (the “Grantor”) and ( ) (Lucky Billion Development (Qinhuangdao) Co., Ltd.) (the “Grantee”), a wholly-owned

• subsidiary of KPL, on 31 May 2007, the land use rights with a site area of approximately 113,393.31 sq.m. is agreed to be granted to the Grantee as follows:

Location : West Section of Hebei Street Lot No. : 272-2 Site Area : 113,393.31 sq.m. Land Use : Residential and commercial Land Use Term : From 18 October 2007, 70 years for residential use and 40 years for commercial use Development Scale : 291,000 sq.m. (290,000 sq.m. for residential use and 1,000 sq.m. for commercial use) Construction Period : Commence before 18 October 2007 with an extension of not later than 18 January 2008 in the case that the Grantee applying 30 days in advance to the deadline and complete before 18 April 2010, with an extension of not later than 1 year Land Grant Fee and : RMB756,600,000 Payment Schedule (A deposit of RMB10 million was paid, the remaining land grant fee shall be paid before 18 January 2008)

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VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

• Handover of the : The Grantor is agreed to handover the granted land, which will has Granted Land been leveled in contour and connected with roads, water and electricity supply for construction works, to the Grantee before 18 October 2007

The Certificate for the Use of State-owned Land should be applied within 30 days after land grant fee is fully settled; and the Certificate for the Use of State-owned Land should be issued within 30 days following the application.

• (3) According to Business Licence No. 130300400003844, ( ) (Lucky Billion Development (Qinhuangdao) Co., Ltd.) was established with a registered capital of RMB230,000,000 for a valid period from 17 May 2007 to 16 May 2008 (The company is applying for the increase of the registered capital to RMB882,000,000).

• (4) The PRC legal opinion states that:

• (i) According to the Contract for the Grant of the State-owned Land Use Rights and its supplementary agreement (Note 2), the land use rights of the property is agreed to be granted to ( ) (Lucky Billion Development (Qinhuangdao) Co., Ltd.), comprising a

• total site area of 113,393.31 sq.m., for a term of 70 years for residential use and 40 years for commercial use. The permitted gross floor area of residential shall be 290,000 sq.m. and commercial shall be 1,000 sq.m.

• (ii) The Contract for the Grant of the State-owned Land Use Rights and its supplementary agreement (Note 2) are valid and legally binding on the contract parties. ( ) (Lucky Billion Development (Qinhuangdao) Co., Ltd.) can legitimately obtain the land use rights of the property subject to the terms and conditions under the land granting documents, including but not limited to the full payment of the land premium in accordance with their respective terms under the land granting documents.

• (iii) Up to the issuance date of the PRC legal opinion, the steps, procedures and actions taken by ( ) (Lucky Billion Development (Qinhuangdao) Co., Ltd.) for purpose

• of acquiring the land use rights of the property are in conformity with the PRC laws and shall have the full legal effect pursuant to the relevant PRC laws.

• (iv) ( ) (Lucky Billion Development (Qinhuangdao) Co., Ltd.) is entitled to transfer the land use rights of the property subject to the land use rights have been obtained and has invested in and developed the land pursuant to the land granting documents and has invested 25% of the total investment amount thereon.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by the KPL Group and the PRC legal opinion are as follows:

Certificate for the Use of State-owned Land No Contract for the Grant of the State-owned Land Use Rights and its supplementary agreement Yes Red-line Drawing Yes Business Licence Yes

– 49 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

VALUATION CERTIFICATE

Property interest Description and tenure

1. A plot of land (Lot The property comprises a plot of No. 253-3) situated land with a site area of at West Section of approximately 92,250.92 sq.m. Hebei Street ( ), According to Contract for the Haigang District, Grant of the State-owned Land Qinhuangdao, Use Rights, the property has a Hebei Province, permitted total gross floor area the PRC of 151,200 sq.m.

Capital value in Particulars of existing state as at occupancy 31 October 2007 The property is RMB595,000,000 currently a vacant site. (Please see Note 1)

( ) The land use right of the (Sky Fair property is agreed to be granted Development from 18 October 2007 for a term (Qinhuangdao) for 70 years for residential use. Co., Ltd.)

Notes:

• (1) The relevant Certificate for the Use of State-owned Land has not been issued. We have prepared the capital value of the property interest in existing state as at 31 October 2007 assuming all relevant title certificates have been obtained.

