board of directors - listed companyhotelroyal.listedcompany.com/misc/ar2010.pdfboard of directors dr...

BOARD OF DIRECTORSDr Lee Keng Thon, Non-Executive Group ChairmanCol (Ret) Rodney How Seen Shing, Independent Non-Executive DirectorMr Ng Kok Lip, Independent Non-Executive DirectorMr Goh Kok Yeow, Independent Non-Executive DirectorMr Lee Khin Tien, Non-Executive DirectorMr Lee Kin Hong, Non-Executive Director

AUDIT COMMITTEECol (Ret) Rodney How Seen Shing (Chairman)Mr Ng Kok Lip Mr Goh Kok YeowMr Lee Khin Tien

REMUNERATION COMMITTEEMr Ng Kok Lip (Chairman) Col (Ret) Rodney How Seen ShingMr Goh Kok YeowMr Lee Khin Tien

NOMINATING COMMITTEEMr Goh Kok Yeow (Chairman) Col (Ret) Rodney How Seen Shing Mr Ng Kok Lip Mr Lee Khin Tien

COMPANY SECRETARYSharon Yeoh (Ms)Wong Siew Choo (Mrs)

SHARE REGISTRARB.A.C.S. Private Limited63 Cantonment RoadSingapore 089758Tel : (65) 6593 4848Fax : (65) 6593 4847Email : [email protected]

REGISTERED OFFICE36 Newton RoadSingapore 307964Tel : (65) 6426 0168Fax : (65) 6256 2710Email : [email protected]

AUDITORSDeloitte & Touche LLPCerti ed Public Accountants Singapore 6 Shenton Way #32-00DBS Building Tower Two Singapore 068809Tel : (65) 6224 8288Fax : (65) 6538 6166

AUDIT PARTNER-IN-CHARGEKee Cheng Kong, MichaelAppointed on 11 August 2007

PRINCIPAL BANKERSOversea-Chinese Banking Corporation LimitedUnited Overseas Bank LimitedDBS Bank LimitedBank of New Zealand LimitedCredit Suisse Company Reg. No: 196800298G

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Chairman’s Message 22 Chairman s Message

4Board of Directors

6Senior Managemennnt t

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Annual Report 2010

Hotel Royal Limited Annual Report 2010

Dear Shareholders,

On behalf of your Board of Directors, I am pleased to present the Group’s annual report for the financial year ended 31 December 2010.fi

Operations and Financial Review

With the economic recovery from the global financial crisis and increase in fitourists’ arrivals, the Group capitalised on the opportunities and offered attractive room rates to capture a bigger slice of the market. This resulted in an increase of revenue from the Singapore hotel segment of 18% in 2010 as compared with 2009. On the other hand, revenue from the Group’s hotel segment in Malaysia also showed vast improvement of 69% with higher room revenue from Hotel Royal Penang and additional contribution from the newly

acquired The Coronade Hotel Kuala Lumpur in October 2010.

The Group made a profit before income tax of S$11.467 million as compared with S$10.058 million in 2009 due to fithe bargain purchase gain of S$4.109 million arising from the acquisition of The Coronade Hotel Kuala Lumpur and its business, offset against expenses relating to acquisition, such as legal, consultancy and other professional fees which cannot be capitalised of S$2.190 million and impairment loss on the investment property in New Zealandof S$1.116 million.

However, the Group’s profit after income tax decreased in 2010 as compared with 2009 mainly due to additional fideferred tax liability of S$5.075 million being recognised by Grand Complex Properties Limited in New Zealand. The increase in deferred tax expense arises from a change in regulations in New Zealand which disallowed theGroup’s New Zealand subsidiary to claim tax deduction for the remaining depreciation for the estimated useful lifeof the building effective from year of assessment 2012.

The Company successfully completed a renounceable non-underwritten rights issue of 24 million new ordinary shares at an issue price of S$1.50 for each rights issue share on the basis of two rights shares for every five existing fifiordinary shares. The rights issue was completed in July 2010 and a total of S$35.869 million excluding expenses was raised. The proceeds of rights issue had been utilised to repay bank loans amounting to S$14.1 million, partfi nance renovation works in Penang Plaza of S$1.209 million, part fifi nance acquisition of The Coronade Hotel Kuala fiLumpur of S$10.215 million and meeting working capital requirements amounting to S$2.419 million. The net balance of S$7.926 million was placed in fixed deposit.fi

The Group will continue to proactively manage and maximise the operating performance of its hotel, investmentand financial investment segments. fi

Outlook for 2011

Tourists’ arrivals to Singapore are expected to remain healthy in 2011 and our two Singapore hotels will tap into this enlarged pool of tourists. Hotel Royal Penang will continue to build on its brand recognition in Penang. We intend to renovate the newly acquired The Hotel Coronade Kuala Lumpur and increase its room count so as to maximise the potential of the excellently located hotel.

2

Chairman’s Message


With the commencement of a major tenancy in September 2010, we expect an improvement in rental from Grand Complex in New Zealand.

In addition to the above, the performance of the NZD, USD and Malaysia Ringgit against the SGD, the changes in the value of our investment trading portfolio and investing income for our total investment portfolio will affect the Group’s profitability.fi

The Group will continue to proactively manage and maximise the operating performance of its hotels, investment properties and financial investments.fi

Other Developments

Construction of the Royal Residences (formerly known as Star Mansions) is progressing smoothly and this new development at 1A Surrey Road will be held as a long-term investment for recurring rental income for the Company.

The Group’s Malaysian subsidiaries have completed the acquisition of five offififi ce/residential units at Penang Plaza fiat a purchase consideration of RM2.23 million or S$0.93 million. With this acquisition, the Group’s stake of Penang Plaza increased from 85% to 95%.

The Group is actively looking for other investment opportunities in Singapore and the surrounding regions.

Net Tangible Asset Per Share

Based on directors’ estimate, the total market value of the Group’s hotel and investment properties as at 31 December 2010 was about S$475.4 million as compared to their total net book value of S$354.4 million. The unrecorded revaluation surplus (net of tax effect) amounted to S$100.2 million. Had this revaluation surplus (net of tax effect) been included in the net asset value, the net asset (after revaluation) would have increased from S$3.66 to S$4.85 per share as at 31 December 2010.

Proposed Dividend

The Board of Directors recommends a one-tier tax exempt first and fifi nal dividend of fifi ve cents per share amounting fifito S$4.2 million.

A Word of Appreciation

I wish to thank you, our valued shareholders, for your continuous support. I would also like to extend my gratitude to our loyal customers and business partners for their consistent support. Last but not least, I would like to thank my fellow directors for their invaluable insights and wise counsel.

Dr Lee Keng ThonChairman

18 March 2011

3

Chairman’s Message


Goh Kok Yeow

Goh Kok Yeow, aged 49, was appointed to the Board of Directors on 21 June 2002.

He is a practising lawyer and currently a partner in a local law firm, De Souza Lim & fi

Goh LLP. He was last re-elected as a director on 24 April 2010 and is the Chairman

of the Nominating Committee and a member of the Audit and Remuneration

Committees.

He graduated from University of Manchester, UK with a LLB (Hons) and is also a

Barrister-at-law. Mr. Goh practices in the areas of commercial litigation, corporate

law, banking and securities and intellectual property law. Mr. Goh is a member of

the Law Society of Singapore, the Singapore Academy of Law and the Singapore

Institute of Arbitrators. He is also a member of the Inquiry Panel appointed by the

Honourable the Chief Justice under the Legal Profession Act.

Lee Khin Tien

Lee Khin Tien, aged 59, was appointed to the Board of Directors on 31 December

1996 as a non-executive director. He is a member of the Audit, Nominating and

Remuneration Committees. He was last re-elected as a director on 24 April 2010.

Lee Khin Tien is a director of Aik Siew Tong Limited, Melodies Limited and

Singapore-Johore Express (Private) Limited with businesses ranging from real

estate, bus transportation and plantation. He has more than 20 years of experience

in real estate and plantation business. He graduated from Nanyang University with

a Bachelor of Science (Biology).

Lee Kin Hong

Lee Kin Hong, aged 57, was appointed to the Board of Directors on 21 June 2002 as

a non-executive director. He was last re-elected as a director on 26 April 2008.

He is currently the Managing Director of Singapore-Johore Express (Private)

Limited and has more than 20 years of experience in managing commercial, industrial

and residential projects.

He graduated from the National University of Singapore with a Bachelor of Science

(Building) and Master of Science (Project Management). He is also a member of

the Singapore Institute of Building.

5

Board of Directors


Lee Chin Chuan – Adviser

Lee Chin Chuan, aged 79, was appointed to the Board of Directors on 10 July 1968 and had held the position of

Managing Director, Chairman and Executive Chairman of the Group until his retirement as a director on 29 April

2006. He was appointed as the Group Adviser on 29 April 2006. Lee Chin Chuan PBM is also the founder of the

Company and sits on the board of many companies including Aik Siew Tong Limited, Melodies Limited, Man Won

Co. Ltd. (Hong Kong) and Singapore-Johore Express (Private) Limited with businesses ranging from real estate,

plantation and bus transportation. He has been in the real estate business since 1954 and has been appointed as

the Hon. Patron of Real Estate Developers Association of Singapore. He is also currently the Hon. Council Member

of Singapore Chinese Chamber of Commerce and Industry and Hon. Chairman of Singapore Lee Clan Association

and Singapore Hin Ann Huay Kuan.

Lee Chou Hock – Chief Executive Officerfi

Lee Chou Hock joined Hotel Royal Ltd in 1985 is presently the Chief Executive Officer of the Company. He is fi

responsible for the management of the day to day operations of the Company and its investments in the subsidiaries.

Prior to joining Hotel Royal, he was with a public accounting firm in Singapore. He holds a Bachelor of Accountancy fi

from the University of Singapore and a Master of Business Administration (Hospitality & Tourism Management)

from Nanyang Technological University.

George Lee Chou Hor – General Manager of Group’s Key Subsidiaries

George Lee Chou Hor joined the Group in 1993 and is the General Manager/Director of the Group’s key subsidiaries,

namely Royal Properties Investment Pte Ltd, Royal Capital Pte Ltd, Castle Mall Properties Pte Ltd and Grand

Complex Properties Ltd (New Zealand). His primary responsibilities are real estate and capital market investments

evaluation and acquisition, and asset planning and management for the Group. His prior working experiences

included the Singapore Airlines Group and the Housing and Development Board. He holds a Bachelor of Business

Administration (Hons) and Master of Business Administration from Schulich School of Business (York University,

Toronto, Canada), a Master of Science (Real Estate) from the National University of Singapore and a Master of

Professional Accounting from the Singapore Management University.

Tay Kok Liang – Group Financial Controller

Tay Kok Liang is responsible for the Group’s accounting and taxation functions. She joined the Group in 1975. She

holds a Bachelor of Accountancy from the University of Singapore and is a member of the Institute of Certified fi

Public Accountants of Singapore.

Wong Siew Choo – Group Revenue Controller

Wong Siew Choo is responsible for the treasury functions and credit control of the Group. She joined the Group in

1973. Prior to joining the Group, she had accumulated experiences in accounting and purchasing.

Lee Chu Bing – General Manager

Lee Chu Bing joined the Group in 2004 in the Sales & Marketing Department and also assisted in the leasing of the

Group’s investment properties. He was appointed the General Manager of Hotel Royal @ Queens (Singapore) Pte

Ltd in April 2007. He holds a Bachelor of Arts from the National University of Singapore.

6

Senior Management


Preamble

The Board of Directors of Hotel Royal Limited has adopted the following corporate principles and guidelines tailored to the specific needs of the Company set out in the Code of Corporate Governance 2005 (the “Code”). These fiprinciples and guidelines reflect the Board’s commitment in having effective self-regulatory corporate practices to flsafeguard the interests of its shareholders and maximising long-term shareholders’ value. The Board believes that these guidelines should be an evolving set of corporate governance principles, subject to the specific needs of the fiCompany and subject to modification as circumstances may warrant.fi

1. BOARD MATTERS

1.1 The Board’s Conduct of its Affairs

Principle 1: Every company should be headed by an effective Board to lead and control the company. The Board is collectively responsible for the success of the company. The Board works with Management to achieve this and the Management remains accountable to the Board.

The primary responsibilities of the Board of Directors encompass the following:

To provide strategic direction and decision-making pertaining to the Group’s activities that are of significant finature and approve periodic plans as well as major investments and divestments;

To oversee the business and affairs of the Company, and working with management, establish strategic directions and financial goals to be implemented by management as well as monitoring the performance of fimanagement;

To oversee the evaluation of the adequacy of internal controls, risks management, financial reporting and ficompliance, and satisfy itself as to the sufficiency of such processes; andfi

To be responsible for the overall corporate governance of the Group.

The Company requires the approval from the Board for material new investments or increase in investments in businesses of subsidiaries, projects or fixed assets and any divestments or sales by any company in the Group.fi

Other aspects which require the approval of the Board include all material commitments to term loans and lines of credit from banks and financial institutions by the Company.fi

Each Board member exercises equal responsibility in overseeing the business and affairs of the Company.

The Board meets quarterly and as and when deems necessary. To cater to urgent substantial matters, however, the Board may convene on an ad-hoc basis. The Board of Directors held four meetings in total for the financial fiyear ended 31 December 2010.

77

Hotel Royal Limited Annual Report 2010Report on Corporate Governance


8

The directors’ attendance at those meetings are as follows:

During 2010, the Board held four meetings:

Director (a) (b) Percentage (%)

4 4 100%Dr Lee Keng Thon

4 4 100%Col (Ret) Rodney How Seen Shing

4 4 100%Ng Kok Lip

4 4 100%Goh Kok Yeow

4 4 100%Lee Khin Tien

4 4 100%Lee Kin Hong

During 2010, the Audit Committee held four meetings:

(a) (b) Percentage (%)

Col (Ret) Rodney How Seen Shing 4 4 100%

Ng Kok Lip 4 4 100%

Goh Kok Yeow 4 4 100%

Lee Khin Tien 4 4 100%

During 2010, the Nominating Committee held two meetings:




Ng Kok Lip 2 2 100%


During 2010, the Remuneration Committee held one meeting:


Ng Kok Lip 1 1 100%




Notes:

(a) Number of meetings held in 2010

(b) Number of meetings attended



1.4 Board Membership

Principle 4: There should be a formal and transparent process for the appointment of new directors to the Board.

Directors will present themselves for re-nomination and re-election at regular intervals of at least once every three years. Pursuant to Article 117 of the Company’s Articles of Association, one-third of the directors retires from office fiat the Company’s Annual General Meeting. The year of initial appointment and last re-election of the directors are as appended below:

Dr Lee Keng Thon 67 Non-Executive Chairman 08.09.1971 24.04.2010

Col (Ret) Rodney How Seen Shing 68 Director 26.02.1986 25.04.2009

Ng Kok Lip 69 Director 01.01.2003 25.04.2009

Goh Kok Yeow 49 Director 21.06.2002 24.04.2010

Lee Khin Tien 59 Director 31.12.1996 24.04.2010

Lee Kin Hong 57 Director 21.06.2002 26.04.2008

The Nominating Committee

The Nominating Committee consists of four directors; namely, Goh Kok Yeow, (Chairman of the NominatingCommittee), Col (Ret) Rodney How Seen Shing, Ng Kok Lip and Lee Khin Tien. The terms of reference of the Nominating Committee are as follows:

(a) To recommend appointment and re-appointment of directors;

(b) To review the proficiency or expertise required by the Board annually and the size of the Board;fi

(c) To review the independence of each director and ensure that the Board consists of at least one-third of independent directors;

(d) To assess the capabilities of the director in the execution of his work if he has multiple board representation;

(e) To establish measures for evaluating the performance of the Board;

(f) To conduct annual assessment on the effectiveness of the Board; and

(g) To report to the Board.

The Board will engage in annual self-evaluation as a collective body. The evaluation process will be administered by the Nominating Committee and the results of this evaluation will be deliberated with the full Board.

The Nominating Committee held two meetings during the financial year ended 31 December 2010.fi

Date of Initial Appointment

Date of Lastre-election

10


Name Age Position


1.5 Board Performance

Principle 5: There should be a formal assessment of the effectiveness of the Board as a whole and the contribution by each director to the effectiveness of the Board.

We believe that the Board’s performance is ultimately reflected in the performance of the Group. The Board ensures flcompliance with applicable laws and Board members act in good faith, with due diligence and care in the best interests of the Company and its shareholders. In addition to these fiduciary duties, the Board is charged with fitwo key responsibilities: setting strategic directions and ensuring that the Company is ably led. The measure of a Board’s performance is also tested through its ability to lend support to management especially in times of crisis and to steer the Group in the right direction.

The financial indicators set out in the Code as guides for the evaluation of directors are, in our opinion, more of fia measure of management’s performance and hence are less applicable to directors. In any case, such financial fiindicators provide a snapshot of a company’s performance, and do not fully measure the sustainable long-term wealth and value creation of the Company.

The Board through the delegation of its authority to the Nominating Committee, has used its best efforts to ensure that directors appointed to our Board possess the background, experience and knowledge in technology, business, finance and management skills critical to the Company’s business and that each director with his special ficontributions brings to the Board an independent and objective perspective to enable balanced and well-considered decisions to be made.

Informal reviews of the Board’s performance are undertaken on a continual basis by the Nominating Committee with inputs from the other Board members and CEO. Renewals or replacement of Board members do not necessarily reflect their contributions to date, but may be driven by the need to position and shape the Board in line with the flmedium term needs of the Company and its business.

1.6 Access to Information

Principle 6: In order to fulfil their responsibilities, board members should be provided with complete, fiadequate and timely information prior to board meetings and on an on-going basis.

The Company recognises the importance of continual dissemination of relevant information which are explicit, accurate, timely and vital to the Board in carrying its duties. As such, the Board expects management to report the Company’s progress and drawbacks in meeting its strategic business objectives or financial targets and other fiinformation relevant to the strategic issues encountered by the Company in a timely and accurate manner.

In exercising their duties, the directors have unrestricted access to the Company’s management and independent auditors.

Directors have separate and independent access to the Company Secretary. The Company Secretary is responsible for ensuring that board procedures are followed and that applicable rules and regulations are complied with.

All new directors are oriented by senior management with the Company’s operations, its significant fifi nancial, fiaccounting and risk management issues, its principal officers and its independent auditors. All directors are fialso encouraged to attend, at Company’s expense, directors continuing education programs offered by various organisations.

Professional advices are sought by the Board when necessary to enable the Board or its independent directors to carry out their roles effectively. Individual directors may obtain professional advice to assist them in the execution of their tasks subject to the approval from the Chairman, at the Company’s expense.

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2. REMUNERATION MATTERS

2.1 Procedures for Developing Remuneration Policies

Principle 7: There should be a formal and transparent procedure for developing policy on executive remuneration and for fi xing the remuneration packages of individual directors. No director should befiinvolved in deciding his own remuneration.

The Remuneration Committee comprises four directors; namely Ng Kok Lip, (Chairman of the Remuneration Committee), Col (Ret) Rodney How Seen Shing, Goh Kok Yeow and Lee Khin Tien. Where necessary, the Committee can engage professional help from external consultants in areas of executive compensation.

The Remuneration Committee held one meeting during the financial year ended 31 December 2010 and executedfithe following in consultation with the Chairman:

(a) Made recommendations to the Board a framework of remuneration for the Board members as well as key executives;

(b) Determined specifi c remuneration packages for each non-executive director and the Chief ExecutivefiOffi cer; andfi

(c) Reviewed the terms, conditions and remuneration of the senior executives of the Company.

The Remuneration Committee’s objective is to motivate and retain proficient executives and ensure that thefiCompany is able to attract competent staff in the market to maximise shareholders’ value.

The review covers all areas of remuneration, including but not limited to director’s salaries, fees, bonuses, allowancesand benefi ts-in-kind. No director is involved in deciding his own remuneration.fi

2.2 Level and Mix of Remuneration

Principle 8: The level of remuneration should be appropriate to attract, retain and motivate the directors needed to run the company successfully but companies should avoid paying more than is necessary for this purpose. A signifi cant proportion of executive directors’ remuneration should be structured so as to linkfirewards to corporate and individual performance.

The Remuneration Committee has recommended a framework of remuneration for the Board members and key management executives. The details are as follows:

Board members

The directors’ fees paid to the directors are based on the number of meetings attended during the year, subject to aminimum sum. The Chairman of the Board and the sub-committees will receive an additional Chairman’s allowance of 100% of the directors’ fees of the main Board and 50% of the directors’ fees of the sub-committees respectively. The directors’ fees are recommended by the Board for approval at the Company’s Annual General Meeting.

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Senior Executives

Senior executive remuneration consists of three parts:

1. Base or fixed remuneration fi

This element reflects the scope of the job and the level of skill and experience of the individuals.fl

2. Variable for performance related income/bonuses

This is paid depending on the annual performance of the Company and its subsidiaries. It usually takes the form of an end of the year ex-gratia payment.

3. Directors’ fees in subsidiaries

Some of the executives are directors of the subsidiaries and receive directors’ fees.

2.3 Disclosure on Remuneration

Principle 9: Each company should provide clear disclosure of its remuneration policy, level and mix of remuneration, and the procedure for setting remuneration, in the company’s annual report. It should provide disclosure in relation to its remuneration policies to enable investors to understand the link between remuneration paid to directors and key executives, and performance.

