Hong Kong, September 23, 2005 - Kerry Properties Limited (HKEx: 683) today announced a 46% year-on-year increase in turnover to HK$3,846 million for the six months ended 30 June 2005. Consolidated net profit attributable to shareholders increased 131% year-on-year to HK$1,602 million. Excluding the effect of the net increase in fair value of the Group's investment properties of HK$761 million during the six months ended 30 June 2005 due to the adoption of the new accounting standards, the Group's net profit attributable to shareholders for the six months ended 30 June 2005 was HK$841 million, or a 21% year-on-year increase from 2004.

Earnings per share increased by 127% year-on-year to HK132.14 cents. Excluding the effect of the net increase in fair value of the Group's investment properties during the six months ended 30 June 2005, earnings per share increased by 19% year-on-year to HK69.37 cents. The Group declared an interim dividend of HK20 cents per share, with a scrip dividend alternative. On 27 June 2005, Standard and Poor's reaffirmed a "BBB-" credit rating for the Company with a stable outlook.

PRC Property Division

During the six months ended 30 June 2005, the PRC Property Division reported turnover of HK$486 million (2004: HK$789 million) and a net profit attributable to the Group of HK$137 million (2004: HK$189 million).

As at 30 June 2005, the Group has an investment property portfolio in Mainland China measuring an aggregate gross floor area ("GFA") of 3,348,340 square feet, registering occupancy rates of 97%, 97% and 80%, respectively (as at 31 December 2004: 97%, 97% and 72%, respectively) for office, commercial and residential properties.

Sales of the remaining units of Central Residences, Fuzhou and Arcadia Court, Shenzhen continued during the first six months of 2005.

In Shanghai, development of the 642,000 square-foot Central Residences Phase II (a high-end residential property project) in Changning District, and the 1,603,000 square-foot Kerry Everbright City Phase II in Zhabei District, are scheduled for completion respectively in the fourth quarter of 2005 and in phases during 2007 and 2008. Development of the 807,000 square-foot grade-A office complex in Shenzhen's Futian Central District, and a 77,000 square-foot office property in Beihai, Guangxi Province, are scheduled for completion in the fourth quarter of 2007 and the fourth quarter of 2006, respectively.

During the first six months of 2005, turnover and operating profit generated from Beijing Kerry Centre Hotel amounted to HK$152 million and HK$58 million, respectively (2004: HK$124 million and HK$41 million, respectively), on an average occupancy rate of 80 % (2004: 77 %).

Hong Kong Property Division

During the six months ended 30 June 2005, the Hong Kong Property Division reported turnover of HK$506 million (2004: HK$741 million) and a net profit attributable to the Group of HK$645 million (2004: HK$247 million) after taking into account the increase in fair value (net of deferred taxation) on investment properties of HK$286 million (2004 : Nil).

As at 30 June 2005, the occupancy rates of the Group's 1,904,930 square-foot Hong Kong investment property portfolio of residential, commercial and office properties were 96%, 91% and 99%, respectively (as at 31 December 2004: 97%, 89% and 93%, respectively).

During the first six months of 2005, sales of property units at Constellation Cove, The Cliveden, Olympian City, Residence Oasis and Enterprise Square Three continued.

Currently under development is Enterprise Square Five, a 1.6 million square-foot grade-A office and commercial complex in Kowloon Bay. The project comprises a 1 million square-foot retail portion, to be named as "MegaBox", and a 600,000 square-foot office space. Completion of the retail portion and the office spaces are scheduled for the first and second quarters of 2007, respectively.

The Group's 155,000 square-foot luxury residential development, 15 Ho Man Tin Hill Road, is scheduled for completion in the first quarter of 2006. The 395,000 square-foot residential development project in Kwok Shui Road, Tsuen Wan, and the 913,000 square-foot development in Ap Lei Chau in which the Group has a 35% interest, are both scheduled for completion by the first quarter of 2008.

As at 30 June 2005, the Group held the existing property units at No. 5 and No. 9 Yuk Yat Street in Tokwawan for development purpose. Redevelopment works are expected to commence in 2006, with completion scheduled for the first quarter of 2008. In July 2005, the Group acquired a residential development site near the Central Mid-Levels at the junction of Shelley Street and Mosque Junction which, upon completion, is expected to deliver an aggregate gross floor area of approximately 47,000 square feet.

Also in July 2005, the Urban Renewal Authority awarded the Group with a joint development contract in respect of a site at First Street / Second Street in Sai Ying Pun, which, upon completion, is expected to deliver an aggregate GFA of 425,000 square feet for residential and commercial uses.

The Group's development project in Macau will fall in line with the Macau SAR Government's objective to provide low to medium-density and high quality living environment. Negotiation with the Macau SAR Government on land acquisition has made progress. The conceptual design for the development has been discussed with the Macau SAR Governemnt, and it is expected that approval will be granted to the Group towards the end of 2005.

Overseas Property Division

The Group's overseas property investments in Australia and the Philippines contributed an aggregate net profit after tax of HK$12 million to the Group during the six months ended 30 June 2005 (2004: HK$11 million).

Logistics Network Division

The Logistics Network Division recorded turnover of HK$2,834 million for the six months ended 30 June 2005 (2004: HK$1,081 million), or a year-on-year increase of 162% which is attributable to the turnover contribution from Kerry EAS Logistics Limited ("KEAS"), a 70%-owned subsidiary of Kerry Logistics. Net profit attributable to the Group from the Division during the six months ended 30 June 2005 increased by 261% to HK$736 million (2004: HK$204 million) after taking into account the increase in fair value (net of deferred taxation) of HK$475 million (2004 : Nil) on warehouse properties held by the Group as investment properties.