• (2) According to Contract for the Grant of the State-owned Land Use Rights and its supplementary agreement signed between Qinhuangdao Land Resources Bureau (the “Grantor”) and ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.) (the “Grantee”), a wholly-owned subsidiary

• of KPL, on 31 May 2007, the land use rights with a site area of approximately 92,250.92 sq.m. is agreed to be granted to the Grantee as follows:

Location : West Section of Hebei Street Lot No. : 253-3 Site Area : 92,250.92 sq.m. Land Use : Residential Land Use Term : From 18 October 2007, 70 years for residential use Development Scale : 151,200 sq.m. for residential use Construction Period : Commence before 18 October 2007 with an extension of not later than 18 January 2008 in the case that the Grantee applying 30 days in advance to the deadline and complete before 18 April 2010, with an extension of not later than 1 year Land Grant Fee and : RMB583,632,000 Payment Schedule (A deposit of RMB10 million was paid, the remaining land grant fee shall be paid before 18 January 2008)

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VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

Handover of the Granted : The Grantor is agreed to handover the granted land, which will has Land been leveled in contour and connected with roads, water and electricity supply for construction works, to the Grantee before 18 October 2007

The Certificate for the Use of State-owned Land should be applied within 30 days after land grant fee is fully settled; and the Certificate for the Use of State-owned Land should be issued within 30 days following the application.

• (3) According to Business Licence No. 130300400003869, ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.) was established with a registered capital of RMB230,000,000 for a valid period from 17 May 2007 to 16 May 2008 (The company is applying for the increase of the registered capital to RMB735,000,000).

• (4) The PRC legal opinion states that:

• (i) According to the Contract for the Grant of the State-owned Land Use Rights and its supplementary agreement (Note 2), the land use rights of the property is agreed to be granted to ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.), comprising a total

• site area of 92,250.92 sq.m., for a term of 70 years for residential use. The permitted gross floor area shall be 151,200 sq.m. for residential use.

• (ii) The Contract for the Grant of the State-owned Land Use Rights and its supplementary agreement (Note 2) are valid and legally binding. ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.) can legitimately obtain the land use rights of the property subject to the terms and conditions under the land granting documents, including but not limited to the full payment of the land premium in accordance with their respective terms under the land granting documents.

• (iii) Up to the issuance date of the PRC legal opinion, the steps, procedures and actions taken by ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.) for purpose of

• acquiring the land use rights of the property are in conformity with the PRC laws and shall have the full legal effect pursuant to the relevant PRC laws.

• (iv) ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.) is entitled to transfer the land use rights of the property subject to the land use rights have been obtained and has invested in and developed the land pursuant to the land granting documents and has invested 25% of the total investment amount thereon.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by the KPL Group and the PRC legal opinion are as follows:

Certificate for the Use of State-owned Land No Contract for the Grant of the State-owned Land Use Rights and its supplementary agreement Yes Red-line Drawing Yes Business Licence Yes

– 51 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

VALUATION CERTIFICATE

Property interest Description and tenure

1. A plot of land (Lot The property comprises a plot No. 2007-053, No. land with a site area of 8 Golden Corridor) approximately 172,694.30 sq.m. situated at the east side of According to Contract for the Qingnian Street Grant of the State-owned Land ( ), Use Rights, the property has a Shenhe District, permitted total gross floor area Shenyang, of 2,072,332 sq.m. Liaoning Province, the PRC The land use right of the property is agreed to be granted for a term for 50 years for residential use and a term of 40

(Kerry (Shenyang) years for commercial use. Real Estate Development Co., Ltd.)

The property comprises a plot of land with a site area of approximately 172,694.30 sq.m.

Capital value in Particulars of existing state as at occupancy 31 October 2007 The property has RMB2,820,000,000 some structures and buildings, which are (Please see Note 1) pending for demolition.

Notes:

• (1) The relevant Certificate for the Use of State-owned Land has not been issued. We have prepared the capital value of the property interest in existing state as at 31 October 2007 assuming all relevant title certificates have been obtained.