The breakdown of remuneration of the directors of the Company for the financial year ended 31 December 2010 fiis as follows:

Annual Remuneration Report

Remuneration of directors for the year ended 31 December 2010

Variable for Director’s Fees Remuneration Band & Base/Fixed performance related (including

Name of Director salary income/bonuses subsidiaries)

Below S$250,000

Dr Lee Keng Thon - - 100% Col (Ret) Rodney How Seen Shing - - 100% Ng Kok Lip - - 100% Goh Kok Yeow - - 100% Lee Khin Tien - - 100% Lee Kin Hong - - 100%

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Details of remuneration paid to key executives of the Group (who are not directors of the Company) for the financial fiyear ended 31 December 2010 are set out below:

Variable for Director’s Fees Remuneration Band & Base/Fixed performance related (including Name of Executive salary income/bonuses subsidiaries)

S$250,000 to below S$500,000

Lee Chou Hock 83% 13% 4% George Lee Chou Hor 84% 12% 4%

Below S$250,000

Lee Chin Chuan 95% 5% - Tay Kok Liang 100% - - Wong Siew Choo 100% - - Lee Chu Bing 100% - -

Lee Chou Hock (Chief Executive Officer) and George Lee Chou Hor (General Manager, Subsidiaries) are the finephews of the Non-Executive Chairman, Dr Lee Keng Thon and Non-Executive Directors, Lee Khin Tien and LeeKin Hong. Their annual remuneration exceeded S$250,000 during the year.

Lee Chu Bing is the son of Dr Lee Keng Thon. Tay Kok Liang is the niece and Wong Siew Choo is the sister of Dr Lee Keng Thon respectively.

Lee Chin Chuan, Lee Khin Tien and Lee Kin Hong are brothers of the Non-Executive Chairman, Dr Lee KengThon.

3. ACCOUNTABILITY AND AUDIT

3.1 Accountability

Principle 10: The Board should present a balanced and understandable assessment of the company’s performance, position and prospects.

The Board believes that it should conduct itself in ways that deliver maximum sustainable value to its shareholders.Prompt fulfillment of statutory requirements is one of the ways to maintain shareholders’ confifi dence and trust in fithe Board’s capability and integrity.

Management is responsible to the Board and the Board itself is accountable to the shareholders.

The Management will provide the Board with detailed management accounts which present a balanced and understandable assessment of the Group’s performance, position and prospects on a quarterly basis.

The Management also presents to the Board quarterly, and full year financial results of the Group and the Audit fiCommittee reports to the Board on the results for review and approval. The Board approved the results after review and authorised the release of the quarterly and full year financial results of the Group to the SGX-ST and fithe public via SGXNET.

Annual general meetings are held every year to obtain shareholders’ approval to routine business, as well as theelection of directors.

In addition to its statutory responsibilities, the Board also ensures that the principal risks of the Company’s business are identified and appropriately managed.fi


14


3.3 Internal Control

Principle 12: The Board should ensure that the Management maintains a sound system of internal controls to safeguard the shareholders’ investments and the company’s assets.

The Board is satisfi ed that the Group has in place internal controls and systems designed to provide reasonablefiassurance in safeguarding assets and that proper accounting records are maintained, and in ensuring financialfiinformation used with the business and for publication is reliable.

3.4 Internal Audit

Principle 13: The company should establish an internal audit function that is independent of the activities it audits.

The Company has engaged a public accounting company, Philip Liew & Co., to perform the internal audit function.The internal auditors adopt the Standards for the Professional Practice of Internal Auditing set by the Institute of Internal Auditors. The internal auditors report directly to the Audit Committee, with full and direct access tothe members of the Audit Committee at all times. Their duties encompass reviewing the Group’s material internalcontrols consisting of fi nancial, operational and compliance controls as well as risk management. The internal auditficomprises all areas of operations.

4. COMMUNICATION WITH SHAREHOLDERS

4.1 Communication with shareholders

Principle 14: Companies should engage in regular, effective and fair communication with shareholders.

In line with the continuous disclosure obligations of the Company pursuant to the Singapore Exchange Listing Rulesand the Singapore Companies Act, it is the Board’s policy to ensure that all shareholders are informed regularly and on a timely basis of every signifi cant development that impact on the Group.fi

Pertinent information is communicated to shareholders on a regular and timely basis through the following means:

The Company’s annual reports;

Notices of and explanatory memoranda for annual general meetings and extraordinary general meetings;

Announcements of quarterly and full-year fi nancial statements containing a summary of the fififi nancial informationfifiand affairs of the Group for the period. These are disclosed on SGXNET;

Other announcements, where appropriate;

Press releases regarding major developments of the Group; and

Disclosures to the Singapore Exchange Securities Trading Limited.

4.2 Greater Shareholder Participation

Principle 15: Companies should encourage greater shareholder participation at annual general meetings, and allow shareholders the opportunity to communicate their views on various matters affecting the company.

16



Shareholders are encouraged to be present at annual general meeting in person so that face-to-face communication can best be achieved. The annual general meeting is the principal forum for dialogue with shareholders. Thus, with greater shareholders participation, it will ensure that they will be kept up to date as to the Group’s long-term strategies and goals.

In addition, the Chairmen of the Board Committees as well as the external auditors are also present in the meeting to assist in addressing any appropriate queries from the shareholders.

The Board will ensure that there should be separate resolutions at general meetings on each substantially separate issue and adhere to the Code’s principle with regards to the “bundling” of resolutions. In the event that “bundled” resolutions cannot be avoided whereby such resolutions are interdependent and linked so as to form one significant fiproposal, the Board will provide reasons and material implications.

ADDITIONAL INFORMATION

5. DEALING IN SECURITIES

The Group has adopted an internal code which prohibits the directors and key executives of the Group from dealing in the Company’s share during the period of two weeks and one month immediately preceding the announcement of the Company’s quarterly and full-year results respectively or if they are in possession of unpublished price-sentitive information of the Group. In addition, directors and key executives are expected to observe insider trading laws at all times even when dealing in securities within the permitted trading period. They are also discouraged from dealing in the Company’s shares on short-term considerations.

6. MATERIAL CONTRACTS

There are no material contracts (including loans) of the Company or its subsidiaries involving the interests of the Chief Executive Officer or any director or controlling shareholder subsisted at the end of the fifi nancial year or have fibeen entered into since the end of the previous financial year.fi

7. INTERESTED PERSON TRANSACTIONS

The Company has established procedures to ensure that all transactions with interested persons are reported in a timely manner to the Audit Committee and that transactions are conducted on an arm’s length basis and are not prejudicial to the interests of the shareholders. The Company’s disclosure in accordance with Rule 907 of the Listing Manual of the SGX-ST in respect of the interested person transaction for the financial year ended 31 December fi2010 is set out on page 53 of this Annual Report.

17



5. Liquidity risk

Liquidity risk refl ects the risk that the Group will have insuffifl cient resources to meet its fifi nancial liabilitiesfias they fall due.

As at 31 December 2010, total current liabilities exceeded total current assets by $5.3 million (2009 : $16.2 million) for the Company. This is mainly due to some of the Company’s bank loans being arranged on short-term revolving basis, as the interest rates are more favourable.

Management assesses the availability of credit facilities and compliance with loan covenants on an on-going basis and no matters have been drawn to its attention that the roll-over of the short-term financing may finot be forthcoming or that covenants have been breached. The Group and the Company have unutilised credit facilities totalling $138.9 million (2009 : $81.7 million) and $105.1 million (2009 : $66.7 million) respectively.

6. Capital risk

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the bank borrowings disclosed in Notes 14, 16 and 18, and equity comprising share capital disclosed in Note 20, reserves and retained earnings.

The Group reviews the capital structure on an annual basis. As a part of this review, the Group considers the cost of capital and the risks associated with each class of capital. The Group seeks to balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the obtaining of new debts, refinancing or redemption of existing debts.fi

The Group’s overall strategy remains unchanged from 2009. The bank loans require the Group to comply with certain financial covenants with respect of the market values of asset collaterals, and there has been fino non-compliance with these externally imposed capital requirements during the year.

General business risks

The Group’s businesses are subject to general business risks. They are as follows:

a. War and terrorism, and its adverse effect on business;

b. The spread of contagious diseases and their adverse effect on tourist arrivals;

c. Global recession and its effect on the performance of the local economy; and

d. Changes in government regulations that burden the Group’s operating costs or restrict business.

It is recognised that such risks can never be eliminated totally and that the cost controls in minimising these risksmay outweigh their potential benefi ts. Accordingly the Group continues to focus on risk management and incidentfimanagement. Where appropriate, this is supported by risk transfer mechanism such as insurance.

19

Hotel Royal Limited Annual Report 2010Risk Factors and Risk Management


The directors present their report together with the audited consolidated fi nancial statements of the Group and fi

statement of financial position and statement of changes in equity of the Company for the fifi nancial year ended fi

31 December 2010.

1 DIRECTORS

The directors of the Company in offi ce at the date of this report are:fi

Dr Lee Keng Thon

Col (Ret) Rodney How Seen Shing

Ng Kok Lip

Goh Kok Yeow

Lee Khin Tien

Lee Kin Hong

2 ARRANGEMENTS TO ENABLE DIRECTORS TO ACQUIRE BENEFITS BY MEANS OF THE

ACQUISITION OF SHARES AND DEBENTURES

Neither at the end of the fi nancial year nor at any time during the fifi nancial year did there subsist any fi

arrangement whose object is to enable the directors of the Company to acquire benefits by means of thefi

acquisition of shares or debentures in the Company or any other body corporate.

3 DIRECTORS’ INTERESTS IN SHARES AND DEBENTURES

The directors of the Company holding office at the end of the fifi nancial year had no interests in the share fi

capital and debentures of the Company and related corporations as recorded in the register of directors’

shareholdings kept by the Company under Section 164 of the Singapore Companies Act except as follows:

Shareholdings Name of directors and companies Shareholdings registered in which directors arein which interests are held in name of directors deemed to have an interest

At beginning At end At beginning At end of year of year of year of year

The Company Ordinary shares Ordinary shares

Dr Lee Keng Thon 357,000 499,800 - -

Lee Khin Tien 168,000 235,200 - -

Lee Kin Hong 55,200 77,280 240,000 336,000

The directors’ interests as disclosed above remained unchanged at 21 January 2011.

Report of the Directors

20


4 DIRECTORS’ RECEIPT AND ENTITLEMENT TO CONTRACTUAL BENEFITS

Since the beginning of the financial year, no director has received or become entitled to receive a benefifi t fi

which is required to be disclosed under Section 201(8) of the Singapore Companies Act, by reason of a

contract made by the Company or a related corporation with the director or with a firm of which he is a fi

member, or with a Company in which he has a substantial financial interest except for salaries, bonuses and fi

other benefits as disclosed in the fifi nancial statements. Certain directors received remuneration from related fi

corporations in their capacity as directors and/or executives of those related corporations and as disclosed

in the financial statements. There were certain transactions (as shown in the fifi nancial statements) with a fi

corporation in which certain directors have interest.

5 SHARE OPTIONS

(a) Options to take up unissued shares

During the financial year, no option to take up unissued shares of the Company or any corporation in fi

the Group was granted.

(b) Options exercised

During the financial year, there were no shares of the Company or any corporation in the Group fi

issued by virtue of the exercise of an option to take up unissued shares.

(c) Unissued shares under option

At the end of the financial year, there were no unissued shares of the Company or any corporation in fi

the Group under option.

6 AUDIT COMMITTEE

Members of the Audit Committee comprise four directors, namely Col (Ret) Rodney How Seen Shing

(Chairman of the Audit Committee), Ng Kok Lip, Lee Khin Tien and Goh Kok Yeow.

The Audit Committee held four meetings during the financial year ended 31 December 2010 and performed fi

the following functions:

(a) Reviewed with management and the external auditors on audit plans and the areas to be audited on

pertaining to external audit, financial and operating results, internal controls, accounting policies as fi

well as other significant matters;fi

(b) Reviewed the assistance rendered to the external auditors by the Company’s officers;fi

(c) Reviewed annual financial statements, inclusive of quarterly announcements to shareholders and fi

SGX-ST prior to submission to the Board of Directors for approval;


21


(d) Performed annual review of the independence and objectivity of the external auditors;

(e) Recommended the appointment or re-appointment of external and internal auditors and remuneration

of the external and internal auditors;

(f) Reviewed the scope and extent of non-audit services performed by external auditors;

(g) Held meetings annually with both external and internal auditors without the presence of

management;

(h) Reviewed the adequacy of the Group’s internal controls;

(i) Reviewed the efficiency and effectiveness of internal audit function; andfi

(j) Reviewed interested person transactions, if any.

The Audit Committee has full access to and co-operation of management and has been given the resources

required for it to discharge its function properly. It also has full discretion to invite any director and executive

officer to attend its meetings. The external auditors have unrestricted access to the Audit Committee.fi

The Company’s internal audit function has been outsourced to Philip Liew & Co. Both the external auditors

and the internal auditors report directly to the Audit Committee their findings and recommendations.fi

The Audit Committee, having reviewed the scope and value of non-audit services provided to the Company

and Group by the external auditors, are satisfied that the nature and extent of such services will not fi

prejudice the independence and objectivity of the external auditors.

The Audit Committee has recommended to the directors the nomination of Deloitte & Touche LLP for

re-appointment as external auditors of the Company at the forthcoming annual general meeting.

7 AUDITORS

The auditors, Deloitte & Touche LLP, have expressed their willingness to accept re-appointment.

ON BEHALF OF THE DIRECTORS

Dr Lee Keng Thon

Lee Khin Tien

18 March 2011


22


In the opinion of the directors, the consolidated financial statements of the Group and the statement of fifi nancial fi

position and statement of changes in equity of the Company set out on pages 25 to 76 are drawn up so as to give

a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010, and of the

results, changes in equity, and cash flows of the Group and changes in equity of the Company for the fifl nancial year fi

then ended and at the date of this statement there are reasonable grounds to believe that the Company will be able

to pay its debts as and when they fall due.

ON BEHALF OF THE DIRECTORS

Dr Lee Keng Thon

Lee Khin Tien

18 March 2011

STATEMENT OF DIRECTORS

23


24

Report on the Financial Statements

We have audited the consolidated financial statements of Hotel Royal Limited (the “Company”) and its subsidiaries fi(the “Group”) which comprise the statement of financial position of the Group and of the Company as at 31 December fifi2010, the profit and loss statement, statement of comprehensive income, statement of changes in equity and fistatement of cash flows of the Group and the statement of changes in equity of the Company for the year then ended, fland a summary of significant accounting policies and other explanatory notes, as set out on pagefi s 25 to 76.s 25 to 7to 76..

Management’s Responsibility for the Financial Statements

Management is responsible for the preparation of financial statements that give a true and fair view in accordance fiwith the provisions of the Singapore Companies Act (the “Act”) and Singapore Financial Reporting Standards and for devising and maintaining a system of internal accounting controls sufficient to provide reasonable assurance that fiassets are safeguarded against loss from unauthorised use or disposition; and transactions are properly authorised and that they are recorded as necessary to permit the preparation of true and fair profit and loss accounts and fibalance sheets and to maintain accountability of assets.

Auditors’ Responsibility

Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our fiaudit in accordance with Singapore Standards on Auditing. Those standards require that we comply with ethicalrequirements and plan and perform the audit to obtain reasonable assurance about whether the financial statements fiare free from material misstatement.

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial fifistatements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, fithe auditor considers internal control relevant to the entity’s preparation of financial statements that give a true fiand fair view in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by management,as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we fihave obtained is sufficient and appropriate to provide a basis for our audit opinion.fi

Opinion

In our opinion, the consolidated financial statements of the Group and the statement of fifi nancial position and fistatement of changes in equity of the Company are properly drawn up in accordance with the provisions of the Act and Singapore Financial Reporting Standards so as to give a true and fair view of the state of affairs of the Group and of the Company as at 31 December 2010 and the results, changes in equity and cash flows of the Group and flthe changes in equity of the Company for the year ended on that date.

Report on Other Legal and Regulatory Requirements

In our opinion, the accounting and other records required by the Act to be kept by the Company and by thosesubsidiaries incorporated in Singapore of which we are the auditors have been properly kept in accordance with the provisions of the Act.

Deloitte & Touche LLPPublic Accountants andCertified Public Accountantsfi

Singapore

18 March 2011

To The Members of Hotel Royal LimitedINDEPENDENT AUDITORS’ REPORT


25

The Group The CompanyNote 2010 2009 2010 2009

$’000 $’000 $’000 $’000

ASSETS

Current assets

Cash and bank balances 6 25,841 13,241 9,997 2,244

Held-for-trading investments 7 4,956 5,114 397 318

Available-for-sale investments 8 2,771 3,471 374 359

Trade receivables 9 4,307 3,451 1,444 1,779

Other receivables, deposits

and prepaid expenses 10 1,112 1,370 80 212

Inventories 272 196 72 74

Total current assets 39,259 26,843 12,364 4,986

Non-current assets

Subsidiaries 11 - - 78,727 51,592

Available-for-sale investments 8 4,397 3,851 1,778 1,633

Property, plant and equipment 12 279,144 217,861 121,901 114,664

Investment properties 13 84,377 75,824 17,522 15,080

Total non-current assets 367,918 297,536 219,928 182,969

Total assets 407,177 324,379 232,292 187,955

LIABILITIES AND EQUITY

Current liabilities

Bank loans 14 11,081 18,746 9,350 18,049

Trade payables 3,333 3,301 2,277 2,040

Other payables 15 2,208 1,544 5,069 32

Current portion of finance lease 16 7 - - - fi

Income tax payable 1,716 1,475 1,000 1,017

Total current liabilities 18,345 25,066 17,696 21,138

STATEMENTS OF FINANCIAL POSITION31 December 2010


26

The Group The CompanyNote 2010 2009 2010 2009

$’000 $’000 $’000 $’000

Non-current liabilities

Retirement benefit obligations 17 548 523 - - fi

Long-term bank loans 18 67,279 39,525 - -

Finance lease 16 32 - - -

Deferred income tax 19 13,595 7,874 442 450

Total non-current liabilities 81,454 47,922 442 450

Capital and reserves

Share capital 20 100,438 64,569 100,438 64,569

Asset revaluation reserve 132,077 113,177 96,008 88,108

Fair value reserve 3,025 2,586 658 483

Translation reserve (1,210) 59 - -

Retained earnings 73,048 71,000 17,050 13,207

Total equity 307,378 251,391 214,154 166,367

Total liabilities and equity 407,177 324,379 232,292 187,955y

See accompanying notes to financial statements.fi

STATEMENTS OF FINANCIAL POSITION 31 December 2010


The Group Note 2010 2009 $’000 $’000

Revenue 21 39,951 35,507

Cost of sales (18,847) (16,983)

Gross profitfi 21,104 18,524

Distribution costs (311) (323)

Administrative expenses (8,118) (8,156)

Other income

- Bargain purchase gain arising from acquisition of business 28 4,109 -

- Miscellaneous income 22 790 1,715

Other expenses

- Expenses relating to acquisition of business (2,190) -

- Miscellaneous expenses (2,389) (450)

Finance cost 23 (1,528) (1,252)

Profit before income taxfi 24 11,467 10,058

Income tax (expense) credit 25 (6,419) 558

Profit for the year attributable tofi

owners of the Company 5,048 10,616y

Basic earnings per share (cents) 26 6.72 cents 15.86 cents

Diluted earnings per share (cents) 26 6.72 cents 15.86 cents

27

Year ended 31 December 2010

( , )

CONSOLIDATED PROFIT AND LOSS STATEMENT



28

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME Year ended 31 December 2010

The Group Note 2010 2009 $’000 $’000

Profi t for the yearfi 5,048 10,616

Other comprehensive income:

Revaluation increase of freehold land - hotels 12 18,900 -

Available-for-sale investments:

Fair value gain recognised in fair value reserve 742 2,294

Transfer from fair value reserve to profit or lossfi

arising from impairment of investments 19 91

Transfer from fair value reserve to profi t or loss uponfi

disposal of available-for-sale investments (322) (11)

Exchange differences on translation of foreign operations (1,269) 7,575

Income tax relating to components of other comprehensive income - -

Other comprehensive income for the year, net of tax 18,070 9,949

Total comprehensive income for the year attributable

to owners of the Company 23,118 20,565y



29

Year ended 31 December 2010 STATEMENTS OF CHANGES IN EQUITY

Asset Share revaluation Fair value Translation Retained capital reserve reserve reserve earnings Total $’000 $’000 $’000 $’000 $’000 $’000

The Group

Balance at 1 January 2009 64,569 113,177 212 (7,516) 63,384 233,826

Total comprehensive income for the year - - 2,374 7,575 10,616 20,565

Final dividends (Note 32) - - - - (3,000) (3,000)

Balance at 31 December 2009 64,569 113,177 2,586 59 71,000 251,391

Total comprehensive income for the year - 18,900 439 (1,269) 5,048 23,118

Rights issue (Note 20) 35,869 - - - - 35,869

Final dividends (Note 32) - - - - (3,000) (3,000)

Balance at 31 December 2010 100,438 132,077 3,025 (1,210) 73,048 307,378

Asset Share revaluation Fair value Retained capital reserve reserve earnings Total $’000 $’000 $’000 $’000 $’000

The Company

Balance at 1 January 2009 64,569 88,108 39 9,981 162,697

Total comprehensive income for the year - - 444 6,226 6,670

Final dividends (Note 32) - - - (3,000) (3,000)

Balance at 31 December 2009 64,569 88,108 483 13,207 166,367

Total comprehensive income for the year - 7,900 175 6,843 14,918

Rights issue (Note 20) 35,869 - - - 35,869

Final dividends (Note 32) - - - (3,000) (3,000)

Balance at 31 December 2010 100,438 96,008 658 17,050 214,154



30

CONSOLIDATED STATEMENT OF CASH FLOWS Year ended 31 December 2010

The GroupNote 2010 2009

$’000 $’000

Operating activities

Profit before income tax 11,467 10,058fi

Adjustments for:

Depreciation expense 3,452 3,183

Impairment loss on available-for-sale investments 19 91

Dividend income (180) (161)

Interest income (97) (154)

Allowance for doubtful debts 363 16

Write-back of allowance for doubtful debts (24) (110)

Bargain purchase gain arising from acquisition of business 28 (4,109) -

Interest expense 1,528 1,252

Gain on disposal of available-for-sale investments (322) (13)

(Gain) Loss on disposal of property, plant and equipment (41) 155

Impairment loss on an investment property 1,116 -

Fair value gain on held-for-trading investments (276) (918)

Operating cash flows before movements in working capital 12,896 13,399fl

Available-for-sale investments (current assets) 33 (206)

Held-for-trading investments 434 1,098

Trade and other receivables (935) 315

Inventories (76) 49

Trade and other payables 721 (943)

Cash generated from operations 13,073 13,712

Interest paid (1,528) (1,252)

Interest received 97 154

Dividend received 180 161

Income tax paid - net of refund (1,211) (1,615)

Net cash from operating activities 10,611 11,160

(( )


31

CONSOLIDATED STATEMENT OF CASH FLOWSYear ended 31 December 2010


The GroupNote 2010 2009

$’000 $’000

Investing activities

Purchase of available-for-sale investments (non-current assets) (44) (530)

Proceeds from disposal of property, plant and equipment 45 35

Proceeds from disposal of available-for-sale investments 907 209

Additions to property, plant and equipment A (1,112) (1,085)

Arising from acquisition of business 28 (39,395) -

Additions to investment properties (11,469) (19)

Net cash used in investing activities (51,068) (1,390)

Financing activities

Proceeds from bank loans 46,738 16,662

Net proceeds from rights issue 35,869 -

Repayment of bank loans (27,540) (19,589)

Repayment of fi nance lease (1) -fi

Dividends paid (3,000) (3,000)

Net cash from (used in) fi nancing activities 52,066 (5,927)fi

Net increase in cash and cash equivalents 11,609 3,843

Cash and cash equivalents at beginning of year 13,241 9,183

Effect of currency exchange adjustment 991 215

Cash and cash equivalents at end of year 25,841 13,241

The Group2010 2009

$’000 $’000

Cash and cash equivalents consist of:

Cash on hand 126 120

Cash at bank 10,302 6,661

Fixed deposits 15,413 6,460

Total 6 25,841 13,241

Note A

During the fi nancial year, the Group acquired equipment with aggregate cost of $115,900 (2009 : Nil) of whichfi

$40,000 (2009 : Nil) was acquired under finance lease agreement.fi

( )

( , )( ,

( , ),

,

,,

,


32

NOTES TO FINANCIAL STATEMENTS 31 December 2010

1 GENERAL

The Company (Registration No. 196800298G) is incorporated in Singapore with its registered office and its fiprincipal place of business at 36 Newton Road, Singapore 307964. The financial statements are expressed fiin Singapore dollars, which is the functional currency of the Company.