During the first six months of 2005, the Division's logistics operations recorded a 199% increase in turnover to HK$2,635 million (2004: HK$880 million), with operating profit attributable to the Group increased by 94% to HK$95 million (2004: HK$49 million). A total of 56,105 tons of cargo were handled by air and 180,684 TEUs by sea during the first six months of 2005, which represent a year-on-year growth of 352% and 325% from 2004, respectively.

The first six months of 2005 saw a breakthrough in the Division's operations in Mainland China. The acquisition of a 70% interest in KEAS endows the Division with a leading nationwide logistics operation network serving over 1,100 cities from over 120 offices, covering all provinces of Mainland China and most market segments with the full range of supply chain services and logistics infrastructure.

The integration of KEAS's operations with the Division's existing operations in Hong Kong and Mainland China has now been completed. The second phase re-engineering of KEAS's internal control processes and management systems, the tightening of KEAS's credit control, a deeper streamlining of KEAS's operating structure as well as the integration of KEAS's network with Kerry Logistics' other overseas businesses and agency networks, is expected to be completed by the end of 2006.

The Division currently operates a fleet of over 1,000 trucks and a logistics centre portfolio of over 2 million square feet in Mainland China. The latest additions are the 170,000 square-foot logistics centre in Tianjin's Free Trade Zone and the 269,000 square-foot logistics centre in Shenzhen's Futian Free Trade Zone, which are scheduled for completion by the third quarter of 2005 and the second quarter of 2006, respectively. Furthermore, the Division plans to build a 200,000 square-foot logistics centre in Pujiang, Shanghai.

In Thailand, the Group completed its construction of a 790,000 square-foot Inland Container Depot ("ICD") in Siam Seaport, with a further port expansion project scheduled for completion in early 2007. The Division also restructured its freight forwarding operations in Malaysia by integrating with the KEAS operation in the country. The Division currently operates a fleet of over 80 trucks in Malaysia and Thailand.

In Europe, the Division's operations were successfully extended to Spain during the first six months of 2005. Meanwhile, the Division is in the process of restructuring its sales and marketing network in the United States of America (the "US"), including the co-operation with Lynden International, a US-based company with more than 45 offices in the US, Canada, Mexico and Puerto Rico. In Australia, the Division plans to construct a 75,000 square-foot logistics centre. The Division also plans to explore the Middle East and South American markets as an effort to develop a global presence in the freight forwarding industry.

As at 30 June 2005, the Division achieved an occupancy level of 96% (2004: 95%) for its 6.74 million square-foot portfolio of 13 warehouses in Hong Kong. During the six months ended 30 June 2005, its Hong Kong warehouse portfolio generated turnover of HK$199 million (2004: HK$201 million) and an operating profit before taking into account the increase in fair value of warehouse properties of HK$109 million (2004: HK$107 million).

Infrastructure Division

Net profit attributable to the Group from this Division during the six months ended 30 June 2005 amounted to approximately HK$17 million (2004: HK$14 million).

The Group announced in December 2004 an investment in a water treatment project in Hohhot Municipality in Inner Mongolia Autonomous Region, Mainland China. In February 2005, the Group tendered for a greenfield project to build and operate the first solid waste management facilities in Changzhou, Jiangsu Province. The Group's share of maximum total investment amount in this project is approximately HK$80 million.

Outlook

1. Properties

In Mainland China, the Group places strategic focus on Shanghai and Beijing, and will explore development opportunities in high-end premium properties in certain cities which have demonstrated active economic growth. The continuing development of the economy in Mainland China will further bolster the prospects of the property market in Mainland China.

As the property market in Hong Kong continues to revive on the back of a stronger economy and improved household incomes, the Group remains cautiously optimistic as to the pent-up demand for quality developments in the office and residential sectors. The Group will continue to identify property projects with favourable development potentials in Hong Kong in order to sustain the Group's future growth.

2. Logistics

KEAS was a breakthrough development in expanding the Group's logistics capabilities and operating network in Mainland China. Driven by the opening up of Mainland China's logistics market to foreign ownership by the end of 2005 and by improving efficiencies in Mainland China's logistics infrastructure, it is expected that the logistics market in Mainland China will experience rapid changes and increasing competition in the coming years. The Group will continue to focus on its core activities in Mainland China through KEAS, and to develop its information technology system and operational expertise in order to cope with the increasing challenges.

3. Infrastructure

The Group will continue to study and, where appropriate, pursue investment opportunities in other commercially viable infrastructure projects which are capable of generating attractive financial returns to the Group.

4. Overall

Properties, logistics and infrastructure will continue to be the Group's core business activities and are poised for future growth and development. The Group will continue to maintain a well-balanced portfolio of assets and earnings base which is attuned to market environment and development, and to monitor its recurrent income base and financial performances with a view to maximize shareholders' returns.

About Kerry Properties Limited
Kerry Properties Limited is a company listed on the Main Board of The Stock Exchange of Hong Kong Limited in August 1996. The principal business activities of Kerry Properties Limited and its subsidiaries are (i) property development and investment in Hong Kong, Mainland China and the Asia Pacific region; (ii) the provision of independent third party logistics and freight services and warehouse operations; and (iii) investments in infrastructure projects in Hong Kong and Mainland China.