• (2) According to Contract for the Grant of the State-owned Land Use Rights signed between Shenyang Planning and Land Resources Bureau (the “Grantor”) and (Kerry (Shenyang) Real Estate Development Co., Ltd.) (the “Grantee”), a wholly-owned subsidiary of KPL, on 29 August 2007, the land use rights with a site area of approximately 172,694.30 sq.m. is agreed to be granted to the Grantee as follows:

Location : The east side of Qingnian Street, Shenhe District, Shenyang Granted Site Area : 172,694.30 sq.m. Land Use : Residential and commercial Land Use Term : 50 years for residential use and 40 years for commercial use Plot Ratio : Shall not exceed 12 Commercial Portion : 70% Construction Density : Subject to the approval from Planning Authority Height Restriction : Subject to the height restriction of obstacle to airport Construction Period : The Company shall commence the construction on the Land within 6 months from obtaining the Planning Permit for Construction Works

– 52 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

Demolition : The Grantor shall be responsible for the demolition of the existing buildings on the site, and the relocation of and compensation to the existing occupants. The Grantor shall deliver vacant possession of the leveled land to the Grantee within 31 months from date of the Grantee paid the 1st payment of land grant fee Land Grant Fee and : RMB2,764,835,743 Payment Schedule (The Grantee shall paid the 1st payment of RMB500 million at the date of transaction. Pay up to 30% of the land grant fee within 10 days from the date of transaction. Pay up to 50% of the land grant fee within 10 days when the demolition works were completed 35%. Pay up to 70% of the land grant fee within 10 days when the relocation and demolition works were completed 55%. Pay up to 90% of the land grant fee within 10 days when the relocation and demolition works were completed 75%. Pay up to 100% of the land grant fee within 10 days when the relocation and demolition works were completed 85%)

The Certificate for the Use of State-owned Land should be applied within 30 days after the land premium is settled.

• (3) According to Planning Permit for Construction Land No. Shen Gui Tu Zheng Zi 2007 Year 0143 issued by Shenyang Planning and Land Resources Bureau on 17 July 2007, (Kerry (Shenyang) Real Estate Development Co., Ltd.), a wholly-owned subsidiary of KPL, is approved to use the property with a site area of approximately 172,723.70 sq.m. for residential and commercial development as follows:

Project Location	:	The east side of Qingnian Street, Shenhe District, Shenyang
Project Name	:	Residential and Commercial
Site Area	:	172,723.70 sq.m. for the project development area, 40,500 sq.m. for
		road area and 9,500 sq.m. for green belt area
Land Use	:	Residential and commercial
Development Scale	:	2,072,600 sq.m.
Plot Ratio	:	Not exceed 12
Site Coverage	:	50%
Commercial Area	:	70%
Ratio
Green Belt Area Ratio	:	Not less than 20%

• (4) According to Business Licence No. 210100403000120, (Kerry (Shenyang) Real Estate Development Co., Ltd.) was established with a registered capital of RMB2,457,500,000 for a valid period from 13 June 2007 to 12 June 2057.

• (5) The PRC legal opinion states that:

• (i) According to the Contract for the Grant of the State-owned Land Use Rights (Note 2), the land use rights of the property is agreed to be granted to (Kerry (Shenyang) Real Estate Development Co., Ltd.), comprising a total site area of 172,694.30 sq.m., for a term of 50 years for residential use and 40 years for commercial use. The plot ratio shall not exceed 12.

– 53 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

• (ii) The Contract for the Grant of the State-owned Land Use Rights (Note 2) is valid and legally binding on the contract parties. (Kerry (Shenyang) Real Estate Development Co., Ltd.) can legitimately obtain the land use rights of the property subject to the terms and conditions under the land granting documents, including but not limited to the full payment of the land premium in accordance with their respective terms under the land granting documents.

• (iii) Up to the issuance date of the PRC legal opinion, the steps, procedures and actions taken by (Kerry (Shenyang) Real Estate Development Co., Ltd.) for

• purpose of acquiring the land use rights of the property are in conformity with the PRC laws and shall have the full legal effect pursuant to the relevant PRC laws.

• (iv) (Kerry (Shenyang) Real Estate Development Co., Ltd.) is entitled to transfer the land use rights of the property subject to the land use rights have been obtained and has invested in and developed the land pursuant to the land granting documents and has invested 25% of the total investment amount thereon.

• (6) The status of the title and grant of major approvals and licences in accordance with the information provided by the KPL Group and the PRC legal opinion are as follows:

Certificate for the Use of State-owned Land No Contract for the Grant of the State-owned Land Use Rights Yes Planning Permit for Construction Land Yes Red-line Drawing Yes Business Licence Yes

– 54 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

VALUATION CERTIFICATE

Group II – Property interests held for owner-occupation by the KPL Group in the PRC