The principal activity of the Company is that of a hotelier and investment holding. The principal activitiesof the subsidiaries are disclosed in Note 11.

On 2 December 1968, the Company was listed on the Main Board of Singapore Exchange Securities Trading Limited (“SGX-ST”).

The financial statements of the Group and the statement of fifi nancial position and statement of changes fiin equity of the Company for the year ended 31 December 2010 were authorised for issue by the board of directors on 18 March 2011.

2 SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

BASIS OF ACCOUNTING - The financial statements have been prepared in accordance with the historical ficost convention, except as disclosed in the accounting policies below and are drawn up in accordance with the provisions of the Singapore Companies Act and Singapore Financial Reporting Standards (“FRS”).

ADOPTION OF NEW AND REVISED STANDARDS - In the current financial year, the Group has adopted fifiall the new and revised FRSs and Interpretations of FRS (“INT FRS”) that are relevant to its operations and effective for annual periods beginning on or after 1 January 2010. The adoption of these new/revised FRSs and INT FRSs does not result in changes to the Group’s accounting policies and has no material effect on the amounts reported for the current or prior years, except as follows:

FRS 103 (2009) Business Combinations

FRS 103 (2009) has been adopted in the current year and is applied prospectively to business combinations for which the acquisition date is on or after 1 January 2010. The main impact of the adoption of FRS 103 (2009) Business Combinations on the Group has been:

• to allow a choice on a transaction-by-transaction basis for the measurement of non-controlling interests (previously referred to as ‘minority’ interests) either at fair value or at the non-controlling interests’ share of the fair value of the identifiable net assets of the acquiree.fi

• to change the recognition and subsequent accounting requirements for contingent consideration. Under the previous version of the Standard, contingent consideration was recognised at the acquisition date only if payment of the contingent consideration was probable and it could be measured reliably; any subsequent adjustments to the contingent consideration were recognised against goodwill. Under the revised Standard, contingent consideration is measured at fair value at the acquisition date; subsequent adjustments to the consideration are recognised against goodwill only to the extent that they arise from better information about the fair value at the acquisition date, and they occur within the ‘measurement period’ (a maximum of 12 months from the acquisition date). All other subsequent adjustments are recognised in profit or loss;fi

• where the business combination in effect settles a pre-existing relationship between the Group and the acquiree, to require the recognition of a settlement gain or loss; and

• to require that acquisition-related costs be accounted for separately from the business combination, generally leading to those costs being recognised as an expense in consolidated profit or loss as fiincurred, whereas previously they were accounted for as part of the cost of the acquisition.


33

NOTES TO FINANCIAL STATEMENTS31 December 2010

In the current period, these changes in policies have affected the accounting for the acquisition of the Coronade Hotel Kuala Lumpur and its business. The adoption of FRS 103 (2009) contributed $2.2 million and 0.03 cents decrease to the Group’s profit for the year and earnings per share in the statement of comprehensive fiincome.

FRS 103 (2009) has also required additional disclosures in respect of business combinations in the period.

Results in future periods may be affected by future impairment losses relating to the increased goodwill, and by changes in the fair value of contingent consideration recognised as a liability.

FRS 27 (2009) Consolidated and Separate Financial Statements

FRS 27 (2009) has been adopted for periods beginning on or after 1 January 2010 and has been applied retrospectively (subject to specified exceptions) in accordance with the relevant transitional provisions. The firevised Standard requires changes in ownership interests in its subsidiaries that do not result in a change in control, to be dealt within equity reserve, with no impact on goodwill or profit or loss.fi

When control of a subsidiary is lost as a result of a transaction, event or other circumstance, the revised Standard requires that the Group derecognise all assets, liabilities and non-controlling interests at their carrying amount. Any retained interest in the former subsidiary is recognised at its fair value at the date control is lost, with the gain or loss arising recognised in profit or loss. fi

The change in accounting policy has no impact on amounts reported in current or prior years.

At the date of authorisation of these financial statements, the following FRSs, INT FRSs and amendments fito FRS that are relevant to the Group and the Company were issued but not effective:

FRSs (Amendments) Improvements to FRSs (issued in October 2010)FRS 24 (Revised) Related Party DisclosuresAmendment to FRS 32 Financial Instruments : Presentation – Classification of rights issuefiAmendment to FRS 12 Income Taxes

Consequential amendments were also made to various standards as a result of these new/revised standards.

The management anticipates that the adoption of the above FRSs and amendments to FRS that were issued but only effective in future periods will not have no material impact on the financial statements of the Group fiand the Company in the period of their initial adoption, except for the following:

FRS 24 (Revised) Related Party Disclosures

FRS 24 (Revised) Related Party Disclosures is effective for annual periods beginning on or after 1 January 2011. The revised Standard clarifies the defifi nition of a related party and consequently additional parties may fibe identified as related to the reporting entity.fi

In addition, the revised Standard provides partial exemption for government-related entities, in relation to the disclosure of transactions, outstanding balances and commitments. Where such exemptions apply, the reporting entity has to make additional disclosures, including the nature of the government’s relationship with the reporting entity and information on significant transactions or groups of transactions involved. fi

In the period of initial adoption, the changes to related party disclosures, if any, will be applied retrospectively with restatement of the comparative information.


34


FRS 32 Classification of Rights Issuesfi

The amendments to FRS 32 address the classification of certain rights issues denominated in a foreign ficurrency as either an equity instrument or as a financial liability. To date, the Group has not entered into fiany arrangements that would fall within the scope of the amendments. However, if the Group does enter into any rights issues within the scope of the amendments in future accounting periods, the amendments to FRS 32 will have an impact on the classification of those rights issues.fi

Amendments to FRS 12 Income Taxes

The amendments to introduce an exception to the principle when deferred tax assets or deferred tax liabilities arise from;

• investment property measured using the fair value model in FRS 40 Investment Property; and

• investment property acquired in a business combination if it is subsequently measured using the fair value model in FRS 40.

Currently, the entity measures deferred tax assets and deferred tax liabilities arising from investment properties to reflect the tax consequences that would follow the manner in which the entity expects to recover flthe carrying amount of its investment properties (which may differ depending on whether the recovery is from use or from sale or from both). Such manner of recovery was based on estimates of future transactions based on current intention.

The amendments introduce a rebuttable presumption that the carrying amount of the investment property will be recovered entirely through sale. This presumption is rebutted if the investment property is depreciable and is held within a business model whose objective is to consume substantially all of the economic benefits fiover time, rather than through sale.

The amendments are effective for annual periods beginning on or after 1 January 2012. Early application is premitted. However, this is not applicable to the Group as the Group’s investment properties are stated at cost less accumulated depreciation and any accumulated impairment losses.

BASIS OF CONSOLIDATION - The consolidated financial statements incorporate the fifi nancial statements fiof the Company and entities (including special purpose entities) controlled by the Company (its subsidiaries). Control is achieved where the Company has the power to govern the financial and operating policies of an fientity so as to obtain benefits from its activities.fi

The results of subsidiaries acquired or disposed of during the year are included in the consolidated statementof comprehensive income from the effective date of acquisition or up to the effective date of disposal, as appropriate.

Where necessary, adjustments are made to the financial statements of subsidiaries to bring their accountingfipolicies into line with those used by other members of the Group.

All intra-group transactions, balances, income and expenses are eliminated on consolidation.

Non-controlling interests in subsidiaries are identifi ed separately from the Group’s equity therein. The interests fiof non-controlling shareholders may be initially measured (at date of original business combination) either at fair value or at the non-controlling interests’ proportionate share of the fair value of the acquiree’s identifiablefinet assets. The choice of measurement basis is made on an acquisition by-acquisition basis. Subsequent to acquisition, the carrying amount of non-controlling interests is the amount of those interests at initial recognition plus the non-controlling interests’ share of subsequent changes in equity. Total comprehensiveincome is attributed to non-controlling interests even if this results in the non-controlling interests having a deficit balance.fi


37


Financial assets

Investments are recognised and de-recognised on a trade date where the purchase or sale of an investment is under a contract whose terms require delivery of the investment within the timeframe established by the market concerned, and are initially measured at fair value, net of transaction costs except for those financial fiassets classified as at fair value through profifi t or loss which are initially measured at fair value. fi

Other financial assets are classififi ed into the following specififi ed categories: fifi nancial assets “at fair value fithrough profit or loss”, “available-for-sale” fifi nancial assets and “loans and receivables”. The classififi cation fidepends on the nature and purpose of financial assets and is determined at the time of initial recognition.fi

Financial assets at fair value through profig p t or loss (FVTPL)( )fi

Financial assets are classified as at FVTPL where the fifi nancial asset is either held for trading or it is designated fias at FVTPL.

A financial asset is classififi ed as held-for-trading if:fi

• it has been acquired principally for the purpose of selling in the near future; or

• it is a part of an identified portfolio of fifi nancial instruments that the Company manages together and fihas a recent actual pattern of short-term profit-taking; or fi

• it is a derivative that is not designated and effective as a hedging instrument.

A financial asset other than a fifi nancial asset held for trading may be designated as at FVTPL upon initial firecognition if:

• such designation eliminates or significantly reduces a measurement or recognition inconsistency that fiwould otherwise arise; or

• the financial asset forms part of a group of fifi nancial assets or fifi nancial liabilities or both, which is fimanaged and its performance is evaluated on a fair value basis, in accordance with the Company’s documented risk management or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and FRS 39 permits the entire combined contract (asset or liability) to be designated as at FVTPL.

Financial assets at fair value through profit or loss are stated at fair value, with any resultant gain or loss firecognised in profit or loss. The net gain or loss recognised in profifi t or loss incorporates any dividend or fiinterest earned on the financial asset. Fair value is determined in the manner described in Note 4.fi

Available-for-sale financial assetsfi

Certain shares and debt securities held by the Group are classified as being available-for-sale and are stated at fifair value. Fair value is determined in the manner described in Note 4. Gains and losses arising from changes in fair value are recognised in other comprehensive income with the exception of impairment losses, interest calculated using the effective interest method and foreign exchange gains and losses on monetary assets which are recognised directly in profit or loss. Where the investment is disposed of or is determined to be fiimpaired, the gain or loss previously recognised in other comprehensive income and accumulated in the fair value reserve is reclassified in profifi t or loss for the period. Dividends on available-for-sale equity instruments fiare recognised in profit or loss when the Group’s right to receive payments is established. The fair value of fiavailable-for-sale monetary assets denominated in a foreign currency is determined in that foreign currency and translated at the spot rate at reporting date. The change in fair value attributable to translation differences


38


that result from a change in amortised cost of the asset is recognised in profit or loss, and other changes are firecognised in other comprehensive income.

Loans and receivables

Trade receivables, loans and other receivables that have fixed or determinable payments that are not fiquoted in an active market are classified as “loans and receivables”. Loans and receivables are measured at fiamortised cost using the effective interest method less impairment. Interest is recognised by applying the effective interest rate method, except for short-term receivables when the recognition of interest would be immaterial.

Impairment of fip nancial assetsfi

Financial assets, other than those at fair value through profit or loss, are assessed for indicators of impairment fiat the end of each reporting period. Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after the initial recognition of the financial asset, the estimated fifuture cash flows of the investment have been impacted. For fifl nancial assets carried at amortised cost, the fiamount of the impairment is the difference between the asset’s carrying amount and the present value of estimated future cash flows, discounted at the original effective interest rate.fl

The carrying amount of the financial asset is reduced by the impairment loss directly for all fifi nancial assets fiwith the exception of trade receivables where the carrying amount is reduced through the use of an allowance account. When a trade receivable is uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off are credited to the allowance account. Changes in the carrying amount of the allowance account are recognised in profit or loss.fi

With the exception of available-for-sale equity instruments, if, in a subsequent period, the amount of the impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously recognised impairment loss is reversed through profit or loss fito the extent the carrying amount of the investment at the date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not been recognised.

In respect of available-for-sale equity instruments, any subsequent increase in fair value after an impairment loss, is recognised directly in other comprehensive income.

Derecognition of fig nancial assetsfi

The Group derecognises a financial asset only when the contractual rights to the cash flfi ows from the asset flexpire, or it transfers the financial asset and substantially all the risks and rewards of ownership of the asset fito another entity. If the Group neither transfers nor retains substantially all the risk and rewards of ownership and continues to control the transferred asset, the Group recognises its retained interest in the assets and an associated liability for amounts it may have to pay. If the Group retains substantially all the risks and rewards of ownership of a transferred financial asset, the Group continues to recognise the fifi nancial asset and also firecognises a collateralised borrowing for the proceeds received.

Cash and cash equivalentsq

Cash and cash equivalents comprise cash on hand and demand deposits, bank overdrafts, and other short-term highly liquid investments that are readily convertible to a known amount of cash and are subject to an insignificant risk of changes in value.fi


39


Financial liabilities and equity instruments

Classification as debt or equityq yfi

Financial liabilities and equity instruments issued by the Group are classified according to the substance of the ficontractual arrangements entered into and the definitions of a fifi nancial liability and an equity instrument. fi

Equity instrumentsq y

An equity instrument is any contract that evidences a residual interest in the assets of the Group after deducting all of its liabilities. Equity instruments are recorded at the proceeds received, net of direct issue costs.

Financial liabilities

Trade and other payables are initially measured at fair value, net of transaction costs, and are subsequently measured at amortised cost, using the effective interest method, with interest expense recognised on an effective yield basis.

Interest-bearing bank loans and overdrafts are initially measured at fair value, and are subsequently measured at amortised cost, using the effective interest method. Any difference between the proceeds (net of transaction costs) and the settlement or redemption of borrowings is recognised over the term of the borrowings in accordance with the Group’s accounting policy for borrowing costs (see below).

Financial guarantee contract liabilities are measured initially at their fair values and subsequently at the higher of the amount recognised as a provision and the amount initially recognised less cumulative amortisation in accordance with the revenue recognition policies described below.

Derecognition of fig nancial liabilitiesfi

The Group derecognises financial liabilities when, and only when, the Group’s obligations are discharged, ficancelled or they expire.

Derivative financial instruments fi

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently remeasured to their fair value at the end of each reporting period. The resulting gain or loss is recognised in profit or loss immediately unless the derivative is designated and effective as a hedging fiinstrument, in which event the timing of the recognition in profit or loss depends on the nature of the hedge firelationship.

Embedded derivatives

Derivatives embedded in other financial instruments or other host contracts are treated as separate derivatives fifiwhen their risks and characteristics are not closely related to those of the host contracts and the host contracts are not measured at fair value with changes in fair value recognised in profit or loss.fi

INVENTORIES - Inventories comprising mainly consumables are stated at the lower of cost (weighted average method) and net realisable value. Cost includes all costs of purchase and other costs incurred in bringing the inventories to their present location and condition. Net realisable value represents the estimated selling price less all estimated costs to be incurred in marketing, selling and distribution.

PROPERTY, PLANT AND EQUIPMENT - Property, plant and equipment are stated at cost less accumulated depreciation and any accumulated impairment losses except for freehold land-hotels which are stated at revalued amounts.


40


Revaluations of freehold land - hotels are performed with sufficient regularity such that the carrying amounts fido not differ materially from that which would be determined using fair values at the end of the reporting period.

For the freehold land-hotels which has been revalued, the revaluation increase arising on the revaluation of freehold land-hotel is recognised in other comprehensive income and accumulated in the asset revaluation reserve, except to the extent that it reverses a revaluation decrease for the same asset previously recognised in profit or loss, in which case the increase is credited to profifi t or loss to the extent of the decrease previously ficharged. A decrease in carrying amount arising on the revaluation of freehold land-hotel is charged to profit fior loss to the extent that it exceeds the balance, if any, held in the asset revaluation reserve relating to a previous revaluation of that asset.

On subsequent sale or retirement of a revalued freehold land, the attributable revaluation surplus remainingin the asset revaluation reserve is transferred directly to retained earnings.

Depreciation is charged so as to write off the cost of assets, other than freehold land, over their estimated useful lives, using the straight-line method except for linen, china, glassware, silver and uniforms where the original expenditure has been written down to approximately one-half of the original cost and all subsequent purchases have been written off as replacements. The estimated useful lives are as follows:

Number of years

Freehold buildings - hotels 80 Building improvement - hotels 20 to 25 Plant and equipment 3 to 10

Depreciation is not provided on freehold land-hotels and freehold land for redevelopment.

The estimated useful lives and depreciation method are reviewed at each year end, with the effect of any changes in estimate accounted for on a prospective basis.

The gain or loss arising on disposal or retirement of an item of property, plant and equipment is determined as the difference between the sales proceeds and the carrying amount of the asset and is recognised in profit fior loss.

Fully depreciated assets still in use are retained in the financial statements.fi

INVESTMENT PROPERTIES - Investment properties are held on a long-term basis for investment potential and income. Investment properties are stated at cost less accumulated depreciation and any accumulated impairment losses.

Depreciation is charged so as to write off the cost, other than freehold land, over their estimated useful lives,using the straight-line method. The estimated useful lives are as follows:

Number of years

Freehold buildings 50 to 80Leasehold buildings 80*

* Leasehold buildings acquired are depreciated over the shorter of remaining useful life or the terms of the relevant lease.

Investment properties in the course of construction are carried at cost, less any recognised impairment loss. Cost includes professional fees and for qualifying assets, borrowing costs capitalised in accordance with the Group’s accounting policy. Depreciation of these assets commences when the assets are ready for their intended use.


42


The amount recognised as provision is the best estimate of the consideration required to settle the present obligation at the end of the reporting period, taking into account the risks and uncertainties surrounding the obligation. Where a provision is measured using the cash flows estimated to settle the present obligation, its flcarrying amount is the present value of those cash flows.fl

When some or all of the economic benefits required to settle a provision are expected to be recovered from fia third party, the receivable is recognised as an asset if it is virtually certain that reimbursement will be received and the amount of the receivable can be measured reliably.

LEASES - Leases are classified as fifi nance leases whenever the terms of the lease transfer substantially all fithe risks and rewards of ownership to the lessee. All other leases are classified as operating leases.fi

The Group as lessorp

Rental income from operating leases is recognised on a straight-line basis over the term of the relevant lease. Initial direct costs incurred in negotiating and arranging an operating lease are added to the carrying amount of the leased asset and recognised in profit or loss on a straight-line basis over the lease term.fi

The Group as lesseep

Assets held under finance leases are recognised as assets of the Group at their fair value at the inception fiof the lease or, if lower, at the present value of the minimum lease payments. The corresponding liability to the lessor is included in the statement of financial position as a fifi nance lease obligation. Lease payments are fiapportioned between finance charges and reduction of the lease obligation so as to achieve a constant rate fiof interest on the remaining balance of the liability. Finance charges are charged directly to profit or loss, fiunless they are directly attributable to qualifying assets, in which case they are capitalised in accordance with the Group’s general policy on borrowing costs (see below). Contingent rentals are recognised as expenses in the periods in which they are incurred.

