09:56 WHARF HOLDINGS<00004> - Announcement (3) The rents receivable under the agreements for the TS Tenancy and the Gateway Tenancy (together, the "Tenancy Agreements") are no less favourable to the landlords than those for comparable premises available from independent third parties. The estimated approximate annual rents, exclusive of rates, air-conditioning charges and management fee (the "Annual Rents"), payable in cash on monthly basis (with the turnover rent, also payable on monthly basis, being subject to subsequent adjustment, if any, on yearly basis) by City Super, for each of the eight fiscal years ending 31st December, 2011 receivable by TSL and WRL under the TS Tenancy and under the Gateway Tenancy respectively are as follows: Annual Rents Fiscal year TS Tenancy Gateway Tenancy ending 31 Dec. (HK$ Million) (HK$ Million) 2004 1.89 0.56 2005 22.73 13.52 2006 22.77 14.39 2007 23.25 16.08 2008 * 16.13 2009 * 17.42 2010 * 16.69 2011 * N/A or turnover rent or turnover rent ranging from 8.5% of 7.25% of gross sale to 8.75% of gross per annum, whichever sale per annum, is higher whichever is higher *For the three years ending 30th September, 2011 (i.e. from 1st October, 2008 onwards) in respect of the TS Tenancy, the amounts of rent will be determined by reference to open market rental to be agreed between the parties at a later date but will still be subject to the relevant cap amounts as described below. As estimated by the parties, the aggregate base rent or turnover rent, whichever applicable, receivable by TSL and WRL respectively under the TS Tenancy and the Gateway Tenancy for the period from the commencement of the Agreements to 31st December, 2004 will be below the de minimis level under Rule 14A.33(3) of the Listing Rules. However, for the remaining period from 1st January, 2005 onwards, the rent under each of the TS Tenancy and the Gateway Tenancy receivable by TSL or WRL, as the case may be, for each of the seven financial years of the Company ending 31st December, 2011 are estimated to exceed the de minimis level under Rule 14A.33 of the Listing Rules. Therefore, the parties have agreed to adopt an annual cap amount, as required by Rule 14A.35(2) of the Listing Rules, for the base rent or turnover rent, whichever applicable, under each of the TS Tenancy and the Gateway Tenancy for each of the seven financial years of the Company ending 31st December, 2011. Such annual cap amounts ("Annual Cap Amounts") are in line with the Company's internal forecasts based on an upside scenario and represent the expected maximum basic or turnover rent, whichever is higher, receivable from City Super with reference to (i) the historic trading records in respect of the original tenancies between the Group and City Super, and (ii) possible buoyant retail sentiment and environment in the next several years as projected by the management of the Group. The Annual Cap Amounts are set out below: Annual Cap Amounts Fiscal year TS Tenancy Gateway Tenancy ending 31 Dec. (HK$ Million) (HK$ Million) 2005 54.96 45.55 2006 59.80 51.01 2007 64.16 56.12 2008 66.09 60.60 2009 68.07 65.45 2010 70.11 67.74 2011 54.16 N/A REASONS FOR AND BENEFITS OF ENTERING INTO THE TRANSACTIONS ETC.