==> picture [426 x 347] intentionally omitted <==

----- Start of picture text -----

|||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Capital|value|in|
|Particulars|of|existing|state|as|at|
|Property|interest|Description|and|tenure|occupancy|31|October|2007|
|6.|Room|No.|3601|on|The|property|comprises|2|The|property|is|under|RMB1,317,000|
|Level|31|and|residential|units|of|Unit|2,|Block|development.|
|Room|No.|3701|on|3,|Sunshine|Coast.|The|building|(Please|see|Note|1)|
|Level|32,|Unit|2,|comprises|32|storeys|plus|a|
|Block|3,|Sunshine|basement,|which|will|be|
|Coast,|situated|at|completed|in|2008.|
|the|junction|of|
|Hebin|Road|The|property|has|a|total|gross|
|(|)|and|floor|area|of|196.82|sq.m.|as|
|Wenti|Road|follows:|
|(|),|Gross|Floor|
|Haigang|District,|Unit|Area|
|Qinhuangdao,|(sq.m.)|
|Hebei|Province,|
|the|PRC|Room|No.|3601|on|98.41|
|Level|31|
|(|)|Room|No.|3701|on|98.41|
|(Lucky|Level|32|
|Billion|
|Development|Total|196.82|
|(Qinhuangdao)|
|Co.,|Ltd.)|
|According|to|the|Apartment|Sales|
|Contracts,|the|land|use|rights|of|
|the|property|have|been|granted|
|for|a|term|of|70|years|from|22|
|September|2002|to|22|September|
|2072|for|residential|use.|

----- End of picture text -----

Notes:

• (1) The relevant Real Estate Title Certificate has not been issued. We have prepared the capital value of the property interest in existing state as at 31 October 2007 assuming all relevant title certificates have been obtained.

• (2) According to the 2 Apartment Sales Contracts entered into between ( ) (Lucky Billion Development (Qinhuangdao) Co., Ltd.) (the “Purchaser”) and Qinhuangdao Guozheng Real Estate Development Co., Ltd. (the “Vendor”), the Vendor is agreed to sell 2 apartments with a total gross floor area of 196.82 sq.m. for a land use term of 70 years from 22 September 2002 to 22 September 2072 for residential use to the Purchaser. The details are shown as follows:

==> picture [379 x 117] intentionally omitted <==

----- Start of picture text -----

||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
|Gross|
|No.|Execution|Date|Apartments|Floor|Area|Use|Price|
|(sq.m.)|(RMB)|
|1|21|August|2007|Room|No.|3601|on|Level|31,|98.41|Residential|663,283|
|Unit|2,|Block|3,|
|Sunshine|Coast|
|2|21|August|2007|Room|No.|3701|on|Level|32,|98.41|Residential|653,442|
|Unit|2,|Block|3,|
|Sunshine|Coast|

----- End of picture text -----

– 55 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

• (3) According to Business Licence No. 130300400003844, ( ) (Lucky Billion Development (Qinhuangdao) Co., Ltd.) was established with a registered capital of RMB230,000,000 for a valid period from 17 May 2007 to 16 May 2008. (The company is applying for increase in the registered capital to RMB882,000,000)

• (4) The PRC legal opinion states that:

• (i) According to Apartment Sales Contracts, the property was acquired by way of pre-sold.

• (ii) The Real Estate Title Certificate is yet to be obtained.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by the KPL Group and the PRC legal opinion are as follows:

Real Estate Title Certificate No Apartment Sales Contract Yes Business Licence Yes

– 56 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

VALUATION CERTIFICATE

Property interest Description and tenure

Capital value in Particulars of existing state as at occupancy 31 October 2007

1. Room No. 2001 on The property comprises 2 Level 17 and residential units of Unit 2, Block Room No. 2901 on 3, Sunshine Coast. The building Level 25, Unit 2, comprises 32 storeys plus a Block 3, Sunshine basement, which will be Coast, situated at completed in 2008. the junction of Hebin Road The property has a total gross ( ) and floor area of 196.82 sq.m. as Wenti Road follows: ( ), Gross Floor Haigang District, Unit Area Qinhuangdao, (sq.m.) Hebei Province, the PRC Room No. 2001 on 98.41 Level 17

( ) Room No. 2901 on 98.41 (Sky Fair Level 25

Development (Qinhuangdao) Total 196.82 Co., Ltd.)

The property is under RMB1,228,000 development.

(Please see Note 1)

According to the Apartment Sales Contracts, the land use rights of the property have been granted for a term of 70 years from 22 September 2002 to 22 September 2072 for residential use.

Notes:

• (1) The relevant Real Estate Title Certificate has not been issued. We have prepared the capital value of the property interest in existing state as at 31 October 2007 assuming all relevant title certificates have been obtained.