BORROWING COSTS - Borrowing costs directly attributable to the acquisition, construction or production of qualifying assets, namely assets that necessarily take a substantial period of time to get ready for their intended use or sale, are capitalised as part of the cost of these assets until such time as the assets are substantially ready for their intended use or sale.

All other borrowing costs are recognised in profit or loss in the period in which they are incurred.fi

REVENUE RECOGNITION - Revenue is measured at the fair value of the consideration received or receivable and represents amounts receivable for goods and services provided in the normal course of business, net of discounts and sales related taxes.

Hotel room revenue is recognised based on room occupancy while other hotel related revenue is recognisedwhen the goods are delivered or the services are rendered to the customers.

Interest income is accrued on a time basis, by reference to the principal outstanding and at the effective interest rate applicable, which is the rate that exactly discounts estimated future cash receipts through the expected life of the financial asset to that asset’s net carrying amount.fi

Dividend income from investments is recognised when the shareholders’ rights to receive payment have been established.

Income from providing financial guarantee is recognised in profifi t or loss over the guarantee period on a fistraight line basis.

EMPLOYEE LEAVE ENTITLEMENT - Employee entitlements to annual leave are recognised when they accrue to employees. A provision is made for the estimated liability for annual leave as a result of services rendered by employees up to the end of the reporting period.


43


RETIREMENT BENEFIT COSTS - Payments to defined contribution retirement benefififi t plans are charged fias an expense in profit or loss as they fall due. Payments made to state-managed retirement benefifi t schemes, fisuch as the Singapore Central Provident Fund and Employee Provident Fund are dealt with as payments to defined contribution plans where the Group’s obligations under the plans are equivalent to those arising in fia defined contribution retirement benefifi t plan.fi

A subsidiary operates an unfunded, defined benefifi t Retirement Benefifi t Scheme (“the Scheme”) for its fieligible employees. The subsidiary’s obligation under the Scheme, calculated using the Projected Unit Credit Method, is determined based on actuarial computations by independent actuary, through which the amount of benefit that employees have earned in return for their service in the current and prior years is estimated. fiThat benefit is discounted in order to determine its present value.fi

Actuarial gains and losses are recognised as income or expense in profit or loss over the expected average firemaining working lives of the participating employees when the cumulative unrecognised actuarial gains or losses for the Scheme exceed 10% of the present value of the defined benefifi t obligation. Past service costs fiare recognised in profit or loss immediately to the extent that the benefifi ts are already vested, and otherwise fiare amortised on a straight-line basis over the average period until the amended benefits become vested.fi

The amount recognised in the statement of financial position represents the present value of the defifi ned fibenefit obligations adjusted for unrecognised actuarial gains and losses and unrecognised past service costs. fiAny asset resulting from this calculation is limited to the net total of any unrecognised actuarial losses and past service costs, and the present value of any economic benefits in the form of refunds or reductions in fifuture contributions to the plan.

INCOME TAX - Income tax expense represents the sum of the tax currently payable and deferred tax.

The tax currently payable is based on taxable profit for the year. Taxable profifi t differs from profifi t as reported fiin the profit and loss statement because it excludes items of income or expense that are taxable or deductible fiin other years and it further excludes items that are not taxable or tax deductible. The Group’s liability for current tax is calculated using tax rates (and tax laws) that have been enacted or substantively enacted in countries where the Company and subsidiaries operate by the end of the reporting period.

Deferred tax is recognised on differences between the carrying amounts of assets and liabilities in the financial fistatements and the corresponding tax bases used in the computation of taxable profit, and is accounted fifor using the balance sheet liability method. Deferred tax liabilities are generally recognised for all taxable temporary differences and deferred tax assets are recognised to the extent that it is probable that taxable profits will be available against which deductible temporary differences can be utilised. Such assets and filiabilities are not recognised if the temporary difference arises from goodwill or from the initial recognition (other than in a business combination) of other assets and liabilities in a transaction that affects neither the taxable profit nor the accounting profifi t.fi

Deferred tax liabilities are recognised for taxable temporary differences arising on investments in subsidiaries, except where the Group is able to control the reversal of the temporary difference and it is probable that the temporary difference will not reverse in the foreseeable future.

Deferred tax is calculated at the tax rates that are expected to apply in the period when the liability is settled or the asset realised based on the tax rates (and tax laws) that have been enacted or substantively enacted by the end of the reporting period.

Deferred tax assets and liabilities are offset when there is a legally enforceable right to set off current tax assets against current tax liabilities and when they relate to income taxes levied by the same taxation authority and the Group intends to settle its current tax assets and liabilities on a net basis.

Current and deferred tax are recognised as an expense or income in profit or loss, except when they relate to fiitems credited or debited outside profit or loss (either in other comprehensive income or directly in equity), fi


44


in which case the tax is also recognised outside profit or loss (either in other comprehensive income or fidirectly in equity), or where they arise from the initial accounting for a business combination. In the case of a business combination, the tax effect is taken into account in calculating goodwill or determining the excess of the acquirer’s interest in the net fair value of the acquiree’s identifiable assets, liabilities and contingent filiabilities over cost.

FOREIGN CURRENCY TRANSACTIONS AND TRANSLATION - The individual financial statements fiof each Group entity are measured and presented in the currency of the primary economic environment in which the entity operates (its functional currency). The consolidated financial statements of the Group fiand the statement of financial position and statement of changes in equity of the Company are presented in fiSingapore dollars, which is the functional currency of the Company, and the presentation currency for the consolidated financial statements.fi

In preparing the financial statements of the individual entities, transactions in currencies other than the fientity’s functional currency are recorded at the rates of exchange prevailing on the date of the transaction. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing on the end of the reporting period. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing on the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated.

Exchange differences arising on the settlement of monetary items, and on retranslation of monetary items are included in profit or loss for the period. Exchange differences arising on the retranslation of non-monetary fiitems carried at fair value are included in profit or loss for the period except for differences arising on the firetranslation of non-monetary items in respect of which gains and losses are recognised in other comprehensive income. For such non-monetary items, any exchange component of that gain or loss is also recognised in other comprehensive income.

For the purpose of presenting consolidated financial statements, the assets and liabilities of the Group’s foreign fifioperations (including comparatives) are expressed in Singapore dollars using exchange rates prevailing on the end of the reporting period. Income and expense items (including comparatives) are translated at the average exchange rates for the period, unless exchange rates fluctuated signififl cantly during that period, fiin which case the exchange rates at the dates of the transactions are used. Exchange differences arising, if any, are recognised in other comprehensive income and accumulated in the Group’s translation reserve. Such translation differences accumulated in the translation reserve shall be reclassified to profifi t or loss (as fia reclassification adjustment) in the period in which the foreign operation is disposed of.fi

On consolidation, exchange differences arising from the translation of the net investment in foreign entities (including monetary items that, in substance, form part of the net investment in foreign entities), and of borrowings and other currency instruments designated as hedges of such investments, are recognised in other comprehensive income and accumulated in translation reserve.

Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the closing rate.

3 CRITICAL ACCOUNTING JUDGEMENTS AND KEY SOURCES OF ESTIMATION UNCERTAINTY

In the application of the Group’s accounting policies, which are described in Note 2 above, management is required to make judgements, estimates and assumptions about the carrying amounts of assets and liabilities that are not readily apparent from other sources. The estimates and associated assumptions are based on historical experience and other factors that are considered to be relevant. Actual results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period of the revision and future periods if the revision affects both current and future periods.


46


Impairment indicators of investment properties (Note 13) and property, plant and equipment (Note 12)p p p ( ) p p y, p q p ( )

Management engages independent professional valuers to assess the market values of investment properties and hotel buildings which are measured using cost model, and based on the market values, an impairment loss of investments properties of $1.1 million (2009 : Nil) for the Group was determined.

Key sources of estimation uncertainty

The key assumptions concerning the future, and other key sources of estimation uncertainty at the end of the reporting period, that have a significant risk of causing a material adjustment to the carrying amounts of fiassets and liabilities within the next financial year, are discussed below.fi

Allowance for doubtful debts (Note 9)( )

Management considered the recoverability of the Group’s trade receivables and have made estimates for unrecoverable amounts based on objective evidence of debtors’ financial status. Allowances made are as fidisclosed in Note 9.

Fair values of net assets arising from acquisition of business (Note 28)g q ( )

In 2010, the Group acquired The Coronade Hotel Kuala Lumpur, which was accounted for using the acquisition method. As at 31 December 2010, the Group has applied the acquisition method using the fair values of the net assets of the acquiree as described in Note 28.

Retirement benefit obligations (Note 17)g ( )fi

The subsidiary, Faber Kompleks Sdn. Bhd., operates an unfunded defined benefifi t Retirement Benefifi t Scheme fithat requires actuarial estimates to determine the present value of the benefit obligations. The basis of fiestimates is described in Note 17.

Fair values of held-for-trading and available-for-sale investments (Notes 7 and 8)g ( )

The basis of determining the fair values of held-for-trading investments and available-for-sale investments are described in Note 4(c)(vi). Certain of these investments amounting to $4.5 million (2009 : $5.1 million) for the Group and $0.4 million (2009 : $0.3 million) for the Company are not traded in active markets, and therefore their fair values are obtained from other sources which involve estimates. Management is satisfied fias to the reasonableness and objectivity of these estimates.

Useful lives of investment properties and property, plant and equipmentp p p p y, p q p

Management exercises their judgement in estimating the useful lives of the depreciable assets which takes into consideration the physical conditions of the assets and their legal useful lives. Depreciation is provided to write off the cost of investment properties (Note 13) and property, plant and equipment (Note 12) over their estimated useful lives, using the straight-line method.

Freehold land - hotels at revalued amounts (Note 12)( )

Management engages independent professional valuers to assess the market values of freehold land-hotels on a regular basis to ensure that their revalued carrying amounts are not materially different from their fair values as at end of the reporting period. The market values as at 31 December 2010 were assessed by independent professional valuers, taking into account open market values of similar properties in Singapore and Malaysia on existing use basis, and considering current occupancy rates, room rates and rental rates of hotel premises prevailing at and around end of the reporting period.


47


4 FINANCIAL INSTRUMENTS, FINANCIAL RISKS AND CAPITAL RISKS MANAGEMENT

(a) Categories of financial instrumentsfi

The following table sets out the financial instruments as at the end of the reporting period:fi

The Group The Company 2010 2009 2010 2009

$’000 $’000 $’000 $’000Financial assetsFair value through profit or lossfi(FVTPL): Held-for-trading investments 4,956 5,114 397 318Loans and receivables (including

cash and cash equivalents) 30,742 17,659 52,226 49,006Available-for-sale investments 7,168 7,322 2,152 1,992

Financial liabilitiesAmortised cost 83,940 63,116 11,652 20,121Financial guarantee - - 5,044 -

(b) Financial risk management policies and objectives

The Group’s overall financial risk management programme seeks to minimise potential adverse fieffects of financial performance of the Group. fi

The Group’s activities expose it to a variety of financial risks, including the effects of changes in fiforeign currency exchange rates, interest rates and equity prices. The Group does not hold or issue derivative financial instrument for speculative purposes.fi

The Group invested in a variety of financial instruments such as bonds, fifi xed income funds, equity fishares, structured notes with embedded derivatives and managed funds as disclosed in Notes 7 and 8. These investments are subject to a variety of financial risks, including credit risk of counterparties, filiquidity risk, interest rate risk, foreign currency risk, and other market risks related to prices of equity, commodities or real estates.

The Group engaged professional investment managers from banks to manage the risks and returns from these investments. Investment risk is managed primarily by diversification in asset classes, ficurrency denomination and geographical region. All investment accounts opened with professional investment managers from banks are approved by the board of directors.

For certain investment accounts (managed funds), the professional investment managers from the banks are given the discretionary powers to make investment decisions on behalf of management based on specified guidelines. The risks and performance of such managed funds are measured and fievaluated by the fair values of the underlying investments on an overall portfolio basis.

It will not be practical to provide an analysis of the various types of financial risks for certain types of fiinvestments (such as managed funds) given the dynamic management of the portfolio or the variety of the underlying instruments involved.

The maximum exposure on the investments is limited to the carrying amounts recognised in the financial statements.fi

There has been no change to the Group’s exposure to financial risks or the manner in which it fimanages and measures the risks. Financial risk exposures, to the extent practicable, are described below.


48


(c) Exposure to financial risksfi

i) Credit risk

The Group’s credit risk is primarily attributable to its cash and bank balances, trade and other receivables and investments. Cash and fixed deposits are placed with creditworthy fifi nancial fiinstitutions. The trade and other receivables presented in the statement of financial position fiare net of allowances for doubtful receivables, estimated by management based on prior experience and the current economic condition. Investments are also subject to credit risk, which have been factored in the determination of their fair values.

The Group has no significant concentration of credit risk, with exposure spread over a large finumber of counterparties and customers.

The carrying amounts of financial assets recorded in the fifi nancial statements, grossed up for fiany allowances for losses represents the Group’s maximum exposure to credit risk.

ii) Interest rate risk

Summary quantitative data of the Group’s interest-bearing financial instruments can be found fiin Section (v) below. The Group is exposed to interest rate risk through the impact of rate changes on interest bearing liabilities and assets.

Further information related to interest rate and maturities of bank loans is disclosed in Notes 14 and 18.

Interest rate sensitivity

The sensitivity analyses below have been determined based on the exposure to interest rates for interest-bearing financial assets and fifi nancial liabilities at the end of the reporting period. fiA 50 basis point increase or decrease is used when reporting interest rate risk sensitivity internally to the board of directors.

If interest rates had been 50 basis points higher or lower and all other variables were held constant:

• the Group’s profit for the year ended 31 December 2010 would decrease/increase by fiapproximately $0.4 million (2009 : decrease/increase by $0.3 million). This is mainly attributable to the Group’s exposure to interest rate risk on its variable rate borrowings and its investments in quoted bonds and fixed income funds measured at fair value fithrough profit or loss.fi

• the Company’s profit for the year ended 31 December 2010 would decrease/increase fiby approximately $0.1 million (2009 : decrease/increase by $0.1 million). This is mainly attributable to the Company’s exposure to interest rate risk on its variable rate borrowings.

The above analysis may not be fully reflective of the Group’s exposure to interest rate risk as flthe extent of interest rate sensitivity of the Group’s investments may vary given the dynamic management of the portfolio and the variety of the instruments involved.

iii) Foreign currency risk

The Group’s foreign currency exposures arose mainly from the exchange rate movements of the United States dollar, the Euro, the Australian dollar, the Great Britain pound, the Malaysian ringgit and the Swiss franc vis-a-vis the functional currencies of the Group entities.


50


If the relevant foreign currency weakens by 5% against the functional currency of each Group entity, there will be an equal and opposite effect on profit or loss and other comprehensive fiincome.

In addition, the Group is exposed to currency translation risk as it has significant subsidiaries fioperating in New Zealand and Malaysia. For the year ended 31 December 2010, approximately 12% (2009 : 18%) of the Group’s net assets is denominated in New Zealand dollar and approximately 13% (2009 : 6%) is denominated in Malaysian ringgit.

iv) Price risk managementg

The Group is exposed to price risks arising from its investments classified as held-for-trading fiand available-for-sale. These investments include equity shares, and instruments whose fair values are subject to volatility in equity prices, commodity prices or real estate prices. 10% is the sensitivity rate used when reporting price risk internally to the board of directors.

Further details of these investments can be found in Notes 7 and 8.

Price sensitivity

The sensitivity analyses below have been determined based on the exposure to price risks of investments at the reporting date.

In respect of the Group’s investments, if prices had been 10% higher/lower while all other variables were held constant:

• the Group’s profit for the year ended 31 December 2010 would increase/decrease by fiapproximately $0.4 million (2009 : $0.4 million); and

• the Group’s other comprehensive income would increase/decrease by approximately $0.6 million (2009 : $0.7 million).

In respect of the Company’s investments, if prices had been 10% higher/lower while all other variables were held constant:

• the Company’s profit for the year ended 31 December 2010 would increase/decrease by fiapproximately $0.04 million (2009 : increase/decrease by $0.03 million).

• the Company’s other comprehensive income for the year ended 31 December 2010 would increase/decrease by approximately $0.1 million (2009 : increase/decrease by $0.1 million).

v) Liquidity riskq y

Liquidity risk reflects the risk that the Group will have insuffifl cient resources to meet its fifinancial liabilities as they fall due. fi

As at 31 December 2010, total current liabilities exceeded total current assets by $5.3 million (2009 : $16.2 million) for the Company. This is mainly due to some of the Company’s bank loans being arranged on short-term revolving basis, as the interest rates are more favourable.

Management assesses the availability of credit facilities and compliance with loans covenants on an on-going basis and no matters have been drawn to its attention that the roll-over of the short-term financing may not be forthcoming or that covenants have been breached. The fiGroup and the Company have unutilised credit facilities totalling $138.9 million (2009 : $81.7 million) and $105.1 million (2009 : $66.7 million) respectively.


51


Liquidity and interest risk analyses

Financial liabilities

The following tables detail the remaining contractual maturity for non-derivative financial filiabilities. The tables have been drawn up based on the undiscounted cash flows of fifl nancial filiabilities based on the earliest date on which the Group and Company can be required to pay. The table includes both interest and principal cash flows. The adjustment column represents flthe possible future cash flows attributable to the instrument included in the maturity analysis flwhich is not included in the carrying amounts of the financial liabilities on the statements of fifinancial position.fi

Weighted average On demand effective or within Within interest rate 1 year 2 to 5 years After 5 years Adjustment Total

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 2010 2009 % p.a. % p.a. $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

The Group

Non-interest bearing NA NA 5,541 4,845 - - - - - - 5,541 4,845

Variable interest

rate instruments 4.37 1.72 11,573 18,993 42,572 4,438 27,680 35,836 (3,426) (996) 78,399 58,271

The Company

Non-interest bearing NA NA 7,346 2,072 - - - - - - 7,346 2,072

Variable interest

rate instruments 1.71 2.29 9,510 18,462 - - - - (160) (413) 9,350 18,049

NA: not applicable.

The company has given corporate guarantees to banks for credit facilities granted to certain subsidiaries of the Group, as disclosed in Note 30. The earliest period that the guarantee could be called is within 1 year (2009 : 1 year) from the end of the reporting period. Management considers that it is more likely than not that no amount will be payable under these intra-group financial guarantee arrangements.fi

Financial assets

The following table details the expected maturity for non-derivative financial assets. The tables fibelow have been drawn up based on the undiscounted contractual maturities of the financial fiassets including interest that will be earned on those assets except where the Group and the Company anticipates that the cash flow will occur in a different period. The adjustment flcolumn represents the possible future cash flows attributable to the instrument included in flthe maturity analysis which are not included in the carrying amounts of the financial assets on fithe statements of financial position.fi

Weighted average effective On demand interest rate or within 1 year Within 2 to 5 years Adjustment Total

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

% p.a. % p.a. $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000

The Group

Non-interest bearing NA NA 22,228 19,071 4,398 3,851 - - 26,626 22,922 Fixed interest rate instruments 0.37 0.28 15,470 6,478 - - (57) (18) 15,413 6,460 Variable interest rate instruments - 1.37 827 723 - - - (10) 827 713

,,,, ( ) ( )


52


Weighted average effective On demand interest rate or within 1 year Within 2 to 5 years Adjustment Total

2010 2009 2010 2009 2010 2009 2010 2009 2010 2009

% p.a. % p.a. $’000 $’000 $’000 $’000 $’000 $’000 $’000 $’000The Company

Non-interest bearing NA NA 3,260 3,306 1,778 1,633 - - 5,038 4,939Fixed interest rate instruments 1.47 1.66 9,106 1,563 41,362 45,584 (731) (770) 49,737 46,377

vi) Fair value of financial assets and fifi nancial liabilitiesfi

The fair values of financial assets and fifi nancial liabilities are determined as follows:fi

• Cash and fixed depositsfi

The carrying amounts of cash and fixed deposits approximate their fair values due to fitheir short-term maturities.

• Held-for-trading and available-for-sale investments

Held-for-trading and available-for-sale investments that are measured at fair values amounted to $5.0 million (2009 : $5.1 million) and $6.4 million (2009 : $6.5 million) respectively for the Group and $0.4 million (2009 : $0.3 million) and $1.4 million (2009 : $1.2 million) respectively for the Company.

The information on the basis of fair values are classified into the following 3 ficategories:

The Group The Company 2010 2009 2010 2009 $’000 $’000 $’000 $’000

Level 1 6,810 6,503 1,371 1,211

Level 2 2,926 3,123 210 204

Level 3 1,607 2,029 187 114

Level 1 : Fair values are determined using quoted prices in active markets for identical instruments (without modification and repackaging). These include quoted fibonds, shares and fixed income funds.fi

Level 2 : Fair values are estimated using inputs other than quoted prices included in Level 1 that are observable, either directly or indirectly. These include managed funds measured at redemption net asset values provided by fund managers, and certain structured products with prices available from dealers.

Level 3 : Fair values are derived using inputs that are not based on observable market data. These include structured products and instruments measured based on fair values provided by the banks’ investment managers.


53


Reconciliation of movements in Level 3 financial assets:fi

Fair value through profit or loss:fi


Opening balance 2,029 2,373 114 70Fair value gains (144) 70 71 - Exchange difference (31) - (15) - Purchases 659 374 53 44Disposals (906) (788) (36) - Closing balance 1,607 2,029 187 114

• Trade receivables, other receivables, trade payables and other payables

The carrying amounts of these balances approximate their fair values because of the immediate or short-term maturity of those financial instruments.fi

• Finance lease and bank loans

The fair values of finance lease and bank loans are disclosed in Notes 14, 16 and 18.fi

(d) Capital risk management policies and objectives

The Group manages its capital to ensure that entities in the Group will be able to continue as a going concern while maximising the return to stakeholders through the optimisation of the debt and equity balance.

The capital structure of the Group consists of debt, which includes the bank borrowings disclosed in Notes 14, 16 and 18, and equity comprising share capital disclosed in Note 20, reserves and retained earnings.

The Group reviews the capital structure on an annual basis. As a part of this review, the Group considers the cost of capital and the risks associated with each class of capital. The Group seeks to balance its overall capital structure through the payment of dividends, new share issues and share buy-backs as well as the obtaining of new debts, refinancing or redemption of existing debts.fi

The Group’s overall strategy remains unchanged from 2009. The bank loans require the Group to comply with certain financial covenants with respect of the market values of asset collaterals, and fithere has been no non-compliance with these externally imposed capital requirements during the year.

5 RELATED PARTY TRANSACTIONS

Related parties are entities with common direct or indirect shareholders and/or directors. Parties are considered to be related if one party has the ability to control the other party or exercise significant inflfi uence flover the other party in making financial and operating decisions.fi


54


Compensation of directors and key management personnel

The remuneration of directors and other members of key management personnel during the year was as follows:

The Group 2010 2009 $’000 $’000

Short-term benefits 749 1,061fiPost-employment benefits 20 53fi

769 1,114

The remuneration of directors and key management is determined by the remuneration committee having regard to the performance of individuals and market trends.

Other related party transactions with a director and certain key management personnel:

The Group 2010 2009 $’000 $’000

Fees paid to a director in respect of professional services 41 41Rental paid to key management personnel for staffing housing 43 43fiCommission paid to a related party in respect of services rendered 25 - Money-changing transactions 2 28

During the year, the Company entered into an agreement with a related party (a company with common directors and in which certain directors have interest) to jointly redevelop the freehold land at 1A Surrey Road into a residential investment property as disclosed in Note 13.

6 CASH AND BANK BALANCES The Group The Company

2010 2009 2010 2009 $’000 $’000 $’000 $’000

Cash on hand 126 120 79 83Cash at bank 10,302 6,661 944 624Fixed deposits 15,413 6,460 8,974 1,537Total 25,841 13,241 9,997 2,244

Fixed deposits bear interest ranging from 0.02% to 3.25% (2009 : 0.07% to 2.00%) per annum and for a tenure ranging from 8 to 92 days (2009 : 13 to 91 days) for the Group and 0.13% to 0.22%(2009 : 0.11% to 0.54%) per annum and for a tenure of 8 to 92 days (2009 : 30 to 91 days) for the Company.

The Group and Company’s cash and bank balances that are not denominated in the functional currencies of the respective entities are as follows:


United States dollar 2,141 1,657 1 23Great Britain pound 176 197 - - Hong Kong dollar 5 8 - - Euro 1 410 - -

Swiss Franc - 156 - - Australian dollar - 79 - -


55


7 HELD-FOR-TRADING INVESTMENTS


Quoted bonds 827 714 - - Quoted fixed income funds 171 270 - - fiStructured notes with embedded derivatives 2,782 2,780 210 204Managed funds and alternative investments 1,176 1,350 187 114 4,956 5,114 397 318

The Group’s investments in quoted bonds in 2009 have average effective interest rate of 3.85% per annum and had matured August 2010.

Investments in quoted bonds, quoted fixed income funds, structured notes with embedded derivatives, and fimanaged funds offer the Group and the Company the opportunity for return through fair value gains.

The Group and Company’s held for trading investments that are not denominated in the functional currencies of the respective entities are as follows:


United States dollar 1,469 1,010 188 114Euro 239 168 - -

8 AVAILABLE-FOR-SALE INVESTMENTS


Current assets

Equity-linked funds 575 1,022 - - Quoted equity shares 2,196 2,449 374 359 2,771 3,471 374 359


Non-current assets

Quoted equity shares 3,616 3,070 997 852Unquoted equity share - at cost 781 781 781 781 4,397 3,851 1,778 1,633

Total 7,168 7,322 2,152 1,992


56


Available-for-sale investments are held for strategic rather than trading purpose. The Group does not actively trade available-for-sale investments. The available-for-sale investments presented as current assets are those held in investment accounts managed on behalf of the Group by professional fund managers. The available-for-sale investments presented as non-current assets are those held and managed directly by the Group and the Company.

Unquoted equity share is carried at cost as fair value cannot be reliably measured. Management has evaluated whether there is any indicator of impairment for unquoted equity share carried at cost, by considering both internal and external sources of information, and are satisfied that there is no such indicator.fi

Quoted equity shares offer the Group and the Company opportunity for return through dividend income and fair value gains. They have no fixed maturity or coupon rate.fi

The Group and Company’s available-for-sale investments that are not denominated in the functional currencies of the respective entities are as follows:


United States dollar 728 1,095 374 359Malaysian ringgit 618 423 - - Euro 240 277 - - Hong Kong dollar 224 263 - -

9 TRADE RECEIVABLES The Group The Company

2010 2009 2010 2009 $’000 $’000 $’000 $’000

Trade receivables 4,821 3,632 1,710 1,801Less: Allowance for doubtful debts (514) (181) (266) (22) 4,307 3,451 1,444 1,779

The average credit period granted to customers is 30 days (2009 : 30 days). No interest is charged on the trade receivables.

Before accepting any new customer, the Group assesses the potential customer’s credit quality and defines ficredit limits by customer. The review of customer credit limits is conducted annually. Except for two regular customers with total balance of $0.6 million (2009 : $0.7 million) which made up 14% (2009 : 19%) of the Group’s trade receivables, there is no other customer who represents more than 5% of the total balance of trade receivables of the Group.

The allowance for estimated irrecoverable amount has been determined based on on-going evaluation of recoverability and aging analysis of individual receivables by reference to their past default experience. The Group does not hold any collateral over these balances. The age of receivables past due but not impaired amounting to $1.7 million (2009 : $1.2 million) ranges from 31 to 60 days (2009 : 31 to 60 days). In determining the recoverability of a trade receivable, the Group considers any change in the credit quality of the trade receivable from the date credit was initially granted up to the reporting date. Management believes that there is no further allowance required.

( ) ( ) ( ) (


57


Movement in the allowance for doubtful debts:


Balance at beginning of the year 181 275 22 22(Decrease) Increase in allowance 339 (94) 244 - Bad debts written off (4) - - - Exchange adjustment (2) - - - Balance at end of the year 514 181 266 22

10 OTHER RECEIVABLES, DEPOSITS AND PREPAID EXPENSES


Outside parties 193 141 21 - Income tax recoverable 105 103 - - Refundable deposits 401 323 1 143Structured deposit with a bank - 400 - - Prepaid expenses 413 403 58 69 1,112 1,370 80 212

Structured deposit in 2009 represented a capital-protected deposit placed with a bank, which earned interest that was linked to the performance of certain equities. The tenure of the deposit was 3 years and had matured in November 2010. The deposit was carried at amortised cost and fair value approximate its carrying amount.

11 SUBSIDIARIES The Company

2010 2009 $’000 $’000

Unquoted equity shares - at cost 32,154 6,494Advances to subsidiaries 40,763 44,840Deemed investment in subsidiaries arising from fair value of corporate guarantee 5,810 258 78,727 51,592

,


58


The details of the Company’s subsidiaries at are as follows:

Country of incorporation Proportion of (or registration) ownership interestName of subsidiary and operation and voting power held Principal activity 2010 2009

% %

Royal Properties Singapore 100 100 Property investmentInvestment Pte Ltd

Royal Capital Pte Ltd Singapore 100 100 Investment holding and provision of management services

Castle Mall Properties Singapore 100 100 Investment holdingPte Ltd(wholly owned subsidiary of Royal Properties InvestmentPte Ltd)

Grand Complex New Zealand 100 100 Property investmentProperties Ltd (wholly owned subsidiary of RoyalProperties InvestmentPte Ltd) (1)

Hotel Royal @ Queens Singapore 100 100 Hotelier(Singapore) Pte Ltd(wholly owned subsidiary of Royal Properties Investment Pte Ltd)

Hotel Royal Investment Singapore 100 100 DormantPte Ltd (2)

Premium Lodge Sdn. Bhd. (1) (3) Malaysia 100 100 Hotelier

Prestige Properties Malaysia 100 100 Investment holdingSdn. Bhd. (1)

Faber Kompleks Malaysia 100 100 Hotelier and propertySdn. Bhd. (1) investment(wholly owned subsidiary ofPrestige Properties Sdn. Bhd.)

All the subsidiaries are audited by Deloitte & Touche LLP, Singapore except for the subsidiaries that are indicated as follows:

(1) Audited by overseas practices of Deloitte Touche Tohmatsu.

(2) Not audited as the subsidiary has remained dormant since incorporation.


59


(3) During the year, the Company’s direct shareholdings in the wholly-owned subsidiary, Premium Lodge Sdn. Bhd.,was transferred to Prestige Properties Sdn. Bhd., another wholly-owned subsidiary of the Group.

In November 2010, the Company registered a branch in Kuala Lumpur, Malaysia. The branch has remained dormant as at end of the year.

The amounts owing by subsidiaries are unsecured, not expected to be repaid within the next 12 months and bear interest at 1.6% (2009 : 1.6%) per annum which approximate market interest rate. Hence, the carrying amounts approximate their respective fair values.

12 PROPERTY, PLANT AND EQUIPMENT

Linen, china,Freehold Freehold Building glassware, Freehold

land building improvement Plant and silver and land for - hotels - hotels - hotels equipment uniform redevelopment Total

$’000 $’000 $’000 $’000 $’000 $’000 $’000

The Group

Cost or valuation: As at 1 January 2009 159,565 58,579 4,186 16,989 399 14,762 254,480

Additions - - - 750 17 318 1,085 Disposal - (200) - (144) - - (344) Transferred to investment property

(Note 13) - - - - - (15,080) (15,080) Exchange adjustment (54) (214) (10) (12) - - (290) As at 31 December 2009 159,511 58,165 4,176 17,583 416 - 239,851 Additions 9,172 34,914 - 1,377 19 - 45,482 Disposal - - - (186) (6) - (192) Revaluation gain 18,900 - - - - - 18,900 Exchange adjustment (67) (313) 14 12 - - (354) As at 31 December 2010 187,516 92,766 4,190 18,786 429 - 303,687

Comprising:

31 December 2010 At valuation 187,516 - - - - - 187,516 At cost - 92,766 4,190 18,786 429 - 116,171 Total 187,516 92,766 4,190 18,786 429 - 303,687

31 December 2009 At valuation 159,511 - - - - - 159,511 At cost - 58,165 4,176 17,583 416 - 80,340 Total 159,511 58,165 4,176 17,583 416 - 239,851

Accumulated depreciation: As at 1 January 2009 - 8,739 3,178 7,379 217 - 19,513 Charge for the year - 675 112 1,844 - - 2,631 Disposal - (13) - (141) - - (154) As at 31 December 2009 - 9,401 3,290 9,082 217 - 21,990 Charge for the year - 816 114 1,808 3 - 2,741 Disposal - - - (182) (6) - (188) As at 31 December 2010 - 10,217 3,404 10,708 214 - 24,543

Carrying amount: As at 31 December 2010 187,516 82,549 786 8,078 215 - 279,144

As at 31 December 2009 159,511 48,764 886 8,501 199 - 217,861


61


2010 2009 $’000 $’000

Subsidiary - Hotel Royal Penang (2): Freehold land 6,672 5,330 Freehold building 17,097 14,350

Subsidiary – The Coronade Hotel Kuala Lumpur (3): Freehold land 10,425 - Freehold building 36,759 -

(1) Desktop valuation (2009 : Full valuation) performed by an independent professional valuer in Singapore as of 31 December 2010 (2009 : 31 December).

(2) Full valuation performed by an independent professional valuer in Malaysia as of 31 December 2010 (2009 : 31 December).

(3) Full valuation performed by an independent professional valuer in Malaysia as of 1 October 2010, followed by desktop valuation of the same amount as of year end.

Revaluation increase/decrease is recognised only for freehold land-hotels in accordance with the Group’s accounting policies. Revaluation increase/decrease is not recognised for freehold building - hotels. As at 31 December 2010, had the freehold land - hotels been carried at historical cost less accumulated impairment losses, its carrying amount would have been approximately $33.3 million (2009 : $25.4 million) for the Group and $1 million (2009 : $1 million) for the Company.

Property, plant and equipment of the Group and the Company are pledged as securities for the Group’s and the Company’s bank loans as disclosed in Notes 14 and 18.

The carrying amount of the Group’s plant and equipment includes an amount of $108,173 (2009 : $Nil) in respect of assets held under finance lease.fi

13 INVESTMENT PROPERTIES

Freehold Freehold Leasehold Construction land buildings buildings in-progress Total $’000 $’000 $’000 $’000 $’000The GroupCost: As at 1 January 2009 16,361 41,767 1,456 - 59,584 Additions - 19 - - 19 Transferred from property, plant and equipment (Note 12) - - - 15,080 15,080

Exchange adjustment 2,204 7,860 - - 10,064 As at 31 December 2009 18,565 49,646 1,456 15,080 84,747 Additions - 9,027 - 2,442 11,469 Exchange adjustment (2,183) 934 - - (1,249) As at 31 December 2010 16,382 59,607 1,456 17,522 94,967

Accumulated depreciation: As at 1 January 2009 - 6,344 405 - 6,749 Charge for the year - 534 18 - 552 Exchange adjustment - 1,338 - - 1,338 As at 31 December 2009 - 8,216 423 - 8,639 Charge for the year - 693 18 - 711 Exchange adjustment - (160) - - (160) As at 31 December 2010 - 8,749 441 - 9,190


62


Freehold Freehold Leasehold Construction land buildings buildings in-progress Total $’000 $’000 $’000 $’000 $’000

Impairment: As at 1 January 2009 and 31 December 2009 - 284 - - 284 Charged for the year - 1,116 - - 1,116 As at 31 December 2010 - 1,400 - - 1,400

Carrying amount: As at 31 December 2010 16,382 49,458 1,015 17,522 84,377

As at 31 December 2009 18,565 41,146 1,033 15,080 75,824

The Company

Construction-in-progress: $’000 Cost: As at 1 January 2009 - Transferred from property, plant and equipment (Note 12) 15,080 As at 31 December 2009 15,080 Additions 2,442 As at 31 December 2010 17,522

Accumulated depreciation: As at 1 January 2009, 31 December 2009 And 31 December 2010 -

Carrying amount: As at 31 December 2010 17,522

As at 31 December 2009 15,080

Fair values of investment properties (for information only):

2010 2009 $’000 $’000

Freehold land and buildings in New Zealand (1) 51,735 50,898Freehold land and buildings in Malaysia (2) 14,178 11,070Freehold buildings in Singapore (3) 4,030 3,870Leasehold buildings in Singapore (3) 5,350 4,500Freehold land under redevelopment in Singapore (3)(4) 19,338 17,938 94,631 88,276

(1) Full valuation by an independent professional valuer in New Zealand.(2) Full valuation by an independent professional valuer in Malaysia.(3) Desktop valuation (2009 : Full valuation) by an independent professional valuer in Singapore.(4) Included under construction-in-progress.


63


Fair values of investment properties are generally assessed with reference to their open market values of similar properties on existing use basis, and taking into account current rental rates and market conditions prevailing at the end of the reporting period. Fair value increases/decreases are not recognised for investment properties.

During the year, the Company entered into an agreement with a related party (a company with common directors and in which certain directors have interest) to jointly redevelop the freehold land at 1A Surrey Road into a residential investment property. Currently, the Company and the related party own 87.5% and 12.5% respectively of the titles to the freehold land. The costs of approximately $10.3 million for the redevelopment shall be shared by the Company and the related party in proportion to their respective percentage share of the freehold land. On or before the completion of the redevelopment, the Company and the related party shall enter into a Partition Agreement under which the redeveloped property shall be partitioned such that the related party will own a particular unit and the Company shall own the remaining units. The company shall then pay, by way of equality of partition, a sum to be computed based on the total redevelopment costs or total market value, attributable to its increased percentage of titles held in the redeveloped property, whichever is higher.

The Company’s interest in the freehold land for redevelopment was valued by an independent professional valuer in Singapore at approximately $19.3 million (2009 : $17.9 million), with reference to its open market value as a redevelopment site for residential property. Revaluation increase/decrease is not recognised for the freehold land for redevelopment.

Certain investment properties of the Group are pledged as securities for the Group’s bank loans as disclosed in Notes 14 and 18.

The Group recognised an impairment loss of $1.1 million (2009: Nil) on investment property based on directors’ estimation of the market value of that investment property as at 31 December 2010.

The property rental income for the Group from the Group’s investment properties which are leased out under operating leases, amounted to $4.4 million (2009 : $6.8 million). Direct operating expenses (including repairs and maintenance) of the Group arising from the rental-generating investment properties and non-rental generating investment properties amounted to $1.8 million (2009 : $2.5 million) and $1.3 million (2009 : $1.1 million) respectively.

14 BANK LOANS


Short-term bank loans (secured) 9,350 18,049 9,350 18,049Long-term bank loans (secured)- current portion (Note 18) 1,731 697 - - 11,081 18,746 9,350 18,049

Short-term bank loan, drawn down under the Company’s specific advance facility with a bank, with carrying fiamount of $2.6 million as at 31 December 2010 (2009 : $9.8 million), bears interest rate at 1.71% (2009 : 1.25%) per annum over the prevailing swap offer rate of the bank. The specific advance facility is fisecured by a mortgage on the Company’s freehold land for redevelopment which has been reclassified as an fiinvestment property construction-in-progress (Note 13) with carrying amount of $17.5 million (2009 : $15.1 million).


64


Another short-term bank loan, drawn down from the Company’s 5-year revolving credit facility with a bank, with carrying amount of $6.75 million as at 31 December 2010 (2009 : $8.2 million), bears interest at 1.71% (2009 : 2.28%) per annum which represents 1.25% (2009 : 1.25%) plus Singapore Swap Offer Rate. This 5-year revolving credit facility is secured by a mortgage on the Company’s freehold hotel land and building with a carrying amount of $119.0 million (2009 : $111.1 million).

The carrying amounts of short-term bank loans approximate their fair values due to the relatively short-term maturity of these borrowings.

15 OTHER PAYABLES The Group The Company

2010 2009 2010 2009 $’000 $’000 $’000 $’000

Outside parties 2,208 1,544 25 32Financial guarantee contract liabilities - - 5,044 - 2,208 1,544 5,069 32

16 FINANCE LEASE

Present valueMinimum lease of mimimum

payments lease payments 2010 2009 2010 2009 $’000 $’000 $’000 $’000

Amount payable under finance lease:fi

Within one year 8 - 7 - In the second to fifth year inclusive 35 - 32 - fi 43 - 39 - Less: Future finance charges (4) - NA - fiPresent value of lease obligations 39 - 39 - Less: Amount due for settlement within 12 months (shown under current liabilities (7) - Amount due for settlement after 12 months 32 -

The lease term is 5 years. For the year ended 31 December 2010, the average effective borrowing rate was 3.72% per annum. Interest rates are fixed at the contract date, and thus expose the company to fair value fiinterest risk. All leases are on a fixed repayment basis and no arrangements have been entered into contingent firental payments.

All lease obligations are denominated in Singapore dollars.

The fair value of the Group’s lease obligations approximate their carrying amount.

The Group’s obligations under finance leases are secured by the lessor’s title to the leased asset.fi

17 RETIREMENT BENEFIT OBLIGATIONS

A subsidiary operates an unfunded, defined benefifi t Retirement Benefifi t Scheme (the “Scheme”) for its eligible fiemployees in Malaysia. Under the Scheme, eligible employees are entitled to retirement benefits based on fi83% of their last drawn salary multiplied with the years of service on attainment of the normal retirement age of 55 or an early retirement age of 45.

Hotel Royal Limited Annual Report 2010NOTES TO FINANCIAL STATEMENTS31 December 2010

67

The deferred income tax balance is made up of the following:

Accelerated tax depreciation Others Total $’000 $’000 $’000

The Group

At 1 January 2009 6,636 1,053 7,689Debit (Credit) to profit or loss for the year 216 (31) 185fiAt 31 December 2009 6,852 1,022 7,874Arising from acquisition of business (Note 28) 826 - 826Debit to profit or loss for the year 5,861 (966) 4,895fiAt 31 December 2010 13,539 56 13,595

The Company

At 1 January 2009 522 - 522Credit to profit or loss for the year (72) - (72)fiAt 31 December 2009 450 - 450Credit to profit or loss for the year (8) - (8)fiAt 31 December 2010 442 - 442

A subsidiary has unutilised tax losses and capital allowances carryforward of approximately $30.2 million (2009: $29.9 million), which management has not recognised the related deferred tax benefits, as the expected fiamount and timing of recoverability are uncertain.

20 SHARE CAPITAL The Group and the Company

2010 2009 2010 2009 Number of ordinary shares $’000 $’000 (’000)

Issued and fully paid: At beginning of year 60,000 60,000 64,569 64,569 Issued during the year 24,000 - 35,869 - At end of year 84,000 60,000 100,438 64,569

The issued and paid up ordinary share capital of the Group and the Company was increased during the year by way of rights issue of 24 million new ordinary shares of $1.50 each on the basis of two rights shares for every five ordinary shares. The rights issue was completed in July 2010 and a total of $35.869 million fi(net of rights issue expenses of $0.131 million) was raised.

The Company has one class of ordinary shares with no par value, carry one vote per share and carry a right to dividends.