• (2) According to the 2 Apartment Sales Contracts entered into between ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.) (the “Purchaser”) and Qinhuangdao Guozheng Real Estate Development Co., Ltd. (the “Vendor”), the Vendor is agreed to sell 2 apartments with a total gross floor area of 196.82 sq.m. for a land use term of 70 years from 22 September 2002 to 22 September 2072 for residential use to the Purchaser. The details are shown as follows:

			Gross
No.	Execution Date	Apartments	Floor Area	Use	Price
			(sq.m.)		(RMB)
1	21 August 2007	Room No. 2001 on Level 17,	98.41	Residential	594,396
		Unit 2, Block 3,
		Sunshine Coast
2	21 August 2007	Room No. 2901 on Level 25,	98.41	Residential	633,760
		Unit 2, Block 13,
		Sunshine Coast

– 57 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

• (3) According to Business Licence No. 130300400003869, ( ) (Sky Fair Development (Qinhuangdao) Co., Ltd.) was established with a registered capital of RMB230,000,000 for a valid period from 17 May 2007 to 16 May 2008. (The company is applying for increase in the registered capital to RMB735,000,000)

• (4) The PRC legal opinion states that:

• (i) According to Apartment Sales Contracts, the property was acquired by way of pre-sold.

• (ii) The Real Estate Title Certificate is yet to be obtained.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by the KPL Group and the PRC legal opinion are as follows:

Real Estate Title Certificate No Apartment Sales Contract Yes Business Licence Yes

– 58 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

VALUATION CERTIFICATE

Property interest Description and tenure

Particulars of occupancy

Capital value in existing state as at 31 October 2007

1. Room No. 6 on The property comprises 3 Level 11, Room residential units of Unit 2, Block No. 7 on Level 18 13, Diwang International Club. and Room No. 7 The building comprises 27 on Level 26, storeys plus a basement, which Unit 2, Block 13, was completed in 2006. Diwang International Club, The property has a total gross No. 19 Wenyi floor area of 259.69 sq.m. as Road ( ), follows: Shenhe District, Gross Floor Shenyang, Unit Area Liaoning Province, (sq.m.) the PRC Room No. 6 on 92.57 Level 11 (Kerry (Shenyang) Room No. 7 on 83.54 Real Estate Level 18 Development Co., Room No. 7 on 83.58 Ltd.) Level 26 Total 259.69

The property is RMB2,250,000 currently owneroccupied as staff (Please see Note 1) quarters.

According to the Apartment Sales Contracts, the land use rights of the property have been granted for a term from 25 April 2003 to 14 March 2053 for residential use.

Notes:

• (1) The relevant Real Estate Title Certificate has not been issued. We have prepared the capital value of the property interest in existing state as at 31 October 2007 assuming all relevant title certificates have been obtained.

• (2) According to the 3 Apartment Sales Contracts entered into between (Kerry (Shenyang) Real Estate Development Co., Ltd.) (the “Purchaser”) and Shenyang Ingenious Development Co., Ltd. (the “Vendor”), the Vendor is agreed to sell 3 apartments with a total gross floor area of 259.69 sq.m. for a land use term from 25 April 2003 to 14 March 2053 for residential use to the Purchaser. The details are shown as follows:

			Gross
No.	Execution Date	Apartments	Floor Area	Use	Price
			(sq.m.)		(RMB)
1	5 September 2007	Room 6 on Level 11,	92.57	Residential	794,251
		Unit 2, Block 13,
		Diwang International Club

– 59 –

VALUATION REPORT ON THE PRC PROPERTIES

APPENDIX I

			Gross
No.	Execution Date	Apartments	Floor Area	Use	Price
			(sq.m.)		(RMB)
2	5 September 2007	Room 7 on Level 18,	83.54	Residential	717,617
		Unit 2, Block 13,
		Diwang International Club
3	5 September 2007	Room 7 on Level 26,	83.58	Residential	737,819
		Unit 2, Block 13,
		Diwang International Club

• (3) According to Business Licence No. 210100403000120, (Kerry (Shenyang) Real Estate Development Co., Ltd.) was established with a registered capital of RMB2,457,500,000 for a valid period from 13 June 2007 to 12 June 2057.

• (4) The PRC legal opinion states that:

• (i) According to Apartment Sales Contracts, the property was acquired by way of pre-sold.

• (ii) The Real Estate Title Certificate is yet to be obtained.