Hotel Royal Limited Annual Report 2010NOTES TO FINANCIAL STATEMENTS 31 December 2010

68

21 REVENUE The Group

2010 2009 $’000 $’000

Room revenue 24,827 19,645Food and beverage revenue 6,090 4,470Rental income from: Investment properties 4,367 6,753 Other properties 2,951 3,018Car park revenue 1,220 1,169Interest income from outside parties 97 154Dividend income from: Quoted equity investments 166 149 Unquoted equity investments 14 12Others 219 137

39,951 35,507

22 OTHER MISCELLANEOUS INCOME The Group

2010 2009 $’000 $’000

Gain on disposal of available-for-sale investments 322 13Fair value gain on held-for-trading investments 276 918Gain on disposal property, plant and equipment 41 - Write-back of allowance for doubtful debts 24 110Other income 127 674

790 1,715

23 FINANCE COSTS The Group

2010 2009 $’000 $’000

Interest on bank loans 1,528 1,252

24 PROFIT BEFORE INCOME TAX

Profit before income tax includes:fi The Group

2010 2009 $’000 $’000

Staff costs (including directors’ remuneration) 7,679 7,183 Cost of defined contribution plans included in staff costs 492 446fiDirectors’ remuneration: Directors of the subsidiaries (key management personnel) 567 535Proposed directors’ fee: Directors of the Company 141 129 Directors of the subsidiaries (key management personnel) 61 52Fees paid to a director in respect of professional services 41 41Non-audit fees paid to: Auditors of the Company 31 31Depreciation of property, plant and equipment 2,741 2,631

Hotel Royal Limited Annual Report 2010NOTES TO FINANCIAL STATEMENTS31 December 2010

69

The Group 2010 2009 $’000 $’000

Depreciation of investment properties 711 552Write-back of allowance for doubtful debts (24) (110)Allowance for doubtful debts 363 16Impairment loss on available-for-sale investments * 19 91Impairment loss on investment property 1,116 - Gain on disposal of available-for-sale investments * (322) (13)(Gain) Loss on disposal of property, plant and equipment (41) 155Fair value gain on held-for-trading investments * (276) (918)Transfer from fair value reserve upon disposal of available-for-sale investments * (322) (11)Net foreign exchange adjustment loss * 883 336

*Included in other (income) expenses in the consolidated profit and loss statement.fi

25 INCOME TAX (EXPENSE) CREDIT The Group

2010 2009 $’000 $’000

Current tax (1,739) (1,500)Deferred tax (4,899) (112)

(6,638) (1,612)(Under) Overprovision in prior years- current tax 291 1,165- deferred tax (72) 1,005Total income tax (expense) credit (6,419) 558

The income tax expense varied from the amount of income tax expense determined by applying the Singapore income tax rate of 17% (2009 : 17%) to profit before income tax as a result of the following differences:fi

The Group 2010 2009 $’000 $’000

Income tax expense at statutory rate (1,949) (1,710)Non-taxable items 84 89Effect of change in tax rates 344 - Effect of change in tax rules in New Zealand* (5,189) - Overprovision in prior years 219 2,170Difference due to foreign tax rates (14) (84)Tax exemption and rebate 80 81Other items 6 12Total income tax (expense) credit (6,419) 558

* The New Zealand goverment’s analysis suggests that on average long-lived building have been appreciating since 1993 and a 2% depreciation rate that is tax deductible is not appropriate. Hence, with effect from year of assessment 2012, depreciation expenses will no longer be tax deductible for buildings with estimated useful life of fifty years or more. No further tax depreciation can be claimed from year of assessment 2012.fi


70

26 EARNINGS PER SHARE

Basic earnings per share is calculated on the Group profit after tax of $5.0 million (2009 : $10.6 million) fidivided by weighted average number of ordinary shares of 75,108,932 (2009 : 66,919,791), which has been adjusted to reflect the effects of rights issue in 2010.fl

Diluted earnings per ordinary share is the same as basic earnings per share as there are no dilutive potential ordinary shares.

27 SEGMENT INFORMATION

Products and services of the Group

The Group is primarily engaged in the following operations:

• Owning and operating hotels and providing ancillary services (“hotel operation”)

• Owning and letting out investment properties (“property investment”)

• Holding financial investments which comprise fifi nancial assets such as shares, bonds, funds and other fifinancial products, to generate a stable stream of income through interest and dividends, and also for fipotential capital appreciation (“financial investment”)fi

Definition of operating segments and reportable segments of the Groupfi

For the purpose of reporting to the Group’s chief operating decision-maker for resource allocation and assessment of operational performance, the information is organised in the following manner:

• Hotel operation – information is reported on individual hotel basis

• Property investment – information is reported on individual property basis

• Financial investment – information is reported on overall performance of the investment portfolio

The above forms the basis of determining an operating segment of the Group. For the purpose of reporting segment information externally, the following reportable segments are identified:fi

• Hotel operation- Singapore- Malaysia

• Property investment- Singapore- New Zealand- Malaysia

• Financial investment

The accounting policies of the reportable segments are the same as the Group’s accounting policies described in Note 2. Segment profits represent profifi ts earned by each segment without allocation of the central fiadministrative costs, finance costs and income tax expense. All assets are allocated to reportable segments fiexcept for certain financial assets. Segment liabilities represent operating liabilities attributable to each fireportable segment. Bank borrowings and tax liabilities are not allocated. These are the measures reported to the chief operating decision-maker for the purposes of resource allocation and assessment of segment performance. Information regarding the Group’s reportable segments is presented below:



I Revenue External Inter-segment Total

2010 2009 2010 2009 2010 2009$’000 $’000 $’000 $’000 $’000 $’000

Hotel operationSingapore 28,585 24,223 - - 28,585 24,223Malaysia 6,028 3,563 - - 6,028 3,563 34,613 27,786 - - 34,613 27,786

Property investmentSingapore 395 409 107 100 502 509New Zealand 4,206 6,398 - - 4,206 6,398Malaysia 460 599 - - 460 599 5,061 7,406 107 100 5,168 7,506

Financial investment 277 315 1,960 1,560 2,237 1,875

Segments total 39,951 35,507 2,067 1,660 42,018 37,167

II Net profit fi Net profit before one-off fi income and expenses One-off income (Note 1) and expenses Total

2010 2009 2010 2009 2010 2009$’000 $’000 $’000 $’000 $’000 $’000

Hotel operationSingapore 11,004 7,977 - - 11,004 7,977Malaysia (360) (1,119) 1,919 - 1,559 (1,119) 10,644 6,858 1,919 - 12,563 6,858

Property investmentSingapore (60) 192 - - (60) 192New Zealand (610) 2,854 - - (610) 2,854Malaysia (133) (46) - - (133) (46) (803) 3,000 - - (803) 3,000

Financial investment 1,235 1,452 - - 1,235 1,452

Segments total 11,076 11,310 1,919 - 12,995 11,310

Finance costs (1,528) (1,252)

Profit before income taxfi 11,467 10,058Income tax (expense) credit (6,419) 558

Profit after income taxfi 5,048 10,616

Note 1 – This relates to the bargain purchase gain net of expenses relating to acquisition the Coronade Hotel Kuala Lumpur and its business as completed on 1 October 2010.

71



III Segment assets and liabilities

Segment assets Segment liabilities 2010 2009 2010 2009 $’000 $’000 $’000 $’000

Hotel operationSingapore 221,318 203,068 3,090 2,880Malaysia 66,298 19,084 1,526 1,204 287,616 222,152 4,616 4,084

Property investmentSingapore 24,770 19,248 173 164New Zealand 53,144 50,685 194 484Malaysia 13,438 11,311 925 468 91,352 81,244 1,292 1,116

Financial investment 12,796 14,523 181 169

Segments total 391,764 317,919 6,089 5,369

Unallocated items 15,413 6,460 93,710 67,619Consolidated total 407,177 324,379 99,799 72,988

IV Other segment information

Additions to Depreciation Impairment loss non-current assets

2010 2009 2010 2009 2010 2009$’000 $’000 $’000 $’000 $’000 $’000

Hotel operationSingapore 2,085 2,120 - - 881 1,009Malaysia 615 425 - - 44,483 76 2,700 2,545 - - 45,364 1,085

Property investmentSingapore 97 90 - - 2,561 - New Zealand 555 494 1,116 - 6,182 19Malaysia 100 54 - - 2,844 - 752 638 1,116 - 11,587 19

Financial investment - - 19 91 - -

Segments total 3,452 3,183 1,135 91 56,951 1,104

Reconciling items - - - - - - Consolidated total 3,452 3,183 1,135 91 56,951 1,104


72


V Geographical information

Information about the Group’s revenue and non-current assets by geographical location are described below:

Revenue from Non-current external customers assets

2010 2009 2010 2009 $’000 $’000 $’000 $’000

Singapore 29,225 24,922 241,260 218,441Malaysia 6,496 4,168 74,921 30,671New Zealand 4,230 6,417 51,737 48,424 39,951 35,507 367,918 297,536

28 ACQUISITION OF A BUSINESS

During the year, the Group’s wholly-owned subsidiary, Premium Lodge Sdn. Bhd., entered into a Sale and Purchase Agreement (“Agreement”) to acquire the Coronade Hotel Kuala Lumpur and its business from a third party, for a cash consideration of approximately $39.4 million (RM93 million). The acquisition is an opportunity for the Group to expand its hotel operations in the region. In addition, the Coronade Hotel Kuala Lumpur located in one of the prime tourist and hotel belts of Kuala Lumpur city centre offers potential capital appreciation in the future.

The fair value of the net identifiable assets acquired in the transaction are as follows:fi

Carryingamount before Fair value acquisition adjustments Fair value

$’000 $’000 $’000Net identifiable assets acquired:fi

Land 7,544 1,628 9,172Building 31,607 3,307 34,914Other assets 244 - 244Deferred tax liabilities - (826) (826)Total consideration 39,395 4,109 43,504Bargain purchase gain arising from acquisition of business (4,109)Total consideration, satisfied by cash 39,395fi

Net cash outflow arising on acquisitions:fl Cash consideration paid 39,395

In 2010, the acquired business contributed $1.6 million and $0.1 million increase to the Group’s revenue and profit before income tax respectively for the period between the date of acquisition and the end of the fireporting period. If acquisition had been completed on 1 January 2010, total Group’s revenue and profit fibefore income tax for 2010 would have increased by $6.5 million and $0.4 million respectively.

Management was of the view, after re-assessment, that the gain represented a bargain purchase on acquisition, which was primarily due to the fact that the price was negotiated with the seller during the economic downturn and the market condition had improved subsequently at the completion date of the acquisition.

73



29 OPERATING LEASE ARRANGEMENTS

The Group and Company as lessor

The Group and Company rents out its office premises and shop space under operating lease to outside fiparties. Most of the office premises and shop space held have committed tenancy ranging from 1 to 8 fiyears.

At the end of the reporting period, the Group and Company have contracted with tenants for the following future minimum lease receipts for the following periods:


Within one year 9,360 3,005 708 1,438In the second to fifth years inclusive 12,621 13,238 4 361fiAfter fifth year 3,569 2,570 - - fi 25,550 18,813 712 1,799

30 CONTINGENT LIABILITIES

(a) Guarantees given

The Company and a subsidiary provide guarantees amounting to $4.32 million (NZ$4.35 million) [2009 : $0.05 million (NZ$0.05 million)] to banks for banking facilities granted to another subsidiary which are secured as disclosed in Note 18. In addition, the Company agrees to stand as guarantor for banking facilities totaling $96.3 million (2009 : $54.0 million) obtained by subsidiaries. The fair values of the financial guarantee contract liabilities is about $5.0 million. The maximum amount that the fiCompany could be forced to settle, in the event that the full guaranteed amount is claimed, is about $69.2 million (2009: $40.1 million).

(b) Legal claims

(i) Civil suit initiated by former hotel operator

In January 2009, Faber Kompleks Sdn. Bhd., a wholly-owned subsidiary of the Company was served with a notice of civil suit by the former hotel operator of Hotel Royal Penang, for alleged wrongly termination of its services. The former hotel operator is seeking to claim injunctive relief, specifi c performance and general damages. Faber Kompleks Sdn. Bhd. had maintained that there was no valid claim on the grounds that the former hotel operator had previously operated solely on an interim arrangement which has ceased on 31 December 2008. No formal management contract had been entered between Faber Kompleks Sdn. Bhd. and the former hotel operator.

In January 2010, the former hotel operator obtained an interlocutory order from the High Court of Malaya at Penang to restrain Faber Kompleks Sdn. Bhd. from interfering with his operation and management of the hotel. Faber Kompleks Sdn. Bhd. had fi led an appeal to the Appeals Court of Malaysia against this order and the High Court of Malaya at Penang had granted Faber Kompleks Sdn. Bhd. a stay of execution in February 2010.

On 12 October 2010, the Appeals Courts of Malaysia had allowed the appeal of Faber Kompleks Sdn. Bhd. against the decision of the High Court in granting the Injunction against Faber Kompleks Sdn. Bhd.

74



31 CAPITAL EXPENDITURE COMMITMENTS The Group The Company

2010 2009 2010 2009 $’000 $’000 $’000 $’000

Estimated amounts committed for future capital expenditure but not provided for in the financial statements 7,322 9,038 6,405 8,800fi

32 DIVIDENDS

During the financial year ended:fi

(a) 31 December 2009, the Company declared and paid a first and fifi nal one-tier tax exempt dividend of fi$0.05 per share on the ordinary shares of the Company totaling $3.0 million in respect of the financial fiyear ended 31 December 2008.

(b) 31 December 2010, the Company declared and paid a first and fifi nal one-tier tax exempt dividend of fi$0.05 per share on the ordinary shares of the Company totaling $3.0 million in respect of the financial fiyear ended 31 December 2009.

Subsequent to 31 December 2010, the directors of the Company recommended that a first and fifi nal one-tier fitax exempt dividend be paid at $0.05 per ordinary share totaling $4.2 million for the financial year just ended fion the ordinary shares of the Company. The dividend is subject to approval by shareholders at the Annual General Meeting and has not been included as liability in these financial statements.fi

33 SUBSEQUENT EVENT

In January 2011, the Group’s Malaysian subsidiaries have completed the acquisition of five offififi ce/residential fiunits at Penang Plaza at a purchase consideration of approximately $0.93 million (RM2.23 million). With this acquisition, the Group’s share of the total rentable areas of Penang Plaza increases from 85% to 95%.


76


77

Schedule of the Group’s Major Properties

The schedule below shows the Group’s major properties as at 31 December 2010 with particulars of their tenure and usage.

Held By Location Description and area Tenure Effective Stake

Hotel Royal Limited 36 Newton Road Land area of about Freehold 100%Singapore 7,200 sq m Hotel building with built-up area of approximately 23,500 sq m

1A Surrey Road Land area of about Freehold 100%Singapore 718 sq m Residential building held for redevelopment with strata fl oor areafl of 1,232 sq m (The Company has a 87.5% share of the above property. The remaining 12.5% is owned by a related party)

Royal Properties No. 20 Office unit 99 years 100%fiInvestment Pte Ltd Maxwell Road Strata floor area of about (from 1969)fl

#12-02 551 sq mMaxwell HouseSingapore*

#05-14 Flatted factory unit Freehold 100%Kapo Factory Building Strata floor area of aboutflSingapore* 157 sq m

#02-14, #06-02, #07-02 Factory unit Freehold 100%and #09-08 Strata fl oor area of aboutflTong Lee Building 277 sq m eachSingapore*

Grand Complex 16 Willis Street Land area of about Freehold 100%Properties 22-42 Willis Street 6,898 sq mLimited 80 Boulcott Street & Shopping centre

84 Boulcott Street and offices withfiWellington lettable retail areaNew Zealand* of 4,431 sq m; lettable offi ce area offi 20,028 sq m and 323 car park lots

Hotel Royal @ Queens 12 Queen Street Land area of about Freehold 100%(Singapore) Pte Ltd Singapore 1,979 sq m

Hotel building with built-up area of approximately 14,605 sq m

Prestige Properties 3 Jalan Larut Land area of about Freehold 100%Sdn. Bhd. Georgetown 3,495 sq m and subsidiaries Penang Hotel building

Malaysia with build-up area of approximately 28,569 sq m

126 Jalan Burma Land area of about 5,498 sq m Freehold 95%Georgetown Shopping centre andPenang offices with total lettable retailfiMalaysia* area of 5,786 sq m; total lettable office area of 2,714 sq m; andfi 88 carpark lots

Jalan Walter Frenier Land area of about 773 sq m Freehold 100%55100 Kuala Lumpur Hotel building with built-upMalaysia area of approximately 20,027 sq m

* Investment properties


ANALYSIS OF SHAREHOLDINGS as at 25 March 2011

Issued and Fully Paid-Up Capital - S$100,729,496 **

No of Shares Issued - 84,000,000

Class of Shares - Ordinary Shares

Voting Rights - 1 Vote Per Share

Treasury Shares - Nil

** This is based on records kept with the Accounting & Corporate Regulatory Authority (“ACRA”) and differs from

the accounting records of the Company which is S$100,438,356 due to certain share issue expenses.

Size of No. of % of Shareholdings Shareholders Shareholders No. of Shares % of Shares

1 - 999 322 23.78 66,189 0.08

1,000 - 10,000 750 55.39 3,014,081 3.59

10,001 - 1,000,000 267 19.72 15,049,228 17.91

1,000,001 & above 15 1.11 65,870,502 78.42

Total 1,354 100.00 84,000,000 100.00

Based on the information provided and to the best knowledge of the Directors, approximately 25.46% of theissued ordinary shares of the Company is held in the hands of the public as at 25 March 2011 and therefore Rule 723 of the Listing Manual of Singapore Exchange Securities Trading Limited is complied with.

TOP TWENTY SHAREHOLDERS as at 25 March 2011

Name of Shareholders No. of Shares % of Shares1. Oversea Chinese Bank Nominees Pte Ltd 9,379,460 11.172. The Great Eastern Life Assurance Co Ltd - Participating Fund 9,307,012 11.083. Aik Siew Tong Ltd 8,246,000 9.824. Asia Building Bhd 6,875,400 8.195. Hock Tart Pte Ltd 5,292,000 6.306. Melodies Limited 4,060,000 4.837. United Overseas Bank Nominees Pte Ltd 3,761,430 4.488. Mayban Nominees (S) Pte Ltd 3,368,000 4.019. Singapore Island Bank Nominees Pte Ltd 3,360,000 4.0010. The Singapore-Johore Express (Private) Limited 3,154,200 3.7611. Mellford Pte Ltd 2,986,000 3.5512. Lee Chin Chuan 2,164,400 2.5813. Tan Chaw @ Tan Kow Tee 1,384,000 1.6514. Chan Tai Moy 1,377,600 1.6415. Chip Keng Holding Bhd 1,155,000 1.3816. The Great Eastern Trust Private Limited 741,066 0.8817. Season Holdings Pte Ltd 600,800 0.7218. Liu Ping-Nan Phyllis 528,500 0.6319. Bank of Singapore Nominees Pte Ltd 499,800 0.6020. Morph Investment Ltd 482,000 0.57

Total 68,722,668 81.84

78

Statistics of Shareholdings


STATISTICS OF SHAREHOLDINGS as at 25 March 2011

SUBSTANTIAL SHAREHOLDERS as at 25 March 2011 as shown in the Register of Substantial Shareholders:-

Direct Interest Deemed InterestSubstantial Shareholders No. of Shares % No. of Shares %

Lee Chou Hor George (1) 42,000 0.05 8,666,000 10.32

Lee Chou Tart (2) - - 8,652,000 10.30

Aik Siew Tong Ltd (3) 20,286,000 24.15 10,714,200 12.76

Hock Tart Pte Ltd (4) 8,652,000 10.30 20,286,000 24.15

The Great Eastern Life Assurance Co Ltd (5) 9,310,372 11.08 - -

Great Eastern Holdings Limited (5) - - 10,054,798 11.97

Oversea-Chinese Banking Corporation Limited (6) - - 10,054,798 11.97

Asia Building Bhd (7) 6,875,400 8.19 1,155,000 1.38

Melodies Limited (3) 7,560,000 9.00 - -

Other Shareholders

The Singapore-Johore Express (Private) Limited (3) 3,154,200 3.76 - -

Chip Keng Holding Bhd (7) 1,155,000 1.38 - -

Note:

(1) Lee Chou Hor George owns 23.8% of the share capital of Hock Tart Pte Ltd (“Hock Tart”). He is deemed interested in the shares held by Hock Tart. Additionally, Lee Chou Hor George is deemed interested in the shares held by his spouse.

(2) Lee Chou Tart owns 23.8% of the share capital of Hock Tart. He is deemed interested in the shares held by Hock Tart.

(3) Aik Siew Tong Ltd (“AST”) holds 83.4% and 69.1% of the share capital of Melodies Limited (“Melodies”) and The Singapore-Johore Express (Private) Limited (“S-J Express”) respectively and is deemed to be interested in the 7,560,000 Shares and 3,154,200 Shares which are held by Melodies and S-J Express respectively.

(4) Hock Tart Pte Ltd holds 31.7% of the share capital of AST and is therefore deemed interested in the shares held by AST.

(5) Great Eastern Holdings Limited is deemed interested in the 10,054,798 Shares comprising 9,310,372 Shares held by The Great Eastern Life Assurance Co Ltd, a wholly-owned subsidiary of Great Eastern Holdings Limited, 741,066 Shares registered in the name of its subsidiary, The Great Eastern Trust Private Limited, and 3,360 Shares registered in the name of United Overseas Bank Nominees Pte Ltd.

(6) Oversea-Chinese Banking Corporation Limited is deemed to be interested in the shares held by Great Eastern Life Assurance Company Ltd through Great Eastern Holdings Ltd.