• (5) The status of the title and grant of major approvals and licences in accordance with the information provided by the KPL Group and the PRC legal opinion are as follows:

Real Estate Title Certificate No Apartment Sales Contract Yes Business Licence Yes

* for identification purpose only

– 60 –

GENERAL INFORMATION

APPENDIX II

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 each of the Directors and the chief executive of the Company in the Shares, underlying Shares and debentures of the Company or any of its Associated Corporations which were (a) required to be notified to the Company and the 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); or (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 Stock Exchange were as follows:

(i) The Company

Name of Director Mr. ANG Keng Lam Mr. WONG Siu Kong Mr. HO Shut Kan Mr. MA Wing Kai, William Mr. CHAN Wai Ming, William Mr. QIAN Shaohua	Number of ordinary shares Number of underlying ordinary shares held under equity derivatives Total Approximate % of shareholding(6) (Personal interests) (Other interests) 115,367(1) 50,000(5) 2,536,495(2) 2,701,862 0.19 – 50,000(5) 912,000(2) 962,000 0.07 – 50,000(5) – 50,000 0.00 l,020(1) 50,000(5) 720,000(2) 771,020 0.05 4,000(1) 50,000(5) – 54,000 0.00 – 50,000(5) – 50,000 0.00

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(ii) Associated Corporations

			**Number of ordinary **	**Number of ordinary **	shares		Approximate
Name of Associated		Personal	Family	Corporate	Other		% of
Corporation	Name of Director	interests	interests	interests	interests	Total	shareholding
Shang Properties, Inc.	Mr. HO Shut Kan	1,570(1)	–	–	–	1,570	0.00
Kerry Group Limited	Mr. ANG Keng	–	7,300,000(3)	5,540,716(4)	8,000,000(5)	20,840,716	1.36(7)
	Lam
	Mr. WONG Siu	4,617,263(1)	–	8,504,300(4)	–	13,121,563	0.86(7)
	Kong
	Mr. HO Shut Kan	1,388,452(1)	–	–	–	1,388,452	0.09(7)
	Mr. MA Wing	1,010,620(1)	–	–	–	1,010,620	0.07(7)
	Kai, William
	Mr CHAN Wai	100,000(1)	–	–	–	100,000	0.01(7)
	Ming, William
	Mr. QIAN	500,000(1)	–	–	–	500,000	0.03(7)
	Shaohua
	Mr. TSE Kai Chi	600,000(1)	–	–	–	600,000	0.04(7)
Kerry Siam Seaport	Mr. ANG Keng	1(1)	–	–	–	1	0.00
Limited	Lam
	Mr. MA Wing	1(1)	–	–	–	1	0.00
	Kai, William

Notes:

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

• (2) 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 option shares granted by the Company.

• (3) This represents interests held by the relevant director and his spouse through a discretionary trust of which the relevant director and his spouse are contingent beneficiaries.

• (4) This represents interests held by the relevant director through his controlled corporation(s).

• (5) This represents interests held by the relevant director through a discretionary trust of which the relevant director is a contingent beneficiary.

• (6) 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. 1,424,278,046 ordinary shares).

• (7) 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. 1,529,076,815 ordinary shares).

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 and the chief executive of the Company 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 Stock Exchange pursuant to Divisions 7 and 8 of Part XV of the SFO (including interests and short positions which they were taken

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GENERAL INFORMATION

APPENDIX II

or deemed to have under such provisions of the SFO); or (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 Stock Exchange.

(iii) Other

Mr. Ang Keng Lam and Mr. Wong Siu Kong are directors of KHL. Mr. Tse Kai Chi is a senior finance executive of KHL.

Save as disclosed above, as at the Latest Practicable Date, none of the Directors and the chief executive of the Company is a director or employee of companies which have an interest or short position in the shares and underlying shares of the Company which would fall to be disclosed to the Company under the provisions of Divisions 2 and 3 of Part XV of the SFO.

3. DIRECTORS’ INTEREST IN THE AGREEMENTS

• (a) As at the Latest Practicable Date, no Director was materially interested in any contract or arrangement subsisting which is significant in relation to the business of the Group taken as a whole.

• (b) Since the date to which the latest published audited financial statements of the Group were made up, none of the Directors has or has had any direct or indirect interest in any assets acquired or disposed of by or leased to or proposed to be acquired or disposed of by any member of the Group.

4. 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.

5. COMPETING INTERESTS

As at the Latest Practicable Date, the following Directors were considered to have interests in the following Excluded Businesses:

• (a) Mr. Ang Keng Lam was a director of and had interests in shares in AG, the businesses of which consisted of property investment and development, project and property management and leasing 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. AG was listed on the SGX as at the Latest Practicable Date;

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• (b) Messrs. Ang Keng Lam and Wong Siu Kong were directors of and had interests in shares in the 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 business of the Group in Beijing, it is likely that these Excluded Businesses may compete with the hotel business of the Group in Beijing. SA was listed on the Stock Exchange as at the Latest Practicable Date; and

• (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.

The Excluded Businesses are operated and managed by companies (and in the case of AG 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 and at arm’s length from the Excluded Businesses.

6. LITIGATION

Kerry EAS Logistics Limited (“ KEAS ”), a company in which the Group has a 70% interest, is involved in a legal case in which an airline operator, together with five other plaintiffs, including the insurers of the aircraft, are claiming damages, costs and interest, against six defendants, including KEAS, on a joint and several basis in relation to the alleged damages amounting to approximately US$65.6 million (approximately HK$511.7 million at the exchange rate of US$1.00 = HK$7.8) caused to an aircraft in 2000 in respect of the transportation of certain chemical substance.

The alleged damages of approximately US$65.6 million sought by the plaintiffs represent the market value of the aircraft at the time when the damage occurred less the resale value of the aircraft after repairs. According to the pleadings and the affidavits of the five other plaintiffs, the airline operator was compensated by these plaintiffs for 15% of the total loss. The remaining 85% of the total loss was compensated by other reinsurers. These reinsurers have not brought any legal action against the six defendants as at the Latest Practicable Date.

In the court judgment given by Beijing High Level People’s Court (the “ Court ”) on 5 December 2007, it was stated that KEAS had fulfilled all its obligations in this case and it had no liability to any of the plaintiffs. All claims brought by the airline operator together with the other five plaintiffs against KEAS, and the other three defendants were all dismissed by the Court. Judgment was entered by the Court in favour of all plaintiffs against the other two defendants for the amount of US$65.1 million. All the six plaintiffs and one of the defendants had lodged their appeal.

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APPENDIX II

GENERAL INFORMATION

Based on the opinion of the legal advisers to the Group, neither the allegation nor the said amount claimed by the plaintiffs against KEAS was substantiated and the legal advisers to the Group also advised that it is unlikely that KEAS will be found liable for the claimed damages and losses. Accordingly, no provision has been made in the financial statements.

Save as disclosed above, as at the Latest Practicable Date, the Company was not aware of any further development of this legal action. Pursuant to the sale and purchase agreement for the acquisition of KEAS, the vendor of KEAS has undertaken to indemnify the Group in full in respect of all losses, costs, expenses and other responsibilities and liabilities arising in respect of various pieces of litigation against KEAS, including the one referred to above.

As at the Latest Practicable Date, save as disclosed above, 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.

7. EXPERTS AND CONSENTS

The following are the qualifications of the experts who have been named in this circular or has given opinions or advice which are contained in this circular:

Name Qualification Anglo Chinese Corporate a licensed corporation of Types 1 (dealing in Finance, Limited securities), 4 (advising on securities), 6 (advising on corporate finance) and 9 (asset management) regulated activities under the SFO DTZ Debenham Tie Leung professional surveyors and valuers Limited Zhong Lun Law Firm qualified PRC lawyers

Each of the experts has given and has not withdrawn its written consent to the issue of this circular with the inclusion herein of its opinion prepared for the purpose of incorporation in this circular, and the references to its name and opinion in the form and context in which they respectively appear.

Each of the experts has confirmed that as at the Latest Practicable Date, it did not have any beneficial shareholding in any member of the Group or the right (whether legally enforceable or not) to subscribe for or to nominate persons to subscribe for securities in any member of the Group nor did it have any direct or indirect interests in any assets which have since 31 December 2006 (being the date to which the latest published audited accounts of the Group were made up) been acquired or disposed of by or leased to any members of the Group, or were proposed to be acquired or disposed of by or leased to any members of the Group.

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GENERAL INFORMATION

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8. NO MATERIAL ADVERSE CHANGE

Since the date to which the latest published audited accounts of the Company have been made up, there has been no material adverse change in the financial or trading position of the Group.

9. MISCELLANEOUS

• (a) The Qualified Accountant of the Company is Mr. Yu Kam Wah. Mr. Yu is a Fellow of the Hong Kong Institute of Certified Public Accountants, a Fellow of the Association of Chartered Certified Accountants, a member of The American Institute of Certified Public Accountants, and holds a Master of Professional Accounting degree from The Hong Kong Polytechnic University. Mr. Yu is also an associate member of both the Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

• (b) The Secretary of the Company is Ms. Li Siu Ching, Liz. Ms. Li is a solicitor qualified in Hong Kong and holds a Master of Laws from the University of Northumbria at Newcastle, England. Ms. Li is also an associate member of both the Institute of Chartered Secretaries and Administrators and The Hong Kong Institute of Chartered Secretaries.