(7) Chip Keng Holding Bhd is the wholly-owned subsidiary of Asia Building Bhd. Asia Building Bhd is deemed interested in the 1,155,000 Shares held by Chip Keng Holding Bhd.

Statistics of Shareholdings

79

The Coronade Hotel Kuala LumpurThe Coronade Hotel Kuala Lumpur( To be rebranded as Hotel Royal Kuala Lumpur )( To be rebranded as Hotel Royal Kuala Lumpur )


81

(in $’000) FIVE YEAR GROUP FINANCIAL STATISTICS

2010 2008 2007 2007 2007 2006 2008 2008 2009

PROFIT & LOSS

Turnover 39,951 35,507 36,909 30,961 30,961 30,961 28,91339,951 39,951 36,909 36,909 35,507 35,507

Profit before income tax 11,467 10,058 13,703 40,074 40,074 40,074 8,89411,467 11,467 13,703 13,703 10,058 10,058 fi

Profit after income tax 5,048 10,616 10,853 37,727 37,727 37,727 5,1575,048 5,048 10,853 10,853 10,616 10,616 fi

Dividends 3,000 3,000 3,000 2,460 2,460 2,460 12,400 3,000 3,000 3,000 3,000 3,000 3,000

BALANCE SHEET

Current assets 39,259 26,843 21,813 26,526 26,526 26,526 42,80139,259 39,259 21,813 21,813 26,843 26,843

Investments 4,397 3,851 2,448 3,526 3,526 3,526 2,8664,397 4,397 2,448 2,448 3,851 3,851

Property, plant & equipment 279,144 217,861 234,967 221,318 221,318 221,318 142,433279,144 279,144 234,967 234,967 217,861 217,861

Investment properties 84,377 75,824 52,551 56,936 56,936 56,936 53,30684,377 84,377 52,551 52,551 75,824 75,824

Total 407,177 324,379 311,779 308,306 308,306 308,306 241,406407,177 407,177 311,779 311,779 324,379 324,379

Current liabilities 18,345 25,066 43,310 51,124 51,124 51,124 27,73618,345 18,345 43,310 43,310 25,066 25,066

Finance lease 32 - - - - - -32 32 - - - -

Long-term bank loans 67,279 39,525 26,433 - - - 57,51267,279 67,279 26,433 26,433 39,525 39,525

Deferred income tax 13,595 7,874 7,689 8,903 8,903 8,903 8,08813,595 13,595 7,689 7,689 7,874 7,874

Other payables 548 523 521 - - - - 548 548 521 521 523 523

Total liabilities 99,799 72,988 77,953 60,027 60,027 60,027 93,33699,799 99,799 77,953 77,953 72,988 72,988

Shareholder’s equity 307,378 251,391 233,826 248,279 248,279 248,279 148,070307,378 307,378 233,826 233,826 251,391 251,391

Total 407,177 324,379 311,779 308,306 308,306 308,306 241,406 407,177 407,177 311,779 311,779 324,379 324,379

Earnings per share before income tax (1) 15.27cts 15.03cts 20.48cts 59.88cts 59.88cts 59.88cts 13.94cts 15.27cts 15.27cts 20.48cts 20.48cts 15.03cts 15.03cts

Earnings per share after income tax (1) 6.72cts 15.86cts 16.22cts 56.38cts 8.08cts

Net tangible asset backing per ordinary share $3.66 (2) $4.19 $3.90 $4.14 $4.14 $4.14 $2.47$3.90 $3.90 $4.19 $4.19

(1) The weighted average number of ordinary shares of 75,108,932 for 2010, 63,788,747 for 2006 and 66,919,791 for 2007 to 2009 have been adjusted to refl ect the rights issue during 2010.fl

(2) Please refer to Chairman’s Message on page 3.


NOTICE IS HEREBY GIVEN that the 42nd Annual General Meeting of Hotel Royal Limited will be held at the Royal Room, Level 15, Hotel Royal, 36 Newton Road, Singapore 307964 on 30 April 2011 at 2.30 p.m. for the following purposes:-

Ordinary Business

1. To receive and adopt the Directors’ Report and Audited Financial Statements for the financial year ended 31 December fi2010 together with the Auditors’ Report thereon. (Resolution 1)

2. To declare a First and Final Dividend of 5 cents per ordinary share one-tier tax exempt for the financial year ended fi31 December 2010. (Resolution 2)

3. To approve the sum of S$141,488 as Directors’ Fees for the financial year ended 31 December 2010. fi (FY2009: S$128,625). (Resolution 3)

4. To re-elect the following Directors who are retiring in accordance with Article 117 of the Company’s Articles of Association:-

(a) Col (Ret) Rodney How Seen Shing (Resolution 4)

(Note: Col (Ret) Rodney How Seen Shing will, upon re-election as director of the Company, remain as the Chairman of the Audit Committee and a member of the Remuneration Committee and Nominating Committee and will be considered independent).

(b) Mr Lee Kin Hong (Resolution 5)

5. To re-appoint Messrs Deloitte & Touche LLP as Auditors of the Company and to authorise the Directors to fix their firemuneration. (Resolution 6)

Special Business

To consider and, if thought fit, to pass the following resolutions, with or without amendments, as Ordinary Resolutions:-fi

6. Authority to issue shares

“That pursuant to Section 161 of the Companies Act, Chapter 50 (the “Act”), the Articles of Association and the listing rules of the Singapore Exchange Securities Trading Limited (“SGX-ST”), authority be and is hereby given to the directors of the Company to:-

(a) (i) allot and issue shares in the capital of the Company (the “Shares”) (whether by way of rights, bonus or otherwise); and/or

(ii) make or grant offers, agreements, or options (collectively, “Instruments”) that might or would require Shares to be issued, including but not limited to the creation and issue of warrants, debentures or other instruments convertible into Shares,

at any time and upon such terms and conditions and for such purposes and to such persons as the directors may in their absolute discretion deem fit; andfi

(b) (notwithstanding the authority conferred by this Resolution may have ceased to be in force):

(i) issue additional instruments as adjustments in accordance with the terms and conditions of the Instruments made or granted by the directors while this Resolution was in force; and

82

NOTICE OF ANNUAL GENERAL MEETING

Hotel Royal Limited Annual Report 2010NOTICE OF ANNUAL GENERAL MEETING

84

BY ORDER OF THE BOARD

Sharon YeohCompany Secretary

Singapore

14 April 2011

Explanatory Notes:-

(a) Resolution 7, if passed, will empower the Directors from the date of the above Meeting until the date of the next Annual General Meeting, to issue shares and convertible securities in the Company. The number of shares and convertible securities that the Directors may allot and issue under this Resolution would not exceed fi fty per cent. (50%) of the total number of issued sharesfi(excluding treasury shares) of the Company at the time of the passing of this resolution. For issue of shares and convertible securities other than on a pro rata basis to all shareholders, the aggregate number of shares and convertible securities to be issued shall not exceed twenty per cent. (20%) of the total number of issued shares (excluding treasury shares) of the Company.

(b) Resolution 8, if passed, will renew the Share Purchase Mandate and will authorise the directors to purchase or otherwise acquire Shares on the terms and subject to the conditions of the resolution. The rationale for, the authority and limitation on, the sources of funds to be used for the purchase or acquisition including the amount of financing and the fifi nancial effects of the purchase or fiacquisition of Shares by the Company pursuant to the Share Purchase Mandate on the audited consolidated financial statementsfiof the Group for the fi nancial year ended 31 December 2010 are set out in greater detail in the Appendix enclosed together withfithe Annual Report. The authority will expire at the next Annual General Meeting of the Company, unless previously revoked or waived at a general meeting.

NOTES:-

1. A member entitled to attend and vote at the Annual General Meeting (“the Meeting”) is entitled to appoint not more than twoproxies to attend and vote in his/her stead. A proxy need not be a member of the Company.

2. The instrument appointing a proxy shall, in the case of an individual, be signed by the appointor or his attorney, and in case of acorporation, shall be either under the Common Seal or signed by its attorney or an officer on behalf of the corporation. fi

3. The instrument appointing a proxy must be deposited at the Registered Offi ce of the Company at 36 Newton Road, Singaporefi307964 not less than forty-eight (48) hours before the time for holding the Meeting.

HOTEL ROYAL LIMITED(Co. Reg. No. 196800298G)

(Incorporated in the Republic of Singapore)

ANNUAL GENERAL MEETINGPROXY FORM

I/We, _____________________________________________________(Name), NRIC/Passport No. ________________________ of

____________________________________________________________________________________________ (Address) being a member / members of HOTEL ROYAL LIMITEDf hereby appoint:

and/or (delete as appropriate)

or failing him/her, the Chairman of the Meeting, as my/our proxy/proxies to vote for me/us on my/our behalf, at the 42nd Annual General Meeting (“AGM”) of the Company, to be held at the Royal Room, Level 15, Hotel Royal, 36 Newton Road, Singapore 307964 on 30 April2011, at 2.30 p.m. and at any adjournment thereof.

I/We direct my/our proxy/proxies to vote for or against the Resolutions to be proposed at the AGM as indicated hereunder. If no specific fidirections as to voting is given or in the event of any item arising not summarised below, the proxy/proxies will vote or abstain from voting at his/their discretion

1. Adoption of Directors’ Report, Audited Financial Statements and Auditors’ Report for the financial year ended 31 December 2010. fi

2. Declaration of First and Final Dividend.

3. Approval of Directors’ Fees.

4. Re-election of Col (Ret) Rodney How Seen Shing.

5. Re-election of Mr Lee Kin Hong.

6. Re-appointment of Auditors and fi xing their Remuneration.fi

7. Authority to issue new shares.

8. Renewal of Share Purchase Mandate

* Please indicate your vote “For” or “Against” with a tick ( ) within the box provided.

Dated this _______ day of ________________________ 2011.

________________________________________Signature(s) of Member(s)/Common Seal

IMPORTANT: PLEASE READ NOTES OVERLEAF

Shares in:

(a) Depository Register

(b) Register of Members

No. of Shares

NRIC/ Proportion of Name Address Passport Shareholdings

Number (%)

NRIC/ Proportion of Name Address Passport Shareholdings

Number (%)

No. Resolutions: For* Against*

IMPORTANT

1. For investors who have used their CPF monies to buy shares of Hotel Royal Limited, the Annual Report 2010 is forwarded to them at the request of their CPF Approved Nominees and is sent solely FOR INFORMATION ONLY.

2. This Proxy Form is not valid for use by CPF Investors and shall be ineffective for all intents and purposes if used or purported to be used by them.

3. CPF Investors who wish to vote should contact their CPF Approved Nominee.

NOTES

1. A member of the Company entitled to attend and vote at the Meeting is entitled to appoint not more than two proxies to attend and vote in his stead. Such proxy need not be a member of the Company.

2. Where a member appoints more than one proxy, he/she shall specify the proportion of his/her shareholdings (expressedas a percentage of the whole) to be represented by each proxy. If no such proportion or number is specified, the fifi rst finamed proxy may be treated as representing 100% of the shareholding and any second named proxy as an alternateto the first named.fi

3. A member should insert the total number of shares held. If the member has shares entered against his/her name in the Depository Register (as defined in Section 130A of the Companies Act, Cap. 50 of Singapore), he/she should fiinsert that number of shares. If the member has shares registered in his/her name in the Register of Members of the Company, he/she should insert that number of shares. If the member has shares entered against his/her name in the Depository Register and registered in his name in the Register of Members, he/she should insert the aggregate number of shares. If no number is inserted, the instrument appointing a proxy or proxies shall be deemed to relate to all shares held by the member.

4. The instrument appointing a proxy or proxies must be deposited at the Company’s Registered Office at 36 Newton fiRoad, Singapore 307964 not less than forty-eight (48) hours before the time for holding the Meeting.

5. The instrument appointing a proxy or proxies must be under the hand of the appointor or his attorney duly authorised in writing. Where the instrument appointing a proxy or proxies is executed by a corporation, it must be executedeither under its Common Seal or under the hand of its attorney or a duly authorised officer.fi

6. Where an instrument appointing a proxy is signed on behalf of the appointor by an attorney, the letter or power of attorney or a duly certified copy thereof shall (failing previous registration with the Company) be lodged with the fiinstrument of proxy, failing which the instrument may be treated as invalid.

7. A corporation which is a member may be resolution of its directors or other governing body authorise such person as it thinks fit to act as its representative at the Annual General Meeting.fi

8. The Company shall be entitled to reject the instrument appointing a proxy or proxies which is incomplete, improperlycompleted, illegible or where the true intentions of the appointor are not ascertainable from the instructions of theappointer specified in the instrument appointing a proxy or proxies. In addition, in the case of shares entered in fithe Depository Register, the Company shall be entitled to reject any instrument appointing a proxy or proxies if the member, being the appointor, is not shown to have shares entered against his/her name in the Depository Register asat 48 hours before the time appointed for holding the Meeting, as certified by The Central Depository (Pte) Limited fito the Company.

APPENDIX DATED 14 APRIL 2011

This Appendix is circulated to shareholders of Hotel Royal Limited (the “Company”) together with theCompany’s Annual Report. Its purpose is to explain to shareholders the rationale and provide information relating to the proposed renewal of the Share Purchase Mandate (de ned herein) to be tabled at the Annual General Meeting to be held on 30 April 2011 at 2.30 p.m. at Hotel Royal, Royal Room (Level 15), 36 Newton Road, Singapore 307964.

The Notice of Annual General Meeting and a Proxy Form are enclosed with the Annual Report.

The Singapore Exchange Securities Trading Limited takes no responsibility for the correctness of any of the statements made, reports contained/referred to, or opinions expressed in this Appendix.

HOTEL ROYAL LIMITED(Registration No. 196800298G)

(Incorporated in the Republic of Singapore)

APPENDIX TO SHAREHOLDERS

in relation to the

PROPOSED RENEWAL OF SHARE PURCHASE MANDATE

SUMMARY SHEET FOR RENEWAL OF SHARE PURCHASE MANDATE

The SGX-ST assumes no responsibility for the correctness of any of the statements made, reports contained or opinions expressed in this Summary Sheet. If you are in doubt as to the action that you should take, youshould consult your stockbroker or other professional adviser immediately.

(A) Shares Purchased In The Previous Twelve Months

Pursuant to the share purchase mandate obtained at the Annual General Meeting on 24 April 2010 (“Share Purchase Mandate”), the Company had not bought back any issued ordinary shares in the capital of the Company (the “Shares”) by way of market or off-market acquisitions (the “Share Purchase”).

(B) Renewal of The Share Purchase Mandate

Ordinary Resolution No. 8 if passed at the Annual General Meeting, will renew the Share Purchase Mandate from the date of the forthcoming Annual General Meeting or any adjournment thereof and will expire on the date on which the next annual general meeting of the Company is held or is required by law to be held, whichever is the earlier.

(C) Rationale For The Share Purchase Mandate

Short-term speculation may at times cause the market price of the Shares to be depressed below the true value of the Company and the Group. The proposed Share Purchase Mandate will provide the Directors with the means to restore investors’ con dence and to protect shareholders’ investments in the Company in a depressed share-price situation through judicious Share Purchases to enhance the earnings per Share and/or the net asset value per Share. The Share Purchases will enhance the net asset value per Share if the Share Purchases are made at a price below the net asset value per Share.

The proposed Share Purchase Mandate will also provide the Company with an expedient and cost-effective mechanism to facilitate the return of surplus cash reserves to shareholders as ffand when the Directors are of the view that this would be in the best interests of the Company and shareholders.

The Directors will only make Share Purchases as and when the circumstances permit and only if the Directors are of the view that such purchases are in the best interests of the Company and the shareholders. The Directors will decide whether to purchase Shares only after taking into account, among other things, the market conditions at such time, the Company’s nancial condition and whether such purchases will cause the Company to become insolvent (i.e. the Company is unable to pay its debts as they become due in the ordinary course of business, or the value of the Company’s assets is less than the value of its liabilities including contingent liabilities), and whether such purchases represent the most efff cient and cost-effective approach to enhance Share value. Share Purchases will only be made if the Directors believe that such purchases are likely to bene t the Company and increase economic value for shareholders.

The Directors will ensure that the Share Purchases will not have any effect on the listing status of the Company’s securities including the Shares listed on the Singapore Exchange Securities Trading Limited (the “SGX-ST”). Clause 723 of the Listing Manual of the SGX-ST requires at least ten per cent. (10%) of any class of a company’s listed securities to be held by the public at all times. The Directors shall safeguard the interests of public shareholders before undertaking any Share Purchases. Before exercising the authority comprised in the proposed Share Purchase Mandate, the Directors shall at all times take due cognizance of (a) the then shareholding spread of the Company in respect of the number of Shares held by substantial shareholders and by non-substantial shareholders and (b) the volume of trading on the SGX-ST in respect of the Shares immediately before any Share Purchase.

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Currently, approximately 21.4 million Shares (25.46%) of a total of 84 million Shares are held by the public. The Company is of the view that there is sufff cient number of Shares held by public shareholders which would permit the Company to undertake Share Purchases of up to ten per cent. (10%) of its total number of Shares without affecting the listing status of the Shares on the SGX-ST. The Company will ensure that the Share Purchases will not cause market illiquidity or affect orderly trade.

(D) Financial Impact Of Share Purchases

1. Shares purchased may be:

(i) held by the Company; or

(ii) dealt with, at any time, in accordance with Section 76K of the Company Act (Chapter 50) of Singapore (the “Act”), as Treasury Shares.

Section 76K of the Act allows the Company to:

(i) sell the Shares purchased (or any of them) for cash;

(ii) transfer the Shares purchased (or any of them) for the purposes of or pursuant to an employees’ share scheme;

(iii) transfer the Shares purchased (or any of them) as consideration for the acquisition of shares in or assets of another company or assets of a person; or

(iv) cancel the Shares purchased (or any of them).

The aggregate number of Shares held as Treasury Shares shall not at any time exceed ten per cent. (10%) of the total number of Shares. Any Shares in excess of this limit shall be disposed of or cancelled in accordance with Section 76K of the Act within six (6) months from the date when the excess arises.

Any Share Purchase will:

(i) reduce the amount of the Company’s share capital where the Shares were purchased or acquired out of the capital of the Company;

(ii) reduce the amount of the Company’s pro ts where the Shares were purchased or acquired out of the pro ts of the Company; or

(iii) reduce the amount of the Company’s share capital and pro ts proportionately where the Shares were purchased or acquired out of both the capital and the pro ts of the Company;

by the total amount of the purchase price paid by the Company for the Shares cancelled.

The Company cannot exercise any right in respect of Treasury Shares. In particular, the Company cannot exercise any right to attend or vote at meetings and for the purposes of the Act, the Company shall be treated as having no right to vote and the Treasury Shares will be treated as having no voting rights.

2. The nancial effects on the Company and the Group arising from Share Purchases which may be made pursuant to the proposed Share Purchase Mandate will depend on, inter alia, the aggregate number of Shares purchased and the consideration paid at the relevant time.

3. Based on the Company’s total number of issued Shares as at 25 March 2011 (the “Latest Practicable Date”), the proposed purchases by the Company of up to a maximum of ten per cent. (10%) of the total number of issued Shares under the Share Purchase Mandate will result in the purchase of up to 8.4 million Shares.

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4. An illustration of the impact of Share Purchases by the Company pursuant to the proposed SharePurchase Mandate on the Group’s and the Company’s nancial position is set out below based on the following assumptions:

(a) audited accounts of the Group and the Company as at 31 December 2010;

(b) in full exercise of the Share Purchase Mandate, 8.4 million Shares were purchased;

(c) the maximum price for the market or off-market purchases is $2.42 per Share, which is ve per cent. (5%) above the average closing prices of the Shares over the last ve (5) market days preceding the Latest Practicable Date on which the transactions in Shares were recorded on the SGX-ST; and

(d) the maximum amount of funds required for the Share Purchases in the aggregate is $20.33 million.

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(a) Market Purchase or Off-Market Purchase Made Entirely out of Capital and Held as Treasury Shares

GROUP COMPANY

Before After Before AfterShare Share Share Share

Purchase Purchase Purchase Purchase($‘000) ($‘000) ($‘000) ($‘000)

As at 31 December 2010

Pro t After Tax 5,048 5,048 6,843 6,843

Share Capital 100,438 100,438 100,438 100,438Reserves 133,892 133,892 96,666 96,666Retained Earnings 73,048 73,048 17,050 17,050

307,378 307,378 214,154 214,154Treasury Shares - (20,328) - (20,328)

Shareholders’ Funds 307,378 287,050 214,154 193,826

Net Tangible Assets (“NTA”) (1) 307,378 287,050 214,154 193,826

Current Assets 39,259 18,931 12,364 1,596

Current Liabilities 18,345 18,345 17,696 27,256

Working Capital 20,914 586 (5,332) (25,660)

Total Liabilities 99,799 99,799 18,138 27,698

Number of Shares (‘000) 84,000 75,600 84,000 75,600

Financial Ratios

NTA Per Share ($) 3.66 3.80 2.55 2.56

Earnings Per Share (“EPS”) ($) (2) 0.06 0.07 0.08 0.09

Gearing (3) 0.25 0.27 0.04 0.05

Current Ratio (4) 2.14 1.03 0.70 0.06

Notes:

(1) NTA equals total equity less minority interest less intangible assets.

(2) For illustrative purposes, EPS is computed based on pro t after tax and number of Shares as shown in the table above.

(3) Gearing equals total bank borrowings for the Group and Company respectively, divided by shareholders’ funds.

(4) Current ratio equals current assets divided by current liabilities.

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(b) Market Purchase or Off-Market Purchase Made Entirely out of Pro ts and Held as Treasury Shares

GROUP COMPANY




Pro t After Tax 5,048 5,048 6,843 6,843


307,378 307,378 214,154 214,154Treasury shares - (20,328) - (20,328)


NTA (1) 307,378 287,050 214,154 193,826

Current Assets 39,259 18,931 12,364 1,596


Working Capital 20,914 586 (5,332) (25,660)


Number of Shares(‘000) 84,000 75,600 84,000 75,600

Financial Ratios

NTA Per Share ($) 3.66 3.80 2.55 2.56

EPS ($)(2) 0.06 0.07 0.08 0.09

Gearing (3) 0.25 0.27 0.04 0.05

Current Ratio (4) 2.14 1.03 0.70 0.06

Notes:





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(c) Market Purchase or Off-Market Purchase Made Entirely out of Capital and Cancelled

GROUP COMPANY




Pro t After Tax 5,048 5,048 6,843 6,843



NTA (1) 307,378 287,050 214,154 193,826

Current Assets 39,259 18,931 12,364 1,596


Working Capital 20,914 586 (5,332) (25,660)


Number of Shares(‘000) 84,000 75,600 84,000 75,600

Financial Ratios

NTA Per Share ($) 3.66 3.80 2.55 2.56

EPS($) (2) 0.06 0.07 0.08 0.09

Gearing (3) 0.25 0.27 0.04 0.05

Current Ratio (4) 2.14 1.03 0.70 0.06

Notes:





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(d) Market Purchase or Off-Market Purchase Made Entirely out of Pro ts and Cancelled

GROUP COMPANY




Pro t After Tax 5,048 5,048 6,843 6,843

Share Capital 100,438 100,438 100,438 100,438Reserves 133,892 133,892 96,666 96,666Retained Earnings 73,048 52,720 17,050 (3,278)


NTA(2)A 307,378 287,050 214,154 193,826

Current Assets 39,259 18,931 12,364 1,596


Working Capital 20,914 586 (5,332) (25,660)


Number of Shares(‘000) 84,000 75,600 84,000 75,600

Financial Ratios

NTA Per Share ($) 3.66 3.80 2.55 2.56

EPS($) (3) 0.06 0.07 0.08 0.09

Gearing (4) 0.25 0.27 0.04 0.05

Current Ratio (5) 2.14 1.03 0.70 0.06

Notes:

(1) Assuming that a subsidiary of the Group declares and pays a dividend of approximately S$3.278 million to the Company such that it has sufff cient pro ts for the Share Purchase.





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As at 31 December 2010, the Group and the Company had cash balances of $33.57 million and $10.77 million respectively. In order to effect a purchase of up to 8.4 million Shares at the Maximum Price computed as at the Latest Practicable Date, cash reserves by the Company of $20.33 million will be required. As illustrated above, the purchase of Shares will have the effect of reducing the working capital and NTA of the Group and the Company by the dollar value of the Shares purchased. The consolidated NTA per Share of the Group and the Company as at 31 December 2010 will increase from $3.66 to $3.80 and $2.55 to $2.56 respectively. The consolidated basic EPS of the Group and the Company for the nancial year ended 31 December 2010 would increase from $0.06 per Share to $0.07 per Share and $0.08 per Share to $0.09 per Share respectively as a result of the reduction in the number of issued Shares.

As the Share Purchases will reduce the cash reserves of the Group and the Company, there will be a corresponding reduction in the current assets and the shareholders’ funds of the Group and the Company. The current ratios of the Group and the Company will decline. The actual impact on the current ratios will depend on the number of Shares purchased and the prices at which the Shares were purchased.

As at 31 December 2010, the Company had cash balances of approximately $10.77 million. When undertaking any Share Purchase, the Directors will ensure that:

(a) the Company and the Group will at all times have adequate working capital to meet its operational requirements;

(b) any Share Purchase will be nanced by the Company’s distributable pro ts; and

(c) the Company will not obtain or incur any borrowings to nance any Share Purchase.

5. Shareholders should note that the nancial effects set out above are based on the audited nancial accounts of the Group and the Company for the nancial year ended 31 December 2010 and are for illustration only. The results of the Group and the Company for the nancial year ended 31 December 2010 may not be representative of future performance.

6. The Company intends to use its internal sources of funds to nance its Share Purchases. The Company does not intend to obtain or incur any borrowings to nance its purchases of the Shares. The Directors do not propose to exercise the Share Purchase Mandate in a manner and to such extent that the working capital requirements of the Group would be materially affected.

7. The Company will take into account both nancial and non- nancial factors, among other things, the market conditions at such time, the Company’s nancial condition, the performance of the Shares and whether such Shares Purchases would represent the most efff cient and cost-effective approach to enhance the Share value. Shares Purchases will only be made if the Board believes that such purchases are likely to bene t the Company and increase economic value for shareholders.

(E) Consequences of Shares Purchases Under The Singapore Code on Take-over and Mergers

1. In accordance with The Singapore Code on Take-over and Mergers (“Take-over Code”), a person will be required to make a general offer for a public company if:

(a) he acquires 30 per cent (30%) or more of the voting rights of the company; or

(b) he already holds between 30 per cent (30%) and 50 per cent (50%) of the voting rights of the company, and he increases his voting rights in the company by more than one per cent (1%) in any six-month period.

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2. As at the Latest Practicable Date and before the proposed Share Purchase Mandate, the substantial shareholders’ and Directors’ interests are as follows:

Before Before After Share Share Share

Purchase Purchase Purchase

Direct Deemed TotalInterest Interest Interest

No. of No. of No. ofDirectors Shares Shares Shares % %

Dr Lee Keng Thon (1) 499,800 - 499,800 0.60 0.66

Col (Ret) Rodney How Seen Shing - - - - -

Ng Kok Lip - - - - -

Goh Kok Yeow - - - - -

Lee Khin Tien (1) 235,200 - 235,200 0.28 0.31

Lee Kin Hong (1) 77,280 336,000 413,280 0.49 0.55

Substantial Shareholders

Lee Chou Hor George (1),(2),(4) 42,000 8,666,000 8,708,000 10.37 11.52

Lee Chou Tart (1),(4) - 8,652,000 8,652,000 10.30 11.44

Aik Siew Tong Ltd (3) 20,286,000 10,714,200 31,000,200 36.91 41.01

Hock Tart Pte Ltd (3),(4),(7) 8,652,000 20,286,000 28,938,000 34.45 38.28

The Great Eastern Life Assurance Co Ltd (5) 9,310,372 - 9,310,372 11.08 12.32

Great Eastern Holdings Limited (5),(6) - 10,054,798 10,054,798 11.97 13.30

Oversea-Chinese Banking Corporation Limited (6) - 10,054,798 10,054,798 11.97 13.30

Asia Building Bhd (7),(8) 6,875,400 1,155,000 8,030,400 9.56 10.62

Melodies Limited (3) 7,560,000 - 7,560,000 9.00 10.00

Other Shareholders

Lee Chou Hock (1),(3),(4),(9) 126,000 2,800 128,800 0.15 0.17

The Singapore-Johore Express (Private) Limited (3) 3,154,200 - 3,154,200 3.76 4.17

Chip Keng Building Bhd (8) 1,155,000 - 1,155,000 1.38 1.53

Notes:

(1) Dr Lee Keng Thon, Mr Lee Khin Tien, Mr Lee Kin Hong are siblings and Mr Lee Chou Hor George, Mr Lee Chou Tart and Mr Lee Chou Hock are their nephews. Dr Lee Keng Thon, Mr Lee Khin Tien, Mr Lee Kin Hong, Mr Lee Chou Hor George, Mr Lee Chou Tart and Mr Lee Chou Hock together with their parents, siblings, spouses, children, nieces and nephews, as the case may be, shall be known as the “Lee Family”.

(2) Mr Lee Chou Hor George is deemed interested in the 8,652,000 Shares (10.30%) held by Hock Tart Pte Ltd (“Hock Tart”) and the 14,000 Shares (0.02%) held by his spouse.

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(3) Aik Siew Tong Ltd (“AST”) is wholly-owned by Hock Tart Pte Ltd (“Hock Tart”) and the Lee Family. AST holds 83.4% and 69.1% of the share capital of Melodies Limited (“Melodies”) and The Singapore-Johore Express (Private) Limited(“S-J Express”) respectively and is deemed to be interested in the 7,560,000 Shares and 3,154,200 Shares held by Melodies and S-J Express respectively. The Lee Family directly holds 14.42% and 22.93% (inclusive of the 2.27% held by Mr Lee Chou Hock) of the shareholdings in Melodies and S-J Express respectively. The other shareholders of Melodies and S-J Express are non-related third parties.

(4) Hock Tart is wholly-owned by the Lee Family. As Hock Tart holds 31.7% of the share capital of AST, it is therefore deemed interested in the shares held by AST. Each of Mr Lee Chou Hor George and Mr Lee Chou Tart owns 23.80% of the shareholdings in Hock Tart and they are therefore deemed interested in the Shares held by Hock Tart. In addition, Mr Lee Chou Hock, his son and daughter own 12.22%, 6.07% and 5.51% of the shareholdings in Hock Tart respectively. Accordingly, Mr Lee Chou Hock is interested in the shares of Hock Tart.

(5) Great Eastern Holdings Limited is deemed interested in the 10,054,798 Shares comprising 9,310,372 Shares held by The Great Eastern Life Assurance Co Ltd, a wholly-owned subsidiary of Great Eastern Holdings Limited, 741,066 Shares registered in the name of its subsidiary, The Great Eastern Trust Private Limited, and 3,360 Shares registered in the name of United Overseas Bank Nominees Pte Ltd.

(6) Oversea-Chinese Banking Corporation Limited is deemed to be interested in the Shares held by Great Eastern Life Assurance Company Ltd through Great Eastern Holdings Ltd.

(7) Asia Building Bhd is wholly-owned by Hock Tart and the Lee Family.

(8) Chip Keng Building Bhd is the wholly-owned subsidiary of Asia Building Bhd which is deemed interested in the 1,155,000 Shares held by Chip Keng Building Bhd.

(9) Mr Lee Chou Hock is the Chief Executive Offf cer of the Company. He is deemed interested in the 2,800 Shares (0.003%) held by his spouse.

The Lee Family together with their holding companies, AST, Hock Tart, Asia Building Bhd, Melodies and S-J Express own an aggregate of 63.52% of the Shares.

In the event the Company undertakes Share purchases of up to ten per cent. (10%) of the total number of Shares as permitted by the Share Purchase Mandate, the shareholdings and voting rights of the Lee Family and their holding companies will remain above fty per cent. (50%), hence no general offer is required to be made by any of the abovementioned substantial shareholders pursuant to the Take-Over Code.

(F) Miscellaneous

1. Any Share Purchases undertaken by the Company shall be at a price of up to but not exceeding theMaximum Price. The Maximum Price is a sum which shall not exceed the sum constituting ve per cent. (5%) above the average closing price of the Shares over the period of ve (5) trading days in which transactions in the Shares on the SGX-ST were recorded, in the case of a Market Purchase, before the day on which such purchase is made, and, in the case of an Off-Market Purchase, immediately preceding the date of offer by the Company, as the case may be, and adjusted for any corporate action that occurs after the relevant ve (5) day period.

2. In making Share Purchases, the Company will comply with the requirements of the SGX-ST Listing Manual, in particular, Rule 886 with respect to noti cation to the SGX-ST of any Share Purchases. Rule 886 is reproduced below:

“(1) An issuer must notify the Exchange of any share buy-back as follows:

(a) In the case of a market acquisition, by 9.00 a.m. on the market day following the day on which it purchased shares,

(b) In the case of an off-market acquisition under an equal access scheme, by 9.00 a.m. on the second market day after the close of acceptances of the offer.

(2) Noti cation must be in the form of Appendix 8.3.1 (or 8.3.2 for an issuer with a dual listing on another stock exchange).”

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3. Share Purchases will be made in accordance with the “Guidelines on Shares Purchases” as set out in Appendix I of the Company’s Circular to Shareholders dated 9 April 2009, a copy of which is annexed. All information required under the Act relating to the Shares Purchase Mandate is contained in the said Guidelines.

4. The SGX-ST Listing Manual does not expressly prohibit any purchase of shares by a listed company during any particular time or times. However, as a listed company would be considered an “insider” in relation to any proposed purchase or acquisition of its shares, the Company will undertake not to purchase or acquire Shares pursuant to the proposed Share Purchase Mandate at any time after a price sensitive development has occurred or has been the subject of a decision until the price sensitive information has been publicly announced. In particular, the Company will not purchase or acquire any Shares during the period commencing one month immediately preceding the announcement of the Company’s full-year and half-year results and the period of two weeks immediately preceding the announcement of its quarterly results.

(G) Directors’ Responsibility Statement

The Directors of the Company collectively and individually accept full responsibility for the accuracy of the information given herein and con rm, that to the best of their knowledge and belief, this Summary Sheet constitutes full and true disclosure of all material facts about the proposed renewal of the Share Purchase Mandate, the Company and its subsidiaries, and the Directors are not aware of any facts the omission of which would make any statement in this Summary Sheet misleading.

(H) Directors’ Recommendation

The Directors of the Company are of the opinion that the renewal of the proposed Shares Purchase Mandate is in the best interests of the Company. Accordingly, the Directors of the Company recommend that shareholders vote in favour of Ordinary Resolution 8 to be passed at the forthcoming Annual General Meeting.

(I) Taxation

Shareholders who are in doubt as to their respective tax positions or any tax implications, or who may be subject to tax in a jurisdiction outside Singapore, should consult their own professional tax advisers.

(J) Documents For Inspection

Copies of the following documents may be inspected at the registered offf ce of the Company at 36 Newton Road, Singapore 307964 during normal business hours up to and including the date of the AGM:

(a) the Memorandum and Articles of Association of the Company; and

(b) the audited nancial statements of the Company for the nancial year ended 31 December 2010.

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ANNEXURE TO SUMMARY SHEET

GUIDELINES ON SHARES PURCHASES

1. Shareholders’ Approval

(a) Purchases of Shares by the Company must be approved in advance by the Shareholders at a general meeting of the Company, by way of a general mandate.

(b) A general mandate authorising the purchase of Shares by the Company representing up to ten per cent. (10%) of the issued ordinary shares in the capital of the Company (excluding any Shares held as Treasury Shares) will expire on the earlier of:

(i) the conclusion of the next annual general meeting of the Company;

(ii) the expiration of the period within which the next annual general meeting of the Company is required by law to be held; or

(iii) the time when such mandate is revoked or varied by an ordinary resolution of the Shareholders of the Company in general meeting.

(c) The authority conferred on the Directors by the Share Purchase Mandate to purchase Shares shall be renewed at the next annual general meeting of the Company.

(d) When seeking Shareholders’ approval for the renewal of the Share Purchase Mandate, the Company shall disclose details pertaining to the purchases of Shares made during the previous 12 months, including the total number of Shares purchased, the purchase price per Share or the highest and lowest price for such purchases of Shares, where relevant, and the total consideration paid for such purchases.

2. Mode Of Purchase

Share Purchases can be effected by the Company in either one of the following two ways or both:

(a) by way of market purchases of Shares on the Offf cial List of the SGX-ST, which means a purchase transacted through the ready market; or

(b) by way of off-market acquisitions on an equal access scheme in accordance with section 76C of the Act.

3. Funding Of Share Purchases

(a) In purchasing the Shares, the Company may only apply funds legally permitted for such purchase in accordance with its Articles of Association, and the relevant laws and regulations enacted or prescribed by the relevant competent authorities in Singapore.

(b) Any purchase by the Company may be made out of capital or pro ts that are available for distribution as dividends, so long as the Company is solvent (as de ned by Section 76F(4) of the Act).

(c) The Company may not purchase its Shares on the Offf cial List of the SGX-ST for a consideration other than cash or for settlement otherwise than in accordance with the trading rules of the SGX-ST.

4. Trading Restrictions

The number of Shares which can be purchased pursuant to the Share Purchase Mandate is such number of Shares which represents up to a maximum of ten per cent. (10%) of the issued ordinary shares in the capital of the Company (excluding Treasury Shares) as at date of the last annual general meeting of the Company or at the date of the EGM, whichever is the higher.

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5. Price Restrictions

Any Share Purchase undertaken by the Company shall be at the price of up to but not exceeding themaximum price at which the Shares can be purchased pursuant to the Share Purchase Mandate, which shall not exceed the sum constituting ve per cent. (5%) above the average closing price of the Shares over the period of ve (5) trading days in which transactions in the Shares on the SGX-ST were recorded, in the case of a market purchase, before the day on which such purchase is made, and, in the case of an off-market purchase on an equal access scheme, immediately preceding the date of offer by the Company, as the case may be, and adjusted for any corporate action that occurs after the relevant ve (5) day period.

6. Off-Market Purchases

(a) For purchases of Shares made by way of an Off-Market Purchase, the Company shall issue an offer document to all Shareholders. The offer document shall contain, inter alia, the following information:

(i) the terms and conditions of the offer;

(ii) the period and procedures for acceptances;

(iii) the reasons for the proposed Share Purchase;

(iv) the consequences, if any, of Shares purchased by the Company that will arise under the Singapore Code on Take-over and Mergers or any other applicable take-over rules;

(v) whether the purchase of Shares, if made, would have any effect on the listing of the Company’s securities on the Offf cial List of the SGX-ST; and

(vi) details of any purchase of Shares made by the Company in the previous 12 months whether through Market Purchases or Off-Market Purchases, including the total number of Shares purchased, the purchase price per Share or the highest and lowest prices paid for such purchases of Shares, where relevant, and the total consideration paid for such purchases.

(b) All Offeree Shareholders shall be given a reasonable opportunity to accept any offer made by the Company to purchase their Shares under the Share Purchase Mandate.

(c) The Company may offer to purchase Shares from time to time under the Share Purchase Mandate subject to the requirement that the terms of any offer to purchase Shares by the Company shall be pari passu in respect of all Offeree Shareholders save under the following circumstances:

(i) where there are differences in consideration attributable to the fact that an offer relates to Shares with different dividend entitlements;

(ii) where there are differences in consideration attributable to the fact that an offer relates to Shares with different amounts remaining unpaid; and

(iii) where there are differences in an offer introduced solely to ensure that every Shareholder is left with a whole number of Shares in board lots of 1,000 Shares after the Share Purchases, in the event there are Offeree Shareholders holding odd numbers of Shares.

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7. Status Of Purchased Shares

The purchased Shares shall be cancelled immediately on purchase or acquisition unless held intreasury in accordance with Section 76H of the Act. Section 76H of the Act allows purchased Shares to be:

(i) held by the Company; or

(ii) dealt with, at any time, in accordance with Section 76K of the Act, as Treasury Shares.

Section 76K of the Act allows the Company to:

(i) sell the Shares (or any of them) for cash;

(ii) transfer the Shares (or any of them) for the purposes of or pursuant to an employees’ share scheme;

(iii) transfer the Shares (or any of them) as consideration for the acquisition of shares in or assets of another company or assets of a person; or

(iv) cancel the Shares (or any of them).

The aggregate number of Shares held as Treasury Shares shall not at any time exceed ten per cent. (10%) of the total number of Shares at that time. Any Shares in excess of this limit shall be disposed of or cancelled in accordance with Section 76K of the Act within six (6) months.

Any Share Purchase will:

(i) reduce the amount of the issued shares in the capital of the Company where the Shares were purchased or acquired out of the capital of the Company;

(ii) reduce the amount of the Company’s pro ts where the Shares were purchased or acquired out of the pro ts of the Company; or

(iii) reduce the amount of the Company’s share capital and pro ts proportionately where the Shares were purchased or acquired out of both the capital and the pro ts of the Company;

by the total amount of the purchase price paid by the Company for the Shares cancelled.

The Company cannot exercise any right in respect of Treasury Shares. In particular, the Company cannot exercise any right to attend or vote at meetings and for the purposes of the Act, the Company shall be treated as having no right to vote and the Treasury Shares will be treated as having no voting rights.

8. Noti cation To ACRA

(a) Within thirty (30) days of the passing of a Shareholders’ resolution to approve any purchase of Shares, the Company shall lodge a copy of such resolution with ACRA.

(b) The Company shall notify ACRA within thirty (30) days of a purchase of Shares. Such noti cation shall include details of the date of the purchase, the total number and nominal value of Shares purchased by the Company, the issued shares in the capital of the Company as at the date of the Shareholders’ resolution approving the purchase, the Company’s issued shares in the capital after the purchase and the amount of consideration paid by the Company for the purchase.

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9. Noti cation To The SGX-ST

(a) For purchases of Shares made by way of an Off-Market Purchase, the Company shall notify the SGX-ST in respect of any acquisition or purchase of Shares in the relevant form prescribed by the SGX-ST from time to time, not later than 9.00 a.m. on the second trading day after the close of acceptances of an offer, or within such time period that may be prescribed by the SGX-ST from time to time.

(b) For purchases of Shares made by way of a Market Purchase, the Company shall notify the SGX-ST in respect of any acquisition or purchase of Shares in the relevant form prescribed by the SGX-ST from time to time, not later than 9.00 a.m. on the trading day following the date of market acquisition by the Company, or within such time period that may be prescribed by the SGX-ST from time to time.

10. Suspension Of Purchase

(a) The Company may not undertake any Share Purchase prior to the announcement of any price-sensitive information by the Company, until such time as the price sensitive information has been publicly announced or disseminated in accordance with the requirements of the Listing Manual.

(b) The Company may not effect any repurchases of Shares on the SGX-ST during the period commencing two weeks before the announcement of the Company’s nancial statements for each of the rst three quarters of its nancial year, or one month before half year or nancial year, as the case may be, and ending on the date of announcement of the relevant results.

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