• (c) The Company’s Hong Kong branch share registrar and transfer office is Tricor Abacus Limited of 26/F, Tesbury Centre, 28 Queen’s Road East, 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.

10. DOCUMENTS AVAILABLE FOR INSPECTION

Copies of the following documents are available for inspection during normal business hours at any weekday (public holidays excepted) at the office of the Company at 13/F., Cityplaza 3, 14 Taikoo Wan Road, Taikoo Shing, Hong Kong up to and including Thursday, 21 February 2008:

• (a) the Framework Reorganization Agreement; and

• (b) the Amendment Agreement.

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NOTICE OF SPECIAL GENERAL MEETING

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

NOTICE IS HEREBY GIVEN that a special general meeting of Kerry Properties Limited (the “ Company ”) will be held at Atrium Room, Level 39, Island Shangri-La Hotel, Pacific Place, Supreme Court Road, Central, Hong Kong on Thursday, 21 February 2008 at 10:00 a.m. for the following purpose:

To consider, and if thought fit, passing with or without modification the following resolution as an ORDINARY RESOLUTION :

“ THAT

• (A) the Framework Reorganization Agreement as amended by the Amendment Agreement (copies of the Framework Reorganization Agreement and the Amendment Agreement have been produced to this meeting marked “A” and “B” respectively and signed by the Chairman hereof for the purpose of identification) and the transactions contemplated thereunder be and are hereby confirmed, ratified and approved; and

• (B) the Board be and is hereby authorised to take all such actions as it considers necessary or desirable to implement and give effect to the Framework Reorganization Agreement as amended by the Amendment Agreement and the transactions contemplated thereunder.

For the purposes of this resolution, the terms “Framework Reorganization Agreement” and “Amendment Agreement” shall have the same definition as defined in the circular to the shareholders of the Company dated 31 January 2008.”

By order of the Board Li Siu Ching, Liz Company Secretary

Hong Kong, 31 January 2008

• for identification purpose only

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NOTICE OF SPECIAL GENERAL MEETING

Head Office and Principal Place

of Business in Hong Kong:

13-14/F, Cityplaza 3

• 14 Taikoo Wan Road

Taikoo Shing

Hong Kong

Notes:

• (1) Every member entitled to attend and vote at the above meeting (or at any adjournment thereof) is entitled to appoint up to two individuals as his proxies to attend and vote instead of him. A proxy need not be a member of the Company. The number of proxies appointed by a clearing house (or its nominee) is not subject to the aforesaid limitation.

• (2) Where there are joint registered holders of any share, any one of such persons may vote at the above meeting (or at any adjournment thereof), either personally or by proxy, in respect of such share as if he were solely entitled thereto; but if more than one of such joint holders be present at the meeting personally or by proxy, that one of the said persons so present whose name stands first on the registers of members of the Company in respect of such share shall alone be entitled to vote in respect thereof. Several executors or administrators of a deceased member, and several trustees in bankruptcy or liquidators of a member in whose name any share stands will for this purpose be deemed joint holders thereof.

• (3) In order to be valid, a form of proxy, together with the power of attorney or other authority (if any) under which it is signed or a notarially certified copy of that power or authority must be deposited at the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited at 26/F, Tesbury Centre, 28 Queen’s Road East, Wanchai, Hong Kong, not less than 48 hours before the time appointed for the holding the above meeting (or at any adjournment thereof). Completion and return of the form of proxy will not preclude a member from attending the meeting and voting in person if he so wishes. In the event that a member attends the meeting after having lodged his form of proxy, his form of proxy will be deemed to have been revoked.

• (4) The registers of members of the Company will be closed from Wednesday, 20 February 2008 to Thursday, 21 February 2008, both days inclusive, during which period no transfer of shares will be effected. In order to be entitled to attend and vote at the meeting, all transfers accompanied by the relevant share certificates must be lodged for registration with the Company’s branch share registrar and transfer office in Hong Kong, Tricor Abacus Limited, at the above address not later than 4:00 p.m. on Tuesday, 19 February 2008.

• (5) Shareholders are advised to read the circular to the shareholders of the Company dated 31 January 2008 which contains information concerning the resolutions to be proposed in this notice.

• (6) The resolution to be proposed at the meeting shall be decided by way of a poll.

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